Party Poker Co-founder Agrees to Pay $300 Million to Settle with U.S. DOJ

Anurag Dikshit, one of four founders and currently the biggest shareholder of Party Poker's parent PartyGaming, has pleaded guilty to a federal crime in U.S. court, and agreed to forfeit $300 million (GBP 196m, 213m Euros) to U.S. authorities as settlement for his part in U.S. activities prior to the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA).

Dikshit, who retains a 27 per cent stake in the company, entered the plea yesterday when he appeared voluntarily in a federal court in Manhattan New York, according to the Associated Press.

Mr. Dikshit pleaded guilty to violating the federal Wire Act and to operating an "internet gambling business which offered casino and poker games, among other games of chance, to customers" in the US from around 1997 to October 2006, and to using communications "wires to transmit bets and wagering information in interstate commerce".

He signed an agreement with the DOJ to assist investigations. Prosecutors indicated they are likely to apply on Dikshit's behalf to the judge asking for leniency, to avoid jail time.

The charge carries a potential prison term of up to two years, and up to one year of supervised release when he is sentenced, the judge said. The judge scheduled his sentencing for Dec. 16, 2010.

Dikshit was released on a $15 million personal recognizance bond and under the plea deal his travel is restricted to the European Union, India and New York.

OTHER FOUNDERS LIKELY NOT TO SETTLE

It is rumored that Russ DeLeon and Ruth Parasol, two other founders of the company, will not settle with the US authorities, as they prefer to wait to see if the new administration re-opens the United States to online gambling. No mention of the intentions of Vikrant Bhargava, the fourth founder of the company, has been made.

Dikshit in total made close to US$900m when PartyGaming floated in 2005. He sold US$120m of shares in 2006, and received a dividend of US$64m during the period, according to figures from egrmagazine. Ruth Parasol and Russ DeLeon made about US$471m from the float and subsequent share sale and dividend, while the fourth co-founder Vikrant Bhargava made around US$354m from the same activities. The total amount to have gone to the founders after floatation, share sale and dividend came to around US$1.7bn.

The company stopped doing business with American residents after passage of the UIGEA two years ago.

Following the Financial Times article (prior to public announcement of the settlement), PartyGaming commented in an official statement that they were "currently negotiating the final terms of a possible settlement" with the DoJ. Though no amount has been finalized, the company did say, "On the basis of the discussions to-date, PartyGaming expects any settlement with the DoJ to involve a payment by the Company of an amount that is significantly lower than that reported to be paid by Mr Dikshit in today's Financial Times. In addition, the Company believes that any such settlement is unlikely to include a criminal plea on the part of the Company or any director."

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