Full Tilt Poker’s trials and tribulations continued to dominate the online gambling news headlines Wednesday, with legal representatives for the company refuting allegations by the US Justice Department that it was nothing more than a global Ponzi scheme.
“I disagree strongly with the allegation that FTP operated as a global Ponzi scheme,” said Jeff Ifrah, an attorney based in Washington. “FTP may have made mistakes, but I have seen no evidence to support the Department of Justice’s characterization of it as a global Ponzi scheme.”
The issues at Full Tilt should be likened to that of a problematic bank, rather than an illegal investment scheme, Ifrah told the Wall Street Journal. “A Ponzi scheme requires an investment vehicle in order to receive a certain rate of high return. None of those things happened here. Maybe it was mismanaged,” he claimed.
U.S. prosecutors made new allegations on Tuesday in the probe of the Full Tilt Poker website, accusing the company of paying its directors more than $440 million while defrauding its players.
Ian Imrich, an attorney for Full Tilt owner and board member Chris Ferguson agreed with Ifrah, saying: “While the government has obviously taken issue with the underlying activities of FTP, under any reasonable interpretation, the world-wide operations of the online cardroom are not a so-called Ponzi scheme.”
Quoting unidentified insiders, the Journal says that the in-camera hearings on the FTP situation this week held by the Alderney Gaming Control Commission heard evidence from an investment banker from The Seaport Group working for Full Tilt, who testified that the company had three interested investors, and that FTP is seeking another 30 days to resolve its issues. The Seaport group declined to comment when approached.
There have been no communications from the AGCC since the hearing reconvened Monday.
From the USA the Boston Globe reported that Democratic Party Congresswoman Shelley Berkley of Nevada, a longtime advocate for federal legalisation of Internet poker, had in the past accepted an estimated $20,000 in political contributions from Full Tilt Poker.
Jessica Mackler, a spokeswoman for Berkley?s U.S. Senate campaign, said in an email statement the money would not be kept. It was unclear, however, how the funds would be disposed.
“These allegations are extremely troubling and, if true, threaten to unfairly cast a shadow over the entire online poker community thanks to the alleged actions of a few individuals,” said Berkley.
The newspaper’s article focused on fellow Democrat Barney Frank of Massachusetts, who has introduced several bills in Congress over the years to legalise Internet poker – including one currently pending, and who also accepted political contributions of $18,600 from FTP.
Boston.com revealed that public records show that Rep. Frank has since January 2007, received $48,300 from poker interests, making up about 7 percent of individual contributions to his political campaign funds.
The newly formed professional Epic Poker League took fast action, announcing Wednesday that it has suspended Howard Lederer and Chris Ferguson – two of its members involved in the FTP debacle – indefinitely following the US Attorney?s amendment.
The Epic Poker Standards and Conduct Committee decided that the allegations in the amendment constitute a breach of the EPL?s Player?s Code of Conduct.
?The Committee voted to suspend Howard Lederer and Chris Ferguson indefinitely, pending the outcome of the Department of Justice?s action,? said Committee Chairman Stephen Martin, a former federal prosecutor who now acts as the Independent Ethics Advisor to Epic Poker. He added that should the civil complaint be further amended, the EPL committee will consider additional disciplinary action.
Notably, committee member and poker pro Andy Bloch recused himself from the decision. It is presumed that so did Annie Duke, a League official who is the sister of one of the defendants, Howard Lederer.
A recent addition to the list of defendants in the Full Tilt issue, Rafe Furst, also burst into print Wednesday, publishing an open letter in which he claimed that whilst he could not expand too much on the matter due to the legal proceedings in motion, he has nothing to be ashamed of or hide as an FTP shareholder.
“It sucks to have to endure the character assassination and potshots,” he complained. ?From a moral, personal and interpersonal perspective I feel I?ve got nothing to hide. And since I trust in our system of justice and have the utmost respect for my legal counsel, I will refrain from talking about the case until it?s resolved.”
Furst said that he had received much appreciated support from many quarters, and addressed the sceptics, saying: “Please consider that not everything you read is true, and our society is built on a presumption of innocence until proven otherwise. ?It?s difficult to take back hurtful things that you might later regret, when the damage has already been done.”
Perhaps inevitably, the latest developments were widely discussed at the EiG expo and conference in Milan., where the chief executive of the UK-based 3D online gambling site PKR.com, Malcolm Graham, advocated that regulators should be more forceful in requiring that online gambling operators licensed in their jurisdictions segregate player deposits from operational funds.
A senior executive of the Italian regulator, AAMS, Franceso Rodano, confirmed that in Italy licensees are required to segregate accounts, saying: “To protect customers, stipulated operators can’t spend on the players’ funds. We regularly check the bank accounts with technology to make sure the two balances match. We also have bank guarantees in place.”
The Isle of Man, regulator of sites like Pokerstars, has long insisted that player deposits be ring-fenced, safe-guarding their interests in a requirement that distinguishes it from Full Tilt’s regulator the AGCC.