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PPA Linked to Full Tilt / PokerStars SunFirst Bank Lobbying Effort, Part 2: Building Elite Debit

The online poker payment processing operation called Elite Debit, run through the SunFirst Bank of St. George, Utah, came about as a chain reaction of the failed Australia-based Intabill processing operation, which was led by Daniel Tzvetkoff and included Curtis Pope and others.

sunfirstbank-logoA second processing operation created in Intabill’s wake collapsed in 2009 and led to PokerStars filing a lawsuit against Elie in an attempt to retrieve more $4 million the site believed Elie had misappropriated.  However, through a complex series of negotiations and allegations by Elie of identity fraud by his former partners (including Pope), PokerStars and Elie ended up splitting the disputed $4 million and Elie recommended a new possible processing solution for Stars, courtesy of the connections of his internet-marketing mentor, Jeremy Johnson.

Johnson had prominent ties with Utah’s top legal officials, several of whom he counted as personal friends, and he had powerful connections within the small SunFirst Bank of St. George, Utah.  One of the best lines regarding SunFirst, as later quipped by an employee to court-appointed regulators, was that SunFirst was “The Bank of Jeremy Johnson,” such was his influence due to the many millions he funneled through the bank.

Elie believed that through his connections with Johnson and their combined knowledge of a new form of remote online depositing called “Check 21” processing, they could help Stars solve its problems transferring money to and from US players.  (That the operation would involve mis-coded financial transactions and dummy online sales sites became evident only later.)

Stars, in desperate need of US-based payment processing channels, agreed to go ahead with the Elite Debit operation, and also pursued a related opportunity to invest in SunFirst itself in its pursuit of a friendly US banking base.

Elite Debit, named for Elie (ELItE), began processing for Stars in November, 2009.  Jeremy Johnson was the primary executive behind Elite, even if he put the paperwork in the names of his business associates, including Elie.

By late February of 2010, Full Tilt was recruited into the Elite / SunFirst operation as well, with actual processing believed to have begun in March.  Two special business entities, out of more than 60 that Johnson controlled, were added to Johnson’s corporate web: Triple Seven LLC (for PokerStars), and Powder Monkeys LLC (for Full Tilt).  These were tied to and intermingled with the many other corporate activities Johnson ran through the SunFirst bank, where he enjoyed virtual carte blanche.

The processing through SunFirst on behalf of Full Tilt and PokerStars was thus estabished and by early 2010 was humming along, processing millions in transactions per week.  However, its legality remained questionable, despite the willingness of SunFirst’s cash-strapped bank executives to go along with processing activity.

Whether the lobbying effort grew out of SunFirst’s own desire for legal confirmation or whether it was the sensing of an opportunity by lawyers for Stars and Tilt remains unexplained, as does the mechanism of how John Pappas and the PPA became involved in lobbying on SunFirst’s behalf, to benefit Stars and Tilt.  The lobbying effort appears to have begun in conjunction with Full Tilt joining the SunFirst operation, but the failure to procure a beneficial legal opinion from the Utah AG’s office did not cause Full Tilt to back out of the arrangement.

The e-mails and related documentation forwarded by Johnson to the Salt Lake Tribute show a connected circle of executives and lawyers interested in the success of the SunFirst processing.  Those included Jeremy Johnson and and Chad Elie of Elite Debit, the PPA’s Pappas, two prominent attorneys connected to Full Tilt, A. Jeff Ifrah and Marc Zwillinger, and of course Utah’s Deputy Attorney General, John Swallow.  Others may have been involved as well, and several other gaming attorneys show up on opinions rendered as part of the lobbying push.

Zwillinger’s involvement is especially noteworthy, as he also served as counsel representing the PPA’s amicus interests in the later Eastern District of New York federal case wherein presiding judge Jack Weinstein issued an opinion declaring poker a game of skill.  Thus a lengthy relationship between Zwillinger and the PPA is also established.

By March of 2010, only weeks after Full Tilt had joined the Elite Debit / SunFirst operation, these executives and lawyers had agreed to a multi-front lobbying operation targeting Swallow and Shurtleff, the top two Utah AG officials.  The plan was to submit to Shurtleff and Swallow legal opinions crafted by prominent gaming attorneys, and persuade them to issue their own legal opinion supporting the legality of SunFirst’s online poker processing.

Had the lobbying worked, and thus supported by an opinion buttressed by Utah’s top legal officials, the bank would be much less likely to be targeted by the types of seizures and takedowns that had closed other online processing channels.

And… there were a couple of kickers.  The lobbying was designed to be done on behalf of SunFirst, the bank itself, rather that the Elite Debit entities, the better to keep the Utah-based corporate veneer in place.  Also, through some sort of communal talks between those involved, it became known that both Jeremy Johnson and the PPA’s Pappas had previous connections to Shurtleff.

Johnson had long since bragged of his close ties to Shurtleff and Swallow, and pictures of Johnson and Shurtleff aboard Johnson’s private jet and in Johnson’s yellow Lamborghini have circulated the internet for two years.  The connection between Pappas and Shurtleff has yet to be uncovered, but certainly existed, and by March of 2010, it was already cited by Johnson as part of their preparatory lobbing plans.

Johnson may have first met Shurtleff through his work as a staffer for Arizona Congressman John Shadegg, and if not there, then it was likely through work related to Pappas’s work at DC lobbying firm Dittus Communications.

Excerpts from these e-mails have already been published by the Salt Lake Tribune, and are therefore deemed to be genuine.  Taken from a composite of notes forwarded by the Tribune, the entries below are complete for shorter e-mails and have been reduced to paraphrased, short-hand summaries in a couple of later instances — not including those below, but in a couple of instances appearing in later parts of this series.

With the headers and e-mail addresses also attached and the same entries already published by the Tribune, the only way these could be faked is if falsified somehow by Johnson himself, a possibility which exists but seems highly unlikely given the depth of information of the Tribune’s ongoing series on the Swallow bribery allegations.

These e-mails’ existence demonstrates the shared knowledge and ongoing involvement of Pappas and the PPA in the private SunFirst lobbying effort.  Full Tilt counsel Jeff Ifrah appears to have served as the go-between for many of the communications, and may have been the person putting Johnson in touch with Pappas.

The notes as provided to this author include these e-mail excerpts and summaries:

From: [email protected]
Re: Utah Draft Opinion
March 4, 2010
To:  [email protected]
Previous message from “A. Jeff Ifrah [email protected]

To: [email protected] and [email protected]
Please take a look at this. We would like you to deliver this to the Utah AG and request that he meet next week T-W or Th, with me and the Executive Director of the Poker Players Alliance (John Pappas) who he already knows.

March 8, 2010, JJ @elitedebit.com
To: [email protected]
Re: Utah draft opinion
Any progress on his opinion? Do you think I can come up and meet with Mark about it next week?

March 8, 2010
From: [email protected]
Mark and I met today and we discussed it and he read it like I did. Can I call you tomorrow and we can talk about it? Utah law is less lenient than federal law. But I have some ideas that should help. Let’s talk tomorrow.

By early April of 2010, over a year before Black Friday, Pappas can be confirmed to be a party to the lobbying communications, as in this exchange between Pappas, Zwillinger, Ifrah and Johnson:

[email protected]
arranging a meeting with Shurtleff. SLC Tribune reporter inquiring why he meeting with AG. To jj Marc J. Zwilger; Jeff Irgrah, re: UT AG meeting
4-1-2010

[Miscellaneous header in notes:]

April 1, 2010
From: Marc Zwillinger [email protected]
To [email protected]

So what happened with the multi-pronged lobbying effort?  We’ll pick that up in Part 3.

Next, Unsuccessful Lobbying

Links

Part 1

Part 2

Part 3

Part 4

Timeline

 

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