Full Tilt Ponzi?
Federal prosecutors say Full Tilt Poker operated as a Ponzi scheme and defrauded online poker players out of millions while paying its executives and directors—including celebrity poker players Howard Lederer and Christopher “Jesus” Ferguson—$440 million dollars since April 2007.
Preet Bharara, the U.S. Attorney for the Southern District of New York, today added Lederer, Ferguson, and board member Rafael Furst, plus Full Tilt CEO Ray Bitar as defendants to its already existing civil complaint seeking $3 billion from the company and its officials. The complaint says the defendants defrauded poker players out of some $300 million by not maintaining funds at the company sufficient to repay players.
The story was first picked up by Forbes, followed closely by the Wall Street Journal and others. The Forbes piece links to a previous story that explains the background:
Full Tilt Poker did reach an agreement in April with the Justice Department that was supposed to help facilitate the return of funds to players who had large cash balances with the company, but Full Tilt’s inability to pay money back has infuriated its players and the poker world at large.
City Paper’s Van Smith has been reporting the on-line poker saga for more than a year, (see, for example: “Another Guilty Plea in Maryland-Based Money Laundering Probe,” Mobtown Beat, Jan. 21 and “The Ghost Hand,” Feature, March 24, 2010 ) ever since Baltimore U.S. Attorney Rod Rosenstein filed charges against Edward Courdy and Michael Garone. The feds have been winning convictions for money laundering and other offenses, and they reportedly set up a payment processing company in order to sting several big-time online poker web sites.
Online gambling has always been in a legal gray area at best–at least in the United States. But calling a poker company a Ponzi scheme is a first.
“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” Bharara said in a statement. “Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited.”