By Wendeen H. Eolis
Poker Player Newspaper
April 23, 2013

While most of the country was glued to the movements of Boston area law enforcement agents immediately after the Boston Marathon bombings, the U.S. Attorney’s Office for the Southern District of New York had it sights set elsewhere on a sting against organized crime that was tied into a few game runners and players in high stakes poker games in New York. April has been a tough month for poker in New York City, more than once.
NY Poker Highlighted in Bust of Russian–Based Organized Crime Ring

At the crack of dawn on April 16, 2013, federal agents were on the march to pick up their prey in Los Angeles, Philadelphia, Miami, and California, as well as New York. They moved in with plans to break the back of an internationally based gambling enterprise rooted inside the Russian Federation.

The accusations made by the Government marry illegal gambling activities to organized crime and put some of New York’s best known nosebleed poker games in the hands of old school “Russian Mafia” with locally based operatives intertwined in their operations.

Arguably, the April 16th bust shone the brightest light over high stakes poker games in the underground world of New York poker — ever.

According to the US Attorney’s 84 page indictment, the cast of characters includes high-level Russian-surnamed mobsters from two organizations, a bank branch manager from JP Morgan Chase, an art dealer whose gallery resides in the tony Carlyle Hotel in Manhattan, and a bunch of sports bettors and high stakes poker players most of whom are better known to their poker game buddies as part of the New York gambling world’s population of “good family men.”

And then, there is Molly Bloom. She was the poker hostess with the mostess. She attracted to her high-stakes poker games well-marketed poker pros, captains of industry and finance, movie stars and sports stars. She arranged poker events in glamorous homes and hotels on one coast and then the other – supposedly with many if not all of the accoutrements of a high end gentleman’s club.

The indictment is short on details but there is nothing murky about the seriousness of the charges or the defendants. The charges include illegal gambling operations, wire fraud and far-flung money laundering. Worse for some of the defendants are claims of a conspiracy under the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO charges provide for prosecution of conspirators behind a crime. The cast of characters listed in the indictment is spelled out with a recitation of both formal names and nicknames of the defendants.

Penalties range from 10 years to 90 years in prison. The poker game runners/promoters purportedly associated with the targeted gambling enterprise have become inextricably caught up in the fray — at least for now. Few New York poker game “entrepreneurs” have ever feared serious jail time for gambling offenses before.

Mayfair and Diamond Clubs Stung

In April of 2000, the town’s two largest and most popular poker clubs of that time — the Mayfair Club and the Diamond Club — were simultaneously raided by cops. The peace officers showed up with battering rams and cocked guns as if they expected to find the equivalent of an Appalachian National Convention of La Cosa Nostra in progress.

The Government failed to link the clubs to drug deals, loan sharking, or any other criminal activity often associated with organized crime. Nevertheless, the City closed down these clubs soon thereafter. The clubs’ operators, investors and employees lost their cherished lifestyle, but otherwise were left alone to go on their merry way.

While doing research for another writing project, one senior law enforcement agent involved in the sting, confirmed what the club operators knew when they got hit. The officer said, “The precipitating causes” for the scrutiny of the clubs “was twofold.” He went on to explain that an FBI agent stumbled upon the Mayfair in the course of investigating a sports betting operation, and a vice squad officer made a random visit to the Diamond Club where years earlier, he had slapped the club’s hands for newspaper ads that advertised for customers. Ultimately the top earning sports bettor under investigation went to prison.

After the clubs were closed, a high level New York City official who spoke on condition of anonymity said, “The clubs were closed mostly because their activities had become “too extensive for law enforcement to turn a blind eye.”

PokerStars, Full Tilt Poker & Absolute Poker / Ultimate Bet Stung

Some observers say online poker suffered similar scrutiny by the Government looking, mostly aimlessly, for links to organized crime as online poker surged from small businesses into a multi-billion dollar industry. One public acknowledgement of such efforts occurred in the course of the notorious prosecution of online poker by the U.S. Attorney’s Office of the Southern District of New York in US v. Scheinberg et al April 14, 2011.

The case targeted 11 key figures associated with the three largest and most popular online poker sites serving U.S. customers. Companion civil cases were brought against the companies – PokerStars, Full Tilt Poker, and Absolute Poker/Ultimate Bet.

There were blaring headlines of criminality and greed. And, at one point in the prosecution of the cases, the DOJ raised the specter of ties to organized crime. The DOJ quickly retreated from that notion, however, after being politely, but firmly challenged by counsel to PokerStars founder Isai Scheinberg who had been faintly implicated in a footnote of the Government’s legal papers. The Justice Department has never uttered a further peep on this subject. Counsel was none other than Mary Jo White, a former U.S. Attorney for the Southern District. She is presently Chairman of the Securities and Exchange Commission.

An Opening for Organized Crime Emerges

Since the New York poker sting of 2000, law enforcement authorities have become more intimately familiar with poker, and not just online poker which has yielded worldwide publicity. The Feds as well as local precincts periodically cast their eye on the world of underground New York poker. Over the next several years there were few raids unless a club was too noisy or brought too much foot traffic to suit the taste of the neighborhood.

For the most part, police appeared to return to a laissez-faire policy despite a spate of robberies at these clubs, which became known to them. Things changed fast, however, after the murder of a poker player during an armed heist at one of the City’s small new clubs that opened in 2006.

Suddenly poker clubs were seen as dangerous venues by police and poker players alike. The lack of a respectful relationship between clubs and local police created a big opening for expanded involvement of a criminal element—one that, according to the indictment, has played a real role in the operations and “protection” of some of the biggest poker games in town. It has yet to be seen if the Government will succeed this time in pairing poker games with organized crime. But meanwhile, New York poker players ask, “Isn’t  there  enough proof that licensing, regulating and taxing both live and online poker in New York is the safest bet?”