Was full tilt poker a ponzi scheme?

Earlier this year, the feds cracked down on a number of online gambling sites, including the popular Full Tilt Poker. On Tuesday, the U.S. Justice Department accused Full Tilt of doing far

worse than illegal gambling, though, filing a civil suit and releasing a statement saying it "was not a legitimate poker company, but a global Ponzi scheme." Here, a brief guide:

WHAT IS FULL TILT POKER? It's an online poker company once so huge it had 54,000 players in a single tournament. In the spring, the site — owned by professional poker players Howard

Lederer, Chris Ferguson, and Rafael Furst, and a manager named Raymond Bitar — was blocked from operating in the U.S. in an FBI online gambling crackdown. Some called this an infringement on

freedom; others, like Felix Salmon at _Reuters_, cheered, saying "it's the job of the government to look after the weakest members of society." On Tuesday, the Justice

Department said Full Tilt wasn't just breaking gambling laws but defrauding customers out of hundreds of millions of dollars. SUBSCRIBE TO THE WEEK Escape your echo chamber. Get the

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inbox. WHAT DO PROSECUTORS SAY HAPPENED? Justice Department lawyers say Full Tilt was essentially running "a global Ponzi scheme," using the money in players' accounts to

cover operations and expenses, and to handsomely pay the website's owners. Investigators say Full Tilt paid its board members $444 million in players' money over four years.

According to Full Tilt Poker accounting records, as of late March, the company owed players around $390 million but had less than $60 million in the bank. Full Tilt had assured players that

the money they deposited and won was "segregated and held separately from our operating accounts." HOW LONG DID THIS GO ON? Federal lawyers think Full Tilt started to face cash

issues in 2010 as the government made it harder for gambling sites to accept new bets. By August of that year, Full Tilt's payment processing had been "severely disrupted,"

and it was no longer able to get funds from users' accounts. At that point, the feds say, Full Tilt began crediting accounts with "phantom funds" that it didn't actually

have the cash to back up. A free daily email with the biggest news stories of the day – and the best features from TheWeek.com WHAT HAS FULL TILT'S REACTION BEEN? David Angeli, the

lawyer for Rafael Furst, says his client "hasn't done anything wrong... He always acted in what he believed was the best interest of players and anyone associated with Full

Tilt." The attorneys for Raymond Bitar and Chris Ferguson had no comment, says _The Wall Street Journal__,_ while Howard Lederer was unreachable. SOURCES: _Forbes__,_ _Reuters__,_ _Wall

St. Journal_ (2)