Black Friday Online Poker Case: Settlement and Executive Outcomes

The Full Tilt Poker settlement was a $731 million agreement approved on July 31, 2012, by U.S. District Judge Leonard B. Sand that resolved the federal government’s money laundering and forfeiture claims against PokerStars and Full Tilt Poker. Under the deal, PokerStars paid the U.S. government $547 million, took over Full Tilt’s forfeited assets, and assumed responsibility for repaying the hundreds of millions of dollars Full Tilt owed to players around the world. It remains the largest settlement in online gambling history.¹

What the Settlement Required

The agreement had three moving parts. PokerStars paid $547 million to the United States, with those funds earmarked to compensate American victims of the Full Tilt fraud. Full Tilt Poker forfeited essentially all of its assets to the government, which then transferred them to PokerStars once PokerStars made the first $225 million installment of its payment. And PokerStars agreed to reimburse roughly $184 million to non-U.S. Full Tilt players within 90 days.¹

The civil money laundering and forfeiture claims against PokerStars were to be dismissed with prejudice once the first payment was received.²

Several restrictions came attached. PokerStars founder Isai Scheinberg was barred from management for 45 days. PokerStars could not hire Full Tilt insiders, including Raymond Bitar, Howard Lederer, Chris Ferguson, Rafael Furst, and Nelson Burtnick. And PokerStars was prohibited from offering real-money poker to U.S. players until doing so became legal.¹

None of the parties admitted wrongdoing.¹

Why Reimbursement Was the Central Issue

The settlement was structured around player repayment because Full Tilt could not repay anyone on its own. In September 2011, Manhattan U.S. Attorney Preet Bharara’s office filed an amended civil complaint alleging that Full Tilt was operating as a “massive Ponzi scheme” and had “cheated and abused its own players.”³

Full Tilt had told players their deposits were held in segregated, secure accounts. As of March 2011, the company owed players roughly $390 million worldwide, including about $150 million to Americans, but held only about $60 million in its bank accounts.³ The company had also credited roughly $130 million to player accounts for deposits it never actually collected from U.S. banks, funds prosecutors called “phantom.”⁴

Where had the money gone? Between April 2007 and April 2011, Full Tilt distributed approximately $443.8 million to its board members and owners, several of them well-known professional poker players:³

Chris Ferguson was allocated approximately $87.5 million and received at least $25 million of it.
Howard Lederer received approximately $42 million.
Raymond Bitar received approximately $41 million.
Rafael Furst received approximately $11.7 million.

By early June 2011, board member Howard Lederer reported that only about $6 million remained in company accounts, leaving Full Tilt with “no realistic ability to repay its new depositors.”³ Without a buyer stepping in, players had no realistic route to their balances. The settlement made PokerStars that buyer.

When Players Actually Got Paid

International Full Tilt customers were paid first. PokerStars reopened the Full Tilt platform in November 2012 and made roughly $184 million in balances available to non-U.S. players within 90 days of the asset transfer.⁵

American players waited considerably longer. In March 2013, the Department of Justice appointed the Garden City Group as claims administrator, directing eligible U.S. victims to file petitions for remission through a dedicated website.⁶ The filing window opened in September 2013 and closed that November.⁷

The first wave of U.S. payments went out on February 28, 2014, totaling $76 million to approximately 27,500 players, exactly 1,050 days after Black Friday.⁸ More rounds followed: $5 million in April 2014, $14 million in June, and roughly $2 million more in September, bringing the total to about $95 million distributed to over 33,000 players.⁹ Additional rounds continued into 2016. As of March 2016, the Garden City Group reported it had processed approximately 94% of filed petitions, including claims from players with disputed balances and from Full Tilt professionals.¹⁰

What Happened to the Full Tilt Executives

The corporate settlement did not resolve the fate of the individuals behind Full Tilt, and their outcomes varied widely.

Raymond Bitar

Full Tilt’s CEO pleaded guilty on April 15, 2013, to violating the Unlawful Internet Gambling Enforcement Act and to conspiracy to commit bank fraud and wire fraud. He admitted lying to customers about the safety of their deposits. Sentencing guidelines called for six and a half to eight years in prison. U.S. District Judge Loretta A. Preska instead sentenced him to time served, seven days in jail, because Bitar suffered from severe heart failure and needed a heart transplant. The judge stated she would have imposed a “substantial term of imprisonment” otherwise. Bitar was ordered to forfeit $40 million, his home, and other properties.⁴¹¹

Howard Lederer and Chris Ferguson

Neither Lederer nor Ferguson was charged criminally. Both were named as defendants in the DOJ’s September 2011 civil lawsuit alleging that Full Tilt owners defrauded customers of $443.8 million, and both reached civil settlements without admitting wrongdoing.

Lederer agreed in December 2012 to pay a $1.25 million civil money laundering penalty plus $168,000 from bank accounts, and to surrender two Las Vegas land parcels, a 1965 Shelby Cobra, and additional bank accounts. Ferguson’s settlement, approved by U.S. District Judge Kimba Wood in February 2013, required him to forfeit a bank account, any remaining interest in money Full Tilt owed him, and an additional $2.35 million.¹² None of the Full Tilt executives spent time in prison.¹³

Isai Scheinberg

The PokerStars founder was arrested in Switzerland in June 2019 and arrived in the United States voluntarily in January 2020 after a failed appeal. He pleaded guilty in March 2020 to running an illegal online gambling business; the bank fraud and money laundering charges from the original indictment were dismissed as part of the plea. In September 2020, U.S. District Judge Lewis Kaplan sentenced Scheinberg to time served and a $30,000 fine rather than the estimated 12 to 18 months of imprisonment, citing mitigating circumstances, particularly that PokerStars had assumed Full Tilt’s debts and reimbursed millions of players.¹⁴

Separately, Scheinberg’s son Mark agreed in June 2013 to forfeit $50 million he had received through PokerStars operations. There is no indication Mark Scheinberg faced criminal charges.¹⁵

Nelson Burtnick

The director of payments for PokerStars and Full Tilt pleaded guilty in September 2012 to conspiracy to commit unlawful internet gambling, bank fraud, and money laundering. Internal emails presented in the case showed Burtnick acknowledged that the company’s remaining payment processing options involved “some form or another of ‘misrepresentation.'”¹⁶

Absolute Poker Was a Separate Deal

The $731 million settlement covered only PokerStars and Full Tilt. Absolute Poker, indicted alongside them on Black Friday, settled separately. Under terms approved by Judge Kimba Wood on July 16, 2013, the Absolute Poker group, including Ultimate Bet and several affiliated entities, forfeited all rights and property to the United States. The government was authorized to liquidate those assets, with proceeds held pending resolution of other parties’ claims. Civil money laundering claims against the named Absolute Poker companies were dismissed with prejudice, though claims against four related entities remained pending.¹⁷ As with the PokerStars deal, no wrongdoing was admitted.¹⁸

1
FBI New York. Manhattan U.S. Attorney Announces $731 Million Settlement
2
ESPN. PokerStars Reaches Settlement With Department of Justice, Acquires Full Tilt Poker
3
U.S. Department of Justice. Amended Civil Complaint Against Full Tilt Poker
4
U.S. Department of Justice. Former Full Tilt Poker CEO Pleads Guilty and Sentenced
5
PokerNews. PokerStars Acquires Full Tilt Poker Assets, Players to Be Refunded
6
FBI New York. Manhattan U.S. Attorney Announces Appointment of Garden City Group as Claims Administrator
7
U.S. Department of Justice. United States v. PokerStars et al. – Full Tilt Poker Information
8
ESPN. Green Friday: FTP Money Returned
9
PokerTube. Full Tilt Remission Set to Pay $2 Million More
10
PokerStake. $2.6M in Refunds Coming for U.S. Full Tilt Players and Professionals
11
Los Angeles Times. Former Full Tilt CEO Pleads Guilty, Avoids Prison
12
Las Vegas Review-Journal. Former Poker Champ Ferguson Settles With Federal Prosecutors
13
PokerNews. Full Tilt Poker Cheating Scandal
14
SBC Americas. PokerStars’ Isai Scheinberg Avoids Prison Sentence
15
U.S. Department of Justice. PokerStars Founder Pleads Guilty
16
FBI New York. Online Poker Executive Pleads Guilty in Manhattan Federal Court
17
Justia. United States v. PokerStars et al., Stipulation and Order of Settlement
18
PokerNews. US DOJ Settlement Agreement With Absolute Poker