Lederer Settles with SDNY, Keeps Mansion and more

Howard Lederer, shareholder and Board of Directors Member of Tiltware LLC, and one of the faces of the original Full Tilt Poker online poker site, has settled his civil case with the U.S. Attorneys Office, Southern District of New York.

Lederer was named, along with the other “FTP Insiders” (board members) in September 2011 in an amended civil complaint following the Black Friday charges against the company. He was charged with civil forfeiture claims based on illegal gambling business proceeds, conspiracy to commit bank fraud and wire fraud, and conspiracy to commit money laundering. A further superseding amended complaint was filed against Lederer in September of 2012, reiterating the previous claims, adding claims that Lederer and the other Board members defrauded the players out of more than $ 330 million (not having account balances available), making misrepresentations to the FTP regulator, misrepresenting that player funds were “safe and secure” both before and after Black Friday, covering up those misrepresentations and violations of the Travel Act.

During his tenure as a Board Member, Lederer collected more than $ 42 million in distributions and profit sharing. (This does not include salary or other payments also made to Lederer over the years). The second amended complaint asked the court that a money judgment of $ 42.5 million be entered against Lederer.  Lederer denied the charges, made a motion to dismiss all charges and made claims for all property related in the complaints.

This week, in a settlement, the numbers appear to be much less. 

As part of the settlement,  Lederer contends that Full Tilt Poker was a legitimate business, and prior to April 15, 2011, he was unaware any any wrongdoing, including that the company was unable to satisfy its player account liability. He further admits no wrongdoing.  Lederer also agrees to forfeit the following property:

  • All funds in the Lloyds TSB International account (#…402) in Isle of Man (amount not stated). This was one of the accounts cited in the original complaint.
  • All funds in the LPL Financial Accounts (where Lederer set up his retirement account with FTP funds)
  • A 1965 Shelby Cobra automobile
  • His property at 309 Kingsclear Court in Las Vegas
  • $ 30,000. representing proceeds traceable to the sale of the 5426 Fawn Chase Way property
  • All proceeds traceable to the sale of the 2735 Twin Palms Circle property, less any outstanding mortgage amount owed, provided that the Twin Palms property is sold within 120 days from the entry of this Stipulation and Order of Settlement for a price not less than $440,000. Alternatively, if the Twin Palms Property is not sold during that time period for an amount not less than $440,000, the Twins Palm Property itself shall be forfeited to the United States (collectively, the “Forfeited Property”). Lederer agrees to take all necessary steps to facilitate the immediate transfer of the Forfeited Property to the U.S. Marshals Service.
  • Also Lederer agrees to immediately liquidate all funds and other assets in his remaining accounts at Lloyds, which (not including the Lloyds 0402 Account) have a current total approximate U.S. dollar value of $168,000 (the “Liquidated Funds”).
  •  Lederer agrees to the entry of a civil money laundering penalty judgment in the amount of $1.25 million (the “Additional Funds”) , plus the Liquidated Funds (together, the “Money Judgment Funds”), and to the forfeiture of the Money Judgment Funds for disposition according to law, pursuant to Title 18, united States Code, Section 981, without admitting any liability thereunder. Within three days of the liquidation of the Liquidated Funds, Lederer shall pay to the United States the full value of the Liquidated Funds. Within three days of the entry of this Stipulation and Order of Settlement, Lederer shall execute a promissory note for the Additional Funds (the “Note”). The Note shall specify that $500,000 of the Additional Funds shall be due no later than 18 months from the date of the entry of this Stipulation and Order of Settlement and that the remaining $750,000 shall be due no later than 36 months from the date of the entry of this Stipulation and Order of Settlement. The Note shall be secured by the Skybird Property and the Hawk Ridge Property. The Note shall specify, and it is hereby ordered, that if either or both of those properties is sold within 36 months of the date of the entry of this Stipulation and Order of Settlement, the entire $1.25 million shall be due and owning immediately upon such sale.

Lederer further agrees not to work for, or derive money from, either directly or indirectly, through the operation of any internet gambling business in the united States, including businesses offering internet poker in the United States, until if and when a change in applicable law takes place making the offering of such gambling lawful in the United States and Lederer, or whatever entity with which he is affiliated, obtains appropriate authorization from all relevant governmental regulatory authorities.

In addition to the above, and besides a monetary judgment of $ 42.5 million, the government had requested that Lederer’s primary residence on Hawk Ridge Drive and the guest house on Skybird Court in Las Vegas be forfeited, along with three bank accounts at Wells Fargo Bank, another property in California and various other automobiles. According to the second amended complaint more than $ 42 million of funds originating from FTP companies moved from the Lederer Consulting account at Wells Fargo to another Wells Fargo personal account in the name of Howard and Susan Lederer. None of these however  were part of the final civil settlement agreement.

Chris Ferguson had joined in Lederer’s motion(s) to dismiss following the second amended complaint being filed.  Ferguson has not yet settled his civil case, but according to documents, negotiations for such a settlement are ongoing and, with Lederer having settled, Ferguson’s motion to dismiss is now a stand-alone motion. The government has until January 28, 2013 to respond to the motion and Ferguson will have until February 18, 2013 to file any replies. Rafe Furst settled his case with SDNY last month. The case against Ray Bitar is still pending.

Sources say that Lederer and his wife hosted a Holiday party last night for approximately 150 people at the palatial mansion he managed to keep post settlement.

 

Edit: 12/19/12 Repaired link
Edit: 12/20/12 Date correction made
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20 Responses to Lederer Settles with SDNY, Keeps Mansion and more

  1. Brian hacker says:

    Can you estimate how much SDNY got from this agreement? It’s hard to total it from the article. Good reporting as always DF!

    • Diamond Flush says:

      Seemingly the government purposely makes this unclear, but what is clear is that it’s significantly less than originally sought.

  2. adam smith says:

    Sigh. So many former U.S. Full Tilt players had hoped that the SDNY would mete out retribution for all of their missing, distributed or stolen accounts, for all the lies and pedantic arrogance and general vileness of this person but apparently that is not to be the case. Negreanu’s crazy baseball bat scenario doesn’t seem quite so absurd anymore.

  3. johnny says:

    Great article DF!

    ‘Ferguson has not yet settled his civil case, but according to documents’

    link doesnt work :(

  4. Mucking Aces says:

    Any idea why the gov’t would accept so little from Howard, DF?

  5. WPISN says:

    The balls of this Lederer guy…..to have his lawyer right in a clause to allow him to operate a online poker room if it becomes legal in the U.S. and if he get licensing, IS ANOTHER SLAP IN THE FACE TO ANY PLAYER WHO HAS LOST MONEY IN THIS.

  6. Tony says:

    Settlements are almost always for less than the complaint in civil cases. It’s the old “a bird in the hand is worth two in the bush” philosophy.

  7. herbertstemple says:

    “Lederer further agrees not to work for, or derive money from, either directly or indirectly, through the operation of any internet gambling business in the United States, including businesses offering internet poker in the United States, until if and when a change in applicable law takes place making the offering of such gambling lawful in the United States and Lederer, or whatever entity with which he is affiliated, obtains appropriate authorization from all relevant governmental regulatory authorities.”

    This provision must have been a real blow to him.

    When its all said and done, few people profited more than Lederer during the internet poker era in the USA.

  8. Marecki says:

    How is that possible that US Goverment allows thefts to walk free, with large piece of stolen money in their pockets? Here in Europe every penny he owns would get confiscated without any negotiations and he would be thrown into jail like the criminal he is. US legal system is such a joke…

    • Vodkas says:

      You probably live in northern Europe, cause here in the southern side, law doesn’t chase those who own large sums of money as long as they share it properly.

  9. psujohn says:

    TL/DR: Crime pays!

  10. clutch352 says:

    I wonder if the fact that lots of Lederer’s money was made when the company was in good standing (supposedly) would effect how much they could actually get.

  11. bobby2007 says:

    Why is this a civil case not a criminal case?

    It’s fraud. It wasn’t negligence.

    • Diamond Flush says:

      The charges were brought civilly against Lederer, with the forfeiture as the penalty. In and of itself, the civil division settlement does not obligate the criminal division to never bring charges, but to date, there are none.

  12. eric says:

    As much as I cant stand Howard Lederer,why shouldn’t he(as an owner of FTP) be entitled to keep millions in profit? Should he have to forfeit all his earnings from FTP? I think not. The DOJ went after him civilly because he hasnt committed any criminal offenses. The DOJ sued him civilly because they know they can easily squeeze money out of him. His gains from FTP were not ill gotten, he helped run a thriving business and as a result was rewarded handsomly. Had the US govt not interfered(black fridy), i believe FTP would have raised the capital to pay players back and if they werent able too would then have sold the company in order to pay back its liabilities(player funds). This in fact has happened (FTP was sold) and all player funds will eventually be repaid. I do understand that a small percentage of players have large sums stuck on the site but at this point it is the US govt that is holding your funds hostage, not Howard or any other owner of FTP. For the record i only have approx 5k locked up on FTP.

    • Diamond Flush says:

      The funds were missing from FTP long before Black Friday. BF caused only another very small amount in comparison to be frozen. They had plenty of time prior to BF to raise the funds or sell the company as you suggest. They did neither, and in fact continued the ruse that everything was hunky dory until too much information got out.

      They (FTP) did not eventually sell the company. They forfeited the company to the US govt to have the civil in rem charges against the company dropped. If they hadnt done that, liquidation was the only other resort and they owed too much money out for that to be a feasible answer to the problem. PokerStars bought only some of FTP’s assets from the US government as part of their settlement.

  13. Steve Krahn says:

    Seems low-life runs in his family. Do you think he prays before he starts his million dollar car each day? Probably not, he’d have to believe in God first. I’m sure when he has to answer to Him, “I don’t know” won’t go over too well and then it’s straight to Hell. “I’m all in Satan”

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