Wall Street Journal Quotes Jeff Ifrah on Full Tilt Poker Deal

Nov 18, 2011

Wall Street Journal Quotes Jeff Ifrah on Full Tilt Poker Deal



A French investment group reached an agreement with the U.S. Justice Department that could pave the way for the group to take control of beleaguered online poker operator Full Tilt Poker, an attorney for the investor group said Thursday.

The agreement provides that U.S. poker players—who had $150 million credited to their player accounts but never paid to them by Full Tilt Poker—would seek compensation through the Justice Department. However, it doesn’t guarantee they will get that money back, according to people familiar with the matter.

Under the deal, the investment group, Groupe Bernard Tapie, will buy the company’s assets for $80 million, according to an agreement letter signed by Jason Cowley, an assistant U.S. attorney in Manhattan, and Group Bernard Tapie attorney Behnam Dayanim. The investor will try to restart Full Tilt’s operations outside of the U.S., Mr. Dayanim said.

The deal allows for some money in bank accounts associated with Full Tilt that were seized by the U.S. government to be given to the investment group, according to the agreement letter. Accounting for that, the amount spent by Groupe Bernard Tapie for the assets would actually be around $40 million, according to a person with knowledge of the situation.

Now that the investors have reached an agreement with the Justice Department, Full Tilt and the investors will work out final terms of an agreement with one another “to bring this matter to a complete resolution as soon as possible,” Full Tilt said in an emailed statement.

The deal will require Full Tilt’s current owners reaching a settlement of a civil lawsuit brought by the Justice Department against the company and forfeiting the company to the government, the agreement states. Groupe Bernard Tapie would then buy the company’s assets from the government, and the government could use those funds to pay back players owed money by the company. Full Tilt has denied the civil suit’s allegations.

The deal has the support of the company’s current chief executive, Raymond Bitar, and is expected to pave the way for U.S. poker players to get paid back at least much of the money credited to them that was never paid by Full Tilt, said Jeff Ifrah, an attorney for Mr. Bitar.

Mr. Ifrah said Mr. Bitar wouldn’t profit in the sale or gain a stake in the new version of the company.

In a statement, the company’s attorney, Barry Boss, said he is pleased the agreement “provides a mechanism for U.S. players to get repaid.”

A spokeswoman at the Justice Department declined to comment.

On April 15, the Justice Department shut down the U.S. business of Full Tilt, once the world’s second-most-popular online poker site, along with its bigger competitor, PokerStars, and another company, Absolute Poker. The government also indicted Mr. Bitar and others on criminal charges and filed a $3 billion civil suit against the three companies, seeking $1 billion from Full Tilt.

The government alleges the companies engaged in bank fraud, money laundering and ran illegal gambling operations. The companies have denied the allegations and say the U.S. laws don’t specifically outlaw online poker, which they say is a game that involves skill, in contrast to other gambling that is purely chance.

Full Tilt said immediately following the government’s charges in April that it “is and has always been committed to preserving the integrity of the game and abiding by the law.”

Mr. Bitar, who lives outside the U.S., hasn’t been arrested for the charges and hasn’t responded to them.

While PokerStars returned money it owed to players in the U.S., Full Tilt at the time of the crackdown was nearly out of cash and unable to pay back the $150 million credited to its U.S. players. In June, regulators shut down the rest of the Dublin-based Full Tilt’s operations, leaving thousands of poker players world-wide unable to access the money credited to them.

Full Tilt was licensed in the U.K.’s Channel Islands before its license to operate around the world was revoked.

Under the deal reached between Groupe Bernard Tapie and the Justice Department, the investors will “repay or make whole” poker players outside of the U.S. who are believed to be owed about $150 million, according to the agreement.

The company wouldn’t be able to operate in the U.S. unless a new federal law is imposed allowing online poker.

The agreement would allow most of Full Tilt’s 23 current shareholders to take a small percentage of the new entity. However, Mr. Bitar and three other company board members named in the Justice Department’s civil lawsuit against the company wouldn’t be allowed to own a piece of the company going forward, the agreement states.

In September the government accused Full Tilt owners and executives of defrauding players by paying themselves $444 million even as funds owed to users of their site—poker players—dwindled. Government actions to limit the company’s ability to process money through banks had made it increasingly impossible to move player money into company-affiliated bank accounts, the government said. A U.S. attorney called the scheme a “Ponzi scheme.”

Attorneys for Mr. Bitar and others have denied those allegations constituted a “Ponzi scheme.”

A settlement by the company won’t prevent the Justice Department from going ahead with its suit against those board members, according to a person familiar with the matter.

Write to Alexandra Berzon at