Chad Elie

Chad Elie Responds to A. Jeff Ifrah Motion to Dismiss Malpractice Lawsuit

chad-elie2The legal battle continuing to brew between convicted Black Friday payment processor Chad Elie and prominent gaming lawyer A. Jeff Ifrah shows no signs of dissipating soon.  In the latest volley, Elie and his attorney, Sigal Chattah, have filed a response to Ifrah’s motion to dismiss that reiterates and expands claims made against Ifrah.

Elie’s response also includes dozens of pages of documentation, largely in the form of e-mails, that sheds more light on the complicated relationships between sites such as PokerStars, legal counsel such as Ifrah that often served as independent consultants, and third-party payment processors such as Elie who created the often short-lived channels through which Stars, Full Tilt, and other US-facing sites handle financial transactions for their American players.

FlushDraw remains the Internet’s leading outlet on the story, which has already provided eye-opening insights into the payment-processing business.

Among related FlushDraw pieces are a three-part examination of the complex Elie-Ifrah relationship (Part 1 / Part 2 / Part 3); two detailed excerpts from Elie’s plea-hearing allocution (Excerpt 1 / Excerpt 2) introduced by Ifrah and his own legal counsel along with his motion to dismiss; and our reports on Elie’s initial filing of the lawsuit and Ifrah’s subsequent motion to dismiss.

Elie’s response to Ifrah’s dismissal motion makes a great addition to the storyline.  In the latest filing, Elie and his attorney, Chattal, directly rebut Ifrah’s claims.  In that motion to dismiss, Ifrah and his attorneys, Brian Terry and Kenneth Lund, referred to Elie as a “confirmed liar who admitted under oath to willfully lying to banks for pecuniary gain for years.”

Regarding Elie’s accusations about Ifrah’s alleged malpractice and breach of fiduciary duties, Ifrah’s motion to dismiss included this footnote:

Plaintiff’s false and defamatory allegations include, among other things, that Defendants received commissions for payment processing; received payments from poker providers for procuring bank relationships; induced Plaintiff to enter relationships with banks for poker payment processing; induced Plaintiff to continue poker payment processing; were paid $4,000,000 by Plaintiff in attorney’s fees and commissions; cooperated with law enforcement against Plaintiff’s and other clients’ interests; failed to disclose conflicts of interest; breached rules of professional responsibility; as well as many other false claims too plentiful to be specifically enumerated.

That’s quite the laundry list.  Among the declarations made in Elie’s latest response are that Ifrah’s alleged bad actions occurred after Elie’s processing escapades in 2008 – 2010, first with Intabill-related processing and later with the ill-fated St. George, Utah SunFirst Bank operation.  Elie’s latest response clarifies his assertion that Ifrah actively assisted Elie in setting up several processing accounts at Chicago-area banks, after the FDIC-ordered shuttering of the SunFirst processing in November of 2010.

The latest filing by Elie includes these specifics:

6. I relied on Mr. Ifrah’s professional expertise as a top-tier litigation attorney with particular expertise over the field of online gaming, specifically Internet poker.

7. Acting upon such reliance, I engaged Mr. Ifrah’s services as his attorney and eventually, I paid Mr. Ifrah in excess of four million dollars ($4,000,000.00), in attorney’s fees and what Mr. Ifrah termed “commissions” during the course of Mr. Ifrah‟s representation of me.

8. Once indicted as part of the Black Friday Indictments, throughout the course of discovery with the U.S. Attorney‟s Office, I discovered the gruesome truth, that my own lawyer, Mr. Ifrah, knowingly misrepresented the facts and the law to me; that Mr. Ifrah hid critical documentation that had said documentation been disclosed to me I would have never continued to process poker.

9. It was clear that Mr. Ifrah, used his position and esteem in the internet gaming industry to further his own economic endeavors at my expense and to my prejudice.

10. Ifrah gave me wrong advice regarding poker processing so that Mr. Ifrah’s other client-operators of Internet Poker sites would benefit while Mr. Ifrah would make a windfall not just from me; but from these other clients that were paying Mr. Ifrah substantial sums to find them a payment processing solution that would allow them to operate in the United States without any apparent domestic presence here.

11. Mr. Ifrah specifically denied ever advising me that processing exclusively for Internet poker operators was legal. …

In the latest filing, Elie and his attorney, Chattal, asserted that Elie’s statement about not using a “reliance on counsel” defense made during his plea-hearing allocution does not bar him from from pursuing a claim against Ifrah, since Ifrah was not Elie’s attorney of record in the Black Friday matter, and that much of the criminal activity occurred via processing at Fifth Third Bank, prior to the formation of the Elie-Ifrah relationship.

Chattal’s brief, on Elie’s behalf, even quotes the following testimony from Elie’s plea hearing:

The Court: Did you as charged in the information in 2008 assist Australian processor Intabill in disguising poker payment transactions for the poker companies including by establishing a bank account that you represented would be used to process so-called payday loans but that you in truth and in fact was used to process transactions for PokerStars?

The Defendant: Yes, your Honor.

The Court: Did you in or about the summer of 2009 establish a bank account at Fifth Third Bank that you claimed would be used to process payments for various Internet membership clubs but that in truth and in fact you used to process millions of dollars in payments for the poker companies?

The Defendant: Yes, your Honor.

However, Chattal’s response omits the exchange immediately following that, where phrases such as “continuing into 2011” (SunFirst ended in late 2010), “three failing banks,” and “at least some part of that period” are likely to now have hotly contested relevance.

The Court: Did you beginning in and around the fall of 2009 and continuing into 2011 offer to invest millions of dollars into three failing banks, including SunFirst Bank, all of which have since been ordered closed by bank regulators  in return for processing Internet poker transactions?

The Defendant: Yes, your Honor.

The Court: Did you from in or about May 2008 to and including April 14, 2011, or at least some part of that period, in the Southern District of New York and elsewhere, combine, conspire, confederate, and agree with at least one other person to commit bank fraud, in violation of the laws of the United States?

The Defendant: Yes, your Honor.

Next time out, we’ll look at samples from the 50 pages of documentation Elie and his attorney have now filed in support of his claims against Ifrah.  Several of the inclusions are eye-opening, and shed light on the nature of PokerStars’ and Full Tilt’s processing efforts in the period preceding Black Friday.


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