As the U.S. Congress debates ways to update the PATRIOT Act, a civil case working its way through the U.S. District Court for the District of Columbia could have implications on the law and could directly affect the way online gambling companies do business.
The case involves Billy Scott, a well known veteran to the I-gaming industry, and some legal experts say it's the first time money that has never passed through the United States has been seized from foreign banks.
Scott, the founder of World Wide Tele-Sports (WWTS), has been battling the U.S. government since having nearly $7 million seized in late 2003.
The latest action, a status hearing, came in May, and court analysts say the case could drag on for a lengthy period of time.
The Department of Justice argued in its original complaint that Scott illegally accumulated $6,976,934.65 in an account with Royal Bank of Scotland International. Scott and his wife controlled the account, which was in the name of Soulbury Limited and held at an RBS bank on the island of Guernsey, which is part of the United Kingdom.
Seizing "tainted" funds is common practice among government agencies like the Federal Bureau of Investigation, the Drug Enforcement Agency and even the Internal Revenue Service in combating money laundering, tax evasion and other criminal activities.
The section of the U.S. Criminal Code outlining rules of seizure (Sec. 18, 1957) is limited to transactions involving U.S. citizens and to transactions that occur in the United States, so the government typically seizes money that eventually makes its way into the U.S. banking system. But attorneys close to the case say that none of the transactions funding the RBS account were conducted in the States.
The government argues that the transactions entered the United States through an RBS account at Harris Bank, a corresponding bank in New York. Because the transactions involved U.S. dollars, the DOJ stated, RBS had to use a corresponding bank in the United States.
According to the complaint, Scott (or people acting on his behalf) wire-transferred the money into the RBS account on eight occasions between August 2001 to June 2002.
All the transactions involved banks in Nevis, St. Kitts, Antigua and Guernsey.
The complaint alleges that Scott and Soulbury Limited received the funds through the business dealings of WWTS, which is based in Antigua. It also states that Scott and his partner, Jessica Davis-Dyett, are fugitives whose involvement with WWTS is in violation of the Federal Wire Act.
In subsequent filings, Scott's legal team argued that the United States has no jurisdiction over the funds or the transactions because WWTS is a legal business in Antigua and because the funds never entered the United States.
Some legal experts familiar with the case say that a government victory could have far reaching implications on the entire banking industry.
In theory, they say, such a ruling would give the government jurisdiction over any transaction in the world involving U.S. dollars.
The government complaint additionally states that Scott has a record of illegal gambling dating back to the 1960s. He was cited in Ohio in 1984 for violating the Racketeer Influenced and Corrupt Organizations Act after trying to bribe police officials and trying to extort gambling debts through threats of violence and received three concurrent eight-year sentences after pleading guilty to three counts of a six-count indictment.
Attempts to reach Billy Scott for comment were unsuccessful, and phone calls to Davis-Dyett and other representatives with WWTS went unreturned. Attorneys representing Scott and RBS declined comment, as did officials with the IRS and representatives from the U.S. Attorneys office handling the case.
Click here to view the government's original complaint.
Click here to view Soulbury Limited's response to the claim.