The Sunday Times January 21, 2007
US gaming probe rocks top banks
Jenny Davey
THE US Department of Justice has ordered the world’s biggest investment banks, accountants and law firms to hand over all e-mails, telephone records and papers connected with internet gaming firms as part of an investigation into illegal online gambling in America.
HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank are known to be among the banks that have been issued with subpoenas — official requests for information — as part of a worldwide hunt to build a case against those who benefited from illegal online gambling.
Britain has been the fundraising centre for many internet gambling companies, with a number of international operators listing their shares in London.
Fortunes were made by the founders of internet gaming stocks, including Party Gaming, 888.com and Betonsports.com, and advisers pocketed huge fees.
The Department of Justice first issued subpoenas in October, only days after George Bush sounded the death knell for America’s $6 billion (£3.2 billion) internet gambling industry by signing legislation banning all related transactions. But until now the investigation has been kept secret.
According to City sources, the subpoenas have continued to arrive over the past few weeks.
It is thought that some investors in online gambling companies, including Party Gaming and 888.com, have also been hit with requests for information.
One source said: “To say the situation is sensitive is the understatement of the decade. The problem is, even if you know you have done nothing wrong, you have no powers of resistance.”
He added: “You can quickly go from being a bystander to a target, so even if you are bomb- proof, you have to assume you are subject to hostility.”
The source went on: “The Department of Justice has taken a shotgun, not a rifle approach in relation to lots of gaming companies and has just asked everyone to hand over all the information they have.”
The request could force banks and other advisers or former advisers to the gambling companies to hand over hundreds of thousands of e-mails and files to American investigators.
Another City source familiar with the circumstances said: “There is no doubt at all that this situation is escalating. This has definitely got legs.”
Another source described it as one of the biggest “fishing expeditions” ever undertaken by the Department of Justice.
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