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FullTilt Poker, Absolute Poker, and PokerStars are all accused of carrying out similar Ponzi schemes, which cumulatively stole $444 million USD from players.

Howard "The Professor" Lederer, a celebrity owner of Full Tilt Poker, and Chris Ferguson, celebrity sponsor of the site are among the poker celebrities charged with gaining from the Ponzi scheme.  (Source: Howard Lederer; Full Tilt Poker)
This gamble didn't pay off

The U.S. Attorney's Office for the Southern District of New York on Tuesday filed charges against executives of online poker powerhouses Full Tilt Poker, Absolute Poker, and PokerStars -- as well poker celebrities Howard Lederer and Christopher Ferguson -- on money laundering and other charges related to Ponzi schemes that defrauded players of $444M USD.  Board members and owners of the businesses were paid in the scheme were also charged.

The criminal complaint against Full Tilt Poker 
alleges [press release; PDF]:

[Full Tilt Poker] defrauded players by misrepresenting that their funds on deposit in online gambling accounts were safe, secure, and available for withdrawal at any time.  In reality, Full Tilt Poker did not maintain funds sufficient to repay all players, and in addition, the company used player funds to pay board members and other owners more than $440 million since April 2007.

U.S. Attorney Preet Bharara, who's serving as prosecutor for the case stated in the press release, "Full Tilt was not a legitimate poker company, but a global Ponzi scheme. Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company."

Full Tilt Poker, AbsolutePoker, and PokerStars -- all top 10 world poker sites -- are each accused of operating similar Ponzi schemes.  

The sites all operated within a legal gray area -- the world of online gambling.  The Unlawful Internet Gambling Enforcement Act, a last minute amendment to the 
SAFE Port Act of 2006, outlawed financial institutions from transferring funds to online gambling sites.  Many confuse this with a prohibition on online gambling, but many sites -- including the three charges ones  -- found ways to continue money games within the U.S.

While that was permissible under current laws, federal prosecutors say these sites broke the law by funneling money from player accounts to the company's owners, executives, board, and celebrity sponsors.  Full Tilt Poker allegedly only had $60M USD in the bank, but owed players $390M USD after paying $443 to owners, including $42M USD to Lederer.  Mr. Ferguson was paid $25M USD, transferred to overseas Swiss bank accounts.  The company said it owed Mr. Ferguson another $65M USD.

In order to hide its gaping money hole, the gambling site began issuing credits.

In April the sites were shut down after a federal order was unsealed as a precursor to the criminal charges.  The sites currently have placeholder pages embossed with the seal of the 
U.S. Department of Justice.

The prosecutor complains, "In order to maintain its false image of financial security, Full Tilt continued to credit player accounts without disclosing its inability to fund those credits. When players gambled with these phantom funds and lost to other players, a massive shortfall developed... this scheme continued even after the original complaint was filed and the criminal indictment unsealed in April."

Chris Ferguson is one of the most iconic poker players, known for his distinctive wide-brimmed hat and sunglasses.  Before becoming a professional poker player he earned a Ph.D in computer science.  Howard Lederer does not have a Ph.D but he is known as "The Professor" for his methodical approach to the game and learning materials.

Both men are believed to reside in the U.S.

If convicted on the federal charges, the pair may have to pay back a large part of their earnings and/or spend time in prison.  Given that many other poker celebrities also were paid for endorsements of these top sites, this may just be the tip of the iceberg when it comes to charges.

Apparently this is one gamble that didn't pay off for the giants of the poker world.



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...
By lolmuly on 9/20/2011 8:58:25 PM , Rating: 2
how is this any different than a bank only holding 10% of my funds?




RE: ...
By overlandpark4me on 9/20/2011 9:13:06 PM , Rating: 3
Because the bank is backed up by the FDIC, and they don't have just 10 percent of your funds. 20 percent is standard these days and they are also backed by the assets and other banks. These losers are missing 300 mill plus that they can't cover unless more people bring in deposits, which isn't how it is supposed to work. It's like paying off your charge card with another card.


RE: ...
By Solandri on 9/21/2011 12:01:24 AM , Rating: 4
Right. With the bank, they accept your deposit. If they're required to keep 20% reserve, they can give out the remaining 80% as loans. So which technically they only have 20% of your money on-hand, the sum total of the money they're owed (via loans) + reserve >= deposits.

With this scheme, they were skimming players' "deposits" and using it for their payroll with no intent to pay it back. So they may have had 20% in reserve, but the remaining 80% wasn't money that's expected to be paid back. All they had to back up what people deposited was the reserve. Essentially, they stole the 80% to pay their staff, and using new deposits to cover it up.


RE: ...
By lolmuly on 9/21/11, Rating: -1
RE: ...
By BSMonitor on 9/21/2011 8:50:24 AM , Rating: 4
You friend are an idiot.

It's not their money! Bank owners don't take the 80-90% of the deposited money and go off and buy their own homes. Stake their own poker tournaments. Etc.

Banks take that money and in invest it. Turning it into long-term investments, essentially. Cash does not earn interest. Loans on houses, etc, do.


RE: ...
By kaosstar on 9/21/11, Rating: -1
RE: ...
By mcnabney on 9/21/2011 10:02:14 AM , Rating: 4
You simply don't understand.

You can't compare this to a bank for any number of reasons. First, banks pay FDIC/FSLIC insurance so that deposits (under 250k) are protected. In addition, banks pay the depositor interest (a little). Third, regular banks didn't invest in mortgage securities or credit default swaps - Investment Banks did. Fourth, there are tight banking regulations concerning not only available cash on hand, but also investment grades. Money will come and go from a bank, but the value of the bank is going to remain - outside of some financial meltdown.

In this case, these jokers (sic) didn't invest or protect the assets - they paid them to themselves. The only recent equivalent in the banking industry to this is Madoff, but he operated an INVESTMENT bank which has MUCH looser rules than your local bank.


RE: ...
By javiergf on 9/21/2011 12:28:35 PM , Rating: 2
20% hahahaha
Goldman Sach was leveraged 331 to 1 during the 2008 crisis in some invesments and now that the whole fiat system is collapsing everywhere it is probably a lot higher. The truth is that the average levarge on most banks is close to 10 to 1


RE: ...
By Redwin on 9/21/2011 3:52:28 PM , Rating: 2
Goldman Sachs was not a bank, it was an investment bank.

This means you're likely right about their massive leverage in 2008, but it also means that the poster you're replying to (and laughing at) is also right.. a REAL FDIC-backed bank has regulations that prevent it from doing that, both in 2008 and now.


RE: ...
By javiergf on 9/21/11, Rating: 0
RE: ...
By dark matter on 9/21/2011 5:21:23 AM , Rating: 4
"they are also backed by the assets and other banks."

Are you a politician? Because that statement is meaningless.


RE: ...
By Leper84 on 9/21/2011 5:59:20 AM , Rating: 1
Current reserve requirements (from federalreserve.gov):
$0 to $10.7m- 0%
>$10.7 to $58.8m- 3%
>$58.8m- %10%

To answer the question- the difference between these poker websites and your bank? Bank losses are socialized by law.


RE: ...
By FaaR on 9/21/2011 4:05:46 PM , Rating: 1
The real difference - when you're not deliberately being obtuse - is that banks don't blatantly steal the vast majority of their customers' money and shower their top staff with it.

You're trying to make a bullshit point, which is fail.


RE: ...
By foolsgambit11 on 9/21/2011 6:11:26 PM , Rating: 2
But the reserve banks are required to have is only the liquid portion of their assets. (Don't confuse a pure bank with other investment houses, which have different regulations and different risks for deposits, which are still clearly spelled out for the person investing their money with the institution, unlike for these companies.) A bank has non-liquid assets that make the company's total worth greater than the amount owed (in general). That worth does depend on others fulfilling their contractual obligations to pay the bank what they owe, granted. But if everybody who had money in a bank demanded it back at the same time, the bank could sell its assets (or arrange a bankruptcy proceeding) so that everybody gets their money back (or equivalent assets) eventually.

With these companies, if everybody demanded their money back at the same time, there is no way everybody would get more than a fraction of their money back.


RE: ...
By TSS on 9/21/11, Rating: 0
RE: ...
By animekenji on 9/21/2011 8:31:22 AM , Rating: 2
2006 predates the current financial crisis we are in. The Federal Reserve raised the requirement to make sure banks weren't under capitalized, so 20% is accurate.


RE: ...
By TSS on 9/21/2011 9:07:17 AM , Rating: 2
ugh banking is so complex i don't know where to exactly pull the relevant information from. All i know is the situation now is exactly the same as 3 years ago, simply because we have the same monetairy system as we did 3 years ago.

http://www.youtube.com/watch?v=rCu3fpg83TY

can't belive i missed that one comming out. oh well, watched it now and since it's from febuary this year so i'm pretty up to date again.

Also explains why the M3 money supply has slowed (according to shadowstats.com) while inflation is still picking up through M2. The inevitable deflationairy spiral. Probably caused because total debt is decreasing (as shown on usdebtclock.org) while government spending is still increasing. Artificial hyper inflation to stave off artificial deflation.

Man i'm so glad i never got economics classes in school. Atleast i'm not letting the numbers overwhelm common sense. The funny thing is usually i'm wrong about economics, not because i'm wrong about common sense, but simply because economics no longer has anything to do with common sense.


RE: ...
By Gondor on 9/21/2011 10:06:44 AM , Rating: 1
So in the end the bank from your example still has 10% ($10000 of ~$100000) in reserves, which is 10%. This is precisely how "money multiplication" process works through loans (note that "money" deosn't equal "cash").


RE: ...
By Nekrik on 9/20/2011 9:17:57 PM , Rating: 2
I think it's because they are backed by the Federal Reserve. Not that it makes for a better scenario given our current financial conditions in the US...


RE: ...
By Samus on 9/21/2011 2:24:08 AM , Rating: 1
lolmuly, how is a bank suppose to make any money if they hold onto all your money?

a successful economy relies on banks to give out loans to help business grow and people buy homes, cars, etc. the problem is when the loans default and lending becomes too risky. a safety of high interest rates used to be the way of balancing the risk (a bank would usually break even on a 30-year loan in ~15 years via interest) but with the government lending to banks at zero-interest and pressure for banks to lend low, the breaking-point is now 20+ years, which is why banks are so reluctant to give out loans and help people refinance.

most banks are good, especially small, local banks. everyone should do their business with a local bank and establish a relationship with their lenders. it never hurts to know who is holding onto your money.

i've found that those who hate on the banking sector typically don't know jack shit about investing and are completely ignorant of macro economics.


RE: ...
By dark matter on 9/21/2011 5:24:39 AM , Rating: 2
You don't need a degree in Macro economics to see greed when it shows it's ugly face. That is why people hate the bankers.


RE: ...
By BSMonitor on 9/21/2011 8:55:16 AM , Rating: 5
quote:
You don't need a degree in Macro economics to see greed when it shows it's ugly face. That is why people hate the bankers.


But DAMN them if they want the mortgage payment on time. They are assholes if they don't give me the $500,000 loan I cannot afford. But they are assholes for making risking investments by giving me a $500,000 mortgage on my $40k per year job.

It's YOU who are greedy. They are simply a reflection of YOU wanting more than you can afford.


RE: ...
By Leper84 on 9/21/11, Rating: 0
RE: ...
By animekenji on 9/21/2011 8:12:04 AM , Rating: 4
With a full reserve system banks would be unable to make loans. Think about it. If they were required to hold 100% of all customer deposits all the time, then where do they get the money to make loans? They basically become money vaults and would have to start charging people to leave their money in them like they charge customers for deposit boxes.


RE: ...
By TSS on 9/21/2011 9:18:31 AM , Rating: 1
They don't have any money to make loans to begin with. They give you credit, not money.


RE: ...
By Solandri on 9/21/2011 2:33:30 PM , Rating: 3
They give you credit. But when you use that credit to make a purchase, they send the money to whomever sold you the goods. If you take out a $200,000 home mortgage, true they don't give you a check for $200,000. But after you jump all their hurdles and finalize the purchase of the house, the bank sends, on your behalf, $200,000 of real money to the seller.

So yes they have money to make loans or give you credit. If they were required to keep 100% of their deposits on reserve, they wouldn't be able to make loans nor give you credit.

The only time banks don't have the money on hand when they make a loan is when the Fed decides to expand the money supply, and authorizes a bank to make a certain amount of additional loans without deposits to back it up. That money comes from nowhere, and thus the money supply is increased.


RE: ...
By michal1980 on 9/21/2011 9:08:15 AM , Rating: 2
you are ignorant.

nothing in your post had anything factual, just pent up angry feeling and populist group think.


RE: ...
By mkrech on 9/21/2011 3:52:17 PM , Rating: 2
Justify your claim of ignorance or admit to the petty ad hominem.

http://www.federalreserve.gov/monetarypolicy/reser...
direct link to the facts from Leper84's previous post.

Present your argument if you can. I doubt your ability to even attempt a point of intelligence.


RE: ...
By bupkus on 9/21/2011 4:26:25 PM , Rating: 2
Riiiiiight


RE: ...
By javiergf on 9/21/2011 12:41:59 PM , Rating: 3
Why people hate banks? A couple of facts, the US goverment has given them over 2 trillion dollars over the last 3 years to patch some of the huge holes they have created on their balance sheets for poor decisions and management. These longs were give as low as 0.0018% interest rate, if you count that CPI inflation is almost at 3%, and the real inflation is way over 7%, basically they were given billions of free money. Now Joe six pack go to a bank to borrow money for himself or his business and the cheapest loan is 4%, the cheapest credit card rate is 12%... heck a monkey can make money like that, especially when they screw up we the tax payers have to bail them out... And don't even get me started that the morons who have screwed us all keep getting their 6 or 7 figure Christmas bonuses so they can keep banging more coke than Charlie Sheen and 10K whores while the whole economy is going to the toilet. How about the $100 million dollars that Goldman Sach steals every day though HFT?


RE: ...
By mattclary on 9/21/2011 8:05:51 AM , Rating: 2
A bank makes money by lending it's customers money to other people and charging interest. These guys simply pocketed customers money.


RE: ...
By wookie1 on 9/21/2011 3:25:46 PM , Rating: 2
Are you sure that their assets weren't frozen?


RE: ...
By animekenji on 9/21/2011 8:08:37 AM , Rating: 3
The difference is that the bank is collecting interest and principal payments on the loans it made with your money and other people's money so they have that money coming in every day and can handle any checks or withdrawals that come in. They aren't depending solely on deposits from other customers to honor withdrawal requests so they aren't a ponzi scheme. They are also insured and licensed by the government and the government can seize the bank if it looks like it's becoming insolvent to protect the depositors. Gamblers in an internet casino don't have that protection because most of them are located outside the government's jurisdiction. How was it that you thought banks worked? Did you think you just deposited your money and they paid you interest on it without actually doing anything with it? If that's how you think banks operate then I suggest you close all your bank accounts now because you'll never feel secure about leaving your money in one.


RE: ...
By TSS on 9/21/2011 9:21:29 AM , Rating: 1
RE: ...
By animekenji on 9/24/2011 5:28:07 AM , Rating: 2
That video has to be wrong and here's why:

Let's say the bank creates a credit like you say for their customer to buy a car for $10,000 like in the video. The customer writes a check against the $10,000 credit and buys the car. Now, let's say the person they buy the car from is also a customer of the same bank. They go down to the bank and instead of depositing it, they cash the check and get $10,000 in actual money. If the bank was dealing in money they don't actually have, they wouldn't be able to honor the check so they have to have deposits because eventually the credits they create in your account will be cashed out. Without them, they can't function. The same scenario applies if the seller of the car insists on being paid in cash and the buyer has to immediately withdraw the $10,000 from his account to pay the seller. How does the bank pay out on the $10,000 withdrawal request if they don't actually have the money?


Hmmm
By kjboughton on 9/20/2011 10:50:19 PM , Rating: 2
Wake me up when the headline reads:

"US Federal Government, Insider Bureaucrats Caught in $100T+ USD Ponzi Scheme"




RE: Hmmm
By michal1980 on 9/21/2011 9:13:49 AM , Rating: 2
what ponzi scheme? SS without any reforms can pay 70% of what it promised forever.

A ponzi scheme dies when there are no new suckers paying into the system.


RE: Hmmm
By mkrech on 9/21/2011 3:56:35 PM , Rating: 2
LOL!

I bet 30% of the people will be 100% unhappy with that outcome.

How many "suckers" would pay into SS if it was not required by law?


RE: Hmmm
By Skywalker123 on 9/23/2011 3:08:26 AM , Rating: 2
The SS Ponzi scheme won't die because the Government won't allow the suckers to bail out.


reminds me of something
By slyck on 9/20/11, Rating: 0
RE: reminds me of something
By Sivar on 9/20/2011 9:46:58 PM , Rating: 3
Nah, Social Security is all but mathematically guaranteed to fail. The gambling sites would only fail if a lot of users withdrew all at once.
I suspect the website owners, knowing their business, kept enough in the account for a "big withdrawal day" plus a little extra.


RE: reminds me of something
By Murst on 9/21/2011 11:28:32 AM , Rating: 2
Mathematically guaranteed to fail?

Where exactly do you come up with this crap...

SS will be there in the future - some calculations will need to change such as benefits and eligibility age, but it is certainly not guaranteed to fail.


RE: reminds me of something
By animekenji on 9/23/2011 7:00:21 AM , Rating: 2
If the payouts have to be changed, then it has already failed. You can't have $1 coming in and $3 going out. It is simply not sustainable. The only way to make it sustainable is to lower payouts to such a level that beneficiaries may as well work until they die because they won't be able to survive on what little they get from it.


Mmmm
By symbiosys on 9/21/2011 12:14:44 AM , Rating: 3
I was pretty confident this was how the big online poker companies were doing business. But coming from Australia, I don't really understand the laws in which these companies reside. I do actually play online poker but nothing to the degree of some (any time my account is over 100, I cash out back to 50).

I really do hope they get drilled because from ready more on this matter, I think its atrocious that these gambling companies can use money that isn't technically there's, for personal wealth.

If they don't get nailed, then I'm starting up my own poker site. Done Deal.

I promise I'll give you bonus's all the time!




RE: Mmmm
By Solandri on 9/21/2011 2:38:23 PM , Rating: 2
This issue covers more than poker sites. It covers all sites which are acting like banks, but technically aren't banks (I'm looking at you, PayPal) so don't fall under the umbrella of the nation's banking regulations. This really needs to be fixed.


Seems like a sham
By wookie1 on 9/21/2011 11:48:58 AM , Rating: 2
For a number of years, US legislators have been trying to figure out a way to choke off online gambling to save us from ourselves (or maybe to help protect domestic casino revenues?) They didn't want to criminalize the act of online gambling, so they passed a law preventing banks from handling the money to and from the gaming sites. Well of course there are many international banks that can be used to get around this, so that was fairly ineffective, and the US gov't has since been looking for any way possible to strike at the gaming sites. Several years ago, some CEO or something of a sports betting site made the mistake of traveling to the US and was immediately arrested and charged with all of these similar charges like money laundering and such. I'm not sure what happened in that case, probably a long jail sentence for the crime of doing online what you can already do in Las Vegas or Atlantic City.

I believe authorities were eventually successful in freezing funds and the website of Full Tilt Poker, so it is not surprising that they can no longer pay the players if the funds are frozen. The crime seems to be that they paid their employees, and now don't have enough non-frozen money to pay the players. Of course, the executives are not within legal reach of the US - but Howard Lederer and Chris Ferguson are residents, so that's the only people they can perp-walk. I'm curious to see if any of these charges can stick (I hope not), or if it is just for show and to intimidate other operators.

If this is a ponzi scheme, as others have mentioned banks are as well since they pay their employees even though they don't have enough money on-hand to pay back all the depositors at any given time (FDIC is just insurance, the bank does not maintain enough money to pay everyone, and if enough depositors in the banking system wanted their money at the same time, the FDIC would quickly run dry).




RE: Seems like a sham
By animekenji on 9/23/2011 7:02:24 AM , Rating: 2
Try opening an account at a bank in another country some time. It's not as easy as you seem to think.


Greed is not good...
By Cakemeister on 9/21/2011 12:50:19 PM , Rating: 4
Who watches the watchmen?

These people just got greedy and thought they could get away with it.

If you have $330,000,000 invested in something with a guaranteed 3% return, that's $10 million dollars in easy income per year. Plus the rake. They weren't content with that.

I am no longer a fan of Chris Ferguson.




By KOOLTIME on 9/21/2011 1:19:35 PM , Rating: 2
Let idiots keep gambling online, let them all lose every cent they have, then when they are broke, they will cry we were cheated lol. Stupid people think software wont cheat you and is a respectable way to gabble haha.

Software is unregulated, and even worse it can be altered on the fly, so 1 second seems legit, then the server admin clicks a script for his over seas hidden network connection, and bam now you will lose at whatever preset % rate the admin just chose for you. Thats all instant and any time they can skew odds to whatever they like.

Thier is a reason all the servers that hold the gambling software is sitting physically in a country that governments wont easily raid or confiscate. Not for legal laws its to hide the crooked software, so they can bilk players as they deem fit. The smart sites use lower % loss rates to make it seem more legit but the fact is the software loss rate is their meaning its not 100% fair and legitimate player skill weather you win or lose, online a real / mechanical deck or machine does.




Wth
By kadomot on 9/21/2011 6:44:30 PM , Rating: 1
Please do not lump PokerStars in with these clowns, Stars did in no way shape or form run any sort of ponzi scheme.

Did they commit fraud and launder their money? Hell yeah they did, because our government made some bullshit laws, because they didn't like foreign companies raking in easy billions.

Stars never did anything bad to the players and payed out the Americans extremely quickly




Full Tilt
By AVGTEXAN on 9/20/11, Rating: -1
RE: Full Tilt
By jajig on 9/20/2011 8:50:26 PM , Rating: 2
Hmm.. You only have one post on this site and it was to defend a ponzi scheme... I wonder..


RE: Full Tilt
By ryedizzel on 9/20/2011 9:04:40 PM , Rating: 4
Do you know what a Ponzi scheme is? If not I suggest you look it up. But in layman's terms it works like this: I create a gambling website and you deposit $200 into it. While you are gambling with that $200 I just gave $150 of it to some celebrity or investor. Now as long as you don't withdraw the money I am ok. After all there is a good chance you will lose it or reinvest if you win more (the nature of gambling). But let's say you won $50 and decided to withdraw the full $250. The way I pay you is by taking the money from someone else's account- which creates a massive chain reaction that depends upon new people constantly adding money to sustain itself. So the problem is not that they failed to pay the few who cashed out, it's that if everyone (or a large number of people) decided to do so they won't have the funds to honor it because they spent most of it. A Ponzi scheme could easily crash just like a pyramid scheme, hence the reason it is illegal. But that was a risk these gambling websites were willing to make with our money...


RE: Full Tilt
By overlandpark4me on 9/20/2011 9:05:59 PM , Rating: 2
AVG, you sound like one of the board members...Read the numbers dickwipe. 60 million left, 400 million is supposed to be there. Just because the players haven't noticed yet means nothing. 60 million. 400 million. Nuff said. Stop posting...


RE: Full Tilt
By xsilver on 9/21/2011 12:09:07 AM , Rating: 2
60/400 million is around average for a company that declares bankruptcy. Investors/creditors are likely to only see 10-15c on the dollar.


RE: Full Tilt
By Flunk on 9/21/2011 8:09:04 AM , Rating: 2
These are not investors silver. Investors accept the risk in exchange for the possibility of growth. These are customers who are letting the company hold their funds for convenience. When I deal with a company I don't expect them to steal 80% of the money in my account. Could you imagine if Paypal dud this?


RE: Full Tilt
By wookie1 on 9/21/2011 3:24:54 PM , Rating: 2
What makes you think this wouldn't happen if PayPal went bankrupt and didn't have enough money to cover all of their depositors? Would you say that PayPal is running a Ponzi scheme?


RE: Full Tilt
By Redwin on 9/21/2011 4:06:21 PM , Rating: 2
You sound like you understand neither ponzi schemes, nor pay pal.

When you leave your money in paypal, you have 2 options. Normally, its a non-interest bearing account, and what happens to that money is paypal actually deposits it INTO FDIC-insured bank accounts that it owns on your behalf. These accounts likely generate a small amount of interest that paypal keeps, but if paypal (or the backing bank for that matter) went bankrupt you would still be protected by FDIC Pass-Through Insurance from the backing bank.

If you're curious, here is the list of banks paypal puts those deposits in: Bank of America, Citibank, HSBC Bank USA, RBS Citizens Bank, and Wells Fargo Bank

Your other option is to put the money into a "PayPal Fund". This bears interest directly from paypal, but is NOT FDIC insured. If they went bankrupt your money in that fund would be at risk as you're implying.

That doesn't in any way make paypal a ponzi scheme though, because for the "PayPal Fund" accounts, they are CLEARLY stating it is a non-insured interest-bearing account you invest in at your own risk, and the NORMAL way they hold your money is via FDIC-Insured banks unless you request the Fund option.

These poker sites were saying "We've got your money, its not invested, its not leveraged, it bears no interest, we are just HOLDING it for you" ... and that was NOT true, they were spending it with no plans to ever recoup the money aside from getting new players to deposit new money to cover withdrawals. That's a Ponzi Scheme.


RE: Full Tilt
By animekenji on 9/23/2011 6:56:00 AM , Rating: 2
Paypal closed their money market fund. You don't get interest from them any more.


RE: Full Tilt
By animekenji on 9/23/2011 7:16:48 AM , Rating: 2
Oh, and one more thing, if that is what Paypal is doing then they are violating the law. You are not allowed to pool funds belonging to lots of people into a single account because of how easy it makes money laundering. The government has to be able to access bank records and see who has money in the bank. If they access the bank records all they see is Paypal's name and not the names of the people who have money with them. Someone could put dirty money into a Paypal account in one part of the world, transfer it to someone else, and then that person can withdraw the money on the other side of the world without a paper trail because the money remained in Paypal's bank account the entire time.


RE: Full Tilt
By animekenji on 9/21/11, Rating: 0
RE: Full Tilt
By johnsonx on 9/21/2011 12:07:08 PM , Rating: 2
the slaughterhouse truck will come for the rest of us; the piggies feeding at the trough have nothing to worry about.


RE: Full Tilt
By animekenji on 9/23/2011 7:07:14 AM , Rating: 2
ANYONE receiving a check from the government is feeding at the trough.That includes government contractors, politicians, farmers receiving subsidies, welfare recipients, people on food stamps, or any other form of government assistance or largesse.


"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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