The phantom deposits thing is a lot more awkward than I think you guys realize. By collecting on these deposits, the DoJ is essentially collecting on the proceeds of what they construe as an illicit offshore gambling operation and redistributing them to other players. This isn't a very good policy to follow, especially with the pending criminal/civil charges.

One of the points of the legislation was to further a policy of not having easily accessible and unregulated gambling available to potential US problem gamblers. They would be furthering something counter to that policy by collecting on FTP debts. I'd be shocked if they tried to pull the phantom debts, honestly. I'm very curious what's going on here if the DoJ really intends to make all the victims whole.

Do they collect outstanding debts from people who owe drug dealers when trying to make things right with victims?

Perhaps a better analogy would be a 50,000 deposit I made to Madoff which he never drew from my bank account. Madoff goes down and tons of $$ is owed to lots of other victims. Does the DoJ come knocking and ask me for the portion of the 50,000 I would have lost? Fred Wilpon could possibly be sort of a similar situation, but isn't he being directly sued by the victims themselves? And isn't he sort of winning currently?

Meh that's a bad analogy too, but you guys see what I'm getting at here.

First of all, I just want to use this space to mention how much I love this new forum. At last there is a place at 2+2 to get what has always been good signal without all the noise when it comes to poker's hot issues. So thanks to whoever conceived this section.

But back to the topic...

Yeah, I gotcha, so it can't be that bad of an analogy. And it's yet another reason why I can't see how the DOJ will realistically settle that part of the problem.

Hell, there have to be several large organizations that the DOJ has taken down. I'm not talking about a legit business that had a few individuals acting illegally, but rather entities whose very operations are fraudulent (e.g. your Madoff example). Certainly, these organizations must have had debtors. So when these businesses were brought down, were those debts forgiven? I'm very curious to see what the precedence is. Time to do some digging.

PX, to return to your point about Full Tilt "bearing the brunt" of the phantom deposits, here's how I see it:

1. Full Tilt Poker had X number of dollars on its site in the form of player deposits. This is money that actually did transfer from player bank accounts to site balances.
2. In late 2010, players deposited Y number of dollars. Of course, we know now that this money never truly transacted, yet it appeared on players' balances.
3. Full Tilt then operated as if it had X+Y dollars in player deposits.
4. Now that Full Tilt is returning player balances, the site will pay out the X number of dollars actually held in player balances (i.e. legit deposits) plus the Y number of dollars purported to be in those accounts (i.e. phantom deposits).
5. Despite having X amount in its coffers, Full Tilt's outlay to U.S. players, via the DOJ, will be X+Y.

Thus, the Y amount effectively becomes FTP's penalty for allowing those phantom deposits to take place at all. (This is how I interpret RJ's phrase "swallowing that loss.")

Is it perfect? Well, no. A certain number of players will collectively receive Y more dollars than they should be entitled to. But from my seat in the upper deck, this seems like the more realistic way that the DOJ-facilitated cashouts will go down.

Granted, I haven't followed this part of the story as closely as some of you. In fact, the link I posted to the "phantom deposit" thread represents the first time I had actually read it. (Until then, I only knew about this snafu from hearing about it via the poker media.) So it's possible that I'm misunderstanding the mechanics of the situation.

tbh these are all pretty bad analogies and you're missing a key point, which is that at no point as the DOJ explicitly said or tried to claim that individuals playing on these sites were committing a crime. And there are no laws on the books (with the exceptions of a few states) for them to make or enforce such claim. Quite the opposite they've painted the picture that players were victims of fraud perpetrated by the owners of FTP.

Also the ponzi comparison just doesn't really hold any water both as statement of what was going on with ftp and as an analogy to the process of collecting these debts. Every player that chose to deposit on full tilt knew exactly what they were in for. And players that lost money that was never deposited weren't under the impression that they were investing or that something else was happening to their money other than it being put into play on a poker site.

While I don't know if the DOJ would aggressively pursue collecting that debt, it seems highly likely that they would at least make some effort. I think a surprising number of people owing small deposits would simply mail in a check were they to receive a letter from the DOJ.

I guess I look at it this way: imagine that this sale of FTP had happened at this price years ago, and then all of this stuff went down but instead of FTP being short on cash because of DOJ confiscations, they simply paid a larger fine and turned over the repayment process to the DOJ. If that were to happen I think the DOJ would certainly go about collecting missing deposits. and there would be no confusing that these civil and criminal complaints should be mixed in with player balances that made phantom deposits on the site.

I hope that makes sense. Just finished a workout and am worried it was all just light headed rambling.

Not sure exactly how this fits in (IOW, I am not a lawyer), but virtually every state law on gambling law I have read says that gambling debts are unenforceable - for example, in New York state, "Contracts on account of money or property wagered, bet or staked are void."

It does seem to be a stretch for the DOJ to try to collect debts from the proceeds of a gambling operation it deems to be illegal. (Which is basically what Karak said.)

FTP is not "returning player balances" to US players. DOJ is seizing all the FTP assets. The DOJ will reportedly be making the players whole through a claims process against this forfeiture.

Karak - your analogies don't quite work because they don't apply to this situation. As Pizzle says, the players with lost balances are considered victims. Those that owe money (via phantom deposits) could be classified as debtors. Although the point made by Elf that gambling debts are often not legally collectible may hold some weight, the DOJ may make the attempt anyway. Know anyone that will take the DOJ to court to challenge it?

There was a recent case where people tried to get out of paying their credit card bills for playing poker by calling them unlawful gambling debts, and the court ruled that since the gambling occurs after the transaction is authorized the debts were lawful.

In previous fraud cases the trustee has filed lawsuits against everyone determined to be a net winner in order to make net losers whole, so someone who phantom deposited would just have the deposit deducted from account balance, and I'd be shocked if anyone with a negative balance for whatever reason isn't contacted by the trustee.

I would assume that most people would just want to do the right thing and pay what they owe, but if someone refuses to pay and actually withdrew money after the phantom deposit, they could be served with an unjust enrichment lawsuit (an echeck isn't legally binding to sue for breach of contract against anyone that freerolled and lost rather than withdrew).

The Madoff analogy is bad because SIPC insurance would cover the $50,000 you in theory lost. I believe I've read the insurance claims have already been paid.

I believe if someone never had the money pulled, but showed a balance equal to it, the DOJ would just net it out because everyone is to be paid in full. However, the DOJ would have a fiduciary responsibility to recover as much money as possible to pay off claims if you owed more money than you were owed. Otherwise, other claimants wouldn't be paid.

Your view on this troubling.

How can the DOJ try to collect a debt on behalf of a company accused of conducting illegal activity within it's borders? These uncollected deposits are uncollectible, and I don't have to be a lawyer to know this.

If the DOJ decides to go out of bounds and try to collect these uncollected deposits, I am sure that there are some people that would challenge it out of principle alone.

So many people keep calling these uncollected deposits a debt. Well, maybe it is a debt, but not one that people for the most part were planning on. FTP bears the brunt of these uncollected deposits, and the DOJ is in no position to go back to these customers of FTP to tell them it's their responsibility to repay a debt that was meant for a company accused of conducting illegal activity.

As for Karak's analogies, I understand what he meant.

Can someone give me a history lesson of a company that is no longer in business that can still collect old debts from customers after being shut down for conducting illegal activity? (please don't tell me that it's the DOJ collecting on behalf of FTP)

How much different is this situation compared to the PS situation? There were uncollected deposits, but not only did Stars pay out US players, but they also acted as if "phantom deposits" didn't even happen.

The difference is that PS covered the uncollected deposits out of their profits, while FTP kept paying themselves profits as if the deposits had cleared, so people writing bad echecks to PS were scamming PS, while those writing bad echecks to FTP were scamming fellow players.

Now that the sale of FTP assets is insufficient to make all the players whole, the DOJ will appoint a trustee to collect from everyone that defrauded FTP players, and the players who wrote bad echecks could find themselves on that list if they refuse to make good on those echecks.

OK this is where I am having the biggest issue. You are saying that the players wrote bad echecks. This is the biggest misconception. A bad echeck is when someone intentionally deposited on their FTP account using their bank account knowing that there were not enough funds to cover the deposit. This case is drastically different, and I don't understand how it is still being confused with the fact that people didn't know that there would not be an attempt to be collected. Please stop calling them bad echecks.

You also said that the trustee would attempt to collect from everyone that defrauded FTP players, possibly including players that were just trying to use a deposit method that they were accustomed to using? You have to give the players using this method the benefit of the doubt, regardless of the fact that it may have been taken advantage of as time went along. Putting the players in the same category of the true fraudsters is irresponsible, and I am hoping that the people ultimately making the decisions have some common sense.

People attempting to deposit via echeck were not scamming fellow players. FTP made a decision to allow players to deposit when there were no processors to collect them. Players were unaware of FTP's gross irresponsibility and rogue business practices.

I don't want to begin any kind of battle, but you really need to re-evaluate your first paragraph. The only people scamming were the people from FTP, and I guess that this is why Stars is still in business while FTP is not.

Uncollected player deposits that were not collected because they didn't even have processors in place to collect from players that were not even legally able to use their bank accounts to fund an illegal poker account is considered a transferrable asset? (sorry for the run-on)

Amnesty is a legislative or executive act by which a state restores those who may have been guilty of an offense to the positions of innocent people, without changing the laws defining the offense.

Before being offered amnesty, you need to be guilty of something. The fact that none of these uncollected echecks were rejected by any bank means that nobody committed an offense.

There is plenty of anecdotal evidence that there were indeed people doing this with intent to defraud, but by at least responding with a willingness to make good, even if they say they can't afford to pay right now, those people could jump from the scammer category into the innocent category - which is the purpose of an amnesty period.

The assets forfeiture and repayment to players will be done under civil law (its a civil court case), not criminal law.

Well, even if you change it to "FTP returning player balances via the DOJ" the statement is still not accurate. FTP will not be taking any such action. FTP will be forfeiting all their assets to the DOJ. The DOJ will then do whatever they want with those assets. Fortunately, and perhaps due to our lobbying efforts, that includes setting up a process for players to make a claim against the forfeiture for their account balances.

I doubt there will be any need for an amnesty as there won't be any potential criminal charges pending. The intent to defraud won't be at issue. The only issue will be whether or not a player's deposits were collected by FTP. Uncollected deposits are receivables owned by FTP. These receivables are an accounting asset which will transfer to the DOJ as part of the assets forfeiture. Whoever acts as the trustee for the DOJ for the assets held in trust against player claims with have a fiduciary responsibility to attempt to collect these receivables.

It will fall on the shoulders of the depositing players to prove that they don't owe that money, if they wish to challenge such a collection. The DOJ trustee only has to say, "the records show that on such and such a date you made a deposit to your poker account which was never collected from your bank account...please pay up now".