Federal prosecutors are accusing Full Tilt Poker and its executives of defrauding players of hundreds of millions of dollars in what they describe as a global ponzi scheme, The Wall Street Journal reported on Tuesday.

Preet Bharara, U.S. Attorney for the Southern District of New York, announced a motion to amend an earlier federal complaint, filed against the online poker operation in April, to now include misuse of players' funds to the charges.

The civil money laundering complaint accuses Full Tilt executives -- which include famous poker players Howard Lederer and Christopher Jesus Ferguson -- of pocketing $440 million dollars in player deposits that were supposed to be in secure accounts.

Full Tilt was not a legitimate poker company, but a global Ponzi scheme, Bharara said in a statement. In the statement, Mr. Bharara claims Full Tilt Poker cheated and abused its own players to the tune of hundreds of millions of dollars and that insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company.

The initial complaint, filed in April 2011, alleged that Full Tilt CEO Ray Bitar and board members Lederer, Ferguson and Rafael Furst defrauded players of $300 million by failing to maintain sufficient funds to pay out the players' deposits and winnings.

Prosecuters now accuse the executives of transferring player funds to their own accounts in Switerzland and other offshore locations, according to a Forbes report.

The Forbes article explains that Fill Tilt Poker's cash flow problems began in 2010 because of a federal government crackdown on online poker sites that disrupted the payment processing account, preventing Full Tilt from withdrawing money from U.S. players' accounts. U.S. government lawyers claims that Fult Tilt continued to credit players accounts with what amounted to $130 million of 'phantom funds,' a practice that backfired (much like Bernie Madoff's ponzi scheme did) when players won the fake money and could not cash out.

The FBI has seized the FullTiltPoker.com domain, but some pages are still live, including an FAQ for Full Tilt Poker customers who are owed money.

The most recent update was on Aug. 31, when Full Tilt Poker blamed government enforcement activities and significant theft for its cash-flow problems. The statement insists that Full Tilt Poker has been actively exploring opportunities with outside investors in order to stabilize the company and pay back our players. It says that company is fully committed to paying them back in full and restoring confidence in our operations.

Professional poker player Phil Ivey, a longtime exclusive player with Full Tilt Poker, sued the gambling outfit this spring and refused to participate in the World Series of Poker until Full Tilt had paid all of its customers.

As IBTimes previously reported, Ivey alleged in the lawsuit that Full Tilt Poker failed to maintain a reserve account sufficient to satisfy the return of funds to U.S. players.

According to the Forbes report, Lederer allegedly told others at Full Tilt that the company only had $6 million in funds.

It is unclear how the creditors will be paid back if Full Tilt does not have the money.

New York Lawsuit Fbi New York