17 March 2008

Eliot Spitzer and Poker: Any Connection?

As I ate lunch with my wife, my wife and I discussed tax rebates, finances, and our own tax preparations that she is spearheading. "I wish we were a bit less ethical or moral," I told her. "A good chunk of our income last year came from poker." And that brings us squarely back to the disgraced governor of New York, Eliot Spitzer.

If you recall, Spitzer wasn't brought down by a prostitute who gave up her clients or even a pimp who squealed. No, it was wire transfers that hit him hard. From a New York Times article written last week by Don van Natta and Jo Becker, they detail how the saga unfolded, starting with wires to two offshore shell companies.

"These officials said that banks are likely to more closely monitor the transactions of politicians like Mr. Spitzer than those of average customers. In part, that is because of legislation passed after the 2001 terrorist attacks.

As part of the “know your customer” requirements, banks must assess their clients’ financial patterns and set guidelines to ensure that an alarm is sounded if there are unusual transactions..."
What does that have to do with income taxes, blogs, and poker? I'll give you my own account. I made money last year writing articles for PokerWorks and PokerStars blog, as well as writing my blog on PokerWorks. I was paid via wires to our account, cash that theoretically could be invisible. Yet as we did in 2006 and 2005, we are dutifully recording this income and paying taxes on it. I am not recording my poker winnings as income (I'm still in that negative world where I've never actually won anything and can't claim the losses, a double-loser whammy in our little US taxation universe...).

Spitzer was sniffed out under the broad auspices of greater scrutiny on financial transactions to set off alarms which might lead the US Government to money laundering and/or financing of terrorists, whether they be domestic or international. I'll heed to the legal minds in our mix (Jordan et al) to provide any greater details into this, and I don't know if this type of examination is normal banking due diligence or new in the post-9/11 days. The authors of the NY Times article suggested the latter.

The 4th Amendment of the US Constitution: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

I'm no Libertarian and confess that I have given minimal thought to the dynamics of these types of invasions of privacy under the broad blanket of preventing bad things from happening. The Spitzer result seems to be an example of sniffing around in a way theoretically/possibly/maybe initially protected by the Constitution, finding something bad, punishing someone who did something bad, then moving on.

Is any of this right, or am I missing something?

The relevance to us is that Big Brother is indeed watching, and the IRS will ultimately receive all the observations. Don't claim your income from international sources, wires, and other invisible methods at your own peril.


Blogger HighOnPoker said...

My understanding was that Spitzer's accounts were flagged by software, since he was making a series of transfers to the same account, each under $10,000. As we all know from the Sopranos episode in which Carmella decided to invest some of Tony's cash (which was hidden in the duck feed...damn tangent), financial institutions are required to notify the Federal govt for any transactions over 10k (I think the numbers are slightly higher now).

I'm not sure if that changes the way you feel about invasion of privacy. It's just the facts as I know it.

In my opinion, I have no problem with that type of "invasion" of privacy, since it is tailored to only invade the privacy of those suspected of a very specific act.

7:59 PM  

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