The Justice Department has issued subpoenas to at least four Wall Street investment banks as part of a widening investigation into the multibillion-dollar online gambling industry, people briefed about the investigation said.
The subpoenas were issued to firms that had underwritten the initial public offerings (IPOs) of some of the most popular online gambling sites that operate abroad.
The banks involved in the inquiry include HSBC, Credit Suisse, Deutsche Bank and Dresdner Kleinwort, the sources said.
While online gaming sites like PartyGaming and 888 Holdings operate from Gibraltar and their initial public offerings were held on the London Stock Exchange, companies that do business with them and have large bases in the US have come under scrutiny by regulators in Washington.
None of the largest US banks like Goldman Sachs or Citigroup underwrote the IPOs in London, in part because of the legal ambiguity of the sites -- they are illegal in the US but still accessible to residents.
The subpoenas, reported by the Sunday Times of London, appeared to be part of an indirect but aggressive and far-reaching attack by federal prosecutors on the Internet gambling industry just two weeks before one of its biggest days of the year, the Super Bowl.
Unable to go directly after the casinos, which are based overseas, they have sought to prosecute the operations' US partners, marketing arms and now, possibly, investors.
The prosecutors may be emboldened by a law signed by US President George W. Bush last October that explicitly defined the illegality of running an Internet casino. Even before that law, the Unlawful Internet Gambling Enforcement Act, was adopted, the government said Internet gambling was illegal under a 1961 provision.
These offshore casinos, typically based in Costa Rica or Antigua, allow US-based bettors to use their home and office computers to place wagers on a range of contests.
Millions of Americans participate; more than half of all bets placed to major offshore casinos are from residents of the US.
The prosecutors' efforts have taken a toll in the last two years on offshore casinos, most notably with the arrest last year of David Carruthers, the chief executive of BetonSports, an Internet sports book. The company is based in Britain and has operations in Costa Rica, but Carruthers was detained at Dallas airport while traveling through the US.
The arrest led to BetonSports' decision to stop taking bets from the US, crippling its business.
‘A DISASTER’: A successful Chinese attack on Taiwan would undermine the credibility of US security guarantees and could result in a global depression, three experts wrote A Chinese takeover of Taiwan would be a geopolitical catastrophe for the US and its allies, one that would overshadow almost all others over the next decade, US policy experts said. Andrew Erickson, a professor of strategy in the US Naval War College’s China Maritime Studies Institute; Gabriel Collins, a fellow at Rice University’s Baker Institute for Public Policy; and former US deputy national security adviser Matthew Pottinger issued the warning in an article published on Tuesday in Foreign Affairs. Bejing’s invasion or annexation of Taiwan “would be a disaster of utmost importance to the United States, and I am convinced that
Taiwanese businesspeople’s investments in China last year hit a record low of 11.4 percent of total foreign investment, the Mainland Affairs Council said yesterday. The number was a huge decline from 83.8 percent in 2010, mainly because Taiwanese businesspeople have been diversifying their investments globally over the past few years, with great success, the council said. From 1991 to last year, 45,523 Taiwanese investments in China totaling US$206.37 billion had been approved, accounting for 50.7 percent of overall foreign investment, data from the Ministry of Economic Affairs’ Investment Commission showed. The amount and proportion of Taiwanese investments in China has been declining, with
Taiwanese tourists on board a Kinmen cruise ship had a scare yesterday when it was intercepted by Chinese coast guards who forcefully boarded the vessel to inspect it. The Sunrise, a tourism ferry that operates between Kinmen and Xiamen, China, was sailing around the waters around the islets of Dadan (大膽) and Erdan (二膽) — both of which are part of Kinmen County — yesterday afternoon when it encountered personnel from China’s Fujian Coast Guard Bureau. China Coast Guard personnel forced their way on board and conducted an inspection for about 30 minutes before leaving, local media cited the tourists as saying. The
CHINA’S VERSION: The TAO threatened Taiwan and denied the existence of restricted waters around Kinmen County after two Chinese died fleeing the Taiwanese coast guard Taiwan would continue to enforce the law in restricted waters around Kinmen County, the Mainland Affairs Council (MAC) said yesterday. The council was responding after China’s Taiwan Affairs Office (TAO) spokeswoman Zhu Fenglian (朱鳳蓮) on Saturday rejected the existence of restricted waters around Kinmen County — a group of Taiwanese islands close to China’s coast — and said that Beijing reserves the right to take further measures after two Chinese died in the area. The two died on Wednesday after the speedboat they were in capsized while they were being pursued by Taiwanese Coast Guard Administration (CGA) officials. The speedboat had entered