Federal prosecutors have accused a Canadian man of laundering more than $350m for offshore internet gambling operations to skirt US laws prohibiting payments to American citizens trying to cash out their winnings.
Douglas Rennick, 34, was charged with three felony counts related to the alleged scheme by the US Attorney's office in Manhattan. Between February 2007 and June 2009, he and several unnamed co-conspirators established sham businesses that provided false information to banks so they could carry out large financial transactions that otherwise would have been barred, according to an indictment filed Thursday.
The charges highlight the cat-and-mouse struggle that plays out between law enforcement agencies and the online gambling outfits the authorities try to rein in. In 2006, federal law prohibited credit card companies from processing payments related to online gambling. Given the continued popularity of internet gaming in the US, money laundering schemes like the one alleged Thursday aren't surprising.
What is unexpected are the astronomical amounts of money involved. Prosecutors are seeking the forfeiture by Rennick of almost $566m in proceeds from the alleged conspiracy. Not a bad haul for a couple years of work.
The indictment claims Rennick founded a series of businesses with names including KJB Financial Corporation, My ATM Online, and Alenis Limited to defraud banks such as Washington Mutual and Wells Fargo. The faux businesses claimed they were involved in issuing affiliate cheques and auto rebates when in fact they were almost exclusively used to funnel money to US-based customers of online gambling sites, the indictment alleges.
If convicted, Rennick faces a maximum penalty of 55 years in prison and $1.75m in fines. Curiously, the charges come as some federal lawmakers have renewed the push to legalize and regulate online gaming so the proceeds could be taxed. ®