Full text of Lederer's motion to dismiss BF civil charges

[gordo]

Sorry if this should go in the big thread, thought it might be of interest to some:

http://*****************.com/images/misc/HL-mtd.pdf

[JPFisher55]

Lederer uses the same defense of online poker as the criminal defendants. I wonder if the DOJ will eventually settle for like a $1,000. Such a settlement, compared to the monetary damages pleaded, would be similar to their plea bargains in the criminal case compared to the potential sentences.

[Clever Nickname]

I just skimmed through it. Could the defense of the IGBA charges actually work, and if so, would it provide some relief against prosecution for poker sites that still serve the US?

[DonkeyQuixote]

Originally Posted by gordo

Sorry if this should go in the big thread, thought it might be of interest to some:

http://*****************.com/images/misc/HL-mtd.pdf

Thanks.

(It is a bit slow to load, but it does work.)

[tamiller866]

Originally Posted by Clever Nickname

I just skimmed through it. Could the defense of the IGBA charges actually work, and if so, would it provide some relief against prosecution for poker sites that still serve the US?

Yes and no, the extraterritorial argument against the IGBA has a chance if Judge Sands doesn't take the position Judge Kaplan did - that laws evolve with technology, therefore Congress would have included foreign applicability had they envisioned internet gambling.

The motion makes an interesting argument against extraterritoriality, that when Congress debated the UIGEA they discussed the need for new law since those on the books didn't apply, and internet poker was thriving during those debates.

I'd expect the government to argue that new law was needed to curtail internet gambling before it started at the deposit button, while using the IGBA violation for actual prosecution/relief, because there is no forfeiture remedy in the UIGEA.

If the IGBA violations are struck, the civil penalties for money laundering would likely go away, but the UIGEA would still apply for the criminal charges (assuming they can prove a State law violation), so those continuing to offer poker would still be at some risk of criminal prosecution.

[tamiller866]

Originally Posted by DonkeyQuixote

Thanks.

Could not get this to fully download/open. Is there another source/link ?

http://dockets.justia.com/docket/new...v02564/377900/

[DonkeyQuixote]

Originally Posted by tamiller866

Yes and no, the extraterritorial argument against the IGBA has a chance if Judge Sands doesn't take the position Judge Kaplan did - that laws evolve with technology, therefore Congress would have included foreign applicability had they envisioned internet gambling.

The motion makes an interesting argument against extraterritoriality, that when Congress debated the UIGEA they discussed the need for new law since those on the books didn't apply, and internet poker was thriving during those debates.

I'd expect the government to argue that new law was needed to curtail internet gambling before it started at the deposit button, while using the IGBA violation for actual prosecution/relief, because there is no forfeiture remedy in the UIGEA.

If the IGBA violations are struck, the civil penalties for money laundering would likely go away, but the UIGEA would still apply for the criminal charges (assuming they can prove a State law violation), so those continuing to offer poker would still be at some risk of criminal prosecution.

If the IGBA argument prevails on the "business" issue, I think the UIGEA falls as well, (lawdude says "if" = never under NY law, but I am talking about your hypothetically successful strike-down of the IGBA application to poker.)

"The government’s failure to plead facts sufficient to establish that poker is “roughly similar” to the activities listed in § 1955(b)(2) is not surprising: running an internet poker site like FTP falls outside IGBA’s definition of “gambling.” Nearly all the activities listed in §1955(b)(2) involve games where the business—the “house”—is betting directly against the
customers."

Altho it is not the Preferred Holy "Skill Game" mantra praising the game of poker itself, the statutory construction argument that operating online poker is not a "Gambling Business" under the IGBA is actually stronger if made under the coverage provisions of the UIGEA.

[tamiller866]

Originally Posted by DonkeyQuixote

If the IGBA argument prevails on the "business" issue, I think the UIGEA falls as well, (lawdude says "if" = never under NY law, but I am talking about your hypothetically successful strike-down of the IGBA application to poker.)

"The government’s failure to plead facts sufficient to establish that poker is “roughly similar” to the activities listed in § 1955(b)(2) is not surprising: running an internet poker site like FTP falls outside IGBA’s definition of “gambling.” Nearly all the activities listed in §1955(b)(2) involve games where the business—the “house”—is betting directly against the
customers."

Altho it is not the Preferred Holy "Skill Game" mantra praising the game of poker itself, the statutory construction argument that operating online poker is not a "Gambling Business" under the IGBA is actually stronger if made under the coverage provisions of the UIGEA.

I'm presuming that the 'game of skill'/'poker isn't gambling argument fails, whereas the UIGEA is obviously intended to apply to all unlawful internet gambling, the IGBA was written at a time when the only realistic entry by a foreign business to conduct gambling would be bookmaking over the phone.

Lederer et al argue that the IGBA makes no mention of foreign business application because it was only intended to shut down interstate organized crime, but the DOJ cited several cases where the IGBA was used against foreign bookmaking businesses in their answer to Campos/Elie.

The difference, which Lederer et al failed to articulate is that those bookmaking operations were directly taking bets from US customers, while the poker sites are taking player deposits, then giving them a seat on a virtual table to place their bets on a foreign server.

Following the Advanced Deposit Wager doctrine, betting takes place where the money is, so it's possible they could convince a judge that yes, poker is gambling, yes we take US customers, but all of the gambling takes place either in cyberspace or on foreign soil, so unlike a sports book, foreign poker sites do not conduct any gambling business on US soil.

Obviously that's a Hail Mary defense, but under that construction an online poker site could be viewed as in violation of the UIGEA in States with internet gambling prohibitions, but not in violation of the IGBA in any state.

[exoendo]

cliffs for the last 24 hours? I can't read 5 pages a day..

[exoendo]

Originally Posted by exoendo

cliffs for the last 24 hours? I can't read 5 pages a day..

errr sorry meant to post that in the main ftp discussion thread -_-

[tamiller866]

http://www.scribd.com/doc/99724375/2...-Oldford-Group

This is the PokerStars motion to dismiss, after reading it I'm wondering if we should stop lobbying for new legislation; they make a very reasonable argument that their only business in the US is placing player funds into trust accounts on the Isle of Mann and returning player funds when a withdrawal request is submitted.

They argue and cite precedent that it can't be money laundering just because the money being transferred is disguised, the money itself would need to be dirty, therefore since all of their profits are made legally on the IoM, their money is at no point derived from unlawful activity.

Since they didn't make any revenue in the US, they argue that they didn't conduct any business in the US, so they can not be contrived as an illegal gambling business.

They make several other arguments for technical reasons why the allegations fail to make a claim, but this one seems the most compelling.

[Clever Nickname]

The thought of Stars taking on the DOJ in court is certainly exciting, although I don't think I'd be happy sacrificing my FTP roll for it unless I knew that Stars had a high chance of winning. Even if they did, how long would such a case take to play out in court? I'm no lawyer, but I'm guessing a fairly long time?

[tamiller866]

Originally Posted by Clever Nickname

The thought of Stars taking on the DOJ in court is certainly exciting, although I don't think I'd be happy sacrificing my FTP roll for it unless I knew that Stars had a high chance of winning. Even if they did, how long would such a case take to play out in court? I'm no lawyer, but I'm guessing a fairly long time?

If the judge were to rule in favor of their motion to dismiss on the grounds of those arguments, Americans could theoretically be playing on PokerStars before the fall.

The UIGEA isn't applicable in the civil case, and the criminal charge of conspiracy to violate/circumvent the UIGEA wouldn't go away, but if both of these arguments are successful, then by precedent regulated offshore poker sites that segregate player funds should no longer be blocked under the UIGEA from accepting deposits (except in states with specific laws against internet poker).

[tamiller866]

Originally Posted by JPFisher55

Lederer uses the same defense of online poker as the criminal defendants. I wonder if the DOJ will eventually settle for like a $1,000. Such a settlement, compared to the monetary damages pleaded, would be similar to their plea bargains in the criminal case compared to the potential sentences.

Judge Kaplan dismissed those motions in the criminal case, and even threatened not to accept their plead agreement, because they had one fatal flaw: under their arguments, no US State could legally protect itself from offshore poker sites.

PokerStars takes the reasoned position of admitting the possibility that in 10 States (which have internet specific gambling laws) they operated (they ceased accepting Washington customers, and Utah had yet to pass it's ban), they may have been in some violation, but the DOJ is making a claim not just for the business they did in all 50 States, but the entire world-wide operation.

I wouldn't be surprised at this point that the DOJ not only takes the deal to let Scheinberg walk and PokerStars takeover FTP in return for player repayment, but also make the admission that the current laws only cover those States which have passed internet specific legislation.

[JPFisher55]

Originally Posted by tamiller866

Judge Kaplan dismissed those motions in the criminal case, and even threatened not to accept their plead agreement, because they had one fatal flaw: under their arguments, no US State could legally protect itself from offshore poker sites.

PokerStars takes the reasoned position of admitting the possibility that in 10 States (which have internet specific gambling laws) they operated (they ceased accepting Washington customers, and Utah had yet to pass it's ban), they may have been in some violation, but the DOJ is making a claim not just for the business they did in all 50 States, but the entire world-wide operation.

I wouldn't be surprised at this point that the DOJ not only takes the deal to let Scheinberg walk and PokerStars takeover FTP in return for player repayment, but also make the admission that the current laws only cover those States which have passed internet specific legislation.

I hope that you are right. I would like to see the FTP players get some money even though I am not one of them. Also, few states has a law specifically dealing with Internet gambling. So if the IGBA and UIGEA only covers those states, then most of us could be back in business.

However, I still hope for federal legislation because I would like to play on sites regulated by a US state like Nevada.