Full Tilt Poker Issues Statement; Addresses Finances, Investors

On Monday, Poker News Daily reported on the interactions of Full Tilt Poker lawyer Jeff Ifrah with members of the poker community.  In answering questions about the status of the once second largest online poker room in the world, Ifrah said that a series of statements from Full Tilt were on the way, with the first coming this week.  Late last night, Full Tilt released the first of these statements, attempting to explain the cause of its financial problems as well as providing an update on its search for investors.

The complete statement is as follows:

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 $42 million that was cited was the money stolen by Daniel Tzvetkoff and his payment processing company, Intabill, back in 2009.  Tzvetkoff was arrested last year on money laundering, gambling conspiracy, and bank fraud charges.  There is some speculation that he may have then cooperated with U.S. law enforcement officials, providing information that led to the Black Friday indictments.

While not explained in detail, the “unprecedented issues” with payment processors almost certainly refers to the massive shortfall that resulted from Full Tilt crediting player accounts with deposits while not actually taking the money from their bank accounts.  The company was apparently looking for payment processors to complete those transactions when Black Friday came, resulting in as much as $128 million sitting in player accounts as just virtual dollars without it actually being available for withdrawal.

As for the six investors to whom Full Tilt has spoken, only the identity of one – Jack Binion – is officially known at this time.  Jeff Ifrah, in his question and answer sessions on the Two Plus Two poker forums, has said several times that every investor understands that the top requirement in a deal is that all players must be repaid and that this has not caused any potential partner to balk.  Ifrah has also said that of the six interested parties to this point, three are still in active negotiations with Full Tilt.