Thoughts on the Full Tilt Poker Civil Complaint

Another Black Friday related bombshell hit today.  Howard Lederer, Rafe Furst and Chris Ferguson were added to the civil complaint related to Black Friday.  There are hundreds of stories floating around out there about it.  Instead of writing about it again I will post a few links:

Story I wrote for Poker Affiliate Solutions

Subject Poker Story

Pokerfuse Story

Each post tells pretty much the same story.  The U.S. Department of Justice alleges that Full Tilt Poker’s owners robbed players of hundreds of millions of dollars.  I do not think today’s news is entirely a bad thing.  Sure, if the DOJ had not gotten involved to begin with then this would not be a big issue assuming Full Tilt found a way to process U.S. deposits other than phantom echecks.  The reality is that the DOJ may have saved even more money from getting deposited onto an online poker room that was insolvent.

Obviously Full Tilt Poker had their dirty secrets exposed.  They were paying the owners with money they should have been keeping on hand to pay players if there was a run on the bank.  They got caught cheating and it can be argued that Full Tilt Poker is as rogue as Cereus.  Both had cheating scandals, one was at the poker tables, one in the cashier.

For months many people, including myself, saw Black Friday as a cash grab and nothing else.  Now there is the possibility that the Department of Justice actually wants Full Tilt Poker to account for all of the money that they paid to their owners.  While not likely, it is possible that restitution could be required for Lederer, Furst and Ferguson to avoid criminal charges.  At this point all of the allegations are civil meaning that at this point there is no concern about jail time, just massive asset forfeitures.   If the money is there to cover the alleged fraud then all three will likely avoid jail, they will just be bust or close to it.

Other Full Tilt Poker owners should be extremely concerned.  If the large shareholders cannot come up with the money then I suspect the DOJ will look further down the shareholder line.  It is possible that even the smallest of shareholders can be held accountable for the company’s actions, either by the DOJ or by class action lawsuits that have already been filed.

This might also pave the way for online poker regulation.  From the start of the Black Friday indictments some have speculated that this was a way to clean up the industry before the brick and mortar casino companies can get involved.  Each time the feds come down on online poker, the more online poker players get involved in regulation legislation.

I could be completely wrong.  This could just be another cash grab by the feds.  Only time will tell.  It is obvious that Full Tilt Poker was a fraud.  They lied to players and enticed them to deposit into a black hole that at one point before Black Friday only had 15% of its player’s deposits on hand as cash but yet found a way to pay its owners about $10 million a month in dividends from the failing business.  Before losing their gaming license, Full Tilt was operating with $300 million in liabilities while only holding 1-2% of that in cash.  They operated insolvent and continued to take deposits anyway.  Operating a banking type operation while insolvent is a fraud related crime in most industrialized countries and the people that made the decision to operate that way will have to answer with their wallet.  They may even have to spend some time in prison.  That will not help bring player funds back, but it will at least give some players satisfaction.

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