The founder of the defunct gambling site Full Tilt Poker, which allegedly owes $350 million to Internet poker players, was arrested in New York as he came back into the country.
Raymond Bitar, who was an equities trader in Los Angeles before establishing the offshore website, was taken into custody Monday at John F. Kennedy International Airport. In addition to previous charges of bank fraud, money laundering and gambling, an indictment unsealed before his arrest charged him with defrauding customers.
Bitar, who according to prosecutors had been in Ireland for more than a year, had told Full Tilt Poker customers than their money deposited in the site for poker playing was kept separate from company funds.
Instead, the supposedly secured funds were used, "to pay for Full Tilt operations and to pay Bitar and other owners over $430 million," a statement from the U.S. attorney's office in New York said.
Also accused in the indictment was Nelson Burtnick, the former head of payment processing for the site. He remained at large, the U.S. attorney's office said.
Bitar said in a statement that he returned to the U.S. voluntarily.
"I know that a lot of people are very angry at me," Bitar said. "I understand why. Full Tilt should never have gotten into a position where it could not repay player funds."
The site was shut down in April 2011 by U.S. authorities. Prosecutors alleged that it and other shutdown gambling sites had illegally disguised transactions from players' credit cards by saying they were payments for items such as jewelry and golf balls.
According to the new indictment, Bitar had made several statements that money deposited by customers for poker play was secure. In a 2008 email cited in court documents, Bitar allegedly advised a Full Tilt customer service employee that, "The best we can say is we keep a 100% of customers' funds in segregated accounts."
But when the site, which was registered in Alderney, one of the British Channel Islands, closed down, players worldwide did not get their funds returned. According to the U.S. attorney's office, $350 million is owed to players.
"Full Tilt Poker could not return player money because," the indictment said, "the player money had been spent by the company and distributed to its owners."
Bitar was arraigned Monday evening and pleaded not guilty to the charges. U.S. Magistrate Judge Debra Freeman ordered him held pending the establishment of a $2.5-million bond.
Bitar was also ordered to surrender his passport.
Bloomberg News was used in compiling this report.