Poker Site Defends Business, Not a Ponzi Scheme
By SUSANNA KIM
Sept. 22, 2011
abcnews
The operators of online gambling site Full Tilt
Poker, charged with running a $440 million
Ponzi scheme by federal authorities, say what
happened to them was simply
mismanagement, not a scam.
"Banks fail for not having sufficient revenue to
cover customer deposits all the time. No one
refers to such failures as Ponzi schemes. And
there was no Ponzi scheme here," said Jeff
Ifrah, an attorney for Full Tilt Poker.
"Players were not investing in any company-
run investment vehicle. Players were never
promised any type of high rate return. Players
just wanted to play poker and the company
offered that service," he said. Ifrah explained
that in late 2010, the company suddenly
found itself unable to meet the player
withdrawal demand.
Full Tilt was shut down in April by federal
authorities. "Full Tilt was not a legitimate
poker company, but a global Ponzi scheme,"
Preet Bharara, the U.S. Attorney for the
Southern District of New York, said in a
statement Wednesday.
The site told players their gambling accounts
were secure and available for withdrawal at
any time when in fact, "Full Tilt Poker did not
maintain funds sufficient to repay all players,"
Bharara said. The operation allegedly used
player funds to pay board members and other
owners more than $440 million since April
2007.
The complaint named board members
Raymond Bitar, Howard Lederer, Christopher
Ferguson and Rafael Furst as defendants.
"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 DOJ statement.
Ifrah said the individuals added to the civil
complaint will "certainly have comments on
the allegations against them." If they received
distributions at a time when the company was
underwater, the individuals will need to
defend whether the distributions are subject
to seizure as the amended complaint alleges.
On April 15, 2011, the Justice Department
Poker Site Defends Business, Not a Ponzi Scheme
filed a complaint for money laundering, fraud,
and violating the 2006 Unlawful Internet
Gambling Enforcement Act against 11
individuals who ran PokerStars, Full Tilt Poker
and Absolute Poker.
"But even if the government can prove that
case and forfeit such distributions, such a
case simply does not amount to a 'global
Ponzi scheme' as the US Attorney stated in his
press release," Ifrah told ABC News. "The
inflammatory description by NY's lead federal
prosecutor has nothing to do with the
allegations in the amended complaint and the
timing of these comments is most
unfortunate."
Ifrah conceded that Full Tilt may have been
mismanaged, and the company "may have
made poor decisions."
The Justice Department's shutdown of online
poker sites has affected millions of poker
players and the poker industry.
In June, Phil Ivey, one of the world's best poker
players, announced he was suing his sponsor,
Full Tilt, in June for $150 million and
boycotted this year's World Series of Poker
(WSOP).
