Internet Gambling Company Partygaming PLC Enters Non-Prosecution Agreement – Forfeits $105 Million

LawFuel.com – Legal Newswire –
LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, announced today that the
United States Attorney’s Office for the Southern District of New
York (the “Office”) has entered into a Non-Prosecution Agreement
with PartyGaming PLC (“PartyGaming”), an Internet gambling
company incorporated in Gibraltar and publicly traded on the
London Stock Exchange under the ticker symbol PRTY. As part of
the Non-Prosecution Agreement, PartyGaming agreed to forfeit a
total of $105 million, representing proceeds of PartyGaming’s
U.S. Internet gambling operations, to be paid over a period of
three years.

PartyGaming offers a variety of web-based real-money
and free-play games including, for example, real-money poker and
casino gambling. However, Internet real-money gambling is not
legal in the U.S. Nonetheless, PartyGaming offered Internet
gaming to players in the U.S. from 1997 until October 13, 2006.
Indeed, most of PartyGaming’s customers during that time were
located in the U.S., and at the time the Company began trading on
the London Stock Exchange in 2005, U.S. players constituted
approximately 88% of PartyGaming’s customer base. Moreover,
beginning in 2001, PartyGaming employed a variety of methods to
misrepresent the nature of its customers’ transactions to U.S.
credit card issuers who did not permit their credit cards to be
used for Internet gambling. PartyGaming also took steps to
disguise payments of winnings to U.S. customers. In its 2005 IPO
prospectus, PartyGaming recognized that “[t]here is uncertainty
as to the legality of online gaming in most countries and in many
countries, including the U.S., the Group’s [PartyGaming’s]
activities are considered to be illegal by relevant authorities.”
PartyGaming has now acknowledged that this conduct did in fact
violate certain U.S. criminal laws, including sections 1955
(illegal gambling), 1343 (fraud by wire communications), and 1344
(bank fraud) of Title 18 of the United States Code. PartyGaming
has been cooperating with this Office’s ongoing investigation of
illegal Internet gambling since Spring 2007.

Under the terms of the Non-Prosecution Agreement, this
Office has agreed that, except for federal criminal tax
violations, as to which this Office does not have decision-making
authority, this Office will not criminally prosecute PartyGaming
and its subsidiaries for any crimes related to PartyGaming’s
Internet gambling business with customers in the U.S. from 1997
through and including 2006. PartyGaming in return has promised
to continue to cooperate in this Office’s investigation; to
maintain a permanent restriction preventing Internet gambling
services from being provided to customers in the U.S. in
violation of the law of the United States or of any jurisdiction
within the U.S.; and will forfeit $105 million, representing
proceeds of PartyGaming’s U.S. Internet gambling operations. The
forfeiture is payable over three years.

Mr. DASSIN said that the decision to enter into a Non-
Prosecution Agreement was made after weighing the factors set
forth in the Department of Justice’s Principles of Federal
Prosecutions of Business Organizations, including: PartyGaming’s
early and full cooperation with the Government’s investigation;
changes in PartyGaming’s management; PartyGaming’s termination of
all real-money Internet gambling services for U.S. customers in
October 2006; PartyGaming’s cessation of its deceptive creditcard
processing practices; the forfeiture agreement; and the
negative effect that charges against PartyGaming would have on
the Company’s overseas business.

As previously announced, on December 16, 2008, ANURAG
DIKSHIT, a founder and former officer and director of
PartyGaming, pleaded guilty before United Stated District Judge
JED S. RAKOFF to one count of using the wires to transmit bets
and wagering information in interstate commerce. DIKSHIT, 37,
faces a maximum sentence of 2 years in prison and a fine of
$250,000, or twice the gross gain or loss from the offense.
DIKSHIT also admitted to forfeiture allegations requiring him to
forfeit $300 million to the United States. DIKSHIT is scheduled
to be sentenced by Judge RAKOFF on September 30, 2010.
Mr. DASSIN praised the investigative work of the
Federal Bureau of Investigation. He added that the investigation
into illegal Internet gambling is continuing.
Assistant United States Attorneys JONATHAN B. NEW and
ARLO DEVLIN-BROWN are in charge of this investigation.
09-086 ###