Tuesday afternoon, we learned that the Department of Justice had accused Full Tilt Poker executives of fraud. The online poker website was shut down by the FBI earlier this year as part of a general crackdown of online gambling. But the DOJ's accusations are far more specific. It says that the company wasn't merely allowing people to gamble illegally but also stealing money from its customers.
Here's the news, via Alexandra Berzon at the Wall Street Journal:
In the motion to amend the complaint, the government alleges Full Tilt executives misrepresented to the website's players that the money the company was supposed to be holding in player accounts was safely held when it was actually being used for other purposes, including payments to owners.
The distributions to the owners, including Mr. Ferguson and Mr. Lederer, continued even as funds to pay out creditors--the poker players--dwindled because government investigators had made it increasingly impossible to move player money into company-affiliated bank accounts, the government says.
"Full Tilt was not a legitimate poker company, but a global Ponzi scheme," said Preet Bharara, U.S. Attorney for the Southern District, in a statement.
So if I have this straight, the allegations are that Full Tilt executives claimed they put customer money into secure accounts but were really keeping some of that money for themselves. This would certainly qualify as some sort of fraud. It amounts to theft. It would be like if bank executives were siphoning money away from depository accounts. But is it really a "global Ponzi scheme"?