Former Bank Official Sentenced In Manhattan Federal Court To Three Months In Prison For Processing Gambling Transactions For Online Poker Companies
FOR IMMEDIATE RELEASE
Wednesday June 27, 2012
Former Bank Vice-Chairman is First of Six Defendants Who Pled Guilty in the Case to Be Sentenced
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that JOHN CAMPOS, the former Vice-Chairman of SunFirst Bank in Saint George, Utah, was sentenced in Manhattan federal court to three months in prison for processing approximately $200 million in illegal online poker transactions. Campos pled guilty in March 2012 to one count of causing a federally insured bank to accept money in connection with illegal gambling. As part of his plea, CAMPOS agreed to an order permanently barring him from the banking business. He was sentenced today by U.S. District Judge Lewis A. Kaplan.
According to the Superseding Information filed in Manhattan federal court, the indictment in which CAMPOS was initially charged, other documents previously filed in the case, and statements made in court:
In late 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), making it a crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” After several Internet gambling businesses withdrew from the U.S. market following the passage of the UIGEA, Pokerstars, Full Tilt Poker, and Absolute Poker/Ultimate Bet (the “Poker Companies”) became the top three Internet poker operators continuing to do business in the United States. Because United States banks were largely unwilling to process payments for an illegal activity such as Internet gambling, the Poker Companies principally relied on one of two tactics to process billions of dollars in payment transactions from U.S. residents who gambled through their websites. First, the Poker Companies and their agents lied to U.S. banks about the nature of the poker transactions they were processing by creating phony corporations and websites to disguise payments to the Poker Companies. Second, the Poker Companies and their agents identified small banks on the brink of failure and offered them millions of dollars in investments in return for the banks’ agreements to process the poker transactions.
CAMPOS was the Vice-Chairman of the Board of Directors and part owner of SunFirst Bank in St. George, Utah, which was in need of capital. In September 2009, a payment processor serving Pokerstars and Full Tilt Poker proposed to CAMPOS that Sunfirst Bank accept an investment of $10 million in return for processing Internet poker transactions. Such an investment would make the payment processor the bank’s single largest owner. SunFirst’s attorney warned CAMPOS that processing payments for an illegal business could lead to prosecution or seizure and forfeiture. CAMPOS chose to ignore this advice, and proceeded to finalize the deal for SunFirst to process poker transactions in return for an investment. SunFirst bank earned approximately$1.6 million in fee income for processing poker transactions until November 2010, when the Federal Deposit Insurance Corporation ordered the bank to cease such processing. In November 2011, bank regulators ordered SunFirst closed due to lack of capital.
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In addition to the prison term, Judge Kaplan sentenced CAMPOS, 58, of Saint George, Utah, to three years of supervised release and ordered him to pay a $25 special assessment fee.
CAMPOS was originally charged in April 2011 along with 10 other defendants. All six of the defendants arrested in connection with the Indictment have now pled guilty. In addition to CAMPOS, those individuals include Bradley Franzen, Brent Beckley, Ira Rubin, Ryan Lang, and Chad Elie, all of whom were payment processors for the Poker Companies. The remaining five defendants, including the founders and directors of payment processing for Full Tilt Poker and Pokerstars – reside outside the United States and are at large. They are presumed innocent unless and until proven guilty.
Mr. Bharara praised the FBI for its outstanding work in the investigation, which he noted is ongoing. Mr. Bharara also thanked Immigration and Customs Enforcement’s Homeland Security Investigations New York and New Jersey offices for their continued assistance in the investigation.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Arlo Devlin-Brown, Andrew D. Goldstein, Niketh Velamoor, and Nicole Friedlander are in charge of the criminal case, and Assistant U. S. Attorneys Sharon Cohen Levin, Jason Cowley, and Michael Lockard are in charge of related civil money laundering and forfeiture actions.