New DOJ Statement Gives FTP Players Hope of Compensation

As reported by Subject: Poker, the Department of Justice has released a new statement offering updates to its position on Full Tilt Poker – a statement that is particularly notable for the fact that it mentions the possibility of players with account balances on the site being treated as victims who might be compensated with funds seized from Full Tilt Poker. While this possibility had been discussed by some in the past – including the Poker Players Alliance – this is the first time any government agency has made mention of the possibility.

The statement reads as follows (emphasis added):

After the amended complaint in United States v. Pokerstars et al., 11 Civ. 2564 (LBS), was filed on September 22, 2011, the United States Attorney’s Office for the Southern District of New York received a number of new inquiries from individuals regarding the recovery of their funds from Full Tilt Poker.

By way of background, in April of 2011, this Office entered into a domain-name use agreement with Full Tilt Poker. That agreement, among other things, expressly authorized Full Tilt Poker to return player funds to players. However, as the September 22 amended complaint alleges, Full Tilt Poker did not in fact have player funds on hand to return to players. Instead, the amended complaint alleges that Full Tilt Poker had, among other things, (a) transferred significant amounts of players’ real money deposits to principals of the company, while (b) allowing many players to continue to gamble, and “win” and “lose,” with phantom credits in their player accounts.

At this time, this Office, together with the FBI and other agencies, is attempting to trace, secure and forfeit as much as possible of the funds derived from operation of the fraud committed by Full Tilt Poker and its board members that is alleged in the amended complaint. The Office is also attempting to obtain and examine the books and records of Full Tilt Poker. Many of those books and records are kept overseas. The return of forfeited funds to victims of the alleged fraud may be possible, but will depend on several factors, including the successful conclusion of the litigation, the amount of funds seized and ordered forfeited by the court, and compliance with other procedures the Department of Justice may eventually establish regarding return of forfeited funds to victims who lost money as a result of the alleged fraudulent conduct.

We cannot predict the duration of proceedings in this case, other than to state that they will last for many months at the least. We will apprise victims of the alleged fraud of future developments as appropriate.  General information regarding what is known as “remission” (i.e., return to victims) of funds that have been seized and forfeited is set forth in Department of Justice regulations found at 28 C.F.R. Part 9.

The civil complaint against Full Tilt Poker was recently amended to include new charges against several prominent executives at the site, including Howard Lederer, Ray Bitar, Chris Ferguson and Rafe Furst. The new complaint charged FTP with fraud against those who played on the site; in a controversial press release, the site was referred to as a Ponzi scheme.