Feds cracking down on Full Tilt Poker soon? Article inside.

[AceHigh Pino]

Just saw this when I was perusing my Facebook wall updates - I copy/pasted from the FT.com site so you don't have to register with their online publication just to read it in its entirety:

Court probe into internet poker site

By Joseph Menn in San Francisco

Published: April 4 2010 23:26 | Last updated: April 4 2010 23:26

A federal grand jury in Manhattan is investigating one of the largest internet poker sites serving US gamblers and could bring indictments against some of the world’s best known professional players, according to people familiar with the case and a subpoena issued to a witness this week.

The probe is aimed at Full Tilt Poker and individuals including Chris Ferguson and Howard Lederer, champion gamblers who are among those accused of controlling the company in a Los Angeles civil lawsuit filed last year. Online gambling is illegal in the US and according to the subpoena the investigation is examining whether gambling and money-laundering laws have been broken.

FBI agents or prosecutors have spoken to at least two people involved in disputes with Full Tilt, paying special attention to the possibility of money-laundering violations, those familiar with the inquiry say. Money-laundering charges might be attractive to the government as they would compel co-operation from authorities even in countries where gambling is legal.

Full Tilt’s web pages say it is registered in Alderney, in the UK’s Channel Islands, and regulated there.

The Manhattan US attorney declined to comment, as did justice department officials in Washington. Eric Jackson, a Los Angeles civil attorney representing Mr Lederer, Mr Ferguson and a software company with ties to Full Tilt, said his clients had not been informed of the grand jury inquiry.

“We are not going to comment about a speculative grand jury investigation that we are not aware of,” Mr Jackson said.

Both Mr Lederer and Mr Ferguson filed a motion to dismiss the civil case but have not addressed the substance of the allegations at this stage.

Criminal charges, especially against the celebrity Americans known for televised tournament play, would mark an escalation in the US government’s stuttering moves against internet gambling.

But it would fit the federal law enforcement strategy by trying to make an example out of prominent targets, according to Nelson Rose, an author of books on gambling law and adviser to some companies in the industry. “They are waging this war of intimidation,” Mr Rose said. “There are not a lot of good statutes, so they go after high-profile targets and try to intimidate everybody.”

The justice department maintains online poker violates the decades-old Wire Act, and it gained strength with the 2006 Unlawful Internet Gambling Enforcement Act. But not all judges agree on the former, and Mr Rose said he did not know of any criminal charges brought under the 2006 law, which has been criticised for poor wording.

While various bills are circulating in Congress that would at least permit the states to authorise and regulate online poker, federal agents have continued to take shots at leading figures under money-laundering and other laws.

Even though London-traded PartyGaming pulled out of the US market after the 2006 bill was passed, it paid $105m (€77m, £70m) last April to avoid prosecution. Last year a Canadian payment processor traded on Nasdaq forfeited $19m for handling gambling transactions before the 2006 law.

[jdogg]

Well I think well probably see more of this kind of action in the US poker industry although will much come out of it I am not sure. As long as full tilt is regulated in the UK the US can't really do a whole lot right?

[cernus11]

Potentially if they manage to prove the close relationship between Tiltware and FTP it might cause trouble for Lederer and Ferguson.

[pokerprop]

Back story goes something like this:

Full Tilt Poker decided it was only paying the US "tribute" on players who earned 125 FPP and deposited with in 60 days of registration, as opposed to their previous deal which was for each depositing player they serviced. This pissed someone off and they sent an encrypted email to Full Tilt Poker asking to discuss it. Of course, unknown to the federal government, a year ago, in a move to reduce the already well below industry standard operating costs, it was set up that Howard and Chris's personal FTP email addresses were now directed to the Full Tilt customer support staff for processing.

In case you're not aware Full Tilt currently has a total staff of 4 customer service reps who manage everything from their affiliate program, banking support, security department and more. All four are located in Cambodia don't speak English so need to run the approximately 25,000 emails they get per day through Google translator first and then translate a response using Google search to find answers. When they can't understand the Google translator (which is 70+% of the time) a button is clicked for the email to be sent to them again in a week - the thought here is someone might contribute a better translation at some point and at that time they can answer the email or at least click which non helpful template response to issue. While this might appear ineffective on the surface, Its actually well thought out genius strategy Ferguson devised during a long wait for a pocket pair in some live-donkament.. You see: for less than $100 per month Full Tilt covers all their support costs and in the process, quite wittingly i might add, drives away many of their winning players (losers deposit more and have higher value) because winners need support more often.

Anyways totally fed up with no response from Full Tilt another message was sent off that said "this is a bad move we are the m/fucking law and you don't want to mess with us. This time where not going to light any fires or shed anyones blood, Were going to shut the whole damn company down if we don't our cut." They then received a template email that informed the feds the could not change affiliates but could take advantage of a reload bonus offered exclusively to them.

The latest post from Pino catches us up to where things are at now.

[jdwanchalk]

YouTube - N.W.A FUCK DA POLICE

[kushmoney]

YouTube - N.W.A FUCK DA POLICE

+1

[Zujo]

While this would not be a good thing for me personally or the industry - I have always wondered how the owners could operate so openly and with such seeming impunity. Lead witness for the grand jury is no doubt Clonie Gowen. Hell hath no fury...

[PTC]

Potentially if they manage to prove the close relationship between Tiltware and FTP it might cause trouble for Lederer and Ferguson.

It usually ends in tax evasion charges when these things cant be proven. If they are paying taxes and avoiding that issue... well that sort of admits guilt in the first issue IMHO. Im guessing that in the end it will turn out that howard and chris are smarter than everyone else and this wont be a long standing issue for them on a personal level.

[nitro]

While this would not be a good thing for me personally or the industry - I have always wondered how the owners could operate so openly and with such seeming impunity.

And i am wondering if they'll join Ayre in Antigua or end up in federal prison...

[MJ]

Pino any further predictions since this one was spot on?