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Old 09-22-2012, 01:37 PM   #1673
Join Date: Nov 2003
Location: Irvine, CA
Posts: 526
Re: The Lederer Files (Interview w/ PokerNews, starting 9/18)

Originally Posted by Dhani View Post
I could see Ray Bitar not telling HL and CF about the growing shortfall at the end of 2010. I am not saying that that is what happened, but it's quite realistic HL didn't know about the shortfall until MAR-APR 2011. If HL didn't know about the shortfall until close to BF, then that is just more illustration on how incompetent of an owner/manager of FTP he was. I quote Darth Vader when I say, "He's as clumsy as he is stupid."
HL must;ve had an idea of something in the area of deposits, even if it was a hunch. You don't take a board seat on a company that is the 2nd largest US poker site and not know what is going on with regard to your main revenue stream (payment processors). As soon as the owners all knew the situation in late April, Ray Bitar should have been removed ASAP and HL or CF should have assumed those duties as it was apparent that none of the other owners really could have handled that position, especially under the cirumstances. Keeping Ray Bitar on for as long as they did, was just asinine.

From Day One, I've never really believed Howard was completely unaware of what was going on. And believe me, I've had this debate with former Full Tilt employees who assured me that Howard had nothing to do with the day to day operations after he left in 2008 to people who are family friends of the Lederer's who assure me that Howard has told people, off the record, that he was completely surprised by what happened.

I still don't buy it.

For all of the BS Howard spouts about not knowing and not being an accountant, Howard is selling himself far too short. He's very good with numbers. He's the kind of person that in a meeting can recall numbers down to two decimal places.

The reason I don't believe that he didn't know anything was that the numbers had to seem funny to him. There's no way that the DOJ seized $40 or $100 million from the company and it wasn't brought up in a board meeting. There's no way nobody asked where the money went and how that would impact the company and the owner distributions.

I know Howard can grill people. I've been on the other side of a grilling trying to justify a project or explaining a cost/schedule overrun. He's very bright, very intelligent, and very detail oriented. Numbers are not something that just pass right by him.

I can't believe that someone who knows FTP as intimately as he does, knows all of the company KPIs, couldn't look at a balance sheet and KPI report and know that something wasn't adding up.

For instance, if you're looking at a balance sheet that says:

Player Funds on Deposit: $200 million
Full Tilt Cash Available: $150 million

Now a DOJ seizure comes along and they snag $50 million. The balance sheet better not say the company has $150 million available because you know that $50 million was just seized.

And if Ray tried to bury it in the Player Funds, the other KPIs should have been a red flag that something wasn't right.

By that I mean that you should have a fairly accurate idea how much each dollar on deposit earns you. It's an important KPI to track. If you have $100 million of player funds on deposit, over time, when you compare this to rake generated, you should have an idea of how much a dollar on deposit earns the company.

You can project your revenues based off of that. So, if the player balance shrank but the revenues stayed the same or increased that should be a warning sign that something isn't right.

I don't know how Ray hid the shortfalls but I don't think Howard is so naive that he couldn't figure it out. There are just so many variables that some of them should have been blinking red a long time before things got as bad as they did.
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