DENVER — A 38-year-old man who ran an illegal gambling business through an electronic arcade operating as part of a larger network of gambling parlors across the state was found guilty by a federal jury, announced the U.S. Attorney's Office for the District of Colorado on Tuesday.
Jonathan Arvay, who operated Player One Arcade in Denver, was found guilty of one count of conducting an illegal gambling business and one count of conspiracy to conduct an illegal gambling business.
At trial, the electronic gambling parlors were described as offering "games made to resemble arcade games, as well as virtual slot machines in which customers attempted to earn credits," the news release reads.
“These gambling dens masqueraded as arcades with a veneer of legitimacy,” said Matt Kirsch, acting United States Attorney for the District of Colorado . “I am grateful to law enforcement for digging beneath the veneer and finding that these establishments were causing real harm in our communities.”
The U.S. Attorney's Office explained how customers would play the games of their choice and exchange any credits won for a purported cryptocurrency from Obsidian Digital Asset Coin. Players then exchanged the cryptocurrency for cash at an "ATM-like cryptocurrency teller machine" located next door to the gambling parlor.
Customers were required to pay a transaction fee to exchange the crypto for U.S. currency.
FBI Denver Special Agent in Charge Mark Michalek described a complex financial scheme created by the defendants that was a "large, complex illegal gambling operation, both online and in person in Pueblo, Colorado Springs, Lakewood, Denver, Aurora and Greeley."
The FBI said the gambling parlors and their "illicit proceeds led to crimes involving money laundering and fraud against the U.S. government."
The IRS Criminal Investigation Denver Field Office said as "fraudsters devise new ways to evade their tax liability and defraud the government," their special agents continue to develop new investigative methods to track the illicit funds and hold criminals accountable.
Sentencing for Arvay is on Dec. 12.
