Stars files last ditch motion to dismiss civil complaint
Move threatens to scupper its chances of acquiring Full Tilt and settling with the government although execs remain bullish, eGR understands.
PokerStars has been forced to file a last ditch legal motion to the US Department of Justice (DoJ) to dismiss the amended civil complaint against a number of its subsidiary companies, eGaming Review has learned, a move that threatens to potentially scupper its chances of acquiring Full Tilt and settling with the government.
In a similar legal manoeuvre to Tiltware board members Howard Lederer, Chris Ferguson and Rafe Furst who last night filed motions to dismiss September 2011’s amended civil complaint in which they were accused of receiving hundreds of millions of dollars in funds held in player accounts with parent company Full Tilt Poker (FTP), Stars’ legal representation “ New York-based firm Skadden, Arps, Slate, Meagher & Flom – filed its 51-page motion to the DoJ.
“Pursuant to Rules 9 and 12(b) of the Federal Rules of Civil Procedure and Rules E and G of the Supplemental Rules for Admiralty and Maritime Claims and Asset Forfeiture Actions, the PokerStars Defendants submit this memorandum in support of their motion to dismiss the Government’s Verified First Amended Complaint (the “Complaint”),” reads the motion.
Stars legal team suggests that the complaint “reads like a novel, invoking shady dealings and far-reaching conspiracies. But unlike pulp writers who enjoy literary license, the Government must honor the pleading standards of the Federal Rules of Civil Procedure. And that is where the Government’s story breaks down”.
It suggests the complaint fails to allege “sufficient facts” to justify its “bold bid” to seize more than $1.5bn from PokerStars, adding the complaint “suffers from three global flaws”.
“First, it does not provide adequate detail to satisfy the heightened pleading requirements applicable to civil forfeiture and fraud actions. This vagueness fails to do what pleading rules require: Let PokerStars know what it is alleged to have done wrong so that it can marshal its defense.
“Second, the Complaint fails to state a legally viable theory of how PokerStars violated the Illegal Gambling Business Act, the wire and bank fraud statutes, and the money laundering statutes.
“Third, although the Government admits that PokerStars operated legally throughout the world “ and has implicitly conceded that it has lawfully provided services in much of the United States “ it seeks to seize all of PokerStars’ assets without showing that this Court has in rem jurisdiction over those assets and without attempting to separate PokerStars’ lawful income from the income that the Government alleges PokerStars earned through illegal activities.”
PokerStars executives are known to have been close to agreeing a deal with the DoJ that would involve acquiring the assets of now defunct Full Tilt Poker, pay approximately US$390m in funds FTP owes to players as well as an additional sum said to be close to $800m in order to settle with US authorities. Including legal fees the total amount is expected to amount to around $1.5bn.
eGR understands that PokerStars executives had been desperate to agree a deal with the DoJ before this deadline, however as it became increasingly clear nothing would materialise its legal team agreed with its Isle of Man client to hurriedly file a motion with the authorities at around 3am UK time.
It is unclear whether or not this will hinder Pokerstars’ chances of agreeing a deal and a potential $1bn-plus settlement however eGR understands that the company’s senior executive team remain bullish that something can still be done and it can emerge relatively unscathed from the allegations Scheinberg, Tate and former employee Nelson Burtnick face.
“The Complaint ignores all of this in a misguided effort to depict PokerStars as complicit in criminal activity. The Complaint asserts three claims for relief against PokerStars: (1) that PokerStars’ property is subject to forfeiture because it was used in an “illegal gambling business” in violation of the IGBA, or is the proceeds of an illegal gambling business; (2) that PokerStars’ property is subject to forfeiture as proceeds of a conspiracy to commit wire and bank fraud; and (3) that PokerStars’ property is subject to forfeiture and that PokerStars is subject to a $1.5 billion penalty under the money laundering statute,” the motion continues.
“In light of the heightened pleading standards applicable to civil forfeiture claims, and because the facts alleged in the Complaint do not give rise to liability under the relevant criminal and forfeiture statutes, each of these causes of action must be dismissed as a matter of law,” it adds.