So said my friend @tropicalsteve over Twitter a little while ago, his observation coming after breaking news that the U.S. Department of Justice was filing a motion to amend its earlier “Black Friday” civil complaint to add new charges, all directed at Full Tilt Poker and its owners.
The amendment adds three more names -- Howard Lederer, Chris Ferguson, and Rafe Furst -- while also alleging Full Tilt Poker “defrauded its poker players by paying out hundreds of millions of dollars of player funds to Full Tilt Poker owners while misrepresenting to players that funds credited to their online player accounts were secure and segregated from operating funds.”
In a press release accompanying the action, the DOJ notes how the company had been using player funds to pay board members and owners as far back as April 2007.
That release quotes U.S. Attorney for the State District of New York Preet Bharara claiming “Full Tilt was not a legitimate poker company, but a global Ponzi scheme” that not only was guilty of the previous charges (violating the UIGEA, bank fraud, money laundering) but “abused its own players to the tune of hundreds of millions of dollars… while blithely lying to both players and the public alike about the safety and security of the money deposited with the company.”
Not sure if “Ponzi scheme” quite describes what was going on Full Tilt Poker, but you get the idea. As we have already known for some time, the company’s books were hardly in order. If there were books, that is.
The press release goes on to note how emails were sent to players by Full Tilt in 2008 and 2009 stating that funds were segregated and safe. It also describes how “approximately $443,860,529.89” was distributed to Ray Bitar, Lederer, Furst, Ferguson, and others. Gotta love that approximation... right down to the last red cent.
Also noted there is a report by Lederer this summer “to others at Full Tilt Poker that there was only approximately $6 million left, and therefore no realistic ability to repay its new depositors.” And Bitar apparently believed FTP couldn’t even pay $5 milly if they had to.
“Yep,” I responded back to @tropicalsteve. “Other eye blackened,” I added, referring to online poker’s further weakened status in the U.S. “Will be stumbling around blind for awhile.”
I’m not entirely sure, actually, how today’s news will affect ongoing efforts to license and regulate online poker in the U.S.
I would think the DOJ’s amendment should end whatever hope FTP had for getting the Alderney Gambling Control Commission to lift the suspension of its license to operate. As it happens, representatives of Full Tilt met with the AGCC yesterday, and apparently were planning to continue discussions today over that matter.
The news probably won’t help the situation for those few still-U.S.-facing sites either, where the great majority of Americans who played online poker for real money prior to April 15 were reluctant to deposit and play already.
In any case, Full Tilt Poker’s example as “not a legitimate poker company” but some utterly illegitimate, corrupt enterprise that successfully masqueraded as one for seven years will likely stand as ample, difficult-to-refute evidence to be employed by those arguing for the need for regulation.
Although, of course, as @tropicalsteve points out, those hoping to make that argument are going to have to deal with the fact that for many -- the idea perhaps further reinforced by today's developments -- “online poker is bad.”
(EDIT [added 7:30 p.m.]: As I am sure anyone reading this blog is aware, the news of the DOJ’s action against Full Tilt Poker has been extensively reported by many mainstream outlets today, including CNN, FoxNews, MSNBC, the New York Times, the Wall Street Journal, Forbes, and elsewhere. In fact, at this moment the story appears front and center on the CNN website -- a sight startling enough I thought it worth adding a screenshot of it here.)