On Wednesday, PokerNews published the first installment of a four-part interviewwith convicted online poker payment processor Chad Elie (pictured). He was one of the 11 people named in the Black Friday indictments and eventually pleaded guilty to conspiring to commit bank fraud and operating an illegal gambling business. He recently completed a five-month prison term.
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At the start of the interview, PokerNews’ Matthew Parvis asked Elie to explain a little bit about how payment processing works and how he got involved in the business. Elie tried to keep it simple, saying that processors, regardless of industry, are essentially a layer of protection for the banks, regulated by the bank with whom they work.
He had been working in online marketing for a company called Selling Source, a payday loan firm. He found that banking relationships were hard to hold onto because payday loan customers were typically people who had no credit, bad credit, or very little to no money.
In additional, processors like to keep money, “steal money,” from the banks. He found out several processors took his company’s money and it was very hard to get any of it back, even through litigation.
Elie eventually decided that it would be a better idea to get into processing, not because he wanted to steal money from banks, but because he wanted to provide a reliable, trustworthy service for banks.
It was this switch in focus, he said, that allowed him to cross paths with the infamous Daniel Tzvetkoff (pictured) and Tzvetkoff’s company, Intabill. Intabill was working with Selling Source processing payments for poker companies while Elie was in Selling Source selling to consumers. “He needed banks to process his transactions and I had great relationships with banks because I was honest and forthright with them on our returns that we were experiencing through Selling Source.”
When Parvis asked Elie if the payment processing industry is shady, he pulled no punches, saying, “Absolutely, yeah. I mean, just the processing… You look at business models and a lot of these processors and a large part of their profits is to keep the companies’ funds. They’ll process for six to eight weeks and then they’ll keep your funds, thinking that you don’t have enough money to litigate and go after them for the funds that they’re holding. So, it is an incredibly dirty industry.”
Eventually, Elie said he moved away from Intabill because he didn’t like how the company operated. He said Intabill basically opened lots of bank accounts and held money, but was still at risk of having funds taken by banks. Elie wanted to buy a bank so that he could make sure everyone was on board with the program and that money could be turned around in 24 to 48 hours.
Although Tzvetkoff was involved with online poker, Elie did not get directly involved until Andrew Thornhill, Accounts Manager at Intabill, told him that PokerStars and Full Tilt Poker were in need of payment processing because Tzvetkoff had stolen “ungodly” amounts of money from them. At that point, which Elie estimated was around 2008, introductions were made.
And then there was the “$4 Million Incident.”
Elie’s company, Viable Marketing, was processing Selling Source transactions through Intabill, with the money going through the National Bank of California. The funds in the account were to process payday loans, but apparently Intabill had been putting poker money in there.
Elie was in Florida, having not dealt much with Intabill in a few months, when he got a call from the bank that there was another “Chad” on the other line impersonating him and trying to make transactions on an account with Elie’s name on it. He flew out to California and found out there was about $5 million in the account. Elie took $4 million that was owed to Viable Marketing out of the account, leaving $1.1 million behind.
Once Intabill found out about this, the company sued him. Intabill said it wasn’t Viable’s money. Elie didn’t even really know whose money it was, only that his name was on the account. Then, Isai Scheinberg, Founder of PokerStars, allegedly stepped in and sued Elie, taking the place of Intabill’s suit. Elie and his company fought back and were, according to him, winning, when he decided to talk to Scheinberg to settle things amicably. The two got past the issue and developed a friendly relationship.
Elie’s relationship with Tzvetkoff had already been going downhill before the lawsuit, as Elie moved back to Florida and stopped trying to find Tzvetkoff’s banks for processing relationships. “It was just a very weird time in my life and ended up being a horrible time in the poker industry that the big theft of funds happened.” The strife in the relationship came to a head with the “$4 Million Incident.”
The first part of the interview concluded with Elie lamenting the fact that Tzvetkoff stayed out of significant legal trouble by being the U.S. Government’s star witness against Elie and the others who were indicted. He said his legal team had hundreds of questions they were going to ask Tsvetkoff on the stand that would have shown he was a liar and that would have severely damaged the Government’s case.
It never got to that point, though, and Elie pleaded guilty. Elie said that Tzvetkoff, in the meantime, is continuing to process payments under aliases, although he is not sure if any of the processing is for online poker sites.