Lederer, Ferguson Refile Motions to Dismiss “Black Friday” Civil Complaints
Plenty of news on the Full Tilt / Black Friday poker front today, starting with the refiling of a motion by Full Tilt founders and board members Howard Lederer and Chris “Jesus” Ferguson to dismiss the civil complaints against them, in which the Department of Justice seeks more than $40 million from each of the two.
The re-filing was made necessary by the DOJ’s filing of its own “Second Amended Complaint” a couple of months back, which expanded on the civil complaints levied against Lederer and Ferguson, among others. Lederer and Ferguson had originally filed a motion to dismiss back in July, but that motion was rendered invalid by the amended complaint, necessitating this week’s refiling.
As happened in the first go-round, Lederer’s attorney, Elliot R. Peters of the San Francisco law firm Keker & Van Nest LLP, filed the motion to dismiss. Ferguson’s attorneys, Julie Withers and Ian Imrich, then referenced the Lederer motion as the basis for their own similar motion to dismiss, with Imrich himself quickly posting the updated brief.
Well, a reading of this revised Lederer motion reveals it to be long on bombast, and short on substance. Let’s get the full introduction of the filing into the public discourse, since it’s quite tasty:
The original complaint in this case made no mention of Howard Lederer. The First Amended Complaint (“FAC”) added Lederer, charging him in an alleged scheme to defraud customers of Full Tilt Poker (“FTP”), which was touted as a “Ponzi Scheme” in the United States Attorney’s press release. But when Lederer moved to dismiss that complaint, whose threadbare allegations stated no claim against him, much less a fraud claim, the government went back to the drawing board. The result is the instant sprawling, 133-page Second Amended Complaint (“SAC”).
The SAC is so structurally complex that it takes a cartographer to understand what is being alleged and against whom. As to Lederer, the allegations of scheming to defraud customers, the centerpiece of the FAC (“First Amended Complaint”), are gone. The centerpiece of this complaint as it pertains to Lederer is the allegation that FTP—an online poker site operating abroad—was an illegal gambling business under the Illegal Gambling Business Act, (“IGBA”), 18 U.S.C. § 1955, rendering illegal any proceeds Lederer derived from it. Never mind that one month before the government filed the SAC, the Honorable Jack B. Weinstein, United States District Judge for the Eastern District of New York held in an exhaustive, 120-page opinion, that poker does not constitute “illegal gambling” under the IGBA. See United States v. DiCristina, F.Supp.2d , No. 11–CR-414, 2012 WL 3573895 (E.D.N.Y. Aug. 21, 2012). Unless the Second Circuit reverses DiCristina, the government’s IGBA theory here is likely dead on arrival. For the reasons Judge Weinstein so meticulously catalogued in DiCristina, poker is not “gambling” as defined by the IGBA, and FTP’s activities consequently fall outside of that statute’s prohibitions.
Apparently hedging its bets against the likelihood that its IGBA claim may hold no water post-DiCristina, the government has added a new claim in the SAC—an alleged violation of the Travel Act, 18. U.S.C. § 1952. But far from stating a cause of action against Lederer, the new Travel Act claim merely underscores the weakness of the government’s shifting legal theories.
In fact, this new claim stands on even shakier ground than the IGBA claim and must also be dismissed, since its existence relies on the Court ignoring explicit qualifying language in the very statute on which the government relies.
Because the government has disclaimed any attempt to state a fraud claim against Lederer—either based on alleged bank fraud or a fraud against FTP’s own customers—the personal money laundering claim must be dismissed in its entirety, along with the First and Second in rem claims against Lederer’s property.
[All in the above that is bolded, done by me for emphasis — hh]
That’s really it — the rest of the 33-page filing cites various court precedents and handles other legalese, going into the specifics of why this claim or that claim or another claim ought to be dismissed.
Okay, all that stuff about “threadbare” and “sprawling” and “back to the drawing board” is a thin attempt to convince those who might actually read the complaint that this is an instance of the government trying to bury a defendant under paperwork.
Which makes this line even funnier: “The SAC is so structurally complex that it takes a cartographer to understand what is being alleged and against whom.” Seriously, did a lawyer really write that? Especially some guy who’s being paid by the hour?
Let’s re-parse that. “Dear Judge, this is really a lot of paperwork. Boy, it’s sure a lot. I mean, really, a lot. If you dismiss this, you won’t have to read it all.”
Beyond that, however, the motion mixes possibly good points with belly-busters in a relative equal mix. There is lots more evidence regarding the involvement of (especially) Lederer and Ferguson, some of which has even emerged in recent days, and the fact that it’s omitted from the general complaint doesn’t mean that the DOJ doesn’t have it or won’t introduce it. The intent is merely to show that there is enough evidence to warrant filing the case and seeking a trial, and all of Elliot’s “threadbare” pomposity doesn’t change that.
Similar, while the IGBA statutes may or may not be relevant — and you can bet that that Weinberg decision will be appealed soon — the Travel Act stuff is another matter.
I wrote a newsy brief about the filing this morning over at pokerfuse, and commenter TA Miller was the first to note another salient point, about that meddlesome Travel Act:
“[Elliot’s] MTD of the IGBA related forfeiture allegations are quite convincing, but the idea that a Travel Act (a statute that specifically targets racketeering) violation could not be considered a RICO (Racketeering Influenced and Corrupt Organizations) predicate is laughably absurd.”
What to expect from the latest motion to dismiss? Two words: motion denied. It’s pretty much that simple.