Law 360 Quotes Jeff Ifrah Following Dismissal of RICO Class Action Suit Against Full Tilt Poker.
A. Jeff Ifrah
January 31, 2012
Law360, New York (January 30, 2012, 7:58 PM ET) — A New York federal judge on Monday largely dismissed a putative Racketeer Influenced and Corrupt Organizations Act class action alleging that Full Tilt Poker and 10 individual defendants conspired to defraud company account holders of $150 million by freezing their accounts.
U.S. District Judge Leonard B. Sand dismissed the RICO plaintiffs’ claims against Full Tilt, the individual defendants and several other corporate entities, arguing that it was unclear at this point whether a conspiracy by the defendants or the federal government’s actions were the reason plaintiffs’ could not get access to their money.
“What is clear is that in neither case was the direct cause of the injuries the racketeering offenses alleged in the complaint,” the judge wrote.
He also rejected plaintiffs’ claims that individual defendants, who were not New York residents, duped them into putting their money into Full Tilt’s accounts by playing live, online poker games with players based in New York, but allowed New York common law conversion claims against some corporate defendants to survive.
The suit, targeting nine companies, 16 individuals and scores of John Doe defendants over the alleged scheme, stems from the federal government’s probe into and subsequent criminal and civil suits over the gambling site’s activities. The government’s case focused on allegations of bank and wire fraud and money laundering at Full Tilt and competitor sites PokerStars and Absolute Poker.
As a result of the investigation, on April 15 — known as “Black Friday” to the gambling community — prosecutors seized the assets of the so-called Big Three gambling sites, barring players from accessing their accounts. The plaintiffs filed the RICO suit seeking to recover those funds.
“We are very pleased with the outcome. We obviously fully agree with the court’s reasoning,” said Jeff Ifrah, lead counsel for the defendants.
Counsel for the plaintiffs declined to comment Monday.
According to the complaint, following regulatory changes in 2006 that left Full Tilt unable to process players’ electronic and credit card account deposits legally, the defendants formed a so-called enterprise through which to process the funds illegally through sham companies.
Following the Black Friday seizure of Full Tilt’s assets, the plaintiffs say, they have been unable to access their accounts or withdraw their money, amounting to $150 million in deposits.
The suit alleges that because of the defendants’ illegal activities, the plaintiffs were induced into investing their money in the accounts. Absent the defendants’ fraud, the plaintiffs would never have been denied access to their funds, it says.
Even though the U.S. Department of Justice has said the individual players’ funds are not subject to seizure and has even entered into separate agreements with the gambling sites to that effect, Full Tilt continues to refuse to refund the money, the plaintiffs claim.
The plaintiffs are represented by Thomas H. Burt, Beth Alexandra Landes, Gregory Mark Nespole and Lawrence Paul Kolker of Wolf Haldenstein Adler Freeman & Herz LLP.
The other defendants are represented by Alain Jeff Ifrah of Ifrah PLLC.
The case is Segal et al. v. Bitar et al., case number 1:11-cv-04521, in the U.S. District Court for the Southern District of New York.
–Additional reporting by Lisa Uhlman. Editing by John Quinn.