It’s easy to lose money by gambling. And it’s really easy to lose money by gambling when the house is basically using a stacked deck, and never plans on paying out all the winnings. According to attorneys who filed a civil suit yesterday on behalf of the U.S. government, the popular poker website Full Tilt Poker—whose logo had been splashed all over ESPN and the hats and T-shirts of top poker pros— “was not a legitimate poker company but a global Ponzi scheme.” The operation is accused of defrauding thousands of online gamblers to the tune of over $300 million.
Who took the money? The Department of Justice says it was the Professor and Jesus, among others. Those are the nicknames of Howard Lederer and Chris Ferguson, respectively. They’re both prominent poker pros who, it seems, pursued an expedient means of grabbing piles of money that didn’t involve playing cards or relying on lady luck. The two are among those charged with profiting from Full Tilt’s scheme, receiving $42 million and $25 million, respectively.
The investigation of Full Tilt Poker stretches back months. In April, the government shut down access for Americans to the Full Tilt site and two other sites, arguing that they were in violation of fraud and money-laundering laws. At that point, Full Tilt Poker promised to pay back winnings being held in U.S. customer accounts.
But the company couldn’t come up with the money—because hundreds of millions had already been siphoned off by its various owners. Prosecutors say that owners and board members had taken $440 million out of the company’s accounts since April of 2007.
Sites like Full Tilt Poker were supposed to be making money by charging online tournament fees and collecting a small percentage (“rake” in poker lingo) of each pot. But it appears as if the owners were taking home far more than the company realized in legitimate profits.
By March of 2011, Full Tilt was theoretically holding roughly $390 million in the accounts of customers around the world, yet the company had only $60 million in the bank. When access to the site was cut off in the U.S. in mid-April, Full Tilt Poker promised that the $160 million in credits of U.S.-based accounts was “safe and secure.” But thousands of customers couldn’t retrieve their money, and it looks like there’s a chance they’ll never get it back.