Full Tilt Poker is being called an online “global Ponzi scheme,” according to the San Francisco Chronicle, as this gambling website defrauded players out of hundreds of millions of dollars. While Full Tilt Poker was blocked from operating in the U.S., as a part of an online gambling crack-down a few months back, it still had money in player’s accounts to the tune of almost $4 million.
While in operation, this very popular gambling website illegally went into player’s accounts and used the money to make extravagant payments to the people who owned the site, along with using the money for operating costs. Over a four year period, $444 million was taken out of players accounts and used to pay star poker players, Christopher Ferguson and Howard Lederer, as well as the board members of the Full Tilt Poker website.
The players of this gambling website were given a false sense of security when it came to their accounts, as the website promised their money was secure and would not be touched, according to the Bloomberg Business Week. This wasn’t the case, unbeknown to the players; their money was mingled in with the financial workings of this website. In layman’s terms, the saying that best describes what the website was doing is, “they robbed Peter to pay Paul,” so to speak. March of this year the company found itself with only $60 million left in bank accounts and owing its players $390.
The company frequently took money from one player's account to pay another player and it was common that they used the player’s funds to cover the finances of the Full Tilt Poker website. U.S. Attorney Preet Bharara said, "Full Tilt was not a legitimate poker company but a global Ponzi scheme." Bharara went on to say that, "Not only did the firm orchestrate a massive fraud against the U.S. banking system, as previously alleged, Full Tilt also cheated and abused its own players to the tune of hundreds of millions of dollars," according to SF Gate.
Full Tilt Poker was one of a group of gambling websites that the federal authorities shut-down in the spring. They not only filed criminal charges against Nelson Burtnick and Raymond Bitar, the website's top two executives, but they also sued the company. Absolute Poker and PokerStars are two more popular gambling websites whose executives are also facing charges in this online crack-down.
While authorities are still seeking Burtnick and Bitar, the two executives did release statements shortly after the website was shut-down calling the charges “unfounded and unfair.” While the U.S. passed a law in 2006, making this type of online gambling against the law, these websites operated from other countries under the pretense that their off-shore status didn’t fall under these new laws.