Crime

Meet the Boy Genius Who Allegedly Created–Then Took Down–the Online Poker Industry

Meet the Boy Genius Who Allegedly Created Then Took Down the Online Poker Industry

As you may have heard, earlier today, the FBI shut down the three largest internet poker sites in operation.

From the LA Times:

The founders of the three largest online poker sites were indicted on Friday in what could serve as a death blow to a thriving industry.

Eleven executives at PokerStars, Full Tilt Poker, Absolute Poker and a number of their affiliates were charged with bank fraud and money laundering in an indictment unsealed in a Manhattan court. Two of the defendants were arrested on Friday morning in Utah and Nevada. Federal agents are searching for the others.

Prosecutors are seeking to immediately shut down the sites and to eventually send the executives to jail and to recover $3 billion from the companies. By Friday afternoon Full Tilt Poker’s site displayed a message explaining that “this domain name has been seized by the F.B.I. pursuant to an Arrest Warrant.”

Business Insider has the story of the young Australian man who seemingly played a hand in propping these companies up–and then bringing them down:

Daniel Tzvetkoff was a young Australian entrepreneur who set up the payment processing schemes used by the biggest poker sites to handle their (mostly illegal) transactions.

He is described by those who know him as a “boy wonder” and “genius” who started his first company at 13 and knew all the intricacies of e-commerce.

He made Full Tilt Poker and Poker Stars millions of dollars — and made as much as $150,000 a day for himself — but then got even more greedy and started taking their. They sued him, accusing Tzvetkoff of taking more than $100 million of their money.

According to Australia’s Courier Mail, Tzvetkoff may have been involved in bringing the three gambling websites down:

A former Queensland internet king is believed to have been a key figure behind FBI action against three major gambling websites in the United States.

Daniel Tzvetkoff, who had been facing 75 years jail in the US, has done a deal with prosecutors which has seen him freed on bail and living in a secret New York location.

The Courier-Mail reported today that the deal came after Tzvetkoff – a Brisbane boy wonder, who started a company with school mates at 13 – became embroiled in a massive, $543 million stew of money laundering, bank fraud and conspiracy that could bring down the world of online gambling.

Business Insider has an additional piece of information: according to a rumor, one of the online gambling companies, either Full Tilt or Poker Stars, tipped U.S. officials off that Tzvetkoff would be traveling to America.

“They ratted him out … and he turned the tables. No honor among thieves.”

Read more at Business Insider.

Comments (69)

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  • socalconservative
    Posted on April 16, 2011 at 11:26am

    I learned a lot here from Jimsb and unruled; and this is an issue of government overreach it seems. On the surface I don’t care for gambling; I had the same instincts that it might be “rigged”. The case is made that it is an opportunity for adults to use their money and leisure as they choose while knowing the risk……the “banking” is where this guy began dipping in and corrupting. I have to come down on the side of our freedoms.

    Report Post » socalconservative  
  • rockstone
    Posted on April 16, 2011 at 11:12am

    Wait a minute. Are you trying to tell me here that the “gaming” industry is full of crooks, cheats and rats?

    Wow……

    Report Post » rockstone  
    • JimSB
      Posted on April 16, 2011 at 11:47am

      Actually, online poker is much more honest than you might think, probably much more so than face-to-face games. There was a major scandal a few years back where “superusers” were able to cheat using software hacks. Two things happened 1) there was a mass exodus from the sites involved to honest sites 2) the sites involved returned money to the victims and scrambled to make amends. This is a classic case of the marketplace correcting itself. Because of the simple and profitable business model, online poker sites have a vested interest in keeping the games honest. Unlike other types of gambling, you are not playing against the house, where the house has a financial incentive to be dishonest. Instead, the sites make money by increasing the number of players and games played, which will only happen if the players think the games are honest.

      In my opinion, any dishonesty and crookedness is a direct result of government policy (as most of our problems seem to be these days). Rather than legalization, regulation, and taxation, the government chose a rather arcane form of prohibition, which worked just as well as it did in the 1920s with alcohol. Instead of ensuring an honest and regulated market with a steady stream of tax revenue, our rulers decided that they knew what was best for us, driving what could be a legitimate business underground. It should be noted that yesterday’s indictments focused on the financial transactions, rather than running and playing the games. One of the few places where playing online poker is specifically illegal is Washington State, and this legislation was done at the behest of Indian Casino interests, who bought enough legislators to stifle competition by legislation rather than attempt to win in the marketplace.

      It will be interesting to see how this plays out, especially as many of the sites involved are based overseas, and their home countries just might tell our FBI and DOJ to “go pound sand”. I hope they do. It should be noted that the UIGEA was actually found to be in violation of various international trade agreements in a world court. Our government chose to ignore this ruling.

      It is highly likely that something is going on behind the scenes, and we will soon see a bunch of “approved” internet poker sites appearing in the U.S., with this set of indictments being used to squelch competition beforehand.

      Report Post »  
    • thinkinghuman
      Posted on April 16, 2011 at 1:08pm

      Let’s all remember that when we think of TRUMP becoming a president of a country. Let’s all remember that if it were not for his celebrity in the Apprentice show, no one would get past the trust factor that is MISSING with a Casino owner and business shark.

      Report Post » thinkinghuman  
  • JimSB
    Posted on April 16, 2011 at 10:20am

    This is an example of government overreach and libertarians should be up in arms. What business does the government have telling us what to do with our money and leisure time? It is not just the despicable Obamites, but also the holier-than-thou Republicans who should be excoriated. The internet poker industry had a boom time in 2005, after a relative unknown won the World Series of Poker for over a million dollars after investing $40 at an on-line site. Lots of companies sprang up, many of them of dubious honesty. However, the major players in the industry begged for regulation and taxation, as they have a relatively straightforward and profitable business plan and wanted to be completely legal. Instead Senators Kyl and Frist attached an ambiguous anti-gambling rider (called the UIGEA – look it up) to a must-pass port security bill in the middle of the night near the end of 2006. This had the effect of driving the poker sites off-shore and underground. It also deprived the govt of a relative steady stream of taxes. While I am sure that Senator Kyl et al were sure they had the moral high ground, there are some shadier interests involved, primarily the big casinos and the legislators that they own (such as Harry Reid). I find myself in a strange situation, as I generally agree with the conservative fiscal policy, but do not want them imposing their view of morality on me any more than I want political correctness imposed by the left. Anyway, the government action, although taken by the Obama DOJ, has its roots several years back. It is all about money and control. Our government wants to steal the money from the sites and control our leisure time. Think about it – do you want this, especially as the poker companies were more than willing to set up a rational taxation scheme.

    For those that are not familiar with online poker, you are not playing against the house, but against other players. The poker companies make their money by charging a small fee for putting on the tournament. Poker is a game of skill, mathematics, and psychology, with a luck factor, unlike games like craps and roulette, which are entirely luck. While it is possible to be a donkey and lose a lot of money, it is also possible to play on line for tiny stakes and get a lot of entertainment value for a small (under $5) amount of money.

    The government action is abominable

    Report Post »  
    • copatriots
      Posted on April 16, 2011 at 1:26pm

      Well said!!!!!!! To those who don’t understand the game, it IS a game of skill. Far better than playing the lottery (which States endorse and sponsor) or even freaking bingo. I can drive 35 minutes from my house and play at a casino here in Colorado but I can’t play online in the comfort of my home. This is absolutely ridiculous! But there is more to the story. The government just wants control over this industry and typical scam politics as usual

      Report Post »  
  • vngstr
    Posted on April 16, 2011 at 9:43am

    WT! Wake up and smell the Government/Obama takeover! The internet is next.!!!!!!!

    Report Post » vngstr  
  • vngstr
    Posted on April 16, 2011 at 9:40am

    What a crock of !##&. First online poker, next the internet. WAKE UP AND SMELL THE GOVERNMENT/OBAMA TAKEOVER!!!!!!!!!!!!!!!!!!!!!!!

    Report Post » vngstr  
  • Hisemiester
    Posted on April 16, 2011 at 9:37am

    The only reason the Feds make it illegal. It’s impossible for them to collect, are you ready, Taxes!

    Report Post »  
  • FORLORNHOPE
    Posted on April 16, 2011 at 9:14am

    You would not want the government to take your property and shut down your business with out your day in court. Well the next time it could be you!

    Report Post »  
  • TruthisHealthy
    Posted on April 16, 2011 at 8:38am

    Most of the owners of these sites are professional poker players. They should throw the book at all the so called poker celebrites for promoting the scumbags sites. Low-life thieves is what they are in life. Period!

    WILL THE GOVERNMENT RETRIEVE THE MONEY THEY DELIBERATELY STOLE FROM THE INNOCENT, TRUSTING PLAYERS? No they will not.

    Report Post »  
    • Unruled
      Posted on April 16, 2011 at 9:25am

      Stole? Obviously you don’t know anything about how professional poker or the poker world in general works. It is ABSOLUTELY not in the best interests of theses sites to be crooked or fixed in anyway. If they run a straight game they can rake from every hand. At a rate of 60 hands an hour at many of the tables that is insane money. In say a 5-10 holdem game the rake is usually 10% of the pot capped at 5 dollars per hand. 60 hands per hour times 5 dollars per hand = 300 dollars per hour at just one table. They had hundreds of tables of this size as well as bigger and smaller limits. So I ask you, with a virtual license to print money why would you ever do anything crooked that might anger your players and send them elsewhere? The answer is you would not! It is the perfect example of of capitalism keeping business honest. Honesty equals tons of money and smiling customers forever, or cheat so you can make just a little bit more in the short term while killing the golden goose,. I think not! Everyone who played knew they might win or lose money and chose to play of their own freewill. If you don‘t want to play then don’t, but no one is being harmed by other choosing to play poker in person or on-line. Government needs to get out of our lives in all areas possible and let adults get back to doing as they wish with their time and hard earned money.

      Report Post »  
  • Lssmc
    Posted on April 16, 2011 at 8:10am

    I watch Poker After Dark, WSOP, Poker Stars.Net, all the time. All on Networks or cable TV, ESPN. Are they going to shut them down also? Most of the gamblers on them wear Logos of these websites. Are they going to arrest them as well? I love to watch the gaming spirit. I love to play Texas Holdem also. Heck, I thought it was legal. Poker has been played forever. It’s a game of skill and luck. I know some who gamble are addicted, but there are so many addictions that are legal; smoking, drinking, overeating, are we just going to target gambling? I wonder if Obama ever bets on sports or his golf game?

    Report Post »  
  • bikerr
    Posted on April 16, 2011 at 8:02am

    Kenny Rogers sang it best.—You got to know when to hold ‘em, know when to fold ‘em
    Know when to walk away and know when to run
    You never count your money when you‘re sittin’ at the table
    There‘ll be time enough for countin’ when the dealing’s done
    Every gambler knows that the secret to survivin’
    Is knowin’ what to throw away and knowing what to keep
    ‘Cause every hand’s a winner and every hand’s a loser
    And the best that you can hope for is to die in your sleep—–I still like that song!

    Report Post »  
  • zaphodb
    Posted on April 16, 2011 at 7:48am

    Do you think this might have something to do with it?
    http://www.newsfactor.com/news/Net-Gambling-Gets-Green-Light-in-D-C-/story.xhtml?story_id=033003QUFH2I&full_skip=1

    Report Post » zaphodb  
    • thinkinghuman
      Posted on April 16, 2011 at 1:05pm

      ABSOLUTELY has everything to do with it. It is a simple connecting of the DOTS. One comes down, and a government one comes in. All corrupt, though.

      Report Post » thinkinghuman  
  • Thevoice
    Posted on April 16, 2011 at 7:13am

    To me it is interesting this comes as the Marxists Lefts propaganda war on the evil rich is beginning to escalate .Each week it is brought up more and more . This week commander numb nuts Obama made symbolic gesture that even he should pay more… So I guess he considers himself one of the evil rich ..

    Report Post » Thevoice  
    • Dale
      Posted on April 16, 2011 at 1:57pm

      I guess he is wealthy, I don’t know.

      Report Post » Dale  
  • TulsaYeeHaw
    Posted on April 16, 2011 at 6:41am

    Why do other people get to use government to tell me I can’t gamble online? How very freedom loving of them.

    Report Post »  
  • Workforit
    Posted on April 16, 2011 at 6:28am

    Those Poker giants sure gave a lot of money to charity… You can bet somebody else wants the cash… I sure think DGROUNDHOG is on to something!

    Report Post »  
  • DGroundhog
    Posted on April 16, 2011 at 5:50am

    Gee….. who benefits?????

    D.C. legalizes online poker
    April 11, 2011

    Washington D.C. is now the first U.S. jurisdiction to legalize online poker, Las Vegas Review-Journal reports.

    The district is a step ahead of Nevada and New Jersey. The city council approved a budget last year allowing lottery provider Intralot to operate a poker website accessible only inside the district boundaries. According to Councilman Michael Brown, it is legal in the district.

    According to the The Wall Street Journal, the district estimates online gambling could make the nation’s capital the first test case for “intrastate” online poker, which allows only players within a state or the district to gamble on a site.

    Report Post »  
    • Dale
      Posted on April 16, 2011 at 1:55pm

      You see, oBOMBa needed a way to check future actions. If he wins a hand, he goes ahead, but if he looses, he doesn’t. Unfortunately, he sometimes forgets if he won or lost and plays again. That’s the only realistic explanation I have for his flip/flops.

      Report Post » Dale  
  • IPFW_11
    Posted on April 16, 2011 at 5:17am

    Something seems wrong about this. Why would the federal government care this much about online poker sites? It is trivial unless something more is going on. This regime constantly ignores laws why would they choose to enforce this one?

    There is something more behind this.

    Report Post »  
  • mrmikejohnson
    Posted on April 16, 2011 at 5:12am

    This action is pretty typical of the Obama justice system. Online poker players are predominately white males. So, this was a pretty easy target. Illegal immigrants, Black Panthers, etc. don’t have to follow the laws because of their skin color. Poker players, Sheriff Joe Arpaio, etc walk a very, very narrow line and might be investigated purely based on race.

    This kids’ genius is played up in the story a little bit. It’s not rocket science to work around the banking with poker sites. The sites just set up a 3rd party businesses and run the transaction through as if it were a legimate transaction there. A $300 deposit at at poker site will look like a $300 purchase for web design or something similar.

    It’s like if the Blaze for some reason charged $20/month to see their site, but the US government wouldn’t allow them to take money. Another company is then set up that charges $20 for a service unrelated to the Blaze, but behind the scenes that $20 actually gives access to the Blaze. I’m sure the kid in the story is very smart, but the money system used by the poker sites and credit cards isn’t that complicated.

    Report Post »  
  • clingingtogodandguns
    Posted on April 16, 2011 at 5:06am

    well $3 billion for potus welcome to the soft tyranny this guy is making chavez look bad he’s taking things over so fast.WE ARE NEXT get ready for the camps if you don’t agree with this illegal alien.

    Report Post »  
  • Anne G
    Posted on April 16, 2011 at 2:30am

    Well now, lets see. In less than a month they have, or are taking away my two favorite shows, Glenn Beck, All My Children. Now they will be shutting down my Full Tilt Poker site. I don’t play real money, just their play chips. But, its fun, especially when you are housebound and can’t sleep at night. I do believe I have died and gone to hell. And, yes, I do believe they will be coming for The Blaze soon.

    Report Post » Anne G  
  • CHICAGOTHUGBUCKET
    Posted on April 16, 2011 at 1:59am

    Hey, Crime still Pays! That is the moral to this story.

    Report Post » CHICAGOTHUGBUCKET  
    • Oraclevoiceofreason
      Posted on April 17, 2011 at 10:32am

      of course it does – ask George Soros, Barney frank, and even down to the little city councilman who take bribes on the side and engage in shady real estate deals… or pays off the cop who pulls them over for a ticket. But never assume that a person so engaged doesn’t pay a price for their lack of good judgement – there are always consequences they just may not look like jail

      Report Post » Oraclevoiceofreason  
  • Alan
    Posted on April 16, 2011 at 1:59am

    Not sure I’ve got a pony in this race. Waiting to see.

    Report Post »  
  • mossbrain
    Posted on April 16, 2011 at 1:41am

    With that swarthy complexion and evil grin me thinks that hollow shell of a human is a vessel for Satan.

    Report Post » mossbrain  
    • Hisemiester
      Posted on April 16, 2011 at 9:36am

      Obama, you mean? Well I guess you are correct. Obama is a pawn of Lucifer.

      Report Post »  
  • teahugger
    Posted on April 16, 2011 at 1:32am

    If only he had used his powers for ‘good’!

    Report Post » teahugger  
  • conservativeme
    Posted on April 16, 2011 at 1:32am

    Well, you’ve got to have an Ace in the hole . . .
    A little secret that no body knows . . .
    Life is a gamble, a game we all play,
    You’ve got to save something for a rainy day!

    Report Post »  
  • banjarmon
    Posted on April 16, 2011 at 1:31am

    “They ratted him out … and he turned the tables. No honor among thieves.”
    Just like the potus.

    Report Post » banjarmon  
    • Gold Coin & Economic News
      Posted on April 16, 2011 at 1:32am

      What happened to innocent until proven guilty? Yea, I know online gambling in the US is illegal, but it just isn’t right that the fed can seize a domain name and put people out of business without even taking them to court. And they want to get at some $3 BILLION these companies have? This is flat out scary. What if they decide The Blaze is to controversial or becomes a perceived threat?

      Report Post » Gold Coin & Economic News  
    • BecksTheMan
      Posted on April 16, 2011 at 2:35am

      FullTilt is back up and running with U.S. players right now as we speak, I heard on the Schnit show earlier today that Pokerstars was still up and running just no U.S. players. I did hear that Absolute Poker is down however. I think the Government is over reaching. They should give these sites their day in court and I would think they have a right to continue to operate until proven guilty of the allegations. I think this is really scary and shows the extent a financially desperate out of control government will go to exert its unlimited over reaching powers and tyrannical authority.

      Report Post »  
    • Showtime
      Posted on April 16, 2011 at 2:45am

      The site I went to for Full Tilt ( http://www.fulltiltpoker.com/ ) has the sign up saying it has been seized…and it’s 2:43 a.m.

      But there’s another one ( http://www.burnpoker.com/Full-Tilt-Poker/ ) that does appear to be up and running.

      Report Post » Showtime  
    • Creestof
      Posted on April 16, 2011 at 6:05am

      It’s amazing where people have the money and time in their lives to play on-line poker.

      I have heard nothing but bad things about these games, from robot players to teams and so on. Very little chance of winning other than a bone thrown at you from time to time to keep you hooked…like a slot machine.

      Report Post »  
    • Marcobob69
      Posted on April 16, 2011 at 7:44am

      GOLD COIN & ECONOMIC NEWS: Sounds like you are talking about the “Fairness Doctrine”, or something similar. And BANJARMON, it DOES sound like the POTUS!!!

      Report Post »  
    • Professional Infidel
      Posted on April 16, 2011 at 9:04am

      it still ****** me off that anyone can make a deal. Rat out somebody even though your guilty and get off.

      Report Post »  
    • Capitalist Mama
      Posted on April 16, 2011 at 9:47am

      Gold Coin,

      Actually online poker is not illegal. Transferring money from a US bank to a online casino is illegal. Playing poker online is not legal, if you have another way to get the funds to the site, such as a foreign bank account, or prepaid cards. Credit cards, paypal and paypal knockoffs rarely allow casino transfers. Other forms on online gambling such as the lottery, horse racing, & dog racing are legal.

      Report Post »  
    • watchmany2k
      Posted on April 16, 2011 at 9:49am

      What I also find significant is our dear Barney Frank has said on more than one occasion that we should legalize online gambling. I mean, afterall his work on the banks and stock markets why shouldn’t he work on gambling. It’s all the same rigged game.

      Report Post » watchmany2k  
    • J.C. McGlynn
      Posted on April 16, 2011 at 10:28am

      If they paid state and federal taxes there would be no problems.

      J.C. McGlynn  
    • thinkinghuman
      Posted on April 16, 2011 at 1:02pm

      Just Like TRUMP. He does this stuff too. Casinos are all the same.

      Report Post » thinkinghuman  
    • Dale
      Posted on April 16, 2011 at 1:46pm

      @BecksTheMan;

      Let’s just suppose that you are arrested for bank robbery, and let’s also suppose you are guilty. Should they/WE let you continue robbing banks until you’re proven guilty? I don’t understand your reasoning.

      Report Post » Dale  
    • G.W. Dobbs
      Posted on April 16, 2011 at 10:21pm

      You must realize that the Government decides what it wants to do and DOES IT. The Constitution and Laws on the books make NO DIFFERENCE to them, THEY do whatever they want and flat out tell you that if you don’t like it, SUE US. We live in a Nation which has kissed Freedom, Honesty, Fairness, GOD and the Rule of Law “GoodBye” long ago. The Government gets more brazen every day. We are DESTROYED FROM WITHIN by our very own.

      Report Post »  
    • RoguePatriot
      Posted on April 18, 2011 at 9:39am

      Actually I have played online poker live and I have won thousands upon thousands in the online poker world. I used to play about an hour a day at lunch and would win as much as 5 grand in one hour.

      Report Post » RoguePatriot  
    • RoguePatriot
      Posted on April 18, 2011 at 9:40am

      Honestly though I have not played in years. Every since I accepted Christ as my Lord and Savior I do not do anything that goes against his will!

      Report Post » RoguePatriot  
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