Sunday, September 19, 2010

Feds: Bank to forfeit funds tied to Web scheme

Scottsdale-based Goldwater Bank has agreed to forfeit nearly $734,000 in revenue tied to money-laundering and illegal online-gambling operations, federal officials say.

The one-branch bank agreed to relinquish the funds to resolve claims the money was traceable to assets involved in money laundering and proceeds of an illegal online-gambling business, according to an announcement by the FBI, the U.S. attorney's office for the Southern District of New York and inspectors for the Troubled Asset Relief Program.

Goldwater was among a small number of Arizona-based banks that received TARP funding.

Like many banks in the state, Goldwater has been hurt by Arizona's soft economy and real-estate downturn.

It reported a loss of $803,000 for the second quarter and has been unprofitable for most of the time since its founding in early 2007. At midyear, the bank listed nearly $174 million in deposits, giving it a statewide market share of around 0.2 percent.

The settlement requires Goldwater to implement better money-laundering and audit controls and an internal training program.

"Although Goldwater Bank denies guilty knowledge of its role in facilitating an illegal online-gambling business, it was paid to execute transactions that were essential to the operation of this criminal enterprise," said Janice Fedarcyk, the FBI's assistant director in charge, in a statement.

"The forfeiture settlement means the bank won't profit by providing this service."

According to the complaint, Goldwater in early 2009 received more than $13.3 million in deposits from accountholder Allied Wallet Inc. The funds were largely traceable to Poker, an online-gambling operation based in the Isle of Man.

Federal officials say the funds came from individuals and entities engaged in illegal gambling and were used to promote the business, with an effort by the parties to conceal the origin of the funds.

During that time, Allied Wallet paid Goldwater to process automated clearinghouse transactions, including payments to and from Americans using and other gambling websites.

Last month, Allied Wallet Inc. owner Ahmad Khawaja and another company owned by him agreed to forfeit the $13.3 million.

Goldwater executives didn't immediately respond to a request for comment on the agreement.

According to the complaint, Goldwater officials denied knowledge that the transactions were made to promote an illegal online gambling business.

"Today's forfeiture underscores that banks, particularly TARP recipients like Goldwater Bank, should not profit from the fruits of criminal conduct," Manhattan U.S. Attorney Preet Bharara said in a statement.

by Russ Wiles The Arizona Republic Sept. 17, 2010 02:33 PM

Feds: Bank to forfeit funds tied to Web scheme

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