Some defend him because they know there's a big difference between virtue ethics and business ethics.

I assume you are saying you don't believe FT was insolvent.

So why did PS pay so much? They had to settle with the DOJ and by also paying the debt to all FT players they got rid of that headache for the DOJ. For this PS admitted to no wrong doing and Isai does not go to jail.

On March 31 FT had $60 mil to cover $330 mil in player deposits and April 1 paid out "profits" to the owners as usual including Gus. Source? The DOJ. So yeah they weren't totally insolvent

The criminal prohibitions of the UIEGA are found in § 5363, entitled “Prohibition on Acceptance of Any Financial Instrument for Unlawful Internet Gambling.” That pertinent part of that section provides in part:

No person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person, in unlawful Internet gambling – [credit, EFTs, checks, drafts, or the proceeds of any other form of financial transaction as set forth in federal regulation].

That means if you file tax returns in the US and claim you are a professional poker player, and you participate in illegal online gambling, then you are liable for criminal penalties under the bill. Amateurs would not be liable for criminal penalties.

Please send me an IM with your email, and I will send you my PayPal account for the $1000.00.

You open a business with a $100,000 loan. The lender is perfect happy if you make enough sales to pay the principal/interest on that loan.

A year goes by, and you have $20,000 left over after all expenses. The first thing you do is go back to the bank, and show them the $20K.. and say "I'm a success. I want to expand my business. Lend me another $100,000.. And the bank will.

Now you are roughly $200,000 in debt.

Another year goes by, you make all your loan payments, pay all your bills, labor costs, etc, and you have $50K extra left over..
Back to the bank.. borrow maybe $1,000,000. The bank loves you. It looks like you will be around a long time, sending them loan payments..

Now you are in debt by about $1,150,000.. on the bottom line, you are far worse than broke. If you failed at this point (or if the DOJ shut your doors) you cannot pay off your debts.

However, businesses can exist virtually forever, providing jobs, goods and services, paying all their bills, while deeply in debt and technically "insolvent"... and most businesses do it that way.

Businesses are valued according to their income, not their net worth.

I do understand the issue of not enough cash on hand available at FTP to pay off user accounts, but that does not explain why Poker Stars paid so much for FTP. It seems to me that there may have been substantial other non-cash assets available at FTP.

You claim that Poker Stars paid $731 million for FTP so that Isai Scheinberg does not go to jail. That seems a bit far fetched to me, especially since if iFTP was insolvent, you would have to add the amount of cash deficit on to the $731 for the real price.

Poker Stars kept their customer accounts separate and paid everyone off, so it is doubtful that the DOJ had much of case against Scheinberg, since there was reason to believe that the Wire Act did not apply to online poker (http://calvinayre.com/2011/12/23/leg...ports-betting/) and a US District Court ruled that poker was not prosecutable under federal IGBA (http://calvinayre.com/2012/08/21/leg...-federal-igba/). I don't claim to know all the facts, but it just seems unlikely that Scheinberg paid that much for FTP if it really had a substantial negative net worth (or any negative net worth).

Even if your explanation was true (which I am skeptical about), how can you explain that Howard Lederer and Chris Ferguson do not face any criminal charges and have settled the US DOJ civil suit by only paying back a several million dollars each (at least for Lederer that is the amount)? Lederer and Ferguson did not bail any other poker firms out, so why would DOJ not charge them with crimes if they were really guilty of criminal activity (not just total incompetance and poor oversight).

So, you're saying that player deposits were like a loan, and they could be spent as FTP saw fit?

I personally think the player account balances should have been kept in separate cash equivalent accounts, as Poker Stars apparently did.

However, the way all banks in the US operate is that they only have to keep about 20% of customer deposits in cash equivalents on-hand. The rest of it has to exist on paper as assets, but can be in the form of non-liquid assets like real estate, loans to other customers, etc.

Unfortunately, since the US forced these firms to operate offshore, they are not regulated and were able to choose which model of they wanted to use (the one used by Poker Stars or the one used by US Banks).

Not saying that at all..
However, businesses will take advantage of anything they can. Sometimes they must..
And not being regulated (like a bank) there was no law (afaik) that said they must keep those player account moneys separate.

so, bad management, yes.. absolutely... But was it outside the law? I dunno.
[edit] Why bad management? Because handing out $Hundreds of K a month to partners without concern for some emergency shows someone up there is an idiot. To paraphrase what Doyle said, stockholders would be mortified.]

My guess, from what I've read, is that FT had enough money and income behind to pay off a normal, predictable amount of player withdraws.. forever. There was loads of rake streaming in, constantly.. We can only guess how much, but it had to be huge.

Irrelevant. You agree to this when signing up for an account. There was no such agreement when signing up for Full Tilt.

They operate offshore in small countries which have little or no regulation.

But even they acted like a bank, US banks are not required to keep customer deposits separated. If they did, they would be out of business. US banks only have to keep a relatively small percentage of their total assets as liquid (cash equivalent) assets. The rest of the assets are used to issue loans to other customers or are held as non-liquid assets such as real estate, or other non-cash equivalent investments.

If everyone who had an account at a bank showed up to collect their deposits at the same time (or even within the same year), the bank would not have anywhere near enough money to pay them off (this is called a "run on a bank"). That is why the government set up the FDIC to insure the deposits (up to a maximum of $250,000 per person, per bank).

pretty much

so roger you think when you deposit money to make bets with, it should be used for overhead and anything else . so if I depo a 100 that only 20 should be in my account . basically after I depo my money is now worth 20 cents on the dollar. bookmakers and casinos would love this new concept. maybe have a 20% of your money gtd.so if I want to bet 10k 8k gos to overhead and I can win 4k . this should go over great . you could call it the roger . ok champ you depo 10k bet it all on green bay and won minus 8 k in overhead you now have 4 k u can collect.

There is no such agreement when you open a bank account.

The bank still owes you the money, and it is insured up to $250.000 by the FDIC. If the bank cannot pay all depositors off when a run on a bank occurs, the bank is taken over by the government to liquidate the non-cash assets over time, so effectively the bank no longer exists (which is why the bank does not need your permission to not segregate your deposits).

In more extreme cases, such as in 2008 financial crisis, the US Government/ Federal Reserve injected (loaned) the biggest US banks and other financial institutions over $700 million in cash to help convince depositors that there was enough cash in these banks and customers should not cause a run on the banks (which would have sent us back to the stone age if that happened).

I didn't like him either, and still don't. But not sure he is solely to blame for FTP poker, and apparently DOJ cannot charge him with a crime that would stick.

your funds are safe and secure a lil black Friday quote for you.

Hey man, that 1 thing of 20 of things hate Lederer for has only 99% chance of being true (and he plead guilty of it)! lol?

if the funds were not segregated than that is fraud
If there was fraud than thats a crime
if there was a crime then there are criminals
If there are criminals than their names are Lederer, Ferguson, and Bitar


And the reason we pick these names because these are the CEO, Chair of the board ect.
And therefore are legally the ones who get the blame for business malpractice.

I am well aware of all that.. There is no need to bring the intricacies of banking law into this. FT was not a bank.
My point was that FT was not regulated. Therefore they could do pretty much whatever they wanted with the money in the legal sense.

I hate Daniel Negreanu. Why does he have to say "ya'll" all the time. What is wrong with him? Do most people say this? It really annoys me and I don't like him for it and don't want to listen to him anymore.

I have never deposited money with any offshore company, much less a poker website. Most offshore companies are not properly regulated IMO, and the transfer of money to them via credit card or bank account is illegal if used for internet gaming.

I am not condoning what FTP did, but it is not all that unusual to not keep all the customer balances in separate cash accounts. US Banks only keep a small percentage of customer balances as cash assets and they are not separated. But US Banks have regulators who frequently inspect the other non-cash assets to make sure they actually exist and are worth what the bank claims they are worth. But quite a few banks fail each year because the cannot pass the test.

I don't want to defend what some of those at FTP did. The question of this thread is how much did Lederer (and Ferguson) know as members of the Board of Directors about what the people who ran the company did with the money and how the company was run on a daily basis. Obviously, what FTP did was not right, and Lederer was negligent for not exercising proper oversight as to what was happening, but how much did he really know before it blew up? What about all the other poker pros who got big distributions each month from FTP?

Howard was sitting on a top of a cash cow - and helped to kill it. Pity him.

Now just Pokerstars guys make billions each year.

Anyone arguing that FTP wasn't out of line to have EXACTLY the amount of players funds in escrow is really really uninformed.

FTP's business operating funds have nothing (read: nothing) to do w/ players funds. FTP was simply a "holder" of funds. The total amount of funds deposited on the site should never, ever be below the amount of $ FTP has in escrow for these funds.

Negreanu is a showman, so I guess it is part of his act. Not sure why someone from Canada would talk like a southerner (maybe he is from southern Canada?)

I can't disagree with that. But I wonder how much the board of directors knew about how the company was actually run. It was definitely negligence on their part for poor oversight (on the part of board of directors).

negligence that can put you in jail or sued.
If they signed documents that verified what they did not make sure was verified, than that is fraud and should definitely be brought up.

Its the same as a notary that is not doing their job properly. You say something is true, without checking first, you should get burnt when it turns out to be fake.