Full Tilt blames massive theft for payment issues

[The Buzz]

Full Tilt Poker released its most detailed statement yesterday on why it hasn't been able to repay American customers. Not surprisingly, the former second largest online poker room in the world was unprepared for Black Friday. What was surprising was the revelation that Full Tilt said it was a victim as well, as the site claimed a payment processor (Daniel Tzvetkoff?) stole $42 million from the company.

From Forbes:

“Until April 15th, Full Tilt Poker had always covered these losses so that no player was ever affected,” the company said, adding that it experienced “unprecedented issues with some of its third-party processors that greatly contributed to its financial problems.”

[Anthony]

OK, thanks for the timely explanation Full Tilt...

[Doolally]

You couldn't make it up! I think it's about time they came 100% clean and take the pain that comes with it.

I presume they're currently suing for the $42M?

[rak]

You couldn't make it up! I think it's about time they came 100% clean and take the pain that comes with it.

I presume they're currently suing for the $42M?

Nope.
The guy who stole the money, turned up to a processing conference in Vegas, he basically brushed of the Full Tilt guys.
Full Tilt told the feds that this guy was in Vegas.
He processed about $500million in gambling transactions over a 2 year period.
He had been processing for FullTilt, Pokerstars.
The FBI arrested him and he faced 75 years jail term.
He turned grass and was put into the witness protection program, and rolled on all the companies he did transactions for.

What did he do with the money? He sent some to the US to setup a pay day loans company in Vegas, he moved money into off shore accounts Singapore is a country I'm pretty sure where they setup accounts as well. He has had to forfeit all this money. He basically started taking money which was his clients and bought himself toys and a life beyond his means. eg $27 million unfinished house, boats, night clubs etc.

[Doolally]

Wow...."house, boats, night clubs etc. "

I guess if you're gonna do it, best do it with style!

[DealTheNuts]

Thank you for the additional information rak, very helpful indeed as it is difficult to believe anything Full Tilt releases to the public.

The short statement from Full Tilt still leaves a lot of unanswered questions, for example funding, (lack of) management control/working capital, where the money was actually going to and why player funds were not segregated, to start a very long list.

I can understand they don't want to say too much while looking for a potential investor and a due dilligence process needs to be completed, but trying to blame others for their own mess isn't really the best PR approach in current circumstances with so many players out of pocket.

[FictionNet]

It ain't just American players who haven't been paid. I doubt I'll ever see my withdrawal.

[rak]

I think the massive theft pushed FullTilt over the edge in what was already a business that was extended to the hilt.

[tommyk]

The way I've always understood it (and the way I think PokerStars works) is; the players money (deposits,account balances) is kept separate from the company money (the drop/any revenues). It's really very simple. KEEP your xxxxxx off other peoples money (OPM). - - They had to have been making enough money just from the drop and tourney fees to run that company and have plenty profit. - - - Someone just couldn't stand seeing all that money sitting there (collecting interest which they keep). Once they started messing with OPM even the interest went down the tubes !!

[rak]

tommyk is right.. the players money is meant to, and should be kept separate from the operation costs of the business.

its exactly how we run our player balances, players money never gets mixed in with the money used to operate the business.

any company that does this - the players are risking their online casino/poker balances.

[DealTheNuts]

We will hopefully hear more on the 19th at the AGCC hearing, but I suspect it will be a long time before anything close to the truth about what went on at Full Tilt will become public and any investor will run a mile when their due dilligence team report back from investigating the FTP business operation. It cannot pay its bills, has no value as a company in the present form and based on current inactivity the only outcome will be liquidation including selling the software and other assets to a third party.

A 'new' Full Tilt, under different management with fresh funding and the old software, may have a chance if agreement can be reached with the DOJ on a way forward to settle debts and pay all or a % to players. The major problem at the moment is the current FTP management and shareholders do not want to let go or accept they are not the future.

[universal4]

I personally think the biggest issue is that the US Government thinks it has a right to the "players'" money.

No matter what wrongdoing or whatever else they find....in the end the money should be returned to the players....every dime not a portion....

Rick
Universal4

[DealTheNuts]

I agree with you, all the players money should be repaid in full, but the DOJ is not the problem as PokerStars and Full Tilt both (allegedly) broke US law.

PokerStars and Full Tilt reached an agreement with the DOJ in April to allow funds to be returned to players and PokerStars acted immediately to make sure all players were paid, because they always kept player money segregated from the business operations of the company.

However Full Tilt were unable to comply with this agreement because business and player funds were mixed together, they hadn't a clue who was owed what amount (due to inadequate accounting practices) and in any case did not have enough money to pay the players because of the massive funding shortfall.

Therefore the current situation is extremely complex legally (civil and criminal), financially and also operationally as a business.

I hope it all turns out well for the players but it will be a long and difficult road to find a solution that allows that to happen, unless an investor with VERY deep pockets and a willingness to take a long term loss appears on the horizon.

[universal4]

It really shouldn't matter how bad their accounting was, they knew how much exactly was in each player's account, and that money should have been returned to the players and the US Govt, should not have made claim to it....

The fact remains that other bills were paid, electric, server hosting, employees etc....and money should have been returned to the players before other monies were released....

I agree that FT probably could have failed anyway considering how bad their accounting was, and other corners they were cutting...

...but the govt. keeps going in to this crap saying they are doing this crap to "protect" it's citizens etc but it is always the "PEOPLE" that get hurt first and get hurt the most in this whole process....

Rick
Universal4