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IN DEPTH: POKER STARS JOINS FTP IN HOT SEAT

By Wendeen H. Eolis
Poker Player Newspaper

In the preceding months of 2009, Mr. Dayanim had obtained non-prosecution agreements and had settled related forfeiture actions brought by the Department of Justice against two high-profile companies operating in the e-gaming space.

Benham Dayanim’s Bona Fides are Established

 In April of 2009, Dayanim acted for PartyGaming PLC. A non-prosecution agreement was obtained with the company’s forfeiture of $105 million. Dayanim also served as co-lead counsel for Optimal Group, Inc., settling the Federal Government’s forfeiture action for a total of $19,182,418 on October 30, 2009. He obtained a non-prosecution agreement in this case too.

At the newly established “November 9” festivities of the 2009 World Series of Poker just a few days later, Mitch Garber, the recently appointed CEO of Harrah’s Interactive Entertainment (now Caesar’s Interactive Entertainment) and a formerly practicing lawyer in the gaming space, introduced himself to this writer. In a quick mental note to self, Yours Truly recalled Mr. Garber’s prior background as a gaming lawyer, former CEO of Optimal Group, Inc. and CEO of PartyGaming, PLC, before joining Caesar’s.

 A few days later, Mr. Garber was one of Eolis International Group’s first calls for recommendations of suitable law firms for an e-gaming client. Mr. Garber promptly responded, waxing poetic over the extraordinary abilities of Behnam Dayanim and the law firm at which he was a partner. Little could anyone have projected in November 2009 that Dayanim would become the go-to lawyer for Groupe Bernard Tapie in its bid to acquire Full Tilt Poker.

 Meet the Credentialed Tapie Counsel.

Sitting with Dayanim in a kosher restaurant in downtown D.C., this writer (who also serves as a consultant to corporate clients seeking special counsel) interviewed Dayanim for a “dicey bet the ranch” legal problem, listening to the lawyer’s laid back account of his career.

Born in 1967, Dayanim proved his smarts early, first graduating from Yeshiva University summa cum laude followed by a J.D. degree from Harvard. He then accepted a year-long clerkship for the late federal Judge Frank A. Kaufman in Baltimore.

From there, he joined as an associate at the Washington office of the nationally acclaimed law firm of Paul Hastings, LLP where he was elevated to partnership. He remained at the firm until 2010 when he joined the high-powered boutique law firm of Axinn Veltrop & Harkrider LLP. Dayanim came on board to help bring increasing cachet to the firm’s growing practice in Washington, D.C. Like Mitch Garber, AVH name partner Steve Axinn also opines on the dynamism and creativity of Behnam Dayanim, mentioning both his team player abilities in growing the firm and his passion for his practice.

 Advocate for Legalized, Regulated Online Gambling

Dayanim says he was a vocal proponent of legalized and regulated internet gaming long before the Government’s April 15th assault on the online gambling operations of the former “big three”— PokerStars, Full Tilt Poker and Absolute Poker/ Ultimate Bet.

He says, “I respect gambling as a legitimate online activity. He adds, “I believe in the message,” and goes on to explain, “I see no reason not to allow internet gaming regulated with safeguards and protections, but available to any adult who chooses to participate. The people should be free to engage in it as they do with other forms of leisure activity online.”

Observing the Scene

Over this past summer, Dayanim kept abreast of the developments arising from the DOJ’s April 15 crackdown and the subsequent suspension of Full Tilt’s license by its regulators, the Alderney Gambling Commission. Apparently, however, it was like a bolt out of the blue when Dayanim learned of Groupe Bernard Tapie’s plan to acquire FTP.

Shortly after the Full Tilt hearing got under way during the week of September 19, Laurent Tapie, the son of GBT’s patriarch, contacted Dayanim to discuss representation of the Company in negotiations for Full Tilt Poker, noting they would require intimate involvement and approval of the DOJ.

By all accounts made by lawyers and law firms familiar with Dayanim’s practice and results for clients, he is well suited for his current role. Still, a multitude of issues will undoubtedly survive the anticipated deal Dayanim is expected to complete in the near future. While Dayanim demurs as to the specific points in the deal he is attempting to put together, lawyers around town speculate that the originality and cleverness of the plans on the table would stun even the most seasoned veterans of the Bar.

The DOJ has Multiple Horses on the Betting Line

In recent days, there has been nary a word from the protagonists. This has led some to wonder if the DOJ has slowed down the tempo of final negotiations with the GBT-DOJ-FTP while publicizing opposition to the dismissal of cases against John Campos and Chad Elie. Mr. Campos and Mr Elie are two of the eleven named parties preparing to stand trial in the April 15 indictment U.S. v. Scheinberg et al.

Last Friday, the DOJ trumpeted its latest and most inflammatory assault on online gaming operations in a fifty-one page document filed in connection with Campos and Elie’s respective bids to extricate themselves from the charges against them.

The Feds not only claimed that e-gaming is flat-out illegal under gambling statutes in place, they also scoffed at the notion that poker is a game of skill (lawyers debate the applicability of UIGEA, some claiming that poker should be exempt from enforcement because it is a game of skill) and upped the ante with more warring words, suggesting that online poker operations have been infiltrated by the infamous Cosa Nostra, the formal name applied to the organization better known worldwide as the Mafia.

The Government Shines Light on Scheinberg

The Government has taken particular aim at PokerStars’ founder Isai Scheinberg, claiming that he pursued Mr. Elie for restitution of monies Elie had allegedly embezzled from the online site. The Feds allege that a “collector” assisted in obtaining partial restitution of stolen monies. According to the Government, Elie was later hired by Scheinberg to develop “transparent payment processing” relationships with banks willing to take the business in exchange for fees and investments. Mr. Elie supposedly hooked up online poker payment processing with Campos’ Sun Bank of Utah until stopped by the FDIC. The DOJ claims the scheme violated multiple statutes. The cases against Elie and Campos have led to the DOJ’s litigation against online gaming companies’ activities as illegal under the Illegal Gambling Business Act of 1970 and under the Unlawful Internet Gambling Enforcement Act of 2006.

 Another Assault in Progress

The Feds’ response in last Friday’s papers provide fair warning of significant consequences if their allegations and arguments prove correct.  These papers have upstaged the noise of impending victory for FTP customers with shudders of looming doom for the online operators. For the moment, however, the saber rattling is just part of the game.

Only time will tell whether or not the Justice Department’s extraordinary record of convictions in the Southern District of New York will be reflected in the resolution of the Government’s April 15 criminal and civil cases related to online gaming operations.

 Ben Dayanim is Poised to Please!

In the meantime, Behnam Dayamin, GBT’s prodigious counselor, is keeping his eye on the ball and not on the flack. He appears to be patient and determined and prepared to work through the final details of a deal that will allow his client to put the Full Tilt Poker brand back on the map, against a backdrop of a reasonable process by which to address player repayments.

 As we go to press, there is no further word yet as to when the FTP-DOJ-Tapie plans will reach a conclusion one way or the other, but the smart money continues to bet that a stunning deal will be done.

The Smart Money Analysis.

As reported last week, the Justice Department apparently allowed Full Tilt poker CEO Ray Bitar to inform FTP shareholders of plans for a deal that would turn over the company or its assets to Groupe Bernard Tapie. A recap of this writer’s in-depth look at the email that triggered premature jubilation is provided for those less up-to-date on the recent, fast-moving events

The Bitar Email to Shareholders

 1. The email excludes any language to suggest that the company is being sold outright from FTP to GBT.

 2. The insertion of an alternative between the company and the company’s assets as the basis for the acquisition makes the presumption of an asset sale of sorts the likely vehicle for the acquisition.

 3. The careful language that refuses to refer to a sale at all–only to an acquisition by GBT–suggests that Full Tilt might be turning over or forfeiting its assets to the DOJ and the DOJ might then flip the assets over to GBT for a price payable to the U.S. Government by GBT not necessarily even made known to FTP.

 4. The “understanding” that “DOJ will reimburse US players” could be a very economical truth; lawyers around town insist that the DOJ may not see itself as responsible for paying out the entire player balance total, noting that the monies reflect not only player deposits but also winnings which may be looked upon differently.

 5. The email’s reference to the DOJ settling the outstanding civil litigation with the companies comprising Full Tilt is silent as to the DOJ’s responsibility, if any, to settle civil litigation between FTP and anyone other than DOJ.

DOJ—MARCHING TO THE BEAT OF ITS OWN DRUMMER

 For the moment, it still looks like only the DOJ is playing with a full deck in this power poker game. While Groupe Bernard Tapie’s legal counsel continues to move the ball down the court, Dayanim closed this evening’s interview noting there was no news he could report at this time. He left open the possibility of big news on the horizon.