AGCC Falsely Reported $331M, Real Number $159M

October 20, 2011 - 10:22 AM EDT
By

The Alderney Gambling Control Commission’s report that the US Department of Justice had seized $331 million from Full Tilt Poker over almost four years is false. Subject: Poker believes that the real number is about $159 million.1 Approximately $35-$45 million was seized from FTP on April 15th.

Following ten days of hearings and deliberation, on September 29, the Alderney Gaming Control Commission revoked three of the four licenses belonging to Full Tilt Poker. In a detailed determination notice attached to the revocation announcement, the AGCC made this incorrect statement:

The individual seizures made by the Department of Justice during the period 28th June 2007 to 20th June 2011… amount to a cumulative total of approximately $331 million US Dollars.

This number is much higher than the $115 million that Full Tilt reported was seized in the two years before Black Friday combined with the $60 million that the DOJ reported was in Full Tilt’s bank accounts on March 31st (about $10 million of which went to April 1st distribution payments to shareholders).

The actual total amount of money seized by the DOJ as recorded by FTP in its internal accounting for that four year period amounted to $158,793,000, much less than the $331 million that the AGCC tribunal reported. Assuming that this number and Full Tilt’s estimate of $115 million for the pre-Black Friday total are both correct, this leaves about $35-45 million seized on Black Friday itself.2 This range agrees with numbers quoted by many different Subject: Poker sources, and we believe it to be correct.

The AGCC tribunal stated that the false $331 million figure came from “Document JS21(I),” one of many referenced attachments that were not actually included in the publicly available documents. Subject: Poker and other sources familiar with this document have confirmed that JS21(I) contains blatantly false information. In fact, it labels legal disputes with previous processors as seizures, including the $42 million that Full Tilt says was stolen by Daniel Tzvetkoff.3 In addition, the document labels the $128 million e-check shortfall as a DOJ seizure, which of course is also not true, although in this document it is listed $131 million.4 The $331 million “seized” figure could also be otherwise inflated, as the document does indeed include many other errors that we were able to identify.

Subject: Poker has heard conflicting reports about who actually created document JS21(I). Sources at Full Tilt Poker say that Alderney created the document. Other sources have said that AGCC specifically identified JS21(I) as a Full Tilt document, though Alderney refused to respond to this question to us directly. It is also possible that AGCC’s “chartered accountants,” Dixon Wilson, created the document.5 The determination notice includes the following ambiguous statement in paragraph 23:

According to the evidence before it, document JS21(I) was produced by [AGCC Executive Director André Wilsenach] from information supplied by FTP during the course of the examination of their financial position by Dixon Wilson.

The AGCC refused to comment about this issue on the record despite numerous requests. On at least six different occasions over a period of two weeks, Subject: Poker attempted to contact the AGCC Executive Director and author of the September 29th media release, André Wilsenach, about their incorrect figure. E-mails went unanswered, and Wilsenach refused to answer telephone calls. In each attempt to contact Wilsenach, this reporter explicitly stated that Subject: Poker was aware of the misrepresentation and was looking for his clarification. Wilsenach did get back to us when we told him that we were publishing, but only to say to speak to another AGCC executive, who then refused to comment. To our knowledge, although Wilsenach has given numerous interviews since the revocation, at no time has he agreed to answer any questions regarding the validity of the report.

We also made numerous attempts to contact other AGCC employees and representatives. Alderney executive commissioners would not comment on the notice since it was written by a tribunal of two AGCC non-executive commissioners, Isabel Picornell and Jeremy Thompson.6 We were unable to get in contact with the tribunal. Other Alderney employees and representatives simply did not respond to our repeated inquiries. As a result, we were unable to obtain a response from the AGCC about the notice. And, in spite of the fact that we repeatedly informed Alderney of the misinformation, they released no correction.

Although the correct value of the seizures themselves would likely not have changed Alderney’s decision to revoke Full Tilt’s licenses, the incorrect figure distorted the story of where players’ funds went. This gave players, many of whom had recently read the DOJ’s statement mentioning the possibility of remission, the false hope that the DOJ had seized enough money to compensate everyone. In fact, the amount of money that the DOJ seized over the course of years is roughly half of the amount that Full Tilt owes to its customers, and much of this money was already disbursed long ago by SDNY or other jurisdictions.

Subject: Poker will continue following this story, and in particular, we will report if Alderney decides to correct the mistake.


Update at publish time

Immediately before we published this article, after we informed them that we would be publishing, Alderney posted a correction on their website after three weeks of e-mails and phone calls asking them to clarify:

AGCC wishes to correct and clarify an erroneous statement contained in the Commission tribunal’s published determination notice of the hearing into Full Tilt, which includes the statement:‐ “the individual seizures made by the Department of Justice during the period 28th June 2007 to 20th June 2011, which amount to a cumulative total of approximately $331 million US Dollars.” The underlying evidence in the hearing clearly demonstrated that $331 million was the total of funds unavailable to Full Tilt, of which DOJ seizures formed only a part. The mis‐statement is thus not of significance in the Commission’s assessment of the matter.

They still refuse to speak with us on the record about this situation or to respond to any of our relevant questions.


Footnotes

  1. We came to this conclusion partly based on the same documents that led the AGCC to the incorrect $331 million figure.
  2. Seizures prior to April 2009 were relatively small and likely amounted to less than $5 million.
  3. Tzvetkoff headed the payment processing company Intabill. He is the now infamous Australian payment processor who, together with associate companies, processed for all three of the major poker companies operating in the USA before Black Friday. In 2009, Full Tilt filed a lawsuit in Australia to try to retrieve $42 million that FTP claimed Tzvetkoff stole from the poker site, and that lawsuit is still pending. After the reported theft, Tzvetkoff and Full Tilt stopped working together. Shortly thereafter, someone told the US DOJ that Tzvetkoff would be in Las Vegas, and he was arrested and criminally charged in 2010. He was later moved to New York, into the custody of the SDNY, where he is reportedly out of jail and cooperating in the investigation that led to Black Friday.
  4. The $128 million shortfall was caused by Full Tilt’s decision to credit players’ Full Tilt accounts for echecks without a payment processor in place to debit their bank accounts. Of the $128 million, $9 million is believed to be collectible directly from player account balances. Both these numbers were released in open court during the Todd Terry class action lawsuit, and Full Tilt released a press release reconfirming the $128 million figure. It’s not surprising that Alderney has a slightly different number because of the complexities of this issue.
  5. Dixon Wilson also refused to comment.
  6. According to AGCC sources, the tribunal consists of two non-executive commissioners who were not affiliated in any way with the course of the investigation into Full Tilt Poker. They were to act as objective judicial entities to decide the hearing based on evidence presented. The evidence was presented by the Wilsenach, including testimony by the auditors presenting their reports, presumably including testimony about the above figures. Other AGCC executive personel testified as to the validity of the incorrect documents as well.

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34 Responses to AGCC Falsely Reported $331M, Real Number $159M

  1. huntse
    October 20, 2011 at 11:08 AM EDT

    Speaking as someone who has dealt with the AGCC in a professional capacity before, this doesn’t surprise me at all.

  2. Zach
    October 20, 2011 at 12:31 PM EDT

    Hats off to you sir for giving us accurate and honest information. Subject Poker is about the only site I feel I can trust what I read on lately.

  3. Bodo Polzer
    October 20, 2011 at 3:51 PM EDT

    Noah,

    if I understand these new numbers correctly that means that FT was at least “technically” bancrupt even before Black Friday and the accompanying seizures, correct?

    • Noah Stephens-Davidowitz
      October 20, 2011 at 4:21 PM EDT

      Bankrupt isn’t the right word. They were insolvent before Black Friday, meaning that they did not have enough money to cover player liabilities.

      According to the DOJ, FTP had $60 million in bank accounts on March 31st and owed players $390 million. The owners then paid themselves about $10 million in distribution payments on April 1st.

      See this (admittedly scatterbrained) article for more: http://www.subjectpoker.com/2011/09/ftp-civil-amended/ .

      • Bodo Polzer
        October 21, 2011 at 3:32 AM EDT

        Thx, and sorry, sometimes the “same” terms have sligthly different meanings in english / german.

  4. WhatSir
    October 20, 2011 at 6:53 PM EDT

    So guys, im confused. Is this more bad news for FTP?

    • Dontrustdurrrr
      October 20, 2011 at 9:22 PM EDT

      This is horrible news for those of us owed money by FT. Like I’ve said before, I’ll take 20 cents on the dollar. And like I’ve also said, when are Bitar, Lederer, Ferguson, Ivey, Dwan, and every other crook going to get arrested???? Paid themselves $10,000,000 after Black Friday??? Bitar, Lederer, and Ferguson are crooks. Ivey, Dwan, and every other FT pro is a co-conspirator.

      • Poker Expats
        October 20, 2011 at 11:28 PM EDT

        As I recall, that last $10M FTP distribution took place on April 1st, so technically it was a couple of weeks BEFORE Black Friday.

        All the evidence I’ve read indicates that most of the FTP pros, including Ivey and Dwan, probably didn’t know anything about the financial status of the company leading up to Black Friday. Do you have proof to the contrary or are you just spouting off?

        • Owjadi
          October 21, 2011 at 8:53 AM EDT

          According to a Dwan interview, he (and probably Ivey) were aware of FT’s insolvency in May 2011 (from friends having the company audited). One month before the AGCC suspended Full Tilt Poker’s operating license.

          At that time they felt it best to sit on the information, because he was under an NDA.

        • Dontrustdurrrr
          October 21, 2011 at 10:25 PM EDT

          Read Dwan’s 2plus2. He basically admits that he knew what was going down and kept quiet because of an NDA. He could have gone to the feds and saved a bunch of us a bunch of money, but he stayed quiet and hoped things would work out. They didn’t and now he has to live with the consequences of his inaction. He was borrowing money from FT when FT didn’t have the funds to pay player balances. Criminal? I don’t know. Will it affect his reputation and ability to get paid as a pro in the future? Yes. All of these guys (Ivey, Dwan, etc.) were paid big bucks (and allowed to borrow player funds)to put their name behind a brand. The brand has been shown to be a criminal enterprise. They’ve made their bed, now they have to lay in it.

          • Poker Expats
            October 23, 2011 at 7:42 PM EDT

            How would Dwan have saved FTP players a bunch of money? If he’d gone to the Feds when he discovered FTP’s financial situation after Black Friday, it was already too late. After Black Friday, FTP only had enough funds on hand to cover a fraction of player deposits.

            As “fracas” mentions below, Dwan probably made the right call by keeping quiet and giving the ongoing purchase deal a chance.

          • Jeremy Crowhurst
            October 26, 2011 at 2:03 AM EDT

            Dwan explains his actions and decisions in the 2+2 thread. To paraphrase, even with the shortfall, FT was making so much money that only a bunch of retards could have screwed things up. Unfortunately, that’s basically what management turned out to be.

            The idea that Full Tilt’s “brand has been shown to be a criminal enterprise” is just moronic. They operated legally and properly in 100+ countries, but broke a few laws in one country. That makes them less of a criminal enterprise than Coke, Nike, Nestle, and every major oil company in the world.

            I know that in the U.S., there exists only the U.S., and then there’s this vague idea of another place — “You know, that place where all our immigrants come from — California.” Well, out here in the rest of the world, nobody cares about your idiotic banking and gambling laws. None of us are having any trouble finding action at any of the major sites. The shocking revelation that some companies in Ireland did some things that are illegal in the U.S. has, outside the U.S., resulted in little more than the sounds of crickets chirping in all the world’s time zones.

  5. WhatSir
    October 21, 2011 at 1:01 PM EDT

    To my understanding, this news is quite inconsequential to the outcome of the take over by Tapie. Unless it conflicts with their chances of getting a license. Given it’s not their mistake, there shouldn’t be a problem.

    Thoughts?

    • Chappie
      October 21, 2011 at 1:59 PM EDT

      I agree, the only relevance is as it pertains to players getting a distribution from the DOJ, which given the fact that they seized way less money than we thought, means that those odds are now worse At the very least, it means that the amount of any payout will be substantially smaller. I don’t think it would affect the GBT deal, but the sheer number of strings attached to that deal lead me to believe that our best hope was a DOJ payout, and now that seems like a pipe dream as well.

  6. PokerLawyer
    October 21, 2011 at 2:36 PM EDT

    Guys – love your stuff. Request – please add the RSS widget to your blog. That way I can subscribe and be on the up and up even when I can’t get to a desktop!

    Thanks =)

    • Noah Stephens-Davidowitz
      October 21, 2011 at 2:52 PM EDT

      Fixed. See the widget on the right.

    • Al Bow
      October 21, 2011 at 4:09 PM EDT

      Plus 1!!!
      Kinda missed that without knowin’ i did…
      Thanks PokerLawyer

  7. brett
    October 21, 2011 at 3:11 PM EDT

    Kudos for actually doing some journalism. Unlike the magazine corps. who should be reporting about something that is significant going on in their field. I just wanted to say thanks.

  8. Fulzgold
    October 22, 2011 at 2:30 AM EDT

    I’ve been posting that it wouldn’t surprise me if certain factions of AGCC have been in bed with FTP the whole time. Not sure why nobody else is even considering it. The whole negligent police, then the hearing/delay/hearing, then nothing gets done except ROW player funds locked up as well seems like it could have been part of the entire rouse. It’s certainly possible that someone in power at AGCC has been bribed to me. Obv not 100% but this bit of info certainly makes it that much more possible.

    • Jeremy Crowhurst
      October 26, 2011 at 2:09 AM EDT

      Alderney has a population of, like, 1400, and they have exactly four police officers. Go to Alderney’s website and you can find their names. Then maybe you can come back and tell us which one should have conducted this investigation — an investigation which took thousands of man-hours by the DOJ’s legal, forenic accounting, and other experts, as well as compelling the co-operation from several people who were or coud have been charged.

      • Fulzgold
        October 28, 2011 at 11:47 PM EDT

        When I said ‘negligent police’, I meant the negligent policing of Full Tilt’s accounting in the last few years.

        If you’re saying AGCC wasn’t capable of regulating an entity the size of Full Tilt, then that’s a whole other can of worms, but is still pretty infuriating that they were supposedly in charge of monitoring players funds.

  9. Bodo Polzer
    October 22, 2011 at 4:41 AM EDT

    Noah,

    what is your take on this newly discovered information with regards to both repayment of player funds and the Deal with Tapie? Also, wasn´t there a report that additional funds from Bitar & Co. were seized – something in the range of 50 mio USD, as well as some additional USD 20 mio. from a Geneva based bank account? (~ 159 USD + ~ 50 Mio. USD + ~ 20 Mio. USD = 229 Mio. USD. / not so far away from the overall sum needed, at least mathematically)

    • Dontrustdurrrr
      October 22, 2011 at 9:35 PM EDT

      You asking me??? I’ll take 20cents on the dollar. We’re screwed and a lot of people are going to prison, watching their backs, and out of their reputations.

      • fracas
        October 23, 2011 at 12:26 PM EDT

        No, Dontrustdurrr, he WASN’T asking you. Notice how he addressed his post to “Noah”? And your earlier posts are equally lacking in reading comprehension. No pros got paid *after* Black Friday. And abiding by an NDA, especially at a point when a purchase or investment seemed practical, was probably the right call. When such a rescue became less likely, durrr spilled what he knew/suspected.

        All that said, I think your 20¢ on the $ figure is at least in the ballpark.

        • Dontrustdurrrr
          October 23, 2011 at 2:59 PM EDT

          fracas…do you know the meaning of the word “sarcasm”? and riddle me this batman: where is the $$$ that Ivey, Dwan, and other pros “borrowed” from FT player funds?

  10. kavilla
    October 23, 2011 at 9:29 AM EDT

    just like the AGCC and FTP were in bed together, people need to start looking at isle of man and pstars, and most importantly and most obviously, merge and KGC/mohawk…..i will be my entire bankroll on merge being completely compromised; you guys have no clue how unsecure merge network is; ZERO security team anyone can make an MTT collusion team.

    hey noah why dont u expose the illegitimate nature of the games on Merge? its sad, id say atleast 1/4th of the top winners on OPR are team players and cheaters.

    • Jeremy Crowhurst
      October 26, 2011 at 4:26 PM EDT

      That has always been a huge problem, even back in the pre-internet days, and difficult to police. It would be a great article though.

      • Don't Trust Jeremy Crowhurst
        October 29, 2011 at 2:32 AM EDT

        Jeremy….I hope you are getting paid well. You are obviously a pimp for Howard, Phil, Tom, and company. One ???? for you: Where is the money, cash, in the millions of US Dollars, that Tom Dwan, Phil Ivey, and other FT “Pros” have “borrowed” from FT??? Is it in an escrow account??? No. It is not.

  11. Steven
    October 30, 2011 at 11:03 AM EDT

    Just politely asking why Subject Poker isn’t talking about the situation at Absolute more and more specifically the alleged liquidation that everybody is talking about? Looks like that’s exactly what this site should be all about.

    :)

    • Noah Stephens-Davidowitz
      October 30, 2011 at 6:22 PM EDT

      We’ve definitely failed to cover the Absolute Poker story since June.

      This is laregly because, to the best of our knowledge, there hasn’t been a story to cover. We just didn’t hear about anything relevant happening between June and October 27th.

      When the KGC put out that statement on October 27th, it took us by surprise. Other sources got the story up before we did, it got a lot of coverage in the various forums, and we tweeted a link to it, so I’m not particularly concerned that many people who would care would learn about the story from us if we wrote about it. We also don’t really know what to make of it and have no additional information, so we don’t have anything to add to the discussion.

  12. Corey
    October 31, 2011 at 8:34 AM EDT

    try posting more than 1 story a week. and kavilla you are delusional.

  13. Steven
    October 31, 2011 at 8:41 AM EDT

    Ok thank you for the answer.. just wondering :)

  14. jimsbets
    October 31, 2011 at 3:58 PM EDT

    Is there any updates coming? I thought there was to be an announcement from tapie at the end of the month.

  15. MARTY THE CRUSHER FROM NJ
    December 20, 2011 at 2:02 PM EDT

    OWNER OF ABOSULTE POKER PLEADS GUILTY IN NEW YORK FEDERAL COURT OF SEVERAL FRAUD VIOLATIONS.

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