Online Gambling Payment Processor Loses Appeal Battle

Gambling News - February 2nd, 2010 - Written By Glen

Throughout the second half of 2009, online gamblers watched as the industry had taken a hit from the American government. Federal indictments had been thrown about, almost carelessly, targeting the different forms of Online Gambling. Not content with simply targeting the gambling centers, federal prosecution had ultimately turned attention on the payment processors.

One of the payment processors that had taken the heat was Account Services Corp and KJB Financial Corp. These companies, owned and operated by Douglas Rennick, had put Rennick in financial straits. Rennick had suffered against a three count indictment, including a conspiracy to operate an illegal gambling business, conspiracy to commit bank fraud, and conspiracy to engage in money laundering. Rennick, a Canadian, faces 30 years in prison if he fails to meet acquittal.

Rennick had been held in contempt of court after refusing to comply with a grand jury subpoena. Rennick and his attorneys had argued that Rennick's companies could meet the subpoena with non-compliance, stating that this would violate Rennick's rights under the Fifth Amendment - an integral component of the Bill of Rights. Under the Fifth Amendment, Rennick is protected against self incrimination.

"Although the long established 'collective entity rule' prevents corporations from availing themselves of the Fifth Amendment privilege, the companies contend that the Supreme Court's decision in Braswell v. United States compels us to carve out an exception for one person corporations. We disagree and affirm the district court's contempt order," was what the panel of judges had stated, according to the Wall Street Journal.

Rennick had been accused of processing payments for online casinos and poker rooms, which is illegal under the UIGEA. Rennick had allegedly transferred over $350 million dollars from the United States too offshore gambling sites. Federal prosecutors are aiming collect $565.9 million dollars in forfeitures.

Rennick is not the first to suffer at the hands of the federal government, and will undoubtedly be the last. Unless, that is, Barney Frank and his cosponsors manage to overturn the UIGEA.