Poker stars added to civil complaint
The government’s continued crackdown on Internet poker ensnared two of the game’s best-known superstars Tuesday while a federal prosecutor accused one website of being a "massive ponzi scheme," defrauding players of more than $443 million.
The U.S. Justice Department added poker professionals Howard Lederer and Chris Ferguson as defendants in its civil money laundering complaint against online gaming company FullTilt Poker, saying the players and executives — all members of the website’s board of directors — funneled money to their own accounts, rendering FullTilt insolvent.
A spokeswoman for the U.S. attorney for the Southern District of New York, which filed the amended complaint, declined comment on whether the poker players could face criminal charges also. However, legal sources said the investigation is continuing. The crackdown on online poker cut off access to three of world’s largest Internet gaming sites five months ago.
Government prosecutors alleged 19 other owners of FullTilt received portions of the $443 million in payouts but were not named in more than 100 pages of court papers. FullTilt is based in Alderney in the British Channel Islands, where its gaming license has been suspended.
According to the amended complaint, FullTilt defrauded players by representing that their funds in online gambling accounts were safe, secure and available for withdrawal at any time.
U.S. Attorney Preet Bharara said FullTilt did not maintain funds sufficient to repay all players and used player funds to pay board members and other owners more than $443 million since April 2007.
‘Alleged self-dealing scheme’
"FullTilt was not a legitimate poker company but a global Ponzi scheme," Bharara said in a statement. "As a result of our enforcement actions, this alleged self-dealing scheme came to light. Not only did the firm orchestrate a massive fraud against the U.S. banking system, as previously alleged, FullTilt also cheated and abused its own players to the tune of hundreds of millions of dollars."
Operators of FullTilt, PokerStars and Absolute Poker were indicted on April 15 and charged with money laundering, bank fraud and operating an illegal gambling business. The Justice Department also filed a civil lawsuit seeking $3 billion in money laundering penalties.
Lederer and Ferguson were not named in the initial criminal and civil complaints.
FullTilt Chief Executive Officer Raymond Bitar, who was one of 11 individuals indicted in April, was named in Tuesday’s amended civil complaint. Rafael Furst, a member of FullTilt’s board of directors, was also added.
Pro players in crackdown
Lederer, 46, who owns a home in The Ridges area of Summerlin, became one of poker’s earliest "new" superstars in the 1990s when the game transitioned from poker rooms to the Internet and television. He has earned an estimated $5.5 million in tournament poker, including more than $1.6 million at the World Series of Poker, where he has collected two individual event championship bracelets. Lederer is the brother of poker standout Annie Duke, who is commissioner of the Epic Poker League.
Ferguson, 48, won the World Series of Poker’s Main Event in 2000 and owns five individual event championship bracelets. His career earnings of more than $7.7 million include $5.4 million from the World Series of Poker. In his biography on the World Series of Poker website, Ferguson, who has a doctorate in computer science from the University of California, Los Angeles , helped develop FullTilt’s software.
Neither player could be reached for comment. Lederer and Ferguson did not participate in the recent World Series of Poker, possibly because of the April federal crackdown.
According to the amended complaint, prosecutors said Bitar received $41 million, Lederer received $42 million, and Furst collected $11.7 million, from the $443 million. Ferguson is accused of receiving almost $87.5 million, plus as much as $25 million characterized as "owed" to him.
The government alleged the money was transferred to overseas accounts.
Prosecutors said FullTilt owes about $390 million to poker players around the world, including $150 million to American players, but had just $60 million in the bank.
"FullTilt 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 with the company," Bharara said.
After the indictments, PokerStars, which is based in Isle of Man, and FullTilt, reached agreements with the Justice Department to repay customers. PokerStars said it refunded more than $100 million to U.S. poker players while FullTilt returned nothing.
About 150 sponsored players
FullTilt lists about 150 sponsored professional poker players on its website, but with varying degrees of support.
Brian Balsbaugh, who represents poker players through his Las Vegas-based Poker Royalty, said players have lost endorsement deals and other income since the government crackdown began. He said the naming of Lederer and Ferguson in the new complaint shouldn’t hurt other FullTilt-backed players.
"The poker community can differentiate from player who was on FullTilt’s board as opposed to just a sponsored player who was paid a few thousand dollars to wear a hat with the logo," Balsbaugh said.
In the complaint, prosecutors alleged that an unnamed professional poker player and owner of FullTilt received more than $40 million, as well as "millions" characterized as loans from the company. At least $4.4 million had not been repaid.
In June, poker professional Phil Ivey, a FullTilt-sponsored player, sued the website in Clark County District Court, saying his reputation was damaged by the allegations of illegal activity. FullTilt officials told online poker blogs at the time that Ivey was trying to get out of repaying millions in loans from the website.
Attorneys for Ivey could not be reached for comment.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
