Full Tilt Legal Counsel: "Deal is a Great Outcome for Stakeholders"[ return to main articles page ]

By: Dan Cypra    [See all articles by Dan Cypra]
Published on Aug 10th, 2012
It's been a wild last 10 days for members of the online poker community. PokerStars, the largest site in the land, purchased the assets of its one-time chief rival, Full Tilt Poker. The legal firm Cozen O'Connor represented Full Tilt Poker in the deal, which was consummated on Thursday with the receipt of $225 million sent from Stars to the U.S. Government.

Anne Madonia, the Cozen and O'Connor attorney who led the corporate team that closed the deal on behalf of Full Tilt Poker, sat down with PocketFives to talk about the U.S. repayment process, the involvement of Ray Bitar and Howard Lederer, and the value of the Full Tilt Poker brand.

PocketFives: Thanks for joining us. Can you give us your view of the Full Tilt asset sale to PokerStars?

Anne Madonia: After working on multiple potential deals over the last 15 months, it's a great outcome for all of the stakeholders involved, so we're happy to have helped Full Tilt to this point.

PocketFives: Why is it necessary to have U.S. players go through the Department of Justice to be repaid rather than PokerStars itself? Was handling this a different way discussed?

Anne Madonia: My understanding is that we were required as part of the settlement that U.S. players would go through the DOJ remission fund. We didn't have a lot of leverage in negotiating and the U.S. Government mandated that. In thinking back over the last 15 months, there might have been some discussion to pay players in the U.S. directly through the potential buyer, but as the months passed, the DOJ became much more adamant about it going through them instead.

PocketFives: Are there any updates on the process for U.S. Full Tilt player cashouts? Forbes reported that there was a possibility that players would only be refunded their deposits instead of their full account balances.

Anne Madonia: Nothing has changed on that front. We still no information in that regard.

PocketFives: Can you talk about a few of the reasons for the failed deal with Groupe Bernard Tapie, led by Laurent Tapie (pictured)? Would U.S. players have been treated differently in that proposed deal?

Anne Madonia: There were many negotiations between the DOJ and Tapie that we were not privy to. Ultimately, the DOJ decided that they were not going to allow Tapie to purchase the assets after the forfeiture. The DOJ was concerned on a number of levels. Tapie being able to pay the rest of the world players was one of the key concerns for the Government and for Full Tilt. The #1 priority for us has been to get the best deal possible for all of the stakeholders involved.

PocketFives: What are the specific assets that PokerStars purchased?

Anne Madonia: They purchased all of the pertinent assets for the re-launch of Full Tilt. They purchased all of the operating assets.

PocketFives: How much were Howard Lederer and Ray Bitar involved in the deal?

Anne Madonia: Howard and Ray were very much involved in the negotiations with PokerStars and really wanted this deal to go forward.

PocketFives: If the deal with PokerStars were to have fallen through, what were the next steps?

Anne Madonia: There were different avenues that were available to Full Tilt. One would have been to continue to look for a buyer. There are so many operators and potential acquirers out there that were interested in these assets. Part of what we helped Full Tilt Poker and its owners and directors do is navigate the issues. Should they fight the civil forfeiture proceedings on the basis that online poker is not illegal in the United States? Should they liquidate? In the end, we negotiated a voluntary forfeiture with a buyer for the assets. Without a buyer, it would have been very different discussions with the DOJ.

PocketFives: What was PokerStars' motivation to make the deal happen?

Anne Madonia: I can't speak for PokerStars and I'm not privy to the legal or business reasons motivating PokerStars. If I had to guess, there are great synergies, so I'd imagine they took those into consideration. The assets that FTP had to offer, including Rush Poker, were assets they were obviously interested in. The player database is interesting as well.

PocketFives: Do you think there is value in the Full Tilt brand?

Anne Madonia: The future of Full Tilt Poker is in the hands of PokerStars. For the last 16 months, Full Tilt Poker's directors and managers undertook enormous efforts in a very difficult situation to maintain the value of Full Tilt Poker and its assets, including the employees, to accomplish this asset transfer. The Full Tilt Poker brand continues to have value today because of these efforts.

PocketFives: When did negotiating with PokerStars begin?

Anne Madonia: At various times, Full Tilt was under exclusivity. They spoke with lots of potential buyers. For example, in September 2011, they engaged with an investment banker to outreach to 50 potential private equity funds and operators. They did a lot of outreach. We first began to discuss a deal with PokerStars at the end of April.

PocketFives: What happened to the old Full Tilt Poker owners?

Anne Madonia: Certain directors, who are also owners, are not permitted to participate in any way with the ongoing Full Tilt operations. The owners of Full Tilt Poker continue as owners of the companies, which obviously no longer own any assets relating to the operation of the Full Tilt Poker online poker room. As set forth in the settlement documents, none of the Board members of Tiltware LLC will work for the new Full Tilt Poker site.

Comments

  1. Why would the DOJ ever approve the sell of a Ponzi Scheme?
  2. How can she say "its a great deal for all stakeholders involved" when she admits to have no knowledge/information about how cash outs to US players will be handled?
     
    3
  3.  
    Originally Posted by TheVillageGrinder View Post

    How can she say "its a great deal for all stakeholders involved" when she admits to have no knowledge/information about how cash outs to US players will be handled?


    this...

    like her saying...

    woman: every kid will get a present on Christmas!!!

    Q by random w brain: what about the kids in Ethiopia??...

    woman: oh well i don't really no anything about them getting their presents...

    random w brain: Welp I guess that makes you a moron or a Liar, which is it?
     
  4. "Anne Madonia: Nothing has changed on that front. We still no information in that regard."

    I still no understand...
  5.  
    Originally Posted by TheVillageGrinder View Post

    How can she say "its a great deal for all stakeholders involved" when she admits to have no knowledge/information about how cash outs to US players will be handled?

    She's saying that US players will get paid back in some fashion, and that ROW players will be made whole by PokerStars. Plus, she's talking about stakeholders in terms of Full Tilt Poker's owners and directors, whom she represented in the deal.
     
    Thread Starter
  6. " The owners of Full Tilt Poker continue as owners of the companies" what the heck. does that mean howard and the bunch are still gonna be owners just with no assets?
  7.  
    Originally Posted by Dan View Post

    She's saying that US players will get paid back in some fashion, and that ROW players will be made whole by PokerStars. Plus, she's talking about stakeholders in terms of Full Tilt Poker's owners and directors, whom she represented in the deal.

    She said all stakeholders. I consider myself included among all stakeholders. Don't say all if you only mean a couple groups of stakeholders. I don't consider getting some portion of my money back a "great" deal.
     
    3
  8.  
    Originally Posted by lynx9292 View Post

    " The owners of Full Tilt Poker continue as owners of the companies" what the heck. does that mean howard and the bunch are still gonna be owners just with no assets?

    Yeah this was pretty odd. But what I think she was referring to owners as the subsidiaries of FTP, the parent company. They still own those companies but they no longer own any portion of the assets of FTP.
     
    3
  9.  
    Originally Posted by A Bloomfield View Post

    Why would the DOJ ever approve the sell of a Ponzi Scheme?

    I think that was just rhetoric - not really sure anyone involved in the case ever really believed that. A lot of times, one party or another in a closely-followed court case will go to the press to try and bring the public to their side. In any event, ever since Madoff people seem intent on using Ponzi Scheme to describe damn near anything. It was a very poorly managed company in its final years that absolutely didn't handle its finances properly, but it's really difficult to relate it to an actual Ponzi Scheme.

     
    Originally Posted by lynx9292 View Post

    " The owners of Full Tilt Poker continue as owners of the companies" what the heck. does that mean howard and the bunch are still gonna be owners just with no assets?

    In many acquisitions, assets of a company are acquired rather than the company itself. So PokerStars' business entity now owns many or all of the things Full Tilt's business entity owned before. This includes the Full Tilt brand name, poker software, client base, employees and physical office (at least). I'm sure it includes many other things as well. The old Full Tilt company probably still has a few possessions - anything that wasn't an agreed part of the transfer. But they DO NOT own the actual Full Tilt Poker platform or anything like that. What they may still own are just things like their old company bank accounts and certain equipment Stars didn't want or something like that....nothing that affects anyone here really
     
  10. PocketFives: Are there any updates on the process for U.S. Full Tilt player cashouts? Forbes reported that there was a possibility that players would only be refunded their deposits instead of their full account balances.

    This maybe a stupid question, but if this did happen what exactly are they talking about? Every player would receive there deposits back? Just players with money in there accouint would receive money back?????
  11. That last part seems to be causing a lot of hysteria - normal in situations where people have money on the line and no control over the outcome. But at the moment I don't believe that's what they'll actually do. It's possible, I suppose, but it seems like it would be a gigantic hassle for them and would bring them a ton of negative attention
     
  12. The only point that no one seems to be mentioning is that the DOJ doesn't chase or prosecute any entity for free. They always get paid out of whatever funds they liberate from an offender. At best, we're going to have to be happy with a % of whatever money is available and owed to us.
  13.  
    Originally Posted by Dan View Post

    She's saying that US players will get paid back in some fashion, and that ROW players will be made whole by PokerStars. Plus, she's talking about stakeholders in terms of Full Tilt Poker's owners and directors, whom she represented in the deal.


    I understand where you are coming form, and whenever talking about stakeholders in a business sense you never include customers.

    She is only talking about shareholders and owners.

    The worst part is that she freely admits that they were using the possibility of bankruptcy or other liquidation methods to improve the deal for the owners(which is what she was being paid to do)

    None of the legal teams represented the players(customers) and so really the ones who did anything about us was Pokerstars and the DOJ.

    IT was just a cluster fuck of a position to be in and hopefully it will get sorted out soon.

    Oh yeah and anyone who still thinks it was a ponzi scheme please lose your password.Full Tilt was run poorly and the management made horrendous decisions in a lot of areas but the business model was/is solid. Just don't pay a bunch of has beens or random unknowns(to the casual playing public) a stupid amount of money per month, get rid of 100%RB for good.

    Tighten the purse strings and concentrate on promotions to get new money on site>placating a bunch of players who feel entitled to remuneration for a circumstance that the new owners had no control over.
  14. New headline "The crooks who stole from the shareholders make a good deal in getting back the money they stole"
     
  15.  
    Originally Posted by Gameslut View Post

    The only point that no one seems to be mentioning is that the DOJ doesn't chase or prosecute any entity for free. They always get paid out of whatever funds they liberate from an offender. At best, we're going to have to be happy with a % of whatever money is available and owed to us.

    BS statement , you take it out of Howards and Bitars funds. We are not the "offenders". You walk their ass into the bank and withdraw it all into a papersack with Reagan masks on DOj . Stick it to who really deserves it. Why should we as players have to foot the legal bill for their F-up.
  16. [QUOTE=Adam;6976976]I think that was just rhetoric - not really sure anyone involved in the case ever really believed that. A lot of times, one party or another in a closely-followed court case will go to the press to try and bring the public to their side. In any event, ever since Madoff people seem intent on using Ponzi Scheme to describe damn near anything. It was a very poorly managed company in its final years that absolutely didn't handle its finances properly, but it's really difficult to relate it to an actual Ponzi Scheme.

    I know, it irritates me to see people that are uniformed call it a Ponzi Scheme. It was the DOJ that came out and called it a Ponzi Scheme, if it truly was then why sell it to another company to victimize another group of people. It irritates me that they were allowed to throw that word out there with no ramifications.
  17. Heres what happen to funds recovered in the Bernard Madoff case.

    ""I think it is likely that at the end of the day most, if not all, of the recovered funds will be distributed to Madoff victims," said Robert Mintz, former federal prosecutor and now a partner at the New Jersey firm McCarter and English LLP, who estimated that the 1230 investors who were mailed checks today are so far getting back about 4.6 cents on the dollar.


    Mintz said that the courts have already decided that claims by victims should be limited to actual money invested rather than fictional paper profits that were lost when the scheme unraveled.

    note "actual money invested" yuck
  18.  
    Originally Posted by A Bloomfield View Post

    Why would the DOJ ever approve the sell of a Ponzi Scheme?

    Mandatory IQ tests before posting next time
  19.  
    Originally Posted by opgonbad View Post

    Heres what happen to funds recovered in the Bernard Madoff case.

    ""I think it is likely that at the end of the day most, if not all, of the recovered funds will be distributed to Madoff victims," said Robert Mintz, former federal prosecutor and now a partner at the New Jersey firm McCarter and English LLP, who estimated that the 1230 investors who were mailed checks today are so far getting back about 4.6 cents on the dollar.


    Mintz said that the courts have already decided that claims by victims should be limited to actual money invested rather than fictional paper profits that were lost when the scheme unraveled.

    note "actual money invested" yuck


    this is a little different. our money was won legitimately. we weren't promised profits that didn't exist and were just being stolen from someone else. the money we won wasn't stolen
  20. I understand that. But with the gov labeling of Ponzi I feel they may try to revert to past awards like this one and only give initial deposits. The anticipation is killing me. Its still bs the ROW gets their balance back within 90 days we may get squadush.
 
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