Full Tilt Poker Reportedly Investigated by Grand Jury

According to the Financial Times newspaper, Full Tilt Poker, the world’s second largest online poker site, is being investigated on money laundering charges. A “federal grand jury in Manhattan” had taken up the case.

The article, which was published on Monday by a Financial Times reporter in San Francisco, read in part, “A federal grand jury in Manhattan is investigating one of the largest internet poker sites serving U.S. gamblers and could bring indictments against some of the world’s best known professional players, according to people familiar with the case and a subpoena issued to a witness this week.” Two poker players singled out are Howard Lederer and Chris Ferguson, whose names were brought to light in a civil suit last year as having an ownership stake in the company.

Besides Lederer and Ferguson, other members of Team Full Tilt include 2009 World Series of Poker (WSOP) Main Event November Nine member Phil Ivey, 2008 WSOP Europe Main Event winner John Juanda, fundraiser extraordinaire Jennifer Harman, and “Poker Edge” host Phil Gordon. The Financial Times did not name anyone besides Lederer and Ferguson as being involved in the investigation.

Federal agents have purportedly honed in on money laundering charges. On their significance, the Financial Times explains, “Money laundering charges might be attractive to the government as they would compel cooperation from authorities even in countries where gambling is legal.” Subpoenas issued in the case allegedly claim that internet gambling is illegal in the United States, a statement many industry insiders would disagree with.

The Financial Times spoke to attorney Eric Jackson, who is representing Ferguson and Lederer in a separate civil case. Jackson told the news outlet, “We are not going to comment about a speculative grand jury investigation that we are not aware of.” Also reacting was noted gambling and the law expert I. Nelson Rose, who told the Times, “[The Federal Government is] waging this war of intimidation. There are not a lot of good statutes, so they go after high-profile targets and try to intimidate everybody.”

Full Tilt Poker is the industry’s second largest site, trailing only PokerStars in traffic. Both online poker rooms happily accept players from the United States. Full Tilt Poker boasts a seven-day running average of 16,400 real money ring game players according to PokerScout.com, while PokerStars hosts nearly double that total at 29,800. Full Tilt Poker’s traffic has skyrocketed 44% year over year, while PokerStars’ has mushroomed by 29% over the same time period.

The rumored investigation is the latest event in a U.S. Government crackdown of the industry. Recently, authorities in Maryland sought a civil forfeiture of funds destined for online poker players. The forfeiture documents single out four online poker sites – Absolute Poker, Bodog, Full Tilt, and PokerStars – and charge that “the above-mentioned sites all have engaged in betting or wagering in violation of Maryland law.”

The Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006 at the urging of then-Senate Majority Leader Bill Frist (R-TN). In 2009, the Third Circuit Court of Appeals ruled that the UIGEA did not make any online activity illegal. Instead, the legality of internet gambling may ultimately depend on state law. The Wire Act, passed in 1961, has traditionally applied to online wagers on sports and has not been formally updated to encompass internet wagering.

This isn’t the first time that Full Tilt Poker has been in the hot seat. In mid-February, a suit filed by poker pro Clonie Gowen claiming 1% ownership in Full Tilt was dismissed. Recently dismissed was an investigation involving the FBI over the failed television series “Face the Ace” that centers on copyright infringement. In December, a bot lawsuit filed by Lary “pokergirl z” Kennedy and Greg Omotoy reached a new twist when the background of plaintiff lawyer Cyrus Sanai was questioned. The case was originally filed in October and cites the Racketeer-Influenced Corrupt Organization (RICO) Act.

Full Tilt’s domain name is being threatened in Kentucky, where the state’s Justice and Public Safety Cabinet seized the rights to 141 internet gambling URLs, including those belonging to PokerStars and Absolute Poker. Full Tilt Poker has taken steps to preserve its domain name in a U.K. court, but FullTiltPoker.com is still identified by name in the ongoing legal action.

Read the entire Financial Times article.