Ed. Note:  Shortly after Tom wrote this piece, the AGCC revealed that some $330 million had been seized pre-Black Friday. I sent an email asking if this changed the math, to which Tom replied, “That’s almost all that they owed to players, just short $60 million which is purportedly what they had in the bank.  Makes my case even stronger.”

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Just yesterday, I heard the news that the Department of Justice accused Full Tilt Poker of running a Ponzi scheme.  A Ponzi scheme is defined as a pyramid investment swindle in which supposed profits are paid to early investors from money actually invested by later participants.

I object your honor.  Taking money I deposit and distributing it to owners is no Ponzi scheme.  But wait, let’s look at some facts/guesses.

Had our politicians not passed a law that restricted financial institutions from transferring money to and from poker sites, all players would still have their money. 

In reviewing the DOJ complaint and other sources, the following information jumped out at me:

Money owed to players			($390 million)
Cash on Hand, Seized or Frozen Cash, Deposits not Received From Players
Money seized by US Government		$115 million
Deposits not received from players*		$180 million
Money frozen by banks		$42 million
Money in Full Tilt bank accounts		$60 million
			$397 million
Shortfall to pay account holders			None/Zip/No Shortfall

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If you are out real American dollars in the Full Tilt Poker collapse, the US government is apparently your friend. That’s the message of Preet Bharara and the Department of Justice, who put out a statement to get those dumfugkers from 2+2 to stop hassling us clarify the status of player accounts in light of revelations about Full Tilt’s insolvency.

In it they spell out a process they are going through to get money from anyone who mighta suckled from the Full Tilt mother-teat, and give an indefinite timeline (months at a minimum) to tell all those thinking this could be the “final chapter”, “dude, we’re just getting started, here.”

The full DOJ statement is below, which ends with a reminder about 28 C.F.R. Part 9, the regulation that binds them.

Meanwhile, not sure if this is a good, bad, or meh-for-poker … but the DOJ is coming under scrutiny over seized assets. Just this month — after an investigation sparked by a junior prosecutor in the Southern District of New York concerned about plausible shenanigans in the remission of Bernie Madoff loot — the Justice Department’s own Inspector General cited serious deficiencies in the US Marshals’ handling of seized assets. The OIG wrote a report that reads kinda like a Full Tilt indictment … at a time when they are getting flack (from both the left and the right) for essentially abusing some 400 laws allowing them to take money and other assets from people who may or may not face criminal charges.

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The big news this week was, of course, the amending of the Department of Justice’s online poker civil suit claiming that Full Tilt Poker was engaged in a “Ponzi scheme” that defrauded its players. Needless to say, this was a sad day for American poker players that underscored our need as players and enthusiasts for consumer protections.

I have spoken with many poker players who have been deeply affected by the failure of Full Tilt Poker, Absolute Poker, and Ultimate Bet to repay its players since Black Friday. While I have roughly five figures of my own money locked up on Full Tilt Poker, this is nothing compared to the heartbreaking stories I have heard from many of my fellow players. We all need to take a stand — for the present AND for the future.

You all received PPA’s update yesterday detailing how to contact the Justice Department’s Victims and Witness Services program. I encourage everyone affected by this to take a good look at both this program and at PPA’s legal analysis of the options available to individual players who have not been able to access their online poker funds.

PPA has worked to ensure that all proposed online poker legislation includes provisions for consumer protections even well before Black Friday. Needless to say, PPA will continue to push for these important provisions. We all deserve safe, licensed, accountable sites on which to play. I am glad the poker community is standing together, united in this fight for our rights.

Here are some actions we can take right now to continue to advocate for our rights. These take less than 60 seconds each!

 

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J Todd returns from the Barcelona Affiliate Conference where he mingled with online gambling executives, operators, and webmasters. Plus, he has an update on the US Department of Justice amending its indictment against online poker site Full Tilt to include running a Ponzi scheme:

So much to say on this latest development … which has two former “heroes” of poker on the front page of CNN for their involvement with criminal activity. About to go on QuadJacks to discuss it live.

In the meantime, and while you’re listening, here’s the DOJ press release that calls Full Tilt Poker a $440 million Ponzi scheme.

And here’s the actual crime novel of the DOJ-SDNY’s proposed amendment to the complaint.

And read below for a statement from the PPA, calling on the DOJ not to forget about the players as they continue to shut it all down.

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Full Tilt Poker has been very quiet about their non-payment to players since the Black Friday indictments effectively stopped their US facing operations. This week, however, they issued a statement that was predictable at best… blaming the Department of Justice for the payment delays. Also, J Todd looks at poker traffic on the web and welcomes two special guests.

It really would be kinda selfish to hoard all the knowledge in poker, let alone any insight gleaned from all the uninformed and/or misinformed Twitter-fueled forum banter. Things are moving so fast these days in poker it’s hard to keep up, let alone have time to post after filtering through the muck. Actually, that probably explains the continued love/hate in poker for QuadJacks … accuracy shmacuracy, if there’s new hubbub in poker, Zac and Marco and crew are on top of it, and occasionally the middle of it — with informed insiders and ignorant blowhards alike contributing — while SrslySirius makes a rap video.

But a few recent stories of particular significance that might otherwise get buried amid PokerStars/WSOP/WPT press releases, 2+2 NVG threads, and the mashup of Jungleman cheating buzz:

Ring-fenced funds: Full Tilt debaucle explained
ALDERNEY
Check out this story in Poker Player Newspaper about a regulatory matter of new relevance called “ring-fenced funds”. It helps one understand a little better why Full Tilt found themselves in tighter straits than PokerStars post-Black Friday (even though PokerStars is the big boy the DOJ most wants) … and leaves one to wonder why senior executives and on-duty attorneys representing both Party Gaming and PokerStars flew in from Gibraltar, Israel, and the United States to observe the proceedings firsthand. Perhaps they thought they were coming in to witness an execution?

Online gambling goes national
WASHINGTON DC
Big talk all over the internet about a piece in the New York Post that points out how stars seem to be aligning for online gambling legalzation in the US — from the Kyl/Reid letter requesting DOJ assistance in squelching offshore operatives and state initiatives alike, to a Boehner aide taking on a VP role with the American Gaming Association, to a warming friendship between House Majority Leader Eric Cantor and Venetian pooh-bah Shelly Adelson.

It all supports my belief that online gambling will indeed be a national issue in coming months (assuming people behind a rumored Senate bill want it to be). There’s no mention, however, of the player-friendly Barton Bill, nor much anything about poker specifically — the writer talks of “gambling” — which suggests this story could be a plant by media operatives for the AGA, who we know, of course, represent Big Casinos and likely have Harry Reid’s office on speed dial. It also supports contentions that the effort to bring back online poker (thanks PPA and Joe Barton!) will likely become a push for full-on legal online casinos as bills move forward.

Nevada regulators prepping for Poker+ …
LAS VEGAS/CARSON CITY
Meanwhile, unbeknownst to many, Nevada Gaming authorities are in the midst of sweeping changes to state regulations — with very specific language updates on matters of foreign partners, “suitability”, server location, mobile gaming platforms, slot machine networks, money transfers, tax collection, you name it … The new rules currently taking shape in Nevada touch on just about every issue brought up in the online gaming political sphere over the past five years. Whether revolutionary or standard as far as procedure goes, if you really wanna know what the future of online gambling (and therefore poker) will look like — and/or place your bets on who the corporate winners will be* — follow the public work of the Nevada Gaming Commission and State Gaming Control Board here in coming weeks.

* for entertainment purposes only: smart bet is Caesars, William Hill, and Cantor-Fitzgerald.

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For whatever reason, don’t ask me to explain, I’ve started looking back through some of the 300-or-so unpublished posts in Pokerati’s drafts folder. LOL. I found the one pasted below, from early ’07 as I got caught up in the Neteller money grab. No clue why I never pressed publish … I think it was because I wanted to do more research to support a theory about CIA interest in the Muslim-world’s gold-backed e-dinar and/or find a picture of a cartoon terrorist.

But really, takes you back, doesn’t it? I would, of course, get my $520 before year-end — no interest though from the Feds for holding it. And the return of Neteller money back in ’07 is a reason many give for their confidence in some day getting repaid by Full Tilt. But when I look back at that case — though Neteller was in many ways the opening salvo in the US fight to shut down the online poker industry — I frankly see why the current round of money seizures are very different, and thus why repayment via Full Tilt is far less likely than the government’s eventual release of Neteller funds.

Looking back at this post, and the original article it was gonna link to, does remind me about issues of virtual currency that the world is still trying to resolve. We couldn’t know it at the time, but what we’re seeing now started out with poker players getting caught up in something that was about way more than poker:

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This week’s online gambling news includes an unusual bipartisan letter to the US Department of Justice. Plus, industry news from the United Kingdom, and a potential setback for regulated gaming in Washington DC.

By letter to federal Attorney General Eric Holder dated July 14th of this year, US Senators Jon Kyl and Harry Reid have made known their views on Internet gaming. Or rather: they’ve let the AG know what they want the Department of Justice to do without exactly saying what their position is. (Thanks to Chris Krafcik for circulating the letter.)

This letter, from two senators coming from very different camps on the Internet gaming issue, is a very interesting document both for what it says and for what it doesn’t say.

What it says is that the Department of Justice has been lax in pursuing foreign private Internet gaming operators and that this has “led to a signficant and growing perception … that the Department of Justice thought that the case [against operating Internet poker and other Internet gambling websites] was uncertain enough that it chose not to pursue enforcement actions.” The senators state that it’s important for the DOJ to pursue “illegal Internet gambling” in the United States “aggressively and consistently.” Most notably in this paragraph, Senators Kyl and Reid assert that Internet poker websites have been offering online play to Americans for many years “with apparently no repercussions.”

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He said it on Twitter so it’s gotta be true …

@TexDolly
No main event for me.maybe the DOJ will stake me.
1:10 AM Jul 4th via Twitter for iPhone

Less than a half hour earlier Brunson tweeted:

@TexDolly
Busted… Total nightmare… Goodbye WSOP
12:42 AM Jul 4th via Twitter for iPhone

… which seems about as long as it might take to come up with such a jab at the DOJ.

UPDATE: He changed his mind.

Still looking to get confirmation on how many main events Brunson has missed before. Many seem to recall his sitting out for a few years in the ’80s — as do I — but have yet to find any definitive source on where he stands in the record books for total number of WSOP main events, consecutive or otherwise.

Brunson joins a growing list of prominent big-money pros who have publicly declared their intent to sit out the 2011 WSOP, along with big-money Full Tilters who have gone silent amid severe legal and financial difficulties and thus are expected to be no-shows.

Doyle Brunson
Phil Ivey
Tony G
Howard Lederer
Chris Ferguson

Am I missing anyone? I mean other than Russ Hamilton …

If you haven’t read it yet, here’s the civil complaint of Phillip Dennis Ivey, Jr. vs. Tiltware LLC and 10 Team Full Tilt John Does and/or Roe corporations. It’s a narrative tear-jerker for sure, the surface of a tale that scratches beyond matters of non-compete clauses and mishandled player monies.

The attorney who filed the suit, David Chesnoff, is kinda a big deal. He’s the former law partner of Las Vegas Mayor Oscar Goodman, has been an ABC Legal News analyst, and recently secured walks for Bruno Mars and Paris Hilton on cocaine charges. Other celebrity clients have included Vince Neil, Jamie Foxx, Mike Tyson, the Jackson family, Leonardo DiCaprio, Shaquille O’neal, Andre Agassi, Martha Stewart, Suge Knight, Nate Dogg … the list goes on and on — mostly criminal cases, some civil. But beyond having an A-list media component to his practice, Chesnoff is also a semi-regular high stakes poker player in Las Vegas — no stranger to the banter in Bobby’s Room and thus the inner workings of the poker world — with a remarkably successful record, legally, against the Feds.

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Back in the early poker-boom days, it became well-known around higher stakes circles in Dallas that a few of the Mavericks liked to play Texas Hold’em. Thus it was no surprise, back in ’06, when Mark Cuban and the Mavs did business with PokerStars.com. This was before the UIGEA, mind you … so the poker industry as we know knew it was still taking shape. But already the standard was becoming that dot-net was acceptable to advertise, dot-com was not. (The Feds had just seized a few million dollars from the Discovery Channel network, parent to the Travel Channel, for ill-gotten ad revenues from Paradise Poker … dot com.) Thus, though few recognized it at the time, it was kinda a big deal when Cuban was willing to *go rogue* and use his NBA basketball team to advertise the web domain with higher affiliate conversion rates.

(I seem to recall that deal lasted only a few months, if not less; not confirmed though.)

Anyhow, a little flashback to a more innocent era … reminding us where we (as in poker) were just five years ago. Nolan Dalla, then a representative for PokerStars, sat down to explain the difference between dot-com and dot-net, long before poker sites would learn the true power of a dot-gov. You’ll have to excuse the added music … I was still learning how podcasts worked at the time. And poker for that matter:

Jason Terry began dreaming of Championship rings and WSOP bracelets thanks to PokerStars.com.

From Pokerati, May 2006 (Maverick Poker, Take 2)

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

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OK, so the Mavericks are in the playoffs. And not only do the Mavs kick ass … but also they love poker. You’ll notice plenty of advertising and sponsorial relationships between the team and online poker sites. But what you may or may not notice is that while ESPN, Fox Sports, GSN, Travel Channel, et al. run ads for nameyourpokersite.NET … the Mavs advertise the previously declared illegal (by the U.S. Justice Dept.) dot-COM varieties.

WSOP 2011 Bonus: the Tupac Edition

We talk about the 2nd round of DOJ indictments, this time with Doyle’s Room, Bookmaker, and True Poker being the victims.  Neverheeb calls us to tell us of his car-jacking and pistol-whipping, an event covered by a Bay Area newspaper!  We prank call Bodog and try to get them to offer bets on the future of their own site.  The Cake Poker 60k confiscation fiasco is discussed.  Pokerati Dan joins us to talk more about the legal environment for online poker.  Druff announces that he’s quitting online poker until it becomes legal in the US.  An update on our WSOP media pass situation is given.  We talk about the situation with Pokerstars shills, including owner Isai Scheinberg, on 2+2 for the past nine years!  We discuss the Quicktender/Usemywallet collapse.  Micon shits the bed and his actual toilet during the show.

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There are two actions pending against online poker companies in the Southern District of New York — an indictment of individual defendants, and a civil forfeiture complaint against the companies. The civil forfeiture complaint seeks forfeiture of all assets of the defendants, including specified domains and bank accounts.

There have been several civil and criminal forfeiture cases brought by the DoJ in recent years, including Daniel Tzvetkoff’s and Douglas Rennick’s (which are the original and first superseding indictments in the current case). Similar forfeiture cases have also been brought against other payment processors, but in none of these cases, as far as I know, have the Poker companies filed claims objecting to the seizures. Also of note is that no players made claims either.

Any player who makes a claim [for their deposits] should expect criminal inquiry by the FBI and IRS, and would not be able to recover on provable claims for some time. If the Poker companies default on the civil forfeiture, players will have no real legal recovery.

For the purpose of filing Foreign Bank Account Reports, some players may have taken the position, consistent with the position of the IRS, that they are general unsecured creditors in a common pool fund of deposits, and as such have no control or discretion over the investment of the funds. If this position is correct, then the DoJ’s forfeiture claims may have legs, as there may be no players to come forward able to make the specific factual statements necessary for a bonafide claim. Further, in order for the Poker companies to make claims, they likely would have to submit to jurisdiction of the U.S. and open their books and records to the DoJ and IRS among others.

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