By Adam Ulick | August 11, 2009

More details are emerging surrounding the $30 million seizure of online gaming funds that occurred back in June. The seizure, which was enacted by the Department of Justice in the Southern District of New York, prevented many online poker players from cashing checks received from major online poker sites like PokerStars, Full Tilt Poker and Ultimate Bet. The lobbying group Poker Players Alliance (PPA) immediately stepped in and tried to ascertain why and how the money had been taken.

After some investigation the PPA learned the Southern District of New York seized the funds because they were believed to be connected to money laundering and illegal offshore gambling venues. The PPA opposed the seizure on the grounds that proper warrants were not obtained before the money was taken and because the money belonged to the poker players rather than those operating the offshore sites. The PPA filed a motion to be included in any future hearings regarding the issue. That motion was granted and the PPA was set to serve as a friend of the court in upcoming litigation regarding a motion filed by Account Services, one of the payment processors who had funds seized, to return the money that was taken.

The future of that case now comes into question as the Southern District of New York filed an indictment against Canadian Douglas Rennick, who owns several companies that allegedly process payments for online gambling sites. The indictment charges Rennick with conspiracy to commit bank fraud, conspiracy to engage in money laundering and conspiracy to operate an illegal gambling business. In a press release announcing the indictment, the Department of Justice claimed, “[Rennick] and his co-conspirators falsely represented that the accounts would be used for such purposes as issuing rebate checks, refund checks, sponsorship checks, affiliate checks and minor payroll processing.”

Rennick´s companies include KJB Financial Corporation, Account Services Corporation and Check Payment Financial Corporation. The Department of Justice attests that Rennick and his co-workers, “provided false and misleading information to U.S. banks about the purpose of the accounts because the banks would not have processed the transactions had they known they were gambling-related.” The press release went on to claim that over $350 million was processed through a Cyprus bank in order to manage cashout requests from US customers seeking to obtain their online gambling winnings.

Should Rennick be convicted, he faces up to 30 years in prison and nearly $2 million in fines.  Additionally, the Department of Justice seeks the forfeiture of over $565 million, the amount of money they claim Rennick and others profited from their supposedly fraudulent bank accounts. The case will be prosecuted by Assistant U.S. Attorneys Arlo Devlin-Brown and Jonathan New and Assistant U.S. Attorney Jeffrey Alberts will handle the matter of the money forfeiture. The case will be presided over by U.S. District Judge Sidney Stein.

There has been no announcement from Rennick or the PPA regarding how this indictment will affect their current motion to return the money seized in June.

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