AppId is over the quota
September 29 2011, Eric Ramsey
Last week's legal rumblings marked another noteworthy day in the ongoing litigation between the U.S. Department of Justice and Full Tilt Poker. Unless you've been hiding from the Internet for the last few days, you're aware that on Sept. 20, it was announced that the DOJ had amended its civil indictment to include the names of Howard Lederer, Chris Ferguson, and Rafe Furst. In short, the move creates the legal avenue for the attorneys to pursue the seizure of the property and assets of the three men, but there are plenty more juicy details lurking in between the lines of the "tl;dr" document. It's actually worth a read, though, because as it turns out, the inclusion of the new names is just the tip of the indictment iceberg.
These days, when the DOJ drops a pebble in one end of the pool of FTP's nonsegregated player funds, the ripples rush through the poker world, if you'll pardon the pun. Many in the know have taken to personal blogs and podcasts to offer their take on the recent news over the past week, while others needed just 140 characters to express themselves. When Tuesday's troubles hit the presses, we were grinding our Twitter feed hard to gauge reactions from the pros and others in the poker community.
Apart from the naming of the board members in the updated indictment, another major bullet point was District Attorney Preet Bharara's use of the stop-all phrase "Ponzi scheme" in his statement. Suddenly, poker players everywhere flocked to Wikipedia to find out exactly what the heck a Ponzi scheme was. What followed on Twitter was a long and interesting discussion about the new information, as well as the potential effects on the future of online poker. So then, the first question of the day became, "Is Full Tilt a Ponzi scheme?"
The general consensus, it seems, is that the use of the term was inflammatory and an oversimplification on Bharara's part. In a follow-up with, Terrence Chan, he said, "The 'Ponzi' appellation given by Preet Bharara was done so only to draw headlines because the term is immediately recognizable in the public consciousness. Full Tilt was, however, an absurdly mismanaged and ultimately untrustworthy company which disregarded the best interests of its players and was seemingly fraught with massive internal corruption. But I guess that isn't as easily summed up in a sexy two-word phrase."
As he watched the fallout begin to build on his own social media stream, PokerTracker's Steven McLaughlin (@_tizzle) tweeted this: "The AGA may be loving the FTP negative press today, but they may live to hate it — it will probably hurt legalization more than it helps."
Brian Hastings (@brianchastings) was apparently thinking along the same lines from his own couch as he said, "Paying players is most important but having words "Ponzi scheme" tossed around in online poker article is very bad for future in U.S."
Carter King (@ckinglivepro) had a different take on things, though. He chimed in with this reply: "@_tizzle don't get this idea, online poker wasn't the problem it was how the company was run. It makes all their arguments stronger." King went on to draw the familiar comparison to alcohol prohibition as he added, "the more they diss the illegal sites the more the AGA can say this is why you need us. FTP = speakeasy, AGA = ABC Store."
Tom Dwan (@tom_dwan) took the news with even more optimism than King did. Inhibited by a non-disclosure agreement, Dwan hasn't been able to say much during the course of this investigation, but he did grant us one topical tweet on Tuesday: "Super happy with the DOJ's actions today. Restores a little faith in government for me."
Once the wave of governmental chatter died down again, the conversation returned to Full Tilt and the mess the company has gotten itself into. Although the lips of the people most directly connected to the situation are more or less sealed shut legally, plenty of comments can be found from those who were on the fringes, to varying degrees. Hastings, of Cardrunners, spent his Tuesday wondering aloud about just how misguided the business side of Full Tilt was. "FTP management just baffles me," he said. "Longterm EV for owners would be infinitely higher if they ran it well rather than taking all the profits. So essentially they screwed customers over while also hurting personal EV and risking jail time. Brilliant." We'll go ahead and add the #sarcasm hashtag for you, Brian.
There was no sarcasm to be found in Adam Junglen's op/ed tweet from around the same time. "Money makes people evil," he said.
Another issue that was attacked with renewed gusto last Tuesday was that of corporate responsibility and culpability. As facts continue to trickle from Bharara's investigation, the poker world is beginning to get a better picture of who the decision makers were at FTP and what exactly they were doing with all of those player funds. Midway through the day, Josh Brikis tweeted what many were thinking: "It's hard to believe that the rest of 'Team Full Tilt' knew nothing." The way JC Alvarado's cynical side sees it, this whole mess was foreshadowed a long time ago. "This is what happens when you leave $443 million in the hands of people who's maxim all through the 90s was, "if you can't spot the sucker…" he tweeted.
All jokes aside, though, as board members, Lederer, Ferguson, and Furst had a larger responsibility in this than the rest of the Team. Poker writer and lawyer Dave Behr gave us a quick refresher in corporate law: "If the company has outstanding liabilities that it can't cover at the time of a potential distribution, the Board is not allowed to declare the distribution and distribute money to shareholders. This is a very stringent standard. The Board can't say 'we didn't know that the distributions weren't out of profits,' nor can it say 'there is no way we could have known.' The Board is charged with a very strict duty to make sure that the distributions are lawful."
In light of the new information, the Epic Poker League was forced to indefinitely suspend Lederer and Ferguson from its events. Code of conduct, you know. One of the players on the committee who made that decision is Mike "Timex" McDonald (@mikemcdonald89), and he was pensive about the action on Wednesday. "When I got 'Howard Lederer's Secrets of NLHE' DVD for my 15th birthday," he said, "I never imagined that one day I'd be voting him out of a poker league."
Other Quotable Quotes
Daniel Negreanu: "Not a fan of the Lederer family. That brother, sister duo was behind the two biggest scandals in poker history," he said in a WCOOP chat.
Tony G: "No mention of Ivey in the documents. I believe we have our inside man."
Tony Dunst: "Feeling worse by the day about the money in my FTP account. Feeling better by the day that I declined being a red pro. #F***scammers"
Kathy Liebert: "I'm happy I never had any deals with FTP. I still can't believe all that player money stolen...so wrong."
"I don't believe all of Team FTP is responsible for the theft but they are responsible to return the millions they received."
Jon Aguiar: "With every day Phil remains silent more questions and rumors emerge about him, the latest ones being that he is an informant (unlikely) and that he has a substantial fortune that remains untouched, roughly equivalent to the fortunes stolen by the other board members. I've been a huge Ivey fan my whole poker life, but with every day that rumors fly with no answers it becomes harder and harder to have blind faith in my hero," he told PokerNews.
"Tom [Dwan] has received a lot of criticism for how he handled things, but put it this way: name someone who wore FTP patches and handled it better! Not a single dollar has been pledged by any of the numerous Full Tilt pros who now know without question that their dividends were simply players deposits and not profits from the business. There are few people in poker with the moral compass he was born with."
Adam Junglen: "If I ever get my FTP money my family is getting the sickest Christmas ever."
Dan O'Brien: "I really don't have much of a reaction. Obviously, it's extremely frustrating to be taken advantage of by some of the execs there, but it's been pretty clear to me for a while that they misallocated the funds and were trying to figure some way around it once they got closed up. A lot of the top Full Tilt pros are total douche bags, but that's not really news either. They have the money to promote themselves so people stay interested in them and poker reporting sites therefore continually run stories on them, but they've been pretty irrelevant in the professional poker world for a long time," O'Brien told PokerNews.
"As for the Ponzi scheme accusation by the U.S. government, that's more dramatization than fact from what I've seen. If Tilt was allowed to continue operating, it likely would have been able to pay back accounts down the road much like a bank does. So again while it was extremely deceitful and unacceptable, it doesn't appear to be a "Ponzi scheme." The government seems to be trying to rally support against the company, perhaps in an effort to absolve itself for putting us in this position to begin with. When you create a black market for a high demand item through an absurd set of laws, these things happen and it shouldn't be a huge surprise to anyone."
@PokerGrump: "I wonder if Preet Bharara is going to get Full Tilt t-shirts for knocking out three red pros."
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