So here’s the thing, in my last article I said it couldn’t get any worse for Full Tilt Poker. Well, I was wrong. I keep seeming to underestimate the grand incompetence and ethical flexibility of the morons running the company.
This is where we are at: the US Department of Justice (DoJ) has described the Full Tilt Poker site as a ‘ponzi scheme’, stating:“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”. The DoJ reworked the indictments against the company on the 20th of September to specifically name four of the board members: the contemptible pork-bun Ray Bitar; two (previously) respected professional poker players Howard ‘the Professor’ Lederer and Chris ‘Jesus’ Ferguson; and a semi-professional player and irritating strap-on named Rafe Furst. The DoJ has also issued a warrant to seize the assets of these players and owners.
Well, the DoJ is certainly correct about the lying and the betrayal. Full Tilt never segregated player accounts from the operating costs of the company and the owners put their grubby little hands all over the player’s money. Although it isn’t quite accurate to be calling Full Tilt a ‘ponzi’ scheme. By definition a ponzi scheme is something that pays dividends to shareholders by attracting more and more investors, and in itself is not capable of generating any money (other than through swindling more and more people). Now Full Tilt Poker was generating money – through the rake it imposed on every cash game, and through a small fee for every tournament, they were making hundreds of millions of dollars. Industry experts estimate Full Tilt was making at least a million a day from the rake. It was a profitable enterprise, by any measure. In fact, it was a no-brainer of a profitable enterprise that could have made every board member stinking rich and every customer satisfied with the spread of games and quality of the gaming experience.
But they fucked it up. The board paid themselves massive bonuses. The lent out company money to mates in dodgy loans. They got in trouble with some payment processes (who ripped them off – but more of that in a second). They mismanaged the company so badly that it got to the point where they were taking the money deposited by players and spending it on the company, its advertising and themselves. So the dollar amounts registered on the screens of the players as they logged into their accounts were simply that – virtual icons. It was not real money in a segregated account; Full Tilt had turned hard cash into play money, and none of the players were any the wiser.
I guess at some point it did manage to become a sort of ponzi scheme – insofar as they didn’t have enough money to pay out all the players, and the only way was to make up the difference was to keep drawing in new players and new deposits. In March 2011, the company had (or should have had) 390 million player deposits, but in reality only 60 million of that remained. Those scumbags. They’d promised time and again that the player’s money was safe, and it was all bullshit.
The Australian connection in all of this is the mullet-bearing conman Daniel Tzvetkoff (pictured), who allegedly stole 42 million from Full Tilt. This is how it happened: over the past few years, there has been a grey area over whether it was legal for poker sites to pay out their customers. As I explained in a previous article for MTN, it is legal to play online poker in the US, and it is legal to provide that service, but it is apparently illegal for the companies to process withdrawal payments to customers. So the poker sites where left in a position where they had to use dodgier and dodgier third-party payment processors in order to get the money back to the players. Enter the Aussie Tzvetkoff, who was happy to run a dodgy payment processor called ‘Instabill’ and even happier to (allegedly) take 42 million of payouts intended for poker players and put them in his own pockets.
Now here is where it gets interesting. Full Tilt ratted out Daniel Tzvetkoff, who was in turn arrested by authorities during a trip to Vegas. Then, according to media reports, Tzvetkoff turned informant against the online poker companies. His insider information then caused poker’s ‘Black Friday’ – when on the 15th of April 2011 the DoJ shut down all the major poker sites in the States, for the crime of using third-party processors like Instabill. Nice one, dickhead. Four months after being arrested, Tzvetkoff was quietly released by authorities.
So what did Full Tilt decide to do after having some cash-flow problems and a difficult time locating a credible third-party payment processor? Why, fuck all, of course. Except pay themselves bigger bonuses, buy millions of dollars worth of advertising, and entice more players to sign up and deposit at the site.
It is outrageous and it further damages the reputation of poker. The people involved in the lawsuit – Howard Lederer and Chris Ferguson, are (or were) two of the most respected professional poker players in the world. Howard Lederer (the ‘professor of poker’) was my poker hero when I first started playing about ten years ago. Cool, calm, intellectual and analytical, yet also a ‘feel’ player – one who would assess the situation, the odds, and then look his opponent up and down and make a dead read on him. He was a walking advertisement for poker as a thinking person’s game. And Chris Ferguson – with an MIT doctorate in computer programming – always seemed humble, down to earth, never appearing caught up in all the showmanship and bling of the high-stakes poker world. He was the genius who designed much of the original software for the Full Tilt site, the computer nerd who won the Main Event of the World Series of Poker in 2000.
But these two bastards paid themselves 42 and 24 million dollars respectively. Fat-boy Bitar gave himself 41 million and the company gimp (Furst) even managed an 11 million dollar payout. Documents put out in the public sphere state that all of these players were aware of the financial situation the company was in, and none of them did anything to fix the problems or protect the players.
As a final insult, the legal drama in the US has encouraged the Australian Murdoch papers to again put out calls for banning online poker in Australia. A recent article in the Courier Mail argued, “Despite being warned by the Australian Crime Commission that online gambling was a potential channel for money launderers and fraudsters, the Federal Government is yet to act against [poker] websites”. What Australian authorities need to do, just as the US authorities need to do, is regulate and legitimise online poker. They need to put laws in place so the crooks, shills and scumbags are required by law to domicle online poker companies in a real country, with proper regulation, and with credible corporate oversight.