Full Tilt Poker is an Online Ponzi Scheme, Feds Say

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Federal prosecutors alleged Tuesday that an online gambling site whose internet domain the United States seized in April was a scam, and executives lined their pockets with millions of dollars purloined from players’ wagering accounts.

“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” Preet Bharara, the U.S. attorney in Manhattan, said in a statement.

The allegations come five months after Bharara seized the finances and domains of the world’s largest offshore, online gambling sites, including Full Tilt Poker of Ireland. Bharara initially charged Isai Scheinberg, the founder of PokerStars, and Raymond Bitar, the founder of Full Tilt Poker, and nine others of fraudulently scheming to thwart a 2006 anti-gaming law that prohibits U.S. banks from processing internet wagers and payments.

The latest allegations (.pdf) could serve as ammunition against renewed efforts by state and federal lawmakers to legalize online gaming in the United States. One of the reasons it was outlawed in 2006 was the perception that gamblers could be taken to the cleaners by criminal online gaming operations, Patrick Fleming, an attorney for the Poker Players Alliance, said in a July interview.

When the government seized the domains on April 15, tens of thousands of gamblers were frozen out of their accounts. In a deal with federal prosecutors, PokerStars, headquartered in the Isle of Man, is refunding to U.S. gamblers the $120 million they lost when the government seized its U.S. domain.

http://m.wired.com/threatlevel/2011/09/full-tilt-ponzi-scheme/