Black Friday Payment Processor Chad Elie Receives Five Month Sentence
More news from the “Black Friday” front in recent days, where payment processor Chad Elie has officially pled guilty in a New York federal court on charges related to deceiving banks into processing deposits and withdrawals for online sites including Full Tilt, PokerStars and Absolute Poker.
Elie will receive a five-month sentence for his role in the affair, and will have two years of supervised probation following that, as agreed to in the decision signed off on by U.S. District Judge Lewis A. Kaplan. Elie will also forfeit $500,000 and had agreed to surrender his possible claims against another $25 million in online-poker funds, that appear to have been seized by federal authorities from bank accounts in Elie’s control.
Elie seemed to have parlayed his poker-processing paydays into at least a little bit of the good life, having married former Playboy playmate Destiny Davis even as charges were being handed down against him. (That’s her on the right, not Elie.) How that relationship will work out in the wake of Elie heading off for a Club Fed vacation probably doesn’t require a psychic’s crystal ball.
Elie was tied directly by prosecutors to the schemes through which PokerStars and Full Tilt ended up investing in the failing St. George, Utah SunFirst bank, as they continued to search for methods to get around existing processing restrictions, in particular the reality that most banks “overblocked” their processing methods, and kept US funds from reaching online poker sites without undue burden.
However, the SunFirst scheme — which we’ll detail in the near future in a separate post — was probably the legal straw that broke the camel’s back, and brought the whole thing crashing down on Black Friday in April., 2011.
Here’s the brief description, as published in the Department of Justice’s press release about Elie’s plea deal:
ELIE served as a payment processor for each of the three Poker Companies at various times from 2008 through early 2011. For example, in 2008, ELIE opened a bank account that he falsely represented would be used to process payments for “payday loans” in order to disguise his processing of transactions for Pokerstars. In the summer of 2009, he opened an account at another bank, falsely claiming that it would be used to process payments for various Internet membership clubs. He then used it to process millions of dollars in payments for the Poker Companies.
When a bank employee questioned ELIE about the transactions, he falsely denied that the transactions had anything to do with Internet gambling. Finally, beginning in the fall of 2009 and continuing into early 2011, ELIE offered to invest millions of dollars in three failing banks – SunFirst Bank, All American Bank, and New City Bank – in exchange for the banks’ agreements to process Internet poker transactions. All three banks have since been ordered closed by bank regulators.
That’s at least a little bit misleading in that only SunFirst, among those three banks, ended up getting involved in a questionable legal situation because of online poker, and SunFirst was about to fail anyway. It’s a shaky pretense that the DOJ is trying to sell in this instance, that online poker is in any way connected to or responsible for those bank closures.
For Elie, however, it really doesn’t matter. Seven of the Black Friday indictments’ 11 defendants have now pled guilty in exchange for sentencing leniency, and Elie is now the fourth of those to be sentenced. The seven Black Friday defendants who have pled guilty to date include all five who were involved in the payment-processing area: Elie, Ira Rubin, John Campos, Ryan Lang and Bradley Franzen.
Two poker company executives, Absolute Poker’s Brent Beckley and Full Tilt’s Nelson Burtnick, have also pled guilty, while a third site exec and the eight overall Black Friday defendant, Full Tilt’s Ray Bitar, pled not guilty at his arraignment and is currently free on bail.
Three other online-site executives, AP’s Scott Tom and two from PokerStars, Isai Scheinberg and Paul Tate, remain outside US jurisdiction.