MARY LOUISE KELLY, host:
Federal prosecutors in New York have shown their hand, and it includes bank fraud charges against executives at two of the world's biggest online poker companies. The government took over the accounts and disabled the websites of the companies.
NPR's Carrie Johnson reports the case is shaking up the deck in the high-stakes electronic gambling industry.
CARRIE JOHNSON: Poker, an American pastime, a favorite of U.S. presidents from Harry Truman to Barack Obama, and now the makings of a federal case, according to prosecutors in New York.
Let's take a step back for a moment. In 2006, Congress passed a law that pushed many publicly traded online gambling companies out of the U.S. Poker buff Ken Adams says sites such as Poker Stars and Full Tilt Poker - both named in the indictment - stepped right into that void.
Mr. KEN ADAMS (Attorney): They have chosen here to indict the most respectable and largest market leaders in the industry, so clearly, it's an attack on the industry.
JOHNSON: Adams isn't just a big time poker player. He's also a lawyer who's defended the electronic gambling industry. This week, he's one of many people asking why the Justice Department is spending its time going after online poker executives.
Mr. ADAMS: I wish the Southern District of New York U.S. attorney had invested the same amount of federal resources and our taxpayer dollars prosecuting the fraudsters who brought us a near collapse of the U.S. and global financial system. They're right down the street on Wall Street.
Mr. TIM TREANOR (Attorney): This is definitely not chump change. You're talking about, you know, billions of dollars of transactions, and I would expect that these companies have, you know, millions of dollars of player money on hand at any given time.
JOHNSON: That's Tim Treanor. He used to prosecute organized crime in New York. He says the way the money allegedly changed hands in this case exposes deeper vulnerabilities criminals could exploit.
Mr. TREANOR: Setting gambling aside, those cases are very important because of the weaknesses that they point out in the payment system in the U.S.
JOHNSON: Prosecutors say executives at the online poker companies disguised bills on players' credit cards to make it look like they bought golf balls or jewelry or clothes. The government says poker companies sometimes bought the silence of small banks in trouble or bribed bankers to process the payments, even though the Justice Department says they're illegal.
Full Tilt Poker, based in Ireland, says it's standing behind its top executives. The company asserts online poker is legal in the U.S. and elsewhere. Several lawyers who reviewed the indictment say it goes beyond the debate over the legality of electronic poker.
Behnam Dayanim is a lawyer who's defended online gambling companies. He says the charges in the case could solve another problem for prosecutors.
Mr. BEHNAM DAYANIM (Attorney): They're not just online gaming offenses. They're fraud and other and money laundering and other kinds of offenses, too, and that gives the government a much stronger case if it wants to pursue extradition of these people.
JOHNSON: Dayanim says when it comes to online gambling, he's reminded of the Prohibition era, when demand for an illegal product inspired people to supply it.
Mr. DAYANIM: If nothing changes - in other words, if there's no legalization, no regulation of Internet poker - you'll see other people step in to fill that void. And two, three, four years from now, my guess is we'll be right back where we are today.
JOHNSON: In all, 11 people were charged in the electronic poker case. The FBI has arrested three of them.
Carrie Johnson, NPR News, Washington.
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KELLY: This is NPR News. Transcript provided by NPR, Copyright NPR.
