By Wendeen H. Eolis
Poker Player Newspaper
November 20, 2012

Early in the morning of July 28th the shot heard ’round the poker world was short, sweet, and accurate —but incomplete.  A three way deal had been inked hours earlier by Poker Stars (Stars), Full Tilt Poker (FTP), and the United States Department of Justice (DOJ). It allowed for a settlement of the Government’s civil charges against Stars and FTP. It also allowed for the acquisition of the FTP brand by Stars via the DOJ and a process by which FTP players could be united with monies locked deep inside their FTP player accounts for more than a year.

Until last week, there was no concrete hint of a very long lag time between the momentous news of a deal and the actual beginning of a process by which the DOJ would consider compensation to FTP”s victims in America.  Following a November 13 meeting between representatives of the Poker Players Alliance and the DOJ’s Asset Forfeiture and Money Laundering Section, the PPA’s Executive Director, John Pappas, informed the poker world that FTP player refunds in America “are a long way away.”

DOJ’s Dispiriting Message

This latest news has significantly dampened the spirits of U.S. online players caught in the web of the bureaucracy. The DOJ’s previous public stance supporting repayment of all player fund balances at FTP, (as stated in a DOJ press release on April 20, last year), seems all but forgotten.

Lederer Fallout

Negative sentiment has deepened in recent days not only toward the DOJ but also toward former FTP honcho, Howard Lederer, who has been cooing about his high minded role and personal involvement in securing a satisfactory solution for all players. It is now clear that differing opinions inside the Justice Department have caused a logjam of indefinite duration, in addressing losses of FTP victims residing in America.

Meanwhile Lederer has been partying and playing in high stakes cash games and live tournament fare in Las Vegas amid mounting flak over his presence —while the wheels of justice churn on the Government’s civil case against him. And, his former customers’ monies continue to languish in locked out accounts. A petition to ban Lederer from live poker rooms in Las Vegas is now circulating widely on the Internet. The petition itself has created highly charged divided sentiment within the poker community.

Stars Rises

In contrast, Stars has made FTP player account balances fully available for withdrawal for Rest of the World (ROW) players who have legal access to Stars’ or FTP’s online cashier. FTP has quickly regained its former position as the second most popular online poker room, trailing behind Stars.

Player Refunds Have Been a Matter of Contention from the Beginning

Since the earliest discussions of an FTP bail out, the DOJ raised questions about paying out winnings to FTP’s former customers in America. FTP and various suitors have argued otherwise in negotiations over the months. “For a while it appeared as if the DOJ had softened its position according to more than one lawyer who has been involved.  However, at no point has the DOJ made any promises as to its intentions with respect to processing  FTP victim compensation claims —except to disclose plans to hire a 3rd party payment processor as administrator.

To date, no processor has been publicly announced.  During the course of negotiations for FTP, Stars is said to have offered,repeatedly, to administer the repayment process for all concerned, including U.S. players as well as ROW players. The ongoing radio silence by the DOJ as much as the delay in beginning to process claims has effectively put a  broad band of online players  into a posture of “full tilt,” says one irate pro. He says, “I play, I win, and I pay my taxes. I committed no crime, and I still can’t get to first base when I call DOJ anonymously for an update.”

Since the announcement of the deal, The Poker Players Alliance (PPA) has attempted to take the bull by the horns—offering to “assist the DOJ”  in developing an expeditious and responsive process. More pointedly, the PPA has pressed the Government to pay respectful attention to the matter.

PPA Meets with DOJ

This past week, the PPA made a bid to get some intelligence on the Government’s plans and timetable for a remission process. PPA has been represented in this matter by the boutique Washington D.C-based law firm of ZwillGen, PLLC which was founded by nationally recognized commercial and white collar litigator, Mark Zwillinger.

Reading between the lines of Pappas’ statement after meeting with the DOJ, it is quite clear that the DOJ mostly blew off their guests, albeit politely.  Inside the Beltway lawyers say, “The DOJ has little interest in outsiders attempting to advise or guide them in these types of matters, preferring to operate exclusively on their own time tables.

Attorney Zwillinger, who has previously done legal work on behalf of Stars, is no stranger to the folks at the DOJ. He was once one of them. Before founding his boutique firm in early 2010, Zwillinger was among the most highly respected partners at the national law firm of Sonenschein  Nath, & Rosenthal, now operating as an international law firm under the name of SNR Denton. (Its further expansion will result in another name change to Dentons next year).

While at SNR, Zwillinger provided one of the legal opinion letters that was obtained by Stars.It has since been referenced by FTP and Stars’ payment processor Chad Elie who has railed against lawyer opinions he apparently believed made him safe from prosecution.  Elie will soon go to jail.  Zwillinger’s legal opinion raised significant questions as to the Government’s authority to prosecute online poker under current federal statutes while acknowledging the absence of dispositive case law. In discussing the legal opinions cited by the Government in papers related to Elie’s case, one gaming law expert observed, “Clients sometimes hear only what they want”.

Be all of that as it may, lawyers across the country queried about the Zwillinger letter to the DOJ have described it as cogent and detailed—yet succinct in its advocacy on behalf of the PPA and its million + constituents.  Some Lawyers suggest, however, that the letter might have been given short shrift by the DOJ, noting that there had been a lot of discussion and debate about player refunds and victim compensation during the many months of negotiations with FTP and myriad suitors that had entered the fray.

It is worth noting here that in the previously anticipated Groupe Bernard Tapie deal to acquire FTP, the DOJ had pressed the company to make all players whole within 90 days. The Tapie deal reportedly cratered over this requirement.

DOJ‘s Agenda Remains Uncertain

In negotiations for FTP, “Stars reportedly made the case to undertake the repayment process worldwide without passing along any administrative cost to FTP victims”—ultimately, to no avail.   One lawyer chalked up the DOJ’s intransigence as nothing more than an effort to avoid allowing Stars to get too many kudos—especially given the DOJ’s  pending criminal case against Stars’ founder Isai Scheinberg. He is arguably the biggest fish in the pool of defendants in case US v Scheinberg. Others suggested the DOJ might be of a mind to maintain the flexibiity to look closely at some of the player accounts

When the Stars’ deal to pick up FTP was set, a highly placed impeccable source stated that FTP players would be able to collect their funds within 90 days from the date the deal was consummated. In retrospect, it is now clear the words were carefully parsed so as to limit the statement to FTP customers going forward while the fate of those who could no longer be FTP customers would hang in the balance.

The DOJ has demurred ever since, as if it might have an epiphany while practicing the ostrich approach.