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

Tengil

Senior Member
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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
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More links

Forbes: Feds Call Full Tilt Poker A Massive Ponzi Scheme
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WSJ: U.S. Alleges Full Tilt Poker Was Ponzi Scheme
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Edit: Actually Ponzi Scheme is not a correct term for FTP
 
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Tengil

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The amended complaint can be viewed here for example if you dont want to go trough S:p
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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

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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.

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4 of a kind

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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

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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
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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
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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
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... 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

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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

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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.

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

RIP Brian
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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

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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

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Finland
I guess everyone interested already knows this: French Investors Consider Purchasing FTP
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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

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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

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

Tengil

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The potential investor/buyer is rumoured to be Laurent Tapie, son of Bernard Tapie. Sounds quite plausible.
 

jetset

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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

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Was just about to come and post that. The determination notice can be read here:
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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."
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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.
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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
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