On Tuesday, September 20, federal attorneys in the ongoing case against Full Tilt Poker amended their case to include financial figures and allege that the site operated as a ponzi scheme to defraud players.
In its three-page filling linked above, attorneys of the Southern District of New York claim that Full Tilt Poker currently shows debts of $390 million to players worldwide, with approximately $150 million being owed to U.S. players. The revised complaint further alleges that approximately $440 million was paid to executives of Full Tilt Poker using players’ funds since 2007, and names Howard Lederer, Chris Ferguson, Raymond Bitar, and Rafe Furst as the primary beneficiaries.
Full Tilt Poker has not operated in the United States since April 15, when the Department of Justice unsealed a criminal indictment against Full Tilt, Poker Stars, and Cereus (Ultimate Bet/Absolute Poker) alleging bank fraud and money laundering. Full Tilt has not been able to operate anywhere since June 29, when its operating license was pulled by the Alderney Gaming Commission.
Ultimate Bet/Absolute has likewise not refunded its players. PokerStars, on the other hand, immediately put plans into place to refund players and had refunded almost all amounts owed to U.S. players by the end of May.
Since the passage of the UIGEA in 2006, Full Tilt has had difficulty lining up payment processors to take funds from players depositing onto the site. Full Tilt, however, allowed payments to be credited to players’ accounts almost instantly, but then faced a shortfall when the attempted deposit was not honored by the drawing institution or credit by the payment processor.
Furthermore, Full Tilt failed to keep operating funds for the ste and funds for players’ accounts separate, instead commingling the funds. This went against Full Tilt’s oft-said policy of keeping players’ funds “segregated, safe, and secure” and the company dipped heavily into these funds to pay its executives, despite the continues inability to collect funds from U.S. players. To quote the complaint:
“Beginning in August 2010, Full Tilt Poker’s payment processing network in the United States was so disrupted that the company often could not withdraw money from U.S. players’ bank accounts in order to fund credits to their online gambling accounts. In order to maintain its false image of financial security, Full Tilt continued to credit player accounts without disclosing its inability to fund those credits. Ultimately, the company credited approximately $130 million to players’ online gambling accounts that it never actually withdrew from their bank accounts. When players gambled with these funds and lost to other players, a massive shortfall developed.”
As of March 2011, the site owed its players $390 million, but only had cash on hand of $60 milion. Of the hundredds of millions disbursed to Full Tilt’s executives, Lederer and Bitar received just north of $40 million, Ferguson received $25 million of a total allocation of $87 million, and Rafe Furst received approximately $12 million.