Poker boss arrested over Ponzi scheme
Filed under: Scams & Fraud
Raymond Bitar, 40, pleaded not guilty to charges of illegal gambling and defrauding thousands of poker players. He is one of the most high-profile arrests so far in the US government's action against the three biggest online poker companies: Absolute Poker, Full Tilt and PokerStars. 11 people have been charged and the US government has seized the firms' internet domain names.
Online gambling was banned in the US in 2006 and the government's crackdown on internet poker companies forced Full Tilt to move to Ireland that year. The company was set up two years earlier in Los Angeles by Bitar, a former trader, and Chris Ferguson, a professional poker player. Before Monday, Bitar hadn't set foot in the US since charges against him were first brought in April 2011.
At a hearing on Monday night in Manhattan federal court, Bitar pleaded not guilty to nine criminal counts, including illegal gambling, money laundering and wire fraud charges.
Prosecutors claim Full Tilt is run like a Ponzi scheme and paid its directors more than $440 million while defrauding players - and that the scheme continued even after the charges were filed. They say the company has taken in about $1 billion from players in the US, and estimate customers are still owed $350 million.
As the government cracked down on payment processing for poker towards the end of 2010, Full Tilt started to run out of money, yet reassured poker players that their funds were safe.
The government's indictment painted the picture of a Ponzi scheme to enrich Full Tilt's owners – mainly professional poker players – that quickly spiralled out of control between 2008 and 2011.
Bitar could be released on bail if he posts a $2.5 million bond. "I know that a lot of people are very angry at me," he said in a statement emailed to the Wall Street Journal from his lawyer's office. "I understand why. Full Tilt should never have gotten into a position where it could not repay player funds."
"For the last 15 months, I have worked hard on possible solutions to get the players repaid. Returning today is part of that process. I believe we are near the end of a very long road, and I will continue to do whatever is required to get the players repaid, and I hope that it will happen soon."
Six of the 11 individuals charged have pleaded guilty to some charges, including Absolute Poker co-owner Brent Beckley. He pleaded guilty in December to conspiring to break US laws on online gambling, a charge of conspiracy to commit bank fraud and wire fraud. He will be sentenced on 23 July.