Three years behind bars and a $5 million fine. That’s the sentence meted out to Ira Rubin, the man who admitted helping online poker companies hide billions in illegal gambling proceeds for bets made by U.S. customers.
Rubin was arrested last year in a federal investigation that shut down the three largest Internet poker companies operating in the United States and resulted in charges against 11 people.
In January, he pleaded guilty to money laundering and bank and wire fraud charges.
Prosecutors say Rubin hatched a plan to deceive U.S. banks into processing hundreds of millions of dollars in online poker transactions for Pokerstars, Full Tilt Poker and Absolute Poker. He created dozens of phony websites and then disguised the transactions from the poker sites to make it look like they were coming from non-gambling websites.
In 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act which regulates online gambling and restricts how financial institutions could pay monies to Internet gambling sites.
It makes it a crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.”
Following the passage of the UIGEA, many online gambling companies pulled out of the U.S. market. Full Tilt Poker, Absolute Poker and Pokerstars remained but because banks could not process Internet gambling payments they turned to third-party payment processors like Rubin.
Rubin, a U.S. citizen, had been living in Costa Rica since 2008. He was on his way to Thailand when authorities arrested him in Guatemala on April 26, 2011.
He has a history of legal troubles -- Rubin faced criminal charges in Virginia, Florida, New York, Massachusetts, Missouri and Nevada. Most recently, he was ordered to pay the Federal Trade Commission $8 million from a business he operated that was tied to telemarketing fraud.
Rubin’s co-defendant, Brent Beckley, the former head of payment processing for Absolute Poker, was sentenced to 14 months in prison for his role in the scheme and ordered to pay $300,000.
Beckley was responsible for identifying third-party payment processors like Rubin who would hide the hundreds of millions of dollars Beckley collected.
Earlier this month, a federal judge in New York signed off on a bail package for Full Tilt Poker founder Raymond Bitar, who was arrested and charged in connection to the investigation.
Full Tilt Poker was shut down a year ago after the Justice Department brought civil charges against the company and criminal charges against its executives. Bitar is accused of defrauding poker customers by lying to them about the security of their funds. Federal authorities say Bitar promised players their money would be protected in separate accounts but used $439 million to pay for company operations as well as his own salary.
As a result, the company has been unable to pay $350 million it owes to players around the world.
Bitar denies any wrongdoing.
Four other defendants charged in this case, including the founders and directors of Full Tilt Poker and Pokerstars, live outside of the U.S. and remain at large.