tamiller866,

It is a cool to finally be able to debate you lo these many months of lurking. A good measure of my understanding of this case comes from you.

But f it, this is the internet, and I am sure someone is wrong here.

To wit-

First regarding your critiques DF: Meh. OK, we have known you don't like her for awhile now. Your criticism of her started with the fact that she clearly knew stuff she was not saying. Now the critique is that she is just sort of pouring out verbal diarrhea? I am not a fan of big block quotes, but so what?

Sure some of this stuff is known, but it should be concisely summed up at the end. If not, who cares? For example, more name-pros need to speak out. The point is to move info from those who followed closely to the broader community. She has done that well and she has done it for free. Good on her. Yea its a new model of journalism, but why not try it here. Also isn't a lot of part 4 new stuff? (the settlement talks, PI at the meeting etc.) I thought so (could be wrong.)

This is an excellent summary of the legal defense. Now, do you see any problems? I do. I hope you do too because I know you are not simply acting as a defense attorney.

1.) Players will not be made whole. The US govt is not going to pay interest, and I doubt they pay points or limbo funds. (The rfp the doj has out requires players to pay admin fees.) Isn't "made whole," a legal remedy when what we have is victim compensation? (Yea I know I am not a lawyer, hence the nic.)

2.) Clearly this is the guts of the defense. This defense was being prepared when he left management. (Something like- Hey guys I am leaving management, can you just shoot me something in writing that says we have player funds in cash, it just occurred to me.)

The problem for him is that even if he can dance out of the deposit backlog he has to confront the shortfall behind the backlog.

The internal accounting reported a dire warning in Jan. He is a board member, and as such it does not work to claim ignorance of the seizures. As others have pointed out the balance sheets simply won't balance if you have a huge non-recoverable hit to assets from seizures and no concomitant increase in revenue. The site itself showed the player activity. This defense relies on magic money coming from somewhere.

Board members are legally obligated to not pay fake profits especially when there is no plausible source of said profits and the company operated at an actual loss (2010.) I think the paper trial will out on this score. I suspect with the additional Travel Act related claims this may be where the DOJ is headed.

I think you are right that he will avoid criminal prosecution though. So what? That is very different than someone as knowledgeable as you joining a foolish chorus saying it can't be proven he lied and stole.

Related:

Anyone seen the q4 2010 and q1 2011 tiltware financials? What did Gil's team prepare for Ray?

It's worse, they were slow paying US before black Friday. In Jan of '11 the accounting department told the company they were running out of money. I don't like the p**** word as it starts useless debates... But-

Whatever type of company it was after April 15th it was also that company before April 15th. From q4 '10, probably sooner, they did not have cash on hand to pay ROW. Anything that causes a run on ftp could be deadly to the whole world. It had gone beyond US. Howard even concedes this is why Ray had to keep making disbursements to the owners (2+2 interview.)

If the members knew then a wave of withdrawals then game over

The reason you are frustrated people are not pulsed is because, sadly, it is not news.

did this really happen

is htis real life

Daniel ranting and raving about Howard and Annie so much, and going so easy on his friends, takes credibility away from others who correctly call out scumminess of Howard and Annie, imo

To be fair, Howard and Annie appear to be blatant scumbags whereas his friend Eric obviously has a huge problem. I am not saying Eric is not a scumbag, but it's different when you know the person is just a moron.
Also, Daniel obviously knows all three people personally. It appears from what people say is that Eric is a good likeable guy who's gambling problem has been the issue, whereas HL and AD don't really seem like good people by most accounts.

I don't dislike anonymous folks for things (or lack of things) they post on an internet forum, that's silly, but having set the expectation level so high for a one week series that would reveal the 'truth', taking two weeks to reveal nothing but the obvious would be a letdown regardless of the author.

Whether US players get 100% or even 200% they will be victims, since the money is coming from the government 'victims' remission fund, not FTP or even PokerStars, but U.S. victims won't equate to Howard Lederer liability if the DOJ is unable to poke a hole in his 'I didn't know' before April 21 argument.

The Travel Act charge has nothing to do with whether the profits were 'fake', proceeds from an unlawful interstate business (prostitution, gambling, drugs) are illegitimate under the statute regardless of the financial stability of the company.

Under the Travel Act 'I didn't know' the money was dirty isn't a defense, neither intent nor the actual completion of a crime is required, he is going to owe the government $40M+ unless he takes a plead.

So what? There are still prominent people like Daniel Negreanu earlier today suggesting that Howard should go to prison for allowing deposits after BF, people should know that under Morrison what they allowed after BF is not on the US government's plate.

In countries where they were operating legally, the regulators (AGCC, ARGEL, KGC) would likely be liable if Howard's story is true that they were transparent with the regulators once he finally 'knew' (Tony G said he had evidence that Alderney knew the books were cooked as early as Dec 2010),
but again, since ROW players are getting paid next month, only non-player creditors have legitimate claims and those would be civil, not criminal.

Yes we all know he's lying, we didn't need DF to leave us on the edge of our seats all month to figure that out, but is he lying because he was the evil professor behind an elaborate ponzi scheme, or is he lying because he thinks that's his only shot at keeping his assets?

He was lazy, arrogant, and surprisingly stupid (allowing a deposit backlog, really Howard?) but none of those are legal defenses for the 'ponzi scheme' allegations, so of course he is going to lie and of course the lie is going to be 'I didn't know'.

tamiller-

Regarding the travel act, OK I'll cede. My point was that facilitating ill-gotten corporate gain distribution is an illegal activity. I think I am out of depth on this aspect though. Thank you for increasing my understanding.

Regarding DF, I give up. I am now supposed to care that she said one week and has taken longer? All this attention on her performance is just so misplaced. How is it relevant, and why do you care?

This is the aspect of your formulation that bothers me. You seem to be suggesting he would be telling the truth were it not for those pesky feds and their pesky ponzi scheme allegation.

I would suggest he created a company to avoid legal prosecution, fought the owners who tried to bring in proper management and then set in place a structure that ensured his Patsy would loot player funds on his and his friends behalf. His motivation is not to get caught for mendacious and venal crimes. The lies are not driven by legal considerations per sea. They are driven by the fact that the truth is very, very ugly and he wants to hide it so he can play poker and act like it never happened. I don't think he should be allowed to do this. Do you?

"To recap, by the fall of 2010:

Lederer and others in charge at Full Tilt Poker are keenly aware that the U.S.A.O., SDNY may have the company under investigation.
Quite possibly Daniel Tzvetkoff might be cooperating in any such investigation
The company has taken hits from multiple seizures and thefts in the previous 2 years
The U.S. e-check portion of their business is not healthy due to lack of payment processors. The “backlog” has already begun."

The fact that they knew they were under investigation puts a lot of things in context. There was a real rake grab at this time, with the introduction of rush (although I think this may have been earlier) and in particular multi-entry tournaments (this was definitely late 2010). There seems to have been a determined strategy to get as much money out of the US market while they still could.
But I don't understand that if they knew of the backlog at this time, that they would not realise how stupid this was, especially given the above meaning that there will probably be a greater rate of US deposits, and the backlog would increase drastically (as it did). Either they didn't know there was an e-check issue, or they did and thought they could fix it, or some flawed thinking which made them somehow think they were going to get more money out of this?
Did they perhaps realise there was no way they could turn this backlog around without giving up some of their own already pocketed distributions, and they were using the above to milk the current players as dry as possible and maximise future distributions before the company went under?

i was really looking forward to interview. i think df would have turned the professor into the confessor

I like DF, I don't care about her real name, and I think her research is solid. What I think we have yet to see is a real smoking gun. What we have seen so far is inferences. The interview, had it happened, would have looked like this:

DF: Don't you think a reasonable board member should have....
HL: I didn't know
DF: Shouldn't you have know....
HL: I didn't know
DF: By April 20th, weren't you aware
DL: I didn't know

Wouldn't it be nice to have an email from Howard saying something that directly contradicts his statements in the either interview? Otherwise, all we have are people viewing the FT actions in hindsight, which, as we know from country music, is 20/20.

This and an earlier post of yours in a similar vein seems to be the correct perspective.

Here is the actual statement that was made and put on the website on April 15:

"In light of recent events involving the freezing of certain accounts, Full Tilt Poker would like to assure all players that their funds remain safe and secure. Processing of both deposit and withdrawal requests is proceeding as normal and is still available to all of our players.

All players who were affected by the current situation have had their funds returned to their accounts and all new withdrawal requests are processing normally. We assure all players on Full Tilt Poker that your online playing experience will not change and that you will be able to both deposit and withdraw funds as needed. Your money remains safe, secure and accessible at all times.

Full Tilt Poker remains committed to the protection of our players’ security and legal rights, and will continue to provide the best and safest online poker room available worldwide."

This wording was not approved by lawyers, that didn't happen untill the 20th.



You can debate wether he tells the truth if he says:

"I don’t believe that “safe and secure”... that those words would have been used after April 20. And if it did happen, it happened without me knowing about it."

but you can't prove he is not.

The statement was on the website for 3 months, during a time he was sweating the domain (this message went up when they regained control of the domain). He also says that all language was approved by the board and by lawyers. And at least 3 times there was official sanctioned PR post BF that clearly stated taht funds were safe and there was no cause for concern.

No debate here.

Yes and HL claims he didn't know about that.

Not exactly, it went up April 15. The superseding indictment confirms that on page 15 under point 25.
After they regained control of the worldwide domain you got to see that message as well.

I would be interested to see these statements.
Here is the one from April 20 that has no mention of the funds being safe and secure:


"Full Tilt Poker Regains The Use Of Its Worldwide Domain Name

Dublin Ireland (April 20, 2011) – Full Tilt Poker™ is pleased to announce that it has reached an agreement with the United States Attorney’s Office for the Southern District of New York to regain the use of its worldwide domain name, www.fulltiltpoker.com.

Although players in the United States will not be permitted to engage in real-money play, the agreement expressly allows for real-money play outside of the United States.

In addition, the agreement represents an important first step towards returning funds to U.S. players because it allows Full Tilt Poker to utilize its domain to facilitate the withdrawal of player funds. But, unfortunately, there remain significant practical and legal impediments to returning funds to players in the immediate future. As a result of the recent enforcement action, there exists no authorized U.S. payment channel through which to make refunds; Full Tilt Poker has no accounting of the millions of dollars of player funds that were seized by the government; and the government has not agreed to permit any of the seized player funds to be returned to the players. Finally, there are numerous legal and jurisdictional issues that must be considered before poker winnings can be paid out to players throughout the United States. While Full Tilt Poker continues to believe that online poker is not illegal under federal law or in 49 states, the indictment and civil forfeiture action filed last Friday require Full Tilt Poker to proceed with caution in this area.

Notwithstanding these issues, Full Tilt Poker is ready to work diligently with the United States Attorney’s Office in the Southern District of New York to try and resolve these issues and to get players their money back as soon as possible."

I'd rather not have this debate as it puts me in the position of feeling like a devil's advocate, I don't have an ounce of sympathy for Howard Lederer, but the legal reality is that FTP was not a ponzi scheme and if the proceeds he received were from a violation of the Travel Act, then all the proceeds including player winnings were proceeds of that same offense.

But we should all be thankful that the DOJ decided that FTP did commit Wire Fraud (ponzi scheme) and that they are so hypocritical as to view the gamblers as victims and those that merely provided a (virtual) house to gamble in a jurisdiction where it is legal as criminals

What they are doing is analogous to seizing all the money when raiding a crack house then selling the seized home to use the funds to make those who were buying and selling the drugs whole - but "bravo!" DOJ since winning players are the crack pushers in that analogy.

Would Howard tell us the whole truth if it wasn't for the 'pesky ponzi
scheme allegations'?

He would likely tell his own rationalized version of the truth, he will go to his grave believing that the DOJ's unlawful seizures (based on a statute (IGBA) with no extraterritorial application) of player money and shutting down of processors who had 'reasonable legal opinions' that poker was a 'game of skill' is what caused all the suffering felt by not only the players but the other owners.

That is the truth in his mind, does anyone expect him to come out and say that? Maybe someday, but certainly not now when not only assets but his ass is still on the line.

Will he ever tell what I believe is the real truth, that it was his own greed, arrogance and impatience to live the Billionaire lifestyle he felt he deserved, and only eluded him because 'pesky Republicans had passed the UIGEA' making it impossible for FTP to go public?

Of course not, his ego would never allow that, the one glimpse into his soul in the PN interview was when he talked about Ferguson with his palm on his chest, how Chris wanted to be patient and keep the company strong (not dip into player funds) to have the money like PokerStars to be able to weather what was an inevitable storm.

That showed me that in his heart he knows he is at fault, but he still believes the DOJ was more to blame and the players who exploited their processing problems were even worse, and so long as one's ego can find someone more culpable, we can justify the wrongdoings of ourselves or our friends.

Fair enough, I'll stop trying to press this. You do have a very powerful legal point that it may not have been illegal to run the site after April 21st because the victims were not American (short-hand.) People need to understand this, read it, and stop simply saying "How could he..." He did and this aspect alone may not be a crime.

As long as we are doing soul reads I found the most revealing part to be in the 2+2 interview when he explained why he had to keep paying Ray. He goes off script, sounding very emotional. He even says he knew there would be a reckoning for this, that this question would come. Consider-

-Howard says that it was in his interest to make the players whole. The right thing was also the best thing for him. (Matches your defense 1.)

-He says he had to pay Ray or he would have left and he could then not keep the company whole.

STOP. No, just NO. Ray also faces jail. He desperately needs the players made whole to have any hope of a leniency with the DOJ. More than even Howard, Chris and Rafe his freedom depends on it. He never walks. That was not the real threat.

It is clear in this moment the heart of the Patsy deal. Ray would talk if Howard let him walk! For 200k a month he kept quite. Pretty clear quid-pro-quo. Why else would he pay him to stay? I suspect this deal extended all the way to the day Ray turned all himself in, and likely even too today. [In the HV thread the Patsy issue is discussed in detail toward the end.]

My questions for you:

Is it a crime for a member of the board to authorize a very high salary for someone who has lied to the board? Is it a crime if you know he lied to the board and that is your own prospective legal defense? At what point do violations of fiduciary responsibility become criminal?

Howard says Phil Gordon was sending demands to have the company declared insolvent right around this time. Was Howard relying on Gil and Ray to respond to these demands? I suspect PG has an interesting paper-trail in hand. What was PG shown to push back on the insolvency claim? (Howard could not claim ignorance here.)

Phil, unless you are prepping further legal action, time to speak.

---

Howard should be asked this one question whenever there is an opportunity, it is easy. (Good soundbite for poker media journo's, friends etc.)

Will you testify against Ray Bitar?

If no, why? He told you he would leave the company unless you paid him at the most dangerous moment for the company after black Friday.

Thanks! After having lurked these threads for a year and a half I have had time to think about it and I am pretty sure I am right! Just perspective though, I don't have inside info.

But he also claims that all language was vetted after Black Friday, "all being signed off." He can't have it both ways.

The other statements are all mentioned in the orig. pokerfuse article* linked to in DF's article #5. It includes officially statements posted on 2+2 with phrases like "we won’t have any problems paying out Euro (or any other) players".

You can't get a clearer than that. April 28, an official statement that's been vetted and cleared by lawyers, that they knew to be factually inaccurate.

*mod note: i wrote this article but as it was directly requested i think it's okay to link to it. If not please remove link.

Different messages.

What you quote in the indictment is on April 15, a 'message to US customers' was drafted. The words are different to the message on the website that went up April 20.

message to US customers: "please be assured that your funds are safe, and we thank you..."

message on website put up April 20: "please know that your funds are safe and secure we are working to resolve..."

April 15: DOJ took control of fulltiltpoker.com, the single 'seizure' image went up, no mention of 'safe and secure', it's the standard DOJ message for domain name seizures. source with screenshot, date April 16: http://sportofpoker.com/news/2011/4/...ilt-poker.html

April 20: Full Tilt (and PS and UB/AP) regained control of their domain (source: pokernews.com).

archive.org on that day isn't working right now, but it was the same as what you see here on may 2, this is when the 'safe and secure' message goes up on their homepage, underneath the seizure notice.

I'm still surprised that Lederer hasn't been indicted. Opening his mouth for 7 hours can't help avoid it, either. To be that brazen wouldn't he have to have ratted to the feds and been cleared?

I think by now you realise all these statements were written on April 15.
ROW got them before the US did.

It doesn't even matter, because we were discussing wether HL lied about using the words "safe and secure" after April 20. None of the three examples you gave had these words in it.

So it seems he was actually telling the truth on this part and probably had no idea about the statement on the site. Why would he "lie" about that if he knew everybody saw it?

The messages are completely different. I've got no idea how you can conclude that something put up on April 20 was written on April 15.

The words 'safe and secure' were used on the website for a period of 3 months after black friday. It's black and white.

Look, I get your point. Yes, in theory the notice could go up on April 20 just a few hours before HL finds out the "truth" so therefore technically he wasn't aware at the time the statement was made.

In theory, it could be argued that for the following 3 months+, during the time the website was updated a bunch and all language was vetted, that he was never aware of the term "safe and secure" was front and center of the homepage of the website of full tilt.

But these are silly technicalities that i'm not really interested in debating and the use of exact phrasing is not relevant, at least not to me.

Players were fundamentally misled about the safety of their deposits through multiple sanction FTP statements to players after Black Friday. This was the point i was trying to make. I do not think this is really contentious given the evidence.

Because he is trying to paint the picture during the interview that after he found out the news, everything he did was in the players best interests, and players were not misled.

While I've said that the DF articles haven't been nearly as revealing as the buildup might have indicated, the teaser for the next article is that it will focus on inability to find a buyer/investor.

To me, this is the heart of Howard's failure, sure they 'should have' honored their words and not dipped into player funds, and running a deposit backlog in a 'grey area' gambling business (unlawful debt, hello?!?) borders on insanity, but the owners alone would have suffered for those sins had they been willing to hand the company over to someone willing to make the players whole early on.

That's why Ray HAD to go, the conflict of interest for a guy facing criminal charges continuing to not only run the company but to be involved with negotiations with buyers is painfully obvious - plus Ray Bitar's personal lawyer was the one advising them that keeping Ray was vital .

Even Howard said himself, Ray would lose his job if they found a buyer, so what would possibly motivate Ray to speed up that process, lose the big paycheck and the work visa that allowed him to stay outside of US jurisdiction?

I'm looking forward to this next DF blog, because if the rumors are true that they did turn down offers which allowed non-BOD shareholders to keep some equity under new ownership, only to end up making a deal that got nothing for anyone except Ray Bitar and Nelson Burtnick (18 months salary and delayed prosecution), then clearly the BOD breached it's good faith fiduciary duty.

FTP wasn't a publicly traded company, so no, that wouldn't be a crime, and since the breach of loyalty occurred after the owners were aware of a clear breach of care ($250M 'shortfall') - yet the members didn't complete the removal of the BOD - that would likely negate their argument for civil damages from the latter breach - basically they were negligent in their own due diligence.

Not that the BOD is going to have any assets worth suing for when the DOJ is finished with them anyway.

Asking Howard if he would testify against Ray probably isn't as probing a question as you might think, he could honestly answer yes (since the law would require him to testify if subpoenaed), but that wouldn't necessarily imply he would offer anything beyond 'I don't know' on the stand.

Hood's already covered this, but the image I quoted was displayed for months on the ****ing homepage of FTP after BF. Lederer is effectively saying he wasn't aware of this, which is about as believable as a shopkeeper closing up his store then claiming not to know about the huge poster that's displayed in the front window for the next three months.

In a broader sense, I've been waiting for DF to comprehensively take apart the whole Lederer defense that he simply wasn't aware of the financial problems until it was too late. Anyone who was playing regularly and following the forums in early 2011 will remember FTP's blatant money grabbing in the form of multi-entry tournaments, reload bonuses etc (this thread, which I stumbled across recently, is a fun reminder), and FTPDoug's posts in the zoo post-BF when FTP was still accepting non-US deposits and attempting to persuade the community that it was business as usual.

It's painfully obvious looking back that FTP was in desperate financial difficulty and the management went out of their way to persuade players (both from the US and ROW) that everything was fine. They lied to the players, and they stole money by accepting deposits that they knew they were unable to honour. I just want DF (or Hood for that matter, or anyone else with the necessary legal and/or journalistic abilities) to put it all together in a nice, simple, water-tight manner and bang Lederer to rights. Hopefully the final chapter of this DF series will be the online equivalent of Hercule Poirot gathering everyone together in the lounge.

The "safe and secure" statement remained on the site until at least late September 2011. It is even referenced in the amended civil complaint. Been trying to post this comment to DF's Part V, but for some reason it isn't showing:

"That statement on the website that 'your funds are safe and secure' (as it appears in the screenshot above) remained on fulltiltpoker.com until well after June 29, 2011. In fact, the amended civil complaint specifically references how 'As of September 19, 2011, Full Tilt Poker’s website stated that players’ funds were "safe and secure."' I wrote a post on my blog dated 9/22/11 in which I included a similar screenshot (which I took that day). I don't think the statement was removed until a short while after that.

So for us to believe Lederer when says in the Two Plus Two interview that he doesn't think the words 'safe and secure' were used after 4/20/12, we must also believe he didn't read the amended civil complaint in which he was named."