Full Tilt Poker Ponzi Scheme?
Yesterday, the news of the Department of Justice amending its complaint against the Poker Companies to add three individual defendants made national headlines. Read the official press release from the U.S. Attorney’s Office here, and the amended complaint here. Preet Bharara, the U.S. Attorney for the Southern District of New York, asserts that Full Tilt Poker was “a global Ponzi scheme.”
The new allegations add much fuel to the already massive fire that has been burning Full Tilt Poker since Black Friday. Players still haven’t received any of their frozen monies back. It has not appeared as unlikely to happen as it does now. Authorities claim that Full Tilt was $330 million short in funds owed to players in March.
I’ve written before about possible tax consequences for U.S players who don’t receive their funds back. With the Ponzi scheme allegations surfacing, additional tax consequences may arise. In light of the Madoff investment scandal, the IRS created rules for taxpayers who experienced Ponzi scheme losses.
Whether or not players with Full Tilt balances qualify for Ponzi scheme losses is not immediately clear. Russ Fox agrees. Indeed, Full Tilt may not have been engaged in a Ponzi Scheme. Remember, we’re talking about allegations. So, let’s not jump to conclusions. I’ll be sure to revisit these issues when we learn more facts.