Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 1 of 15 Page ID #:1

c, Ci; - i'a 'n € Sanai, SB#150387 1 Cyrus M. f< SANAIS -{ C:'= (r:r.;: i,' (a 2 433 North Camden Drive r !1 { -r'l "-. Suite 600 l'il:? -l 7 t:r.. t r 3 Beverly Hills, Californiq 90210 .->-{--| rfl Telephone: (irO) 7 17 -9840 - i, T lrr a't C] 4 cyrus@)sanalslaw.com ,.| oc ;.(.'5f) (., for Lary Kennedy and Greg Omotoy 5 Counsel 7tt { 6

1

8 UNITED STATES DISTRICT COURT OF TT{E CENTRAL DISTRICT OF CALIFORNIA

9 LARY KENNEDY, an individual, and GREG ) Case No.: 1_0 oMoroY'anindividuar 11 Plaintiffs, r iC"u-L1",o$"[9Jml1,#w') t2 vs. (I) MONEY HAD AND RECEIVED (2) I.INruST ENRICHMENT 13 , an individual; (3) RELIEF UNDER CONSUMERS LEGAL , an individual; REMEDY ACT, CALIFORNIA CIVIL CODE 74 RAYMOND BITA& an individual; PHILLP SECTION I75O; GORDON, an individual; , an (4) FRAUD 15 individual; , an individual;, (5) RELIEF UNDER CALIFORNIA , an individual; JOHN BUSINESS A}ID PROFESSIONS CODE L6 ruANDA, an individual; ERIK LINDGREN, SECTTON 17200 ET SEQ. an individual; , an individual; (6) RELIEF UNDER THE RACKETEER. 77 MCIIAEL MATUSOW, an individual; INFLUENCED CORRUPT ALLEN CUNNINGHAIVI, an individual; GUS oRGANIZATIONS ACT (',RICO*), 18 U.S.C. 18 HANSEN, an individual; PATRIK $ le64 ET SEQ; ANTOMUS, an individual; RAFE FURST, an (7) CONSTRUCTTVE TRUST 19 individual; TILTWARE LLC, a California limited liability company; POCKET KINGS JURY DEMAND 20 LTD, an Irish limited company; KOLYMA CORPORATION A. V . V., a Curacao CLASS ACTION UNDER FRCP 23, CAL. 2L company; POCKET KINGS CONSULTING CTV. CODE SECTION I75O AND BUS. & LTD., an lrish limited liability company; PROF. CODE SECTION I72OO 22 FILCO LTD., a limited company; VANTAGE LTD., a limited company; RANSTON LTD., a 23 limited company; MAIL MEDIA LTD., a limited company; OXALIC LTD., a limited 24 company; ORIMC LTD., a limited company; IAN IMRICH, an individual; COZEN 25 O'CONNO& a limited liability partnership; and DOES I through 10, inclusive, 26 Defendants. 27

28 -l- COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 2 of 15 Page ID #:2

1

2

3 Plaintiffs, Lary Kennedy and Greg Omotoy hereby allege as follows:

4 JURISDICTION 5

6 l. This Court has jurisdiction pursuant to 28 USC $1331. Venue is proper in this 7 distict and Division because the Plaintiffs and certain of the Defendants identified below are

I residents of County. 9

10 TIIE PARTIES 11 2. Plaintifl LARY KENNEDY ("Kennedy"), is apoker player who resides in the

t2 County of Los Angeles, State of California

13 3. Plaintifi GREG OMOTOY ("Omotoy"), resides in the County of Los Angeles,

74 State of Califomia.

15 4. Defendant CHRIS FERGUSON ("Ferguson") is, and at all relevant times hereto

16 was, an individual residing in the County of Los Angeles, State of California.

t'7 5. Defendant HOWARD LEDERER ("Lederer") is, and at all relevant times hereto

18 was, an individual residing in the County of Clarh State ofNevada Lederer was convicted of

19 illegal bookmaking, i.e. sports wagering.

20 6. Defendant RAYMOND BITAR (*Bitar") is, and at all relevant times hereto was,

2L an individual residing in the County of Los Angeles, State of California-

22 7. Defendant PHILLIP GORDON ("Gordon") is, and at all relevant times hereto was,

23 an individual residing in the County of County of Clark, State of Nevada.

24 8. Defendant ANDY BLOCH ("Bloch") is, and at all relevant times hereto was, an

25 individtral residing in the County of Clark, State of Nevada.

26 9. Defendant PHIL IVEY ("Ivey") is, and at all relevant times hereto was, an

27 individual residing in the County of Clarlq State of Nevada.

2B -2- COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 3 of 15 Page ID #:3

1 10. Defendant PERRY FRIEDMAN ("Friedman") is, and at all relevant times hereto 2 was, an individual residing in the County of Los Angeles, State of California. 3 I l. Defendant JOHN ruANDA ("Juanda") is, and at all relevant times hereto was, an 4 individual residing in the County of Los Angeles, State of California. 5 12. Defendant ERIK LINDGREN ("Lindgren") is, and at all relevant times hereto was, 6 an individual residing in the County of Clarh State of Nevada. 7 13. Defendant ERIK SEIDEL ("Seidel") is, and at all relevant times hereto was, an

I individual residing in the County of Clark, State of Nevada.

9 14. Defendant MICHAEL MATUSOW (*Matusow") is, and at all relevant times 10 hereto was, an individual residing in the County of Clarlq State of Nevada.

11 15. Defendant ALLEN CUNNINGIIAM ("Cururingham") is, and at all relevant times

L2 hereto w,rs, an individual residing in the County of Clark, State of Nevada.

13 16. Defendant ("Hansen") is, and at all relevant times hereto was, a

L4 citizen of the Kingdom of .

15 17. Defendant ("Antonius") is, and at all relevant times hereto

76 was, a citizen of the Republic of Finland.

t7 18. Defendant RAFE FURST ("Frust") is, and at all relevant times hereto was, an

t-8 individual residing in the County of Los Angeles.

L9 19. Defendant IAN IMRICH ("Imrich") is, and at all relevant times hereto was, an

20 individual residing in the County of Los Angeles.

2L 20. Defendant TILTWARE,LLC, aCalifornia limited liability company with an

22 address at 10866 Wilshire Blvd. 4fr Floor, Los Angeles, CA 90024 ("Tiltware").

23 21. POCKET KINGS LTD. ("Pocket Kings") is an Irish company based in the

24 Republic of Ireland. Defendants are informed and believe and therefore allege that the entire share

25 capital of this entrty is owned by Tilrware.

26 22. KOLYMA CORPORATION A. V. V. ("Kolyma") is a Curacao company based in

21 Curacao.

28 COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 4 of 15 Page ID #:4

1 23. POCKET KINGS CONSULTING LTD. ("PKC") is an Irish limited liability 2 company. 3 24. FILCO LTD., VANTAGE LTD, RANSTON LTD., OXALIC LTD., ORJMC 4 LTD., and MAIL MEDIA LTD. (the "Money Laundering Companies") are companies whose 5 address and jurisdiction of formation are unknown 6 25. COZEN O'CONNOR LLP ("Cozen") is a limited liability parfrrership with an T offrce in Los Angeles County. I

9 COMMON ALLEGATIONS 10 26. Fergusorl Lederer, Bitar, Gordon, Bloc[ Ivey, Juanda, Furst and Friedman (the 11 "Founder Defendants") founded Tilt'ware in 2003, and together with Lindgren, Seidel, Matusow,

L2 Cunningham, Hanserq and Antonious comprise the "Individual Defendanrc". Tiltware, Pocket

13 Kings, Kolym4 PKC and the Money Laundering Companies are owned and controlled by the

L4 Individual Defendants and were involved in owning, operating, financing and promoting the on-

15 line site fulltiltpoker.com until April l5,20ll and operated other websites incorporating

L6 the name "" (such entities hereby being known as the "Fulltiltpoker.com Group').

L7 Most of the entities do not operate under their own name, but from time to time adopt the name

18 "Full Tilt Poker"; these entities, which are Kolyma PKC and the Money Laundering Entities,

L9 shall be referred to at the "Full Tilt Poker Entities". Defendants Tiltware and Pocket Kings, while

20 members of the Fulltiltpoker.com Group, are not Full Tilt Poker Entities, as these Defendants

2L operate under their own ruune. Each of the Individual Defendants holds an interest in at least one

22 entity which is part of the Fulltiltpoker.com Group. The Individual Defendants and the

23 Fulltiltpoker.com Group comprise an association-in-fact (collectively, the "Full Tilt association-

24 in-fact") which was continuously offering on-line peer-to-peer poker to citizens of the United

25 States, 24 hours aMy, seven days a week from and after October l, 2005 or thereabouts until

26 April 15, 2011, when Bitar, Tiltware, Pocket Kings, Kolym4 PKC and the Money Laundering

27 Companies, among others, received word that a grand jury convened by the Unite States Attorney

28 for the Southern District of New York had indicted them and a forfeiture order for the COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 5 of 15 Page ID #:5

1 fulltiltpoker.com URL and other assets had been granted. The Full Tilt Poker business offered to 2 non-United States citizens was shut down on June 29,2011 when the Alderney Gambling Control 3 Commission suspended the operations of the Defendants' websites due to their violation of 4 Alderney law and failure to return money to players. Imrich was integral in assisting the Founder 5 Defendants, representing from time to time FergusorU the Founder Defendants, Pocket Kings, 6 Tiltware and the Full Tilt Poker Entities in varying capacities as an attorney. 1 27. Peer-to-peer on-line poker is an Internet-based version of California cardrooms I such as the Bicycle Casino and the Commerce Casino (both located in Los Angeles County). At a 9 California cardroom players engage in poker and other card games against each other, and the 10 owner of the cardroom has no stake in the outcome, instead charging a fee to play each hand. 11 28. To play on firlltilpoker.net and parts of the fulltilpoker.com website, a person L2 signed up and is allotted a certain number of chips per day which have no value. The person 13 appeared to other players as a two-dimensional "avatar" selected from a pool of stock images, and

t4 chooses a screen name. The player then played against other persons for such imaginary chips.

15 The business of www.fulltiltpoker.net was legal. To play on fulltilpoker.com, a person registered

L6 for an account on the fulltiltpoker.com website. A person could play for free or for real money.

17 (The companion site, fulltiltpoker.net allowed only free play, i.e. with no actual money wagers.)

1B 29. If a player chose to play for real money on www.fulltiltpoker.conr, the player sent

19 money to a bank account on-line payment system or credit card. The person appeared to other

20 players as a two-dimensional "ayatar" selected from a pool of stock images, and chooses a screen

2L n{rme. There is no ostensible "house" to play againsr Playing poker on a peer-to-peer basis

22 through the Internet is not illegal under federal law, or any state law other than the law of

23 Washington State. The operation of on-line cardrooms are not illegal in California and most other

24 American states provided that they do not profit from operation of the cardroorn, i.e. that the

25 provider of the on-line cardroom services do so for free. On-line cardrooms which profit from the

26 operation of the cardroom are not illegal in Califomia, so long as the operator of the cardroom

2't does not operate in any way as the "house" by having, directly or indirectly, a stake in the outcome

28 of the game. _5- COMPLATNT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 6 of 15 Page ID #:6

1 30. Though the Full Tilt association-in-fact, including each of the Defendants, 2 represent and have represented that the www.fulltiltpoker.com business is not gambling and is a 3 cardroom, both statements are false. Poker is considered a form of gambling in all American 4 states that have addressed the issue in appellate case law, though some states, like California, treat 5 it differently from other kinds of gambling. The www.fulltiltpoker.com website was never a 6 cardroom in respect of real-money play because the house, that it is to say the owners and 1 operators of the www.fulltiltpoker.com website, regularly played on the website. The presence of 8 the "house" on www.fulltiltooker.com is manifested in at least two different ways. First, the 9 Individual Defendants and certain other professional poker players sponsored by the Defendants l_0 will play on the site, utilizing the funds of the Fulltiltpoker.com Group as their stakes in the gzrme. 11 Several of the Individual Players, for example Antonius, use multiple screen ftlmes and accounts

t2 on www.fulltiltpoker.com. The appearances of the Individual Defendants and the other

13 professionals are in some cases open to other players and in some cases not, however the fact that

L4 they play with the Fulltiltpoker.com Group money was completely hidden to players. The

15 participation of the Individual Defendants in the game renders the play on fulltiltpoker.com illegal L6 under Cal. Civil Code $330, though no player could know this from the facts ascertainable to them

]-'7 on the website.

18 31. A second means by which the Defendants took a position in the games which they

L9 own and operate are through "robots'which are computer programs that play poker by interacting

20 with an on-line poker room in amanner similar to a human being. Ferguson and Bloch (graduates

2L of UCLA and MIT respectively) created poker robots to play on the www.fulltiltpoker.com and

22 www.fulltiltpoker.net websites. The purpose of the robots were twofold: frst and most important

23 they filled out virtual poker tables which were nearly empty; second, the poker robots play a very

24 consistent girme and can beat unskilled or moderately skilled players, increasing the site's

25 revenues.

26 32. On-line poker players hate robots, because they play a boring, conservative and

27 error-free game. On-line players avoid those poker sites which allow or tolerate their customers to

2B play via robots, and many consider it a form of cheating. COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 7 of 15 Page ID #:7

1 33. The use of poker robots on www.fulltiltpoker.com and www.fulltilpoker.net 2 created a customer relations problem, because players would complain about other account 3 holders they suspected were robots or whose card play was dictated by robot programs. The 4 Defendants therefore created a"zprotolerance" policy toward robots and robot-assisted players 5 that were reported by its cr.rstomers. Of course, most of the robots reported were the 6 Fulltiltpoker.com Group's own, but the player accounts for the Fulltiltpoker.com Group's own 1 robots could simply be shut down and a new one assigned to Fulltiltpoker.com Group's robots in a

B minute. In additioru certain players who repeatedly lost to a skilled player would start on-line 9 jihads against the successful player, accusing that player of being a robot. The Defendants

t_0 o'robot" discovered over time that cancellation of real player accounts accused of being a was

11 another profit center, as the player account money of the wrongly-accused player was confiscated.

12 While a portion of that money was handed out as bounties, thus incentivizrng such false

13 accusations, the Defendants kept a significant proportion. 74 34. Lederer and Bitar are ostensibly the head of Tiltware, and Ferguson, though 15 playing no legal role, described himself as the "chairman" of Tiltware. Lederer, Bitar, Furst and 76 Ferguson operate as the de facto "board of directors" of Tiltware and the other corporate 77 defendants. Of the Founder Defendants, all but Lederer and Ivey have computer technology 18 experience and all of them but Bitar and Furst are professional or semi-professional poker players. L9 Of the Founder Defendants, all but Bitar and Furst were held out to be part of "Team Full Tilt" or 20 "Full Tilt Pros" who act as spokespersons and representatives of the business. 2L 35. At some time after 2003 but prior to October 1,2005, Defendants Lindgren, Seidel, 22 Matusow, Cunningham, Hansen and Antonius acquired interests, directly or through dummy 23 corporations, in Tilt'ware and other entities comprising the Full Tilt Poker Entities and began 24 exercising common control thereof with the Founder Defendants. The Defendants by their 25 admission regularly cause the Full Tilt Poker Entities to reforur, reorganize and reassign rights and 26 obligations to ensure that no outside person can, without legal discovery tools or the wiretapping 2"7 and investigative powers of the federal governmen! determine the identities of the Full Tilt Poker 28 -7- COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 8 of 15 Page ID #:8

1 Entities. Each of the Individual Defendants has held and continues an ownership interest in 2 Tiltware and through exercise of their votes in the entities comprising the Fulltiltpoker.com Group 3 directed and conholled the operation of www.fulltiltpoker.com. Each of the Fulltiltpoker.com 4 Group employed and continues to employ at least five people from the date of the creation of the 5 entrty, and each such entity has been in existence for at least two years. 6 36. The Defendants deliberately obscured the actual legal entities which comprise the 7 Full Tilt Poker Entities at any time. The roles and responsibilities of the individuals and corporate 8 entities comprising the Full Tilt Poker Entities shift over time, as it is a fluid and sophisticated 9 conspiracy. Based on the information available to Plaintiffs from their own investigation and the 10 indictment, between October 1,2005 and April l5,20ll the following persoru; and entities played

11 or have played the following roles in the Full Tilt association-in-fact.

t2 37. Each of the Individual Defendants owns, directly or indirectly, an ownership

13 interest in each of the corporate Defendants and other entities. Each has a vote in deciding what

L4 the conspiracy does and how it operates, and the Individual Defendants delegate day-to-day legal

15 control of the entities conducting the conspiracy to Bitar, Furst, Ferguson, and Lederer. Without

t6 limiting the forgoing, Friedman wrote and supervised the writing of a significant portion of the

t1 software which runs the www.fulltiltpoker.com and www.fulltiltpoker.net websites. Bitar

18 supervises the legal and money-laundering transfer arrangements described below. Bloch,

19 Ferguson, Lederer, Gordon,Ivey, Juanda, Lindgren, Seidel, Matusow, Cunningham, Hansen and

20 Antonius promote the site and attract players, as well as playing directly on the website; for

27 example, Ferguson and lvey's faces were on the website, and each has made commercials

22 feanring them which could be played on the website during that time period. Furst was in charge

23 of managing the financial arrangementsamong the various corporate defendants.

24 38. The company which currently purports to supply software services to the

25 fulltiltpoker.com website is defendant Pocket Kings. It employed from its formation to the present

26 date at least five persorui continually, and as of April 15,20ll claimed to employ over 600

27 persons. Bitar is the controlling director of Pocket Kings.

2B

COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 9 of 15 Page ID #:9

1 39. Tiltware acts as the nominal paying agent for funds distributed by the 2 Fulltiltpoker.com Group to the Individual Defendants. Each Individual Defendants is amember of 3 Tiltrrare. Bitar and Lederer are managers of Tiltrrare. 4 40. Beginning in or about 2001, credit card companies Visa and MasterCard introduced 5 regulations requiring member banks that processed credit card fiansactions for merchants (so- 6 called "acquiring banks") to apply a particular transaction code to internet gambling tansactions. 7 Thereafter, certain U.S. banks that issued credit cards to U.S. consumers (so-called "Issuing 8 Banks") elected not to extend credit to customers for internet gambling purposes and as a matter of 9 policy automatically declined tansactions bearing that internet gambling transaction code. The 10 number of U.S. issuing banks declining such transactions increased significantly over time such

l_1 that even prior to the passage of the Unlawfrrl lnternet Gambling Enforcement Act in October

12 2006, most United States banks blocked transactions containing the internet gambling code. 13 41. In order to circumvent the Visa and MasterCard regulations and trick U.S. banks

1,4 into authorizing their internet gambling transactions, Bitar, Lederer, and Fergusorl worked with

15 and directed others to apply incorrect transaction codes to the internet gambling transactions in

16 order to disguise the nature of those tansactions and create the false appearance that the

L7 transactions were completely unrelated to internet garnbling.

18 42. One method used by the members of the conspiracy to trick the United States

L9 banks into approving internet gambling charges involved the creation of phony non-gambling

20 companies that the Poker Companies used to initiate the credit card charges. At various times

2L Bitar (at the direction of the other Individual Defendants and on behalf of the Fulltiltpoker.com

22 Group ), created or helped create, with the assistance of third parties, fictitious companies -

23 including phony online flower shops and pet supply stores that established Visa and MasteCard

24 merchant processing accounts with offshore banks. When the Fulltiltpoker.com Group processed a

25 transaction through one of these phony companies without applying a gambling code to the

26 transaction, the United States issuing bank would be tricked into approving the gambling

27 transaction even if its policy was to not allow the extension of credit for internet gambling.

28 Because the credit card networks were often ablelo detect the fraudulent nature of these phony

COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 10 of 15 Page ID #:10

1 merchants after a period of time and to shut down processing for those phony merchants, Bitar 2 arranged for a supply of stand-by phony merchants to be used when a particular phony merchant 3 was discovered. 4 43. A second method used by the FuIl Tilt association-in-fact to trick United States 5 banks involved the use of certain pre-paid credit cards. At various times from January 1,2007 to 6 April 15, 2011, Bitar and the Money Laundering Companies developed so-called "stored value 7 cards" -such as pre-paid debit cards or even pre-paid "phone" cards - that could be "loaded" with 8 funds from a U.S. customer's credit card without using a gambling tansaction code. Once 9 "loaded" in this way, the stored value cards were rsed by gamblers almost exclusively 1s aansfer 10 funds to the Fulltiltpoker.com Group. To avoid detection, Bitar, with the assistance of third party

11 consultants working with the Fulltiltpoker.com Group and other intemet gambling sites, aranged

L2 for fake intemet web sites and phony consiumer "reviews" of the stored value cards so that it

13 would appear that the stored value cards had some other legitimate purpose.

1,4 44. Because Visa and Maste(ard sought to identiff and block attempts to circumvent

15 their rules requiring intemet gambling transactions to be correctly identified -so that banks could

L6 decline to accept them if they wishe{ the Fulltiltpoker.com Group was unable to process credit

l7 card transactions consistently, even through its use of fraudulent means. Accordingly Bitar worked

18 with and directed others to develop yet another method of deceiving United States banks and

L9 financial institutions into processing the Fulltiltpoker.com Group's internet gambling Eansactions,

20 through fraudulent e-check processing. At all times relevant to this Complaint the Automated

2L Clearinghouse (or *ACH") system was an electronic network, administered by the Federal

22 Reserve, that allowed for electronic fund transfers to and from United States bank accounts

23 through "e-checks" or "electronic checks." At various times relevant to this Complain! the

24 Fulltiltpoker.com Group increasingly focused the payment systems on e-checks. A principal

25 difficulty for the Fulltiltpoker.com Group in e-check processing was that the ACH system required

26 the merchant to open a processing account at a United States.based Originating Depository

2T Financial Institution (or "ODFI"). Because the Fulltiltpoker.com Group was violating the laws of

28 most if not all of the states in which it offered .lip" poker, the Fulltiltpoker.com Group could COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 11 of 15 Page ID #:11

1 not and did not seek to open bank accounts for e-check processing in the names of their 2 businesses. Instead, the Fulltiltpoker.com Group found third parties willing to open the bank 3 accounts and process these e-check tansactions on behalf of them using the names of phony 4 companies. 5 45. [n furtherance of this aspect of the scheme, the Fulltilpoker.com Group relied on 6 various middlemerq including Ryan Lang ("Lang") and Bradley Franzen ("Franzen"), to connect 1 the Fulltiltpoker.com Group with payment processors willing to handle internet poker e-check I transactions. Lang and Franzen were also indicted by the grand jury in the Southern District of 9 New York for, inter alia, bank frau4 wire fraud, and money laundering, and Franzen has pled 10 guilty. Following these introductions, Bitar, Ferguson and Lederer caused various of Kolyma and 11 the Money Laundering Companies to enter into processing agreements with certain of the e-check

72 processors. The agreements provided the e-check processors with fees for processing each e-check

13 transaction that were substantially higher than fees paid for standard e-check processing for

74 legitimate, non-gambling merchants. The Fulltiltpoker.com Group then worked with the e-check

15 processors and other co-conspirators to disguise the receipt of gambling payments so that the

L6 transactions would falsely appear to United States banks as non-girmbling transactions. The

t'7 Fulltiltpoker.com Group, along with the e-check prtocessors, typically accomplished fraudulent e-

18 check processing as follows:

L9 a. First, the e-check processors-sometimes directly, and sometimes through third

20 parties -opened bank accounts at United States-based ODFI banks in order to process the

21 Fulltiltpoker.com Group, e-check tansactions through the ACH system. The e-check processors

22 typically lied to the ODFI bank about the purpose of the accoun! falsely claiming that the account

23 would be used to process e-checks for a wide variety of lawful e-commerce merchants without

24 disclosing that, in fact, they would be used to process internet garnbling transactions. In some

25 cases, the e-check processors offered specific lies about the identity of these purported e-

26 commerce merchants. In several cases, for example, the e-check processors falsely told the banks

27 that the transactions were for particular purported internet shopping sites, such as an online store

28 -l l- COMPLATNT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 12 of 15 Page ID #:12

1 selling watches, when, in reality, as the e-check processors well knew, the transactions were for 2 the Fulltiltpoker.com Group. 3 b. Secon4 the e-check processors worked with the Fulltiltpoker.com Group and 4 others in the creation of dozens of phony corporations and corresponding websites so that the 5 money debited from U.S. customer's banks would falsely appear to United States banks to be 6 consumer payments to non-gambling related businesses. For exarnple, in or about June 2009, the 7 Fulltiltpoker.com Group arranged for two third parties to process payments for

8 theFulltiltpoker.com Group disguised as payments to a medical billing company, until accounts 9 related to that processing were seized by judicial order in or about September 2009. [n another 10 example, in or arotrnd June 2009, Franzen, working with multiple co-conspirators, created a phony 1l- business called "Green2Yourcreen" to be used to disguise payments from U.S. gamblers destined

1-2 for the Fulltiltpoker.com Group. Franzen's co-conspirators told multiple United States banks

13 insured by the FDIC, including Citibank and Wells Fargo Bank, irmong others, that

14 "Green2YourGreen" was a "direct sales" business that allowed consumers to buy environmentally

15 friendly household products and sell them to other consumers in retum for commissions. Indeed,

16 the phony Green2YourGreen website that Frarzen's co-conspirators created to disguise the

L1 gambling transactions listed numerousi products that were purportedly for sale and contained

1B "testimonials" about the benefits of green living. Franzen has pled guilty to these crimes which

19 were committed in conspiracy with the Fulltiltpoker.com Group.

20 c. When a U.S. gambler entered his or her checking account information on the

27 fulltiltpoker.com website the e-check transaction was submitted through the, ACH system using

22 the name of one of the phony businesses rather than the ftlme of the relevant entities and the

23 charge appeared on the customer's bank account under this phony rutme. The e-check processors's

24 computer systems communicated with the computer systems of the FulltiltPoker.com Group so

25 that when a gambler entered e-check information on the respective websites, the gambler and

26 website operator received notice of the name of the phony merchant that would appear on the

27 customer's bank account statement in lieu of the rulme of Full Tilt Poker as having initiated the

28 charge. _n- COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 13 of 15 Page ID #:13

1 d. Similarly, members of the Full Tilt Poker association-in-fact worked with the 2 fraudulent processors to coordinate responses to customer inquiries to the phony merchants, 3 including the complaints of gamblers confused by the phony merchant rurme appearing on their 4 checking account statement. 5 46. Bitar and other members of the Futl Tilt association-in-fact worked with multiple e- 6 check processors introduced to them by Lang Franzen, and others. These e-check providers 1 included the following: 8 a. In or around the spring of 2007, Lang introduced Bitar and Kolyma to a method of 9 e-check processing offered by Intabill, an AusEalia-based payment processing company. Because 10 Intabill did not have direct urccess to United States ACH processing accounts, Intabill

11- subcontracted its processing to United States based e-check processors. With the knowledge and

72 approval of the Bitar, Ferguson and Lederer,Intabill disguised the gambling transactions as the

13 transactions of dozens of phony financial services merchants. Intabill processed at least two

l4 hundred million dollars of transactions for Kolyma and others from mid-2007 through March

15 2009. In or around March 2009, Kolyma ceased processing through Intabill, in part because

L6 Intabill owed Kolyma forty million dollars or more for processed firnds that Intabill kept.

17 Kolyma sued Intabill and others for these funds in Australian courts.

18 b. In 2008 and 2009 Chad Elie ("Elie") had worked with Intabill to establish

19 processing accounts for internet gambling that were disguised as accounts set up to process

20 repayments of so-called "payday loans" which were high-interest high-risk loans unrelated to

2t gambling transactions. In or about August and September 2009, working with Franzen, Elie

22 processed transactions on behalf of the Fulltiltpoker.com Group.

23 c. [n or around December 2008, after learning that Intabill was unlikely to continue

24 processing, Bitar, Ferguson and Lederer began to cause the Fulltiltpoker.com Group to process

25 payments through an Arizona payment processor (the "Arizona Processor"), which was assisted at

26 times by a company operated by Lang. From in or about December 2008 through on or about June

27 1,2009, the Arizona Processor processed more than $30 million in payments primarily from U.S.

28 gamblers to the Fulltiltpoker.com Group; all of transactions were processed using the names of COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 14 of 15 Page ID #:14

1 phony merchants so as falsely to appear unrelated to internet gambling. On or about June l, 2009, 2 the Arizona Processor ceased processing transactions following the seizure of its bank accounts by 3 U.S. law enforcement pursuant to a judicial warant. 4 d. At various times relevant to this Complaint the Fulltiltpoker.com Group employed 5 Ira Rubin (*Rubin"), his company E-Triton and various of Rubin's associates including an e-check 6 processor in California (the "California Processor") to process their intemet gambling transactions 7 disguised as legitimate online merchant tansactions order to trick U.S. banks into authorizing

I transactions. In or about June 2009, following the Arizona Processor's termination of its

9 processing activities, Franzen and an employee of the Fulltiltpoker.com Group arranged for two of 10 Rubin's associates to process payments for the Fulltiltpoker.com Group disguised as payments to

11 a medical billing company until accounts related to that processing were seized by judicial order in

12 or about September 2009. 13 47. In or around late 2009, following the collapse of multiple e-check processing

L4 operations used by the Fulltiltpoker.com Group and the judicially ordered seizure of funds, Bitar,

1-5 Ferguson and Lederer begin exploring a new payment processing strategy called "Transparent

16 Processing" (so named because it would be invisible to law enforcement) and sought to find, at

t7 least where possible, processing solutions that would not attract the attention of law enforcement. 18 48. The Fulltiltpoker.com Group had difficulty in identiffing "transparent" processors.

l_9 Elie and his associates were, however, able to persuade the principals of certain small, local

20 United States banks that were facing financial diffrculties to engage in such processing. [n

2L exchange for this agreement to process gambling transactions, the banks received sizeable fee

22 income from processing poker transactions as well as promises of multi-million dollar investrnents

23 in the banks from Elie and his associates. In at least one case, a payment to a bank official who

24 approved the processing was made as well.

25 49. For example, in or around September 2009, Elie, together with Thornhill and a

26 partner of Elie's, Jeremy Johnsoq approached John Campos, the Vice Chairman of the Board and

21 part-owner of SunFirst Banlq a small, private bank based in Saint George, Utah- Campos, while

28 expressing "trepidations" about gambling pto".:il:g, proposed in a September 23,2009 e-mail to COMPLAINT Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 15 of 15 Page ID #:15

1 accept such processing in return for a $10 million invesfinent in SunFirst by Elie and Johnson, 2 which would give Elie and Johnson more than 30% ownership of the bank. Elie and Johnson made 3 an initiat investnent in SunFirst Bank of approximately $3.4 million in approximately December 4 2009. On or aboutNovember 29,2}0g,Thornhill told an associate "things are going well with the 5 bank we purchased in Utah and my colleagues and I are looking to purchase another bank for the 5 purposo of repeating our business plan. We probably could do this for a grand total of 3 or 4 7 banks.'

I 50. On or about December 14,2009, SunFirst Bank began processing payments for the

9 Fulltiltpoker.com Group. On or about April 8, 2010, Carnpos, the defendant, sent an "invoice" to 10 Elie's Partrrer requesting that $20,000 be paid to a corporate entity that Campos controlled as a 11 "bonus" for "Check and Credit Card Processing Conzulting." SunFirst Bank processed over $100

72 million of payments for the Fulltiltpoker.com Group through November 9,2010, when, at the

13 direction of the FDIC, it ceased third party payment processing. SunFirst Bank earned

1,4 approximately $1.6 million in fees for this processing.

t-5 51. During the entire period of operation, the Fulltilpoker.com Group transferred funds

1,6 received from players to pay expenses, to the Individual Defendants, to Imriclr, and others. When

L7 players sought to cash ou! in some cases the requests were honored, and in other cases the

18 accounts were arbitrarily confiscated. Rather than holding player funds in reserve or in separate

19 accormts, the Defendants distributed money from players they permitted to cash out using the

20 fresh deposits from other players. The total disributed to the Individual Defendants was in excess

2L of $400 million dollars. Imrich knew that the moneys he received were from player fi,rnds, as he

22 was intimately involved in the business operations of the Fulltiltpoker.com Group.

23 52. Each of the Individual Defendants knows and understands the legal stmcture of the

24 Fulltiltpoker.com Group. The legal structure of the network of corporate entities that effectuated

25 the money-laundering transactions were created by lmrictr" Plaintiffs are informed and believe

26 and on that basis allege that all Defendants knowingly and willfully conspired to conduct the

27 actions alleged herein. Each Defendant did the acts and things herein alleged ptrsuant to, and in

28 furtherance of, the conspiracy, or lent aid and enco-uragemen! to the conspiracy.

COMPLATNT