DOJ: Full Tilt Poker a Ponzi Scheme

Eddie Braverman's picture
Rank: The Pro | 21,126

As much as I don't want to believe it, Howard Lederer may have screwed us all (well, a good many of us on this site anyway). According to the US Department of Justice, Full Tilt Poker was a massive Ponzi scheme, and poker legends Howard Lederer and Chris Ferguson (among others) were all in on it.

The DOJ alleges that Lederer, Ferguson, and two company directors managed to skim $444 million in player deposits. The deposits were supposed to be held in segregated accounts, but the indictment says the funds were used for pretty much anything the guys at the top wanted.

I know we have (or had, before the FBI crackdown) a lot of online poker players here on WSO. And this news just sucks. It's hard enough to get an edge in the game using your wits. I mean, the deck is already stacked against you when you're going up against top shelf talent and the deposit/withdrawal functionality of the site is dodgy (to put it mildly). To have to compete with the guys at the top screwing you is pretty gut-wrenching.

You would think the rake would be enough to get rich in a near-zero overhead operation. But human nature being what it is, I guess it's too easy to be greedy. I've long suspected heavy bot usage in online poker, and that means more of your money is going to the house. But to think that a couple of professional poker heavyweights are just flat stealing your money is almost too hard to believe.

Obviously, I'll reserve judgment until the facts emerge. And I'm not ashamed to admit that I've got my fingers crossed that it isn't true.

If anything, however, this should just prove to you that gambling (online or otherwise) should be legalized. Especially poker, because it's not really gambling. The free market would provide diverse competition between online card rooms and they'd be forced to keep each other honest. It's yet another area of our lives where more liberty is the answer, not less.

In any case, I'd be interested to hear from anyone who ever won big with Full Tilt Poker and managed to cash out. Did you actually get the money? I did most of my online poker playing with Pacific Poker, and I can vouch for them. I actually cashed checks from them several times.

Comments (27)

Sep 21, 2011

My brother is a current full time poker pro who cashes out periodically/whenever it gets over a certain number. I have a platinum elite guy on my friends list, (who hates the game btw but cant do anything else without taking a crazy earnings hit), who i will ask, but i guess they look after those guys a lot.

This cashing out friction is a damn good way of making sure they never need that $444m to pay back to players, so it sounds credible.

If this is true, and while i dont understand the whole legal aspect of it, the money is either in separate accounts or it isnt, so it sounds black and white to me. I hope these guys do time, this kind of corporate criminality in a time of recession really puts the whole economy at risk and while FTP wont bring down the US economy, it will send a really clear message to those at larger corps.

Sep 21, 2011

That's insane, FTP was basically the face of online poker.

I feel bad for Mr.Fox in London.

Just curious, why does the U.S. Government outlaw online poker ? I imagine this extends to sports gambling online too ? What's the real reason behind it ? Just the typical puritanical bullshit against gambling or some practical reason ?

Sep 21, 2011

Strictly Puritan bullshit.

Sep 21, 2011
Edmundo Braverman:

Strictly Puritan bullshit.

Agreed. Many laws like this date back to the early history of the US and have remained unchanged. Same reason why in many older states you can't buy alcohol on weekends, no happy hours in MA, and with a plethora of other outdated examples.

Also, in my opinion, and many others, poker is not gambling, and thus should not be outlawed. There is a large aspect of skill involved, and is very different from other forms of gambling. Same reason you see many of the same faces year to year at the final table at the main event.

Further, I believe the U.S. should allow online gambling inside the US, regulate it, and tax the hell out of it. Lot of money to be made, and keeps in on shore.

no way kimosabe, this is my house now --Brennan Huff

Sep 21, 2011

because it leeches money out the US economy. These companies are based abroad and pay no US staff. The dollar runs america, nothing else. All decisions are based thereon.

It was outlawed for puritain bullshit, but its stayed illegal because it just trims dollars out of hte US economy, assuming you know how these sites make their money.

Sep 21, 2011

They're based abroad because of draconian American gambling laws. Stop trying to legislate morality and prosecute victimless crimes and you'd see robust American competition in this space.

Think about it: if you're thinking about opening an online poker account where you have to buy a phone card (or something similarly ridiculous) and transfer the value of the card to an anonymous account on the Isle of Man, versus dealing with an American-based company you can just EFT your funds over to their American bank, which one are you going to do?

It's bullshit Puritan laws that force people to take these risks for a little entertainment.

Sep 21, 2011
Edmundo Braverman:

They're based abroad because of draconian American gambling laws. Stop trying to legislate morality and prosecute victimless crimes and you'd see robust American competition in this space.

Think about it: if you're thinking about opening an online poker account where you have to buy a phone card (or something similarly ridiculous) and transfer the value of the card to an anonymous account on the Isle of Man, versus dealing with an American-based company you can just EFT your funds over to their American bank, which one are you going to do?

It's bullshit Puritan laws that force people to take these risks for a little entertainment.

Couldn't have said it better myself. Don't get me started on state run liquor stores and liquor licenses. Man, I thought prohibition was repealed 80 years ago.

Sep 21, 2011

Way off topic, Eddie would you be interested in a little competitive sparring? I'm trying to plan a trip to Europe and this would give me an excuse to swing through France...

Sep 21, 2011

I have a hard time believing this. If this were really a problem i.e. a significant number of players can't cash out, wouldn't we have heard about it from the poker community? It seems like they're trying to nail FTP on a technicality.

Sep 21, 2011

Has anyone had problems with PokerStars? I've got a few hundred still in my account that I've been too lazy to cash out. Are they even still honoring cashouts?

My name is Nicky, but you can call me Dre.

Sep 21, 2011

@GoodBread For several months before the FBI crackdown, it became increasingly difficult to deposit/withdraw money from ALL the poker sites. So we wouldn't have heard specific complaints about FTP, just general complaints about what a pain in the ass the process was becoming thanks to the various "authorities".

Unfortunately, these difficulties could potentially provide the perfect guise for embezzlement. Like you, I have a hard time believing it myself, but the mechanics were certainly in place to make it possible at least.

Sep 21, 2011

Right, but as far I'm aware there hasn't been a big case of a site outright reneging on a player in spite of how difficult it may be to get your money back. When Stars and FTP were shut down, I remember a statement coming out saying players would be able to recover their money in full.

Sep 21, 2011

if this were legal in the US, it would have been easier to keep this shit from happening

i stopped playing anyways in 2006. used to play a lot of paradise and party, but around some time that year the bots took over.

Sep 21, 2011

I just want to point out that the "Puritan Laws" we have are based on the same system that the rest of the English Commonwealth and their Colonies use. A great deal of draconian principal we have is part of the common law that was used to set precedent and shape our laws. If you have a problem with it... just blame the English.

Sep 21, 2011

The lesson here: online poker is lame.

Sep 21, 2011
juniormistmaker:

The lesson here: online poker is lame.

Get past a single-digit post count and then play with the big boys.

Sep 21, 2011

Full Tilt Poker's 100% back (as you earn player points or something) on your first deposit up to $600 makes a lot more sense now.

Sep 21, 2011
  1. Online gambling IS gambling
  2. Agree with legislating morality on this one
  3. The gov't could be making a fortune on taxes with this.
  4. Full Tilt, what a bunch of thieving crooks, this hurts the efforts to go legit.
Sep 21, 2011

Ok, read some more, I'm starting to believe it: http://kiddynamitesworld.com/dept-of-justice-calls...
The part from Paul Kedrosky's blog is crazy but not entirely surprising.

Sep 21, 2011
Sep 21, 2011

Pacific Poker was great back in the day. So many fishes, and great 15$ 10k guaranteed tournaments that would never meet their minimum. Ever since black Friday though online poker has been like the wild west. I foolishly have been still betting with Sportsbook on some games, and now I'm trying to make a fairly substantial cashout request. It's been pending for 2 weeks, and I'm thinking that money is probably gone.

Sep 21, 2011

Ah man, were Howard and Chris really in on it? I haven't played or followed poker in a minute but that can't be good for the game.

Sep 21, 2011

Long-time player with a few thoughts:

1) Is it possible Ferguson and Lederer didn't realize that the funds they received were illlegitimate; i.e. player deposits? My guess is they have pretty hands-off Board representation and I could see a few of the operational guys running this scheme and keeping the celebs in the dark. At least that's what I want to believe

2) People have long suspected that the sites rig large pots (i.e. AA vs. KK) to ensure a greater rake. On a semi-regular basis you would see just enormous pots with ridiculous cards that seemed to never happen in real-life scenarios. Most of us previously dismissed this because we thought these sites were reputable and simply chalked it up to the vast amount of hands we were playing that we'd eventually see some unprobable hands. This clearly changes that defense.

3) Had no problem getting money off PartyPoker, FullTilt, UB, Bodog prior to the crackdown, but haven't played online since

Sep 21, 2011

hope it's not true...really enjoy watching those guys play. I think I have ~$600 on PokerStars...haven't tried cashing out (yet). I usually just play live now.

Sep 21, 2011

Prior to the DOJ's action against Full Tilt, Pokerstars, and Absolute, I cashed out thousands without any problem.

It's hard for me to believe FTP is any sort of a Ponzi scheme because Lederer and Ferguson hardly seem like flashy guys. I think they get their suits at JC Penny or some shit, and they're some of the most boring personalities in poker. It seems like the DOJ is just looking for scapegoats, but who knows.

Sep 21, 2011
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Sep 22, 2011