Subject:Poker: DOJ’s Civil Complaint Amended, Alleges FTP Stole Player Funds

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
Now this is interesting.

"The US Department of Justice has amended its Black Friday civil complain to include discussion of alleged “Full Tilt Poker’s and the FTP insider defendants’ theft of player funds.” The new complaint adds three new defendants, Howard Lederer, Chris Ferguson, and Rafe Furst. It also alleges that these new defendents together with Ray Bitar committed money laundering, and asks for penalties ranging from $12M for Furst to $42M for Lederer".

And much more
You do not have permission to view link Log in or register now.


More links

Forbes: Feds Call Full Tilt Poker A Massive Ponzi Scheme
You do not have permission to view link Log in or register now.


WSJ: U.S. Alleges Full Tilt Poker Was Ponzi Scheme
You do not have permission to view link Log in or register now.


Edit: Actually Ponzi Scheme is not a correct term for FTP
 
Last edited:

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
The amended complaint can be viewed here for example if you dont want to go trough S:p
You do not have permission to view link Log in or register now.
Starts on page 63.

Quite a facepalm that they have listed Pocket Kings (FTP) accounts as belonging to AP:oops:

Durrr has also answered quite a lot of questions at 2+2, also got a lot of heat (mostly by donks). Said he would do some interviews shortly.
 

jstrike

Dormant account
Joined
Nov 16, 2010
Location
Europe
Oh, I'd say Ponzi is exactly the right word for it...a ponzi is anything where investors are paid back out of incoming investment. For a poker site to not hold the full cash value of its players' funds in some kind of assets is definitely a ponzi scheme. For them to then take money out of the till and claim it as earnings is morally repugnant, criminal and absurd.

This isn't to say that there aren't some instances where future profits can be projected and used as a basis for (wise) investment of a safe percentage of capital, but those would still be assets held by the company that could be liquidated in case of an emergency. Such as the sudden shutting-down of the company's largest poker market or the revocation of their license...

I don't know, but I been told... in a perfectly functioning poker site you might actually end up holding around 70% of initial deposits. Frankly I'm not sure how that works, since our site's only given money away on poker and never seen a dime out of it. But assuming that's true, it's interesting to look at the numbers:

FTP had $59,579,413 in bank accounts out of $390,695,788 in player funds. That's 15.24%. My guess (and take this for the pure speculation it is) would be that some genius accountant decided to take the 70% they could eventually hope to earn with a near-perfect level of churn, and then did it again the next year.

You do not have permission to view link Log in or register now.
 

4 of a kind

Repeated violations of forum rule 1.16 - troll
Joined
Mar 11, 2009
Location
New York
Not sure why most don't realize that online casinos have the same freedom to do whatever they damn well please, whenever they damn well feel like it. If it wasn't for the U.S. Department of Justice exposing this, all these people involved including the scumbag pros that were named would still be loading their bank accounts.

Personally I hope most of you affiliates that promote and feed the players to these sharks will start to stand up for what needs to be done "Regulation" and stop being only concerned about lining your own pockets. For the players that keep standing up for the casinos, wake up and realize they to can do shit like this with the blink of an eye, and no one is going to stop them.



This quote from one of those articles resonates well with my beliefs:


If poker sites were legal and regulated, we could trust the regulator — an arm of the US government — to protect gamblers’ funds. Casinos are strictly regulated; online poker sites should be as well. Instead, they became international fugitives,
 

jstrike

Dormant account
Joined
Nov 16, 2010
Location
Europe
4 of a kind, I agree with a lot of what you wrote, but the problem is that money corrupts. If J.C. Himself was in charge of regulating online gaming, he'd have a hard time stopping Judas from robbing Luke. Especially if Judas was a member of the House of Representatives. You give anybody the power to regulate gaming worldwide, or nationwide, and you get what you got in the US, which is State Gaming in the form of lotteries, plus a handful of very powerful interests that can buy senators and congressmen to make sure they're the only ones who have a lock on the market, then buy out whoever they need in the regional gaming commissions and destroy anybody that tries to compete with them. Once the field's clear, the bullies get away with murder. When was the last time you saw the DOJ release the sum total on Harrah's bank accounts, or Wynn's or Bally's? Don't forget, those accounts are in the States, where DOJ actually has territorial jurisdiction.

FTP was licensed. In Alderney, Kahnawake and more interestingly in France, which just introduced what was billed as an extremely tough auditing and licensing regime, and handed over the keys to ARJEL which is essentially complicit in all of this. Vegas understood this when they stood pat on UIGEA and let the online companies go up in flames, just so they could have a clean playing field once the online market was "regulated." In this case, "regulated" means they own it, and regulation means creating a crooked BS state-run bureaucracy that they control, that screws over anyone who doesn't pay under the table.

It's true that without DOJ this case might not've been cracked for awhile to come, but it surely would've been noticed sooner or later, and I'm sure a few heads will roll over this one in their licensing jurisdictions. The point is, they were supposedly regulated by what were supposedly independent and fair jurisdictions, and this just proves regulation ain't worth squat without public disclosure. There's no reason to think that US congressmen are gonna act any better than anyone else who's handed a suitcase of cash and told to shut up.

The only solution or way out of this, that I see, is for governments to get out and for crowd-sourced bodies (like the CM board) to become independent auditors. It doesn't take the force of law to shut down a crooked casino, all it takes is public outrage. The point I agree with most is that players shouldn't boost casinos. They need to demand disclosure, demand to see the books. I'm sure I'm gonna get heat for saying that, but frankly the only people in the industry who benefit from government regulation are the crooks anyway. So if the industry doesn't regulate itself, it's curtains for the ones who are actually honest, because by definition if you're honest, you don't pay bribes to drive your competition out of business.
 

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
This new twist in the evolving Full Tilt story is certainly getting massive media coverage following its first exposure yesterday, and I guess that depending on your half full or half empty tendencies it could be viewed as added momentum for the legalisation of online poker, or an indication that it should continue to be classed by governments as "undesirable".

IMO it will also be seen as another blow against the licensing jurisdictions that were supposedly overseeing this operation, and in particular the lack of an enforced ring-fencing requirement on player funds.

Alderney is taking a beating on this one, and their insistence on the current hearing remaining "in camera" is not helping it.

Edited to add that just before this story broke, the AGA came out in strong support for legalised online poker in a lengthy statement and a Youtube vid, calling on Congress to pass the necessary legislation.
 

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
Looking at the wider picture here, and FTP's business conduct notwithstanding, recent developments in the US do tend to create the impression that the competition is being swept out of the way for a cosy arrangement in which online poker will be legalised and packaged out to the "right" sort of probably American companies. That's my growing perception.
 

maxd

Complaints (PAB) Manager
Staff member
Joined
Jan 20, 2004
Location
Saltirelandia
... a cosy arrangement in which online poker will be legalised and packaged out to the "right" sort of probably American companies.

That would be the other shoe dropping re: the UIGEA, IMO.
 

pokeraddict

Webmaster
Joined
Aug 3, 2002
Location
Las Vegas
The one thing I keep trying to dig up is what went on with AGCC the last 2 days? Weren't they having the FTP hearings? Is anyone else suspicious about the timing of the amended indictment?

I like how the complaint mentions 2+2 as "Poker Forum" and mentions FTPDoug's threads and discussions. It seems every poker scandal always finds a way to involve 2+2.
 

Nifty29

Dormant account
Joined
Jun 20, 2001
Location
Turn right, then right. then right again
The one thing I keep trying to dig up is what went on with AGCC the last 2 days? Weren't they having the FTP hearings? Is anyone else suspicious about the timing of the amended indictment?

I like how the complaint mentions 2+2 as "Poker Forum" and mentions FTPDoug's threads and discussions. It seems every poker scandal always finds a way to involve 2+2.

Why do you think that is?
 

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
Oh, I'd say Ponzi is exactly the right word for it...a ponzi is anything where investors are paid back out of incoming investment. For a poker site to not hold the full cash value of its players' funds in some kind of assets is definitely a ponzi scheme. For them to then take money out of the till and claim it as earnings is morally repugnant, criminal and absurd.

This isn't to say that there aren't some instances where future profits can be projected and used as a basis for (wise) investment of a safe percentage of capital, but those would still be assets held by the company that could be liquidated in case of an emergency. Such as the sudden shutting-down of the company's largest poker market or the revocation of their license...

I don't know, but I been told... in a perfectly functioning poker site you might actually end up holding around 70% of initial deposits. Frankly I'm not sure how that works, since our site's only given money away on poker and never seen a dime out of it. But assuming that's true, it's interesting to look at the numbers:

FTP had $59,579,413 in bank accounts out of $390,695,788 in player funds. That's 15.24%. My guess (and take this for the pure speculation it is) would be that some genius accountant decided to take the 70% they could eventually hope to earn with a near-perfect level of churn, and then did it again the next year.

You do not have permission to view link Log in or register now.

Ponzi scheme is still not the right word. Altough if DOJ would consider it a Ponzi then at least US players are in a better position. Anyone is free to call FTP a Ponzi Scheme if they like but they are wrong, altough its really nothing to debate about.

A hold of 70% would only count as revenue and that is the best case scenario. Most euro skins can be happy if they end up holding 10% of the initial deposits.

Party for example had a profit margin of ~17% for poker in 2010. FTP was speculated to have 20% (100M P and 500M R) and PS 36%(500m P and 1400M R) by Forbes in 2009. And yes there is nothing to indicate that FTP wasnt a profitable company pre 2010.

Edit: S:p article updated a few times. Also including SDNYs press statement:
You do not have permission to view link Log in or register now.


2nd edit: some of the statements made by Preet Bharara are almost ludicrous and some of the amounts mentioned clearly doesnt add up.
 
Last edited:

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
The one thing I keep trying to dig up is what went on with AGCC the last 2 days? Weren't they having the FTP hearings? Is anyone else suspicious about the timing of the amended indictment?

I like how the complaint mentions 2+2 as "Poker Forum" and mentions FTPDoug's threads and discussions. It seems every poker scandal always finds a way to involve 2+2.

The AGCC commissioners have become their own worst enemy with this secretive approach just lately - even their own AGCC director, Andre Wilsenach, has reservations about the manner in which this hearing is being handled.

The resumed confidential hearing appears to be headed into a third day today (Wednesday) without any sort of communique being issued - that is appalling imo, and does Alderney little credit.

I'll bet these new revelations have them going into a huddle;) And the timing of the Justice amendment is certainly suspicious imo.

I can understand why twoplustwo gets mentioned so often - it's such a widely used forum, full of interesting news and views from the poker world and usually picks up on all the issues.
 

footdr

Banned User: PITA violations of the Forum Rules
Joined
Jan 13, 2006
Location
cyberspace
I wouldn't consider it a ponzi scheme unless they were paying players only with players deposits that were incoming as their bank account was in the red or zero otherwise. Then eventually, they would have ran out of money to pay winnings. Which is what according to the DOJ they must have done as they only had X in their bank account and yet owed far more to winners. (hope I have that right, going from memory of what I heard on news yesterday).

Who know how long it was going on but it might be a blessing to those that would have continued to deposit that they were caught. Sounds as if they were running a scam.
 

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
I guess everyone interested already knows this: French Investors Consider Purchasing FTP
You do not have permission to view link Log in or register now.


Saw the rumour evolve at 2+2 but was tired and went to sleep and part of me expected it to be a huge level and wake up to negative news.

The potential investor has signed a Letter of Intent (that itself doesnt mean that much) etc. Much more information and drama that Im too tired to post, because as I said, those that are interested knows or will get the info themself.
 

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
The Wall Street Journal, quoting an unidentified source, says that investment bankers Seaport Group gave evidence to the AGCC enquiry this week that there were three investors in prospect. That would appear to confirm the Subject Poker story.

Apparently Full Tilt is asking for another 30 days to seal a deal.
 

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
The Wall Street Journal, quoting an unidentified source, says that investment bankers Seaport Group gave evidence to the AGCC enquiry this week that there were three investors in prospect. That would appear to confirm the Subject Poker story.

Apparently Full Tilt is asking for another 30 days to seal a deal.

According to Pocketfives two of those dropped out on Tuesday.

"On Tuesday, Full Tilt reportedly lost at least two investors as a result of receiving the designation of a Ponzi scheme by the U.S. Department of Justice's Preet Bharara"
You do not have permission to view link Log in or register now.


Theres so much new information dropping in, much of it just rumours, that its hard to keep up.
 

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
The potential investor/buyer is rumoured to be Laurent Tapie, son of Bernard Tapie. Sounds quite plausible.
 

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
Update. Licence revoked.

FULL TILT POKER LICENCE REVOKED (Update)

Beleaguered online poker operator's life just got harder

After days of silence and what appeared to be an extended in-camera hearing, the Alderney Gaming Control Commission has revoked the licensing on which Full Tilt Poker operated, leaving the beleaguered online poker operator with a secondary Kahnawake licence (see previous InfoPowa reports) and a problem for a prospective investor, who was on record as saying that retention of the AGCC licence was critical to any deal.

The shock news came in a statement from the Commission, which said:

"AGCC Commissioners, sitting as a tribunal, have today revoked the licences of Vantage Limited, Filco Limited and Oxalic Limited, trading as Full Tilt Poker (FTP), with immediate effect. This follows the earlier suspension of the licences on 29th June 2011.

"At a hearing held in London over six days, it emerged that FTP had fundamentally misled AGCC about their operational integrity by continuously reporting as liquid funds balances that had been covertly seized or restrained by US authorities, or that were otherwise not actually available to the operator.

“Serious breaches of AGCC regulations include false reporting, unauthorised provision of credit, and failure to report material events.

"At the commencement of these proceedings on 26th July, AGCC made clear its preference to hold the hearing in public, to the benefit of players and media alike. However, the tribunal was persuaded that the hearing should be held in camera on the basis of claims by FTP that this would maximise the chance of a commercial rescue of the business for the benefit of players. For this reason an adjournment of 54 days was allowed.

"It is important to note that the revocation of FTP’s licences does not, as has been suggested, prevent a reactivation of the business under new ownership and management. Unresolved claims by players against FTP become a matter for the police and civil authorities. Now that FTP’s licences have been revoked, AGCC no longer has jurisdiction over these companies.

"The licence of Orinic Limited, a recently added geographic sub-division of the FTP poker room, remains suspended.

"The determination notice containing the decision of the Commissioners and reasons for it is available at http://www.gamblingcontrol.org/userfiles/file/Determination%20Notice%20290911.pdf"

The statement is signed off by AGCC executive director André Wilsenach.
 

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
Was just about to come and post that. The determination notice can be read here:
You do not have permission to view link Log in or register now.



Now what interesting is this statement by Jefff Ifrah a few days ago:
"The investors are totally committed to doing this- we've met with them and seen the funds. Their primary concern right now is the AGCC's decision on Full Tilt's license. The investor's position is that if Alderney revokes the license, they won't go through with the deal because it makes things too difficult."
You do not have permission to view link Log in or register now.


It will be interesting to see what this quote from AGCC will mean in the end"It is important to note that the revocation of FTP’s licences does not, as has been suggested, prevent a reactivation of the business under new ownership and management. Unresolved claims by players against FTP become a matter for the police and civil authorities. Now that FTP’s licences have been revoked, AGCC no longer has jurisdiction over these companies.

The question being how fast. If its months then there will be no deal. The letter of intent expires tomorrow. How ironic if there would have been a deal but AGCCs actions would have caused it to fail. Read especially the point 68 in the Determination Notice. Somehow saving their face seems to be of bigger importance than the fate of the players.

And a new statement by DoJ:

At this time, this Office, together with the FBI and other agencies, is attempting to trace, secure and forfeit as much as possible of the funds derived from operation of the fraud committed by Full Tilt Poker and its board members that is alleged in the amended complaint. The Office is also attempting to obtain and examine the books and records of Full Tilt Poker. Many of those books and records are kept overseas. The return of forfeited funds to victims of the alleged fraud may be possible, but will depend on several factors, including the successful conclusion of the litigation, the amount of funds seized and ordered forfeited by the court, and compliance with other procedures the Department of Justice may eventually establish regarding return of forfeited funds to victims who lost money as a result of the alleged fraudulent conduct.
You do not have permission to view link Log in or register now.


Edit: An interesting point from the Determination notice, part/point 23. Document JS21(I) illustrates the individual seizures made by the Department of Justice during the period 28th June 2007 to 20th June 2011, which amount to a cumulative total of approximately $331 million US Dollars.


2nd edit: A statement by FTP
You do not have permission to view link Log in or register now.
 
Last edited:

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
Update - FTP back in Jan. 2010?

FULL TILT POKER BACK BY JANUARY 2012?

French buyer believes it may be possible

Hard on the heels of the announcement that France's Groupe Bernard Tapie has conditionally agreed to buy Full Tilt Poker, Laurent Tapie, md of the company and son of the owner, was interviewed by the publication iGaming France Friday.

Although he generally adhered to the formal public statement announcing the deal, Tapie did reveal that he hoped to have FTP up and running again - presumably under new management - by January 2012.

Tapie jnr emphasised in the interview that his company had the skills and financial clout to turn the troubled online poker operator around, noting that it would not have become involved if it did not strongly believe in FTP’s future potential.

He reiterated that Groupe Bernard Tapie had demonstrated that it had the necessary funds to repay FTP's debt, and meet its obligations in terms of monies owed to players. He additionally revealed that his company intends to keep the Full Tilt Poker brand alive after the recent tarnishing has been addressed.

“The brand is not in question, it’s a well-known brand and the technology is widely recognised as being possibly the best in the industry,” Tapie told iGaming France. "The management of the company is being questioned and it will be changed should the takeover be concluded.

"I believe we have the tools necessary to once again make the site one of the leaders in the online poker sector.”

Tapie appeared to be under no illusions regarding the tough path ahead, referring to the negotiations that will be required with the US Department of Justice, which has seized hundreds of millions of Full Tilt dollars in the process of taking the company down this year. However, he appeared to be optimistic and motivated to make Full Tilt Poker work again.

"We want to find ways where we don’t have to put in all the money, and will be talking to the US Department of Justice next week," he revealed.

What Tapie did not disclose is the consideration his company will have to pay for Full Tilt, which when added to the company's debts and other obligations is likely to be very substantial.

As previously reported in InfoPowa bulletins, Groupe Bernard Tapie has impressive experience in taking over, and turning around, troubled businesses.

In related news, there are reports that the current CEO of Full Tilt Poker, Ray Bitar, has added to the blizzard of legal paperwork swirling around his company with an application to fight the Department of Justice's seizure warrants on various bank accounts with which he is associated (see previous InfoPowa reports).

The application is apparently being made under the Federal Rules for Civil Procedure; Admiralty and Maritime Claims, which covers procedures related to "commercial activities that are land based or occur wholly on land, that are maritime in character."

The thrust of Bitar's application appears to be that "the assets subject to forfeiture are neither proceeds nor instrumentalities of any crimes in any jurisdiction in the United States or elsewhere" and that he should be permitted to challenge the forfeiture and the DoJ allegations surrounding it.

EDIT: Oops - typo in title - could one of the mods please change that to 2012?
 

SlotsLover

Dormant account
Joined
Jun 25, 2010
Location
California
US Gov has most of the money

Besides the 330M that the DOJ claims they have frozen, the gov't has (the IRS) all the money paid in taxes by the principals in the case (and other owners--I can't believe they didn't pay tax as this would have been one of the few ways they could get in trouble if they were not shut down).

Add these funds together and US gov't can make all the players (not just US) whole. Let's call on the US Gov't to do the right thing for the players.

Speaking of doing the right thing with frozen money, does anyone know what has happened to the Ewallet money? I have a few k over there that has been gone for almost a year. Thanks DOJ!
 

silcnlayc

Just one more spin pleez!
PABaccred
PABnonaccred
Joined
Sep 20, 2005
Location
Left Hungary
Indicted Banker and Payment Processor Fight Federal Crackdown On Online Poker With Po


Indicted Banker and Payment Processor Fight Federal Crackdown On Online Poker With Powerful Legal Papers


Interesting article in Forbes....The Poker Players Alliance sent me there...(they get credit for the find)



A payment processor and a banker, who were indicted by federal prosecutors in April as part of a sweeping crackdown on the online poker industry in the U.S., have filed strongly-worded legal papers to fight the government’s charges, arguing online poker businesses like PokerStars and Full Tilt Poker were not gambling businesses. continued.....



You do not have permission to view link Log in or register now.


.
 

Tengil

Senior Member
Joined
May 4, 2006
Location
Finland
According to Subject:poker Groupe Bernand Tapie and DOJ have come to an agreement.
The "only" thing needed for the sale to go trough is FTPs shareholders agreement.

Full article:
You do not have permission to view link Log in or register now.


The DoJ will reimburse US players and settle the civil litigation against FTP while GBT will take care of the ROW players. Edit: this is still quite unclear especially the DoJ part

One time!
 

jetset

RIP Brian
Joined
Feb 22, 2001
Location
Earth
Update

GROUPE BERNARD TAPIE CONFIRMS FULL TILT DEAL WITH DOJ (Update)

Good news at last for Full Tilt players

Following wide-spread reportage this week on an e-mail from Full Tilt’s Ray Bitar addressed to Tiltware shareholders (see previous report), Groupe Bernard Tapie (GBT) has confirmed that it has reached an agreement in principle with the US Department of Justice (DOJ) that will lead to the reimbursement of Full Tilt Poker players and clear the way for the group to finalise the acquisition of Full Tilt.

In an interview with iGaming France today (Wednesday), Laurent Tapie revealed that a final agreement between the company and the US Department of Justice will be drafted by this week's end and should be signed in the next 15 days.

Under the proposed terms of the deal, Groupe Bernard Tapie has undertaken to reimburse all non-U.S. Full Tilt customers while U.S. customers will be reimbursed by the DOJ.

Tapie declined to offer further details on the mechanism the group has developed in arranging reimbursements or the amounts involved in paying back players but ended the interview by confirming: "The payment terms are defined. We will draft an agreement by the end of the week and should sign it within the next 15 days, and we will issue a statement shortly after that will provide more information."
 
Top