NEW YORK—An Australian man who made a fortune worth a reported $80 million is now facing 75 years in jail, charged by federal authorities with violating the Unlawful Internet Gambling Enforcement Act (UIGEA), which makes it a crime for anyone to assist in financial transactions associated with “unlawful internet gambling.”
Daniel Tzvetkoff, 27, is the first person to be charged under UIGEA. In an indictment unsealed April 16 in Manhattan, the U.S. Attorney for the Southern District of New York alleged that Tzvetkoff and his partners unlawfully laundered more than half a billion dollars in internet gambling proceeds between early 2008 and March 2009, when Tzvetkoff stopped billing for internet gambling transactions.
Tzvetkoff was arrested in Las Vegas two weeks ago and was seeking to be released on bail. Despite earlier reports that he was released Wednesday morning, a New York district court actually reversed a decision by a Las Vegas magistrate to grant bail, citing prosecutors’ belief that he was a serious flight risk. Instead, he will be transported from Vegas to New York, where he will remain incarcerated, according to Gambling 911.
The indictment against Tzvetkoff lays out a sophisticated scheme in which the co-conspirators “created dozens of shell companies with names unrelated to gambling—complete with phony web sites that made the companies seem legitimate—and represented to banks that the ACH (Automatic Clearing House) transactions were on behalf of those companies.”
The indictment also alleges that Tzvetkoff stopped transacting for gambling transactions “after leading gambling websites accused him of stealing approximately $100 million from them." Tzvetkoff has been charged with four counts, including bank fraud, money laundering and conspiracy to operate and finance an illegal gambling business and to process electronic funds transfers in violation of the UIGEA. The FBI and ICE were both involved in the investigation.
Tzvetkoff ran adult processor Merchant Solutions, which was in business as late as 2007, when it was nominated for an XBIZ award. That same year, he founded online payment processor Intabill, which still has an online presence. Merchant Solutions is no longer in business.
According to the Herald Sun, “Tzvetkoff's world came crashing down last year when his main Brisbane company, BT Projects Pty Ltd, was placed in liquidation with debts estimated at nearly $80 million. His Intabill company, a subsidiary of BT Projects, sacked its workforce, the head office disappeared and Mr Tzvetkoff's exotic cars, including his prized Lamborghini with the number plate "BALLER", were sold.”
Declaring bankruptcy, his prized yacht also was sold as was his “Zuri nightclub in Fortitude Valley and his palatial Hedges Ave property on the Gold Coast, bought from Tony Smith for $29 million. He was also facing a $100 million lawsuit filed by his former business partner, lawyer Sam Sciacca, claiming he ‘diverted funds payable to the company to cover personal expenses.” He also reportedly faces a $43 million lawsuit by a former customer.
The paper reports that despite those setbacks, Tzvetkoff continued to operate an offshore billing and consulting group, and this month made the ultimately fatal decision to travel to Las Vegas to attend an internet billing conference, “where it is believed he came to the attention of several large US online internet players to whom he owed money and they reported him to the authorities.” He was arrested April 16.
Not everyone is convinced that Tzvetkoff deserves to be facing life in prison, however. According to Jacob Sullum from Reason.com, “When you add together all the maximum sentences—five years for the gambling conspiracy, 20 years for each money laundering count, and 30 years for bank fraud—you see that Tzvetkoff faces up to 75 years in prison for the crime of helping Americans play poker.
“All this,” he continues, “is based on a New York State offense, ‘promoting gambling in the second degree,’ that is classified as a misdemeanor and that arguably does not cover poker.”
Ultimately, concludes Sullum, “The government can scare companies such as PayPal and Neteller out of the market and it can prosecute successors such as Tzvetkoff if they're foolish enough to visit the U.S. But because poker prohibitionists cannot impose their will on the entire world, there will always be plenty of alternatives for Americans who dare to defy their government's ridiculous recreational restrictions.”