Full Tilt Poker Revealed as Ponzi Scheme By US Department of Justice

Back in April when the Black Friday indictments were revealed against PokerStars, Full Tilt Poker, and UB, many wondered why known major stakeholders such as Howard Lederer and Chris Ferguson were not implicated.  That has now been correct as the US Department of Justice announced today that they have filed an amended civil suit to include Howard Lederer, Chris Ferguson, and Rafe Furst.  In addition, it now appears that Full Tilt was no more than a glorified Ponzi scheme as opposed to a legitimate poker site.

Chris Ferguson (left) and Howard Lederer (right) were both implicated as major benefactors of the Full Tilt Ponzi scheme.

In a press release, the Manhatten US Attorney Preet Bahara stated, “As the proposed Amended Complaint describes in detail, Full Tilt was not a legitimate poker company, but a global Ponzi scheme.

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.

As described, Full Tilt 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.”

According to the amended complaint, Full Tilt Poker did not actually segregate player funds as the site intended.  Furthermore, it appears the company paid its owners and paid business expenses with the funds intended to go players.

In total, Full Tilt Poker owes $390,659,788 to players and prior to Black Friday, the company only had about $59,579,413 in funds remaining.  By June of this year, Howard Lederer told others at Full Tilt that only about $6 Million of those funds remaining.  The DOJ also revealed that they had an email from Ray Bitar after April 15th that claimed that they could not even sustain a “run on the bank” of even $5 Million.

The amount of funds owed to players is partially due to Full Tilt’s payment processors being unable to pull funds from player’s bank account.  As such, around $130 Million in funds were being posted as live funds and players continued to play with money with no actual monetary backing.

The amended report also revealed that Full Tilt owners were paid out $443,860,529.89.  Full Tilt CEO Ray Bitar was paid $41 Million and Howard Lederer was paid out at least $42 Million.  Chris Ferguson was allocated over $85 Million in payments, but only actually was paid $25 Million.  Rafe Furst received over $11.7 Million in payouts.

The complain also listed what percentage of Full Tilt that the Full Tilt insiders held.  Howard Lederer holds an 8.6% interest in the company and Ray Bit a 7.8% interest.  Rafe Furst holds a 2.6% interest in the company.  Chris Ferguson has the largest stake in the company, holding 19.2% of the company.  Ferguson was the primary designer behind Full Tilt Poker’s software when the site opened.

The remaining approximately $260 Million was paid out to 10 other owners of Tiltware, LLC.  One of those players received at least $40 Million as well as other loans which the player still owes $4.4 to Full Tilt.  While not named specifically, this seems to be Full Tilt Pro Phil Ivey.

The DOJ is seeking judgments against the those named as “FTP Insiders.”  They are seeking at least $40,954,781.53 from Ray Bitar, at least $41,856,010.92 from Howard Lederer, $25 Million from Chris Ferguson, and $11,706,323.96 from Rafe Furst.

Neither Full Tilt nor their attorneys have release a statement on the new allegations.  The company is currently in the middle of a license hearing with the Alderney Gambling Control Commission regarding the suspension of Full Tilt’s license.  The AGCC is actually mentioned in the new complain filed by the DOJ as being one of the companies that Full Tilt deceived in their Ponzi scheme process.

We will keep you updated on this story as new information arises.

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