MANHATTAN (CN) – A federal grand jury accused a Canadian man of processing more than $350 million in online gambling payments. Douglas Rennick is charged with funneling millions of dollars from a Cyprus bank to Internet gamblers in the United States. Prosecutors seek forfeiture of more than $565 million.
Rennick allegedly tried to disguise the transactions. He is charged with fraud and money laundering.
“Rennick and his co-conspirators provided false and misleading information to various United States banks about, among other things, the nature of the Internet gambling-related payments being processed by the companies under Rennick’s control,” the indictment states.
Rennick, 34, is the only person charged.
From 2007 through June 2009, he allegedly set up accounts under corporate names and “falsely represented that the accounts would be used for such purposes as issuing rebate checks, refund checks, sponsorship checks, affiliate checks and minor payroll processing,” the indictment states.
The companies were My ATM Online, Alenis, KJB Financial, Account Services and Check Payment Financial.
Rennick and the unnamed co-conspirators used the accounts to “receive funds from offshore Internet gambling companies that offered variously, poker, blackjack, slots and other casino games,” according to the indictment.
Rennick faces up to 55 years in prison and a $1.75 million fine if convicted of bank fraud, money laundering and gambling charges.
The Unlawful Internet Gambling Enforcement Act was signed by former President George W. Bush in 2006, attached to a port-security bill.
In the last session of the Republican-dominated Congress before the 2006 elections, Rep. Bill Frist attached the bill to the SAFE Port Act 15 minutes before it hit the floor for debate. It passed almost unanimously in the House and Senate.
The Act prohibits online gamblers from using credit cards, checks and electronic-fund transfers to place and settle bets.
The law takes effect on Dec. 1. Horseracing and lotteries are exempt.
The Justice Department says that Internet gambling by U.S. residents is illegal, even if the Web site is owed by a foreign corporation. Prosecutions under the Gambling Enforcement Act have focused mainly on the companies and people involved in the financial transactions.
In June, the Justice Department sought to freeze $34 million belonging to more than 24,000 online poker players trying to cash out winnings from four offshore sites, including Poker Stars and Full Tilt.
It was the first instance in which gamblers were targeted.
Some U.S. trading partners have complained that the U.S. ban violates World Trade Organization rules.
Online gambling is legal in more than 100 countries.
Rep. Barney Frank introduced a bill in 2007 to overturn the gambling section of the SAFE Port Act.
“The existing legislation is an inappropriate interference on the personal freedom of Americans and this interference should be undone,” Frank said.
The bill sets up framework for regulating and taxing the multibillion-dollar industry.