Chad Elie Lawsuit Against A. Jeff Ifrah Dismissed
The civil lawsuit filed in Nevada by convicted online poker payment processor Chad Elie against prominent gaming attorney A. Jeff Ifrah has been dismissed, according to court documents published earlier today.
The decision, first released by gaming attorney Ian Imrich via the JDSupra legal documentation site, shows that presiding U.S. District Judge James C. Mahan dismissed all eight of the allegations brought by Elie and his attorney, Sigal Chattah, against Ifrah.
The charges levied by Elie against Ifrah included two different instances of claimed professional malpractice, one in the Black Friday matter and another in an earlier matter where Chad Elie’s Viable Marketing came to be represented for a while by Ifrah, through a convoluted series of events.
Other charges by Elie against Ifrah included breach of contract, breach of covenant of good faith and fair dealing, intentional misrepresentation and fraud, a plea for damages from alleged racketeering activities, civil conspiracy and collusion, and an attempt to Elie to pierce the corporate veil of PokerStars (for whom Ifrah provided unofficial legal services) in an attempt to uncover more documentation of Ifrah’s alleged misdeeds.
In real-world terms, Elie alleged that Ifrah missed an important filing deadline in his non-poker Viable case, and in poker matters, allegedly induced Elie to continue to seek payment processing solutions on behalf of PokerStars and Full Tilt when Elie would have been willing, according to his lawsuit, to drop the processing scheme.
Most of the counts in Elie’s complaint were dismissed by Judge Mahan under the principle of judicial estoppel, which prevents plantiffs from changing their stories in an attempt to win favorable later judgments. That was a key component of an earlier motion to dismiss brought by Ifrah and his attorney, who noted that Elie had explicitly admitted to lawbreaking behavior in the course of reaching a plea deal with federal prosecutors over his Black Friday-related processing roles.
Later, in his lawsuit, Elie claimed that he continued in the business only after being promised by Ifrah, via legal opinions from several interested law firms, that payment processing for poker was legal. Elie’s claims were undercut by statements such as one submitted by federal prosecutors in Elie’s own case. Back in 2008, Elie had told another payment processor, Andrew Thornhill, “I don’t know how much traffic or data he has but I can handle the riskiest shit. And I can make everyone a SHIT ton of money.”
Elie, one of Black Friday’s 11 individual defendants, eventually pled guilty to reduced charges, paid a $500,000 fine and served five months in a California work camp.
Elie’s admissions of guilt in the processing of securing his plea deal subsequently appear to have barred the door to him recovering damages from others in civil claims, although Judge Mahan technically dismissed all of the counts of Elie’s lawsuit without prejudice, meaning that if Elie can find cause to sue without violating the principals of estoppel, he is free to do so. That may yet arise in the matter of Elie’s Viable Marketing case, which is largely separate from the poker-related matters, and was deemed unripe in accordance with a motion to dismiss made by Ifrah.
The sweeping dismissal allowed Ifrah to dodge one of the most interesting claims made by Elie — that Ifrah himself was among the confidential informants serving as source for the Souther District of New York US Attorney’s Office of Preet Bharara. Ifrah has never answered questions regarding that specific allegation. However, it is also known that investigators were aware of Elie’s processing activities for years, via Elie’s relationships with the above mentioned Thornhill, payment processors John Scott Clark and Curtis Pope, and the Intabill processing operation headed by Daniel Tzvetkoff.
On the flip side, accused attorney Ifrah lost no time in releasing a press release (complete text below) announcing the dismissal of the lawsuit and taking a few healthy whacks at Elie. The PR, issued by Ifrah Law, noted that Elie was a “disgraced payment processor was convicted of fraud and other charges in 2012,” and quoted Black Friday sentencing judge Lewis A. Kaplan’s statement that Elie’s actions were “a deliberate or at least criminally reckless spitting in the eye of the government and laws of the United States.”
Ifrah also stated, “While we wish to put this case behind us, we now have our reputations — which we’ve worked extremely hard to build — to repair. We are pursuing legal fees and will consider a defamation claim.” The claims for legal fees appear likely to proceed, the defamation claim less so, since it could possibly mean that Ifrah himself would have to voluntarily lower the veil of corporate secrecy he has, to date, worked to keep secured.
Elie’s loss, despite his publication of numerous documents and smart-phone text grabs of Ifrah messages that purported to show Ifrah’s deep involvement, demonstrates that it’s hard to make any sort of admission of guilt and then seek to gain a later judgment in related matters. Independent of Ifrah’s actions, Elie could likely have prevailed only if he had gone to a full trial in his Black Friday criminal indictment, which would have necessitated risking a much longer prison sentence.
The Ifrah Law PR release:
Ifrah Law Announces Win in Chad Elie Case
Judge Dismisses All Claims by Convicted Online Poker Payment Processor; Ifrah to Consider Defamation Charges
February 12, 2014 12:39 PM Eastern Standard Time
WASHINGTON–(BUSINESS WIRE)–Ifrah Law announced today that a United States District Court Judge on Monday dismissed claims against noted gaming attorney Jeff Ifrah made by convicted online poker payment processor Chad Elie. The disgraced payment processor was convicted of fraud and other charges in 2012, serving five months in jail. At Elie’s sentencing, Judge Lewis Kaplan described his actions as “a deliberate or at least criminally reckless spitting in the eye of the government and laws of the United States.”
“We can’t speculate why Chad Elie chose to strike out and blame us for his own actions,” said Jeff Ifrah, the founder of Ifrah Law. “We can only speak to the facts. And those facts are clear, unambiguous, and directly contradict Elie’s claims against us.”
As part of the U.S. government’s “Black Friday” crackdown in 2011 on three Internet poker companies — PokerStars, Full Tilt Poker and Absolute Poker — Elie was indicted and pled guilty to charges of conspiring to commit bank fraud and operating an illegal gambling business.
In April 2013, while still in jail, Elie filed suit against Ifrah, claiming Ifrah misled him about the legalities of processing poker. He also took to Twitter, making disparaging allegations against numerous former business partners and claiming to be a government scapegoat.
“We pride ourselves on our strong, long-term relationships with clients, so when a former client sued us we were extremely shocked and disheartened,” Ifrah said. “However, what was truly confounding and upsetting was how far out of left field and utterly false these claims were.”
In his order to dismiss, U.S. District Judge James C. Mahan said Elie’s claims directly contradicted his sworn statements under oath. Under oath, Elie admitted that he knew his conduct was illegal while he committed the crime, and denied that his criminal conduct was based on the advice of counsel.
“But the evidence doesn’t end there,” Ifrah said. “Prior to his guilty plea, Elie contradicted his later statements under oath, claiming he relied upon the advice of several lawyers about the legality of his actions. However — and this is important — he never once claimed to have received any legal advice from my firm or myself. Even more damning is the fact that Elie knowingly and illegally processed payments for nearly two years before his first-ever contact with our firm and myself.”
Ifrah continued: “While we wish to put this case behind us, we now have our reputations — which we’ve worked extremely hard to build — to repair. We are pursuing legal fees and will consider a defamation claim.”