US gaming probe rocks top banks

[The Judge]

The Sunday Times - Business
By: Jenny Davey
January 21, 2007

THE US Department of Justice has ordered the world’s biggest investment banks, accountants and law firms to hand over all e-mails, telephone records and papers connected with internet gaming firms as part of an investigation into illegal online gambling in America.

HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank are known to be among the banks that have been issued with subpoenas — official requests for information — as part of a worldwide hunt to build a case against those who benefited from illegal online gambling.

Britain has been the fundraising centre for many internet gambling companies, with a number of international operators listing their shares in London.

Fortunes were made by the founders of internet gaming stocks, including Party Gaming, 888.com and Betonsports.com, and advisers pocketed huge fees.

The Department of Justice first issued subpoenas in October, only days after George Bush sounded the death knell for America’s $6 billion (£3.2 billion) internet gambling industry by signing legislation banning all related transactions. But until now the investigation has been kept secret.
According to City sources, the subpoenas have continued to arrive over the past few weeks.

It is thought that some investors in online gambling companies, including Party Gaming and 888.com, have also been hit with requests for information.

One source said: “To say the situation is sensitive is the understatement of the decade. The problem is, even if you know you have done nothing wrong, you have no powers of resistance.”

He added: “You can quickly go from being a bystander to a target, so even if you are bomb- proof, you have to assume you are subject to hostility.”

The source went on: “The Department of Justice has taken a shotgun, not a rifle approach in relation to lots of gaming companies and has just asked everyone to hand over all the information they have.”

The request could force banks and other advisers or former advisers to the gambling companies to hand over hundreds of thousands of e-mails and files to American investigators.

Another City source familiar with the circumstances said: “There is no doubt at all that this situation is escalating. This has definitely got legs.”
Another source described it as one of the biggest “fishing expeditions” ever undertaken by the Department of Justice.

Vast riches were made by the founders of internet gambling companies, including Party Gaming and 888.com. Party Gaming floated with a value of £5 billion in the summer of 2005, propelling it straight into the FTSE 100 index ahead of British household names such as British Airways and ICI. Its four founder shareholders — Anurag Dikshit, Vikrant Bhargava, Ruth Parasol and her husband, Russ DeLeon — took out £797m and valued their remaining shares at about £ 3.3 billion. Meanwhile, 888.com, which floated in September 2005 valued at £590m, created another batch of dotcom millionaires, this time among the company’s Israeli founders. Avi and Aharon Shaked received more than £10m from selling a quarter of their 70% stake.

The probe by the Department of Justice will spark outrage in Britain, coming so soon after the extradition of the so-called NatWest Three to America.

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[jaypasco]

its over isnt it judge? they are going after everyone

[TravisPH]

That's it, I think I'm done.... I'm pulling my money out right now. This one shocked me.

If they have to turn over info of gamblers, I am done for.

[Dr. Jack]

Originally Posted by TravisPH

That's it, I think I'm done.... I'm pulling my money out right now. This one shocked me.

If they have to turn over info of gamblers, I am done for.

Travis, I believe the info they are after is aimed at the "founders" of online sportsbooks, not the actual players

With that being said, people have to do what they feel is right. All advice, posts, articles are all opinions and speculating by everyone. This goes for both sides (positives and negatives). At the end of the day this is all new to everyone. Each person is responsible for their own actions and must follow what their head and heart tells them.

I personally have stated several times months ago that I thought the panic would get a lot worse before it got better. It appears I was right about that one. Now is it the end? I don't think so but again people have to do what they feel is right because in the end - no one else will worry about Travis but Travis.

[justdonating]

Panic is widespread............at least for now. Action at the locals is definitely picking up right now.