Feds quietly seized millions from online casinos' money movers
‘Currency exchange’ didn’t bother to fight for $3.4M seized during a Seattle-based investigation
By LEVI PULKKINEN, SEATTLEPI.COM STAFF
Published 9:49 pm, Sunday, December 4, 2016
Federal prosecutors in Seattle have seized millions of dollars alleged to be tied to online gambling.
In the spring of 2011, a Seattle Police Department detective hit it big on Betus.com.
The undercover detective had joined the online casino and sportsbook as part of an investigation into companies that move its money. A Western Union check to the Philippines funded his gambling; a wire transfer into a dummy bank account paid by his winnings.
That sting operation enabled members of a Seattle-based U.S. Secret Service taskforce to seize $3.4 million from Thames Point Management, one of the money processors working with the casino. If those companies’ operators cared, they haven’t mentioned it – the firms didn’t bother fighting a civil action brought by federal prosecutors looking to keep the money.
The seizure represented a large portion of the $21 million collected in 2015 through forfeiture actions initiated by federal prosecutors in Western Washington. Despite its size, the Thames Point seizure passed without any announcement from the government.
Now, prosecutors are looking to keep another chunk of change seized from a related money processing firm, Axia FX. As with Thames Point, the Axia legal action does not involve criminal charges.
No criminal complaints or indictments have been filed in the matter, said Emily Langlie, spokesperson for the U.S. Attorney’s Office for Western Washington. Langlie said the investigation was undertaken in the district because there were gamblers using the sites there.
The action coincided with a higher-profile prosecution by federal prosecutors in New York. There, prosecutors continue to pursue criminal charges against men purported to be involved with three online poker companies, PokerStars, Full Tile Poker and Absolute Poker, also known as Ultimate Bet. Several have been sentenced to prison in the ongoing prosecution.
Neither Thames Point nor Axia appear to be tied to the poker companies, though several businesses identified as their customers were also implicated in the poker prosecution.
Court records indicate more than a dozen U.S. firms were investigated during the probe into Thames Point and, now, Axia. Investigators in California, Texas, Florida, North Carolina and Washington, D.C. appear to have found the firms to be tied to online gambling.
According to court papers, Axia, Thames Point Management and the other transfer services serve virtual casinos hosted on servers outside the United States. Online gambling is illegal in most states, including Washington, but the e-casinos appear to be flourishing.
Online gambling would be a pretty simple proposition, if the houses didn’t have to pay up when their patrons win.
Gamblers stake themselves by paying into accounts hosted by the casinos or third parties. To pay winners, the casinos make electronic transfers to a third party so that the money will appear to be “clean” when it is wired into a gambler’s bank account. The third party firms may also mail checks to winning gamblers to cash them out.
Writing in court papers, the detective said the need to transfer money into the United States has “spawned a market for illegal money transmitting business.” Axia, he said, is in that market.
Neither Axia nor Thames Point are licensed to transmit money, according to the legal action. Nonetheless, Axia is alleged to have moved money through a London bank to gamblers in the United States.
During the 2011 investigation, the undercover Seattle Police Department detective watched as his gambling winnings moved from a London bank to his account in the United States.
Investigators met with seven Seattle-area gamblers who had been paid out after betting on sports or poker on BetUs.com and Bodog.com. According to court papers, the gamblers each explained that Thames Point delivered their winnings.
On July 19, 2011, investigators seized seven bank accounts holding a total of $3.4 million. Federal prosecutors filed a forfeiture action three years later claiming the money was related to unlawful activity.
A certified letter was sent to Thames Point. Prosecutors didn’t hear back.
U.S. District Judge James Robart in May 2015 found that Thames Point had failed to respond to the lawsuit and issued a default judgment for the government.
Efforts by seattlepi.com to reach Thames Point at its London office were unsuccessful. Representatives at Axia also did not return requests for comment; unlike Thames Point, the currency exchange appears to have a function website.
Company materials reviewed by police in 2012 claim Axia trades more than $760 million annually, exchanging currency for about 10,000 clients. A Seattle Police Department detective reviewing the website noted that customer information was not encrypted or secure, unusual for a financial services company.
Like Thames Point, Axia appeared to be in the business of moving money into and out of the United States. According to court papers, gamblers are among the firm’s clients.
In one year, Axia transferred at least $36.5 million in what investigators believe to be gambling-related transactions involving U.S. bettors. They identified 16 American corporations as well as five international entities thought to be using Axia to move gambling money.
Federal prosecutors in Seattle have asked for a court order that would allow the government to permanently seize $755,238 captured during the Axia investigation.
The civil action, which is before U.S. District Judge Richard Jones, was served on Axia in late November. The company does not appear to have replied.
Seattlepi.com reporter Levi Pulkkinen can be reached at 206-448-8348 or firstname.lastname@example.org. Follow Levi on Twitter at twitter.com/levipulk.