FTP’s August 30th Statement

August 31, 2011 - 12:12 AM EDT
By

Subject: Poker has received the following unprecedented statement from Full Tilt Poker:

As is obvious from the events that have transpired since April 15th, Full Tilt Poker was not prepared for the far-reaching, US government enforcement effort of Black Friday.

The events of Black Friday came on the heels of prior government enforcement activities and significant theft. Over the two years preceding Black Friday, the US government seized approximately $115M of player funds located in U.S. banks. While we believed that offering peer-to-peer online poker did not violate any federal laws—a belief supported by many solid and well-reasoned legal opinions—the DOJ took a different view. In addition, as was widely reported, a key payment processor stole approximately $42M from Full Tilt Poker. Until April 15th, Full Tilt Poker had always covered these losses so that no player was ever affected. Finally, during late 2010 and early 2011, Full Tilt Poker experienced unprecedented issues with some of its third-party processors that greatly contributed to its financial problems. While the company was on its way to addressing the problems caused by these processors, Full Tilt Poker never anticipated that the DOJ would proceed as it did by seizing our global domain name and shutting down the site worldwide.

Over the last four months, Full Tilt Poker has been actively exploring opportunities with outside investors in order to stabilize the company and pay back our players. At least six of those groups, including hedge funds, operators of other internet businesses and individual investors, have visited Dublin to inspect the operation. We have recently engaged an additional financial advisor through an investment banking group to assist us in our search for an infusion of cash as well as a new management team to restore the site and repay players. While any deal of this nature is necessarily complex given the current regulatory environment, our players should know that Full Tilt Poker is fully committed to paying them back in full and restoring confidence in our operations

The statement contains three new important pieces of information:

First, it reveals that the US government froze $115 million in the two years up to Black Friday. Much of this money was frozen long before Black Friday, and the majority of it was eventually forfeited to the US government.

Second, the statement says that at least six groups of prospective investors have travelled to Dublin, where Pocket Kings Ltd is located, as part of their research into the poker site. Subject: Poker is aware of at least four such groups, so we believe this statement to be accurate.1

Third, the statement confirms widespread speculation that, if Full Tilt is to reopen, it will be under new management.

The statement also draws attention to two significant losses that the company suffered in the past:

First is the $42 million stolen by Daniel Tzvetkoff’s Intabill over two years ago. Tzvetkoff was arrested in April of last year, and his original indictment bears the same case number as the Black Friday indictments.

Second is FTP’s extremely large deposit shortfall, in which Full Tilt Poker credited players’ accounts with deposits that had not been debited from their bank accounts. The statement says, “during late 2010 and early 2011, Full Tilt Poker experienced unprecedented issues with some of its third-party processors that greatly contributed to its financial problems.” Though this clearly refers to the shortfall, it provides an incorrect timeline. The shortfall actually began in August of 2010 and continued with no attempts to recover any funds until early 2011. It also blames the problem on payment processors, ignoring the fact that Full Tilt deliberately chose to allow players to deposit without a payment processor available, and allowed this to continue happening as the shortfall continued to grow. Subject: Poker reported recently that the uncollected portion of the shortfall is currently $128 million. The statement does correctly point out that Full Tilt was in the process of collecting this money when the DOJ put a stop to such actions on April 15th. However, statements from FTP employees who worked to recover these funds suggest that such attempts were extremely time consuming and often unsuccessful.

Sources close to Full Tilt tell Subject: Poker that the poker site is planning similar statements to be released in the near future. Our sources say that the next two statements will discuss the deposit shortfall and the DOJ seizures respectively.


Correction 9/20/2011 9:24 PM
We originally report that the $115 million figure included funds seized on April 15th. We no longer believe this to be correct, although we are still actively researching the topic.

Subject: Poker sincerely regrets this mistake, and we apologize for any confusion.


Edited on 8/31/2011 12:58 AM EDT: Fixed a minor typo.
Edited on 8/31/2011 11:36 AM EDT: Removed a misleading statement about investor involvement since June 29th.

Footnotes

  1. The only prospective investor whose name has been released publicly is Jack Binion. There is also one investor who was in exclusive negotiations from June 30th to August 16th and two investors who were in Ireland in May.

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30 Responses to FTP’s August 30th Statement

  1. goodforpoker
    August 31, 2011 at 12:31 AM EDT

    We have a friend who had his ftp account close in 2010. At first he did not know why, but later noticed a reversed FTP payment processor transaction in his checking account. Surmising that this inadvertent, few hundred dollar debt to FTP was why his account was closed, he emailed FTP customer support in an effort to pay it back and reinstate his account. He never heard back! So we couldn’t agree more with your statement that FTP found it difficult to retrieve these funds…in our friend’s case, they didn’t even want to try…when the player was offering it to them! Perhaps this is an example of FTP trying to minimize their ongoing losses from unreceived deposits.

  2. legrang
    August 31, 2011 at 1:29 AM EDT

    Noah, when taken with S:P’s previous article claiming a $128 short fall, does this mean that total irrecoverable deposits are $42 million stolen + $115 million seized + $128 million not processed = $285 million? Or does the $128 shortfall contain some parts of the other losses?

    • legrang
      August 31, 2011 at 1:30 AM EDT

      Obviously $128 should read $128 million :(

    • Noah Stephens-Davidowitz
      August 31, 2011 at 11:41 AM EDT

      legrang,
      Those are all separate issues. The $42 million was allegedly stolen by Daniel Tzvetkoff in a series of transactions ending in the summer of 2009. The $115 million was frozen or seized by the DOJ over a two-year period. The $128 million is the amount of still uncollected loans that FTP made to players without their knowledge.

  3. Ryan
    August 31, 2011 at 1:48 AM EDT

    “However, we have not heard of any of these investors returning to Dublin since June 29th”

    That’s not a great sign, is it?

    • Noah Stephens-Davidowitz
      August 31, 2011 at 11:48 AM EDT

      Ryan,
      We removed that sentence because it’s misleading. FTP was in exclusive negotiations with one investor from June 29th through August 16th, who certainly spent time in Dublin. We haven’t heard any reports of other investors being in Dublin since, but that certainly doesn’t mean that it hasn’t happened.

      Sorry for any confusion.

  4. Ryan Jensen
    August 31, 2011 at 2:56 AM EDT

    I made several deposits for about a total of 5k or so in the summer probably August of 2010. I even emailed Full Tilt asking to pay them back and they said they had no record of it. I figured it was a free 5k freeroll for getting cheated by someone on there. Guess not!!! They won in the long run though.

  5. jay
    August 31, 2011 at 4:27 AM EDT

    i would like to hear what they have to say about,these top players ivey,benyamine,antonius and the main one for me GUSHANSEN these guys obv freerolled on our money for years in the high stakes games what is this total? why should these guys get a free ride there the people with all the fckn money,yet they continued to plunder ftp for millions when stuck in games.A fckn disgrace these guys should be coughin up the money at least a % imo.

    will we get any funds back in near future?……. doubt it.
    will all the hs players live good lives on our $$……… for sure.
    revolt against faces behind ftp the big names………….. i will be on point.

    I THINK evey one should see ivey hansen or any of these big names start asking,NO demanding OUR $$ on the spot i think every one should do the same put these rtards in place make them quiver with fear they would be nothing with out the communtity…….LIFETILT JUST WRITING THIS I HATE THESE MFCKERS SO BAD …… HANSEN YOUR MY TARGET IF YOUR READING THIS AM GONA FCK YOU UP!!!

  6. Lance
    August 31, 2011 at 7:37 AM EDT

    I miss FTP :( come back online soon

    • David
      August 31, 2011 at 12:09 PM EDT

      After all of this, are you honestly going to play there again when/if they are back up?!

      • Lance
        August 31, 2011 at 10:13 PM EDT

        yes i am fully behind FTP

  7. deesmooth
    August 31, 2011 at 8:14 AM EDT

    Same Story Different Outcome
    I made multiple deposit’s into my FTP account late in 2010. Money was available immediately for play on the site and not taken out of my bank account. In 2011 my FTP account was frozen and I was unable to play. I contacted customer support , my monies got moved from my bank account to FTP and my poker account was unfrozen and I was able to play. Some time in April of 2011 I made another deposit to my FTP account. Again it was available immediately and then at some point it was removed from my FTP account.

  8. Reed Err
    August 31, 2011 at 10:31 AM EDT

    “The shortfall actually began in August of 2010…” Where’s the footnote on this claim? I have good reason to believe that it is incorrect – that the statement’s “late 2010″ is correct. Unless you refer to some insignificant isolated “shortfalls” rather than the systematic problem…

    • Noah Stephens-Davidowitz
      August 31, 2011 at 11:34 AM EDT

      Reed,
      We have transaction logs that include uncollected deposits in August and September. We’ve also been told from internal sources that this is when it started. I would still love to see your evidence, though. You can e-mail me at noah@subjectpoker.com .

  9. Kevin
    August 31, 2011 at 12:26 PM EDT

    They would have gone “alot further” in terms of moving forward if they had announced the immediate removal of Ray Bitar as CEO.

    You cannot move forward as a business, if you have a CEO carrying around a federal indictment as a liability. He should have been terminated a long time ago, with an interim CEO being appointed.

    But because this “business” is being run by an inept group of people that run it more as an “old boys club” and as an “ATM” for a select few, that is not happening. Until Bitar truly goes, this is just another example of an FTP press release that doesn’t really do anything except to ask people to give them more time to sort things out.

    It kinda reminds me of a person who has gone busto playing high stakes poker in a brick’n'mortar casino like it was a freeroll, and they have exhausted all their regular backers, and now they are going out begging anyone they can for cash. No reasonable investment person is going to invest in a person (or company) with that kinda liability when the online poker market is clearly contracting in size.

  10. Eric
    August 31, 2011 at 12:57 PM EDT

    FCK FTP and all the scum bags running it. Stealing from the poor the the rich can go donk it off to ISIILLLDURRR, ugghhh ISI why you give Dwan’s bankroll to fcking Hastings. GO ZIGGYYYY

  11. Josh
    August 31, 2011 at 2:27 PM EDT

    Two things strike me about this–and I find them astonishing.
    1) money was being seized for two years prior to Black Friday, and still the shutdown came as a complete shock? How is that possible? Everyone knew a grand jury in NY had been empaneled. They knew how they’d been screwing with banking law. Yet they made no attempt to be ready for this eventuality.

    2) Money had been seized; money had been stolen; ghost deposits for months — yet from all I’ve heard, the investors disbursements continued unabated. The only conclusion is that they were raping player deposits. I don’t see another way to look at it. It’s theft. Shareholders got money that never should have belonged to them.

    I’m hoping the Irish authorities get involved.

  12. Kevin
    August 31, 2011 at 4:17 PM EDT

    “Josh” brings up a really good point.

    Why haven’t the Irish authorities gotten involved? Or is it okay to possibly commit crimes on Irish soil, as long as only non Irish people are screwed over?

    • Dead Dog Bounce
      September 1, 2011 at 10:01 AM EDT

      If the balance seized in April matches the money outstanding (sounds plausible), they may have deliberately kept the cash in the company very close to total outstanding players funds. That would mean that any significant seizure would put the company at risk. If they were in fact running a Ponzi scheme, they could easily have gone bust prior to Black Friday.

      I’d love to see the executive team go to jail, but charges in Dublin would only slow things down. Sell the rush poker patent to Stars, and pay the players back IMO.

      • Noah Stephens-Davidowitz
        September 1, 2011 at 10:12 AM EDT

        The total balance frozen over two years is much less than their total liability to players. The amount seized on Black Friday (which is not public yet) is significantly less than that.

    • DJRiccoLaw
      September 1, 2011 at 4:06 PM EDT

      Cheers Kevin,, great point!!! don’t make this political son ,, i am Irish and proud,, As far as I am concerned the powers that be have stolen a five figure sum from me ,,be it ftp the US govt or whoever ,, I don’t see any Irish people benefiting from this so please in future keep your “tan? ” mouth well and truly shut when it comes to insults directed at my Country !

  13. fuckedup
    September 1, 2011 at 3:33 PM EDT

    @ jay

    good view

    they are hiding and living in fear already, consider at least every second US citizen having a gun at hand.

    and all those russian highrollers nobody reads anything from them but i assume a lot having conections to the mafia. you better don’t steal money from these guys if you want yourself and your family to stay alive.

  14. epj
    September 5, 2011 at 12:09 PM EDT

    I didn’t lose much $ from this, but I especially miss the opportunity to continue practicing and learning the game at a great site. Damn, I miss Rush Poker.

    BTW, Republican candidate Ron Paul supports the legalization of online poker…

  15. Hash
    September 7, 2011 at 6:12 PM EDT

    Hey Noah,

    The statement says the amount is frozen/seized from US banks, and you clarify that it’s ALL the money frozen/seized ‘belonging to Full Tilt Poker that was frozen in the two year period up to and including April 15th’, is this including Non-US banks?

  16. ron
    September 9, 2011 at 3:38 PM EDT

    bottom line should we ever expect to get our money from fulltilt.

  17. DrNotes
    September 9, 2011 at 5:17 PM EDT

    If what they are saying is true, FTP was run by idiots who never bothered to balance or audit their books. Also, why didn’t we hear about over $100 million in earlier bank seizures? If I had heard about that, I would’ve cashed out immediately. Now they are saying they hope someone will buy FTP and then refund everyone’s bankrolls, are they high? Say someone has that kind of money and wants to start a poker site, they would never buy FTP because:

    1. Why should they start a poker site that deep in the hole? Just start a new site.
    2. FTP reputation is such crap right now I wouldn’t take it for free.

    So don’t hold your breath. I also believe that the famous names who were being paid by FTP (and I would bet got all their cash back already) should personally reimburse the public poker players that they have helped rob. We generated SO much money for them over the years that is the least they can do. I moved to PS years ago because the freerolls and such for frequent players were a LOT better (several totaling over $250K vs ONE at $30K per month) there, but never closed out my FTP account, since I had tournament tickets. Those were converted to cash in the account but I never had a chance to cash it out.

    • DrNotes
      September 9, 2011 at 5:28 PM EDT

      PS I was with FTP for several years since even BEFORE they went live when we tested the software with only play money. I only left because I really felt unappreciated compared to the freebies at PS as well as being ignored any time I had an issue. To get very specific, I also hated that they did what I thought was purposely an interface issue that would generate more rake. The Check checkbox would change to Call button in EXACTLY the same location on the screen and I would sometimes mean to Check but instead Call a big bet when I actually now wanted to fold. I brought this issue up many times over the years and was completely ignored. I even tried asking some of the Pros who were actively involved in the programming for the site in live chat and was basically told tough shit and shut up about it. It all added up to them losing a customer who was playing for hours every day.

      • T Knox
        September 20, 2011 at 10:02 PM EDT

        I had the same issue with the check button and raised it with FTP. They didn’t respond to me at all. After a while, it just seemed obvious that you either had to move your mouse every time or they were going to catch you in their little “oops” trick to get extra rake. Such BS and an easy fix. That was a factor in my leaving FTP. Plus, PS just had more options and rewards to its players… and convenient buttons.
        I miss PS…and hey, they paid back all their players.

  18. PowerInNumbers
    September 9, 2011 at 11:58 PM EDT

    Yep Doc, It’s all about the drop. PokerStars has it’s profit generators too- (the sit n go rake increases if you choose not to play turbo format, for example.) however, they did return substancial amounts of profit back to the player with all the freerolls and promotionals. Their quick and apologetic return of seized money previously, (Washington State) speaks VOLUMES about their ethical business approach. I am ashamed of the way my(?) government assaulted THEM- yet rewarded the criminal banking sector for outright fraud! Geezus……. makes ya wonder……. Who is gonna invade America and restore freedom and democracy!? Power In Numbers, folks- We ALL need to get together and reset this mess- and brother, we need to do it quick!

  19. Nicholas Barnett
    September 11, 2011 at 2:57 AM EDT

    What is truly insane is that they would deliberately not pay their licensing fees so that the site goes entirely offline and they lose their remaining 50% of their business and cash flow. How can they be so f’g stupid!!! The best user interface around (imo) going to zero in value. So truly sad……….

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