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Another Guilty Plea in Maryland-Based Money-Laundering Probe

Martin Loftus, a 49-year-old California man, pleaded guilty in U.S. District Court in Maryland on Jan. 19 to one count of laundering money on behalf of internet gambling. Loftus’ associate, James Davitt, pleaded guilty earlier this month in Maryland to one count of conducting a gambling business, and has agreed to cooperate with federal authorities in Maryland and New York.

The two men and a third—Daward Lee Falls, who appears not to have been charged—made “arrangements with representatives of Full Tilt Poker to make payments by checks to gamblers in Maryland and elsewhere,” according to their guilty pleas. Loftus has admitted to laundering from Switzerland nearly $1.5 million, which was transmitted on Aug. 17, 2009, to an account in the name of HMD Inc., the company the three men used to disburse winnings to U.S. gamblers from Full Tilt, which is based in Ireland and is considered one of the world’s foremost online gambling companies.

Another man, Michael Garone of Georgia, was sentenced in Maryland in December to a year’s probation in connection with the ongoing probe, which seeks to disrupt the international flow of internet gambling money—and to seize and forfeit to the U.S. government millions (if not billions, given the size of the $4-billion-a-year industry) in online gambling revenues. Garone’s lenient sentence rewarded his wide-ranging cooperation with law enforcers in Maryland and New York, according to a transcript of his sentencing hearing, which was made available this week at the public computer terminals of the U.S. District Courthouse in Baltimore.

The transcript of Garone’s sentencing hearing features Maryland Assistant U.S. Attorney Richard Kay praising Garone’s “substantial assistance” to the government. Kay explains that, when Garone learned that his business offices had been searched by case agents in 2008, “he came forward quickly and indicated his willingness to cooperate.” He even “let us know that there was an additional account that we had missed,” Kay continued, and “those funds were forfeited” as well.

Thereafter, Garone “participated in a number of lengthy debriefings,” Kay said, including by federal “agents from the IRS, the FBI, and also ICE” (Immigration and Customs Enforcement). In addition, Kay said Garone was interviewed by a federal prosecutor from New York “who is investigating a related case up there,” as well as a “trial attorney from the Department of Justice RICO section,” which prosecutes racketeering crimes.

“So, there was quite a bit of interest in the information that he had to provide to the government,” Kay said, adding that it lent insights into “how the internet gambling world is set up, how it is financed, and how the complex financial transactions move in and out of the country.”

Thanks to Garone’s information, Kay estimated, “It is fair to say that we have seized . . . more than $60 million over the past three years. So, it has been very productive. Plus, there have been a number of prosecutions that have flowed from that, as well. We do not believe that Mr. Garone has been in any physical danger . . . but his cooperation has, at all times, been candid, cordial, and complete.”

Garone’s attorney, Eric Breslin, addressed the point of the potential for danger faced by his client as a result of his cooperation. “While certainly I am not prepared to say that he has been in danger here at any time,” Breslin said, “any time you are a cooperator . . . and any time you are dealing with people that are outside the United States, whose nature and identity are probably not even to this day fully known, that possibility exists.”

Martin Loftus Guilty Plea

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