I said there were exceptions to the general rule regarding purchasers of stolen property. These exceptions are many and they also vary from jurisdiction to jurisdiction. In the case you linked I suspect the lack of having a formal title to the car made a big difference. And though the article is not very complete in detail, it does note that the ultimate resolution of the case (who owes who what) will be handled in civil court ....

But it doesn't matter. Analogies to cases involving actual, specific property, whether real estate or goods, do not really help explain the situation with respect to the funds and dividends at FTP. The law really treats these things as separate categories with separate rules.

Also, while what you say in your paragraph regarding fungibility of funds is correct, it is only correct because you postulated that the person found with funds is also the person who stole the funds. It is obviously a factor when dealing with third parties who did not actually steal the funds: if you walk into my restaurant and pay for dinner with money you stole from your business partner last month, and I have no clue it is stolen, your business partner is not entitled to sue me to recover the money.

Again, the degree of knowledge is often the key. And that is an issue of fact, not law.

Skallagrim

We simply don't know when the dividends that they received were in fact player money. If I understand Skallagrim and DoTheMath's analysis, we would only be able to recover funds under these two conditions where both need to be met:

(a) Shareholders must've been aware that FTP was insolvent
(b) Only the dividends from when playerfunds did not equal what FTP in the bank

So in totality, 440 million was disbursed to shareholders as dividends throughout FTP's entire lifetime, but how much exactly was paid out when FTP's accounts didn't match up to player funds? And even then, you also still must demonstrate that shareholders were aware that FTP was increasingly insolvent. (which is interesting given Brandon Adam's recent accusation bombshell).

So let's take a look at the party line right now.

Currently, most people think that the shortfall starting in the summer of '09 is when FTP's accounts stopped matching.

We also know, from DOJ's amended complaint, that Ray authorized roughly 10million in dividends per month.

Thus, if we calculate June '09-April '10 = 10 months or roughly 100million.

The party line indicates the ABSOLUTE most we could recover is 100million. Now consider that we now have to prove that some or all shareholder's were aware of this insolvency. THEN you have to consider that the biggest shareholder, Chris Ferguson, was not paid more than 50 million in dividends that was due to him.

So in reality, under the analysis given by Skallagrim and DoTheMath, I find it difficult to conceive of a scenario where A + B are reasonably proven resulting in a substantial ( >20million) recovery of player funds. Then you have to pay the lawyers. Then you have to set up payment process. Then you have to talk to the DOJ who will have money from Bitar et al.

All of these things would be unprecedented.

Thanks for the kind words Hdemet, and let me thank you for all the effort you have put in with respect to our common cause of getting players paid.

You have summed up the situation pretty well, but let me clarify that I am not being "pessimistic" about the possibility of "clawing back" some of the dividends paid to shareholders. At this point I really do not feel I have the ability to be pessimistic or optimistic.

What I have tried to add to DoTheMath's pretty much spot-on posts is merely to note that his points do depend on a certain level of innocence on the part of the shareholders. But if anyone seeking to get money from a shareholder cannot prove complicity of some kind by that shareholder, the legal protections normally provided to shareholders will prevent recovery for the reasons DTM has stated.

The DOJ, in its recent addition of the Fraud count against FTP to the BF civil case alleges complicity of certain FTP shareholders in the Fraud without otherwise claiming they were technically directors of FTP. Here the issue is the level of those specific shareholders actual rather than official role in managing affairs. That remains to be proven one way or the other.

The US class action suit with RICO allegations is somewhat different and involves the shareholders allegedly engaging in a conspiracy to engage in illegal conduct under US law.

The allegations in both cases are serious enough to probably go after at least some shareholders. But allegations are just that. And the defendants have denied these allegations. So what matters is the real proof regarding who knew what, when they knew about it, and what if anything did they do about it. And none of us have seen any such proof yet.

So I have no idea whether any of the FTP shareholders will or will not have to pay back all or some of the dividends. I do have a pretty good idea that for any creditor/plaintiff to legally get at those dividends, it is going to require being able to prove more than simply that the defendant got the funds via FTP dividends.

And I hope that helps further the discussion.

Skallagrim

FTP employee claiming Phil Gordon was a member of the FTP board.

http://forumserver.twoplustwo.com/sh...&postcount=301

Isn't this the same guy who got a dismissal from a lawsuit by claiming he had no part in managerial decisions?

Hmmmm.

I think you get something backward. The general rule is that the recipient of stolen property does not have legal claim to the property. There're exceptions. You seem to imply otherwise. Law enforcement returned the stolen car to the rightful owner because the original owner has a prima facie title to the car. The burden of proof is on the seller (or the buyers who bought the stolen car in good faith) to show their legal interest. Not the other way around.

i just want our moneys by christmas. PLZ ONE TIME.

from what i remember he can still be added back to the lawsuit

Can he be charged with any crime if he claims something which isnt true in a legal document?

I have no idea? I know nothing about the law.

If shortfall happened in '09, and they were taking $10M out per month, doesn't that add up to a bit more than $100M?

If the company wasn't turning a profit, no one is due dividends. How is the amount owed to CF relevant?

another interesting post from the ex-FTP employee.

http://forumserver.twoplustwo.com/sh...&postcount=237

Talking about the phantom deposits

If true, FTP management knew of the huge shortfall at the end of 2010 yet continued making huge payments to the owners right up to April 2011.

Thats sounds purely criminal to me.

#1. the shortfall started in summer of '09. The current information that is available to us points to that.

It doesnt start in '09, but summer of '09

I was very clear about that in the post.

#2 It adds up to 100million perfectly.

#3 explain how you are going to sue someone who never received his dividends.

it's a bombshell indeed and if true, would certainly warrant adding whoever was on the board onto criminal complaints if i were the DOJ

The last dividend payment was made in April of this year. You do realize it is 2011, no?

If CF didn't receive a single dividend payment between June '09 and April '11, I guess you are right about him. But I don't know that to be true. Do you?

The last dividends were paid April 1, 2011

FT had 60 mil in the bank on 3/31/11 and paid 10 mil in dividends on 4/1/11

OK

I misspoke.

the shortfall starts in summer of '10

for reference, see page 5 of the amended civil complaint.

http://resources.pokerstrategy.com/2...09-20-2011.pdf


As for CF, I doubt anyone knows. We'd actually have to see specific account activity, but we know that a lot of his dividend payments were deferred, and thus never made.

The claim is 390M owed and 60M in the bank (which is the 330M hole)

The fact they continued paying these "dividends" on non-profits.

This whole thing reminds me of the film "Inside Job" narrated by (ironically) Matt "rounders" Damon

That is when the phantom deposits started. Payment processor seizures go back years. Chances are that FTP couldn't cover player funds earlier than summer 2010.

The same is true of WWII era art stolen from Jews. When its found its been returned either via lawsuits or by police. Not being a lawyer I am wondering if this has to do with evidence of title or perhaps art falls into that category of "should have known it was stolen."

In any case, K1 distributions from an LLC are not dividends, unless of course they are accounted for in that matter....which might have happened, but I don't know enough about US tax law to know if that was the issue, being outside the US...since an LLC is a pass through vehicle though, I supposes corporate dividends from a entity the LLC owns would be classified as dividends for tax purposes, but regardless, they are actually LLC distributions - I am wondering if that affects things here from a legal standpoint.

In any case, there seems to be some evidence that some owners knew that FTP didn't have all the cash it was supposed to....take MM, and I know people love to say, 'Oh he didn't know anything' but he very clearly stated on QJs that FTP had been operating without enough cash to play players from the beginning ('what a dumb thing to say on a podcast')....whether he knew that was right or wrong isn't the issue here....a person with common sense should have known and isn't that a test for these purposes? And, given MM knew...someone who was probably a 1% owner...how many others also knew?

+1 to Skallagrim and DoTheMath™ (nice commentary fellows...)


No he was released with prejudice. But he can be added to other lawsuits.

http://www.pokerky.net/2011/07/phil-...full-tilt.html


A good collection lawyer can bring a lot of hurt to anyone with decent assets. That being said, some of them may have squandered their assets, but that doesn't mean they will not have some later. Optionality is worth a lot....

+1,The basic law is that you cannot take good title from a thief; good faith has nothing to do with it. The "purchaser in good faith" doctrine was specific to certain negotiable instruments but has largely been overturned by judicial decision or legislative action in the past 40 years.
The more important factual issue for persons receiving dividends is whether they were aware, or reasonably should have been aware, of the dividends being improper.
The bigger problem the FTP owners, officers and principals have is the old legal saw "Fraud vitiates all." If a court determines that fraud was involved in obtaining player deposits then most defenses usually available to the defendants will be barred or void.
I also think that it has been generally ignored that FTP induced players to deposit funds based on certain warranties and representations with regard to how those funds would be held. When FTP did that it had a fiduciary obligation to keep its inducements and any failure to do so is actionable.

Isnt it natural when a company like FTP has been found to indulge in dodgy practices leading to the theft/misappropriation of the player deposits for people to go back and question all other areas of the business?

As such it is perfectly OK (as far as I am concerned) and correct for people to question the integrity of the games themselves and whether things like super user accounts existed where hole cards could be seen, or cards dealt were truly random etc etc

I am not saying these things happened merely pointing out its a natural thing for everything else associated with the company to be questioned too.

eg Owner shareholders playing on their own site - possible conflict of interests - favouritism with a higher percentage of winning draws getting there but within acceptable variance levels - etc etc etc

All this can be statistically proven if you have access to all the hand histories but if FTP have been shown to be crooked it automatically sparks questions about all areas of their operations.

Hence I cannot be critical of anyone who asserts that FTP had dodgy rigged software or whatever as it is perfectly natural to do so.

NB as far as FTP robots playing are concerned didnt FTP acknowledge they used them in the past to generate traffic?

Also something touched upon previously from time to time is the unilateral closure of accounts by FTP for robotic use and/or collusion etc etc with confiscation of funds. This was never done via any legal procedure in any country and merely done by them one sidedly claiming terms and conditions were broken. Kind of like them saying they were above the law and had the right to steal money from players without a proper conviction or trial but just becasue they felt that the individuals were guilty.

I guess what I am saying is that now FTP have been shown to be crooked its a fair point to question what other illegal or dodgy practices they may also have adopted as everyhting rightly must now come under the microscope.

I'm drunk... **** you FTP

I don't think so. Even if I am past due on the payment, you have no right to take cash from me. You must first get a court order authorizing the seizure of assets from me to pay off the undischarged debt. Only with that order could you take the money off the table if it was past the due date.

If the funds in your physical posession are not in your legal posession, then yes, you probably have to resore them to their rightful owner. However, the whole point of what I have been saying is that the funds in the posession of FTP were legally theirs, and the funds in the posession of the FTP shareholders were (probably) legally theirs. There are possible exceptions. If the funds were obtained by FTP fraudulently (which AFAIK has not been alleged by the DoJ) then a constructive trust may arise, so the funds are not owned by FTP. And if the shareholders knew about the dividends being improper, or conspired with Directors to make and receive improper dividends, then the shareholders may not have a right to the dividends. Again there is no unsealed allegation to this effect. Absent compelling evidence to the contrary, I prefer to presume the truth lies somewhere between the innocence of the accused and the allegations made by the DoJ, not something even worse than the allegations.

Maybe they can be. I don't know. What I do know is that the case has not yet advanced to this point. If the case doesn't change from the current allegatons, the vulnerability to clawback remains nil.

When you lend me a car, the ownership of the car does not change. When you lend me a sum of money, the ownership of the cash does change. Interesting distinction, isn't it?

I think it is quite likely that many players did not know that they were lending money to FTP when they deposited. I doubt that makes any difference as to whether a loan actually took place.

So apparently does poster Gioco (unless he is giocing), who seems to be a retired American lawyer living in Italy. You are both entitled to your opinion. Pardon me if mine is different. Gioco most likely knows a lot more about the law than I do. There is some evidence that I know a lot more about the facts of the case than does Gioco. Until some judge actually rules that a constructive trust exists, the disagreement is moot.

I don't think so. A constuctive trust is established if FTP took the money from depositors under false pretences. Putting the money in some structure that looks a bit like a trust does nothing toward establishing a constructive trust.

FTP did not present their audits to potential depositors.

I don't think it is at all clear. Does there not have to be an intent to mislead for there to be fraud. IOW, if any misleading that may have taken place was inadvertent, is there still fraud?

That may not be an easy hurdle to surmount.

I'm not going to claim any knowledge of banking laws, except to say that there are a number of different types of account and deposit options.

I don't think so.

The statements by the DoJ and the AGCC indicatinh that FTP had a debt to players predate their knowing that FTP didn't have the money. The AGCC comment in particular is made in describing the relationship of licensees to players in general, not the particular FTP situation.

That's not the reason that the DoJ referred to sites owing money to players in their BF press release. And it is not the reason the Alderney eGambling Regs talk about licensee debt to players.

Let's clarify what you are saying. Assuming that no fomal trust is established (as in the cse of FTP), and that no fraud is being perpetrated to get players to deposit (so there is no constructive trust), and there is no explicit assignment of bailor/bailee relationship associated with a deposit, who do you say owns the deposited funds, and why? I say the site owns the deposited funds because control over the funds passed to the site and there is an absence of any provision for ownership to remain with the player.

Why not?

Do you agree that the Directors are wholly responsible for improper dividends?

Agreed, but they didn't catch the Directors just as they were about to issue dividend cheques. The payments were already made.

I think the nature of the operation is a lot less significant than the knowledge of the shareholders and their relationship with the Directors when it comes to determining whether dividends will be clawed back.

demet,


you're absolutely right, and a sustained exploration for the truth is the only way for us to fully comprehend what's happened.

But I don't think we've come across a single shred of evidence that should reasonably lead anyone to believe that ftp is rigged. That debate is not inclusive to post black friday. It's been debated for years-- but since the conception of online poker.

Speaking for myself, I would agree.

The only thing I would add is that the default is that the dividends will not be clawed back. Certain things have to happen for the dividends to be recoverable. If nothing changes from the current state, they are not recoverable. I am not making a claim that nothing will change - I just don't know.

I don't think it contradicts what I said about the recoverability of stolen property:

I also don't think the article or the case it descibes has any bearing on the issue of whether stolen money spent on a bona fide transaction can be recovered from the payee.

Agreed.

Again, that doesn't address the issue of whether a bona fide tranaction protects the payee from clawback.