It reminded of the sort of stuff that went on in the .com boom, when people with skills that allowed them to take advantage of time-specific opportunities- but otherwise utterly incapable of handling a large enterprise- suddenly found themselves in charge of something that vastly exceeded their capabilities to manage. In the best cases, private equity stepped in, installed the needed grown-ups and it succeeded (or cases like Google where Page/Brin brought on Eric Schmidt, acknowledging their own limitations), but if left founder-managed, usually went to **** once they had to make decisions on things that exceeded their expertise.

All due respect to poker players, but it takes a special sort of hubris to think that a bunch of people who've never managed a large enterprise and whose only real skill was poker would be capable of managing a large, complex enterprise, never mind a gray-area one with enormous regulatory risk.

I don't think either of them were 'bad', but probably found themselves at the helm of a ship that took more skill to pilot than they had, whatever went sideways was more a result of that, than a deliberate scam from the outset, which would be someone like Russ Hamilton. They were in over their heads and it was bungled, but also probably fair to point out that most of the people who think they could've done it better would've had the same result.

Fundamentally disagree on your conclusion, but agree that they were beyond poorly equipped to run a business at the scale of full tilt. Most scams did not start out as one, but I have studied / read about more than I can count and there is always a decision point(s) when it is obvious to the perps that they are doing something wrong / illegal to enrich themselves knowing it will hurt innocent victims. Sometimes they rationalize the action thinking they can fix it in the future and other times they just refuse to think about the inevitable outcome of their actions.

In the case of Howard and Chris (and others who benefited from taking player funds at full tilt) they would have known that the decision to access and distribute money in player accounts would result in harming players. They may have convinced themselves that the site could make enough future profits to repay the amounts they helped themselves to; however, that is no more credible than the accountant who embezzles corporate funds and when caught rationalizes it by claiming they intended to pay it back eventually.

I like to think of myself as a forgiving person, but Howard and Chris have never taken accountability for their actions. Their "apologies" are qualified and they are unwilling to answer basic questions that have been asked since Black Friday exposed their grift. Until they take responsibility I do not think they will ever be welcome in the poker community at large.

This cannot be argued with and is completely fair.
FTP was obviously not started as a scam, but conditions of mismanagement probably deteriorated things to the point where they were forced to make survival choices that lead them to 'cross a line'.

The most reliable constant with 'in over their heads' management is failure to supervise subordinates, because they don't know how. They're 'supervising' people doing things they, themselves, do not understand, which is a recipe for really bad stuff but is just a common organizational dysfunction. IIRC, Lederer claimed a lot of the issues stemmed from things he was ultimately responsible for, but was not personally overseeing (which indicates massive mismanagement, when things existential to the company are buck-passed off out of the C Suite and not overseen by them)

Bob's a brilliant data-scientist and managed to crack the nut on handling a weird type of medical billing. He invents the needed tech, hires some people and hits the road; it works. Orders left and right, hospitals lining up, The biz grows like wildfire and Bob's rich... but Bob knows nothing about hospitals... or the medical field... or sales... or managing people... or managing a business.... or taxes... or liability risk... or business strategy... or business operations... but he's the CEO of a company that now has 400 people, and one thing about Bob; he's quite confident he's got this, all by himself. After all, look what he's done so far, IN THE MEDICAL FIELD! Soon, he'll start making key decisions with a few low-level advisors on existential matters that have nothing to do with coding.

Those 400 people are in for a rough go...

Could not disagree more, with pretty much everything you wrote.

The ship should not have been difficult to sterr, they just did not bother to run it honestly and looted the assets.

The online poker business model was NOT really complex. It was really very simple to NOT take money out when the business could not cover player liabiiity for one example. Similarly, it was really pretty simple to NOT manufacture uncovered liabilities by failing to process deposits upon receipt.

(Besides, why do you think Ferguson's only skill was poker ?)

Sorry, saying that FTP management was "forced" to kite checks, issue unfunded liabilities, and punch above their weight competition is complete and utter nonsense.

Lets just agree that few among us here in this forum are going to have the needed expertise to make an outside-in judgement call on how difficult FTP was to manage, at the height of a poker boom... and all other factors involved. We all believe we are, but really, we aren't. What separates Michael Eisner from your wise uncle Maury isn't just the haircut.

There is no argument from me that they crossed the line. That happened... but I doubt you've ever been in a position to make a judgement call, at those stakes, to 'fudge the line' when you sincerely believe you'll be able to take care of it, with just a bit more time. In business, that's a tightrope owners walk, all the time. Most successfully, but sometimes the wind blows and all of a sudden, the tightrope gets difficult to manage and you have to make hard choices. If you recover, you pulled it off! GREAT businessman! If you fall, you lose.
They fell.

The only argument I'm making on their behalf is that their actions didn't start out with ill-intent, but things spiraled out of control and caused them to make risky choices that they ultimately couldn't pull out of. This was at the expense of customers, and those customers are entitled to feel precisely as they do about FTP.

As much as I will never forgive them, saying running an online poker site was not complex simply isn't true. Let me frame the situation those two guys found themselves in:

They committed to a business model that was US-focused, entered contracts, and hired hundreds of people on the incorrect assumption that the market would remain gray and therefore highly profitable.

In the months leading up to Black Friday, the money inflow was severely restricted but it seemed potentially temporary. At that point, you have a choice:

1) Do what they did - trust that eventually the deposits will be processed and the party keeps going. Liquidity on the site carries on and growth continues. Remember, there had been many past processing issues of a similar nature that had been resolved and you don't know Black Friday is coming.

or

2) Decide you can't risk that temporary hold being permanent, and you cut expenses only to what you can confirm received funds for. This annihilates your site liquidity, and you start to eliminate promotions and do massive layoffs as well as of course eliminating all distributions to the board. With site liquidity and promotions gone, the site starts circling down fast, meaning more cuts and eliminations, and fairly quickly, you're out of business or irrelevant.

Sure, there's some sort of middle ground (eg, carry on the liquidity, eliminate distributions, do some amount of layoffs but not the full amount you need, cut promotional budgets but not eliminate them) but essentially those are your choices.

From an ethical perspective, the choice is clear. From the real world? Maybe not. It's certainly not a simple question.

If they simply mismanaged the business and did dumb things like not having actual cash backing for all the player accounts it's a different level of moral culpability than if the reason they did not have cash backing was because they raided the treasury and slinked off into the night. Given the title is do you forgive them, its a valid difference.

I take issue with tying their grift to Black Friday. That event exposed what was happening and prevented them from generating any more cash; however, the decision to extract cash from the player accounts is responsible for the mess that impacted players. A business can have a bad model or be poorly run and go bankrupt and the only constituents that should lose money are investors and creditors. When your business involves customer "deposits" you have to keep restricted cash equivalent to the deposits or you have risk of ruin. Obviously the model banks use is to take deposits and turn around and loan a high % of those deposits; however, that is why it is heavily regulated including having examiners, we have the FDIC for deposits up to $250k, and customers know their deposits above those amounts are at risk.

Those regulations exist for a reason and were made because of hard lessons learned.
People who kept large sums of money in completely unregulated offshore poker sites with absolutely none of the guard rails associated with banking assumed that risk.
Many always knew better than to keep a lot of money on those sites at any given time and acted accordingly, either very aggressively withdrawing or just not getting involved with it at higher stakes, at all, for the very reasons that played out.

I would argue Black Friday exposed it for sure; at the same time, the online poker industry of the 2000s saw many processors go down or disappear with funds, and new processors would pop up. FTP by even the most negative perspective did have a large backlog of deposits waiting to be processed if they could just find a processor that might very well have covered their shortfall in player funds. Maybe they would have found someone to process all that (I can assure you that this had happened before and been worked out), and maybe not. Black Friday made it certain that they wouldn't.

Wrong answer bro. Harboring animosity is only weighing our own soul down. Let go of it.

Still, don't let either of them within a mile of your money.

Why is this thread even going still? It wasn't like either of them had their pockets emptied by the government or in some other way. Quite the contrary and neither paid back their customers and both rode off into the sunset living with "endless trunks of money" as Bill Perkins would say

How about the "middle ground" of just stop shoveling money from the company into their pockets. You know stop being thieves.

No, and neither of them are interesting. Have they done anything to help poker? To help the people that got screwed? Have they turned to a life of service and charity to make amends for their mistakes? Time is what allows us to let go of grievances because we are ultimately the ones carrying them, but this process can be sped along when the person in the wrong gets active about making up for it. These are just two idiots who were in the right place at the right time.

They were far from idiots. Howard was Ivy League from Columbia and Chris had a PhD from UCLA in Computer Science. Both were in fact very, very smart.

Yeah I had to address the narrative that they stopped playing because they couldn’t adjust to how the game is played now

As it high school dropouts can beat 200NL online (the gold standard of what makes a good player according to 2+2) but these guys didn’t have the brain power

When I started on FTP in 2005 and I had to use Neteller to fund it and I Realized that I was sort of in a gray area playing on the site I immediately knew it was sketchy. Later with all the advertisement, endorsements, and nearly everyone I know loving to play on the site I thought how could this ever go under?

Lederer and Ferguson were table top names we had faith in them. So they broke that faith. They were not slimy bankers, slimy politicians or slimy industrial chemical corps, no. They were Poker Celebrities.

FTP was the birth of On-Line Poker and brought Poker to the masses that a few people destroyed it screwed it up, and to this day it's still dead in America can be pinned on bad business practices. Bad business operators... They let their gray area site be scrutinized by the feds. They could of done things on the up and up and we'd still have FTP.

I am not remarking on the lives that were destroyed. Hell that would be really foolish of me. I always knew that it would go under in my heart. I don't think I would of kept much $ on there.

P.S. I love how people think places like ACR/Global or Bovada isn't in the same boat, it's as gray and people with any real $ on those sites could face the same consequences. It's just too small for the feds to care at the moment.

And he comes by it naturally. His dad (Richard) is a long-time Mensa member writes a monthly column focused around wordsmithing for the Mensa Bulletin which is consistently an excellent read. Annie went to Columbia and Penn. Take issue with his behavior all you want, but calling Howard an "idiot" is pretty, well, you know...

These guys made short-sighted and greedy decisions for their own benefit in a closed ecosystem. They had a chance to become infinitely rich if they did the right thing with a big chance in an industry they clearly love and they just got hoodrich instead and wound up pariahs. Wealth isn't just numbers.

Quality of life is an undefined ceiling in life if you take some time to realize that treating other people and the world well is in your own interest. So yeah, they're idiots (this condition is not permanent).

Any Muppet can memorize concepts and crush an exam. It's a good thing to do, but it doesn't preclude you from making dumb or shortsighted decisions. Lederer and Ferguson aren't unforgivable at all but they haven't really circled back and said "ah **** we ****ed up, is there any way to fix it or make amends?".

Before I saw this thread I genuinely didn't think about them at all, but that's because they're idiots. Wtf am I gonna learn from thinking about them or listening to what they have to say. This one guy wore a cowboy hat and called himself Jesus. He's not exactly Joey Planetarium, and the other potato in a suit smugly making corny jokes while he game theory'd his way thru the softest fields in history is probably not Copernicus.

This thread's about what they did in the poker world, not whether or not they went to school and were well equipped enough to not have done what they did. If anything though, their education level is more of an argument that they're dumb, or rather they behaved that way in the past; idk them now obv.

Don't think that me recognizing they're idiots means I don't think I'm one also btw. I've done dumb **** and made lots of bad decisions. You gotta own it though.

This.

Also - not sure if it is because I am totally baked, but could not stop laughing as I read this.

it is pretty greedy and bold and dangerous to KNOW you arent liquid if the site were to cease right there but I wonder if businesses like amazon were liek that at one point.

to me the question is why wasnt pool segregation ever really discussed and did they know?

either way I would like to see in a parallel universe if BF never ceased how long they could go for. either way they greeded or chose greedy option , I would have been freaking out and baiuled but most peopel I assume woudl have done same thign they were doing


true about that

No.

The trouble with your analysis is that you assume something to be true that likely is not true. I agree they took they sure money rather than gambled for a larger payoff but given the market at the time was most companies fighting over market share at the cost of being actually profitable it is not clear they made a mistake to do so. Especially when they did not have the ability to keep others in FTP from lining their pockets by looting the company.