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The 5 Dumbest Things on Wall Street: Sept. 23

2. Poker Ponzi Scheme

There's an old poker saying, " If you don't know who the sucker at the table is - it's probably you." Well, a whole lot of online poker players, and a few Wall Street banks, woke up this week to find they may have been suckered into a multi-million dollar Ponzi scheme by a bunch of well-known card sharks.

The Department of Justice has accused the owners of Full Tilt Poker, Poker Stars, Absolute Poker, Ultimate Bet and a host of other companies of defrauding online poker players and scheming to trick banks into processing illegal transactions. Among the high profile poker players called out for cheating customers are Christopher Ferguson, also known as "Jesus," and Howard Lederer. Bank of America (BAC - Get Report), JPMorgan Chase (JPM - Get Report), Wells Fargo (WFC - Get Report) and Citigroup (C - Get Report) were among the banks unwittingly holding the deposits of the gambling companies accused of fraud.

Jeez. Forget "too big to fail." These mega-banks are "too big to have a clue." But we should probably expect that from the banks by now.

As for the duped players, well, they should have been more careful considering the fact that online gambling is not exactly lawful in the U.S. That said, this swindle allegedly went on for over four years and reached more than $400 million in scope, so, like the Madoff case, it's hard not to find some fault with the Feds for being so late to break up the game.

Eventually, however, they did show up. U.S. Attorney Preet Bharara said in a statement, "Not only did the firm orchestrate a massive fraud against the U.S. banking system, as previously alleged, Full Tilt also cheated and abused its own players to the tune of hundreds of millions of dollars."

Full Tilt assured its players that their accounts were "segregated and held separately from our operating accounts." That was not the case at all, says the DoJ, which maintains that the company was actually raiding these accounts to kick back money to its owners, board members and spokespeople. Full Tilt CEO Raymond Bitar, for example, allegedly pocketed $41 million from the supposed scam, while Lederer and Ferguson raked in $42 million and $25 million respectively.

How many times can we say it? Whether it's Las Vegas, Wall Street or on the World Wide Web, the house always wins. And inevitably some sad soul will leave the casino poorer but hopefully smarter for the experience.
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