US Online Casino Investigations Cause International Stock Turmoil

Actions by US investigators looking into online casino payments have led to tumultuous financial times for a foreign bank and payment processor.

Investigations by the US Department of Justice into online casino payments to US residents are causing havoc abroad for some legitimate businesses. This week, Wirecard, a German payment processing company listed on the Deutsche stock exchange, saw its value plummet after word of a US inquiry leaked.

The Munich Prosecutor's Office told GoMoPa.net that it had received a complaint from the FBI that Wirecard is involved in money laundering. The FBI notes that Wirecard's subsidiary, Wirecard Bank, transferred $5.7 million over the last year from English real;-estate firm Bluetool to Michael Olaf Schuett in Florida.

The FBI says the money was for illegal payouts from online casinos to winning gamblers. However, while the UIGEA forbids payments involving illegal gambling, there remains no federal law against online gambling except the Wire Act and the PASPA, each of which specifically applies only to sports betting.

"In connection with criminal proceedings brought against a private person in the U.S., false statements have been spread in the market regarding the business activities of Wirecard without any evidence," replied the company in a written statement. Wirecard went further to say Schuett had no relationship with its bank.

But merely the whisper of US legal trouble is enough to cause ripples that shake a company's core, as seen by the 16 percent decline of Wirecard stock in one afternoon. That was after a late bounce, as the stock had fallen over a third of its value at one point.

In seeking to maintain its dubious position on Internet gambling, the US DoJ happily violates due process protections designed to prevent a rush to judgment against those who remain unaccused, let alone unconvicted. And now international companies must present themselves to the pleasure of US prosecutors, less they be subject to rumors destroying their businesses.