Black Friday Prosecutor Preet Bharara Is Fired by U.S. Attorney General Jeff Sessions
Preet Bharara, the U.S. Attorney at the center of the Black Friday poker scandal, was fired by the Trump Administration on Friday. U.S. Attorney General Jeff Sessions called for all forty-six of Obama Era U.S. attorneys to hand in their resignations on Friday, then told them they were being dismissed. It was a clean sweep of the nation’s top prosecutors.
From August 2009 until March 2017, Preet Bharara was the U.S. Attorney for the South District of New York. That made the 48-year old Indian-born attorney the most prominent prosecutor in the Department of Justice. During the transition period of US administrations, Mr. Bharara visited Trump Tower and told reporters that he had been told he would keep his job.
During his time as a US Attorney, Preet Bharara prosecuted over 100 Wall Street financiers. He also prosecuted prominent Democrat and Republican leaders in New York State in the past year, establishing himself as a non-partisan figure who pursued corrupt figures of all political stripes.
Preet Bharara and the Black Friday Poker Scandal
Poker players know Preet Bharara as the man who indicted 13 poker executives on April 15, 2011 — an act which came to be known as “Black Friday“. Those executives were associated with leading poker websites in the United States gaming industry: PokerStars, FullTilt Poker, and Absolute Poker. Bharara seized the domains for each of the companies and froze player funds.
The indictments led to several ancillary scandals, including the lack of segregation of player funds from operating funds at Absolute Poker and FullTilt Poker. Prominent poker players like Howard Lederer and Chris “Jesus” Ferguson, who led FTP in the years after its founding. PokerStars took control of FullTilt Poker, while Absolute Poker never repaid its poker players their account funds.
The Black Friday scandal eventually led the owners of PokerStars to sell the company to Amaya Gaming’s David Baazov for $4.9 billion. The events leading up to the indictments — PokerStars operations in the United States from 2006 to 2011 — continue to plague the company as California, Pennsylvania, and Michigan consider online gambling legislation with “bad actor” clauses meant to bar the world’s top poker site from obtaining a license, ostensibly because of its illegal gambling activities before April 15, 2011.
JP-Morgan Chase Cyber-Attack
Preet Bharara also investigated the largest cyber-attack in American history: the hacking of JPMorgan-Chase & Co and 10 other prominent American financial institutions (E-Trade, Scottrade). The crime was the largest cyber-attack in American financial history, as 76 million private bank accounts and 7 million business accounts were hacked.
When the JPMorgan-Chase hack first happened, U.S. financial and law enforcement authorities believed the cyber-attack to be a state-sponsored operation conducted by the Russian Federation. At the time of the JPMorgan cyber-attack (July-August 2014), it was several months after the Russian invasion and annexation of the Crimea. The United States led the western nations in imposing tough sanctions against Vladmir Putin’s country, so the FBI and SEC believed the Russians had retaliated against America’s largest bank.
Closed the Affactive Media and Revenue Jet Affiliate Networks
Instead, the cyber-attack turned out to be launched by 2 Israelis and 2 American with ties to the online gambling community. Gerry Shalon and Ziv Orenstein were the Israeli hackers who organized the JPMorgan-Chase cyber-attack. Shalon and Orenstein also were the owners of Affactive Group and Revenue Jet Group, which owned 13 online gambling websites known for their underhanded bonus offers, terms and conditions, and withdrawal practices. CasinoMeister once named Gerry Shalon’s gaming operators to be “Worst Casino Group of the Year” four out of five years in a row.
Preet Bharara led the investigation which led to the indictment, arrest, and extradition of Shalon and Orenstein, who were arrested by Israeli police in July 2015. Emails released at Bharara’s press conference announcing charges showed that Gerry Shalon assuring on of his American accomplices they were free from prosecution, because Israel would never allow their extradition to the United States. The men launched their cyber-attack using the Heartbleed virus from Moscow, perhaps hoping to mask their identities further.
“A Brave New World of Hacking for Profit”
Because of the scope of the attack and Russia’s possible involvement, Preet Bharara worked with the FBI and Interpol to help find those responsible. At his press conference announcing the arrests, Preet Bharara called it a “a Brave New World of hacking for profit.” He described a criminal network involving 7 different companies, 75 shell corporations, 30 false passports, and 200 other forged identification documents. In one email, Gerry Shalon claimed he made $75 million a month in illegal online gambling revenues, though that was not enough. The cyber-attack was meant to help the men make billions of dollars in a quick investment scheme.
In the end, Gerry Shalon and accomplices had no political motives, but wanted to conduct a classic “pump and dump” scheme. They would get the information for millions of potential investors in penny stocks, use the good name of JPMorgan Chase to pump up their value, and then dump the stocks (they had bought earlier) on the market. Preet Bharara described the scheme as the largest in American financial history, saying the hackers “Allegedly stole personal information from over 100 million Americans, including 83 million customers from one bank alone, the single largest theft of customer data from a U.S. financial institution ever.”
Preet Bharara Famous Prosecutions
Besides his prosecutions of online gambling operators, Preet Bharara investigated a number of prominent financial fraud cases: the Madoff Ponzi Schem, the Bank of America scandal involving Fannie Mae and Freddie Mac, the Toyota $1.2 billion “unintented acceleration” case, and the Jewish Holocaust survivor fund fraud case.
Bharara investigated New York State Assbembly Speaker Sheldson Silver (D) for corruption in 2015, and eventually received a convicted which sent Silver to prison. In 2013, he brought cases against Democratic New York State Senator Malcolm A. Smith, Republican New York City Councilman Dan Halloran, and several GOP party officials, alleging that Smith paid bribes to secure a spot on the Republican ballot for the 2013 New York City mayoral election.
