Ray Bitar, founder and CEO of Full Tilt Poker, surrendered to United States law enforcement officials Monday more than year after being charged with “bank fraud, money laundering, and illegal gambling offenses” in the infamous Black Friday indictments. Bitar was apprehended at John F. Kennedy International Airport and pleaded not guilty in a Manhattan federal court Monday afternoon.
A member the Two Plus Two poker forums who goes by the screen name “PS<3FTP” and is rumored to work for either Full Tilt or PokerStars posted the following e-mail from Bitar to Full Tilt staff members before the news broke at major media outlets:
“By now you probably have heard that I have returned to the US to deal with civil and criminal case that are pending against me in New York. We have all worked hard over the last 15 months to preserve Full Tilt’s assets and potential in order to provide for the repayment of all players, and that continues to be our top priority. It is as important as ever that we all do everything possible to make that happen and, hopefully our deal with Poker Stars will very soon make our goal a reality. My return to the US is part of this process.
“I am particularly grateful to all of you here in Dublin for your hard work, patience and understanding during this difficult time. I believe that your hard work and dedication should not go unrecognized, and we have made arrangements for Poker Stars to guarantee all July salaries. You should therefore have no concern about coming to work during this period. After that, we expect that your employment contracts will be assumed by the buyer of the company’s assets.”
PS<3FTP also broke the news of the possible PokerStars purchase of Full Tilt, so it is highly likely the above e-mail is legitimate.
U.S. Attorney Preet Bharara issued a press release confirming Bitar’s arrest, also revealing that a superseding indictment was unsealed “charging Bitar with defrauding poker customers by lying to them about the security of their funds.” Nelson Burtnick, one of the people named in the Black Friday indictment, was also named on the superseding indictment. Burtnick headed up Full Tilt’s payment processing indictment.
Whereas the April 15, 2011 indictment’s charges stemmed from the basic operation of Full Tilt Poker, the superseding indictment tacks on charges related to how Full Tilt used player deposits as operating funds and to pay its principals and how the online poker roomallowed players to play with “phantom” funds that had not actually been transferred from their bank accounts to their poker accounts.
“Full Tilt Poker did not protect player funds in segregated accounts, and instead, used them for whatever purposes Bitar directed, including to pay him and other owners millions of dollars,” Bharara wrote in the press release. “Because player funds were being used to cover operating expenses, Full Tilt Poker experienced an increasing shortfall between the cash it had in its bank accounts and the money it owed to players…To conceal this financial shortfall, Bitar directed Full Tilt Poker employees to misrepresent how much cash the company had on hand.”
The statement continued to explain that not only was Full Tilt Poker using player funds in ways that it should not have, it also experienced problems with payment processors, making it impossible at times to actually move deposits from players’ bank accounts to their poker accounts. Instead of freezing deposit requests or suspending the business while things got sorted out, Full Tilt credited player accounts with funds, even though the poker room never actually collected the money. Thus, Full Tilt wound up with a shortfall of $130 million that players thought was in their accounts, but in reality, never existed.
To make matters worse, Bitar knew of all the financial problems, yet continued to lie to Full Tilt’s customers, pretending everything was just fine. In an internal e-mail dated June 12, 2011, he wrote that lay-offs and replacement of Board members would be interpreted as bad news, causing a “new run on the bank.”
“It could be a huge run,” he added, and “at this point we can’t even take a five million run.”
The superseding indictment charges Bitar with a total of nine counts: two UIGEA related, one count of Operation of Illegal Gambling Business, one count of Conspiracy to Defraud Banks, three counts of Wire Fraud, and two counts ofMoney Laundering. Bitar could face a maximum prison sentence of 145 years if convicted on all charges.