Fraudulent Funds case

[zippitybop]

What is the name of your state (only U.S. law)? New York

I'm currently in a dispute with a large online poker site. They are claiming that someone with whom I traded funds with on another site for funds on their site obtained their funds fraudulently, and therefor I was now liable to them for the amount of the transaction. I don't believe this is true, and I have broken the case down like this:

We have 4 parties to this. The scammer (Party A), the credit card company (Party B), the site (Party C), and myself (Party D). A actually stole B's funds, and then used them to deposit on C's site, and C credited legitimate funds to A's account, believing it was receiving legitimate funds from B in return. A and D then trade legitimate funds. B then retrieves it's stolen funds from C. The point at which A and D traded legitimate funds, D is no longer involved in the situation. After the completion of a legitimate trade, D has exited the situation, and therefore, anything that happens after D's involvement (such as B's denying payment and retrieving funds from C), is no longer D's concern or liability.

 

[racer72]

There were never any legitimate funds. What the scammer did is a form of money laundering. Technically you are a victim of the scammer but the money you received was never the scammer's to give away. You can be held liable for the funds, you need to go after the scammer for your losses.

 

[zippitybop]

I'm not entirely sure that's accurate. Lets say the same transaction occurs at a casino. A person buys casino chips with a stolen credit card. The casino issues the chips to that person. In this casino, it also happens to be common practice accepted by the casino for patrons to trade chips for cash with each other (don't ask me why), so I agree to trade the casino chips he received from the casino with his stolen card for cash. Since there are cameras all over the Casino, they witness me doing this. 4 hours later the Casino gets a message back from the credit card company that the card was stolen. Am I then liable to give the casino back the chips? Even though they cleared the transaction as legitimate and chose to issue chips?

 

[tranquility]

Some problems. First, there is not a legitimate casino with tokens they promise to cash in. Second the tokens in this electronic transaction is traceable, unlike fungible tokens.

The situations are not the same.

I believe the OP owes the money and should pay it back. I'm unsure how the casino can enforce this as they should not be doing business in the U.S.. However if they can enforce this in some way, they have every right to and the OP can do nothing.

I agree with racer72, the OP may be wary of committing a crime of money laundering in some way. Guilty of the crime, unlike a charge of fraud which would be false.

 

[zippitybop]

So one more analogy since I love them so much. I'm actually a little surprised since the last two responses I got elsewhere were the exact opposite that you two gave.

A uses jewelry stolen from B to attain cash from C. I run a currency conversion company. A comes into my company, tells me he's going to Mexico and wants pesos. I accept his cash and give him Pesos. B then recovers the jewelry from C. I'm a good business owner and keep records of my transaction with A. C then comes after me for the cash he gave A.

Side note: the site already has the funds from me, since believing there was nothing wrong with that happened I left the funds on my site. I would actually be taking them to court to get my funds back. Assuming that I'm wrong and need to pursue this guy myself, can I somehow compel them to share their information on this.

 

[Zigner]

I would actually be taking them to court to get my funds back.

You would go to court for this? And admit to your crime?

 

[zippitybop]

Last I checked, fraud and money laundering require intent or reason to believe the funds were fraudulently obtained.

 

[swrdmbo]

Why wouldn't the casino think you are involved in the scam? Can you prove that you were not?

 

[zippitybop]

Yes, I have proof of my intent, and I have never been accused by the site either.

 

[tranquility]

You are incorrect as to money laundering, but I believe you are essentially correct as to fraud.

The bottom line is that I don't think the "casino" can sue you in court for the money. They are not allowed to legally operate in the states, so the legal system is unavailable to them, unless they can make it a simple credit card issue. But, if they lock up your funds, you will not be able to do anything back at them. So, if the money is electronically available to seize, they'll do it and there is nothing you will be able to do.

The reality is going to differ from the legal theory in this case because of the illegal nature of the poker sites in the U.S.. Anything will be very fact sensitive and could require substantial and subtle legal arguments to get anything done. Legally, we'd have to know the circuit, the facts and the arguments to even hazard a guess.

Let's look at this from a different perspective. What are they going to do to you? They claim you owe them money, you say, "no". What is the next step? What is your fear? What are you trying to stop?

(As to others having a different conclusion, I am amused. What is their theory as to why you would be able to, arguendo, keep the money gained through fraud?)

 

[zippitybop]

I am not trying to stop anything. I am trying to retrieve funds which I believe were taken from me improperly. I have looking into the company's legal proceedings, and it seems that they have been sued in a Nevada courtroom in the past, so there is some precedent to say it's possible that I can pursue this in an American court, and not in the country the site operates.

The argument is pretty simple. The scammer by some means, I do not know whether he used a fake or stolen card, or if that even matters, charged a deposit on to this site. The site approved this transaction, and added an amount of money to his account. The scammer and myself then have a transaction where I accept funds on site x for funds on site y. This is a common occurrence in the online poker community and not prohibited by either site. The reason I am not liable is that I didn't accept the stolen goods, the site did. The site accepted a fraudulent charge and cleared it for use. So therefor, the money was laundered (if you want to call it that) by the action of site accepting it and clearing it for use. For all intents and purposes, I dealt with clean money in that transaction. If I use the site x's logic, I can turn around and sue site y, which doesn't make much sense.

 

[tranquility]

I am not trying to stop anything. I am trying to retrieve funds which I believe were taken from me improperly.

Ahh...then you are SOL my friend. You have no where to go to find a remedy. Any theory you have, even if it were correct, is worthless as no one can enforce it.

I have looking into the company's legal proceedings, and it seems that they have been sued in a Nevada courtroom in the past, so there is some precedent to say it's possible that I can pursue this in an American court, and not in the country the site operates.

Even if you won a judgment, you could not collect. They have no assets in the U.S.--because they can't by law. Also, I believe you would be admitting to a crime. I'm not sure of that, but I think there is a specific federal statute.

Argue all you want, but the money is gone. Bet me?

 

[zippitybop]

Argue all you want, but the money is gone. Bet me?

Play poker much?

It's not illegal to play internet poker in the states. Running the sites though is a different story.

It's all a little more muddled than I can really explain, I'm probably going to end up speaking with someone from the Poker Player's Alliance about speaking to a lawyer with specific knowledge on how to deal with online poker sites in legal proceedings. Just seeking as many opinions as possible. The big sites do have some level of operations in the states, sponsor events, have a presence at major tournaments, probably employ people, etc.

As a side note, the UIGEA a shining beacon that congress fails all of us. It was passed without a vote (as a rider on a port security bill), creates an accounting nightmare for banks, violates the WTO, forces players into "questionable" dealings to maintain their poker finances, and benefits no one, except scammers, thieves, and maybe Paypal, one of the bills biggest backers.

Thanks for the advice though.