Poker CEO Ray Bitar is now in FBI custody, according to officials close to the situation.
Bitar was arrested this morning at John F. Kennedy International Airport in New York.
Bitar was indicted by the Department of Justice on April 15, 2011, on charges of bank fraud, money laundering, illegal gambling offenses and violating the Unlawful Internet Gambling Enforcement Act (UIGEA).
And according to the superseding indictment released today, the DOJ is seeking the forfeiture of $2.54 billion and all company assets.
Bitar appeared before U.S. Magistrate Judge Debra Freeman this afternoon, according to statement by the DOJ.
"He's one of the last persons involved [in the Black Friday cases]," said Joe Kelly, a business law professor and gambling law expert at Buffalo State (SUNY). "Authorities would love to get this behind them and wrap this up with some sort of plea bargain that might be mutually advantageous to everybody."
After the original Black Friday indictments, Full Tilt Poker halted operations in the U.S. Its operations in the rest of the world were stopped last summer when it lost its Alderney online gambling license because it could not return player deposits to any of its customers worldwide.
The new superseding indictment released Monday offers greater detail on how Full Tilt Poker, led by Bitar, moved money in and out of the states, lies Bitar allegedly instructed Full Tilt employees to tell customers about the safety of their money, and the actions of Bitar and Full Tilt after the Black Friday indictments.
"To encourage players to deposit money with Full Tilt Poker, Raymond Bitar, the defendant, directed Full Tilt Poker employees to assure potential customers that player deposits would be held in 'segregated accounts' that would be kept 'separate and distinct' from the company's operating accounts," reads the indictment.
"In truth and in fact -- and as Bitar well knew -- Full Tilt Poker did not protect player funds in separate accounts and instead used player funds for whatever purposes Bitar directed, including to pay Bitar and the other owners of Full Tilt Poker hundreds of millions of dollars. Accordingly, when Full Tilt Poker was forced to stop operating -- first in the United States in April 2011 and then internationally in June 2011 -- it was unable to repay players around the world the approximately $350 million it owed them.
"However, as Bitar well knew, these representations were simply lies intended to fraudulently induce customers to do business with, and entrust their money to, Full Tilt Poker."
The indictment cites e-mail and forum posts addressing customers using language e-mailed by Bitar to convince customers that their deposits were held separately from operating expenses.
"I'm not sure where most of the information in this thread is coming from," reads one forum post quoted in the indictment. "But I do want to clear up the most important piece of bad info... Players' funds at Full Tilt Poker are kept in several deposit accounts throughout the world, all of which are separate and distinct from our operating accounts. Funds are transferred from the players' deposit accounts to Full Tilt Poker's operating accounts only after we have earned them."
The indictment alleges that forum post is anything but the truth.
"At no time in its history did Full Tilt Poker protect player funds in separate accounts," the indictment reads.
"Full Tilt Poker simply transferred the player funds it collected from third party payment processors into company bank accounts, where player funds were combined with company funds. Full Tilt Poker used the proceeds of these intermingled company/player bank accounts as Bitar directed, including to pay company operating expenses and to pay Bitar and the company's other owners a total of over $430 million from in or about 2007 through in or about April 2011. Of this total, Bitar received at least approximately $41 million from these intermingled accounts as salary and 'profit sharing,'" the indictment adds.
Bitar noted in an e-mail that the "'bottom line is we are not a bank' even though 'we might act like one' and therefore customer funds 'will always be at risk.'"
Because Bitar was using player funds as operating money, the indictment alleges Full Tilt used extraordinary measures to hide their cash shortfalls from the Alderney Gambling Control Commission, which requires operators "to keep, as cash, 100% of the money owed to players."
"To hide the fact that the company was not holding 100% of player deposits as cash - and was in fact simply using player funds to cover operating expenses and pay the company owners - Raymond Bitar, the defendant, directed Full Tilt Poker's Director of Finance to inflate the amount of the company's 'cash' on hand," the indictment reads.
According to the indictment, Bitar told the finance director to include "over $100 million that third party payment processors owed to Full Tilt Poker but had never paid the company and in many cases never would because, for example, the processor had stolen the money or because the funds had been seized pursuant to U.S. Court order."
The indictment alleges Bitar instructed the company to routinely file false financial certifications with Alderney.
Much of the financial information about Full Tilt appears to have been provided by the company's finance director, an unidentified co-conspirator noted in the indictment as "CC-2." "CC-2" has not been indicted at this time. Another Full Tilt owner, identified in the document as "CC-1," also provided information and is currently not a defendant.
No information has been provided as to whether players' deposits will be returned or whether a buyout with PokerStars is in the works.