Attachment 3216
Here it is http://www.subjectpoker.com/2011/09/ftp-civil-amended/
http://www.forbes.com/sites/nathanva...-ponzi-scheme/
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Wow. That has to be one of the most depressing articles I have ever read. :(
As more facts come out, these guys are going to have to put some serious thought into hardcore personal security.
Gah you beat me here! Justice Dept. accuses Lederer, Ferguson, others of defrauding poker players out of $300,000,000 - Poker News - News, Views and Gossip
SOOOOO SICK
Federal Prison should keep them safe just fine, cant same the same for their A$$****s though.Quote:
Originally Posted by Chipless Wonder
Wow......I mean, wow. I can't even come up with anything say. What a bunch of morons. Owning an online casino is like a license to print money and these fools managed to screw it up. Looks like Worm is going to have some more competition in those prison card games.
Are these guys going to be able to show their faces in a card room after this? Would be like Madoff chilling at a Mets game enjoying a nice cold one... in a 24k gold goblet.
Q&A: Durr answers questions about FTP - Poker News - News, Views and Gossip
Some interesting stuff that Dwan is making public. Nothing Earth shattering, but interesting if you guys want to read.
Just finish lookin at the top CNN news on my phone
and I come to this article.
Poker site accused of $440 million Ponzi scheme
I had no idea is it all true ?
This is a crock of shit. The articles all state that the problem only began when the U.S. government prevented Full Tilt from withdrawing money from the bank accounts of willing players. Before that, they were perfectly solvent. They may be guilty of misappropriation of funds, but so what? Most businesses don't have more than a fraction of its customers money on hand. In fact, this system of fractional reserve banking is the basis for our entire banking system. Unless a massive bank run happens, there is no need to have more than 3 - 8 percent of customers' money on hand. And, historically, bank runs have only happened when the government interferes with the free market.
Full Tilt is no different. If players' account funds total $100,000,000.00 there is no need for the site to have more than $10,000,000 on hand. The only things that would cause that reserve ratio to be insufficient would be government meddling.
In other words, the problem right now exists only because the government got involved in the first place. History is full of similar examples of catastrophic consequences of government meddling (The Great Depression, the recent housing/mortgage/banking crisis, etc.)
You must have missed the part where they stated ALL PLAYERS MONEY is kept SEPERATE from Operating Revenue. They are not a BANK. Banks are backed by each other and are able to borrow to cover demands. This little thing is called "The Overnight Rate". etc, etc. There is no such thing for Poker Rooms. Get real.Quote:
Originally Posted by FrankJones
These clowns were running a Ponzi Scheme and anyone who defends what they did can spend time in the cell next to them as far as I'm concerned.
You must be kidding me. You are clueless if you believe that 3-8% bs. This is exactly the description of a Ponzi scheme. Anyone directly involved should be locked away for many years. Total scum!
This was very well put in my opinion.Quote:
Originally Posted by Houdini9
Yes, they were wrong to state that all funds were kept separate if in fact they aren't. But, there is no reason for a poker site to keep 100% of players' funds on hand in an isolated account. A solvent, highly profitable company need only keep a fraction of its player deposits on hand, since a "run" on player funds is unlikely. Again, I agree it was very wrong for Full Tilt to claim they kept 100% of players' funds on hand when apparently they didn't. But that does not make it a ponzi scheme. I don't wee any reason why a site with hundreds of thousands of players and tens of millions of dollars of players money would need to keep more than 10% of that money on hand. No, full tilt is not a bank, but if, for some reason, they found their reserves running low, I doubt it would be difficult to liquidate some assets or take a short term loan to fix the problem. Again, before the U.S. government started interfering, Full tilt was solvent and highly profitable. Suppose their players' deposits total $400 million and they keep $80 million on hand (a 20% reserve ratio). That would be plenty. They certainly wouldn't be insolvent. The only reason their fractional reserve ratio became a problem is that the actions of the U.S. government caused a "run" on funds. Had the U.S. government left well enough alone, none of this would have happened.Quote:
Originally Posted by Houdini9
By your definition, almost every bank and financial institution is a ponzi scheme.Quote:
Originally Posted by JWD_51
I want to review some key points here.
1) For years, Full Tilt was a solvent, highly profitable company. Of course the site's owners and primary investors made millions; that is the case with any billion dollar company.
2) Apparently Full tilt was operating under a fractional reserve system similar to the way every bank and financial institution operates. I don't have a problem with in principle, though, a I stated before, I do have a problem with the fact that they misled the public about this fact.
3) That said, I believe that Full Tilt had enough money on hand to cover any reasonable expectation of player withdrawal requests at any given time. Hence, they were solvent. The only way their fractional reserve system would become a problem is if some external force caused a "bank run" (so to speak).
4) Enter the U.S. government, which did exactly that. First, the government prevented Full Tilt from collecting its deposits from players; this action depleted their reserves and placed them in danger of insolvency in the event of a run.
5) Then, the government exacerbated this folly by actually causing a run by shutting the site down and ordering it to return 100% of its customers' deposits.
If the government did this to any bank, the exact same thing would occur. If the government froze all of a bank's accounts, prevented the bank from collecting any of its outstanding debts, and then shut the bank down and told the bank to return 100% of the customers' deposits, the bank would not be able to. It would only have 10% of the funds necessary to do so. And, the bank would NOT be able to get loans from other banks to sole the problem; why would any other bank lend money at that point to an insolvent bank that has been shut down and forbidden from collecting its outstanding debts or making further investments with the money it does have? Does that mean the bank is a ponzi scheme? No, it just means it (correctly) thought there was no reason to keep more than 10% of customers' funds on hand.
Frank Jones knows what he's talking about. Without any government interference everything would be just fine.
This absolutely does NOT excuse FTP for misusing the funds for operational purposes/huuge paychecks. They did, in fact, lie straight to our faces about segregated accounts.
When the processors stopped processing payments (upon government interference) and FTP started crediting accounts (quite recently apparently), THATS when the shit REALLY hit the fan. But FTP was already in a 'hole' from huuge paychecks, loans, and the 42 mill that was stolen from a payment processor. And if they stopped taking any new US deposits (like they should have), they would've had a huuge run on their remaining bankroll, when people start to lose trust in FTP, which they couldn't handle financially. They should've been fully prepared for that situation and just bowed out of the US market with enough of a BR to take the huge hit when everyone starts to lose confidence. Things wouldn't have gotten as bad. Unfortunately, they were extremely greedy, taking gigantic chunks of players money to pay themselves with no regard to the long term stability of the company.
And for the record. Ponzi schemes don't EARN money. FTP was still earning money.
With no gov interference (BF), cutting back on the huge paychecks and loans, and ending the crediting of accounts they COULD'VE (eventually) recovered all the player deposits. Shame that the gov had to step in.
Yes, but when somebody puts money into a bank account, they are agreeing to let the bank invest/loan that money out as the bank sees fit and, in return, the people collect interest on their accounts. FullTilt did not pay interest and, therefore, had no right to touch the money that was in any player accounts. That money was not given to FullTilt unless you bought into a poker game, otherwise, it was just money in an account that could be quickly spent on the site. It's the same as if you wired money to the Rio so you could play at the WSOP. Until you actually buy into an event, that money does not belong to the Rio. It is merely sitting in their cage waiting for you. There is no way the Rio is going to only keep 10% of what you sent them on hand.Quote:
Originally Posted by FrankJones
I think EVERYONE is missing a key point........banks are regulated, insured and in most cases have an independent board. Fulltilt Poker was not a bank, but pretended to be a bank and they were not operating in the black for along time. It was a ponzi scheme, once they could no longer cover all the accounts that they claimed were active! They all need to go to jail....or a least a real bounty put out on them!
Banks do NOT operate on a fractional system. They are allowed to "borrow" up to 40% (depends on bank) of account deposit. The government FDIC insures each deposit. The banking system in the US is one of the few that pays out all clients at the same rate if it should ever be in receivership by the FDIC.....there have been over 485 banks that have failed since 2007 and everyone received their money back up to the insured amount. There is a difference between banking accounts and investment accounts which are not insured at any bank!
There are so many things wrong with this statement.Quote:
Originally Posted by 5thmardiv
"Banks do NOT operate on a fractional system"
That could not possibly be more wrong. Banks operate on a fractional reserve system. That is a fact.
Also, as far as people receiving their money back, people only receive amounts up to the limits promised by the FDIC. So, monetary loss is possible even for customers of a bank.
Third, and again, I feel like I am beating a dead horse here, none of this would have been a problem had the U.S. government not taken two ill-advised steps that CAUSED the insolvency of full tilt and CAUSED the run on player funds.
Just to be clear, I am in full agreement that Full tilt was wrong to tell the public it kept 100% of funds on hand if it wasn't; and, full tilt was wrong to act like a bank when it isn't one. That said, it would have worked out just fine for everyone if not for the U.S. government.
And for the last time, FULL TILT IS NOT A PONZI SCEHME. Do you people even understand what that term means, or so you just regurgitate what you hear on TV?
Seriously, where did you get this information? What is your background in economics? If banks didn't operate on a fractional reserve system, they would not be able to make any money, since every dollar lent to them by customers would have to be simply put into a vault for safekeeping. They would merely be a large storage vault for customers. The banks would make no money and the customers would make no interest (since a bank cannot pay interest if it isn't allowed to use the deposits to make any money of its own).Quote:
Originally Posted by 5thmardiv
Are you familiar with the term money multiplier? What about leverage? This is how banks make money. How do you think banks make their money?
Also, what do you call it if a bank "borrows" up to 40% of deposits? That would be a fractional reserve system with a reserve ratio of 60%. Of course, no bank operates under a 60% reserve ratio; the very notion is absurd. I don't know where you are getting your information.
Im not sure why we are calling FTP a Ponzi Scheme either, Media uses words like that to make the situation sound more dire than it really is.
[ ] U.S. Interference is the sole reason FTP is where it is today.
[x] The decision to 'credit' players accounts when they were not receiving funds and other mismanagement is to blame.
Obv, proven by stars.
Quote:
Originally Posted by FrankJones
Everyone knows little gnomes in their safe's take our money and clone it. duh...
Step 1: Stick money in vault.
Step 2: ?????
Step 3: Profit.
The US is claiming that the finances worked like a ponzi scheme, outside of the real meaning of a Ponzi scheme where investors are promised high returns with little risk while they are paid out with new investment money. They are claiming that anyone who requested funds from full tilt had to wait for full tilt to have the funds to get paid out....which is why in many cases it would take weeks to get funds (depending on how much you were requesting). Anyone who claims that Full tilt had the funds to properly pay back all the accounts before the Feds shut them down is DREAMING!!! By the way, I do work for the banks and fully understand how they operate. Just like you claim that Full tilt was not a true ponzi scheme, I am saying that the banks are not a true fractional system. It's all in the way you want to swing the terms around. However, I think we can all say that your money was always safer in the banks then with Full tilt or any of the other sites. You would think with the amount of money flowing through FT this would not be an issue......but then again, 440 million is what is reported as being paid out to the crooks...when it will reveal that this was their own cash piggy bank which at any given moment would have crashed if enough people withdrew their funds!
Banks use the term leverage/ing, and hedging. Banks make most of their money by charging fees, mergers and acquisitions, IPO's and by many different types of trading via investment, government bonds, commodities and many more things that banks were never really set up to do. Banks do not make much off from most peoples checking accounts as most people are living pay check to pay check. Who really has a ton of money in a bank saving account? No one as the % is absurd, so one might buy a CD which is still stupid but safe to the FDIC insured max.
3 pages of arguing what it should be called and for some reason bank comparisons. Why dont we compare ftp to its competitor the one that shipped funds back right away, and did actually segregate the money. Who cares what they call it they stole players money and need to pay for it.
Well said.Quote:
Originally Posted by HC28:114092
Nick- Yes, Full tilt credited players' accounts when it wasn't receiving funds, but the reason Full Tilt was not receiving funds is the interference of the U.S. government!Quote:
Originally Posted by Shoecrew22
If the U.S. government hadn't started interfering with Full tilt's ability to withdraw money from people's bank accounts and credit cards, Full Tilt likely would not have had a problem.
A bank operates under a fractional reserve system in any and all senses of the term. I am rather shocked that we are even debating this.Quote:
Originally Posted by 5thmardiv
Also, full tilt is nothing like a Ponzi scheme in any way.
Social Security, on the other hand .......
Didn't the U.S. seize a huge amount of the money? Why hasn't the U.S. repaid this money to the players? I suppose it is okay for the U.S. to steal money, since it does so all the time and few people complain.Quote:
Originally Posted by HC28
Ray Bitar, Ferguson, and Lederer all agree with you on this. I really dont see your point. Its really simple they horribly mismanaged everything way overpayed themselves and stole everyones money. Just because it wasnt their plan to get caught stealing doesnt make it ok. I don't think anyone is siding with the doj. They are the reason that ftps badly mismanagement has come to light, but they didnt make ftp scammers they just outed them.Quote:
Originally Posted by FrankJones
I just want blame to be shared. Both sides are equally culpable, in my opinion. But, I expect corporations to cut corners and be shady. I don't like it, but I expect it. I was never so naive as to believe that Full Tilt kept 100% of its players' deposits in a segregated account, nor did I care, because I understand that barring some needless government interference, they would never need to. I could see that Full Tilt was making lots of money, and that player funds were not in any danger, even if they didn't have the money in a segregated account. And, again, if the government had not interfered, none of this would have mattered. Were they dishonest? Yes. Were they guilty of misappropriation of funds? yes. But, I do not have a problem, in principle, with their decision to act like a bank in using a fractional reserve system regarding how much actual capital they kept on hand at any given moment. I do not believe it was ever their intent to steal anyone's money. Just because it wasn't on hand, doesn't mean it was stolen. Again, by that definition, every bank in the land has stolen all its investors money. Economic theory has shown that a reserve ratio of 10% should be more than sufficient for any large entity in possession of people's money.Quote:
Originally Posted by HC28
Everyone keeps pointing out to me the difference between a bank and a poker site such a full tilt. I know the difference. I majored in economics and studied money and banking. I never claimed that full tilt is bank; rather, I claimed that full tilt, similar to a bank, would be just fine holding a fraction of players' funds as long as no external force acted in a way to cause a run on funds. No one has yet offered any evidence to the contrary. The principle is sound. However, my attempts to bring fractional reserve theory into the discussion are pointless, since it seems that few people actually understand what that even means or how it works. Hell, we have a (supposed) banker on here saying things such as, "banks do not operate on a fractional reserve system, they just borrow up to 60% of the investors' money ...." which might be the most asinine statement ever made on this forum.
What really galls me though are the actions of the U.S. government and the department of Justice. They are "supposed" to be the good guys, but they are just as dishonest, shady, and deceitful as the corporations they crusade against. It frustrates me how readily people vilify corporations while turning a blind eye to the repeated and colossal policy failures of the U.S. government. Simply put, I don't see why the government has any business being involved in this situation at all, and I blame the government for starting the domino effect that eventually brought this system crashing down (just as I blame the government for the Great Depression, the numerous bank failures over the years, and the housing/mortgage crisis of recent years).
The government is ineffective and dishonest and has no credibility. It has a terrible track record, yet people keep looking to the government to solve problems that are caused by the government in the first place.
to say that full tilt would have been fine would maybe be true, but only if it were to operate under more responsible management. and +1 to social security being fucked, 23yo sad face :/
when a company deals with illegal transactions with US customers, responsible management (or any management with any common sense) would plan for government interference and keep most, if not, all the players funds in cash ie Pokerstars. (instead they payed themselves 1/2 a billion) obviously the government should have kept its nose out of this. but bottom line is they were enforcing a law, a stupid one obv, but still a law. this clearly wasnt a ponzi scheme but their extreme neglect, misleading of customers and mismanagement of a half a billion dollars is criminal and theft.
Fine, let's say it's theft, for the sake of argument. Why do people get so worked up over what Full Tilt did when Full Tilt's actions pale in comparison to the vast array of offense committed by the federal government year after year? To whatever extent Full Tilt screwed people over, the U.S. government has screwed over its own citizens 100 times worse, and it uses our own tax dollars to do so.Quote:
Originally Posted by KevinW
Also, you point out that the law is a law, albeit a stupid one, and thus full tilt should have been prepared. Well, if you want to take that approach (one that I consider flawed, but you're taking it, not me) then you would have to argue that the PLAYERS should also have understood that by violating a stupid law they were taking risks, including the loss of their account balance. Besides, even if Full tilt is guilty of massive theft, what do you want the U.S. government to do about it? The government repeatedly said online poker was illegal, and that U.S. citizens were not allowed to play online poker. Full Tilt was operating outside the jurisdiction of U.S. law, right? Which made the players happy, because it allowed full tilt to ignore the U.S. law and it allowed players to keep playing. But now that the government interference helped make Full Tilt insolvent, the same players who were ignoring the U.S. law want the U.S. government to do something about their loss of funds? What the hell?????
THE VILLAIN HERE IS THE U.S. GOVERNMENT.
you are obviously on a U.S. government is corrupt, crooked and they should keep their nose out of shit it doesn't belong in rant..which nobody is disagreeing with....Quote:
Originally Posted by FrankJones
and yes the players are SOL, and should have known the risk. but they lost THEIR OWN MONEY. not millions of customer's money, while its owners were payed 1/2 billion dollars! PokerStars payed out just fine....
so you think Full Tilt is completely innocent in this case and it's owners should continue their outrageous lifestyles?
edit: oh and yeah you are completely right..since the gov't does it on a bigger scale, nobody has the right to get "worked up" as you say.
What the hell?????? When or where did I say full tilt is "completely innocent?" In almost every post I made, I noted Full Tilt's role in this mess. I have put a lot of time and effort into this thread and it is rather irritating that you are making an interpretation of my statements that is completely wrong and shows that you obviously didn't bother to read any of the thread.Quote:
Originally Posted by KevinW
I clearly stated that Full Tilt has misappropriated funds. I think the owners and principal investors should return the funds. I said I didn't have a problem with their decision to keep only a fraction of the funds in a segregated liquid account. I do think though, at this point, that they should put the money back where it belongs. I do not think they should serve jail time though, and I think they should get to keep their actual operating profit. And I think the government should stop interfering (and never should have interfered in the first place). The government forced the industry underground, and everyone suffered.
We have seen this scenario play out before with the alcohol prohibition and the futile war on drugs. Doesn't anyone learn from the mistakes of the past?
i did read your posts and that you said that they "misappropriated funds." but the last sentence of your last post stated..THE VILLAIN HERE IS THE U.S. GOVERNMENT. Which ultimately i agree with. I guess where we disagree is, i think the owners are criminals and you don't. which we may have to agree to disagree :).
if they had the money to "put the money back where it belongs" there would be no problem...FTP is broke! we can drain the owners accounts but I'm sure it wont cover half of the players accounts. I'd have no problem with them keeping only a fraction of the funds in a segregated liquid account either, if they didn't lie and say they kept ALL of players $$ in a segregated account. At least then customers wouldn't be given a false sense of security. maybe they would have kept significantly less money in their accounts, if they knew the truth. we will see how it plays out, lets just hope the players see at least some of their money.
I agree with this. And, you are right, whatever money the owners and principal partners have will not be enough to cover what they owe to the players. Of course, part of the problem is that many players were "freerolling" in that they made deposits that were never deducted from their accounts. I had stopped playing for a while when a friend wanted to play small stakes cash games, so I deposited $200 for him. It was never deducted from my account, which I assumed was just an error. Does anyone know exactly how much money in player deposits was credited to players but not withdrawn from their bank accounts?Quote:
Originally Posted by KevinW
Something else to keep in mind - When we hear about the amount of money Full Tilt owes its players, that amount is somewhat overstated considering that some people who have money in their account also "owe" Full Tilt money that was never withdrawn from their accounts. I am guessing that amount is probably not very large, since players who deposit frequently or in large amounts probably don't build large account balances very often. Still, I'd be curious to see the actual numbers.
Also, not to beat a dead horse here, but hasn't the U.S. government seized a significant amount of money? Why isn't the government using that money to repay FTP players?
Full Tilt knew that at any given time, they would not be able to pay out all the funds and continued to rob the payers accounts pretending and acting like it was safe. Regardless what role the government had in stopping this criminal practice, they knew. There is a big difference in mismanagement and out right deception. Bottom line, the owners need to be held accountable for all the funds not paid out and the government needs to release the rest of the assets to a 3rd party so that we can get our funds back. Otherwise, I would like to offer a bounty on the heads of FT!!!
