The US Attorney’s Office for the Southern District of New York has also charged Howard Lederer and Chris Ferguson of taking part in and profiting from the scams.
In the complaint from attorney Preet Bharara, he describes how Full Tilt Poker and its board, including Lederer and Ferguson, “defrauded players by misrepresenting that their funds on deposit in online gambling accounts were safe, secure, and available for withdrawal at any time.”
“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 complaint read.
The prosecutor is seeking money-laundering penalties against the pair and is also seeking the forfeiture of money gained from the alleged scheme. The original complaint from April charged board member Ray Bitar and 10 other defendants with bank fraud, illegal gambling and money laundering offences.
“Full Tilt was not a legitimate poker company, but a global Ponzi scheme. Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company,” Bharara said.
PokerMedia Australia sought comment from Barry Boss, the attorney representing Full Tilt Poker, but he was not available for comment.
The sites for Full Tilt Poker and PokerStars have been shut down, and are now embossed with the seal of the US Department of Justice. They exist only as a means to pay back gamblers, according to settlements signed with the U.S. district attorney in April.
The prosecutor said that, as of March 31, Full Tilt Poker owed about USD $390 million to players around the world, including USD $150 million to US players. But the company only had USD $60 million in bank accounts to pay them back.
Full Tilt paid more than USD $443 million in player funds to the board of directors and other owners, with USD $41 million going to Bitar, USD $42 million going to Lederer, and nearly USD $12 million going to another board member, Rafe Furst.
The company paid USD $25 million to Ferguson, and said that it owed him another USD $62 million, according to the prosecutor’s office, noting that much of the money was transferred to Swiss and overseas accounts.
“In order to maintain its false image of financial security, Full Tilt continued to credit player accounts without disclosing its inability to fund those credits. When players gambled with these phantom funds and lost to other players, a massive shortfall developed,” the prosecutor said.
“This scheme continued even after the original complaint was filed and the criminal indictment unsealed in April.”
As time went on, the poker site had even less money to pay its customers. By June, Full Tilt owed USD $300 million to players around the world but only had USD $6 million to pay them, according to the prosecutor’s office.