Payment processors, BetUS indicted on money laundering charges

Three payment-processors have been accused of miscoding gaming transactions and funneling that money to online casinos and sportsbooks in grand jury indictments unsealed last week in Utah.

The companies, along with BetUS.com, have been charged with money laundering, bank fraud, racketeering conspiracy and violation of the wire act.

The indictment also alleges that at least on U.S. bank official had been bribed to ensure that the transactions were mislabeled.

The 34-count indictment alleges BetUS used Hill Financial Services and Gateway Technologies in Utah and CurrenC and CurrenC Worldwide in the British Virgin Islands, to deceive credit card companies into believing more than $150 million in U.S.-based transactions were not tied to online gambling. The Unlawful Internet Gambling Enforcement Act, adopted in October, made it illegal for U.S. financial institutions to process online gaming transactions.

The U.S. Attorney is attempting to recover the $150 million under RICO, the federal Racketeer Influenced and Corrupt Organizations law.

"Payment processors who attempt to hide the true nature of the transactions they are conducting and the Internet gambling websites that use these payment processors will be prosecuted and brought to justice," said U.S. Attorney Brett L. Tolman in a statement.

The IRS led the investigation into payment processors.

"Internet gambling, along with other types of 'illegal e-commerce,' are areas of interest to IRS Criminal Investigation," Special Agent-in-Charge Wes Eddy said. . "Laundering money from illegal activity such as illegal internet gambling is a crime. Regardless of how the money changes hands-via cash, check, wire transfers or credit cards-and regardless of where the money is stored-in a United States financial institution or an off shore bank-we will trace the funds and seize them. IRS Criminal Investigation will vigorously investigate and prosecute the owners and operators of these illegal enterprises to the fullest extent possible."

Seven people were charged in the indictment in addition to the four companies. Baron Lombardo, 46, Richard Carson-Selman, 51, Henry G. Bankey, 49, Francisco Lombardo, 52, Count C. Lombardo, 43, Tina I. Hill, 32, and Kimberlie Lombardo 43 are all Las Vegas residents. Baron, Francisco, and Count Lombardo are brothers and Kimberlie and Francisco Lombardo are married.

None of the defendants are in custody because they are not considered flight risks, according to the U.S. Attorney's office. Richard Carson-Selman is the only person to be arrested. He was taken into custody May 10 in Las Vegas, but was released after an initial appearance in Las Vegas under the supervision of pre-trial services.

All of the defendants are scheduled to be arraigned in U.S. District Court in Salt Lake City on Wednesday, May 30, at 10 a.m. before U.S. Magistrate Judge Paul Warner.

Maximum penalties include 20-years for racketeering conspiracy, 30 years for bank fraud, two-years for transmission of wagers/wagering information, and 20-years for money laundering.

The Enterprise

The defendants allegedly set up a complex network of companies to funnel money from U.S. bettors to online sportsbooks and casinos.

The network consisted of three different companies – each with its own function.

The transactions started at the Gateway, a site owned and operated by Gateway Technologies. The Web site was used to process and track illegal gambling transactions. The indictment alleges that the defendants caused the Gateway to misclassify the transactions to Visa and MasterCard, representing that the transactions were for something other than gambling.

CurrenC, based in the British Virgin Islands, was the primary company used to conduct fraudulent credit card and wire transfers. They used a series of offshore accounts to transfer money between the Gateway and online casinos, and facilitated payments from the online casinos back to the defendants.

The indictment names BetUS.com, BetOnSports.com and four other unnamed online casinos as gaming companies that received money in this way. BetUS.com was the online gaming company charged in the indictment.

Hill Financial Services provided accounting and technical services for the operation.

The defendants received a fee for each transaction they processed as payment, the indictment alleges. They also received a percentage of each transaction that was conducted via Western Union, according to the indictment. Depositors who wanted to use Western Union wired money via accounts in the Philippines. The money was then funneled to the online casinos.

No further information about the investigation or evidence is available at this time according to the U.S. Attorney's spokesperson Melodie Rydalch.