The penultimate part of Pokernews’ excellent interview series with Howard Lederer examined the member loans that were paid out and the processes surrounding the sale.
✖Early on the process the board informed the membership there were members that owed money to the company. In Lederer’s words it “got a lot of resistance” and as of June or late May, he was the only member to have paid back what he thought he owed – $700,000.
✖Lederer paid back his share in late May after the account, which was originally under administrative review, was reopened. He hoped that others would follow his lead and start paying back their loans as well. This didn’t happen.
✖Gus Hansen “threw a wet towel on the whole idea” that Lederer had paid all his money back. This was due to Lederer taking away his player balance from the full amount he owed. Hansen said to Lederer on a member call that he had paid himself a player balance when all the U.S. customers could not be paid. Gus said “that’s not right, you just put yourself ahead of them”.
✖Lederer admitted he “hadn’t thought of it” in that way and that Gus “made a lot of sense”. A matter of days later he sent the remaining player balance of $300,000. One other member sent off $11,000 – Phil Gordon.
✖Lederer was very complimentary of Hansen, stating, more than once, that he is a “sharp guy” and “really cared about the players” as well being a “really calming voice of reason on members calls”.
✖There was not “a lot of discussion” among the other members regarding Gus’s views apart from a couple of people acknowledging he had a “good point”.
✖The other players that had loans were Phil Ivey, Erick Lindgren, John Juanda, Ray Bitar and David Oppenheim, plus one or two others who owed $10k or less. Chris Ferguson also had a loan and then sent in the $14million in shareholder distributions that he was owed.
✖Of the $14m that Ferguson sent back, Lederer said: “The saddest thing for me about all of this, in terms of members, is what has happened to Chris as I think it’s really unfair. He would have never authorized any distributions regardless of the financial health of the company.”
✖Breaking it down, there was $9million sitting in an account destined for Ferguson and another $5m that had already been sent. Lederer, who was there when Ferguson decided to do this, commented that he “didn’t call an attorney” or ask Ray to “draw up a document” so that he would get it back when they got out of the mess. Lederer said that he “didn’t know anyone else that would have done that”.
✖Lederer added he didn’t believe the deal with PokerStars would have been done had Chris’ money not given them the “leverage” to get the deal done.
✖The other players with loans were continually asked for the money back but Lederer stated that “couldn’t make them”.
✖Oppenheim claimed the “figure was off by $100,000” and Lederer told him to “send in what he could”. That never happened.
✖One of the others that was lent money, Lindgren, loaned $2million from Ferguson around April 6-7 to pay a player on the site. The money was transferred from Ferguson on the site to the player involved. An error in the finance team meant that Lindgren was paid once into his bank account and once into his player account – thus receiving $4m.
✖Chris noticed and rang to Lindgren to straighten it out. He told Lindgren to pay the money as the “company really needed it” and when Ferguson follows up it hadn’t been paid. Lederer then rang Lindgren and he explained it was a misunderstanding as he didn’t know where to pay the money, something Lederer admitted “didn’t sound right” to him. Lederer sent him the wire information and he “never paid back the money”. This was despite Lederer trying to text and ring him a lot over the next six weeks.
✖Lederer took “great offence” to the company being characterized as a Ponzi scheme.
✖To put it in Lederer’s words “everyone’s gone” at this point except “my good friends” and he only kept in contact with “four or maybe five” other board members after June 29.
✖Groupe Bernard Tapie (GBT) only came in after September 21 and we made an agreement so they could talk to the Department of Justice (DOJ). Asked of the obstacles in the process, Lederer said he “couldn’t answer that question”.
✖Once an agreement had been announced with the DOJ, GBT started due diligence and “spent a lot of time and money in Dublin”. A deal “could have been done in January” but Full Tilt Poker “wouldn’t allow it” as it didn’t make their “customers whole”. Lederer and co believed the DOJ would pay back US players using $80million from forfeited funds and GBT would handle the rest of the world players. “We didn’t agree with what they thought make ‘whole’ meant.”
✖The amount was “actually pennies on the dollar” and Lederer admitted it was as little as “10 cents”.
✖Lederer revealed that Tapie “was getting ready” by hiring staff in Dublin and the deal “would have closed eventually” if Stars hadn’t turned up. DOJ and FTP both had issues with the GBT deal and in “ultimately” Lederer thought a deal could have been done.
✖PokerStars were rumored on the Internet to be interested in a deal around April 24 and Lederer was “aware” before then – not long before though. FTP was told both sides were “99 percent done” and a deal had been agreed “in principle”. Original closing date was “early June”.
✖In terms of the members of Full Tilt Poker, Lederer wanted to get “majority consent” from the other event though lawyers thought they didn’t need it. When asked if it was easy, Lederer said: “Look, nothing’s easy with this group”.
✖Those that didn’t have an interest in signing were the Phil Gordon, Perry Friedman, and Scheinberg group and as such they “ignored it out of spite”.
✖Lederer commented that he found it ironic that John Juanda and Phil Gordon made public statements about their pleasure at the deal being signed when they hasn’t even signed the member consent.
✖Juanda, alongside one other, was the second largest shareholder in the company.
✖Lederer added: “I don’t think I can over emphasize how much a large group of members felt this wasn’t their problem.”
You can read part one here, part two here, part three here, part four here and part five here as we go through the interview part by part here on CalvinAyre.com.
