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Feds Call Full-Tilt Poker a 'Global Ponzi Scheme'

Soulskill posted more than 2 years ago | from the and-let-the-chips-fall-where-they-may dept.

The Almighty Buck 436

blair1q writes "Popular (and heavily advertised) poker website Full-Tilt Poker was sued today by the U.S. government, following an investigation that revealed it to be a massive Ponzi Scheme. The principals in the company set up a complicated system to direct funds from subscribers' poker accounts into their own bank accounts. This was in contravention of their own claim that users' money was untouched. Players' accounts amounted to $390 million, but the company only has $60 million in the bank, having over time distributed $440 million to its own directors and executives."

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436 comments

Ha ha ha (-1, Troll)

roman_mir (125474) | more than 2 years ago | (#37462060)

Feds?

Maybe they should look into social security, medicare, Federal reserve and the entire government system first?

But they would certainly know it if they saw it.

Re:Ha ha ha (0)

Anonymous Coward | more than 2 years ago | (#37462138)

US books are open. Private companies' books are not. Definition of Ponzi scheme involves fraud; how can you have fraud when the books are open? Perry and other illiterates are not questioning the values in the books; therefore Social Security is not a Ponzi Scheme.

Any questions?

Re:Ha ha ha (-1, Troll)

roman_mir (125474) | more than 2 years ago | (#37462170)

SS is a ponzi scam by definition - current beneficiaries are getting paid by current workers, and current workers are hoping to get paid by future workers. SS doesn't have any books, all of the funds are fake, they are moving fungible money back and forward.

I am sure you will totally agree.

Re:Ha ha ha (4, Insightful)

blue trane (110704) | more than 2 years ago | (#37462218)

Look up Ponzi Scheme. It requires fraud, misrepresentation. US Govt is not lying about where the money goes. The Poker company is.

Re:Ha ha ha (0)

wierd_w (1375923) | more than 2 years ago | (#37462372)

Not entirely true.

As originally implemented, social security was meant to be a private trust, not a government slush fund.

Ss became a ponzi scheme when it (the federal goverment) raided the social security assets and replaced them with IOUs, while still presenting social security as a safe, solvent way to save money for retirement.

Also, ss was originally intended to be opt in, and not voluntary, like it is now.

Re:Ha ha ha (0, Offtopic)

roman_mir (125474) | more than 2 years ago | (#37462432)

Let's start from the fact that it does NOT matter, whether there is lying about where the money goes or not. So, just in itself, lying is not necessary to have a ponzi scheme. In fact people who get into a ponzi scheme early on, may easily be aware of it, but they will likely benefit, so they don't care.

Secondly, gov't certainly lies about SS, lied about it from the start. Pretended that SS is an insurance system, even didn't start the payouts for 2 years after the program was started. All to pretend there is some fund. Of-course it was never a fund, and it's an easy to show fact:

Helvering v. Davis, 301 U.S. 619 (1937), decided on the same day as Steward, upheld the program because "The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way". That is, the Social Security Tax was constitutional as a mere exercise of Congress's general taxation powers. [wikipedia.org] - the gov't argued that SS payments are not earmarked, not actually going to be used for any purpose, but are only collected under general taxation powers of Congress.

Of-course the judge in the Supreme Court was very lazy, he didn't care (*was complicit*) and wrote this: The argument for the respondent is that the provisions of the two titles dovetail in such a way as to Justify the conclusion that Congress would have been unwilling to pass one without the other. The argument for petitioners is that the tax moneys are not earmarked, and that Congress is at liberty to spend them as it will. The usual separability clause is embodied in the act. ' 1103. [cornell.edu]

We find it unnecessary to make a choice between the arguments, and so leave the question open.

The entire point of the court was to figure out whether SS taxes were Constitutional or not, and the judge said: I don't care, I'll leave the question open!

SS is absolutely clearly NOT SHOWN TO BE CONSTITUTIONAL in this judgment. At the very minimum it's a "maybe", but it's definitely not a "YES", which is what SCOTUS is SUPPOSED to show.

The only difference between a private and a government ran ponzi scam is that you can't GET OUT of a government ran ponzi scam, so that's the ONLY thing that keeps it alive once people recognize it what it is.

Try this: make it optional. Allow people to just opt out. How many, do you think, would take that offer immediately to stop paying the 12%? (12%, which will grow, it must, Reagan did it to keep the scam going. [slashdot.org] )

Re:Ha ha ha (0)

cryptographrix (572005) | more than 2 years ago | (#37462224)

Let's replace the people with their roles in an actual ponzi scheme:

"current beneficiaries are getting paid by current investors, and current investors are hoping to get paid by future investors. SS doesn't have any books, all of the funds are fake, they are moving fungible money back and forward"

Re:Ha ha ha (4, Insightful)

Anonymous Coward | more than 2 years ago | (#37462226)

Similarly, the US postal service wouldn't be having a problem if the Republicans hadn't raided the fuck out of them in the 1980s (when they were profitable) while holding up and blocking bills this year that would have required the US to pay back the $50 billion stolen from it.

But this is rather like other Republican attitudes - raid raid raid, golden parachute.

Re:Ha ha ha (1)

Sebastopol (189276) | more than 2 years ago | (#37462312)

and this was marked -1. angry republican digg factor.

Re:Ha ha ha (0)

Anonymous Coward | more than 2 years ago | (#37462524)

no not at all. I'm quite fair. anybody who gets their opinions wholesale from radio/cable talk shows gets modded flamebait, whether they blame the left or the right for all the world's woes.

Because surprise surprise, it's flamebait. that's what the moderation choice is there for.

Re:Ha ha ha (0)

Anonymous Coward | more than 2 years ago | (#37462314)

If Al Gore hadn't invented the Internet, then the post office wouldn't be loosing business due to less people sending letters. It's all the Democrats' fault!

Re:Ha ha ha (2)

bennomatic (691188) | more than 2 years ago | (#37462276)

You should really look up the meaning of the word "definition". SS is only a Ponzi scheme in the politically-motivated opinions of extreme right-wing talking heads. A politically-motivated opinion does not equal "by definition".

Re:Ha ha ha (2)

bennomatic (691188) | more than 2 years ago | (#37462310)

Even their aims are different: a Ponzi scheme is meant to concentrate the wealth of many into the hands of the few people who are running the scheme. Social Security aims to achieve a level of wealth redistribution, nominally to ensure that people no longer in the workforce are able to support themselves. Whether or not you feel it achieves that aim is certainly something that can be discussed, but a Ponzi scheme it is not.

Re:Ha ha ha (1)

khallow (566160) | more than 2 years ago | (#37462622)

Or one can view Social Security as an example that has somewhat different motives from the usual implementation of the Ponzi scheme.

Re:Ha ha ha (0)

Anonymous Coward | more than 2 years ago | (#37462490)

By definition SS is a ponzi scheme, and as I wrote here [slashdot.org] it's also not shown to be Constitutional.

By definition, because there is and never was a fund, an asset to tap into, it's all based on payment transfers.

Re:Ha ha ha (3, Informative)

Sebastopol (189276) | more than 2 years ago | (#37462296)

Bzzzt. Wrong. "hoping to get paid by future workers". It is 100% clear how the system works: less workers in the future means less money in the future; it is funded ad hoc (in theory) by the current labor force. It is in NO WAY a guarantee! That's not a ponzi scheme.

My problem with SS is that it takes in more than it spends and then the surplus has been used by greedy politicians since it first funded the Vietnam War. The program isn't the problem, it is the theivery of the surplus. It should be saved to extend the program, or refunded to taxpayers every year.

But it is no way a Ponzi scheme.

Re:Ha ha ha (1)

rthille (8526) | more than 2 years ago | (#37462488)

How would you have the SS funds stored? As pallets of dollar bills? Or perhaps something safer, that earns a return, like T-Bills?

Re:Ha ha ha (-1, Troll)

roman_mir (125474) | more than 2 years ago | (#37462558)

T-Bill? Short term? You do mean a bond, right?

Anyway, writing yourself a check for a million dollars does not make you a millionaire, because it's an asset AND a liability at the same time.

Nice touch with tinyurl in your sig, friend! ;) (1)

PaulBu (473180) | more than 2 years ago | (#37462594)

I tend to be more "in your face" type of guy, but can see your approach working better! ;)

To stay on topic, "US books are open" -- which books? Certainly not Federal Reserve Bank books, or why would it take Bloomberg a lawsuit to see *some* of dirty little dealing which were going on, like "shadow TARP" (http://www.politico.com/news/stories/0811/62358.html), and why original version of H.R. 1207 was never passed, again? ;)

For the record, if what prosecutors are alleging that poker company was doing is true, I fully support going after them for fraud -- but, I would still not call *them* running Ponzi scheme, unless they were letting new "investors" in and paying them with money siphoned from old "investors", or were operating some kind of "poker-playing coop" and promised "guaranteed" gains -- crazy idea, is not it? :) Otherwise, garden variety embezzlement...

But, knowing gov't attitude towards gambling sites, I would take what they are saying with a grain of salt, until proven otherwise.

Paul B.

Re:Ha ha ha (2)

khallow (566160) | more than 2 years ago | (#37462544)

how can you have fraud when the books are open?

Social Security is an excellent example. All the money that goes into Social Security is used to purchase internal bonds, immediately transferring the money to the general budget. That's the first element of this "open" scam, namely, that there's no investment of Social Security funds. It's merely a tool so that Congress can spend more.

That's especially mendacious given the propaganda, particularly, the supposed "untouchable" nature of Social Security. The money goes into a "lock box", but that money is already spent.

Second, Social Security shows the defining characteristic of a Ponzi scam, latter entrants get less return than the early ones. There has been a consistent decline in the ratio of payout to payment ever since the beginning of Social Security. The late babyboomers (say born in late 50s or early 60s) are the first group that's going to get less out than it put in. Later generations will have it even worse.

Re:Ha ha ha (0)

Beautyon (214567) | more than 2 years ago | (#37462228)

If I had mod points, I'd mod you up. The Federal Reserve system, Social Security and Medicare are all pure ponzi schemes that fit the definition of a ponzi scheme perfectly. Its laughable that the Feds are calling what they do themselves a 'crime' simply because it is not them perpetrating it.

The similarities to the government ponzi schemes are uncanny; both claim that monies should have been untouched, but have been (only allegedly in the case of Full Tilt and actually in the case of the Feds) spent away. Astonishing.

Unless anyone who plays Full-Tilt Poker has complained of fraud, the Federal Government has no business suing that company, since it is not an injured party. This is yet another attack on online poker; despicable, ridiculous and evil.

Re:Ha ha ha (1)

Anonymous Coward | more than 2 years ago | (#37462472)

"A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned"

Where does Social Security claim to make a profit, or claim anything other than what it does? Ponzi schemes lie about what they are doing; the govt is not lying.

Re:Ha ha ha (0)

roman_mir (125474) | more than 2 years ago | (#37462596)

the good thing about a private ponzi scam is that one can EXIT, take the losses and leave.

There is no difference between the way SS or any other ponzi scam is financed, but there is a difference that in case of government, even if you KNOW it's a scam, you can't get out.

(but the kids that are growing up now, they'll get nothing out of SS but will be paying through the nose in this employment market, they should just exist for real - leave USA and move somewhere else.)

No. (2)

suso (153703) | more than 2 years ago | (#37462448)

Social security isn't a ponzi scheme, its just the victim of the United State's own success and radical advancements in medicine and thus life expectancy. The life expectancy in the US in 1935 was 58, in 2000 it was 74. The initial planners probably just didn't expect the majority of people to live long enough to collect. I guess that's gambling, but making it out to be ponzi scheme I think is an incorrect assessment. It looks like the retirement age started out with SS at 65 or 62 at half pay or whatever. But the life expectancy increased past that dramatically after World War II, especially with women. So for the past 60 years now, we've had the average life expectancy [infoplease.com] greater than that of the retirement age, and probably social security didn't plan properly for that. I'm just looking at the numbers though, so it might be more or less than that.

Re:No. (0, Troll)

roman_mir (125474) | more than 2 years ago | (#37462532)

By the way, /. broke URL links.
GOOD JOB, IDIOTS.
------

SS is a ponzi scheme, it's financed not by any fund but it relies on current payers to pay to current beneficiaries, and the future beneficiaries have to rely on future payers.

Do you know what Reagan and Tip O'Neill actually did?

In 1984 the payroll tax was raised from 10.8 to 11.4% and kept creeping up. They increased the amount of income subject to tax from 32400USD to 37800USD in one year (16.6%). So SS was raised in total by over 20% in one year. Also SS was originally (in 40s and 50s) paid by employees, not by self employed. However self employed didn't have to pay employer payroll portion of the tax. In 1983 they started collecting the "employer" payroll portion of the tax, so the SS tax went up from 6.8% to 14% 106% increase in one year. This + the SS tax increase of 16.6% described above, the effective rate of tax increase on self employed individuals was 140% tax hike in one year, and kept getting worse.

Reagan also imposed income taxes on SS benefits for higher earning individuals, which is means testing and reduction in benefits.

Reagan basically cut SS benefits for higher income people by applying income tax to SS benefits, while increasing taxes on higher income people by 140%.

When Romney says he'll keep SS around, what he means he'll have to raise taxes. However Obama came out with payroll tax cut, and he's likely to cut payroll taxes further.

I wonder what Obama thinks he is doing with SS? From my POV of-course SS is theft pure and simple.

SS is a ponzi scam by definition of payment transfers and not having a fund, but it was also based on a lie, to make it LOOK like there was a fund by pretending that high income earners wouldn't have to participate (and they didn't have to participate at first.) As all ponzi scams go, over time it became more and more difficult to cover the benefits, so they increased taxes from 2% to now 12%.
----

Unfortunately /. links are broken, so here is the point again as stated in another comment:

Helvering v. Davis, 301 U.S. 619 (1937), decided on the same day as Steward, upheld the program because "The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way". That is, the Social Security Tax was constitutional as a mere exercise of Congress's general taxation powers. [wikipedia.org] - the gov't argued that SS payments are not earmarked, not actually going to be used for any purpose, but are only collected under general taxation powers of Congress.

Of-course the judge in the Supreme Court was very lazy, he didn't care (*was complicit*) and wrote this:

The argument for the respondent is that the provisions of the two titles dovetail in such a way as to Justify the conclusion that Congress would have been unwilling to pass one without the other. The argument for petitioners is that the tax moneys are not earmarked, and that Congress is at liberty to spend them as it will. The usual separability clause is embodied in the act. ' 1103. [cornell.edu]

We find it unnecessary to make a choice between the arguments, and so leave the question open.

The entire point of the court was to figure out whether SS taxes were Constitutional or not, and the judge said: I don't care, I'll leave the question open!

SS is absolutely clearly NOT SHOWN TO BE CONSTITUTIONAL in this judgment. At the very minimum it's a "maybe", but it's definitely not a "YES", which is what SCOTUS is SUPPOSED to show.

And I wonder what happens to the intl. monies (3, Informative)

suso (153703) | more than 2 years ago | (#37462068)

I wonder if there is any precedent or international agreement that the US government has to abide by in order to get monies back to international players? Probably not. Can you imagine players begging the US for their money and us just saying "well, we'll have it to you as soon as we can." *years and years pass.*

When Mitt Romney asks, "Why punish success?"... (2, Insightful)

bennomatic (691188) | more than 2 years ago | (#37462082)

...I suggest people think about this sort of thing. Not all businesses are scams, but the people raking in millions of dollars a year aren't earning it. Their inheriting it, winning it or stealing it, and they deserve to be taxed at a higher rate.

Re:When Mitt Romney asks, "Why punish success?"... (1)

Anonymous Coward | more than 2 years ago | (#37462118)

And yet somehow, "capital gains" are taxed at a rate lower than we tax our poor.

"War on poverty"... ahh yes, the Republican class warfare strategy. Wage war on the poor, make them even poorer, then tell them "oops you lost."

Re:When Mitt Romney asks, "Why punish success?"... (-1)

LBArrettAnderson (655246) | more than 2 years ago | (#37462172)

Capital gains is NOT the same as income tax. You are comparing apples and oranges. If you want to compare apples to apples, look at capital gains PLUS corporate income tax. It amounts to over 50%, except for companies that are in bed with the white house (GE).

Re:When Mitt Romney asks, "Why punish success?"... (2)

LBArrettAnderson (655246) | more than 2 years ago | (#37462214)

correction. It isn't quite 50% now, but will be if Obama gets his way. Right now it's about 45% for long term investments.

Re:When Mitt Romney asks, "Why punish success?"... (3, Informative)

gstrickler (920733) | more than 2 years ago | (#37462216)

That's not the way it works. You don't pay income tax on (long term) capital gains, you pay the capital gains tax. You pay income tax on ordinary income, including short term capital gains.

Re:When Mitt Romney asks, "Why punish success?"... (2)

LBArrettAnderson (655246) | more than 2 years ago | (#37462248)

I'm not sure where I said any of what you just said I said. You pay capital gains tax on what your long term investments earn (which was already taxed as corporate income tax).

Re:When Mitt Romney asks, "Why punish success?"... (4, Informative)

gstrickler (920733) | more than 2 years ago | (#37462418)

You said "If you want to compare apples to apples, look at capital gains PLUS corporate income tax. It amounts to over 50%, except for companies that are in bed with the white house (GE)."

You are not double taxed on capital gains. Yes, you (may have) paid income tax on the money you earned to make the investment. However, you don't pay tax on that amount a second time, it's capital, not a gain. You only pay capital gains tax on the long-term "gain" you earned from that investment, which is to say, you deduct out your initial investment from the sale price, leaving only the "gain" that you pay "capital gains" tax on. Neither the corporate income tax, nor the capital gains tax is over 50%.

Re:When Mitt Romney asks, "Why punish success?"... (1, Insightful)

LBArrettAnderson (655246) | more than 2 years ago | (#37462434)

*Corporate* income tax plus capital gains. The corporation that you invested in is taxed on its earnings. Those earnings are where your gains come from.

Re:When Mitt Romney asks, "Why punish success?"... (1)

bretticus (898739) | more than 2 years ago | (#37462574)

Oh, does that mean we get to count sales tax, gasoline tax, alcohol tax, etc. as income tax now? Perhaps you might even say that's correct and a travesty -- but it's not a double standard.

Re:When Mitt Romney asks, "Why punish success?"... (2)

gstrickler (920733) | more than 2 years ago | (#37462602)

If you're talking about buying stock in a corporation, the corporate income (or income tax) has nothing to do with it. Your gains (or losses) are on the change in price of the stock, which is about what other investors perceive it to be worth. It has no direct relationship to the corporate income (or loss) and does not come from corporate income. Dividends paid to the stockholders may fall into being double taxed, but most corporations don't may much in dividends.

Confusing two diferent tax issues (0)

Anonymous Coward | more than 2 years ago | (#37462512)

LB is confusing personal tax liability of capital gains with the double taxation of corporate earnings [answers.com] . Or to put another way - He's mixing two different issues: capital gains taxes and the double taxation of corporate earnings.

Re:When Mitt Romney asks, "Why punish success?"... (1, Insightful)

Moryath (553296) | more than 2 years ago | (#37462240)

Uhm... if anything, Capital Gains is UNEARNED income, therefore it should be taxed at a higher rate than earned (e.g. worked for) income if we want to encourage people to work.

Or do you disagree?

Re:When Mitt Romney asks, "Why punish success?"... (1)

LBArrettAnderson (655246) | more than 2 years ago | (#37462324)

It IS taxed at a higher rate. It's taxed twice. Just because one of the two taxes is 15% doesn't mean that the money wasn't already taxed at a much higher rate (usually roughly 35%).

And besides, do you really want to encourage people to put their money under a mattress instead of investing it in companies that give people jobs?

So I shouldn't be paying ANY taxes? (2)

khasim (1285) | more than 2 years ago | (#37462444)

It IS taxed at a higher rate. It's taxed twice.

Yeah, and so the pizza delivery guy shouldn't have to pay taxes because the money I use to buy the pizza has already been taxed before I use it to buy the pizza.

And besides, do you really want to encourage people to put their money under a mattress instead of investing it in companies that give people jobs?

You're conflating capital-gains / earned-income / wealth / job-creation.

They aren't the same. I can invest money in a publicly traded company that opens an office in China and hires Chinese workers. How does that help jobs in the USofA? How does that get people earning money by their labor in the USofA?

Re:So I shouldn't be paying ANY taxes? (2)

LBArrettAnderson (655246) | more than 2 years ago | (#37462504)

Your pizza example is extremely flawed. Corporate earnings are taxed. What's left over *belongs* to the investors. The corporation isn't paying the investors--the investors *are* the corporation. They own it. Look at how taxes in an LLC work (it's a beautifully simple system!). What I think would make much more sense is this money being taxed once. Either as personal income tax for the investors (like in an LLC), or as corporate income tax. Having both allows people like you to misunderstand what's really happening.

No, it's correct. (2)

khasim (1285) | more than 2 years ago | (#37462608)

Your pizza example is extremely flawed. Corporate earnings are taxed.

As is my pay. As is every dollar in my wallet. The taxes have been paid.

What's left over *belongs* to the investors.

And once I have paid the taxes on my income, what is "left over *belongs*" to me.

Therefore, the taxes have been paid and the pizza delivery guy does NOT owe any taxes (by your logic) on the money I pay him.

What I think would make much more sense is this money being taxed once. Either as personal income tax for the investors (like in an LLC), or as corporate income tax. Having both allows people like you to misunderstand what's really happening.

No. I understand it. Again, you are the one incorrectly conflating:
capital gains
earned income
wealth
job creation
but they are NOT the same.

Re:No, it's correct. (2)

LBArrettAnderson (655246) | more than 2 years ago | (#37462692)

You're still misinterpreting things. When you get pizza, that money is exchanging hands (again). Therefore it gets taxed. When I pay capital gains tax, that money is not exchanging hands a second time. It was taxed when it went to the company (which I own a part of, and is at that point mine, since this money affects how much my investment is worth), then, without exchanging hands (it's already mine), it gets taxed again.

Re:When Mitt Romney asks, "Why punish success?"... (1)

superdave80 (1226592) | more than 2 years ago | (#37462340)

I wish we would just tax all income the same, rather than have 'dividend' income, and 'earned' income, and 'capital gains' income..... IT'S ALL INCOME!

Assumptions that might skew things. (1)

arthurh3535 (447288) | more than 2 years ago | (#37462326)

Capital gains is NOT the same as income tax. You are comparing apples and oranges. If you want to compare apples to apples, look at capital gains PLUS corporate income tax. It amounts to over 50%, except for companies that are in bed with the white house (GE).

That you have a normal job paying a taxable wage (you may not, actually.)

That you actually do anything to earn money off of your money (you may not do a whole lot other than make sure it is in a profitable investment.)

This isn't aimed at people that have a full time jobs and 'invest full time'. This is aiming at people that their whole 'income' is basically just living off their fat amounts of money, making more money than they can spend easily.

Re:Assumptions that might skew things. (0)

Anonymous Coward | more than 2 years ago | (#37462422)

How do you think that money earns more money? Is it at all possible that it's doing something useful? They earned that money earlier, usually by working hard (though sometimes through inheritance or less ethical means, but this is no place to make that distinction). They are investing it in society-helping companies that are profitable, meaning people purchase their products, meaning they make useful products, and give people jobs.

Re:When Mitt Romney asks, "Why punish success?"... (-1, Flamebait)

ScentCone (795499) | more than 2 years ago | (#37462262)

You'd have a point, if what you were saying wasn't a disengenuous bit of nonsense - a deliberate, knowing lie, actually.

Capital gains have already been taxed as earnings before they are again taxed as gains. And, of course, poor people don't pay taxes at a higher rate because they do not pay any income taxes. Are you saying that the corporate tax rate, combined with the captical gains tax rate, are less than zero? Poor people get refunds on taxes they didn't pay. They pay less than zero income taxes. Of course, you know all of this, and you're just a trolling shill for the power hungry leftists who seek power by promising to continue to keep that half of the country that pays no income taxes not only still not paying, but getting a piece, in cold hard cash, of the taxes collected from the other half.

Re:When Mitt Romney asks, "Why punish success?"... (0)

Anonymous Coward | more than 2 years ago | (#37462638)

Actually, in the US, there is no left party and that is part of the problem. We have Democrats (Center to moderate right) and Republican (Far right to jihad extremist far right). Just figured I would let you know.

Also, part of the reason why they don't pay taxes is cause the people you are defending are refusing to pay them enough to afford it. As of 2007, the top 20% of the nation held roughly 93% of the nations wealth with the top 1% holding roughly 46% of the nations wealth leaving the bottom 80% of the nation to fight over the remaining 7% and even then, that distribution was skewed heavily toward the top.

I honestly wish they could figure out how to tax people correctly where if you made 10% of the nations income, you pay 10% of the nations taxes, if you made 80% of the nations income, you pay for 80% of the nations taxes so that at the end of the day was don't have the bottom 80% of the income latter dragging the top percents dead weight across the finish line come tax time. And make sure socialize healthcare (Or some equivalent) was thrown in it too since it isn't something we can not afford to have as a for-profit venture (No civilized society can if they want it to work with any quality to it).

So yes, if I am working 40 hours a week and only bringing home 16.6k a year gross, sorry if I can't afford to pay taxes too after all my expenses. And before you try and say I was wasting it, I don't drink, smoke, do any drugs or party so..... Kinda hard to make $1280 a month (Before they take cash out) last when your required expenses come to over that. Kinda off topic but kinda not.

Re:When Mitt Romney asks, "Why punish success?"... (4, Informative)

Wandering Idiot (563842) | more than 2 years ago | (#37462708)

Why do people shouting the "poor people don't pay (income) taxes" meme always leave out the other taxes they do pay? It's pretty much universal, and seems rather disingenuous.

It's almost as bad as the confusion of "pay x% rate of income tax" versus "pay x% rate of income tax only for income over y amount", which can be a rather significant difference, although at least that's often an honest misunderstanding.

Re:When Mitt Romney asks, "Why punish success?"... (1)

stms (1132653) | more than 2 years ago | (#37462294)

Ok then the people inheriting it, winning it or stealing it will go to some other country problem solved.

Re:When Mitt Romney asks, "Why punish success?"... (0)

Anonymous Coward | more than 2 years ago | (#37462376)

>>Citation needed.

Can't argue with them (0)

Anonymous Coward | more than 2 years ago | (#37462086)

Of course, it's no worse than bit-coin.

Pot, meet kettle (-1, Flamebait)

Flounder (42112) | more than 2 years ago | (#37462108)

Nice to see they've taken care of all of those other problems, so now they can go after online poker sites.

Re:Pot, meet kettle (1)

Anonymous Coward | more than 2 years ago | (#37462178)

Is your assertion is that only the "biggest" problem at any given moment should be addressed, with everything else being ignored?

Re:Pot, meet kettle (1, Insightful)

black mariah (654971) | more than 2 years ago | (#37462186)

Organized crime, shithead. To the tune of, apparently, $330 million goddamn dollars. THAT is serious fucking crime. THAT needs to be fucking punished. When you grow up and move out of your parents house you'll finally understand why taking money without the owner's permission is a bad thing.

Re:Pot, meet kettle (1)

chispito (1870390) | more than 2 years ago | (#37462198)

Are you suggesting that $330 million gone missing is a small problem?

Re:Pot, meet kettle (0)

Anonymous Coward | more than 2 years ago | (#37462208)

Compared to trillions, absolutely.

Re:Pot, meet kettle (1)

roc97007 (608802) | more than 2 years ago | (#37462232)

Are you suggesting that $330 million gone missing is a small problem?

I suppose it depends on who's money it is.

Re:Pot, meet kettle (0)

Anonymous Coward | more than 2 years ago | (#37462242)

Well I indeed do, first of all it is not missing, they know exactly where it is, secondly as long as the owners guarantee they will eventually pay out they are doing better as, well I dunno, every freaking bank in the US, not that this is in any regards important since the economy is in such a fine state because of, I dunno, those same freaking banks?

I bet this is how it goes (0)

Anonymous Coward | more than 2 years ago | (#37462120)

Feds declare online poker illegal. And seize all funds used by payment processors to pay American citizens. And then declare it to be a ponzi because it is now underwater by the amount they stole (seized).

Dont Steal - (0)

Anonymous Coward | more than 2 years ago | (#37462154)

The government hates competition.

That sounds like my bank (0)

Anonymous Coward | more than 2 years ago | (#37462162)

Why aren't they going after the banks for the exact same thing.

And how is this different than a bank? (1)

ameline (771895) | more than 2 years ago | (#37462188)

Banks don't have cash on hand to pay every account holder should they all choose to cash out their accounts.

Re:And how is this different than a bank? (0)

Anonymous Coward | more than 2 years ago | (#37462212)

And the stock market.

Re:And how is this different than a bank? (2)

Reason58 (775044) | more than 2 years ago | (#37462220)

The FDIC ensures that your money is safe, even in the event of a bank run. There is no such assurance for Full-Tilt Poker.

Re:And how is this different than a bank? (0)

Anonymous Coward | more than 2 years ago | (#37462318)

so all we need is a savings-and-loan scandal for the poker sites (hey, is this it?) and we'll get our FDIC protection. That's where they got it, after all.

Re:And how is this different than a bank? (1)

roc97007 (608802) | more than 2 years ago | (#37462270)

I think the difference is, tellers don't take home their cash drawers.

Re:And how is this different than a bank? (1)

a_n_d_e_r_s (136412) | more than 2 years ago | (#37462358)

Bank has given loans that when payed back they can pay all their customers.
Bank don't tell customers that they have all money they owe in an account that can be payed out directly if all customers wants that.

Full Tilt poker did that but had alot less money then they owed. Full tilt poker was basically bankrupt while telling their customers that all their money was safe.

Banks have assets and receivables to cover (2)

erice (13380) | more than 2 years ago | (#37462364)

Banks don't have cash on hand to pay every account holder should they all choose to cash out their accounts.

They don't have enough cash to pay every account holder if they came in to collect on same day. They do, however, have enough assets and accounts receivable (outstanding loans) to cover. It may take some time but, they could, in principle pay off all their account holders.

Full Tilt, on the other hand, doesn't have the money in any form. What they owe to their subscribers can not be paid. The money isn't on loan to another entity who is obligated to pay it back. It is "spent". That's a big difference.

Banks have assets to repay depositors (0)

Anonymous Coward | more than 2 years ago | (#37462368)

But the bank (if it's solvent) has assets, ie Loans, that exceed the value of its obligations to depositors. Your complaint is that the bank cannot convert that long-term stream of payments into cash should all of its depositors simultaneously withdraw everything from their accounts. Full-Tilt-Poker, on the other hand, does not (apparently) have any assets to cover the obligations to its players.

Re:And how is this different than a bank? (0)

Anonymous Coward | more than 2 years ago | (#37462390)

1. Bankers do not withdraw the money from your account to pay themselves a bonus. They loan it out. That loan is an asset that backs your account. By contrast, Full Tilt Poker's executives (allegedly) stole the money. The company did not have any such asset backing the accounts.

2. Full Tilt Poker made the express claim that they did not remove any money from users' accounts. Banks make no such claim.

Re:And how is this different than a bank? (1)

jjohnson (62583) | more than 2 years ago | (#37462420)

The bank loans out your money with the plausible expectation of being repaid, and a repayable debt is an asset. They may not have cash on hand to cover every depositor, but they have assets to do so. In the event of a bank run, they could borrow against those assets to get the cash they need.

Full-Tilt poker was actually removing money from the pool of player's money, and paying it to themselves, reducing the actual assets held by the company, not just cash-on-hand. If every player cashed out, there'd simply be nothing to give the latecomers.

Regulations (1)

genjix (959457) | more than 2 years ago | (#37462210)

And here we have an example of why dumb regulations make everyone suffer. The poker market basically consists of 4 major companies- PokerStars, Full Tilt Poker, Ultimate Bet/Absolute Poker, and Cake Poker. Together they control 90% of the market, charge huge fees (rake - a high stakes pro friend of mine earned $100k last year and paid $50k in rake to the sites), are marred by scandals and have crappy software that is years old with terrible security flaws (like using xor encryption for traffic).

There's a market for an online poker site, but because of shoddy laws regulating a game of skill between consenting parties, it is near impossible to setup a poker site. We were going to do this before by making a bitcoin poker site but the lawyer wanted a $20 million retainer. The scandals are due to the huge initial cost to opening a poker site that enables these 4 sites to retain a cartel with artificially high prices in the poker world.

Don't blame the bazaar. Blame the regulations on your social life and freedom to choose how to spend your cash.

And this is why we need bitcoin. All hail the bitcoin and the wonderous things people will create. Imagine all those people playing counterstrike or World of Warcraft all day long for nothing. Now imagine is they could compete with each other for cash. A new digital economy with professional video game players. Or imagine funding your favourite free software projects, artists or Wikileaks.

Re:Regulations (1)

Osgeld (1900440) | more than 2 years ago | (#37462300)

I find it much better to have a few accountable parties vs tens of thousands of unaccountable theives (like it was before regulation but I guess you are too young to remember that)

Re:Regulations (0)

Anonymous Coward | more than 2 years ago | (#37462366)

Yes. A perfect world involves playing video games all day long.

Re:Regulations (0)

Anonymous Coward | more than 2 years ago | (#37462380)

All hail the bitcoin and the wonderous things people will create.

Speaking of ponzi schemes [hightechforum.org] ...

Re:Regulations (0)

Anonymous Coward | more than 2 years ago | (#37462592)

Only have enough time to comment on that last bit:

Why do we need bitcoins to compete online for cash (Ever heard of e-sports?), or funding our favorite free software projects, artists, or wikileaks? As far as I can tell all that stuff happens online every day already, and has been for years.

I wouldn't be surprised if this was true (0)

Anonymous Coward | more than 2 years ago | (#37462222)

Online poker is illegal in a lot of countries so these sites operate outside the law. They have done questionable things before although not on this scale. But this shouldn't be a surprise to anyone, my friends who play on Fulltilt and similar sites withdraw their winnings regularly and only keep in enough money to play with exacly for this reason.

It wasn't a Ponzi scheme (1)

CowboyHank (2402342) | more than 2 years ago | (#37462258)

Anyone who played poker towards the End (April 15th) had to know the danger, withdrawals were sometimes taking months, checks were bouncing...the writing was on the wall. The fact that FTP didn't have the funds to pay everyone off when the government seized their domain name (as well as numerous payment processor seizures leading up to the shutdown costing them millions) does not make them a Ponzi scheme; it means they were operating on belief that money would continue to come in, just like many "legitmate" businesses. When a company goes bankrupt they line up and hope to get paid from what's left, unfortunately for those of us who lost money, Uncle Sam seized it. If they truly feel this is a Ponzi scheme then why don't they take all the seized money, including the payment processor money, and pay us "victims" back with it?

Re:It wasn't a Ponzi scheme (0)

Anonymous Coward | more than 2 years ago | (#37462306)

This is not BAU, this is trading whilst insolvent.

Re:It wasn't a Ponzi scheme (0)

Anonymous Coward | more than 2 years ago | (#37462682)

By your logic, any business not able to make meet their accounts payable requirements is a burden for the customer and not the business. That's silly. FTP became criminal when they failed to disclose that their liabilities outweigh their assets. If that is true then FTP will have their assets frozen and what's left will be paid back.

So (0)

Anonymous Coward | more than 2 years ago | (#37462266)

Does this mean that they won't hassle foreign gambling site operators, and imprision them?

Casino Reserve (4, Interesting)

rogueippacket (1977626) | more than 2 years ago | (#37462278)

Real casinos are not required to keep cash on hand for the full value of the chips they give players, and the reason is quite simple - the games are designed such that the casino will always make money! This is even more true in a virtual casino! Every once in a while, someone wins a lot of money, but it's usually at the expense of other players or nothing that can't be recovered in a day or two. However, now that the cat is out of the bag, a lot of players may end up trying to cash out at once.

Re:Casino Reserve (0)

Anonymous Coward | more than 2 years ago | (#37462406)

FAIL. Real casinos have to cover every bet on the floor.

Re:Casino Reserve (5, Informative)

rogueippacket (1977626) | more than 2 years ago | (#37462610)

Check again, in Nevada it only need be available "next business day". Casinos can also issue payouts in credit or checks in case insufficient cash exists on premises. Look up the regulations around the Corporate Treasury Waiver and Bank Balance Waiver. So, yes, the casino must cover every bet on the floor - but not necessarily in cash, which was my original point.

If you go by those standards so are banks. (0)

Uloi (1996356) | more than 2 years ago | (#37462302)

Banks do the exact same crap which is why we are in this mess.

Not a Ponzi scheme (0)

Anonymous Coward | more than 2 years ago | (#37462344)

Ponzi Scheme has become a blanket term when it's a very specific type of fraud. What they were doing is embezzlement and the practice predates Ponzi Schemes. A Ponzi Scheme is where I take investments from say a 100 people a year and I use money from the second hundred to pay the first hundred. They tend to pyramid and collapse when people decide they want to take their money out. The longer lived ones survive by paying insane interest rates so people are afraid to pull out their money and actually encourage friends to "get in on the deal". Siphoning out the money is clearly embezzlement and not a Ponzi Scheme.

Ha Ha Poker fanboys (1)

frovingslosh (582462) | more than 2 years ago | (#37462416)

I posted in past discussions of on-line power about the absurd number of ways that players could and would be cheated, but was always modded down and responded to with stuff like They have no need to cheat or steal, they get a cut of each game and would never risk that". So no pity for those taken who stupidly believed it just couldn't happen. And I'll be going to a casino in either Atlantic City or Pittsburgh in the next few week, so if any of you have money that you can no longer gamble in on-line poker please let me know, I'll play roulette for you; send me the money and let me know how you want it bet and I'll tell you later if you won or not.

fractional reserve? (1)

LibRT (1966204) | more than 2 years ago | (#37462442)

Sounds just like the fractional reserve banking system...

Re:fractional reserve? (2, Insightful)

Anonymous Coward | more than 2 years ago | (#37462620)

Haven't you ever watched It's A Wonderful Life? In fractional reserve banking, the money has been lent by the bank. Those loans are assets. They are nonliquid assets, which means the bank can't just pull all the money out of their vault if everyone comes and wants to cash out, but they are assets, and they will eventually be repaid.

In a Ponzi scheme, there isn't enough money in the system - it has been taken out. It is gone. The only way to keep the system running and seemingly healthy is to keep adding new money to it, because the numbers just don't add up. In other words - whoever is running the scheme has treated it like their personal piggy bank.

The problem isn't that they have $60m cash and outstanding debts worth $390m. The problem is that they have no assets other than the $60m with which to repay their outstanding debts.

So in other words is exactly like social security (2, Interesting)

llZENll (545605) | more than 2 years ago | (#37462648)

except for the fact that you don't go to jail if you choose not to play online poker.

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