‘Ponzi scheme’ poker firm could cost Irish jobs

AN INTERNET poker company that was blocked from operating in the US last spring as part of an online gambling crackdown was “not a legitimate poker company, but a global Ponzi scheme”, federal prosecutors have claimed.

The popular Full Tilt Poker website illegally raided player accounts to fund operations and make lavish payments to its owners, US Justice Department lawyers said in a civil lawsuit filed in New York.

Over four years, the company used $444m (€325m) in player money to pay board members, including well-known professional poker players Christopher Ferguson and Howard Lederer, investigators said.

The poker site had promised players that their accounts were protected and wouldn’t be touched.

But authorities say that, as of March, the company had only $60m (€44m) left in its bank accounts to cover the $390m (€285m) it owed to players. It routinely mingled player money with its own finances, and took cash from some customers to pay out winnings due to others, prosecutors said.

“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” US Attorney Preet Bharara said in a statement. “Not only did the firm orchestrate a massive fraud against the US banking system, as previously alleged, Full Tilt also cheated and abused its own players to the tune of hundreds of millions of dollars.”

Federal authorities initially sued Full Tilt Poker in April as part of a broad crackdown on the most popular online poker sites in the US.

They also filed criminal charges against the company’s two top executives, Nelson Burtnick and Raymond Bitar.

US lawmakers made it a crime to accept money in connection with unlawful gambling in 2006, but some big card-playing sites continued to operate, saying their off-shore status or methods of processing payments put them just outside the law’s reach.

In its revised lawsuit against Full Tilt, Justice Department lawyers said that even though the company had assured players that those accounts “are segregated and held separately from our operating accounts”, they were actually drained regularly for other purposes, including paying the owners and board members of the company.

Bitar got $41m and Lederer $42m, the lawsuit said. Ferguson was supposed to get $87.5m, although he may have only received $25m so far, federal prosecutors claimed.

Pocket Kings, a Dublin-based company that provided marketing and technology backup for Full Tilt’s operations, has said Full Tilt’s departure from the market meant it had to make savings of €12m.

The company said that if all savings were to be made through redundancy, then it could have to cut numbers by up to 250, but it would not be able to confirm the number until it completes a consultation with staff.