State Attorney General Eliot Spitzer has won a precedent-setting case involving an Internet gambling casino located in Antigua.
The operators of the site, Suffolk County-based World Interactive Gaming Corporation (WIGC), had claimed that because their computer servers were located and licensed in Antigua, they were not subject to New York gambling laws.
But in a 20 page decision, State Supreme Court Justice Charles Edward Ramos ruled that "It is irrelevant that Internet gambling is legal in Antigua. The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York State."
"This is an important decision for law enforcement throughout New York and perhaps throughout the nation," said Spitzer. "The judge has clearly stated that it doesnít matter whether someone promoting gambling to State residents is based in Albany, Albuquerque or Antigua, New York State laws still apply."
The judge ruled that WIGC had broken both state and federal gambling laws, including the Federal Interstate Wire Act, saying that "The Internet site creates a virtual casino within the userís computer terminal."
"It is critical that law enforcement offices are constantly working to ensure that we keep up with rapidly-changing technology and those who would use it to try to break the law," said Spitzer. "More and more today, weíre seeing the bad guys move scams and illegal activity to the Internet as a way of trying to evade the law and victimize consumers.
"This decision establishes the critical principle that those who commit illegal acts cannot use the technology of E-commerce as a shield from law enforcement."
This year, Spitzer created an Internet Bureau in his office to handle such cases. New York is the second state in the nation to have a unit dedicated solely to Internet issues.
The case grew out of an investigation of WIGC and its officers by Spitzerís Internet and Investor Protection Bureaus. The company was selling shares in the casino gaming business for $10,000 each. Itís estimated that the defendants raised $1.8 million from 114 investors, including ten from New York.
Judge Ramos also found WIGC liable for violating state securities laws for failing to register with the Attorney General before selling securities and failing to disclose that 46% of investorsí funds would be used to pay salaries, commissions, and consulting fees to the corporationís principals.
A hearing in front of the judge will be held to determine restitution to investors, penalties and costs. A preliminary conference is set for September 9.
The case is being handled by Assistant Attorneys General Joel Michael Schwarz of the Internet Bureau and Jean Marie Cho of the Investor Protection and Securities Bureau.
Additional Information:People v. World Interactive Gaming Corp.(PDF version)