I wasn't playing online at the time but as with every other relatively new poker player I've heard about the downfall of FullTilt and how Lederer and Ferguson stole tons of money from players. How did it play out? Did the site/software just not work one day? Could people get online but find no money in their accounts? Were all FullTilt players affected and if not, who was affected and how? Was there any compensation at all for the people who got screwed over? How were Lederer and Ferguson found guilty?

I've done some of my own research into Black Friday but its mostly legal stuff and not poker- or site-related like the questions above I'm interesting.

Any and all answers, brief or detailed as they may be, are appreciated.

The shutdown had nothing to due with any financial shenanigans. The government shut down FTP, due to the government being against online poker, and this revealed the financial issues. Lederer and Ferguson haven't been found guilty in a court of law for anything dealing with the financial issues. They haven't even been charged with anything regarding that.

There are a ridiculous amount of threads on this site plus articles from numerous other sites on what happened. I do not think "research" means what you think it means.

-BD

but to be fair, reading thousands of (mostly irrelevant) posts is time consuming ...

@ OP ... AI pretty much nailed it, i would add to it, that it's still not known, who really knew about the 'stealing of players funds' and it seems that ray bitar was the fall guy (no worries, he didn't go to jail either).

the whole company was a mess and paying out millions (or lending), was kinda standard. so poker degens gonna be degen. DoJ basically took what was left of the money, forced PS into buying FTP (while repaying players except of US citizens) and it took until recently to pay back the money.

as a side note, not everyone was paid, most players prolly didn't know or didn't care (to get a few dollars). if i'm not wrong, the DoJ kept $45 mio of player funds plus all the fines they took from the black friday 'bad boys' ...

a good resource is definitely http://diamondflushpoker.com/

Please, we don't want to relive this OP.

FWIW I always thought it would be neat to see like a poker history chart from 2000-2012 with key points along the way (sort of like what you see for the US civil war for example) and then under each point on the chart would be a description/summary of the event. I agree most of the history behind full tilt (and poker history in general) is quite jumbled and a pita to search through

This might be helpful OP:

Why don't you make one ?

The history behind Full Tilt is hardly "jumbled". The site was spending more than it earned, and PokerStars was beating it in the US. The owners thought they were going to legislate themselves into a US national market and paid a lot of lawyers/lobbyists, the Feds seized a lot of money, so the site dipped heavily into player deposits to continue paying its various owners/pros, et cetera. Then around the time it stopped collecting on ACH deposits, but kept issuing unfunded player liabilities against those uncollected assets, the banking mess hit the fan .....

i'm no expert but i'll try to give some color.

there were 4 or 5 main shareholders i think. bitar, lederer and ferguson.... i think bitar ran it. lederer knew alot about what was going on and ferguson was a director who knew a moderate amount. ferguson is probably the most interesting situation of the 3.

ftp didn't seem to segregate players money. they weren't required to but it seems obvious that maybe they should have. anyway, they didn't have players balances in whole cash. but as they earned rake and new people deposited i think they could have paid out unless everyone wants their money at once. i realize new people depositing sounds ponzi-esque and probably was. but i don't think either that FTP needed to keep 100% of the player's funds as cash. but certainly a fairly high ratio would have been reasonable.

anyway, i think they paid out knowing that they were not maintaining 100% of all players funds........ not right..... but then at the very end, i think they paid themselves all or most of the players funds. maybe knowing the government would seize it. but of course the players could potentially get it back, which they did....... but the last payment - or last few - seem really egregious and wrong some earlier payments were questionable of course.

and at same time as demise and USA government outlawing online poker, they had problems with customer deposits. so some people get free money out of it. so that complicating things alot. and it was a pretty big $$$$ value........ maybe someone can fill you/us in on detaills here.

anyway, i may be wrong on some of this but i tried to give color........

ferguson is interesting. he wasn't very close to situation but he must have known a) that they they didn't keep 100% of players funds on hand b) the final payment would kill the company and was just a cash grab ahead of the government... i get the feeling - maybe wrongly - that in a perfect world ferguson might give alot of money back. but to who and how?

i forgot..... probably not major $$$$$ but various sponsored players - ivey and others - owed or were owed $$$$$ by/from the company. probably more the sponsored players owed the company money........ just some color, not a major part of the story.

someone said FTP was spending more than it made, which to me implies unprofitable. i don't think they were unprofitable. just not maintaining players funds, big problem with deposits not being handled properly and then a giant cash grab ahead of the usa government.. that's what you get for weak regulation.

either you must be a troll or a ****ing ******ed..there was a tons of explanation about wtf happened or what went down for it!it was all over the internet since the beggining..just dont get it why did you start a thread like this??

BEAT: I lost like $47.93 USD

BRAG: ALL freeroll monies




Edit:

Also, WP GG @Morph!!

To add (because sirius is boss):

Er, you have answered your own question... because he is a troll?

Though he may be undercover Howard Lederer, still puzzling after all these years what happened, as like all the other owners, he honestly never knew what was going on in his own company ...

Maybe a troll, but if OP is legit asking, I'd just add a key point to the story :

The payment processor of FTP was Intabill, an australian company ran by Daniel Tzvetkoff.
The guy actually decided to pocket 100 millions of FTP funds for himself.
In a totally stupid move, FTP decided to file a complaint to US police against Tzvetkoff, even if they were themselves guilty of massive "money laundering and bank fraud" according to US laws.
Seems that this episode might have decided US law enforcers to pull the trigger.

they invented something known as google, check it out some time

OK, I will summarise the case entirely in my own words shamelessly stolen from Wikipedia, as a tribute to Full Tilt shamelessly doing their own stealing.

On April 15, 2011, the Department of Justice unsealed an indictment, dated March 10, 2011, against two of the owners / employees (Ray Bitar and Nelson Burtnick) of Full Tilt Poker, along with some of the owners / employees of PokerStars and Absolute Poker. The defendants were charged with fraud, money laundering, and violation of United States federal gambling laws, and certain domain names for the sites were seized by the FBI. The Full Tilt Poker homepage was reinstated six days later on April 20, 2011.

On September 20, 2011, the U.S. Justice Department accused certain Full Tilt principals of defrauding poker players out of more than $300 million. The U.S. Attorney in the Southern District of New York filed a motion to amend an earlier civil complaint to allege that company directors Chris Ferguson, Howard Lederer, Rafe Furst, and Ray Bitar operated what the Justice Department claims was a Ponzi scheme that allowed the company to pay out $444 million to themselves and other owners, which included other famous poker players. A lawyer for Ferguson has denied the allegations, suggesting that the issues may have been the result of mismanagement rather than malice. Bitar surrendered to authorities on July 2, 2012, to deal with the civil and criminal case that is pending against him in New York . On April 15, 2013, Bitar reached a deal with prosecutors to plead guilt to criminal charges, and was sentenced to time served and ordered to surrender his assets, rumored to include various homes and $40 million in cash.

A companion civil case, U.S. v. PokerStars, et al. (11 Civ. 2564) was filed on April 14, 2011, and includes Full Tilt and its related entities as defendants. On July 31, 2012, the US government dismissed with prejudice all civil complaints against all PokerStars and Full Tilt Poker companies after coming to a settlement with PokerStars which included PokerStars purchasing Full Tilt. PokerStars and Full Tilt admitted no wrongdoing as part of the settlement, which ended all litigation between the government and the companies.

What is a joke is how they managed to screw up such a money making company, like killing the goose that laid the golden egg. Fascionating how owner Ivey was able to be so profitable there with no inside information, yet so unsuccessful at Pokerstars. But he would not cheat, would he, just like Ferguson and Lederer were fine, honest upstanding characters.

A somewhat more accurate synopsis:

FTP paid their many owners and pros (Bitar, Lederer, Ferguson, Ivey, etc.) to the tune of $40M+ each month consistently for many years.

In the years after UIGEA (2006), it became harder and harder for FTP to find financial processors to process deposits and withdrawals from/to US players, largely due to crackdowns on banks and processors by US government agencies. In addition, the financial processors available became shadier and shadier as the legit processors quit, so more and more of the processors available to FTP would just steal the money. And sometimes a processor would be shut by the US government, with the funds seized.

Eventually, sometime in 2010, FTP could not find any processor to do transactions for US players. However, FTP continued to accept deposits from US players, crediting their player accounts for the money in the hopes of soon finding other processors to collect the money from the players' bank accounts. Under the business leadership of Ray Bitar, FTP continued to pay out all the owners and pros the full monthly amounts. Although FTP profits (rakes collected) on paper still covered these amounts, essentially he was actually paying out of player funds on hand.

FTP was required by their regulator, the Alderney Gambling Control Commission, to always have the funds to cover all player balances. Bitar and FTP deceived the regulators by falsifying their reports to show funds being held in the US. These were actually uncollected funds from player deposits, but the regulators just took the FTP reports on face value. Later on, shortly after Black Friday (April 15, 2011), when the regulators investigated and discovered the deception, their only action was to cancel FTP's license. So much for effective regulation.

It is still mostly unknown how much the owners and pros knew about what was going on before Black Friday. It is fairly apparent that Lederer knew more than any of the others - quite probably everything. It is also unclear if any of what was done was intentionally criminal (other than deceiving the regulators), or simply bad decisions and bad management. It seems more likely that the intent was to make everything right once new processors were found, and in the meantime, everything they did (continue to accept player deposits without a way to collect the money; continue to pay their owners and pros; etc.) was to keep the ship afloat by maintaining the status quo and hiding the reality of their situation.

The **** hit the fan on Black Friday, when the US govt seized the FTP website (as well as those of PokerStars and UB/Absolute Poker), indicted the owners and seized or froze funds belonging to the sites in foreign bank accounts. Over the next months FTP tried to find buyers or investors for the business to bail them out, and seemed to come close a few times, but could never close a deal due to the DOJ legal threats, the revelations of the actual financial situation and/or the in-fighting of the FTP owners (like Ivey suddenly filing a lawsuit against FTP for $150M on May 31, 2011 - which likely was a significant factor in failure of one of the deals).

Meanwhile, Pokerstars still had plenty of money after Black Friday - they always kept full reserves to cover all player balances - and continued to operate outside the US. Within weeks of Black Friday, they refunded all their US players. Eventually, in June of 2012, Pokerstars made a settlement with the US Department of Justice - which included the acquisition by Pokerstars of all FTP assets, the direct repayment of all non-US player balances ($184M) by Pokerstars and a large cash settlement ($547M) paid to the DOJ. The DOJ was to repay all the US players their account balances out of the $547M through a long drawn-out remissions process, which is now nearly complete. Most players have been repaid ($114M total to date, out of $160M estimated total). But some players aren't getting repaid some or all of their money due having been owners, pros or marketing affiliates of FTP.

In June of 2014, Amaya acquired PokerStars/FullTilt for a $4.9B cash deal. So, the creators and owners of PokerStars (the Scheinberg family) made out like bandits - although that's not really an appropriate moniker imo as they operated the site with great integrity. Since acquisition, Amaya has moved towards integrating and promoting casino gaming and casino-style poker games.

Pokerstars operated the Full Tilt Poker site from 2012, but it never recovered enough traffic to be viable on its own so Pokerstars merged it into the Pokerstars client the middle of last year.

UB/Absolute Poker simply disappeared after Black Friday, the owners taking whatever money was left for themselves and reportedly living high on the hog in Costa Rica.

Note: Some of the above is partially speculative, based on bits and pieces of news, articles or rumors. I think it is about 90%+ accurate as a synopsis.

Good write up Xanadu. I strongly believe that Pokerstars and Full Tilt new months in advance that the DOJ hammer was going to fall... Pstars had a plan/resources in place whereas Full Tilt didn't.

some excellent write-ups here. NOT the one i did. but hopefully it encouraged others to do better ones.

that is asinine that they would credit someone $1000 with the hopes of finding a payment processor who could collect that sum in the future from the player's bank account.

is there any precedent for that? does that make any sense? maybe it does and i'm not aware of it. did they have you sign a tight legal document that you owed the money? even if so i can't imagine it would be worthwhile cost-wise to apply a ton of legal pressure on someone who doesn't want to pay.

This is a fantastic overview, and surpasses the Wikipedia entry, and has helped me, irrespective of whether or not the initial question was troll generated.

I have marked in bold two worrying points about the outcome, as the owners appear to have got away scott free, as owners they would have known the site was surviving on borrowed money, as they would know of the cash flows, and continuing to operate while knowing this would be criminal, yet no arrests other than Bitar seems a token investigation, with them being free to carry on their poker activities as players, or businessmen.

The moral seems to be crime pays.

That's the potential issues when dealing with offshore businesses located in tax haven countries. And the reason why I have pushed for US regulation of Internet poker.

Xanadu, thank you for a great synopsis.

My 3 lingering questions were:

1) why did PokerStars have to aquire Full Tilt? It just seems like a really bizarre way to come to terms with the US govt. Was this something pstars put on the table to settle the sh*t show or was it something essentially forced on them by the DOJ?

2) what was the real driver behind the doj having interest in this in the first place?

3) (not a troll) is there a confirmed amount on what Tom Dwans compensation was before he left ftp? Was he a part of the monthly payment plan? Did the pros have to reimburse these funds? I found an article with him mentioning the return of 1M of sponsorship funds. Was that confirmed and was it forced by the DOJ?

hopefully others can jump in and give better answers.

1) pretty sure it was forced on PS as part of their own settlement. not sure why the govt couldn't have extracted bigger settlement and then used the extra $$$$$ to reimburse FTP players. but there are all kinds of regulations/laws and concerns with optics that may have pushed things in this direction.

2) not sure exactly govt's motivation...... certainly the casino lobby. but also concerns - maybe not valid - about money laundering and all this unregulated money flows. i think the government disliked the payment processors more than the online poker/sports betting/casinos but couldn't get them on anything..... this is jumbled comment. hopefully someone else can clarify...

3) no idea............ but i think googling erick lindgren in relation to this might be interesting. i think he owed a ton and couldn't pay back. might be faulty memory

my entry was rambling...

but if you really want to dig into this subject, then you have to research the payment processors. who was the big player who went to jail?......