Whistleblower: Banks May Be Laundering Poker Money

A banker who stood up against an online gambling operation was the star of an anti-money-laundering conference in Las Vegas on Monday.

Compliance officer Cathy Scharf told an auditorium full of aghast colleagues about her experiences at a Utah bank that illegally processed at least $200 million for the offshore gambling sites PokerStars and Full Tilt Poker.

She said her bosses told her the bank would fail without the illegal income and brought in criminal lawyers to threaten her with arrest if she told on them.

Scharf ultimately worked with U.S. banking regulators to take down SunFirst Bank. She said other banks may also be caught up in similar offshore gambling operations. After all, banks need deposits.

Her colleagues at the Association of Certified Anti-Money Laundering Specialists conference congratulated her on her bravery. Their chief concern, however, seemed to be how well federal authorities protected her.

"That to me is the ultimate intimidation factor. A set of lawyers come in and say you can't cooperate," said Dennis Lormel, CEO of the Virginia-based financial investigations company DML Associates.

Scharf likes to say that she was in the wrong place at the right time. She took the job at SunFirst, in the depths of the recession, moving to St. George, Utah, from Las Vegas. She found out during her first week that her new employers were dealing primarily in illegal business.

"They just told me," Scharf said. "And also, I could see from the stacks of slips going in and out."

Whenever a gambler transferred funds to one of the offshore card sites, the money went through the small Utah bank. The bank was making $400,000 a month in transaction fees, Scharf said, violating a 2006 law that makes it a federal crime to knowingly accept payment for illegal Internet gambling.

With the support of colleagues, she hired a lawyer, started...

Comments are closed.