On September 20, the U.S. Justice Department accused poker stars Howard Lederer and Christopher Ferguson, directors of the website Full Tilt Poker, of defrauding poker players out of $300 million, reported the Wall Street Journal.
A civil complaint in April had accused the site of bringing in $444 million for poker celebrities, including Lederer and Ferguson. The U.S. Attorney in the Southern District of New York on Tuesday filed a motion to amend the civil complaint to allege that Lederer and Ferguson, and two other Full Tilt Poker directors, what the the Justice Department has called a Ponzi scheme.
Full Tilt executives allegedly misrepresented to the website’s players that the money the company held in player accounts was safely held. It was actually being used for other purposes—to pay out $444 million to themselves and other owners, accused the US. Justice Department.
“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.
The attorney for Full Tilt Poker today defended the executives behind the poker site. “While the government has obviously taken issue with the underlying activities of FTP, under any reasonable interpretation, the world-wide operations of the online cardroom are not a so-called Ponzi scheme,” Full Tilt Poker attorney Ian Imrich told The Wall Street Journal in the article Full Tilt Fires Back at the U.S.
The issues at Full Tilt result from a problematic bank, not an investment scheme intended to defraud players, said Jeff Ifrah, an attorney representing the company and personal attorney of Chief Executive Raymond Bitar. “A Ponzi scheme requires an investment vehicle in order to receive a certain rate of high return,” Mr. Ifrah told the Journal. “None of those things happened here.” Instead, he said, “maybe it was mismanaged.”
Charges against online poker sites may affect the chances of legalizing online gaming in the United States. Tribal led organizations like the California Online Poker Association (COPA), a coalition of California tribes and card rooms led by the Morongo Band of Mission Indians, have long advocated legalizing online poker in California.