by Wendeen H. Eolis
Add the New York Times to the list of venerable mainstream media outlets that have bungled material facts and succumbed to confusing messages that emanate from the US Government’s crackdown on online poker.
Since the April 15 indictment US v. Scheinberg et al and the related civil forfeiture actions the warring protagonists have not been short on words and the media has lapped them up, sometimes with more accuracy, sometimes less.
Do facts matter?
In September, the Wall Street Journal hopped onto a US Department of Justice press release, reporting the DOJ’s amended civil forfeiture action that named additional defendants. The publication missed the nuance and mistakenly referred to the online poker companies referenced in the DOJ's criminal and civil actions of April 15th as indicted; this was not and is not the case.
After being questioned by Poker Player Newspaper, the Wall Street Journal got their facts straight—but without owning up to the original error.
Other media, picked up on the same press release and referred to the newly named defendants in the amended civil forfeiture action —Full Tilt Poker directors Howard Lederer, Chris Ferguson, Rafe Furst and Ray Bitar—as indicted. The only FTP director indicted thus far is Ray Bitar.
Is the US Attorney gearing up to bring more charges?
Meanwhile, Preet Bharara, US Attorney for the Southern District of New York continues to hype his ongoing investigation— without elaboration. Mr. Bharara’s now familiar refrain spawns periodic speculation in both the poker world and the legal world. But, according to one former senior federal prosecutor, “The Government cannot expand the current indictment; there would have to be a new grand jury empaneled to proceed down the road of an indictment of additional parties related to the current cases.”
Are “off the record” conversations and anonymous quotes guaranteed?
Careless homework, loosely analyzed speculation treated as fact, and miscommunications between reporters and their sources are always potential trouble. Take the case of CNN in its dealings with legal counsel representing Group Bernard Tapie, the company presently expected to complete a deal to acquire the Full Tilt Poker brand.
In November, CNN, one of the biggest stakeholders in news broadcasting, blew its obligations on an embargoed story. One of its reporters pulled the trigger on an article prematurely and misstated critical facts along the way. In a visible commitment to damage control, CNN took responsibility for the errors and corrected them. But CNN never filled in the blanks as to how and why the story saw the light of day before it was reviewed for accuracy or approved by Tapie’s lawyer, as apparently had been agreed.
Will the media stop misreporting on the anticipated deal among GBT-FTP and DOJ?
Bad reporting invariably leads to sources closing off access. This has never been truer in the poker world than this past month. A big buzz was created by GBT’s decision to share with the public the contents of an agreement with DOJ that would create a framework for acquisition of FTP’s assets. Since the agreement required dissemination of the details to FTP shareholders for their approval, it may have seemed like a no-brainer to put the company’s lawyer in charge of publicly explaining the document.
But after the CNN misfire, a slew of additional related misstatements by reporters far and wide appeared soon thereafter. According to one source inside the tent, among the faulty assertions was the claim that Full Tilt approved the GBT-DOJ deal, well before the matter was placed on the table for the necessary vote. Similarly there have been reports of a transfer of assets in progress without a scintilla of public word from any of the parties that would be responsible for such maneuvers.
Information related to the GBT’s proposed acquisition of FTP has come to a virtual standstill since late November. Several lawyers familiar with the ongoing talks say it is not plausible that a deal will be done before the end of January and caution that there could be plenty of tension in the deal before it is resolved one way or another.
It stands to reason that the escalated flow of misinformation is disruptive to the parties involved in trying to make a deal and increasingly frustrating, for FTP customers who have been riding an interminable roller coaster between resignation about substantive losses and high hopes for a speedy recovery of their locked funds.
But this may be the real reason for the DOJ’s decision to remain mum on negotiations in progress— including even the existence of a DOJ-GBT agreement that was confirmed to Poker Player Newspaper by lawyers for Tapie and Full Tilt.
Has the DOJ muzzled the protagonists?
In recent weeks the lawyers surrounding the deal have lost their collective voices, begging off all interviews and queries about the ongoing negotiations. The best one can get from them is that matters are moving along, and that in due course in an orderly way— news will be released, but not necessarily on the media’s preferred timetable.
Lawyers engaged in other parts of the DOJ’s prosecution of online gaming have observed that the US Attorney’s Office— especially the Southern District—does not appreciate others stealing their thunder. One senior partner from the world of “biglaw” adds, “There will probably be a much tighter lid on communications in general and the poker press will probably feel it more.” Yet it is the mainstream press that has published far more visible little bloopers.
Did the New York Times do justice to the DOJ’ memo on the Wire Act of 1961?
Last week the New York Times let no grass grow under its feet following the DOJ’s curve ball in its release of a startling internal legal opinion memo shifting its longstanding policy toward the Wire Act of 1961.
The New York Times reported that DOJ had called a foul on itself. In doing its homework, the “Old Gray Lady” noted DOJ’s assertion that the 1961 Wire Act’s prohibition of online gambling would be no more. Evidently, DOJ finally concluded this was a half-baked idea that should be tossed to the winds.
DOJ reverted to its original position from back when the legislation was originally passed. The Feds now say the Wire Act is directed at sports events and contests, effectively dismissing it as irrelevant to other forms of gambling- particularly noting lotteries.
Like most of the poker media, the Times heralded the opinion in its headline, “Ruling by Justice Dept. Opens a Door on Online Gambling.” True! Things are looking mighty fine for the prospects of legal intrastate poker. But the incomplete tabloid-like headline gives no hint of critical facts that could present a bundle of thorny issues for online poker—until deep inside the article. In paragraph 18 of the NYT report, the reader first learns, “The new policy merely reverses the Justice Department’s longstanding position that all forms of online gambling are illegal in the United States. It does not necessarily pave the way for national rules governing online gambling.”
Did the New York Times prove itself confused about FTP?
In another lapse, the “newspaper of record” also would have readers believing that Full Tilt Poker was based (licensed) either in Antigua or the Isle of Man. By this time, most of Full Tilt’s customers probably know better and so does most of the media. FTP has roots in California, was incorporated in Aruba, has its headquarters in Dublin, a secondary license with the Mohawk tribe of Kahnawake in Canada, and held its primary license in Alderney until late September.
FTP’s overseers finally sent the Company packing, after obtaining all of its outstanding licensing fees. The Alderney-based regulators got a token Christmas gift from the New York Times—a rare pass on its association with FTP.
Did the New York Times miss the tug boat?
Most press has become increasingly scathing in its criticism of Alderney as the base of operations of FTP’s online gambling business. Many FTP players see Alderney’s oversight—or lack of it—as the primary cause of their troubles. The Former Chairman of the British Gambling Commission, Peter Dean CBE, is presently heading an independent investigation into AGCCs handling of the affair. The AGCC sought out the independent investigator, but at this point it is of little solace to players who expect to be bogged down with burdensome responsibility in efforts to reclaim their funds.
While the FTP-DOJ-Tapie machinations ripen in the Manhattan US Attorney Office, the DOJ’s legal opinion memo released last week has put the poker world and the legal world into full throttle as the proponents and naysayers in the development of intrastate poker jockey for winning positions.
Editor’s Note: Wendeen Eolis is CEO of Eolis International Group a legal consultancy with specialized experience in the gaming space. She has served as a senior advisor to Governor George E Pataki and Mayor Rudy Giuliani. Her public service initiatives include advisory roles to federal and international agencies.. Wendeen was the first woman to cash in the main event of the World Series of Poker and is a proponent of licensed, taxed and regulated commercial, tribal, and online gaming.