Marco Valerio · @AgentMarco
2nd Jul 2012 from Twitlonger
Must-read: DOJ refuses blame for FTP's problems, details how company became a Ponzi scheme AFTER Black Friday:
25. On or about April 15, 2011, the Federal Bureau of Investigation seized Full Tilt Poker's internet domain name pursuant to a Court order. Full Tilt Poker then terminated its United States operations and promptly drafted a "message to U.S. customers," approved by defendant RAYMOND BITAR, that said "Please be assured that your funds are safe, and we thank you for your patience while we do everything in our power to have your money returned to you as soon as possible."
26. On or about April 20, 2011, Full Tilt Poker reached an agreement with the Department of Justice providing that the company could immediately return all of the money owed to United States players.
Full Tilt Poker did not then repay its customers as its "message to U.S. customers" claimed it was trying to do, and instead issued a press release on April 20, 2011 asserting that "numerous legal and jurisdictional issues" prevented immediate repayment.
In truth and in fact, however, Full Tilt Poker could not return player money because, as BITAR knew, the player money had been spent by the company and distributed to its owners. Indeed, Full Tilt Poker's internal financial statements reported that as of March 31, 2011 the company owed $390 million to players around the world but had less than $60 million in its bank accounts.
27. Even the limited cash that Full Tilt Poker still had available after April 15, 2011 was soon threatened by requests from players outside the United States to withdraw the balance of their Full Tilt Poker accounts, which Full Tilt Poker had no ability to pay.
Full Tilt Poker slowed down payments of there international withdrawal requests - falsely blaming the delay in one press release on "anti-fraud and anti-money laundering checks" the company claimed to be conducting - in order conceal the fact that it simply was out of cash.
Meanwhile, Full Tilt Poker, at the direction of defendant RAYMOND BITAR, continued to encourage players outside the United States to make new deposits with the company with the assurance that their money would be safe. In a statement issued on April 15, 2011 to players outside the United States (and repeated in substance at various times thereafter), Full Tilt Poker stated the U.S. enforcement action "in no way affects your ability to play safe and secure online poker in your country .... It is business as usual and we hope you continue to enjoy playing at Full Tilt Poker."
28. In fact, as defendant RAYMOND BITAR knew, new deposits from players outside the United States were not then "safe and secure" (much less protected in "segregated" accounts).
As BITAR was aware, Full Tilt Poker was entirely dependent on new player deposits to meet the backlog of player withdrawal requests and cover the company's operating expenses. For example, on or about June 10, 2011, CC-2 emailed company financial reports to BITAR showing that despite "8 to 9 million per week" from new deposits, the company only had only $2.1 million in "available funds" and had "current outstanding payments" due of $29.1 million, including $12.5 million to pay in "backlogged player withdrawal requests."
CC-2's e-mail noted that the available cash was being divided "back and forth" between "'must pay' invoices" and "withdrawals" in order "to keep movement on both fronts." All the while, BITAR and defendant NELSON BURTNICK continued to take a salary from the company, collectively receiving several million dollars after April 15, 2011.
In effect, Full Tilt Poker operated what was, by then, nothing more than a Ponzi scheme.