Ray Bitar’s no-jail plea bargain was accepted by a US District Court Judge in Manhattan yesterday, to allow the ailing ex-Full Tilt boss to receive a life-saving heart transplant operation.
Bitar yesterday pled guilty via video link from California to two of the charges levelled against him, of unlawful internet gambling and conspiracy to commit bank and wire fraud, and agreed to forfeit US$40m in cash and other assets derived from his time at Full Tilt Poker.
US District Judge Loretta Preska accepted the plea bargain recently struck by Bitar’s lawyers with federal prosecutors, under which Bitar would avoid imprisonment in order to remain eligible for transplant surgery. When sentencing, she made it clear she would have imposed a “substantial” prison term had it not been for the defendant’s serious heart condition and urgent need for a transplant. Bitar’s heart specialist had provided an opinion that his patient had only a 50% chance of surviving the next 6-12 months without the operation.
Bitar’s guilty plea and sentencing came exactly two years to the day that the US DOJ launched its crackdown on US-facing operators and unsealed indictments against 11 individuals associated with PokerStars, Full Tilt and Absolute Poker.
Manhattan US Attorney Preet Bharara said yesterday that Bitar “now stands convicted and must forfeit tens of millions of dollars in ill-gotten gains in connection with the massive fraud his company orchestrated”.
The Black Friday and superseding indictment accused Bitar of conspiring to trick US banks into processing an estimated US$1bn of illegal gambling payments by relying “on fraudulent means.”
The DOJ’s indictments detailed how Bitar directed Full Tilt employees to falsely assure customers that their deposits would be held separate from the company’s operating accounts, when in reality their deposits were being used to pay operating expenses, resulting in a fatal shortfall between the cash it held in accounts and what it owed players. By November 2010, it owed customers US$344m but only held US$145m.
To cover up the fact it was increasingly unable to collect deposits from US bank accounts, due to provisions within the UIGEA making this more difficult, Bitar arranged for player accounts to continue to be credited even though the money hadn’t actually been collected from them.
By April 2011 when its US facing operation was shut down, FTP owed around US$390m to players but only had US$60 million in bank accounts. Bitar however continued to promise players their funds were safe, while actually using new deposits to pay operating expenses, including his own salary, in effect operating “nothing more than a Ponzi scheme”, according to federal prosecutors.
PokerStars acquired Full Tilt’s assets and liabilities - including funds owed to its players when FTP was eventuallly forced to close by its regulator in June 2011 - in a US$731m civil settlement deal with US authorities in July 2012. FTP’s US players are to be repaid out of the US$547m to be forfeited by Stars to the US government. Stars made the US$184m owed to FTP’s rest-of-world players available in November last year.
Article written by Peter Holmes
