Joined: Apr '11
Location: Romania
Age: 35 (M)
Posts: 6669
"As Full Tilt Poker has been fighting behind closed doors to have its gaming license reinstated by the Alderney Gambling Control Commission over in the UK it seems that matters across the pond have taken a considerable turn for the worse as Manhattan's US Attorney Preet Bhara has today claimed that Full Tilt Poker and its board of directors operated the company "as a massive Ponzi scheme against its own players".
As Forbes.com report;
"Bharara announced the filing of a motion to amend a forfeiture and civil money laundering complaint that was filed in April, alleging that Full Tilt and board members (Howard) Lederer, (Chris) Ferguson and Rafael Furst, together with Full Tilt CEO Ray Bitar, defrauded poker players out of some $300 million by not maintaining funds at the company sufficient to repay players"
It would appear that whilst Full Tilt maintained a facade of being a legitimate business with its players best interests at heart stating that "unlike some companies in our industry, we completely understand and accept that your account money belongs to you, not Full Tilt Poker" that in reality players money was being paid, in vast quantities to the board of directors and other owners of Full Tilt Poker. The amendment actually states that approximately $443,860,529.89 was paid to the board and owners from April of 2007 to April of 2011 with Federal Prosecutors claiming much of these funds have been transferred to accounts in Switzerland and other overseas locations.
The complaint specifies the board members are liable to the government "in an amount that is no less than $40,954,781.53 for Bitar; $41,856,010.92 million for Lederer; $25 million for Ferguson; and $11,706,323.96 million for Furst."
The fact that despite paying themselves nearly $450 million over the past four years that not one penny has thus far been offered up from Full Tilts owners to repay the players from whom they are alleged to have "stolen" the money has left a bitter taste in the mouths of players across the world. At the time of writing Full Tilt Poker still owe players around the world around $300 million.
The "ponzi scheme" allegations refer to the shortfall of cash FTP had onhand when compared to the amount of money owed to its players. This has been caused not only by the massive payments made to the companies owners but also by the apparently deliberate funding of players accounts by Full Tilt when it was known that payment processors were not in place to actually take the deposited funds from the players involved. Full Tilt, it is alleged had relied on only a small percentage of its players withdrawing at any one time and that larger sums would continue to be deposited to Full Tilt in the meantime.
The situation certainly looks dire for Full Tilt Poker and the offering to any future investors is looking less attractive by the day."
Joined: Mar '11
Location: Canada
Age: 44 (M)
Posts: 1490
Posted by Macubaas: "As Full Tilt Poker has been fighting behind closed doors to have its gaming license reinstated by the Alderney Gambling Control Commission over in the UK it seems that matters across the pond have taken a considerable turn for the worse as Manhattan's US Attorney Preet Bhara has today claimed that Full Tilt Poker and its board of directors operated the company "as a massive Ponzi scheme against its own players".
As Forbes.com report;
"Bharara announced the filing of a motion to amend a forfeiture and civil money laundering complaint that was filed in April, alleging that Full Tilt and board members (Howard) Lederer, (Chris) Ferguson and Rafael Furst, together with Full Tilt CEO Ray Bitar, defrauded poker players out of some $300 million by not maintaining funds at the company sufficient to repay players"
It would appear that whilst Full Tilt maintained a facade of being a legitimate business with its players best interests at heart stating that "unlike some companies in our industry, we completely understand and accept that your account money belongs to you, not Full Tilt Poker" that in reality players money was being paid, in vast quantities to the board of directors and other owners of Full Tilt Poker. The amendment actually states that approximately $443,860,529.89 was paid to the board and owners from April of 2007 to April of 2011 with Federal Prosecutors claiming much of these funds have been transferred to accounts in Switzerland and other overseas locations.
The complaint specifies the board members are liable to the government "in an amount that is no less than $40,954,781.53 for Bitar; $41,856,010.92 million for Lederer; $25 million for Ferguson; and $11,706,323.96 million for Furst."
The fact that despite paying themselves nearly $450 million over the past four years that not one penny has thus far been offered up from Full Tilts owners to repay the players from whom they are alleged to have "stolen" the money has left a bitter taste in the mouths of players across the world. At the time of writing Full Tilt Poker still owe players around the world around $300 million.
The "ponzi scheme" allegations refer to the shortfall of cash FTP had onhand when compared to the amount of money owed to its players. This has been caused not only by the massive payments made to the companies owners but also by the apparently deliberate funding of players accounts by Full Tilt when it was known that payment processors were not in place to actually take the deposited funds from the players involved. Full Tilt, it is alleged had relied on only a small percentage of its players withdrawing at any one time and that larger sums would continue to be deposited to Full Tilt in the meantime.
The situation certainly looks dire for Full Tilt Poker and the offering to any future investors is looking less attractive by the day."
God I love how the media completely takes things out of context and warps definitions to create shock value. What happened with Full Tilt wasn't a Ponzi scheme, it was a result of inept management, possibly some corruption and theft. In no way shape or form does what happened constitutute or relate in any way to a ponzi scheme.
Joined: May '11
Location: Canada
Age: 61 (M)
Posts: 15
How 'in any way' does it not relate to a ponzi scheme. It is precisely what they were doing, by taking in deposits, and using said 'deposited money' however it may have been used, and not having enough money in a bank or 'fund' that was capable of covering whatever the amount came to that was owed / payable to players, is exactly what a ponzi scheme is. If it is not, then what exactly is it. And what is a ponzi scheme if this isnt ?? Just curious, because it sure looks, and smells like one, and fits the description as i have known it to be.
Joined: May '08
Location: Germany
Age: 59 (M)
Posts: 6787
That is the end of the road for Full Tilt. No investor will put money in this company now. Will be interesting to see, if the big boys (Lederer and Ferguson) will go to jail.
Joined: Mar '11
Location: Germany
Age: 55 (M)
Posts: 1242
Wow, if this is correct, then it is pure theft, nothing else. So normally they have to go to jail. On the other hand you can see, how much money is in this business. If Fulltilt had been managed by reliable persons, they could have builded a fantastic company.
Joined: Apr '09
Location: Portugal
Age: 44 (M)
Posts: 4829
Its not taking things out of context that press does, its more tending reader to a certain point of view. Most of FTP news readers look at it as something it could or really involved them because they played there and they put their money there. What press does this time is showing the other way round. After all, FTP can be a piramyd scheme because investors behind could take profits of others who used theirs skills and efforts to win. Dont limit your thought to "invite someone and win a % with his wins", its more complex than that.
Joined: Mar '08
Location: United Kingdom
Age: 44 (M)
Posts: 6714
Its actually nothing that new, my guess is lots of sites operated in this way, PS included. My concern is mainly what DOJ motive is, I was always under the impression that they were trying to get the players repaid, I don't think so any more. They can only defraud if they don't pay back the money, if the DOJ is holding close to 200m of it what do they think FT can do?, how is putting all this spin on it helping matters with concern to repaying the players. So if we take the 100m that owners are liable for, add what the DOJ holds, include FT (little as it might be worth) then I think there is enough to repay...I can think of lots of ways in wich FT could eventually pay back the players(late is better than never), but DOJ don't have that concern and feel that they are just out to break them leaving us stranded.
If found guilty, they have to go to jail, if not then this whole thing is pointless all the DOJ would have achieved is making sure we don't get repaid.
Joined: Jan '09
Location: Italy
Age: 53 (M)
Posts: 3871
Charles Ponzi: a tipical example of italian export He frauded firstly other italian immigrants and then the whole nation (about 40 thousands people): started with $2 and grew them to more than 15 millions $$$$$
Joined: Mar '11
Location: Germany
Age: 55 (M)
Posts: 1242
Posted by magatt966: Charles Ponzi: a tipical example of italian export He frauded firstly other italian immigrants and then the whole nation (about 40 thousands people): started with $2 and grew them to more than 15 millions $$$$$
I always thought that Italians are the the persons behind all this. I guess the Mafia brought up FullTilt to wash their money from other business
yes...but, most banks have deposit insurance. In the recent past there have been some high profile people go to jail on money related issues in the US. This issue won't be any different. Just by the shear volume of the numbers their claiming, people will do some form of time...plus fines...back taxes etc. They're applying the letter of the law and the outcome will deem how successful they are. It's not their first kick at the cat...and their boot is well placed.
Joined: Mar '09
Location: Greece
Age: 47 (F)
Posts: 14136
The story gets better and better by the time. Instead of hearing when they are going to open this drops. If this is true then those players must go behind bars for some time.
Who would invest his money into FT after this? It would be a pure gamble.
Joined: Mar '11
Location: Canada
Age: 44 (M)
Posts: 1490
Posted by FreewayJam: How 'in any way' does it not relate to a ponzi scheme. It is precisely what they were doing, by taking in deposits, and using said 'deposited money' however it may have been used, and not having enough money in a bank or 'fund' that was capable of covering whatever the amount came to that was owed / payable to players, is exactly what a ponzi scheme is. If it is not, then what exactly is it. And what is a ponzi scheme if this isnt ?? Just curious, because it sure looks, and smells like one, and fits the description as i have known it to be.
Then you have no idea what a Ponzi scheme is.
For all who care to be educated:
A ponzi scheme is a multi-level, or pyramid type scam. 1 person will recruit a small ammount of investors, pitching them this great short term investment idea, guaranteed to pay high returns.
Level 1 - Let's say he recruits 6 investors for $1 million each, for a term of 30 days. He has $6 million total now, and he promises the investors 30% returns.
Level 2 - To pay the return he's promised to the first investors, he recruits a second pool of investors, this time much larger than the first level. He makes the same promises to these investors, 30% profit in 30 days. This time he gets 12 new investors, with $1million each for 12 million. He then takes some of the money they invested and pays it back to the 1st level investors, plus their 30% profit. So out of the 18 million he now has (6 for level 1 + 12 for level 2) he pays the 1st level 7.8m back (6m they invested + 30% profit of 1.8m.
This leaves him with 10.2m which creates a problem for him, as he not only doesn't have enough left to pay back the new investors, but he also pay the 30% profits he promised.
At this juncture, the pyramid either collapses and leaves the new investors out some money, or proceeds to the next level. Each new level, the number of investors needed to sustain the pyramid increases exponentially like so:
And so on and so forth. These are just loose numbers, but this should give definition to what a ponzi scheme is. The irony is, banks do this on a day to day basis. In fact, over 90% of the currency in circulation is all artificial, exisiting only inside ledgers and computers. The US social security fund has been likened to a Ponzi scheme as well, and financial advisors have long forecasted it's inevitable fall.
So now we move on to what full tilt did.
Players happily deposited money into full tilt. They played the games, some lost it to other players, some won it, and all the while full tilt was taking a small % of it for rake. Everyone was happy, the winning players withdrew, the losing players kept depositing, and full tilt got their cut.
To Operate this scenario indefinately, all Full Tilt had to do was keep taking their cut, and pay their operational costs out of the money they made from the rake. Once their operational costs were paid, any additional funds remaining would be profit, to be dispersed amongst the shareholders, management etc. This is the very structure in which every single business on the face of the planet runs and has run since the beginning of time and shall remain.
However, in the scenario we're in now, Full Tilt, compelled by either greed or ineptness, managed to screw this up. They not only spent their cut, but also dipped into the funds that should have been allocated for the players. This isn't a ponzi scheme, this is what is known in polite society as theft. This is what put Full Tilt in the situation they are in now. They ran out of money, and "borrowed" some of the players funds, and now do not have enough money to pay it back.
Full Tilt is trying to say this happened, because they had payment processor issues. 1 processor stole $62 million from them. Another processor delayed processing player deposits, so Full Tilt "covered" these losses to allow players to play without delay, thus continuing the flow or rake. I'm sure it seemed like a good idea, as it ensured that profits kept coming in, but when they were unable to collect the funds they covered, it put them at a massive loss that their profits could not possibly cover.
I'd like to go on the record stating I am neither condoning, nor condeming Full Tilts actions. No-one can state for sure whether it was intentional or not. Intentions are irrelevant though, as the end result is all of us players got screwed, and that sucks.
I am one of those players. I put my trust in them, and I'm out a few thousand dollars, plus all the points/bonuses etc I had saved. I'm angry, and I certainly have lost a lot of faith in the poker industry as a whole. I will not, however, throw blind uneducated accusations around. I don't know what happened, no-one does. We just have to look past it, and hope that in the end, that proper reperations will be paid. Whether that be in the form of us getting our money, which at this point is unlikely, or whether those responsible face consequences.
Posted by FreewayJam: How 'in any way' does it not relate to a ponzi scheme. It is precisely what they were doing, by taking in deposits, and using said 'deposited money' however it may have been used, and not having enough money in a bank or 'fund' that was capable of covering whatever the amount came to that was owed / payable to players, is exactly what a ponzi scheme is. If it is not, then what exactly is it. And what is a ponzi scheme if this isnt ?? Just curious, because it sure looks, and smells like one, and fits the description as i have known it to be.
Then you have no idea what a Ponzi scheme is.
For all who care to be educated:
A ponzi scheme is a multi-level, or pyramid type scam. 1 person will recruit a small ammount of investors, pitching them this great short term investment idea, guaranteed to pay high returns.
Level 1 - Let's say he recruits 6 investors for $1 million each, for a term of 30 days. He has $6 million total now, and he promises the investors 30% returns.
Level 2 - To pay the return he's promised to the first investors, he recruits a second pool of investors, this time much larger than the first level. He makes the same promises to these investors, 30% profit in 30 days. This time he gets 12 new investors, with $1million each for 12 million. He then takes some of the money they invested and pays it back to the 1st level investors, plus their 30% profit. So out of the 18 million he now has (6 for level 1 + 12 for level 2) he pays the 1st level 7.8m back (6m they invested + 30% profit of 1.8m.
This leaves him with 10.2m which creates a problem for him, as he not only doesn't have enough left to pay back the new investors, but he also pay the 30% profits he promised.
At this juncture, the pyramid either collapses and leaves the new investors out some money, or proceeds to the next level. Each new level, the number of investors needed to sustain the pyramid increases exponentially like so:
And so on and so forth. These are just loose numbers, but this should give definition to what a ponzi scheme is. The irony is, banks do this on a day to day basis. In fact, over 90% of the currency in circulation is all artificial, exisiting only inside ledgers and computers. The US social security fund has been likened to a Ponzi scheme as well, and financial advisors have long forecasted it's inevitable fall.
So now we move on to what full tilt did.
Players happily deposited money into full tilt. They played the games, some lost it to other players, some won it, and all the while full tilt was taking a small % of it for rake. Everyone was happy, the winning players withdrew, the losing players kept depositing, and full tilt got their cut.
To Operate this scenario indefinately, all Full Tilt had to do was keep taking their cut, and pay their operational costs out of the money they made from the rake. Once their operational costs were paid, any additional funds remaining would be profit, to be dispersed amongst the shareholders, management etc. This is the very structure in which every single business on the face of the planet runs and has run since the beginning of time and shall remain.
However, in the scenario we're in now, Full Tilt, compelled by either greed or ineptness, managed to screw this up. They not only spent their cut, but also dipped into the funds that should have been allocated for the players. This isn't a ponzi scheme, this is what is known in polite society as theft. This is what put Full Tilt in the situation they are in now. They ran out of money, and "borrowed" some of the players funds, and now do not have enough money to pay it back.
Full Tilt is trying to say this happened, because they had payment processor issues. 1 processor stole $62 million from them. Another processor delayed processing player deposits, so Full Tilt "covered" these losses to allow players to play without delay, thus continuing the flow or rake. I'm sure it seemed like a good idea, as it ensured that profits kept coming in, but when they were unable to collect the funds they covered, it put them at a massive loss that their profits could not possibly cover.
I'd like to go on the record stating I am neither condoning, nor condeming Full Tilts actions. No-one can state for sure whether it was intentional or not. Intentions are irrelevant though, as the end result is all of us players got screwed, and that sucks.
I am one of those players. I put my trust in them, and I'm out a few thousand dollars, plus all the points/bonuses etc I had saved. I'm angry, and I certainly have lost a lot of faith in the poker industry as a whole. I will not, however, throw blind uneducated accusations around. I don't know what happened, no-one does. We just have to look past it, and hope that in the end, that proper reperations will be paid. Whether that be in the form of us getting our money, which at this point is unlikely, or whether those responsible face consequences.
Unfortunately, whilst you and I might call it theft, I would strongly suspect that if you read the small print of the T+Cs, you will find a little section that happens to mention that any funds you deposit become the sole property of Full Tilt Poker. THat small loophole places themselves above the law in terms of stealing customers money.
THe bottom line is when you deposit funds into a poker site you are giving the owners the money. If they are nice they will let you play with it, if like FTP, they are utter twats, they will go out and spend it.
Joined: Apr '09
Location: Australia
Age: 40 (M)
Posts: 6483
Posted by fcumred: Unfortunately, whilst you and I might call it theft, I would strongly suspect that if you read the small print of the T+Cs, you will find a little section that happens to mention that any funds you deposit become the sole property of Full Tilt Poker. THat small loophole places themselves above the law in terms of stealing customers money.
THe bottom line is when you deposit funds into a poker site you are giving the owners the money. If they are nice they will let you play with it, if like FTP, they are utter twats, they will go out and spend it.
Ummm... no.. It's actually part of the licensing conditions of most poker sites that they CAN'T do this. Player funds must be kept segregated from operating/company funds.
Joined: Mar '11
Location: Canada
Age: 44 (M)
Posts: 1490
Posted by jessthehuman:
Posted by fcumred: Unfortunately, whilst you and I might call it theft, I would strongly suspect that if you read the small print of the T+Cs, you will find a little section that happens to mention that any funds you deposit become the sole property of Full Tilt Poker. THat small loophole places themselves above the law in terms of stealing customers money.
THe bottom line is when you deposit funds into a poker site you are giving the owners the money. If they are nice they will let you play with it, if like FTP, they are utter twats, they will go out and spend it.
Ummm... no.. It's actually part of the licensing conditions of most poker sites that they CAN'T do this. Player funds must be kept segregated from operating/company funds.
Yup, most assuredly so. In fact, to recieve licensing from the AGCC for example, you must specifically fall in to 1 of 3 categories. I can't remember them verbatim, but basically they are:
1) Must keep funds completely segregated from operational costs in a seperate account. 2) Must keep funds completely segregated from operational costs, but they can be in the same account.
I cant remember the 3rd, but also you must specifically state right on your website how you treat player funds.
If you really think about this whole Full Tilt situation as a whole, it's taken on quite the snowball effect.
For the sake of theory, let's travel back in time to april 15th. Suppose black friday hadn't happened. It's just as likely that Full Tilt would have continued on, under everyones radar and it would have been business as usual. Full Tilt would never have to answer to why they couldn't pay back player funds, as the issue would likely never have occured. I mean realistically, what's the chances every single player would have withdrawn at the same time.
This scenario is also the worst case situation for most modern banks. The fact is, banks do not have enough liquid assests to cover all funds in customers accounts, and if there was ever a "bank run" which is a term that defines the scenario where all the banks customers would request to withdraw their balances, the banks would be unable to do so. Sounds just like Full Tilts situation, right? The difference is, banks have insurance against this kind of thing, more to cover their own asses than their clients. After all, it's a business and while businesses wouldn't exist without us consumers, they certainly care more about protecting themselves than us.
This whole Full Tilt situation is plain and simply poor management. But it's something that could have been recovered from, and the company could have easily bounced back and continued on just as strong. Afterall, if UB was able to recover public faith after the whole superuser debacle, why couldn't Full Tilt right?
The problem is, people can't leave well enough alone. Due to so many rumors, false "leaked" information etc, it completely guaranteed Full Tilt had no chance of recovery. As days have turned into weeks, all these rumors have sunk them farther and farther. In the public eye, they've been made out to be corrupt evil crooks. To any potential investors, they will be cast in such a negative light, there's little to no chance anyone would ever get involved.
Again, I'm not defending Full Tilt, I'm merely saying that this whole situation has been blown way out of proportion, and we as a collective have almost assured there will be no chance we will ever see our money again.
