Tuesday, October 25, 2011

Poker pearl #67


"U.S. Alleges Full Tilt Poker is a Ponzi Scheme" was a common headline not long ago. See here for an example.

In the Oct. 24 issue of The Poker Player, columnist and expert on gaming law I. Nelson Rose disagrees. According to the U.S. Department of Justice, Full Tilt was worried about the U.S. Unlawful Gambling Enforcement Act, so it used money from players in other countries to pay off American winners. Even if true, this has nothing to do with a pyramid scheme. Rose says the DoJ used the Ponzi scheme phrase to bring attention to the situation -- hype, in other words. Nelson adds that Full Tilt actually ran a real business and made profits raking pots.

Even though Full Tilt wasn't a Ponzi scheme, Rose did have some choice words for the Full Tilt owners.
"Full Tilt's insiders were greedy and stupid. While the company was losing players, they continued to pay themselves tens of millions of dollars, including, allegedly, funds they had promised players would not be used for operating expenses. Insiders, including poker-pros Howard Lederer and Christopher Ferguson, allegedly took out $443 million in the last four years.

"Greedy and stupid, but not necessarily a crime...Not every company that loses customers' money through incompetence is guilty of a crime."

It seems to me that if you take money that you are supposed to pay to people, that's stealing, but what do I know?

You can read the full text of Rose's article if you click here.

5 comments:

  1. Greed and stupidity and theft seem to norm for the course these days...from our corporate leaders to our political clowns!

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  2. This guy is an absolute a**hole if he is trying to say that all the Full Tilt guys did is "lose people's money" but was not a crime. This was not an investment, where people understood (or should have understood) that there was a risk of loss. They were supposed to be holding customers' own funds, for crying out loud!

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  3. Nelson Ross seems typical of what society offers these days. A corporation runs beyond the ragged edge of the law and gets a pass. If it gets press, the lawmakers come up with another law that punishes the innocent more than the guilty. It isn't about issues of legality; it is more an issue of enforcement.

    Commingling funds has never been legal. Not only is FT culpable but the AGCC failed to properly oversee its licensee. The FT board failed to protect the shareholders to assure an ongoing concern.

    SDNY seems as much on a fishing trip as in pursuing justice. But, who knows, maybe they can transition from tort to criminal law.

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  4. Just wanted to say I'm sorry your Cardinals are having such a tough time! But there is life after baseball, right?

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