PREET BHARARA, the United States Attorney for the
Southern District of New York, JOSEPH DEMAREST, JR., the
Assistant Director-in-Charge of the New York Office of the
Federal Bureau of Investigation (“FBI”), and JAMES T. HAYES, JR.,
the Special Agent-in-Charge of the Department of Homeland
Security’s United States Immigration and Customs Enforcement
(“ICE”), announced that Australian national DANIEL TZVETKOFF was
arrested in Las Vegas this morning on charges that he assisted
illegal internet gambling companies by processing approximately
$500 million in transactions between U.S. gamblers and internet
gambling websites and disguising the transactions to the banks so
that they would appear unrelated to gambling.
According to an Indictment unsealed this morning in
Manhattan federal court:
In early 2008, TZVETKOFF began processing gambling
transactions in the United States through the Automated Clearing
House system (“ACH system”) which allows money to be
electronically transferred from a gambler’s U.S. checking account
to an internet gambling company simply by the gambler going to
the internet gambling company’s website and entering his bank
account information. TZVETKOFF and his co-conspirators processed
more than $543 million in ACH transactions between February 2008
and March 2009, the overwhelming majority of which were on behalf
of internet gambling companies. TZVETKOFF then arranged for the
funds received from gamblers to be wired offshore for the benefit
of the gambling companies. TZVETKOFF also invested approximately
$27 million from these ACH transactions into an online “payday
loan” company that offered consumers high-interest, short term
loans that typically carried an annualized interest rate of more
than 500 percent.
TZVETKOFF and his co-conspirators induced U.S. banks to
provide ACH services to internet gambling companies by disguising
the transactions so that they would not appear to be gambling
related. To accomplish this, TZVETKOFF and his co-conspirators
created dozens of shell companies with names unrelated to
gambling — complete with phony web sites that made the companies
seem legitimate — and represented to banks that the ACH
transactions were on behalf of these companies. On May 3, 2008,
one of TZVETKOFF’s co-conspirators in an email told TZVETKOFF
that he had hired programmers to develop “unique” websites for
the shell companies so that if someone was “checking the
companies out there is absolutely no way to tie the companies
together.” TZVETKOFF responded: “This is all perfect!”
In March 2009, TZVETKOFF stopped processing internet
gambling transactions after leading internet gambling websites
accused him of stealing approximately $100 million from them.
The Indictment charges TZVETKOFF with four counts,
including bank fraud, money laundering, and conspiracy to operate
and finance an illegal gambling business and to process
electronic funds transfers in violation of the Unlawful Internet
Gambling Enforcement Act of 2006. If convicted of all counts,
TZVETKOFF faces a maximum sentence of 75 years in prison.
TZVETKOFF, 27, was arrested this morning in Las Vegas
and is expected to be presented in Las Vegas federal court later
today. This case has been assigned to United States District
Judge LEWIS A. KAPLAN.
Mr. BHARARA praised the investigative work of the FBI
and ICE for their assistance in the investigation. Mr. BHARARA
said that the investigation is continuing.
Assistant United States Attorneys ARLO DEVLIN-BROWN,
JONATHAN NEW, and MICHAEL LOCKARD are in charge of the
prosecution. This case is being handled by the Office’s
Organized Crime Unit.
The charges contained in the Indictment are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.