A federal grand jury in New York has indicted a Canadian resident on conspiracy charges for bank fraud, money laundering and operating an illegal gambling business for allegedly processing payments for online casinos.
According to the indictment filed Tuesday, Douglas Rennick has been "in the business of providing payment services for Internet gambling businesses through several companies under his control" and since 2007 has transferred more than $350 million "from a bank account in Cyprus to various United States banks in order to pay funds to gamblers in the United States."
One of the companies that Rennick allegedly used to pay online gambling customers, Account Services, is already embroiled in legal trouble. In June, federal prosecutors for the Southern District of New York (SDNY), which filed the charges in this latest case, ordered the seizure of about $33 million from two payment processors including Account Services. In July, Account Services filed a motion seeking the return of funds that were seized from their bank accounts by the U.S. Attorneys Office. Account Services has been linked to payments made to players by PokerStars, Full Tilt and UltimateBet.
Rennick is a Canadian citizen, according to a source familiar with the investigation. And the charges are the result of a larger investigation into Internet gambling that began in 2006.
If convicted, Rennick faces up to 30 years in prison for the bank fraud charge, 20 years for the money laundering charge and five years for the gambling charge. He could also be fined up to $1.75 million. Prosecutors are also seeking the forfeiture of nearly $565,000 Rennick made for allegedly processing online gambling transactions.
According to prosecutors, Rennick actively hid the fact he was processing online gambling transactions from the banks he was working with.
In opening a bank account at Union Bank of California for Account Services in February, Rennick and two unindicted co-conspirators allegedly said the business would be a "'rebate check processor' for 'large retailers' and 'auto dealerships,'" the indictment says.
Account Services wasn't the only company Rennick used to process payments for online casinos, according to the indictment.
"On or about August 8, 2007, Douglas Rennick, the defendant, opened an account in the name of KJB Financial Corporation at Washington Mutual Bank in California," the indictment reads.
"In opening the Washington Mutual account, Rennick did not disclose to Washington Mutual Bank that KJB Financial Corporation would process payments from Internet gambling companies.
"Instead, Rennick falsely and misleadingly represented to the Washington Mutual Bank 'for the following reasons': affiliate cheques (travel resellers, product resellers, advertising resellers)...rebates (reward cheques, promotional cheques)...refunds on items purchased...sponsorship cheques...(and) minor payroll."
The SDNY has been the U.S. Attorney's office most actively involved in online gambling cases.
In addition to the June seizure of alleged online gambling funds, SDNY prosecutors also ordered the arrests of NETeller co-founders John LeFebvre and Stephen Lawrence and froze $55 million of the company's funds in 2007. Both Lawrence and and LeFebvre ended up filing guilty pleas, and the money was eventually returned to NETeller customers.