Perhaps it is because the Madoff winners were not shareholders in a Limited Liability Company. Perhaps it is because the shareholders can't be liable for the same thing the directors are liable for. Are you suggesting the directors should be absolved of liability, and the liability should be placed on the shareholders instead?

Because only the defendants can be shown to have done something wrong. The amounts are limited to what the law allows the DoJ to go after. I think there may be a possibility that the directors could be liable for more, although not to the DoJ.

For the transfer of money to constitute money laundering, the money must have been obtained from some predicate offence. In the case of the "insiders", I believe this was the fraud in the new charges.

Perhaps, but I doubt they'd get anything from shareholders. The Madoff case didn't have directors who were liable for the whole amount for the trustee to go after.

The phantom deposits were by Americans, and totalled about $128M. The shortfall for US players is less than $128M isn't it? It seems to me that recovering the phantom deposits could cover all US refunds. Coincidentally, the amount of fines sought from the directors is almost exactly the same amount as the portion of phantom deposits not covered by remaining account balances.

The shareholders don't legally owe anything to anybody. Phantom depositors may owe money to FTP. I think most people want to "go after" the phantom depositors because they are the ones who are beleived to owe money.

I should point out that I am not at all sure that the phantom depositors really do owe anything, because the UIGEA would appear to make it illegal for FTP to receive the payments? Can one owe something that it is illegal for the creditor to receive? Also, perhaps just like regular cheques, after half a year they phantom deposits are not valid if uncleared.

Personal checks never legally expire. After six months, your bank has a choice to either process the check or refuse it. If it refuses the check, you cannot dispute it with your bank as they have the right to refuse a check after six months. Similarly, if it processes the check, you cannot dispute it with your bank as they still can legally process it unless you specifically ordered a stop payment. Your bank has the choice. (Echecks are no different than paper checks.)

I was surprised by this answer, did a bit of reading on the subject and it seems you are correct for the US (which is the applicable case here).

Upon further reflection, it seems to me that even if a bank did reject a check for being stale-dated this might not serve to terminate a legal debt for which the check was a payment.

But you as the account holder can dispute/stop payment on those checks, in fact that leads to what the main argument should be, something you touched on previously, the fact that it was/is technically illegal for the bank to send your money to an internet gambling site.

And if under the UIGEA, the means of putting money on FT was illegal, how would the players be liable for money that was not allowed to sent in the first place?

Interesting. There is surely also a statue barring time period on the collection of debts too though? In the UK it is 6 years.

[Note: this was written couple of days ago in response in the other thread noahSD pared off so apologies]

[1] At ~ $122million it's of a sufficient size both absolutely and relative to the amount owed to other US players to be worth time and effort
to pursue or at the very least to explore options to pursue by the USAO.

[2] There is anecdotal evidence on this forum and others of both players who initiated those deposits in good faith would gladly have it taken from their accounts and end the uncertainty. I do think generous payment plans should need to be considered in cases where players are willing but unable due to changes in circumstances. Without some statistics it's hard to know how much could be collected just by a 'collection letter from the DOJ' - but it's likely extremely cost effective imo.

Also the actual information of the minority that blithely took advantage has worth both to financial institutions and obviously US gaming companies.

[3] As I understand it (someone here on 2p2 must be knowledgeable in regards the US ACH banking system), if one breaks down the e-check transaction process then once one writes an e-check from the originating depository financial institution (ODFI) it then passes to the federal ACH clearinghouse then on to the beneficiary institution and eventual beneficiary company/individual's account. This intermediate clearing stage is where I suspect many of the payment processor funds in transit as block transactions were 'seizable'.

So one may be able to argue that once one writes an e-check with intent to receive benefit but not allow it to be taken from their account by closing it then they have intent to defraud the federal ACH regardless of the final beneficiary business or institution in the chain. I do not know how the authorisation process works and even if the FTP end had made the electronic authorisation step that has agreed for the process to start. Note this argument is stronger w.r.t those persons that closed their own accounts.


If I (or is that we ) were in the State prosecutor's shoes I'd proably adopt a twin track approach of the above - light stick of a polite letter from DOJ trustee aimed at those that always intended to pay.

Then on the other hand playing hardball against those (probably a small number but owing the most ) that deposited the maximum and closed accounts repeatedly e.t.c. Bayes suggests these folk are probably of interest to law enforcement anyways...


hallelujah! +1 As PX says this seems the most likely scenario imho irregardless of the uncollected e-check 'phantom deposit' shortfall issue.

If someone whose deposit never cleared decides not to make good on a collection notice made on behalf of the players who were legitimately stiffed, there is no way for the trustee to get a judgement against them for that so we may as well just drop that discussion.

The trustee can however, and I believe should and will, seek a judgement against those who made illegitimate withdrawals and refuse to make good, meaning anyone who withdrew more than they deposited - either through an external source or legitimate poker sessions - will be face an unjust enrichment lawsuit.

So if you received a 'loan' from ftp (either in the form of a of uncleared echeck or directly like Ivey and Benayamine) or were the recipient of a chip dump, I don't believe that the trustee can force you to make good on it as long as you lost it in a legitimate poker session or left it in your account.

Taking something that doesn't belong to you via a false promise to repay is fraud, done over the internet it is wire fraud, and the fact that the business you defrauded may itself be illegal is not a legal defense, so anyone that did that should be jumping at the opportunity to make good on these debts and face no charges.

The UIGEA only makes it an offence for an entity in the business of betting and wagering to receive transactions. There is nothing about them not being allowed to be sent in the first place and the financial institutions have a reasonable due diligence exemption/defence written in the Bill.

Anyways UIGEA is a confusing mess.

OK, if it is an offense for the business (FT) to receive transactions then the uncleared deposits should never be allowed to go through or be collected. And as far as the banks are concerned, if you tell them the echecks were for gambling purposes, they shouldn't allow them

well then the people will have 2 choices I guess

1-pay up when they get asked for it

OR

2-hire a lawyer at about $350/hr to fight it in court--

-the DOJ is paying their lawyer staff either way as they are on salary however yours is going to charge you at least 1 hour just to tell you that you might as well pay them back the money--lol

No, that's not the right answer, I don't think the DOJ can justify trying to collect money that was not legal to be there, in fact the banks were supposed to not allow the transactions to go through in the first place.

I would assume there would be a class action suit or something if someone tried to collect.

If for some reason

so then you have no problem with the DOJ telling all customers in the states that they are getting nothing back as they deposited the money il-legally and there-fore they should not have been playing and thus could not win any of the money!

you can't have it both ways

Well the players didn't break laws, FT did and FT should be responsible for repaying the players. The players who had money on FT should get their money back, but not from players from whom FT was not legally allowed to take money from anyway.

As a full time player on FT, I think I was the only one who totally stopped playing in nov 2010 due to these uncleared deposits. I was extremely worried that something was very wrong and I was right...don't see how no one else foresaw this.

Back on topic:

How much rake did FT make off of these 120M in uncleared deposits?

LOL at people here thinking that some joe shmoe's uncleared e check belongs to "them" (the player balances). The way I look at it is FT was the enabler here much like the govt and the banks were the enabler for the housing collapse. They looted the company and left the players holding the bag. Then they blamed uncleared deposits. A convenient excuse.

The players who got away with uncleared e checks are scumbags? Maybe. But lets not forget who enabled this mess and for quite a long time to boot. Bottom line is FT is 100% responsible for any and all player balances...I dont give a rats ass how much is outstanding in bad echecks.

If Im a bookmaker and player A wins $100 and player B loses $100. I dont tell player A that Im waiting for player B to pay me before I can pay him. I make sure I have cash on hand to pay the winners.

You probably know more about this than me, but why is a fund manager like Madoff viewed as something that different from a director. Their respective reolse are essentially the same, and while technicalities may play a role, I belive it is precisely in cases of massive fraud and theft where those technicalities are often most effectively set aside. This relatively recent article (http://dealbook.nytimes.com/2011/08/...-on-clawbacks/) makes some interetsing points regarding the madoff case which I belive mainly mirror FTP. Of course the logic behind it could just lead to everyone (winners and losers) simply getting back their initial deposit, though that would seem a little less obvious given the slight differrences in this case, plus that fact that those would actually be greater than the total currently owed to players.

Whats also of interest is the emphesis placed on the relatively unique set of circumstances (much as with FTP) whereby this would not set a precedent for any investors to fear clawbacks in most cases. Obviously I would agree that going after a small time shareholder in a publicly traded multinational for something the board of directors did would be impractical (though not necessarely imorral), and does poses some serious ethical questions as well. However in a much more closed compnay such as FTP given the unique and severe nature of the underlying crimes, allowing for clawback (even from innocent parties reagarding any knowledge of wrongdoing) in order to make the victims whole does seem like the correct outcome, and not without precedent.



This related article http://dealbook.nytimes.com/2011/07/...-much-tougher/ does adress some of the other concerns. What is of interest is that the banks may be liable simply for know doing due diligence if it can be shown they reasonably should have know even if they were not complicit. So whill for now the rulling was favorable for them, that was largely on a tecnicality which should also prove favorable to the phantom depositors. The first is that the trustee is esentially acting on befalf of the company in seeking asets to redistribute to victims, which is what the DOJ would be doing here. This in itself I don't belive to be a problem here given the slightly different details.

However, what would probably be a mojor problem is that given "what is known as the 'in pari delicto' or 'unclean hands' rule, one wrongdoer cannot sue another wrongdoer for any harm caused by the misconduct. Put simply, one bad guy cannot sue another bad guy, even if both were at fault." Therefore if is difficult to see how the DoJ on behalf of a criminal organization according to its own filings, can then petition to recive any compensation even if we belive the phantom depositors are indeed acting in a criminal manner. However, I belive this action would still be available to individual victims (or class action) through a civil suit brought about independently of the DOJ/trustee's attempts to recover said assets. But as far as I can tell from this you shoudn't be expecting the DOJ to go after these depositors in order to make up the shorfall in player funds.

earlier in the thread i tried to bring this point across, but was baffled by the lack of common sense on the subject.