Howard Lederer: Full Tilt Made $2 Million Mistake in Erick Lindgren's Favor
Part 6 of the PokerNews “Lederer Files” was released midday on Thursday and chronicled the loose loan policy Full Tilt had with its sponsored pros. In the 27-minute video, Howard Lederer(pictured) explained that following the discovery of a nine-figure backlog, loans to pros were called in.
Watch Part 6 here. And make sure to check out our recaps of Part 1, Part 2, Part 3, Part 4., and Part 5.
“The Board informed the membership pretty early on that there were members that owed the company money and they needed to pay it back,” the Full Tilt Board member rehashed. “We got a lot of resistance. As of the end of May 2011, the only member who paid back what he owed the company was me. I owed the company $700,000 and I paid it in late May.”
Lederer later paid back another $300,000, which was the balance of his player account, upon the urging of Gus Hansen. Also making good on his debt was Phil Gordon, who sent in $11,000. Lederer said that Phil Ivey, Erick Lindgren, John Juanda, Ray Bitar, and David Oppenheim all had outstanding loans due to Full Tilt and “none of them paid back their loans… We kept asking them to pay their money back.”
Why didn’t the aforementioned members return what they allegedly owed Full Tilt? According to Lederer, Oppenheim argued that the company’s figure was off by $100,000. And as for Lindgren, on April 7, one week before Black Friday, Ferguson loaned Lindgren $2 million. Lindgren needed the money on Full Tilt in order to give it to another player. So, the money was transferred to the player in question, who withdrew it.
Lederer lamented, “I have no idea how it happened, but… somehow the message, ‘Give Lindgren $2 million,’ someone took that to mean give it to him on the site and someone else sent him a wire to his bank account.” Consequently, a $2 million loan to Lindgren (pictured) was mistakenly sent twice for a total of $4 million.
Ferguson called Lindgren to reclaim the money and “According to Chris, they straightened it out.” However, Lindgren never sent any money back. “I waited for Erick to be knocked out of Main Event,” Lederer recalled. “I called him the next day, he answered, and I said, ‘Hey Erick, do you remember the extra $2 million?’ He said, ‘Oh yeah.'”
Lindgren rationalized, “I didn’t know I owed it to the company, I thought I owed it to Chris,” but allegedly never paid back the money to anyone. “The leverage that the company was going to get out of these dollars to give it extra life and extra time was potentially invaluable to our customers,” Lederer stressed.
Meanwhile, Ferguson sent $14 million to alleviate some of Full Tilt’s financial woes. Lederer explained, “Chris had $14 million with the company in distributions that were not sent in because he didn’t want them. At some point soon after April 15, Ray said to Chris, ‘The company really needs this money.'” Consequently,Ferguson sent the company $14 million. “I don’t know anyone in the world that in Chris’ situation would have shipped $14 million to the company with no strings attached.”
In September 2011, the U.S. Department of Justice filed an amended complaint that called Full Tilt a Ponzi scheme. “I take great offense to the characterization that it was a Ponzi scheme,” Lederer defended. Rhetoric aside, the complaint named Lederer, Ferguson, Rafe Furst, and Bitar as the leaders of the Ponzi scheme.
Shortly thereafter, the notion of selling Full Tilt to Groupe Bernard Tapie came into play. Lederer noted, “This is a group that specializes in very distressed assets… [Tapie] came in through Jeff Ifrah, who is a really important member of the legal team. The agreement was just, ‘Here are the general terms the company will be acquired with. We’re agreeing to these terms and therefore we’re going to allow you to talk to the DOJ to create a global deal with them that will allow this deal to happen.'”
The GBT transaction might not have been optimal for players, however, as Lederer pointed out, “Players would have gotten paid pennies on the dollar, less than 10 cents.” The deal could have been completed as early as January 2012.
In April of this year, the Tapie negotiations came crashing down. “I was aware before April 24 that PokerStars was in the mix,” Lederer said of the eventual purchasers of Full Tilt. The site’s lawyers asserted that because the transaction was a forfeiture and not a sale, consent from Full Tilt members would not be necessary. Despite the legal opinion, Full Tilt executives reached out to shareholders and asked them to sign a document anyway.
“The Phil Gordon, Perry Freidman, Scheinberg group had no interest in signing it,” Lederer relayed. “They ignored us. It’s just spite, I guess. I don’t really know why. They decided not to sign it. John Juanda also decided not to sign it. I find it ironic that the only two members besides Chris and Ray who have made public statements about this deal and about their pleasure that a deal was completed are John Juanda and Phil Gordon.”
Juanda was tied for the second largest shareholder of Full Tilt.
More installments of PokerNews’ exclusive sit-down with Lederer are due out in the coming days. You can discuss the series in this PocketFives thread.
