In the weeks before the United States Department of Justice swooped in to crack down on online poker with deadening force, by all outward appearances, Full Tilt Poker was at the top of its game. New offerings were popping up continuously, and Howard Lederer’s voice was a big part of the FTP picture —even though he had long since given up his role in day- to-day operations.
Ray Bitar, the CEO of FTP knew full well the increasingly perilous state of their operations, according to the Government, and several knowledgeable lawyers insist the dye was cast for an indictment against him and he could and should have expected such a consequence from his actions.
Meanwhile the extent of Howard Lederer’s knowledge, involvement and responsibility for the collapse of FTP has been the subject of fierce debate since Black Friday. Last week, Lederer came forward in a seven hour interview; at the end the day the combination of his declarations, fuzzy recollections, and obvious omissions of facts shed more light on the unraveling of the Company than any prior media report.
Cyprus Casino Plans FTP Tournament for December 2011.
In January 2011, Michael Paltekci, President of the Cyprus-based Merit Casino, was introduced to me by a European client at the Grand Casino in Deauville; site of an EPT event in progress. We were to meet about a possible partnering arrangement between the casino and my client, for an upcoming event to be produced by FTP at Paltekci’s gambling emporium.
It became clear, however, in a matter of minutes; Paltekci was in Deauville on a busman’s holiday and no business was going to be transacted between us for the time being. We made a seamless transition to small talk about FTP and the Normandy coast line before he suddenly proposed a little “heads-up” Chinese poker, for later that evening.
Paltekci had already mentioned his California roots and had referred to the FTP crowd as his buddies and Ray Bitar as his longtime good friend. Was I about to be hustled if I took him up on his Chinese poker offer? I paused to inquire (lightheartedly) if he had taken Chinese poker lessons from Howard Lederer. He confirmed that he knew Howard, but seemed unaware Lederer had made a boatload of money in Chinese poker his first year in Las Vegas, after moving there from New York.
Troubled Waters Early On
Lederer’s personal biography has been largely forgotten in the poker world since his sister Katy’s memoir (some years ago), which focused on their dysfunctional, but fascinating, family. The memoir was written well before Lederer reportedly threw a party to celebrate reaching the hundred million mark.
Lederer’s move to Las Vegas followed by repeated clashes with law enforcement authorities in New York over his gambling activities. Too tight handcuff experiences, and too-long waits for arraignments that were supposed to be speedy, presumably had become more than annoying. He pulled up stakes and moved on.
Once settled in Nevada, he found himself under investigation yet again by law enforcement authorities; this time by Federal agents, who drilled safe deposit boxes at Bellagio. Ultimately, the matter was resolved, and the slate was wiped clean.
Lederer Clears His Path for Success
Once out of these thorny patches, Lederer’s stars all seemed to be aligned, with success at poker cash tables, mounting tournament titles, top billing as the poker “Professor”, and connections that ultimately led to a heady position and substantial wealth via FTP.
Michael Paltekci knew Ledererer as a man of enviable success (with plenty of cash to throw around) Until I told him, however, he did not know of Lederer’s dinner with President Obama. Along with some thirty to forty other like-minded souls, including Phil Ivey, the Professor coughed up $30,000 for a fundraiser, obtaining the privilege to hobnob with The Man at the home of George Maloof in Las Vegas. The president was said to have chatted up Lederer and Ivey about playing a game of poker with him at the White House, while the DOJ was plotting its timetable to hammer FTP and its Board.
The Chinese poker proposition raised by Paltekci early on in our tete a tete never came to pass. Instead, our continuing conversation turned to FTP’s beginnings and the incredible rise of good fortune for FTP members—even under the cloud of UIGEA. We gabbed until it was time to pack for our respective departures from Deauville.
Howard Lederer’s description of the birth of FTP as rendered in his recent interview with Matt Parvis of PokerNews meshed with Paltekci’s tale about the founding of FTP, but the casino executive’s rendition was far more revealing . Lederer’s seven-part video interview, which was titled, The Lederer Files, scratched the surface of certain key facts and events and was vague about some matters that seemed, unfathomable for him to forget, especially since several of his friends have referred to Howard’s view of FTP as “his baby.”
At times throughout the interview, Lederer’s penchant for partial answers, along with his failed memory and refusal to speculate, except when he wished to do otherwise , were more notable than his disclosures at some junctures of the interview, which was arguably the biggest story in the poker world, since the DOJ’s crackdown on online poker in April, 2011.
That said, The Lederer Files are still, by far the most detailed single report of the Full Tilt Poker debacle, and Matt Parvis should be congratulated for his yeomen service to the poker community.
Let’s Begin at the Beginning of Full Tilt
Lederer discusses the early days of FTP in Part 1, which sets the tone for all that is to come. He tells us that he met Chris Ferguson in 1999 or 2000. In my personal travel diary, I noted my visit with Paltekci as follows: “Bitar was managing a trading office, Chris did some trading. Chris got the idea for FTP after winning the 2000 World Series of Poker and not finding an endorsement deal with an online site (Party Poker?) to his liking. He basically decided he should figure out the best software and do it himself with Ray as a money guy. They rounded up some investors and then saw a homerun when the Professor bought the idea.”
Other early FTP members have confirmed they hit the ground running —determined to build software better than anyone else on the online poker map! With a marketing plan in place to publicize a pro player –owned site they were ready to roll in 2004.
At the same time, except for Bitar, they were gamblers and small-time entrepreneurs, with neither conventional business experience, nor the wisdom that comes from maturity. And by all accounts, Bitar was never a manager of a full blown business until he waded in over his head at FTP.
Lederer’s Decision to Break Silence
Early in his recent interview, Lederer explains his decision to do the Lederer Files; the deal was done and now was the time. He offered little other elaboration until midway through the interview, where he pokes at poker pro Matt Glantz’ criticism of his prior 15 month public silence. Lederer says, somberly, “I owed it to customers to remain silent.”
These explanations do not hang uniformly well with his audience—former FTP members, other players and poker business executives that have been deeply affected by the mismanagement of the former FTP regime.
The most widespread view is that the raison d’etre for Lederer to mount the public stage at this time is to obtain redemption in the poker world after a failure by friends to make sufficient inroads on his behalf.
Lederer Wants Back In
Months before the 2012 World Series of Poker, there were rumors Lederer wanted to return as a poker pro and that he anticipated doing so—soon. His friends were bending the collective ears of movers and shakers in the community as well as those of lesser known players and reporters in efforts to rehabilitate his shattered image. Lederer was said to be depressed, shocked, and befuddled by the dizzying events, but wholly innocent of wrongdoing, and now only focused on making things right for FTP customers.
The pleas fell mostly on deaf ears. There were snippets of the anecdotes he has since told in the Lederer Files interviews. They portrayed FTP members who criticized him and the Board as interfering with their efforts, as being unhelpful before or after things got tough. There were also the reminders to all who knew him for many years of his impeccable reputation as an honorable gambler.
Frankly, the reminders were hardly necessary here. As a longtime acquaintance, I never had any personal experience that would have led me to believe that Lederer intended to defraud his FTP customers and I have never seen a shred of concrete evidence to support such a theory. However, Company’s active decision to obtain its license from Alderney with the option to co-mingle player funds yields sharp sharp criticism of the entire Board. More significantly, at no point in his interview did Lederer take the lead to explain why he never considered returning (to the Company) any of the 43 million dollars of distributions he received, putting aside the Government’s contentions they should not be left in his hands. It was unfortunate, but inevitable that Lederer’s interviewer would miss some critical point with so much to cover, but for many, this is the burning question that threatens his future welcome in any card room patronized by former FTP customers in the United States.
Since Lederer’s move from New York, more than 20 years ago, I have had only occasional contact with him, mostly at big parties to which I used to be invited by him and his second wife, Susan (no longer Suzie to me).
According to the Government’s updated complaint, The Lederers share substantial assets, thus Susan may stand to lose as much as her husband in the Government’s continuing prosecution of its civil forfeiture action against him.
Lederer, Ferguson Furst—NOT INDICTED
It bears mentioning here —since Fox Business as well as various poker media have mistakenly reported in the past 10 days on the status of the cases against Lederer , Chris Ferguson and Rafe Furst that none of these three former directors have been indicted.
Moreover, interviews, albeit not for attribution, with lawyers very familiar with the FTP directors’ cases, confirm that they perceive little exposure to criminal prosecution in connection with FTP matters for Lederer, Ferguson or Furst.
A Personal Disclosure
Now, I make a personal disclosure. This past summer, Howard Lederer’s loyal wife lashed out in an email addressed to me (but sent to others by her as blind or forwarded copies). Susan admonished me for having covered Full Tilt Poker matters, as if I had committed libel. Her complaint was out of line, her accusations, were ill-informed and her subsequent indiscretion was plainly wrong. But her husband is lucky to have fervent loyalty emanating from his home.
Why Does Lederer Speak Now
For several months—beginning before the last World Series of Poker, Lederer was known to have approached friends about his returning to the card room to make money. He obviously sees the need to reduce hostility toward him before he arrives at the tables. This appears to be the primary reason for his coming onto a public stage at this time.
Perhaps more importantly, it seems that his lawyers think, from a legal point of view, he has a pretty good story to tell—or you could be sure he would be keeping quiet some more.
That said, among the broad spectrum of members of the poker community queried for this article, Lederer is not convincing in his stated reasons for speaking out now. Former FTP customers, other players, poker business executives, reporters, and gaming lawyers not involved in his current legal matter who were consulted for this article, by and large, rejected his short-shrift explanation, declaring the deal is done, and therefore the time is now.
Moreover, they generally see the frequent counterpoint between his settling scores with other FTP members and courting the poker world for redemption–as if he was less than responsible for his own predicament—as jarring.
One More Thing
In the manner of Steve Jobs, Lederer made his most important pronouncement last. His straightforward apology for the suffering of FTP customers, rendered in the final minute and a half of the interview, undoubtedly resonated as his most mellifluous pitch, for those who were still listening to him.