September 27 , 2011
In a stinging denouncement of Full Tilt Poker’s business principles, the United States Department of Justice has significantly raised the stakes in the company’s bid to extricate itself from the government’s grip and escalating financial woes.
In a press release last Tuesday, the Government labeled Full Tilt’s operations as that of a Ponzi scheme, one that had bilked its most loyal players mercilessly. The mainstream media as well as poker media took the bait, catapulting the Justice Department’s latest allegations against Full Tilt and its Board of Directors into page one news worldwide.
The DOJ’s gambit to present, in a press release, FTP and its Board as crooks to be likened to the famously loathed Bernard Madoff was backed up in legal papers presented by the U.S. Attorney’s Office for the Southern District of New York before Federal District Court Judge Leonard Sand, one day earlier.
The Government asked permission of the Court in its September 19th filing to amend its April civil forfeiture action against Full Tilt, Poker Stars, and Absolute Poker/Ultimate Bet to include a seizure warrant against various bank accounts related to FTP board members Ray Bitar (who is also facing a related criminal indictment), Howard “The Professor” Lederer, Christopher “Jesus” Ferguson and Rafe Furst.
By the end of the week, Judge Sand had granted the Government’s motion but not without Full Tilt lawyers and other attorneys excoriating the DOJ as somewhere between over-zealous and downright wrong in calling FTP’s operation a Ponzi scheme.
The DOJ’s recent actions have not only incensed the defendants’ lawyers, but their press release has also raised questions as to the teachings in 9th grade civics classes! We are left to ponder:
Was the public effectively misled by the Justice Department’s rhetoric? Was the U. S. Attorney using its bully pulpit to showcase its power? Was the press release a carefully crafted document designed as a one-two punch to topple Full Tilt’s chances of retaining its Channel Islands-based license while attempting to deflect player grievances toward DOJ–for disruption of their poker activities and likely loss of their deposits— back to FTP? Has the Justice Department provided a stunning eye-opener on just how unscrupulously online poker business has been conducted—albeit at the peril of players?
Meanwhile, in an effort to set the record straight on some of the inaccuracies that crept into the last week’s reports by the likes of the Wall Street Journal as well as poker press, here are a few notable facts:
1. The U.S. Attorney’s Office in Manhattan has confirmed that, contrary to a report last week in the Wall Street Journal, NONE of the online poker companies referenced in the DOJ’s criminal and civil actions of April 15th has been indicted—only the eleven individuals so-named.
2. Likewise, none of the Full Tilt Directors, except for Raymond Bitar, have been indicted.
3. According to the AGCC’s website, licensees are permitted to co-mingle participant monies with corporate funds; they are required to disclose such facts to AGCC, and FTP did so. They are similarly required to advise their players. Various FTP public communications as well as reported emails effectively hid this fact.
4. Publicly available AGCC documents also indicate that Full Tilt put itself at immediate risk with its regulators by failure to reimburse player deposits due to them in a timely manner.
5. Since the suspension of the FTP license by the AGCC, FTP was ordered to “ring-fence” identifiable player funds under their control.
As we go to press, the AGCC remains mute as to continuation of the Full Tilt license. The DOJ has cast a further cloud over FTP’s ability to find a viable investor to rescue its players. And, for the moment, Full Tilt customers are forced to wonder if the warring parties are more intent on jockeying for position in the court of public opinion ahead of dealing with the fallout for innocent victims.
In the next edition of Poker Player Newspaper, I’ll discuss pressing questions and issues as the DOJ’s actions in the world of online poker continue to grow in impact, challenges, and instructive opportunities.