Earlier this year, the feds cracked down on a number of online gambling sites, including the popular Full Tilt Poker. On Tuesday, the U.S. Justice Department accused Full Tilt of doing far worse than illegal gambling, though, filing a civil suit and releasing a statement saying it "was not a legitimate poker company, but a global Ponzi scheme." Here, a brief guide:
What is Full Tilt Poker?
It's an online poker company once so huge it had 54,000 players in a single tournament. In the spring, the site — owned by professional poker players Howard Lederer, Chris Ferguson, and Rafael Furst, and a manager named Raymond Bitar — was blocked from operating in the U.S. in an FBI online gambling crackdown. Some called this an infringement on freedom; others, like Felix Salmon at Reuters, cheered, saying "it's the job of the government to look after the weakest members of society." On Tuesday, the Justice Department said Full Tilt wasn't just breaking gambling laws but defrauding customers out of hundreds of millions of dollars.
What do prosecutors say happened?
Justice Department lawyers say Full Tilt was essentially running "a global Ponzi scheme," using the money in players' accounts to cover operations and expenses, and to handsomely pay the website's owners. Investigators say Full Tilt paid its board members $444 million in players' money over four years. According to Full Tilt Poker accounting records, as of late March, the company owed players around $390 million but had less than $60 million in the bank. Full Tilt had assured players that the money they deposited and won was "segregated and held separately from our operating accounts."
How long did this go on?
Federal lawyers think Full Tilt started to face cash issues in 2010 as the government made it harder for gambling sites to accept new bets. By August of that year, Full Tilt's payment processing had been "severely disrupted," and it was no longer able to get funds from users' accounts. At that point, the feds say, Full Tilt began crediting accounts with "phantom funds" that it didn't actually have the cash to back up.
What has Full Tilt's reaction been?
David Angeli, the lawyer for Rafael Furst, says his client "hasn't done anything wrong... He always acted in what he believed was the best interest of players and anyone associated with Full Tilt." The attorneys for Raymond Bitar and Chris Ferguson had no comment, says The Wall Street Journal, while Howard Lederer was unreachable.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How the South's ugly racial history is haunting ObamaCare
- The real story behind Deliver Us From Evil
- 43 TV shows to watch in 2014
- If Democrats abandon immigration reform after Tuesday's likely loss, they will turn 2016 into a debacle
- What if Leo Strauss was right?
- Beware of Splenda: The backlash against artificial sugars
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- 6 things the happiest families all have in common
- Stop making fun of philosophy and read some philosophy
- What would a U.S.-Russia war look like?
Subscribe to the Week