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Posts Tagged ‘Civil forfeiture’

Congratulations! Your Lottery Winnings Don’t Exist

August 3rd, 2011 No comments

Imagine a new e-mail landing in your inbox. The sender is someone who works for the “Tourism Malaysia Lottery Program,” and claims that you, the e-mail recipient, have just won a $1 million prize from the program. In order to redeem this prize, you are first required to deposit $500 to open a bank account in Malaysia in order to facilitate the transfer of funds.

I’m fairly certain that both you and I would immediately proceed to click the “Delete” button, well-knowing that we would never see a dime. In a complaint recently filed by the U.S. Department of Justice, we learn the story of two individuals who deposited not only the initial required amount but also several hundred thousand dollars in order to redeem their alleged prize. Unfortunately, our instincts were accurate.

To perpetrate the scams, the culprits had each of their victims comply with several requests made beginning in late 2007 through early 2010. The e-mails claimed that in order to retrieve their prizes, certain fees and taxes must first be paid by wire transfer to overseas banks. One victim was under the belief that his money was being used to pay the IRS.

Please take note: I cannot immediately conjure up any circumstances by which a taxpayer situated in the U.S. would satisfy any U.S. income tax obligation by wire transfer to an overseas account. Further, as far as I know, one does not satisfy an income tax liability on lottery winnings by paying the liability out-of-pocket before receiving the winnings. If anything, the lottery payer may be required to withhold a portion of the winnings for remittance to the IRS; alternatively, there may be no withholding and the taxpayer is solely responsible for paying the tax liability directly to the IRS.

As a result of these scams, one victim is now out-of-pocket $428,758, and another $868,438. You’d think that someone who makes a transfer or two of a few thousand dollars would realize something is amiss after not receiving anything. These two victims, however, kept sending more. Approximately 111 wires were sent to 56 accounts among three countries.

The complaint asks for a forfeiture of more than $1.2 million held in various accounts. Similar to poker players with frozen funds on online gambling sites, an individual can file a legal claim for an interest in the funds. Apparently, no such claims have been filed.

(Hat tip: The Blog of LegalTimes)

Filing A Claim For Frozen Online Poker Funds

July 13th, 2011 1 comment

The Poker Player’s Alliance (PPA) is an American nonprofit organization “to speak with one voice to promote the game and and protect the right to play poker in all its forms.” Among recent PPA efforts includes coverage of the Department of Justice’s seizure of three offshore online casinos back in April and the freezing of funds held in player’s accounts on the sites.

The PPA has a legal team, and recently posted a legal guide regarding players’ funds entitled “Legal Rights of Players with Unpaid Account Balances: A PPA Information Guide.” On page 5, the PPA states:

Third-party claims filed in civil forfeiture proceedings must be filed within 60 days of the Government’s first publication of notice of intent to seek forfeiture. With respect to the April 15th cases, the government’s notice was first published on May 16, 2011, and so the deadline to file claims is July 15, 2011.

I am not an expert of civil forfeiture proceedings. I cannot comment on likelihood of success, and am not recommending whether or not a poker player with frozen funds should or should not file a claim. It is clear that what’s best for one player may very well be different for another. As stated several times in the PPA guide, one should consult an attorney to consider particular facts and circumstances. I. Nelson Rose, professor of gaming law, also recommends such.

Both the PPA guide and Mr. Rose mention possible tax-related issues that may arise from filing a claim. I’ll note that the Department of Justice very likely already has access to names of poker players who frequented the seized sites. Furthermore, the IRS is already involved to some extent with the DOJ’s crackdown on offshore online gambling.

That said, a poker player who files a legal claim for seized funds may stick out to authorities. Social security numbers, home addresses, etc., would suddenly become far more easily accessible to the DOJ, IRS, and state tax agencies. In addition, according to the PPA legal guide, an individual who files such claim is subject to questioning under oath “very shortly” after the claim is filed. Answers to these questions could be held against the individual in future proceedings.

The bottom line here: Tread carefully.

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