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NEW YORK (Reuters) - U.S. prosecutors made new allegations on Tuesday in a
probe of the Full Tilt Poker website, accusing self-styled "Poker Professor"
Howard Lederer and professional poker champion Christopher Ferguson and others
of paying themselves more than $440 million while defrauding other players.
In a motion filed in federal court in New York to amend an earlier civil
complaint, the prosecutors accused Full Tilt Poker of running a Ponzi scheme
that continued even after the original charges were filed.
Prosecutors unsealed the earlier charges on April 15, accusing three Internet
poker companies -- Full Tilt Poker, Absolute Poker and PokerStars -- and 11
people, including Full Tilt director Raymond Bitar, of bank fraud, illegal
gambling and money laundering offenses.
Lederer is described on his website (http://www.howardlederer.com) as "The
Poker Professor" and Ferguson has won five World Series of Poker events. The
men are directors and owners of Full Tilt Poker.
"In reality, Full Tilt Poker did not maintain funds sufficient to repay all
players, and in addition, the company used player funds to pay board members
and other owners more than $440 million since April 2007," the office of
Manhattan U.S. Attorney Preet Bharara said in a statement.
"Full Tilt was not a legitimate poker company, but a global Ponzi scheme."
A Ponzi scheme is usually one in which early investors are paid with the money
of new clients and it collapses when funds run out.
The U.S. Attorney's previous civil complaint did not contain allegations of the
company defrauding players or owners taking payments improperly.
Representatives of Full Tilt Poker could not immediately be reached to comment
on the amended complaint, which has yet to be approved by a U.S. District Court
judge. This type of filing is usually approved as a formality.
The prosecutors said Full Tilt Poker's board of directors, including Bitar,
Lederer, Ferguson and Rafael Furst, defrauded players by misrepresenting that
their funds in accounts were safe, secure and available for withdrawal.
In the new complaint, they cited emails and poker message board postings in
2008 and 2009 in which Full Tilt Poker and its representatives assured players
their money was safe.
One of those emails read, in part: "To protect both our players and business
from financial problems, all player account funds are segregated and held
separately from our operating accounts. Unlike some companies in our industry,
we completely understand and accept that your account money belongs to you, not
Full Tilt Poker."
The government challenges the assurances, saying the company did not have money
to repay the players.
The case is USA v Pokerstars, et al, U.S. District Court for the Southern
District of New York, No. 11-02564.
(Reporting by Grant McCool; editing by Gerald E. McCormick and Andre Grenon)