So went the sound of money rolling into St. George’s SunFirst Bank. Lots of it. From across the nation. Tens of millions of dollars coming in, going out.
It lasted from late 2009 for almost a year. But at some point early on, the poker companies shuffling all that cash wanted assurances that processing online player payments in Utah — a state, ironically, dead set against gambling — was indeed legal, even though they already had convinced St. George businessman Jeremy Johnson, his partners and bank officials that it was.
So to whom did they turn? Perhaps even more ironically, to two of the state’s top cops: Attorney General Mark Shurtleff and his chief deputy John Swallow.
For some, including the attorney SunFirst asked to review the legal issues, the answer wasn’t in the cards, it was in the Utah Code.
"I said this is against Utah law, your bank is in Utah and Utah criminal law says gambling is [illegal], and even anything that facilitates gambling," said Scott Clark, of Salt Lake City’s Ray Quinney & Nebeker. "Utah is the last place they could do that."
The supervisor of banks for the Utah Department of Financial Institutions also expressed concerns. And the U.S. Justice Department was determined to shut down what it deemed a criminal activity.
But from Shurtleff and Swallow came silence or, at the most, qualified answers. And the two never launched investigations themselves nor informed federal authorities about the questionable poker payments.
So the money continued to flow — until federal regulators and prosecutors stepped in and all bets were off.
Anteing up » Before winding its way through Utah, the tale of online poker and the processing of player payments — told in hundreds of pages of legal documents, emails and interviews — had many starts and stops.
Running a poker business is unlawful under the Illegal Gambling Business Act of 1970 if the state where it is being played prohibits it. To enforce that law in the Internet age, Congress in 2006 passed the Unlawful Internet Gambling Enforcement Act, which bars acceptance of certain types of payments in connection with any illegal wagering.
Still, offshore online companies PokerStars, Full Tilt Poker and Absolute Poker continued to process payments in the U.S. through an Australian outfit that turned for help to Floridian Curtis Pope and his partner, Logan businessman John Scott Clark, who owned a payday-loan business.
In early 2008, Chad Elie, then a Florida resident, entered the picture. Elie had worked with Pope in online marketing and, together with Clark, the trio set up poker-processing accounts at banks.
In August of that year, Elie, Clark and a man named Jeff Nelson opened an account at the National Bank of California. Jeremy Johnson later was substituted on the account for Clark and Nelson as guarantor.
Elie’s Viable Processing Solutions began passing payments for online poker companies through the bank, claiming the transactions were for payday loans. (Johnson has said he also was told those were payday-loan transactions.)
In about four weeks, National Bank of California processed about $16 million in online-poker payments until the bank discovered the true origin of the monies, halted the practice and informed the FBI.
Federal agents had been investigating online gambling since at least 2006 and had racked up a string of arrests and seizures, including monies from accounts belonging to Clark and Elie.
Dealing them in » Johnson and Elie apparently met in early 2009 to discuss a new strategy, one that would involve "transparent processing" of poker payments at a struggling bank in Johnson’s hometown of St. George.
SunFirst had bet heavily on home loans in booming southwestern Utah. When that bubble burst, officers scrambled to raise additional capital to keep the bank afloat.Next Page >
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