Full Tilt Poker Unravels

This month we took the unusual step of extending our deadline at Card Player Europe in order to be able to write about the goings on at the Alderney Gambling Control Commission’s September 19 hearing about Full Tilt Poker’s suspended license.
It turned out the hearing was to be held over two days and “in-camera”, that is, in secret, so we weren’t entirely sure if we’d even has a story to write.

Then the sucker punch.

As all eyes were on London awaiting news of the hearing, indeed while Full Tilt lawyers were arguing their case to get their license back so they could begin operating and generating revenue again, in New York the U.S. Department of Justice (DOJ) blew Full Tilt Poker apart.

It accused two of poker’s leading lights, Howard Lederer and Chris “Jesus” Ferguson, of working with Full Tilt chief executive Ray Bitar to defraud players at the site out of $440 million over the past four years.

If the figures weren’t shocking enough the language it used to describe Full Tilt hammered it home.

“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” said U.S. attorney Preet Baharara.

The DOJ said that by March 2011 Full Tilt Poker had $60 million in cash but owed players $390 million including $150 to U.S. players.

Around $10 million was paid out in dividends to Full Tilt’s 20-odd shareholders each month and this continued between August 2010, when the company realised it had a problem collecting funds from U.S. bank accounts, and April 2011 when a DOJ blitz on online poker in the U.S. forced the company out of the market.

When it faced difficulties collecting funds from U.S. players the Full Tilt credited their accounts with winnings anyway, creating the beginnings of a black hole shortfall. It also continued to disburse real money to its stable of pros and shareholders, exacerbating the gap between what it had and what it owed.

The U.S. government is now chasing these so called “FTP Insider Defendants” for the amount of money they laundered out of the company to the tune of $40,954,781 for Ray Bitar; $41,856,010 million for Howard Lederer; $25 million for Chris Ferguson; and $11,706,323 million for Rafe Furst.

The sense of shock and despair in the poker industry is palpable and only raises more questions: How could this have happened? Who sanctioned it? What happens next? Where are the people who need to answer questions? Will players get any of their money back?
While your humble European Bureau Chief is neither a fortune teller nor doomsayer, several things seem clear at this point: a billion dollar-plus company was turned to dust by chronic mismanagement and the collateral damage to poker is incalculable.
We won’t be seeing Full Tilt shareholders or senior managers at a poker table anytime soon. ♠