what did howard lederer ray bitar and chris ferguson actually do

I realise I am a bit behind on times and this happened 4 years ago but I still dont get what really happened. I get that they did not have enough player funds to cover the players but would they not have gone to jail for this - so I would really appreciate if someone told me other than that what they did.

Howard Lederer has finally given an very long interview on this few years after. You could check on youtube if it is there.

They stole money from player accounts, and used new deposits to pay cash out demands. This is a version of a Ponzi scheme, which is illegal, and does frequently result in stiff prison time.

I think every bank doesn´t have the money, if all customers want to have their money withdrawn ot once.
Ist the same everywhere...
They all use our money for other things.

Daniel72 said:

I think every bank doesn´t have the money, if all customers want to have their money withdrawn ot once.
Ist the same everywhere...
They all use our money for other things.

Click to expand...

Exactly. When so-called black Friday happened there was a run on the bank. This is actually comparable to the S&L collapse. What they actually did was run a business poorly. It's unfortunate, but it happens.

BTW, instead of paying their fines, declaring bankruptcy and letting the depositors suck it, they stayed around and made sure there was a buyer that would assume the player obligations, which was PokerStars eventually.

They have taken money from accounts, and used new deposits to pay cash outs, they are accused for creating of a Ponzi scheme.
eventually they have settled with US DoJ and retained some money and sold FT to PS

It wasn't that the banks didn't have enough money for it, it's just they literally didn't have the money. Look at Poker Stars, they were able to pay out all of their US players with no issues. That's because they didn't spend player funds. And I don't believe it was a Ponzi scheme, even if they were accused of it.

What they basically did was take the money that was supposed to be reserved for player withdrawals and paid themselves with it. I think they just got in over their heads since it was so successful, they basically cash advanced to themselves with the expectation that future business would cover for it. Honestly, I'm sure the longer it lasted, the worse it would have been. Greed would have gotten the best of them and they would have continued to do it.

The processors were approving funds into players accounts via echeck without actually having the funds from the bank. Most of the fraud transactions and double deposits that were sent to the site were already in a different players account via loses and winnings. as winning players would'nt need to commit check fraud. Essentially they were victims of check fraud and it was their fault in the end because they were'nt verifying funds before crediting accounts. That isnt what busted them though. What busted them was Howard and crew taking their paychecks and dividends and all the sponsored pros getting 3 month checks as scheduled even though there wasn't profits to cover it. Essentially one bad business decision. You can view all the Howard Lederer files here https://www.youtube.com/watch?v=3g1wFJx461U