Online Gambling

Fult Tilt Poker or Full-Tilt Ponzi Scheme? Chris "Jesus" Ferguson Indicted Named in Legal Action.

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[Former Reasoner Radley Balko talks to Jesus Ferguson and Andy Bloch (pictured) about the politics of online poker. Date: April 1, 2008]

The Wall Street Journal reports:

The U.S. Justice Department on Tuesday accused poker celebrities Howard Lederer and Christopher Ferguson among other executives of a major poker website of defrauding poker players out of more than $300 million.

The U.S. Attorney in the Southern District of New York filed a motion Tuesday to amend an earlier civil complaint to allege that Mr. Ferguson, Mr. Lederer and two other directors for the website, Full Tilt Poker, operated what the Justice Department says was a Ponzi scheme that allowed the company to pay out $444 million to themselves and other owners, which included other famous poker players.

In the motion to amend the complaint, the government alleges Full Tilt executives misrepresented to the website's players that the money the company was supposed to be holding in player accounts was safely held when it was actually being used for other purposes, including payments to owners.

The distributions to the owners continued even as funds to pay out creditors—the poker players—dwindled because government investigators had made it increasingly impossible to move player money into company-affiliated bank accounts, the government says.

"Full Tilt was not a legitimate poker company, but a global Ponzi scheme," said Preet Bharara, U.S. Attorney for the Southern District, in a statement….

An attorney for Mr. Ferguson didn't respond to requests for comment while attempts to reach Mr. Lederer on the phone weren't successful.

Hope it's not true, for all involved. We'll update the story as more becomes known. Hat tip: Tim Clark of the great mag Government Executive.

Reason on online gambling.

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  1. Hmm, I stipulate it is possible that there was fraud but I never believe what a government type says about anything until it’s backed up by multiple confirmations.

  2. I hope it’s not true as well, but the fact that Phil Ivey is suing these guys sure isn’t a good sign. He must be out a frightening amount of money, because he didn’t even play in the WSOP at all this year.

    If it really is true, this coming on the heels of the Ultimate Bet cheating scandal could well be the death knell for any possibility of internet poker ever being legal in the U.S.

    1. “could well be the death knell for any possibility of internet poker ever being legal in the U.S.”

      Nonsense, first, it wasn’t on the heels of anything, the UB/AP crap was several years ago.

      Second, Steve Wynn isn’t going to give up on a business that has this much untapped potential.

      Third, this is EXACTLY the type of story that REGULATORS (I.e. those in government) like to see to justify their existence.

      In short, you are pretty much wrong on all counts.

      1. Personally I hope that you’re right, but I think you’re wrong.

        It doesn’t make any more sense than the “War on Drugs”, but for whatever their stupid reasons are, I think the government has simply decided that they don’t want to allow Americans to gamble on the internet, and that they’re not going to change their minds.

  3. as one of the staunchest proponents of poker rights around, i truly hope this is not true. of course neither chris ferguson nor andy bloch are cops, so hopefully reasonoids won’t jump to conclusions and automatically assume all accusations agaisnt them must be true.

    i hope to god they are not true. fwiw, when online poker was still legal in WA state (it’s a C felony thanks to our leftwingasshole legislature) i never particularly liked full tilt’s website. i preferred several other poker sites. )

    regardless, IF this is true, it is serious fraud. however, considering the govt. hostility to online poker, i’m remaining agnostic (just as i usually am with such allegations even against evul cops(tm) until more facts are presented.

    1. ugh. should be “chris ferguson and howard lederer” not andy bloch. duh

    2. “i truly hope this is not true”

      You clearly haven’t been paying attention, it has already proven true, now it’s just watching the fallout.

      And Andy Bloch was a Full Tilt principal too.

      1. look i realize reasonoids love a rush to judgment ™ and it very well MAY be true, but i simply do not rush to judgment.

        i note that balko, who i respect does not EITHER e.g.
        “Hope it’s not true, for all involved.”

        as i’ve said a metric assload of times, i have a lot of respect for balko, gillespie etc. vs. the reasonoids in this respect

        again, it very well may be true. but i have not come to that conclusion yet

        hth

        1. “look i realize reasonoids love a rush to judgment ™ and it very well MAY be true, but i simply do not rush to judgment.”

          Then you should fucking educate yourself asshole, this story has played out daily at 2+2, and the amended charges from today merely formalize information that was well known there for a long time.

          This has fuckall to do with reasonoids, and everything to do with well connected people in high places at FTP that have repeatedly and independently verified these things to be true.

          In other words, as i just said, IT HAS ALREADY PROVEN TRUE and your ignorance of that isn’t “avoiding a rush to judgement” it’s just plain fucking ignorance.

          httyfo

          1. The funny thing is, I post with valid info that you clearly don’t have, indicating a more informed opinion than yours, and rather than take advantage of the opportunity to educate yourself, you shoot off about “rushing to judgement”.

            Fuck you dunphy, fuck you long and fuck you hard.

            1. “Fuck you dunphy, fuck you long and fuck you hard.”

              Don’t waste your cock’s time fucking that pile of pig shit.

              1. smooches, pip!

          2. yawn. all i know is what i read in the article and i don’t dispute for a second that what you say is true. for the umpteenth time

            but reasonoids DO rush to judgment when the meme fits their conception of reality. we see itall the fucking time.

            whether or not this is an example of it FOR YOU, is not the point. but if you truly did your research and came to an informed conclusion, i sincerely apologize to you for lumping you in with the hoi polloi

            sorry

            1. “i sincerely apologize to you for lumping you in with the hoi polloi”

              You should.

              1. and i did. ph33l my love!

            2. Blow me, bitch.

    3. Dunphy cops are automatically guilty if they are not charged. If a cop is charged, then a libertarian doesn’t know who to root against.

  4. Tulpa, explain to me why this is not like Social Security…

    1. Two differences between FTP and Social Security:

      1) Nobody forced me to send money to Full Tilt Poker.

      2) I enjoyed playing at Full Tilt Poker until the FBI busted it.

      Still, I am mighty pissed off at FTP and everybody affiliated with its management … including Chris Ferguson. He’s a smart guy; he either knew or should have known of the fraud at FTP.

      As for Social Security, well, I’ve gotten used to knowing that FICA is really just another tax on income.

  5. Emails exist that document the arc of this story, as sad as it sounds, the charges are pretty much spot on.

    For example, shorty after Black Friday, Ray Bitar (a FT principal and owner) admitted that a “bank run” of as little as 5 million would expose the financial irregularities.

    This, from the owner of a site that once had single POTS in excess of a million dollars.

    This happened, and it’s as bad as the DOJ is claiming. Meanwhile, no one who had any money on Full Tilt has seen a dime for months.

    1. btw, i have a lot of respect for phil ivey as a very clear headed, level headed dood, so that adds to my suspicions that this could be true

      1. And as I just told you, if you had bothered to educate yourself, you’d know it IS true.

        1. and as i am making clear, i do not dispute this.

          all i know AT THIS POINT is your assertions and what i read in the article.

          assuming it’s true, it’s totally fucked and i am sure i will be exposed to more data and i will draw a conclusion

          i have been out of the online poker loop (former very profitable online player) since my fuckstick leftwing legislature made it a C felony

          they don’t intend ot prosecute anybody for it, and haven’t, but since i am a cop, i would certainly lose my job if i played online poker, so i don’t

          1. “all i know AT THIS POINT is your assertions and what i read in the article.”

            I GAVE YOU A LINK FUCKWIT. USE IT.

              1. I can understand his frustration. dunphy still holds that the beating death of Kelly Thomas may have been warranted. We just don’t have all of the facts, so who can say?

                1. actually, RECENT developments make it significantly less likely.

                  some of us live in the reality based, evidence based community.

                  pip lives in his mama’s basement eating hotpockets while she lovingly wipes his ass

            1. you obviously lost your shirt to these ponzassclowns. it sucks. lesson learned. rebuild.

          2. oh, it’s totally fucked … that’s indisputable

  6. Meanwhile, no one who had any money on Full Tilt has seen a dime for months.

    Didn’t the gubmint seize a bunch of on-line poker player accounts a few months ago?

    1. They allowed accounts to be cashed out. AKAIK all the Pokerstars accounts were paid.

  7. This is why online gambling sites were made illegal. I might be old, but I know these sites were playing with a “stacked deck”. Sometimes people who are gambling addicts are to addicted to do the right thing. Now these people are out of money, who will get it back for them? I hope the DOJ prosecutes these scum and return the money to the addicted gamblers!

    1. C- Needs more [brackets]

  8. * Tricking banks: “The principals of the Poker Companies?deceived or directed others to deceive United States banks and financial institutions into processing billions of dollars in payments for the Poker Companies, by, among other things, arranging for the money received from United States gamblers to be disguised as payments to hundreds of non-existent online merchants and other non-gambling businesses?” the lawsuit said.

    In part, the lawsuit says some of the defendants fooled Visa and Mastercard ? which had blocked payments to gambling sites ? by directing “others to apply incorrect transaction codes?and create the false appearance that the transactions were completely unrelated to internet gambling.” The lawsuit says an Absolute Poker document from 2007 identified 20 Internet shopping websites ? including petfoodstore.biz and bedding-superstore.tv ? being used as fronts for credit-card transactions.

    * Shifting money: “[I]n or about the summer of 2010, Full Tilt Poker’s payment processing channels were so disrupted that the company faced increasing difficulty attempting to collect funds from players in the United States. Rather than disclose this fact, Full Tilt Poker simply credited players’ online gambling accounts with money that had never actually been collected from the players’ bank accounts. Full Tilt Poker allowed players to gamble with ? and lose to other players ? this phantom money that Full Tilt Poker never actually collected or possessed.”

    * Assuring Players their Money Was Safe: According to the lawsuit, Full Tilt Poker sought to tamp down players’ concerns about the safety of their accounts. In 2008, according to the lawsuit, a “representative of Full Tilt Poker management, posting under the name ‘FTPDoug'” wrote to on an online forum for Internet poker: “Players’ funds at Full Tilt Poker are kept in several deposit accounts throughout the world, all of which are separate and distinct from our operating accounts.”

    * Putting the ‘P’ in Ponzi: “Full Tilt Poker provided no protection whatsoever to deposits it received from players in the United States and other countries, and simply used the funds it claimed it was holding on account for its players to cover business expenses and to pay hundreds of millions of dollars in distributions to professional poker players affiliated with Full Tilt Poker and others who owned interests in Tiltware LLC,” the lawsuit said.

    I fail to see how this is NOT the fault of the government outlawing online gambling…sooo, are we indicting GBW and BO then?

  9. Far from being the death knell for the eventual legalization of online poker, I imagine execs at Harrah’s and MGM-Mirage are cheering this on. Only makes sense they’d prefer to eliminate or severely stigmatize the competition before HarrahsPoker.com eventually goes live with the DOJ’s blessing.

    Assuming this is all true*, this is simply a gift to Harrahs et al. But I suspect they were whispering loudly in DOJ’s ear in the leadup to Black Friday. Classic Baptists and Bootleggers scenario, but in this case the bootleggers are clearing out the competition before being blessed by the feds.

    *preemptive to reality: I know 2+2 and am not going to wade through a cheating thread over there right now, or probably ever; without clicking I’ll guess it’s at least dozens of, if not 100+, pages long and I’m just not that interested.

  10. In the motion to amend the complaint, the government alleges Full Tilt executives misrepresented to the website’s players that the money the company was supposed to be holding in player accounts was safely held when it was actually being used for other purposes, including payments to owners.

    Are we talking about poker or social security?

  11. Woah Woah Woah, from what I’ve read so far, it doesn’t sound like a Ponzi scheme, it sounds like an inverted pyramid scheme.

    1. They wanted to keep operating their site even though they couldn’t get any more money from accounts so they tried to operate it based on the cash left in it (basically early investors cash). Since they could only move money out, they paid out people that never really paid in.

    Does this sound about right?

    1. Also, it appears they were also fraudsters that used account money in place to pay their own bills, a huge nono. Basically they screwed up by allowing people to gamble without account money, then they more than likely kept taking “house” cuts from these phantom transactions, which amounted to taking real account money from fake accounts.

      They’re idiots that tried to float a system by when it was increasingly being sucked dry by insane legislators and they got caught in the whirlpool.

      The US government definitely deserves some of this blame if the issues really only started when they started locking down the US accounts.

      The FTP guys are idiots though and should be punished.

      1. and fwiw, this gaves the govt.’s claim that they were doing this stuff to “protect” people SOME credence.

        if a local business fucks you over, you have options

        if some poker website, based in cypress etc. (as many are) fucks you over -… not so much.

  12. FWIW, of all the coverage I’ve seen of today’s developments, this Reason article is the only one to make the claim that Chris Ferguson has been “indicted”. All other sources refer to amending DOJ’s existing civil suit against Full Tilt.

    I am not aware of any criminal charges against Mr Ferguson, and I’ve been following this story pretty closely.

  13. Wait, banks take depositor’s money to use for other purposes all the time!

    What, did FTP not meet the proper reserve requirements?

    😉

    1. excellent point.

    2. excellent point

    3. They cannot lend out money in demand accounts (checking), but how else did you think you were getting that .05% interest in your savings?

      1. You need to study up on fractional reserve banking if you really think that banks can’t lend out money held in demand deposits.

        1. LOL, what is this? Tag-team assholery?

  14. Thank God I played on Pokerstars, at least I was able to get my money back.

    1. You’re welcome.

    2. You’re Welcome

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