American citizen Bradley Franzen has admitted to assisting online poker sites in illegal circumvention of the laws preventing internet gambling payments. Franzen was one of the 11 charged on Black Friday. He lived in Chicago, IL and Costa Rica. Franzen ran a company which aided online poker sites in finding people to process their payments. In other words, money laundering.
“To avoid bank restrictions, they used shell companies and phony websites,” Franzen said. Bank restrictions include the 2006 law which makes it criminal for American banks to knowingly process online gambling payments. Shell companies include the people and companies Franzen used to process payments. On Monday, Franzen pleaded guilty to conspiracy to commit bank fraud, accepting funds illegally in connection to internet gambling, and conspiracy to commit money laundering. Franzen faces up to 30 years in prison.
Franzen said that “millions of dollars” were processed, but could not give a specific amount. He began payment processing for online poker sites in 2007. Franzen entered into a plea agreement with the prosecutors, and is cooperating with the FBI’s internet poker sting. The FBI’s case includes billions of dollars in illegal transactions, and Franzen is only a small part of the puzzle.
Part of the FBI’s case against online poker sites rests on the definition that poker falls in the category of gambling. The American UIGEA laws under which part of the case is being prosecuted are specifically about banks processing online gambling transactions. Many in and out of the industry, however, do not define poker as gambling. Poker is no more gambling than the stock market is a game of craps, goes the argument.
“Freakonomics” author Steve Levitt has recently weighed in on this pressing topic. He analyzed results from the 2010 WSOP and came to the conclusion that poker is primarily a game of skill. In fact, Levitt’s study showed that there is a greater chance variance in the stock market, than there is in poker. “This finding,” said Levitt, “has serious implications on the legality of online poker, as that debate is heavily dependent on whether the game is based on skill or luck.” If in trial poker is determined to be a game of skill, the FBI will be going after the poker rooms entirely for bank fraud and money laundering.