Full Tilt declared a ponzi reports WSJ

Quote: Nareed

In this context, let's say the prosecutor calls you "a dangerous psychopath who shows no regard for human life," not in court, but in a press conference about the case. That seems to me to be way over the line, expecially since your prior record blatantly contradicts the prosecutor's assertions.

Wouldn't that be slander?

This would not be slander, even if it was not protected. Expressing opinions is not slander. It would have to be an intentional statement of a fact, known to be false. If a prosecutor (or anyone else) believes you show no regard for human life, he has every right to say so. Especially in this case, since he can demonstrate some basis (however questionable) for such belief.
An example of slander would be if someone makes a public statement that you were driving drunk, while in fact you were not, an the offending party actually knows that his statement is false. Such statement can be construed as slanderous, but you can not sue a DA for slander in this case because, as an officer of the court, he is assumed to act in good faith (i.e,. actually believe the facts to be true). If you can prove he did not you may have a case of malicious prosecution, but that is not easy.

Quote: boymimbo

kp,

Casinos, by law, in Nevada, must keep enough cash in reserve to pay every chip on the floor. However, companies like WalMart or your local convenience store are not required to keep cash deposits to cover its inventory. However, it is required to be able to pay back money left in layway. Customer Some companies run very short on cash. Banks are another example. If every customer of the bank came to the branch and required its deposit back, the bank would have to call in mortgages to cover. The point is that a bank must have some very liquidable assets (stocks, short term bonds) to cover all of its customer deposits. Full Tilt failed to do so, instead electing to use a significant portion of its customer deposits to pay its boardmembers.

A casino, a bank, and a retail store are three very different business models.

A retail store buys inventory, sells it at a profit, skims the profit, and uses the rest to buy more inventory.

A bank takes in deposits, loans them out, collects interest on the loans, and pays pay a portion of the interest to the depositors.

A casino takes in cash, turns it into chips/credits, hosts games of chance where you wager your chips/credits against each other (poker) keeping a small percentage from the winner (rake), and then redeems your chips/credits back into cash.

It would be highly improper for a casino to loan out player funds between the time you buy chips and when you redeem those chips back for cash. A casino is not a bank where you are getting paid interest on your deposits.

Quote: boymimbo

It would make sense to have a different account outside of operating capital for customer deposits. These deposits should be held separately. Was there a law for this in Full Tilt's jurisdiction?

Full Tilt had a jurisdiction? These companies are offshore for a reason. Part of that reason is to be unregulated.

Quote: kp

Full Tilt had a jurisdiction? These companies are offshore for a reason. Part of that reason is to be unregulated.

"Offshore" does NOT mean that they were operating out of a ship in the middle of the ocean. It typically means outside of the US. It can be expanded to mean outside of any major country. It usually means a small island nation.

The jurisdiction may have had very favorable laws, but there absolutely WAS a jurisdiction, somewhere....

Yeah, I know the difference between a business, bank, and casino. I've done work at all three.

For me, the question is "what is a Ponzi scheme?".

Quote: Forbes

Federal prosecutors in Manhattan said on Tuesday they were filing legal papers as part of a civil money laundering complaint that alleged Full Tilt Poker improperly used funds of online poker players to pay members of its board of directors, including famous poker players Howard Lederer and Christopher “Jesus” Ferguson, $440 million since April 2007.

Bharara announced the filing of a motion to amend a forfeiture and civil money laundering complaint that was filed in April, alleging that Full Tilt and board members Lederer, Ferguson and Rafael Furst, together with Full Tilt CEO Ray Bitar, defrauded poker players out of some $300 million by not maintaining funds at the company sufficient to repay players.

What confuses me (and what has always confused me) is that Full Tilt is not operating on US soil, so how can they be prosecuted? It's a "civial money laundering complaint" meaning that the government is after their money, with the intent really of shutting them down.

So, for me, all the government is doing is raising awareness of the issue and the fact that Full Tilt does not keep nearly enough money on hand to repay its deposits. There's nothing illegal about it as Full Tilt is not running on US soil. The judge may rule in the government's favor which would result in a massive fine that couldn't be paid anyway.

And this is the problem with dealing with offshore on-line gambling sites. You really don't know that your money is safe and secure unless there are laws in that jurisdiction that state that a percentage of cash deposits must be kept on hand. There's nothing stopping any off-shore company from taking that $1000 deposit and buying cocaine with it and hope that the next depositor deposits enough cash to pay the winnings. Even with the run on Full Tilt poker, companies are supposed to be paying their executives and employees with profits, not with cash deposits.

IMHO the US Gov't is throwing around terms like 'Ponzi Scheme' merely for salacious value. AS others have stated, prosecutors love to do this to win the media battle before the court battle. I think they know that they can't win on 'online gaming is illegal' merit, so they go for something else, which is why UIGEA was drafted in the first place.

Continuing MHO, I still say that WYNN, LVS, CET have their hands in this. They need established online gaming players knocked into the stone ages, so to speak, so that they can get their versions up and running, which I am betting will be suddenly welcomed by US Gov't with open arms (and palms filled with tax $)

Quote: boymimbo

For me, the question is "what is a Ponzi scheme?".

SEC Definition
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.

During FY 2010, the SEC filed 47 enforcement actions involving Ponzi schemes or Ponzi-like payments.

Ponzi and pyramid schemes are closely related because they both involve paying longer-standing members with money from new participants, instead of actual profits from investing or selling products to the public.

They go on to say that this statement is not a legal interpretation nor a Statement of SEC policy.

I had the foresight (snark) to use PokerStars when I chose my online poker destination. Some friends of mine were not so fortunate.

I recently played poker in the WSOP circuit event over in Bossier City, LA. It was surreal to see WSOP posters of Chris Ferguson et al. prominently displayed in the poker room and around the Horseshoe. Some of the other posters featured players who were pimped out in Full Tilt regalia. You can imagine that this did not go over well with the online poker crowd.

Pretty good thread on 2+2 where Durrr is answering questions on the situation based on what he knows. For those of you who don't know, Durrr pledged to return what Tilt paid him which is around a million dollars to players. I never really have cared for him but after reading this thread I have a lot of respect.

Its a world of "stars" but it seems those "stars" often have links to site ownership rather than just spokesman status. It also appears that atleast one such star was involved in a See The Hole Cards program on one site.

This renders the flea bespeckled "stars" suspect for having knowingly laid down with the dogs.

http://news.cnet.com/8301-13506_3-20110024-17/full-tilt-poker-lashes-out-at-ponzi-scheme-claims/

Its funny, now the attorneys are arguing about the semantics of the accusation. I guess they should have just said fraud. This was a pretty simple business to run they just got greedy and f'ed it up.
They confused player deposits etc... with their working capital. Fraud is pretty much illegal in any jurisdiction. I think they realized they were going to get shut down do to money laundering/OFAC/patriot act violations and figured its best to pay themselves out if they can.

Since I have never used an online casino are/were they a pain in the ass to get $$ out of?

Quote: Scotty71

Since I have never used an online casino are/were they a pain in the ass to get $$ out of?

I have money on FT and on PS. As far as I'm concerned the FT account is toast. Should they manage to work something out with Alderney (not likely after this morning's not-so-positive statement that they may pull the plug on Pocket Kings gaming license permanently) and the feds (good luck with that) and find an investor (someone had better have deep pockets) then perhaps players will see some money but I'm not holding my breath. I had just over $4,000 on FT after my last cash out and I don't expect to see any of it. The way I look at it, I've made a lot of money playing on-line poker and this is just a bad beat. I'm not saying that $4K is nothing but it's not more than I've won or lost in a good or bad session. I still play on PS and I'm still making money. I now keep my balance lower than I used to and I know (as I always have known) that there are no guarantees with on-line gaming. Up until Black Friday I'd never had any problems or delays getting cash out. I feel safe with PS but I might very easily be proven wrong. It's no worse than being robbed at a home/private game but the difference here is that I don't have a gun in my face.

Ponzi scheme? No. Fraud? Absolutely. The money won is won from other players, not from Full Tilt. Full Tilt's profit is the rake and the tournament fees, and any advertising revenue and merchandising revenue. THERE IS NO REASON to not have the money to pay winners, unless money was fraudulently diverted from the money in circulation among the players.

There is no excuse for not having the money. None.

Quote: Mosca

Ponzi scheme? No. Fraud? Absolutely. The money won is won from other players, not from Full Tilt. Full Tilt's profit is the rake and the tournament fees, and any advertising revenue and merchandising revenue. THERE IS NO REASON to not have the money to pay winners, unless money was fraudulently diverted from the money in circulation among the players.

There is no excuse for not having the money. None.

This post is by no means an excuse for anybody who MAY have committed a guilty act, and does not serve as a defense of what was done... just a disclaimer.

Accusing those at Full Tilt guilty of a "Ponzi Scheme" to me is very misleading and to me, libelous unless it is specifically known that they were using new funds generated to pay out current customers. If Bernie Madoff never existed, I don't think it would have QUITE the negative connotation. But a LOT of people are still reeling from what he did, and knew ALL ALONG it was a Ponzi scheme.

There's a difference between premeditated murder and murder committed in the heat of a moment. There may even be different terms used, Murder vs. Manslaughter. They both had the same ends, but how they are viewed in the eyes of the public are quite different. If they committed fraud, then call it fraud. If they were running a Ponzi scheme, then call it that. But the media (and DA office apparently) should be very careful in how they use the terms.

If the results were because of the shutdown, which from I read it wasn't, then I'd even hesitate to label it fraud. The government made it difficult for people to get their money... not an excuse mind you, but to me, each scenario would and should be handled differently.

Quote: TheNightfly

I have money on FT and on PS. As far as I'm concerned the FT account is toast. Should they manage to work something out with Alderney (not likely after this morning's not-so-positive statement that they may pull the plug on Pocket Kings gaming license permanently) and the feds (good luck with that) and find an investor (someone had better have deep pockets) then perhaps players will see some money but I'm not holding my breath. I had just over $4,000 on FT after my last cash out and I don't expect to see any of it. The way I look at it, I've made a lot of money playing on-line poker and this is just a bad beat. I'm not saying that $4K is nothing but it's not more than I've won or lost in a good or bad session. I still play on PS and I'm still making money. I now keep my balance lower than I used to and I know (as I always have known) that there are no guarantees with on-line gaming. Up until Black Friday I'd never had any problems or delays getting cash out. I feel safe with PS but I might very easily be proven wrong. It's no worse than being robbed at a home/private game but the difference here is that I don't have a gun in my face.

How did they pay you (cash out), check, wire transfer?

Quote: Tiltpoul

This post is by no means an excuse for anybody who MAY have committed a guilty act, and does not serve as a defense of what was done... just a disclaimer.

Accusing those at Full Tilt guilty of a "Ponzi Scheme" to me is very misleading and to me, libelous unless it is specifically known that they were using new funds generated to pay out current customers. If Bernie Madoff never existed, I don't think it would have QUITE the negative connotation. But a LOT of people are still reeling from what he did, and knew ALL ALONG it was a Ponzi scheme.

There's a difference between premeditated murder and murder committed in the heat of a moment. There may even be different terms used, Murder vs. Manslaughter. They both had the same ends, but how they are viewed in the eyes of the public are quite different. If they committed fraud, then call it fraud. If they were running a Ponzi scheme, then call it that. But the media (and DA office apparently) should be very careful in how they use the terms.

If the results were because of the shutdown, which from I read it wasn't, then I'd even hesitate to label it fraud. The government made it difficult for people to get their money... not an excuse mind you, but to me, each scenario would and should be handled differently.

This would have to be premeditated so to speak, a run on the bank scenario shouldn't hurt a company like this because idle player money should be on deposit and sitting as a liability on their balance sheet, not an asset to draw down to meet operating expenses. FT to my knowledge wasn't putting capital at risk gambling so they really couldn't get in that kind of bind unless the made themselves a bridge-loan with client deposits with the intent of paying back ASAP with a new line of credit etc..

I hope they make the accounting public if it goes to trial. I would love to know who if anyone was doing their external audit.

Quote: Tiltpoul

Accusing those at Full Tilt guilty of a "Ponzi Scheme" to me is very misleading and to me, libelous unless it is specifically known that they were using new funds generated to pay out current customers.

If they spent funds from current customers, then they would have no choice but use funds from new customers to pay out those current customers.

Quote: Tiltpoul

This post is by no means an excuse for anybody who MAY have committed a guilty act, and does not serve as a defense of what was done... just a disclaimer.

Accusing those at Full Tilt guilty of a "Ponzi Scheme" to me is very misleading and to me, libelous unless it is specifically known that they were using new funds generated to pay out current customers. If Bernie Madoff never existed, I don't think it would have QUITE the negative connotation. But a LOT of people are still reeling from what he did, and knew ALL ALONG it was a Ponzi scheme.

There's a difference between premeditated murder and murder committed in the heat of a moment. There may even be different terms used, Murder vs. Manslaughter. They both had the same ends, but how they are viewed in the eyes of the public are quite different. If they committed fraud, then call it fraud. If they were running a Ponzi scheme, then call it that. But the media (and DA office apparently) should be very careful in how they use the terms.

If the results were because of the shutdown, which from I read it wasn't, then I'd even hesitate to label it fraud. The government made it difficult for people to get their money... not an excuse mind you, but to me, each scenario would and should be handled differently.

The shutdown should have had no bearing on whether or not the funds were actually there. If there was no intent of fraud, the money would have been there.

The reason it doesn't fit a Ponzi scheme is because there was no investment, and no promise of huge returns. It was simply looting from funds that were supposed to pay winnings. It has some characteristics of a Ponzi, such as the mechanics, but the con itself is different. My guess is that there was never any intent to pay. Perhaps at some time the main players were going to step in and "win" the money they'd looted in high stakes games to balance it all out. But really I have no idea how they couldn't know a reckoning would be due some day.

I'm glad nobody took me up on my offer to buy Fult Tilt balances for 90¢ on the dollar shortly after Black Friday. Guess I was wrong about that one.

Quote: Scotty71

How did they pay you (cash out), check, wire transfer?

I got a cheque (from both FT and PS) and usually within 5-7 business days. Different banks for almost every payout - from different accounts I guess.

New poster here, lost money on FTP, but not enough to change my life. Lost and won like many others, but stopped playing near the end as the bots seemed to take over and the cards ran bad. If they were using new money to pay out winnings, then they took the money and should be charged, simple as that.

Would anyone buy a Ponzi Scheme???

The AP reported French sports tycoon Bernard Tapie has agreed to buy the company on condition that the company settle its legal troubles favorably. Tapie served six months in prison in 1997 after being convicted of bribing soccer players to throw a 1993 match, a severe sentence based on weak evidence giving rise to speculation of continued legal difficulties imposed upon him by socialists.

Maybe it wasn't a ponzi scheme.
Maybe the money they took out of the player deposits was money Full Tilt won from the players with the FT bots?

I have no basis for this thought other than the evilness from my own mind and what I might be tempted to do if I were a mad genius.