Full Tilt Poker - End Game?

During September and October the Full Tilt Poker saga continued to unfold with breathtaking drama. Here we bring you up-to-date with all the twists and turns from the main players including the U.S. Department of Justice, Howard Lederer, Chris Ferguson, Rafe Furst, Ray Bitar, the Alderney Gambling Control Commission and possible white knight suitor Bernard Tapie.

Full Tilt Poker Attorneys Strike Back

In late September attorneys representing Full Tilt Poker reacted to U.S. Attorney Preet Bharara’s statement that Full Tilt was not a legitimate poker company, but a “global Ponzi scheme”. This statement was made after the U.S. Department of Justice claimed the site’s board members Chris Ferguson, Howard Lederer, and Rafe Furst worked with CEO Ray Bitar to defraud poker players out of more than $440 million over four years
Full Tilt’s attorney, Ian Imrich said in response, “While the government has obviously taken issue with the underlying activities of FTP, under any reasonable interpretation, the world-wide operations of the online cardroom are not a so-called Ponzi scheme.”
Jeff Ifrah who represents the company in related litigation and is Bitar’s personal attorney, said, “A Ponzi scheme requires an investment vehicle in order to receive a certain rate of high return. None of those things happened here.” However, he added, “Maybe it was mismanaged.”

The Justice Department has not yet commented on the attorneys’ statements.
This was the latest blow in an ongoing battle, which also saw Lederer and Ferguson suspended from the Epic Poker League pending the outcome of the DOJ’s action.

Howard Lederer and Chris Ferguson Suspended by Epic Poker League

The Epic Poker League issued a statement concerning the membership status of Howard Lederer and Chris Ferguson, two players named in the amended indictment filed by the Department of Justice against the board of directors of Full Tilt Poker.

EPL Chairman of the Standards and Conduct Committee, Stephen Martin said, “The Committee voted to suspend Howard Lederer and Chris Ferguson indefinitely, pending the outcome of the Department of Justice’s action.”

The committee is made up of Martin, Tournament Director Matt Savage, league members Eric Baldwin, Andy Bloch, Chad Brown, Joe Hachem, Mike McDonald, Nick Schulman, Alec Torelli, and Commissioner Annie Duke. Duke, who is Lederer’s sister, is a non-voting member of the committee. The committee did not comment on another player named in the indictment, Rafe Furst, presumably because he did not qualify for a tour card this season.

Lederer and Ferguson are the third and fourth players to face disciplinary action by the EPL. The first being inaugural EPL main event champion David “Chino” Rheem for failing to pay ongoing debts and the second being Pro/Am qualifier Michael DiVita, who was asked to forfeit his tournament entry after it was revealed that he was a convicted sex offender.

Card Player spoke to Stephen Martin to get his explanation behind the committee’s prior actions.

“The Epic Poker League, as well as every professional sports league, has a player’s code of conduct that includes both in-play rules as well as provisions to professional conduct outside of the game,” said Martin. “If a person violates either league rules or the law, they are subject to discipline. That discipline could range from a reprimand, to suspension or even a permanent dismissal from the league. All of those circumstances are determined on a case by case basis.”

Martin went further, explaining how the EPL’s reach extends beyond violations committed on the felt. “There is a difference between an in-game violation, such as cheating, that directly affects the integrity of the game and a conduct violation, that has the potential to affect poker’s reputation, hurt its growth or damage the community as a whole. I like to compare it to the National Football League (NFL), which has a history of policing its players for the good of the game. There are players who were punished for the use of performance enhancing drugs that affected the actual game play and there were players like Michael Vick and Ben Roethlisberger, who were punished for outside conduct that hurt the league’s reputation.”

According to Martin, the reason the Standards and Conduct Committee exists is to propel poker into a nationally recognised sport.

“The goal of the EPL is to put the players first and to build the professionalism of the sport so that the entire poker community benefits,” Martin said. “In order to raise poker to the levels of a legitimately recognized national sport, there must be a disciplinary body that takes action against those who are going to bring harm to the game.”

AGCC Revokes Full Tilt Poker’s License

The next dramatic twist saw Full Tilt Poker’s license to operate revoked by regulator, the Alderney Gambling Control Commission, on September 29.

Full Tilt’s license had been suspended on July 29 pending the outcome of a hearing on September 19. The result of that hearing was made public by the AGCC and was a body blow to the company.

The regulator said, “AGCC Commissioners, sitting as a tribunal, have today revoked the licences of Vantage Limited, Filco Limited and Oxalic Limited, trading as Full Tilt Poker (FTP), with immediate effect. This follows the earlier suspension of the licences on 29th June 2011.

At a hearing held in London over six days, it emerged that FTP had fundamentally misled AGCC about their operational integrity by continuously reporting as liquid funds balances that had been covertly seized or restrained by US authorities, or that were otherwise not actually available to the operator. Serious breaches of AGCC regulations include false reporting, unauthorised provision of credit, and failure to report material events.

At the commencement of these proceedings on 26th July, AGCC made clear its preference to hold the hearing in public, to the benefit of players and media alike. However, the tribunal was persuaded that the hearing should be held in camera on the basis of claims by FTP that this would maximise the chance of a commercial rescue of the business for the benefit of players. For this reason an adjournment of 54 days was allowed.

It is important to note that the revocation of FTP’s licences does not, as has been suggested, prevent a reactivation of the business under new ownership and management.
Unresolved claims by players against FTP become a matter for the police and civil authorities. Now that FTP’s licences have been revoked, AGCC no longer has jurisdiction over these companies.

The licence of Orinic Limited, a recently added geographic sub-division of the FTP poker room, remains suspended.

The determination notice containing the decision of the Commissioners and reasons for it is available at www.gamblingcontrol.org.”

DoJ on Seized Funds

Also on September 29 the United States Attorney’s Office for the Southern District of New York released a statement to the victims of Full Tilt Poker’s alleged fraud of more than $300 million, of which $150 million belongs to U.S. players.

Here’s what they said:

“After the amended complaint in United States v. Pokerstars et al., 11 Civ. 2564 (LBS), was filed on September 22, 2011, the United States Attorney’s Office for the Southern District of New York received a number of new inquiries from individuals regarding the recovery of their funds from Full Tilt Poker.

By way of background, in April of 2011, this Office entered into a domain-name use agreement with Full Tilt Poker. That agreement, among other things, expressly authorized Full Tilt Poker to return player funds to players. However, as the September 22 amended complaint alleges, Full Tilt Poker did not in fact have player funds on hand to return to players. Instead, the amended complaint alleges that Full Tilt Poker had, among other things, (a) transferred significant amounts of players’ real money deposits to principals of the company, while (b) allowing many players to continue to gamble, and “win” and “lose,” with phantom credits in their player accounts.

At this time, this Office, together with the FBI and other agencies, is attempting to trace, secure and forfeit as much as possible of the funds derived from operation of the fraud committed by Full Tilt Poker and its board members that is alleged in the amended complaint. The Office is also attempting to obtain and examine the books and records of Full Tilt Poker. Many of those books and records are kept overseas. The return of forfeited funds to victims of the alleged fraud may be possible, but will depend on several factors, including the successful conclusion of the litigation, the amount of funds seized and ordered forfeited by the court, and compliance with other procedures the Department of Justice may eventually establish regarding return of forfeited funds to victims who lost money as a result of the alleged fraudulent conduct.

We cannot predict the duration of proceedings in this case, other than to state that they will last for many months at the least. We will apprise victims of the alleged fraud of future developments as appropriate. General information regarding what is known as “remission” (i.e., return to victims) of funds that have been seized and forfeited is set forth in Department of Justice regulations found at 28 C.F.R. Part 9.

Will Lederer, Ferguson, & Furst Face Criminal Charges?

A week after Manhattan U.S. Attorney Preet Bharara called Full Tilt Poker a “global Ponzi Scheme,” amending charges of fraud against its players to the civil complaint, Howard Lederer, Chris Ferguson, and Rafe Furst were still not facing any criminal charges. The company’s CEO Ray Bitar faces a maximum sentence of 65 years in prison for alleged crimes listed in April’s unsealed indictment.

The U.S. Attorney’s Office in the Southern District of New York said that they cannot confirm or deny any potential criminal charges against Lederer, Ferguson, or Furst, but said the investigation is ongoing.

Jeff Ifrah, attorney for Bitar, told Card Player that anything is possible, but that he hopes the charges in the amendment won’t become criminal. He said he isn’t sure what the motivation was behind calling the site a “Ponzi Scheme”, but that it could reflect the Department of Justice’s frustration with the company’s slow progress to find a buyer.
While the merits of the term Ponzi to describe Full Tilt are currently hotly contested by attorneys associated with the company, such allegations are typically also associated with criminal charges. However, that doesn’t necessarily mean that Lederer, Ferguson, or Furst will face possible jail time.

“I’ve never heard of a ‘non-criminal Ponzi scheme’ before, but that doesn’t mean that it couldn’t possibly exist,” Dr. Henry Pontell, a white-collar crime expert and professor at University of California, Irvine, told Card Player. “Civil charges may be filed where there’s not enough evidence to prove beyond a reasonable doubt. Ponzi is a descriptive and pejorative term, but it’s really about a specific charge for fraud (criminal or
civil).”Pontell also pointed out that the DOJ could bring lesser charges against the defendants, ones that wouldn’t necessarily be called criminal.

Bitar, the only board member facing both forfeiture of assets and possible jail time, is currently overseas trying to coordinate an investment in the company that would release what is owed to players, according to Ifrah. He also said that his client doesn’t want any further criminal charges to fall upon Full Tilt’s board of directors. If everything remains static, “[Bitar] would be the only person punished criminally in the company.”
According to Ifrah, the anonymous potential investor in Full Tilt will meet with the DOJ. Ifrah said that he is “encouraging [the investor] to come out of the closet,” but he is “not looking to scare anybody away.”

Authorities claim that Full Tilt’s Bitar, Lederer, Ferguson, and Furst defrauded players “by misrepresenting that their funds on deposit in online gambling accounts were safe, secure, and available for withdrawal at any time.” Furthermore, the company used the funds to pay board members and other owners more than $440 million in corporate dividends over the past four years.

Full Tilt Poker Claims Sale to French Investor

Right at the end of September some light at the end of the tunnel finally appeared, The Associated Press reported that insolvent Full Tilt Poker reached a tentative agreement to be sold to Groupe Bernard Tapie. The acquisition would facilitate paying out the more than $300 million owed to players worldwide.

Full Tilt said that the sale would be contingent on resolving its case with the Department of Justice. Jeff Ifrah, attorney for Full Tilt’s CEO Ray Bitar, told Card Player that the investor would meet with the DoJ in early October..

Full Tilt said Groupe Bernard Tapie has a reputation for turning bankrupted businesses around. In the 1980s, former chairman Bernard Tapie allegedly made more than 40 defunct companies profitable. Tapie, the 68-year-old former owner of Adidas, spent time in prison in 1997 after being convicted of bribing soccer players to throw a match and was also convicted for tax fraud in a non-related case.

iGaming France confirmed the report in an interview with Bernard’s son Laurent, current manager of Groupe Bernard Tapie. The younger Tapie said that he is confident in the Full Tilt project and has the funds to repay players, but that there is “still a long way to go”.

The announcement came just one day after the Alderney Gambling Control Commission revoked the company’s operating license, citing that Full Tilt “fundamentally misled” regulators. In an article from eGaming Review Magazine, AGCC director Andre Wilsenach called the site “wicked”. It is unclear whether the alleged sale to Tapie could lead to the AGCC reinstating the company’s license.

However caution was urged when reading into the proposed takeover of Full Tilt — the company’s statement came three months after the L.A. Times reported that attorneys associated with the company who wished to remain anonymous said it had signed an agreement with a group of European investors in order to pay back players.

Whatever the eventual outcome for the future of the company it is beginning to play out and there is no turning back now. ♠