As promised in their docket filings 2 weeks ago, S.D.N.Y. has filed an second amended civil complaint in the Black Friday case.
While no new defendants are named, this time there are two specific changes to note.
The US Attorney’s Office has added the Travel Act as one of the statutes to be included in support of the forfeiture requests. The Travel Act, penned in 1961, like the Wire Act, was originally meant to make illegal interstate travel or use of an interstate facility in aid of a racketeering or an unlawful business enterprise.
It’s the “unlawful business enterprise” that could potentially serve as the vehicle for the Travel Act charges to apply here. The Travel Act prohibits distribution of the proceeds of unlawful activity, as well as any act to “promote, manage, establish, carry on or facilitate” any aspect of the unlawful activity.
The Travel Act does not define the term “business enterprise involving gambling.” Although the term is similar to that used in the Wire Act (“engaged in the business of betting or wagering”), courts have applied the term somewhat differently, looking to determine whether there is a “continuous course of unlawful conduct” by the defendant. One court, in affirming the conviction of several gamblers for violating the act, relied simply on “the professional nature with which [the defendants] approached” the gambling activity as a basis for finding that the defendants satisfied the “business enterprise” requirement. 1
From the complaint:
Pursuant to this civil money laundering and in rem forfeiture Complaint, the United States of America also seeks the forfeiture of all right, title and interest in the contents of the accounts set forth in Schedule C to this Complaint and all property traceable thereto, consisting of payments received by the FTP Insider Defendants (collectively, the “FTP Insider Accounts”). The United States of America also seeks the forfeiture of all right, title and interest in the contents of accounts and the properties set forth in Schedule D to this Complaint, consisting of accounts and properties purchased with funds traceable to the dividend payments received by the FTP Insider Defendants (the “FTP Insider Properties”).1 The contents of the FTP Insider Accounts and the FTP Insider Properties are subject to forfeiture (1) pursuant to Title 18, United States Code, Section 1955(d), as properties used in violation of the provisions of Section 1955, or properties traceable thereto; (2) pursuant to Title 18, United States Code, Section 981(a)(1)(C), as properties constituting or derived from proceeds traceable to violations of Section 1955; (3) pursuant to Title 18, United States Code, Section 981(a)(1)(C), as properties constituting or derived from proceeds traceable to violations of Title 18, United States Code, Section 1952; (4) pursuant to Title 18, United States Code, Section 981(a)(1)(C), as properties constituting or derived from proceeds traceable to a conspiracy to commit wire fraud and bank fraud; (5) pursuant to Title 18, United States Code, Section 981(a)(1)(C), as properties constituting or derived from proceeds traceable to the wire fraud scheme relating to player funds; and (6) pursuant to Title 18, United States Code, Section 981(a)(1)(A), as properties involved in violations of Title 18, United States Code, Section 1957 and Sections 1956(a)(1) and (a)(2), or property traceable to such property.
The Travel Act allows the USAO to no longer rely on the Wire Act or on IGBA, and may perhaps support the contention that the distribution of the proceeds to purchase homes, cars, retirement accounts, etc conceal the nature of the illegal distributions and gambling proceeds.
The amended complaint specifically targets assets, allegedly purchased with these “illegal proceeds” of Howard Lederer and Ray Bitar, as two of the four previously named “FTP Insiders”. (Chris Ferguson’s and Rafe Furst’s assets are not specifically called out in the complaint at this time, although they are also reiterated as members of the “FTP Insiders).
As to Lederer, the complaint now shows the tracing of Lederer’s money from FTP, from approximately December 2006 through September 2011, where at least $44,314,997.31 in United States currency that was directly tied to the criminal conduct described, was deposited into his bank accounts. The complaint alleges that no other moneys from other sources were deposited into his cited accounts.
According to the complaint, between approximately December 26, 2006, through approximately August 2, 2011, at least approximately $42,470,660 of the above-identified illicit funds that had been deposited into the Lederer Consulting Account were transferred into a personal bank account owned by Howard and Susan Lederer.
After that time, the complaint breaks down each check or wire transfer that left the personal account. The funds were used to purchase/pay for real estate, renovations, new home construction costs, furniture, mortgage payments, property taxes, personal pension plans and 401K’s, and various personal vehicles including a Maserati and a vintage 1965 Shelby, as well as numerous Audi family cars.
As to Bitar, two of the homes in his name in Glendora California, previously mentioned in prior complaints, were shown to have been purchased with monies fitting the same category of “illegal” proceeds. In addition, a property in Fontana, California was purchased by a California LLC, where a Bitar family member was the owner of the LLC. Eventually Ray Bitar was added to the ownership, and category monies were transferred from Bitar to the LLC. He also loaned money to the LLC to aid in construction of a gas station on the property. Bitar allegedy collected interest on this loan as well.
By calling these expenditures traceable to “illegal proceeds” from the “illegal enterprise”, SDNY classes each of the aforementioned properties as forfeitable. The USAO now also asks for a judgement to be entered against each of the “FTP Insiders” as follows:
Ray Bitar: an amount not less than $40.8 million;
Howard Lederer: an amount not less than $42.5 million;
Chris Ferguson: an amount not less than $42 million;
Rafe Furst: an amount not less than $11.7 million;
The complaint additionally asks for court costs.
None of the defendants could be reached for comment prior to publishing this article. As always, as additional information becomes available, the articles here will be updated.
- Internet Gambling Under Siege, Behnam Dayanim, Gaming Law Review. October 2007, Vol. 11, No. 5: 536-550. ↩