Attorneys for former Full Tilt Poker (FTP) principals Howard Lederer and Chris ‘Jesus’ Ferguson have filed new motions to dismiss (MTD) the civil charges laid against them by the US Department of Justice in relation to the Black Friday criminal indictments. The Nov. 15 filing is a response to the second amended complaint (SAC) the DoJ unveiled in September, which added the Travel Act as a justification for seeking to claw back $42.5m in allegedly illicit gains from Lederer, $42m from Ferguson, $40.8m from FTP’s ex-CEO Ray Bitar and $11.7m from director Rafe Furst.
Lederer’s attorney Elliot Peters didn’t scrimp on the sarcasm, describing the “instant sprawling, 133-page” and “292-paragraph” SAC as “so structurally complex that it takes a cartographer to understand what is being alleged and against whom.” (Peters also noted the SAC’s “prolixity,” the “blunderbuss” nature of its claims for relief and the “legal infirmity” of the arguments contained therein.) Peters repeats claims made in Lederer’s original MTD that the DoJ’s argument that FTP violated the Illegal Gambling Business Act (IGBA) had been undercut by Judge Jack Weinstein’s ruling in August that poker did not qualify as gambling under the IGBA. Peters also claims the IGBA doesn’t apply extraterritorially, and since FTP was operating legally under an Alderney license, Peters believes the IGBA argument is “likely dead on arrival.”
As for the alleged Travel Act violations, this “even more attenuated, more convoluted and even more legally flawed” argument should be tossed since the DoJ ignores the Act’s “explicit qualifying language.” The Act says that to be considered “specified unlawful activity,” an offense has to be punishable by imprisonment for more than one year. The SAC cited violations of New York statutes, but Peters says New York State Penal Law defines “promoting gambling in the second degree” as a Class A misdemeanor punishable by a prison term that “shall not exceed one year.” Ergo, no justification for invoking the Travel Act. Peters also takes issue with the SAC listing eight other “including but not limited to” states whose laws FTP/Lederer may have violated. Peters says this “hodgepodge of state statutes” violates the DoJ’s responsibility to “give the defendant fair notice of what [plaintiff’s] claim is.”
WILL DOJ CALL BULLSHIT ON LEDERER?
The DoJ now has until Dec. 21 to respond to Lederer’s missive, after which Lederer will have until Jan. 11, 2013 to respond to the response. It will be interesting to see if the DoJ’s response acknowledges Peters’ reference to the fact that “the SAC nowhere alleged that Lederer knew about or had anything to do with” FTP’s alleged miscoding of online poker transactions to get around the Unlawful Internet Gambling Enforcement Act’s prohibition on financial institutions processing online gambling funds. In fact, in September, Lederer claimed to have “never met with” a payment processor. Oh, Howard… Never say never.
Earlier this month saw the public reemergence of Chad Elie, one of the online poker payment processors indicted on Black Friday and sentenced last month to five months in prison after pleading guilty in March to a single count of conspiracy. Elie has now provided his first media interview since Black Friday and his comments directly contradict Lederer’s assertions. Speaking to poker blogger Diamond Flush (read the full interview here), Elie stated that he had met with Lederer several times, including a three- or four-hour meeting at a New Year’s Eve 2010 dinner in which he and Lederer did nothing but talk business.
During this tête-à-tête, Elie says he “talked about payment processing, everything [Elie’s companies] had done about transparency … Howard told me that he needed processors just like us, that were transparent. He said they couldn’t work with non-transparent processors anymore. [Emphasis added.] I was in shock when he was being that open with me, about his other processors. It’s something that no one talked about.” Somehow, we expect plenty of people – DoJ attorneys, for instance – will be talking about this in the future. Third amended complaint, anyone?