NEW YORK (Legal Newsline) - Raymond Bitar, the Chief Executive Officer of Full Tilt Poker, was arrested Monday at John F. Kennedy International Airport, the U.S. Attorney for the Southern District of New York announced.
He had been charged last year with gambling, bank fraud and money laundering offenses in connection with the operation of an Internet gambling Ponzi scheme.
Bitar, 40, allegedly defrauded his poker customers by lying to them about the security of their funds. He allegedly told players that their funds would be protected in "segregated" accounts when the company actually used them to pay for Full Tilt operations and to pay Bitar and other owners more than $430 million.
Manhattan U.S. Attorney Preet Bharara said: "With today's arrest and the new charges brought against him, Raymond Bitar will now be held criminally responsible for the alleged fraud he perpetrated on his U.S. customers that cost them hundreds of millions of dollars. The indictment alleges how Bitar bluffed his player-customers and fixed the game against them as part of an international Ponzi scheme that left players empty-handed."
FBI Assistant Director-in-Charge Janice K. Fedarcyk said: "Bitar and Full Tilt Poker persisted in soliciting U.S. gamblers long after such conduct was outlawed. As alleged, Bitar has already been charged with defrauding banks to conceal the illegal gambling. Now he stands accused of defrauding Full Tilt's customers by concealing its cash-poor condition and paying off early creditors with deposits from later customers. The on-line casino became an Internet Ponzi scheme."
Full Tilt Poker was founded by professional poker players in the U.S. in 2004. It offered Internet gambling to U.S. residents and made an estimated $1 billion from U.S. residents through April 15, 2011.
But because of the 2006 Unlawful Internet Gambling Enforcement Act, which made it a crime to "knowingly accept" most forms of payment "in connection with the participation of another person in unlawful Internet gambling," most American banks were unwilling to process illegal Internet gambling payments. Bitar and a co-defendant allegedly relied on fraudulent means to deceive American banks to accept deposits.
Full Tilt Poker employees were allegedly directed to tell potential customers that player deposits would be segregated from the company's operating accounts. But the company allegedly did not protect player funds. It used the funds for various purposes including paying Bitar and other owners millions of dollars, the DOJ says.
Bitar also allegedly devised a plan to make players believe they were gambling with real money when they were actually gambling with "phantom" online credits.
According to the communique, "As American players gambled and won or lost these phantom funds - ultimately totaling over $130 million - Full Tilt Poker would list the phantom funds on players' online account statements, even though the funds were never collected, or available to pay the winning players."
The indictment charges Bitar with nine counts. If convicted on all counts he faces a maximum sentence of 145years in prison.