southsider2k5 Posted September 20, 2011 Share Posted September 20, 2011 http://online.wsj.com/article/SB1000142405...=googlenews_wsj By ALEXANDRA BERZON The U.S. Justice Department on Tuesday accused poker celebrities Howard Lederer and Christopher Ferguson among other executives of a major poker website of defrauding poker players out of more than $300 million. The U.S. Attorney in the Southern District of New York filed a motion Tuesday to amend an earlier civil complaint to allege that Mr. Ferguson, Mr. Lederer and two other directors for the website, Full Tilt Poker, operated what the Justice Department says was a Ponzi scheme that allowed the company to pay out $444 million to themselves and other owners, which included other famous poker players. In the motion to amend the complaint, the government alleges Full Tilt executives misrepresented to the website's players that the money the company was supposed to be holding in player accounts was safely held when it was actually being used for other purposes, including payments to owners. The distributions to the owners, including Mr. Ferguson and Mr. Lederer, continued even as funds to pay out creditors—the poker players—dwindled because government investigators had made it increasingly impossible to move player money into company-affiliated bank accounts, the government says. "Full Tilt was not a legitimate poker company, but a global Ponzi scheme," said Preet Bharara, U.S. Attorney for the Southern District, in a statement. [0920fulltilt] Getty Images Chris Ferguson in 2008 in Melbourne, Australia. In the statement, Mr. Bharara said Full Tilt "cheated and abused its own players to the tune of hundreds of millions of dollars" and that "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 with the company." An attorney for Full Tilt said he had no comment, and that neither did Mr. Ferguson. Attempts to reach Mr. Lederer on the phone weren't successful. In response to the earlier version of the complaint, Full Tilt and other poker sites that had accepted U.S. bets have denied any wrongdoing, arguing that the U.S. laws covering online gambling aren't clear. The earlier version didn't allege defrauding of players or improper payments to owners. The government is also seeking money it says the four Full Tilt directors got from the site, which allegedly includes $42 million for Mr. Lederer and $25 million for Mr. Ferguson, who was allocated $85 million from the company but never collected all the money, the government says. The government's amended complaint also alleges that two other directors defrauded players. One of those named directors is Raymond Bitar, the company's chief executive, who was earlier indicted by the government for alleged bank fraud and money laundering. The company had previously denied any wrongdoing in response to the earlier allegations. The allegations follow months of speculation that Mr. Ferguson and Mr. Lederer, who grew famous winning poker tournaments, might be dragged into a federal case that began in April and has led to the suspension of Full Tilt's operations. Mr. Ferguson, Mr. Lederer and others started Full Tilt in 2004 and steered it to become an online giant, used by thousands of players betting billions of dollars every year. In April the Justice Department indicted executives at three major online poker companies on charges of illegal gambling, bank fraud and money laundering, including Mr. Bitar of Full Tilt Poker, who has been out of the country, and hasn't been arrested or entered a plea. In civil charges the government also sought $3 billion from the companies and, through a court order, seized the domain names from the sites, which stopped operating in the U.S. following the action. Mr. Ferguson and Mr. Lederer have not been charged criminally. The Justice Department has long held that online poker is illegal under several federal laws, while the poker web sites such as Full Tilt that operated in the U.S. argued that poker is not illegal in part because it is a game that involves skill and not purely chance. In a statement in August the company acknowledged that it had problems processing player money, along with also losing $115 million it says was seized by the government and $42 million it says was stolen from a third-party payment processor. "While the company was on the way to addressing the problems caused by these processors, Full Tilt Poker never anticipated that the DOJ would proceed as it did by seizing our global domain name and shutting down the site worldwide," the company said in a statement in August. It said it is seeking outside investment to pay back all its creditors. The charges have upended an industry that became a booming online business and a cultural phenomenon in the last decade. They have also re-framed the debate around the legalization of online gambling. The crackdown has shaken a large universe of poker fans, which researcher H2 Gambling Capital estimates included players using 1.7 million active accounts in the U.S. who before the April crackdown were wagering around $14 billion a year online. U.S.-based players are still owed around $160 million from Full Tilt Poker, according to the government. According to the latest filing from the Justice Department, Full Tilt Poker had just $60 million in the bank just before the April crackdown occurred, while it owed $390 million to players around the world. Yet the company had been distributing around $10 million a month to its owners, the government alleges. Those payments stopped in April, according to the government. The company had continued to issue public statements that told players their funds were safe. Following the indictments of its executives in April, the company said in a statement, "Full Tilt Poker would like to assure all players that their funds remain safe and secure." In June, Mr. Lederer reported to others at the company that there was only $6 million left, the government alleges. Write to Alexandra Berzon at alexandra.berzon@wsj.com Quote Link to comment Share on other sites More sharing options...
soxsoxsoxsox Posted September 21, 2011 Share Posted September 21, 2011 I'm not exactly sure if it falls under Ponzi scheme. Tho I'm glad mainstream press is finally reporting on this story. Too bad I always preferred FTP over Pokerstars. Quote Link to comment Share on other sites More sharing options...
Texsox Posted September 21, 2011 Share Posted September 21, 2011 The ponzi element comes from needing new players to pay off the old players. That was one part of their business model, holding onto money, that always fascinated me. I couldn't believe so many people were leaving so much cash with them. You wouldn't go up to a random person and say here's $500, hold it for me. Players had to know the company was operating on the fringes of the law, so there wouldn't be much legal protection. Quote Link to comment Share on other sites More sharing options...
cabiness42 Posted October 13, 2011 Share Posted October 13, 2011 I was wondering if there are enough poker players here to warrant a separate poker thread? Quote Link to comment Share on other sites More sharing options...
bmags Posted October 13, 2011 Share Posted October 13, 2011 It would be a lot easier to regulate these if they were legal. Quote Link to comment Share on other sites More sharing options...
iamshack Posted October 13, 2011 Share Posted October 13, 2011 QUOTE (bmags @ Oct 13, 2011 -> 11:37 AM) It would be a lot easier to regulate these if they were legal. Just as it would be for online sports betting, marajuana, etc. Instead, let's waste all these funds trying to prevent people from doing something they are going to find a way to do regardless. Let's also forego the massive tax funds we could be obtaining by legalizing and regulating these industries. Foolish. Quote Link to comment Share on other sites More sharing options...
RockRaines Posted October 14, 2011 Share Posted October 14, 2011 QUOTE (iamshack @ Oct 13, 2011 -> 01:19 PM) Just as it would be for online sports betting, marajuana, etc. Instead, let's waste all these funds trying to prevent people from doing something they are going to find a way to do regardless. Let's also forego the massive tax funds we could be obtaining by legalizing and regulating these industries. Foolish. QFFT Also the worst part about those online poker sites (which I always suspected anyway) is that the games were rigged to allow computer opponents to win hands. You literally didnt have a fair shake at winning. Quote Link to comment Share on other sites More sharing options...
Texsox Posted October 14, 2011 Share Posted October 14, 2011 QUOTE (RockRaines @ Oct 13, 2011 -> 07:08 PM) QFFT Also the worst part about those online poker sites (which I always suspected anyway) is that the games were rigged to allow computer opponents to win hands. You literally didnt have a fair shake at winning. Which isn't much different than every game, computer or dealer in Vegas. Quote Link to comment Share on other sites More sharing options...
cabiness42 Posted October 14, 2011 Share Posted October 14, 2011 QFFT Also the worst part about those online poker sites (which I always suspected anyway) is that the games were rigged to allow computer opponents to win hands. You literally didnt have a fair shake at winning. I'm not aware of there being "computer opponents" at the major online poker sites. Poker rooms, real or virtual, make their money differently than other casino games. You don't play poker against the house, you play against other players and the house makes their money by taking a cut of every pot. It's the only game in a casino where you do actually have a fair shake at winning, unless you are an expert card counter playing blackjack. Quote Link to comment Share on other sites More sharing options...
Texsox Posted October 14, 2011 Share Posted October 14, 2011 QUOTE (HickoryHuskers @ Oct 14, 2011 -> 06:30 AM) I'm not aware of there being "computer opponents" at the major online poker sites. Poker rooms, real or virtual, make their money differently than other casino games. You don't play poker against the house, you play against other players and the house makes their money by taking a cut of every pot. It's the only game in a casino where you do actually have a fair shake at winning, unless you are an expert card counter playing blackjack. The house takes a cut in every game, it just varies how they are taking it. Functionally there really isn't much difference. Players put in $X and are competing for $X-Cut. The players as a group will always lose to the house. Quote Link to comment Share on other sites More sharing options...
Brian Posted October 14, 2011 Share Posted October 14, 2011 Or as Rick Perry would say, "Full Tilt Poker is like Social Security!" #dontwannagotofilibuster Quote Link to comment Share on other sites More sharing options...
cabiness42 Posted October 14, 2011 Share Posted October 14, 2011 The house takes a cut in every game, it just varies how they are taking it. Functionally there really isn't much difference. Players put in $X and are competing for $X-Cut. The players as a group will always lose to the house. Functionally there is a big difference. In any casino game aside from poker and to some extent blackjack, you can play 100% of the time with the perfect strategy and the odds are still that you will leave a loser. In poker, your skill is competing against the other players and not the house, so even though the house is taking a cut and the entire group of players is losing, your skill level has a major impact on whether you win or lose. So from the house's perspective, yes it's the same in the sense that they are always taking X% of the players' money, but from the players' perspective it's very different. Quote Link to comment Share on other sites More sharing options...
RockRaines Posted October 14, 2011 Share Posted October 14, 2011 QUOTE (HickoryHuskers @ Oct 14, 2011 -> 06:30 AM) I'm not aware of there being "computer opponents" at the major online poker sites. Poker rooms, real or virtual, make their money differently than other casino games. You don't play poker against the house, you play against other players and the house makes their money by taking a cut of every pot. It's the only game in a casino where you do actually have a fair shake at winning, unless you are an expert card counter playing blackjack. Oh RLY??? I wasnt aware of how poker was played. And you are wrong about it being fair: http://www.pokernews.com/news/2008/05/ulti...unfair-play.htm Online poker has been rigged for years. Quote Link to comment Share on other sites More sharing options...
cabiness42 Posted October 14, 2011 Share Posted October 14, 2011 Yes, there have been instances of cheating in online poker, and you know what, there's cheating in live poker too! Even so, poker offers the possibility of long-term success that is not possible in other casino games. Quote Link to comment Share on other sites More sharing options...
Texsox Posted October 14, 2011 Share Posted October 14, 2011 QUOTE (HickoryHuskers @ Oct 14, 2011 -> 08:12 AM) the odds are still that you will leave a loser. All those games guarantee a loser because the house removes some of the "points". I do agree that the skill factor is highest in poker than the other games. My point is in all these games, if everyone played perfectly every hand, there will still be losers because of the house cut. Whether the house takes a cut by altering the payouts (Craps) or just skimming each hand (poker) they guarantee a loser. And in all those games there are winners and losers. The big difference is poker is the only game (+ parimutuals) I can think of that also guarantees a winner. Since the house limits their cut, someone has to win something. In Blackjack, craps, etc. it is possible for the house to bankrupt everyone. Quote Link to comment Share on other sites More sharing options...
GoodAsGould Posted October 14, 2011 Share Posted October 14, 2011 QUOTE (RockRaines @ Oct 14, 2011 -> 09:36 AM) Oh RLY??? I wasnt aware of how poker was played. And you are wrong about it being fair: http://www.pokernews.com/news/2008/05/ulti...unfair-play.htm Online poker has been rigged for years. There was a scandal with Absolute poker too, but like someone else said people cheat in live poker as well. As far as I know, the 2 biggest poker sides being Pokerstars/Fulltilt as far as gameplay goes were pretty legit. Clearly, they weren't running their bankroll in a legal way though. Quote Link to comment Share on other sites More sharing options...
SouthsideDon48 Posted October 18, 2011 Share Posted October 18, 2011 QUOTE (HickoryHuskers @ Oct 13, 2011 -> 12:30 PM) I was wondering if there are enough poker players here to warrant a separate poker thread? I'm a poker player, I'd be in favor of a separate poker thread. I'm exclusively a live tournament poker player, though. I never liked online poker. Quote Link to comment Share on other sites More sharing options...
RockRaines Posted October 18, 2011 Share Posted October 18, 2011 QUOTE (SouthsideDon48 @ Oct 18, 2011 -> 12:32 PM) I'm a poker player, I'd be in favor of a separate poker thread. I'm exclusively a live tournament poker player, though. I never liked online poker. I'm with you. I played online a TON for years until I found out about the scams. I still have buddies that swear by it since getting scammed is such a remote possibility if you play 20 tables at once. Nothing beats being able to feel the cards and look the players in the eyes. Quote Link to comment Share on other sites More sharing options...
Harry Chappas Posted October 18, 2011 Share Posted October 18, 2011 The only poker I play is five card draw, jacks or better to open, trips to win I think hold'em is just a different version of black jack IMHO Quote Link to comment Share on other sites More sharing options...
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