|Feds accuse Full Tilt Poker of being Ponzi scheme |
By Michael Winter, USA TODAY - Updated 34m ago
Poker player Chris Ferguson during a poker tournament in Las Vegas. Tuesday, the U.S. Justice Department accused Full Tilt Poker and its co-owners, Ferguson and Howard Lederer, of running global Ponzi scheme.
CAPTION - By WSOP/Image Masters
The Justice Department is accusing Full Tilt Poker of being a Ponzi scheme that has defrauded players out of more than $300 million. The civil lawsuit names celebrity players and co-owners Christopher Ferguson and Howard Lederer and other executives of the online site.The Wall Street Journal writes that the government's amended complaint alleges Full Tilt "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."
"Full Tilt was not a legitimate poker company, but a global Ponzi scheme," U.S. Attorney Preet Bharara said in a statement. He alleged that 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."
The complaint states:
According to a balance sheet prepared by Full Tilt Poker, as of March 31, 2011, Full Tilt Poker owed players from around the world over approximately $390,695,788 but had only approximately $59,579,413 in its bank accounts. Full Tilt Poker relied on new deposits from players to ensure its ability to fund withdrawals to players' accounts.
Rather than protect player funds as promised, Full Tilt Poker distributed hundreds of millions of dollars to its owners…
Defendant Lederer personally received at least approximately $42 million, including approximately $37,856,010.92 in ownership distributions and at least $4 million in "profit sharing" payments…
Defendant Ferguson was allocated approximately $85,161,305.88 in distributions. Tiltware records reflect that approximately $25 million of this sum was actually transferred to Ferguson's personal accounts, with the remaining balance characterized as "owed" to Ferguson.
No comment so far from Full Tilt, Ferguson or Lederer.
Back in May, Reuters' financial blogger Felix Salmon wrote about " Why the online-poker crackdown makes sense."