Full Tilt Poker: $400 Million Ponzi Scheme?

The poker world was rocked on September 20 when a new amended motion from US prosecutors in a civil case versus Full Tilt Poker revealed details that they claim points to the online poker site being a “Ponzi scheme” that defrauded customers of $440 million.

The US government originally indicted Full Tilt on April 15 amid charges of wire fraud, money laundering, and breaking anti-gambling laws but the new motion spells out in great detail the amount of money principals with the company were paid even while Full Tilt faced a huge shortfall in its books.

In March 2011 the company reportedly owed close to $400 million to players around the world as far as their total account balances, yet had just $60 million on hand; despite that shortfall the company kept paying out insiders massive sums of money and kept assuring players that their deposited funds were always safe in a segregated account.

US Attorney Preet Bharara (whose office issued the official statement regarding the case) also had the following to say, the strongest language yet pointing to criminal intent at Full Tilt: “Full Tilt was not a legitimate poker company, but a global Ponzi scheme. Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited.”

Those insiders include Howard Lederer (who was paid out $41 million in recent distributions), Chris “Jesus Ferguson ($25 million) and Rafe Furst ($12 million).

It is also alleged that other owners and stakeholders received large payments — including $40 million to an unnamed individual thought to be Phil Ivey — and regular payments of $10 million per year to several other part owners of Full Tilt.

The Full Tilt site has been down since late June when its online gaming license was suspended and has reportedly been in talk with various companies about a sale of the company — something that seems far less likely now that the full details of the government’s case versus Full Tilt are emerging.