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U.S. Attorney calls Full Tilt Poker a `global Ponzi scheme’

Posted: Tuesday, September 20, 2011 4:15 PM

by Frank Angst

Full Tilt Poker, formerly one of the most popular U.S. Internet poker sites when it flourished for years in a legal gray area, is being called a Ponzi scheme by the U.S. Attorney’s Office for the Southern District of New York.

Earlier this year, that same U.S. Attorney pursued legal action against large offshore Internet poker sites like Full Tilt Poker and PokerStars.com, taking actions to prevent the sites from conducting financial transactions with U.S. customers. After that initial action, it did allow the sites an opportunity to pay money owed to U.S. players.

According to players at the sites, PokerStars has been diligent about paying players while Full Tilt has lagged. The U.S. Attorney said the failure to pay is evidence that Full Tilt does not have the funds available.

“Full Tilt was not a legitimate poker company but a global Ponzi scheme,” Manhattan U.S. Attorney Preet Bharara said. “As a result of our enforcement actions, this alleged self-dealing scheme came to light. Not only did the firm orchestrate a massive fraud against the U.S. banking system, as previously alleged, Full Tilt also cheated and abused its own players to the tune of hundreds of millions of dollars.”

The U.S. Attorney said players were defrauded as their account money was used to pay $440-million to board members and other owners since 2007. Some of those board members include well-known poker stars Howard Lederer and Chris Ferguson.

The U.S. Attorney alleges that as the site lost its ability to collect money from U.S. players, it was unable to pay other players off because accounts that were supposed to be “segregated, safe, and secure,” in had been raided by company leadership.

Pari-mutuel wagering is one of the few legal and regulated forms of Internet wagering allowed in the U.S., but for years it has had to compete with unregulated offshore gambling sites.

Frank Fahrenkopf Jr., president of the American Gaming Association, used the legal action to reiterate his call for Congress to make Internet poker legal in the U.S. and set up a means to regulate play.

“Tomorrow, Congress should begin changing the laws to protect consumers from such schemes,” Fahrenkopf said.

Frank Angst is senior writer for Thoroughbred Times