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n Manhattan yesterday, U.S. Attorney Preet Bharara accused the online company Full Tilt Poker of operating a massive Ponzi scheme on a global scale. The prosecution of Full Tilt began in April. The case includes multiple online poker companies as defendants. As the investigation evolved, the Full Tilt Ponzi scheme was detected, prosecutors said. It is the only poker firm accused of a Ponzi offense.
Lost in the Full Tilt Ponzi headlines yesterday was an intriguing series of allegations that raises serious questions about what is real online and what is not. The import of the allegations is that, if true, it shows that certain tentacles of the Internet have evolved in incredibly deceptive and dangerous ways. Could all the king’s horses and all the king’s men working 24/7/365 realistically hope to contain the menace of web-based money-laundering?
The allegations also beg another question: Can the form-shifting Internet even be policed — or do the virtuoso maestros of virtual criminality have a permanent advantage that aids them in the full-scale fleecing of tens of thousands of people of tens of millions of dollars at a time?
There are no easy answers. But it is almost certain that the criminals have the upper hand right now, which makes it even more important for businesses and consumers to stay informed and work proactively with law enforcement. Can there be any doubt that both economic security and national security are at risk in an era in which the largest sports stadiums cannot accommodate all of the victims of online fraud flowing from a single case and fraud proceeds disappear down ratholes in the blink of an eye?
Although the general allegations of fraud beyond the Ponzi variety drew little media attention yesterday, those allegations may be the most important in the evolving poker cases. In one way or another, they touch on each of the defendants — and the story is the stuff of nightmares because it suggests that the nightmares could become permanently entrenched if this extremely murky corner of the Internet continues to expand.
Among the prosecution’s claims (bolding added by PP Blog) is that certain “[C]oconspirators . . . created dozens of phony e-commerce websites purporting to sell everything from clothing to jewelry to golf clubs to bicycles” in bids to route money to the poker companies.
Not one or two, but dozens. Virtual companies and phony corporations/websites, it seems, are doing the work of the fabled brick-and-mortar car washes of yesteryear in disguising fraud proceeds.
And why not project political awareness and a social conscience when funneling cash and laundering money?
There is a specific claim that a phony firm known as “Green2YourGreen” was used to disguise payments to poker firms. A bogus website for Green2YourGreen allegedly was set up, and the purported business was described as a “direct sales” firm.
Its offerings allegedly consisted of purported “environmentally friendly household products” pitched by affiliates on a commissions basis.
In reality, prosecutors charged, the phony “green” operation was created “to disguise the gambling transactions” and “listed numerous products that were purportedly for sale and contained ‘testimonials’ about the benefits of green living.”
All of the phony firms and websites were designed to trick banks into processing payments for illegal gambling, according to the complaint.
There were so many of them that PokerStars, a non-Ponzi defendant, was experiencing “increasing” chargebacks because its customers could not figure out why charges for “BICYCLEBIGSHOP.COM, GOLFSHOPCENTER.COM [and] VENTURESHOPPING.COM” were appearing on their bank statements, according to the complaint.
In any event, the lies and laundering of truth and money worked so well that billions of dollars flowed to the schemes, according to the complaint.
It was hard to read the complaint yesterday without coming away with these questions: How many more bogus websites and bogus companies are doing the same thing — for beneficiaries who have no ties to poker? How many more criminal operations outside of the poker sphere — narcotics traffickers and terrorists, for instance — have cloaked themselves in this fashion and parked themselves at the end of the money-laundering conduit?
The PP Blog has covered various “programs” that seem to make no sense at all — and we’re not just referring to the obvious fraud schemes such as the ones that exist on the Ponzi and criminals’ forums.
No, for the purposes of this post, we’re talking about the less-obvious ones — purported MLM or direct-sales “programs” that do not appear even to have a product and yet have a virtual presence on the Internet, for instance
And we’re wondering how many of the purported “programs” are just fronts for the Steroidal Puppeteers at the end of the criminally gushing money spigot and how many of the hucksters who become the public faces of the schemes are really just people who carry out the orders of the hidden master criminals.