Last September, the likelihood that customers would retrieve their frozen funds from the online poker site Full Tilt Poker was grim at best. At the time, the Department of Justice alleged that the site was $330 million short in funds owed to its players.
Fast-forward to today. The Department of Justice announced it has entered into settlement agreements with Full Tilt Poker and PokerStars, two of the three online poker companies accused of money laundering in a civil forfeiture complaint unveiled in April 2011.
The mechanics of the agreements are a bit complex. Full Tilt has agreed to forfeit its assets to the DOJ in exchange for settling the forfeiture and civil money laundering claims against the company. PokerStars, meanwhile, has agreed to forfeit $547 million to the DOJ and to reimburse non-U.S. Full Tilt customers the approximately $184 million owed to them. In exchange, PokerStars settles its forfeiture and civil money laundering claims and will acquire the forfeited Full Tilt assets.
It’s quite remarkable that one company accused of money laundering (PokerStars) obtained DOJ approval to acquire the assets of its formerly primary competitor (Full Tilt), which also happened to be accused of similar conduct (to a more egregious degree) in the same civil complaint.
Several reasons come to mind why the DOJ would sign off on this. The most critical reason, to me, relates to a rather significant component to the deal that I’ve yet to mention: The DOJ has agreed to enable U.S. Full Tilt customers to retrieve their balances by submitting a claim to the government. The government plans to use the funds collected from PokerStars to make the payouts.
To this point, few details have emerged regarding the DOJ payout process. What we do know is that victims of a judicial forfeiture can make a claim for lost funds by submitting a “petition for remission.” A sample form looks like this.
I think the DOJ is waiting to release payout details because it first must receive the funds from PokerStars to make the payouts. According to the agreement, PokerStars must transfer $225 million to the U.S. Marshals Service within six business days of the court’s entry of the Stipulation and Order. Six business days from today is August 8. Because $225 million is enough to cover the alleged $150 million owed to U.S. Full Tilt customers, we could see a follow-up DOJ press release addressing player payouts as soon as next week. But that’s pure speculation.
I doubt players will simply be permitted to log into their Full Tilt account and request a withdrawal because a petition must first be submitted to the DOJ and approved by the Attorney General through the Asset Forfeiture and Money Laundering Section.
This leaves the following open-ended questions:
- Will the DOJ implement a screening process for each petition (e.g. tax compliance)? If so, will the level of scrutiny, if any, depend on the amount claimed?
- If a petition is approved, how will the DOJ verify the person submitting a petition is in fact the person who controlled the account claimed on Full Tilt?
Keep in mind Full Tilt and PokerStars are represented by reputable law firms. I’d be beyond shocked if these questions haven’t already been asked and answered by the parties involved. But I’m not privy to that information, so I, like the rest of us, must wait to find out.