On Thursday, Nov. 15, attorneys for Howard Lederer filed both a Notice of Motion and a Motion to Dismiss the Verified Second Amended Complaint (SAC) with the United States District Court of Southern New York.
According to the three-page Notice of Motion to Dismiss, which was filed by Elliot R. Peters and Cody S. Harris of Keker & Van Nest LLP in San Francisco: “Defendant and Claimant Howard Lederer hereby moves the Court to dismiss the $42.5 million in personam claim against Lederer for money laundering, along with the First and Second Claims for Relief in rem.”
The U.S. Department of Justice filed the Second Amended Civil Complaint involving the online poker Black Friday indictments in September introducing new forfeiture charges against Lederer and Ray Bitar, including houses and automobiles purchased with “illegal proceeds.”
In addition to giving a detailed account of Lederer’s expenditures from the end of 2006 until September 2011, the Second Amended Complaint added the Travel Act 18 U.S.C. § 1952 as a federal criminal statute in support of their forfeiture request, as well as adding eight more “Claims for Relief,” bringing the total to 12: Illegal Gambling, Travel Act Offenses, Bank and Wire Fraud, Wire Fraud, Promotion Money Laundering and Conspiracy, Concealment Money Laundering and Conspiracy, International Money Laundering and Conspiracy, Bulk Money Laundering and Conspiracy, Promotion Money Laundering and Conspiracy Relating to Full Tilt Fraud Against Players, Concealment Money Laundering and Conspiracy Relating to Full Tilt Fraud Against Players, International Money Laundering and Conspiracy Relating to Full Tilt Fraud Against Players, Bulk Money Laundering, and Conspiracy Relating to Full Tilt Fraud Against Players.
The recent 33-page Motion to Dismiss wasted little time in attacking the SAC’s legitimacy. “The SAC is so structurally complex that it takes a cartographer to understand what is being alleged and against whom,” said the Motion in the second paragraph. “As to Lederer, the allegations of scheming to defraud customers, the centerpiece of the [First Amended Complaint], are gone. The centerpiece of this complaint as it pertains to Lederer is the allegation that FTP—an online poker site operating abroad—was an illegal gambling business under the Illegal Gambling Business Act, ("IGBA"), 18 U.S.C. § 1955, rendering illegal any proceeds Lederer derived from it. Never mind that one month before the government filed the SAC, the Honorable Jack B. Weinstein, United States District Judge for the Eastern District of New York held in an exhaustive, 120-page opinion, that poker does not constitute ‘illegal gambling’ under the IGBA.”
It then went on to add: “Because the government has disclaimed any attempt to state a fraud claim against Lederer—either based on alleged bank fraud or a fraud against FTP's own customers — the in personam money laundering claim must be dismissed in its entirety, along with the First and Second in rem claims against Lederer's property.”
The Motion to Dismiss then reiterated the case’s background and legal standard before launching into a well-crafted argument section, which is where it was suggested that “the government’s IGBA claim fails to allege facts supporting an IGBA violation, and is based on an impermissible extraterritorial application of the law.” The Motion to Dismiss then argues that the IGBA claim fails for three reasons:
- Poker is not gambling as defined by the IGBA per Judge Weinstein’s opinion.
- ”The complaint fails to allege sufficient facts supporting a violation of state law, “an essential and substantive element “ of an IGBA charge.
- ”Under the Supreme Court's decision in Morrison v. National Australia Bank Ltd, 130 S. Ct. 2869 (2010), IGBA does not apply extraterritorially to a business operated abroad whose only contact with the United States is that some of its poker players are based here.
From there, the Motion to Dismiss asserts that the Travel Act claim must also be dismissed. “The government cannot base its forfeiture or money laundering claims on the Travel Act because 18 U.S.C. § 1961(1)(A) requires that any predicate gambling offenses be punishable by more than a year in prison,” the Motion states. “The government's gambit is straightforward enough: knowing it cannot state a claim based on the specific gambling provision in section 1961(1)(A), it has resorted to the Travel Act, a racketeering statute whose own predicate gambling offenses arguably lack the one-year prison term requirement found in the very statute on which its forfeiture and money laundering claims are based.
The other Full Tilt Poker defendants in the case — Bitar, Chris Ferguson, and Rafe Furst — have yet to respond to the Second Amended Complaint. The DOJ seeks forfeitures from them for $42 million, $40.8 million, and $11.7 million respectively. Lederer’s Motion to Dismiss will be heard by the Honorable Leonard B. Sand at a time and date to be determined.