Phil Ivey's lawsuit against Full Tilt Poker, which was filed in mid-2011, took center stage in Part 5 of PokerNews' sit-down interview with Howard Lederer (pictured). Ivey's lawsuit attempted to absolve the eight-time bracelet winner from his non-compete clause and Lederer called the legal action "devastating," "horrific," and "absurd." Read our recaps of Part 1, Part 2, Part 3, and Part 4.Watch Part 5 here.
The 31-minute video began with PokerNews COO Matt Parvis asking Lederer why Full Tilt continued accepting new deposits from non-U.S. players post-Black Friday when a document from CEO Ray Bitar revealed that the site couldn't even absorb a $5 million bank run. Lederer responded, "I, of course, thought about it a lot. I remember in April calling for bankruptcy counsel. Get some lawyers on the phone that are experts in bankruptcy law and just ask them some simple questions."
Lederer claimed his main concerns were preserving the company's assets, finding a buyer, and getting players paid. Among the potential suitors early on was Full Tilt's chief rival at the time, PokerStars: "We knew they could potentially be in the mix. I believe there was a text message sent to Chris [Ferguson]. At that very early state, Ray didn't seem to think it was a good idea. Our lawyers had a lot of reservations, reservations that turned out to be quite accurate. Very early on, it didn't seem like a great idea."
Ivey's lawsuit was for $150 million, which Lederer claimed wasn't possible given Full Tilt had little cash on-hand and assets its were slowly weakening in value. "The Professor" detailed, "He wanted to be able to approach other sites to represent them, which presumably would give him a lot of leverage with us. But at the same time, he wanted to keep his shares [in Full Tilt]."
Lederer was fumed at Ivey's lawsuit, telling Parvis and PokerNews readers about a conference call with Ivey (pictured) and his legal team: "I just simply said, 'The company is in peril right now. The assets are what are going to get our customers paid. You are asking us to weaken the value of our assets right now at our time of need. And you're asking for something that has no value to you.' There was very little chance he would have an opportunity to represent another online gaming site prior to Full Tilt resolving its issues."At the time, several players in the poker community commended Ivey for taking a stand against Full Tilt. Lederer countered, "He wasn't speaking out for anybody except himself. He had a moral obligation to the poker community to do everything he could to, at the very least, not damage the company he had greatly profited from… The lawsuit was absurd."
Did Ivey's lawsuit cause a delay in finalizing a deal? "Clearly, the lawsuit hastened the company's demise as a growing concern and greatly complicated the company's ability to do an effective deal," Lederer asserted.
Back in Full Tilt's headquarters in Dublin, Bitar continued to receive a salary from April 2011 onward despite the evolving financial crisis.
Then, in early June, owners of Full Tilt called for a member-wide meeting and delivered a "Member Written Consent," a document that called for the removal of the four Board members and of Bitar as CEO. The document called for a new Board to take over consisting of Phil Gordon (pictured), Ivey, and Andy Bloch. At the same time, one other Full Tilt Poker member, J.K. Scheinberg, arrived in Dublin and announced himself to the staff as the new CEO. Lederer called that move "weird" and "disruptive."The same "Member Written Consent" also called for a $20,000 per month salary for being on the Board. Lederer reacted to the language by saying, "Are you kidding? We're going to pay ourselves that?" Prior to that point, no financial compensation had existed for being on Full Tilt's Board.
Ultimately, Bloch questioned whether he should take his Board seat. Without Bloch's participation and Scheinberg insinuating that he would work from the United States, Lederer assessed, "We would have literally been a ghost ship."
Lederer reflected, "The greatest mistake I made after April 15 was not putting a stop to the silliness and putting a stop to this Board… I could have killed that Board in five minutes… Our customers deserved more fight from me. I knew it was a big mistake."
Part 6 of "The Lederer Files," which covers Full Tilt's loose player loan policy and its eventual sale to PokerStars, is now posted on PokerNews' website. You can discuss the series in this PocketFives thread.
