As if things weren't exciting enough for these Wall Street banks, Bank of America, JPMorgan Chase, Wells Fargo and Citigroup just learned that their major online poker site clients were charged with running a giant Ponzi scheme. The Big 4 were among the banks unwittingly holding deposits of owners of internet gambling companies accused of fraud, according to a U.S. Justice Department filing released Tuesday.

[C-I Note: We uncertain as to whether the named banks might face liability for having violated anti-money laundering rules - particularly since the Ponzi scheme allegedly took place following enactment of the UIEGA - as you'll read below.  As we dig, you can stay tuned.]

Department of Justice Accusations. The owners of Full Tilt Poker, Poker Stars, Absolute Poker, Ultimate Bet, 22 other companies, and several individuals - including Christopher "Jesus" Ferguson of defrauding online poker players and scheming to trick banks into processing illegal transactions. Unlawful Internet Gambling Enforcement Act. Many Internet gaming companies were rebuffed by banks even before the passage of the Unlawful Internet Gambling Enforcement Act (UIEGA) in 2006.  The Justice Department complaint alleges that those named in the complaint "[tricked] United States banks and financial institutions into processing gambling transactions on the Poker Companies' behalf." After passage of the UIEGA - and subsequent rules introduced by Visa and MasterCard that required identifying transaction codes for internet gambling - the poker companies tried to "circumvent" the rules altering the codes and creating "the false appearance that the transactions were completely unrelated to internet gambling." Allegations in DOJ's Complaint. Among the myriad allegations in the Justice Department's complaint was that "from approximately April 2007 until April 2011, Full Tilt Poker, and its Board of Directors," which included Christopher Ferguson, "all owners of Full Tilt Poker, distributed approximately $443,860,529.89 to themselves." According to the Justice Department's civil complaint, a federal grand jury in March returned a sealed 9-count "Superseding Indictment" charging several individuals named in the civil complaint with "with conspiring to violate the Unlawful Internet Gambling Enforcement Act," conducting illegal gambling businesses, "conspiring to commit wire fraud and bank fraud," and conspiring to launder money. [TheStreet.com, 9/20/11]