Internet poker’s online Jesus and ‘a global Ponzi’

Internet poker company Full Tilt is accused of defrauding its players out of more than $443m in a massive online Ponzi scheme

Bobby Ingram punched the air with delight. He had just scooped the £10,000 first prize in an internet poker tournament.

A semi-professional player with accounts at several online poker companies, his mood soured when he tried to claim his winnings. Despite receiving several emails confirming that the money would be paid into his account, Ingram — not his real name — is yet to receive a penny of it.

“To be honest, I’ve written the money off,” he said. The 29-year-old won the windfall at Full Tilt, the world’s second-biggest online poker operator, and is one of hundreds of players worldwide unable to withdraw funds from their accounts with the firm.

Last week, prosecutors in New York accused Full Tilt of making hefty payouts to its owners despite owing its players millions of dollars. They claimed the company had defrauded its players out of more than $443m (£287m) over four years.

“Full Tilt was not a legitimate poker company but a global Ponzi scheme,” said Preet Bharara, a senior prosecutor in the New York state attorney’s office.

He accused the firm of enriching its owners at the expense of its customers. By the end of March 2011, it is alleged the website owed its customers $390m — but had less than $60m in the bank.

Despite this, the company allegedly distributed hundreds of millions to its owners. The biggest beneficiary, say prosecutors, was Chris Ferguson, Full Tilt’s co-founder, who was allocated about $85m.

The charges, contained in a civil claim, are the biggest scandal ever to rock the online gaming world. The allegations may also dash hopes that America, the world’s biggest gambling market, could legalise the $14 billion internet poker market five years after it was banned.

Full Tilt had been popular because it allowed its customers to play against — and be coached by — some of the world’s top poker players. It was one of these star players — Ferguson — who was behind the site’s launch in 2004.

Sporting a trademark cowboy hat and nicknamed “Jesus” because of his thick beard, Ferguson developed the site with former stock market trader Raymond Bitar.

Bitar, who has been playing poker since he was 12, ran a team of 35 traders in Los Angeles in the late 1990s. It was there that he met Ferguson, a computer expert who was fast becoming one of the most successful players on the poker circuit.

Together with a number of other professional players, they launched the site at a time when online poker was booming. It was one of several sites to shoot to prominence, along with Party Gaming, 888 and Pokerstars.

All the sites shared a common business model. Players deposited money into accounts, which they could access to bet on each hand of cards. The websites collected a percentage of the pot generated — known as the “rake” — for providing the playing facility. When players won, they could withdraw money from their accounts. This set-up proved a goldmine, making hundreds of millions for the sites’ founders.

Full Tilt was not a legitimate poker company but a global Ponzi scheme It seemed that nothing could derail the gravy train — until, in October 2006, the industry hit a massive problem. Lawmakers in the US — the industry’s biggest source of income — banned internet poker.

Publicly-traded operators, such as Party Gaming and 888, immediately stopped allowing US citizens to play on their sites, but private groups, such as Full Tilt, most of whom were based offshore, continued despite the crackdown. Indeed, they went to extraordinary lengths to do so.

For example, poker companies set up phony, non-gambling companies — online florists and pet supply stores — through which all payments from players were channelled. This made it appear to big credit card firms that transactions arising from online gaming were anything but.

The poker companies would also frequently engage third-party “payment processors” to help them with the alleged deception.

One such company, Intabill, based in Brisbane, Australia, provided this service for Full Tilt, Pokerstars and others. In the two years between mid-2007 and March 2009, Intabill processed more than $500m of gambling transactions.

It was so lucrative, Intabill’s twenty-something founder Daniel Tzvetkoff became a multi-millionaire with a garage full of sports cars, a super-yacht and a stake in a trendy nightclub.

In 2009, however, Intabill collapsed, owing its poker operator clients tens of millions. Full Tilt successfully sued the company for $43.5m plus interest.

Sometime afterm Intabill’s collapse, Tzvetkoff was arrested in Las Vegas and is reported to have informed on his former customers, the online poker firms.

The failure of Intabill sent poker firms scurrying to find fresh ways to ensure that US-based punters could continue to play.

They found a payment processor in Arizona willing to help by setting up dummy corporations through which transactions could be made.

After handling more than $100m of payments, the arrangement came to an end in the summer of 2009, when the Arizona firm had its bank accounts seized by US authorities.

Full Tilt and its rivals tried a new tactic. They began to persuade small banks under financial pressure to handle their transactions without disguising the fact that they were gambling-related.

One such lender was Sun First, based in Utah. The bank handled payments via third-party processors on behalf of companies including Full Tilt and Pokerstars.

The latter had even found a prominent law firm to write to the bank explaining that handling payments for online poker companies would be legal under US rules.

Sun First processed more than $200m of poker-related payments but ended its involvement with the internet gaming firms in November 2010, when forced to by US banking regulators.

As it became increasingly difficult for Full Tilt to collect money from its US-based customers, it allegedly began allowing players to gamble with “phantom money” the company had “never actually collected or possessed”, according to the civil claim.

Poker-related internet bulletin boards began filling up with posts from players wondering why they could not withdraw their winnings. Various class action lawsuits are now being prepared to help players reclaim their funds.

In England, Edwin Coe, the law firm, is reportedly preparing a claim on behalf of British Full Tilt customers. In Canada, Jeff Orenstein, a lawyer at Consumer Law Group, said that more than 1,000 players had registered interest in pursuing a case.

Some blame gambling authorities on Alderney, in the Channel Islands, that were responsible for regulating Full Tilt, and wonder why they did not intervene sooner.

Last week, Alderney held a hearing to decide whether to revoke the company’s licence, having suspended it in June. The outcome should be revealed this week.

Full Tilt, which could not be reached for comment, has blamed its problems paying players on issues with the third-party processors and on the actions of the US government. It has previously said it has always been committed to the integrity of the game and to abiding by the law.

Lawyers acting for Ferguson and Bitar have hit out at prosecutors’ description of Full Tilt’s activities as a Ponzi scheme. “Under any reasonable interpretation, the worldwide operations of the online cardroom are not a so-called Ponzi scheme,” said Ian Imrich, Ferguson’s legal adviser.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on whatsapp
WhatsApp

Latest

Contact me

For any queries, training, courses or to write for my site ...
Say hello
Twitter feed is not available at the moment.

Related

Roulette, Slots, or Poker Choosing Your Perfect Casino Game
Casinos

Roulette, Slots, or Poker: Choosing Your Perfect Casino Game

The world of casinos offers a diverse array of games, each with its unique charm and allure. Among the most …

The Thrill of the Bet: Exploring the Psychology of Gambling Gambling has been a part of human culture for centuries, offering excitement, entertainment, and the allure of winning big. In this article, we'll dive deep into the psychology of gambling, understanding why people are drawn to it and the various aspects that make it so thrilling. The Allure of Risk and Reward The rush of gambling often stems from the thrill of risk and the potential for significant rewards. We'll explore the human brain's response to risk and reward, including the release of dopamine, a neurotransmitter associated with pleasure and motivation. The Cognitive Biases in Gambling Gamblers are not always rational decision-makers. Cognitive biases, such as the gambler's fallacy and confirmation bias, can influence our choices. We'll discuss these biases and how they impact decision-making during gambling. Understanding the Role of Skill and Chance Many forms of gambling involve a combination of skill and chance. We'll delve into how understanding the balance between these elements can affect a player's experience and decision-making. The Impact of Near-Misses and "Almost-Wins" Near-misses, where a player almost wins, can be more motivating than clear losses. We'll analyze how near-misses in gambling can keep players hooked and the role they play in addiction. The Dark Side of Gambling: Addiction While gambling can be thrilling and fun, it also has a dark side: addiction. We'll discuss the signs of gambling addiction, its impact on mental health, and available resources for those seeking help. Gambling is a complex and multifaceted activity, driven by both psychological and emotional factors. Understanding the psychology behind gambling can provide insights into one's own behavior and, if necessary, lead to more responsible and enjoyable gambling experiences. If you or someone you know is struggling with gambling addiction, don't hesitate to seek help. Many organizations and support groups are available to provide assistance and guidance on responsible gambling and addiction recovery.
Featured Category

The Thrill of the Bet: Exploring the Psychology of Gambling

Gambling has been a part of human culture for centuries, offering excitement, entertainment, and the allure of winning big. In …

The Enchanting World of Card Magic Tricks
Featured Category

The Enchanting World of Card Magic Tricks

Card magic tricks have fascinated and mystified people for centuries. Whether performed by a seasoned magician or an amateur enthusiast, …

Sports News Keeping Up with the Game
Sports News

Sports News: Keeping Up with the Game

In a world where sports play a central role in our lives, staying updated with the latest sports news has …

Slot Machines The Alluring Symphony of Luck and Chance
Slot Machines

Slot Machines: The Alluring Symphony of Luck and Chance

Slot machines, with their flashing lights, catchy sounds, and the promise of lucrative rewards, are among the most popular attractions …

Lifestyle Tips

A Guide to Using Stock Photographs for Your Website Design

Website design is all about creating an attractive website that people love to visit. A key feature of an attractive …

Scroll to Top