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U.S. calls online poker site a "global Ponzi scheme"

2011-09-21 10:30:41

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)