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Online poker king Brent Beckley pleads guilty to fraud

pokernight by chrischappelear via Flickr

Brent Beckley, one of the founders of Costa Rica-based Absolute Poker, has plead guilty (PDF) in a U.S. case to charges of bank fraud, wire fraud, and conspiracy to violate a U.S. ban on Internet gambling. Beckley and other defendants at Absolute Poker continued to accept credit card payments from U.S.-based gamblers after the United States barred banks from processing payments to offshore gambling sites in 2006. Absolute Poker’s response was simple: instead of charging for gambling, they created hundreds of fictional online merchants and charged their gambling customers for things like flowers, jewelry, pet supplies, and golf balls.

Beckley is a U.S. citizen, and served as Absolute Poker’s director of payment processing. He faces a maximum sentence of 35 years in prison, although the sentence guidelines in his plea agreement recommend 12 to 18 months in prison. Sentencing is scheduled for April 19, 2012.

Four other defendants have been charged in regard to the operation: Bradley Frazen plead guilty last May and awaits sentencing; trail for Ira Rubin and Chad Elie is scheduled to begin March 12, 2012. The investigation and prosecution of online poker enterprises is being headed up by the office of U.S. Attorney Pree Bharara in Manhattan; Bharara’s office is also pursuing Isle of Man-baed PokerStars and Ireland’s Full Tilt Poker, alleging the companies set up similar front companies to disguise the nature of U.S> credit card payments being made to offshore gambling operations. The case is seeking at least $3 billion in penalties and forfeitures.

According to H2 Gambling Capital, the worldwide online gambling market will account for about $30 billion in 2011; of that, the online poker market accounts for a bit over $5 billion.

In 2006, the United States’ Unlawful Internet Gambling Enforcement Act prohibited businesses from accepting bets or wagers via the Internet. The law had an immediate impact, with most publicly-traded overseas online gambling sites ceasing to accept U.S. players. Online gambling companies cannot operate legally in the United States: although some states specifically bar online gambling, any online gambling operation would require a state license to operate, and currently no states offer such licenses.

[Image via Christopher Chappelear.]