Full Tilt Poker dealt with this problem by crediting player accounts without disclosing its inability to fund those credits, letting players make online poker bets with $130 million of “phantom funds” that resulted in a cash shortfall, the feds say. government’s efforts to disrupt the payment processors that facilitate deposits and withdrawals in the online poker industry. According to federal prosecutors, for many months Full Tilt could not collect funds from U.S. operations.īitar and Full Tilt denied wrongdoing, but Bharara’s blow in April had a devastating effect on Full Tilt because the company had been dealing with a cash crunch. At the same time, Bharara launched a money laundering complaint that sought $3 billion from Full Tilt Poker and two of its rivals, and moved to effectively shut down Full Tilt's U.S.
In April Bharara unsealed an indictment against Ray Bitar, Full Tilt’s chief executive, claiming he had been operating an illegal gambling business. The explosive Ponzi scheme allegation is the latest escalation between federal prosecutors in Manhattan and Full Tilt Poker. To be sure, federal prosecutors do not claim in their amended civil complaint that Full Tilt, until recently the world’s second-biggest online poker firm, was an investment fraud rather they allege that Full Tilt’s board members got rich because the company improperly used betting funds online poker players had deposited with the company to pay corporate dividends. Imrich pointed to the Securities & Exchange Commission’s definition of a Ponzi scheme, which states that a Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Attorney in Manhattan, said in a statement that “Full Tilt was not a legitimate poker company, but a global Ponzi scheme.”
In addition to amending the civil complaint, Preet Bharara, the U.S. Federal prosecutors in Manhattan on Tuesday added Ferguson’s name to a civil money laundering complaint, claiming that Full Tilt Poker improperly used funds of online poker players to pay members of its board of directors-including Ferguson and Howard Lederer, a fellow poker champion-$440 million since April 2007.