Howard Lederer

Back in late September, Howard Lederer conducted a lengthy video interview with, now known as the “Lederer Files“, followed by another interview with the TwoPlusTwo Pokercast team. Howard’s interview with Diamond Flush Poker was scheduled to follow, but he cancelled on the eve before. What many people didn’t know was that I had already spoken to Howard, many times for many hours, both before and after his video was made. Knowing that I was promised an interview too, I did not discuss any particular questions I would ask, but he clearly understood some areas I would be interested in, and I clearly understood what some of his answers were going to be. I would have never mentioned even speaking to him at all, even now, but he disclosed our conversation first, more than once, during his Pokercast interview. Some of my critics think that my series of breaking down his answers, or lack thereof, was simply sour grapes due to our interview not happening. I admit that I was disappointed, not only about the broken interview promise, but more because there were so many contradictions and misrepresentations that were not challenged. That, and the fact that there is so much more to this story than is public as yet, and the community, in my opinion, deserves to know those facts before making individual decisions about the accuracy of Lederer’s rendition of events. There are few new things in this segment and a list of just some of the outstanding questions for Lederer, based on what’s been discussed in prior installments 1-7. This isn’t a tell all, and there is much, much more that will become public as time goes on, but I hope the summary below provides some clarity and food for thought.

Howard ‘The Professor’ Lederer is one of the most prominent and well known member of the former Full Tilt Poker team. He was a leading shareholder and director of the company and is now probably the most loathed man in the poker world due him shouldering a lot of the blame for the events of Black Friday. Howard Lederer, best known for being a Person, was born in Nevada, United States on Wednesday, October 30, 1963. Poker player who won World Series of Poker bracelets in 2000 and 2001. Family: He married Suzie Lederer. Howard Lederer father’s name is under review and mother unknown at this time. Howard Henry Lederer is part of the Baby boomers generation. Also known as 'boomers', are the result of the end of World War II, when birth rates across the world spiked. They are associated with a rejection of traditional values. These hippie kids protested against the Vietnam War and participated in the civil rights movement. View the profiles of people named Howard Lederer. Join Facebook to connect with Howard Lederer and others you may know. Facebook gives people the power. Howard Lederer Born in Concord, N.H., in 1964, Howard Lederer was raised in a family of academics with a penchant for games of chance. As a child, along with his sisters Annie and Katy, he was initiated into all manner of games by his parents, who encouraged card-playing as a way for the family to spend time together.

Lederer as a Manager

Lederer talks often about his “retirement” from the company in September 2008. He never specifically says what job he retired from. Was it his seat on the Board of Directors? Was it as his role as the President of Tiltware? Was it his role as a Manager of Tiltware? He has admitted to having all three of those positions at least prior to 2008. Sources say that when he spoke to members in 2008 during the two member calls that year, that he referred only to “resigning”. and it was accepted that he was resigning at least his position as the President of Tiltware. Those sources also say, and Lederer admits in his interview that he was clearly leaving his position in Dublin because he had spent considerable time on site, with day to day activity, and no longer was willing to be away from his U.S. home for such long periods of time.

He never resigned his position on the Board of Directors, which he also clearly admits to holding, even to this day (Tiltware still exists). He speaks of his role on the Board often during his recorded interviews. Sources say that he was asked in 2008 if he wanted to also give up his board seat and his answer was “no”.

Now his position as Manager of Tiltware is one in which he clearly tries to distance himself from in the interviews. What he infers is that his only role since 2008 was as a Board of Directors member. Managers of the company are appointed by a majority vote of the Board of Directors, and two managers are required to hold that position, per the Operating Agreement. When the company adopted that operating agreement, Lederer and Bitar were named as the managers of the company. As already stated in Installment I of the series , the Managers of the company had almost absolute discretion when making most decisions about the company and with few exceptions, were responsible for running the company and all that that entails. Also as a manager, Lederer would have had the responsibility to hire the forensic accountants he so specifically keeps trying to say he was not (according to the Operating Agreement) mandated to do as a Board of Directors member.

Lederer reportedly told some friends that he resigned in 2008 and they assumed he meant as a manager. To date, multiple sources have said that he never explicity said (at the time) that he as leaving the manager position in the company. At least one senior member source has said that he did not ever resign that spot. According to the Operating Agreement, Managers of the company are unpaid positions. Just as Ray Bitar received a salary package as CEO of the company (and as Director of many of the other affiliated companies that made up the Full Tilt companies), Lederer also received a salary while in place as the President of Tiltware. He feigned not knowing whether or not he had a contract for that position, but indeed he did, just as Bitar did. Lederer negotiated that contract and then negotiated his exit package when he left the company as President in September 2008. Sources have said that members, although they inquired, were not permitted to know the details of those contracts, nor the value of any exit renumeration, which was negotiated with the Board, the same Board that Lederer was a member of. Sources have now confirmed that Lederer received a low six figure monthly severance since he stepped down as President in September 2008. This was still being paid in 2011, and would have continued for several more months following, had Black Friday not occurred. This of course, was above and beyond his monthly distributions of approximately $ 845,000, the values of which are confirmed by the payments alleged to have been paid to Lederer in March and April 2011, according to the second amended complaint filed by SDNY following the taping of the Lederer Files.

Obviously if Lederer were holding a Manager’s position after 2008 and prior to Black Friday he would have had certain obligations, which he clearly does not want to acknowledge now. The problem is that following Black Friday, he did act in a Manager’s role, and he represented himself as a Manager to conduct company business, including signing corporate documents as a manager. Interesting enough, in May 2011, just weeks after Black Friday, company counsel sent an email to the shareholders explicitly saying that Lederer had resigned his position as Manager in 2008 and that the Board had never heard of anyone since who expressed interest in that position. Sources have told me that shareholders had not been previously asked to fill a Manager position, nor had there ever been a full membership meeting/call after October 2008 until after Black Friday. The text of that email follows (email addresses redacted by Diamond Flush Poker):

From: Ian Imrich xxxxxxxxxx Subject: Open Manager Position since 09/01/08 Date: May 12, 2011 4:11:00 PM EDT To: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Cc: Ian Imrich xxxxxxxxxx

Tilters – This will confirm, as mentioned on calls recently and over the past couple years that there has been an open Manager position not filled by the Board since 1st of September 2008. Tiltware LLC Member (and Board member) Howard Lederer resigned as Manager and as company President in September 2008 and since that time the Board has not been able to find a Member to serve as a Manager along with current Manager Ray Bitar who is currently the lone Manager at this time. Beginning in September 2003, Managers have been selected by the Board per the governance of the company’s operating agreement. Since September of 2008, my office is not aware of any Member who has approached either my offices or the Board about potentially filling the second Manager position. If the Board is aware of any such Member who has approached it, which again my office is not aware of, I’m sure it will let my office know. If any Member is now ready, willing, and able to be considered by the Board to fill the Manager position, please let the Board and my offices know.

Thank you.


Since Lederer acted as a Manager following Black Friday, he could hypothetically claim that some vote of the Board of Directors took place after May 12 renaming him to that position, which would have required a majority of Board Members (3) to vote in the affirmative. Sources say that such a Board action was never reported to the full membership and there is no evidence available to this author to support that that happened. If such an appointment did happen, it would certainly have been memorialized in Board of Directors’ meeting minutes. Such minutes have not been proffered to me, but if they were to be in the future, I would be happy to authenticate them and alter this part of the report. If it did not happen, then there are only two possible scenarios: 1. Lederer never resigned his Manager’s role in the company in 2008 or 2. Lederer potentially misrepresented himself as a Manager post Black Friday.

Even if he was only appointed by the Board to a Managers position after May 12, 2011, he was then obligated (per the Operating Agreement) to get professional outside experts to get to the bottom of what happened to bring the company to the financial state it was in, specifically because there was now a definite reason to doubt numbers that he says he was misled by.

Howard lederer pre flop chart

These questions about his Manager title were never asked during either interview.

The Special Committee

Even though Lederer said on multiple occasions during the interviews that he had spent zero energy trying to find out who was responsible for what caused the lack of funds needed to cover FTP player balances, there was, in fact, an action taken by the company to at least try to determine why FTP was unable to refund its U.S. player base $ 150 million.

A “special committee” of independent attorneys, not affiliated with FTP or any related companies, was given carte blanche to investigate whether the ACH backlog problem was the reason for the inability to pay or if there was some other underlying reason that was not easily visible. It was agreed that their findings would be shared with the USAO, SDNY, regardless of what they found. Two independent attorneys, along with forensic accountants, went to Dublin to look into the missing $ 150 million. After what sources say was a week long visit where some documents were inspected and some interviews conducted, that committee left Dublin.

Sources confirm that the committee found that the failure of the company to be able to repay U.S. players (more than $ 150 million) was at least partially caused by the inability of the company to have collected on the “phantom e-checks” for a period of many months leading up to Black Friday, that there appeared to be no padding of expense accounts or any evidence that company funds were diverted in any unusual ways during those months. As is now well known, the distributions paid to the shareholders of the company continued during those months, approximately $ 10 million/month. Sources say that the company claims to have believed that the distributions could continue because new payment processor options were being implemented to help clear the backlog of ACH funds. Reportedly shortly before Black Friday the backlog was reduced slightly due to these new processor arrangements. There are sources that say that similar backlog scenarios had occurred before, albeit not to such a large extent of nine figures, but had always been cleared when new processors came into play. Such optimism was reportedly a reason for continuation of distributions during the time period in question, although in the six months leading up to Black Friday, the outlook for finding new processors was seemingly more dismal than ever before.

This investigation by the Special Committee took place in late May/early June 2011, although their final report was not submitted until weeks later, near to early July.

The most interesting thing about the Special Committee is that they were tasked only to determine why U.S. players were not being paid by the company. Sources say there is no evidence that they investigated at all the fact that the company was also unable to back up the rest-of-world player account balances with the funds necessary, as required by their gaming license. We know now that this rest of world balance was approximately $ 180 million more. At the time, May/June 2011, it was not yet public knowledge that the company faced what Lederer calls the “shortfall” (lack of cash not including the “backlog” of ACH issues), which put the company underwater for more than $ 300 million, not just the $ 150 million being investigated by the committee. Whatever documents were inspected, whatever questions were asked, whatever interviews were conducted, were based solely on the lack of ability to pay $ 150 million to US players.

It is not clear which of the people that the committee spoke to in Dublin knew of the additional missing millions, but Lederer confirmed in his interviews that he knew of the issue as of April 21, and that, at a minimum, the entire Board of Directors were advised on that date as well. Such knowledge preceeded the investigation of the Special Committee by more than a month, but if the committee did not know, nor were they hired to investigate it, questions surrounding that part of the shortfall would likely have not been asked. There is no evidence available to this author that Lederer or anyone else in Dublin volunteered that vital piece of information to the committee. Because of Lederer’s admission of knowing about the dire financial position of the company in April, if he in any way was not truthful in answering questions from the Special Committee, and because it was agreed before the investigation took place that the results would be shared with the USAO, any misrepresentations could potentially be construed to be the equivalent of misrepresenting to the USAO directly.

Sources say that a report from the committee was sent to SDNY as originally agreed. Because the committee did not investigate, or report on, the inability to repay rest of world players, obviously the USAO did not receive that information at the time either.

Show me the money

When I say show me the money, I mean All the money.

The numbers don’t add up. I’ve worked on this for months, I’ve consulted with experts and with some sources that were familiar with the real numbers at FTP. It just does not reconcile.

In March 2007 the company, according to Lederer, had at least $ 30-40 million “extra” that gave them the incentive to start paying distributions to the shareholders.

In addition, by 2008, sources say that additional “millions of dollars” was also supposedly being stored by the company to build a warchest, and continually growing, so that if and when the time might come that the company may have to defend it’s position in a court of law, it would be fully funded to do so. Above and beyond the distributions being paid, sources say this number started at a definite $ 10m in hand and the plan was to grow it to $ 40 million

Lederer was still a manager of the company, the President of Tiltware and a member of the Board of Directors.

Furthermore, at the time, sources say that the forecast given to the shareholders by the Board and managers included a projected increase of double the monthly profits booking at the time, which had already started to happen. Approximately mid 2008, revenue was said to be increasing approximately by $400-500m/year, generating significantly more profit, at least an additional $ 15 million/month. That means that from mid 2008 until Black Friday, there was supposedly an increase of at least $ 1.2 Billion in revenue, and likely more. This is above and beyond the revenue that had supposedly generated substantial enough profit to justify paying members approximately $ 10 million/month is distributions. The distributions never did go up. Sources say that an acceptable answer as to why not was never given to the owners. Sources confirm, that the reason that members asked this question, beginning in 2008, was because they were told that it (the increase in profits) was already on track The board never had another full membership call or meeting after October 2008 until May 1, 2011, after Black Friday.

If we look at the numbers, giving the correct weight to every seizure that has happened throughout the existence of the company, every distribution dollar that was paid, every dollar that was stolen by crooked processors, operational expense dollars that were spent for, among other things, marketing, legal etc, including a vast increase in employee numbers, and the e-check backlog of approximately $ 120 million, I find that there should still be approximately $ 200 million in excess cash, possibly more. Unless it’s possible that zero, literally zero, dollars in profit were generated from more than an additional $ 1.2 billion in revenue in the 3 years prior to Black Friday, the numbers don’t add up.

Someone needed to ask Howard how this happened. When he says he doesn’t know, someone could have asked him about the STU reports he saw every single day about every dollar generated, including every possible flow sheet and pie chart that a functioning company could ask for. These reports so exceed the single “simple balance sheet” that Lederer says was at his disposal, that they aren’t even in the same universe.

Or they could remind him of the report that he spoke about in the Lederer Files, Part 2, when in March or April 2008, he was very intent and determined to get the detailed cash coverage report, to be able to clearly see whether the company had sufficient cash on hand over and above player liabilities. He himself said by summer of 2008 that this report, at his insistence, was being generated on a weekly or monthly basis.

When Lederer was questioned about his confidence in this report prepared by the finance department, he says he made it clear what he wanted in that report. He states that he “may have sat down with one of them (finance) and asked, where does this number come from”. While stating again that he isn’t a trained accountant, he says he wanted to make sure that the numbers he was looking at were accurate. He admits that it was explained to him and that he trusted the report.

Having seen a report like this that covered weekly numbers for several years, and possibly the one Lederer himself refers to, I can say that anyone that knows anything about the finances of this company would know the numbers are not as they appear. There is a column for the players liability in .com and .fr, one for cash in the bank, one each for processor gross, total liability and then added for total funds. The final column of net funds should be what is liquid above and beyond each of the prior liabilities. I can tell you that, knowing what we know now, that the misrepresentation in this document is glaring. Furthermore, this particular copy, emailed to Lederer and other Board of Director members on May 31,2011, includes the following caveat paragraph:

The amounts shown for the processors include all processors, ie have not backed out any funds for processors that had funds seized or where legal action is being undertaken.

This is particularly damning, because, among other reasons, this balance sheet shows net funds (the last column) on May 22, 2011 as being in excess of $ 26.5 million. That number should have represented the net funds available AFTER the coverage of player funds, both on and sites, however reports show that by early June Lederer reported to others that there was in fact only approximately $ 6 million left. More telling is the fact that he now admits to knowing well before that time, that the numbers on that document were false, that the company did not have coverage, thru payment processors or anywhere else, to cover player account balances. Sources have said that this document continued to be circulated after April 21, the date on which Lederer claims to have been informed, leading others to still believe in it’s veracity. It is unknown by this author, how many, if any, potential investors were shown this document without benefit of the vital captioned caveat sentence above, or why Lederer continued to distribute the report knowing it was blatantly false.

Outstanding Questions:

Lederer said more than once that he did not want to discuss anything about payment processors, that he didn’t know anything about them, that he had never met with any processors or discussed processing, except for a brief introduction to a payment processor “one time at a party”. It has been reported that on several occasions he met Chad Elie, a processor for FTP, who was indicted on Black Friday. There was a brief “meet and greet” between Lederer and Elie during the annual Fourth of July barbeque at The Golden Nugget in July 2010. In addition to other rief encounters, Elie told the story of spending several hours discussing FT business, including payment processing, and including the e-check backlog, during New Year’s Eve festivities on December 31, 2010, more than 3 months before Lederer claimed to know of the backlog. The questions are obvious…At a minimum, does Lederer admit to spending the evening with Elie (families included), and to discussing the status of payment processing at FTP and the echeck backlog with him?

In addition does Lederer now admit to having met Elie or other payment processors, for example Jeremy Johnson, on other occasion, for example during a private fundraising event for Harry Reid in Las Vegas?

Not including any conversation with Elie or other processors, did Lederer ever admit to other persons that he did know of the backlog months before Black Friday, but that it was being handled?

Since it was at the sole discretion of the Board of Directors to determine if distributions shall be paid to shareholders, how much those distributions should be, and when they would be paid, and that such determinations must be made on at least a quarterly basis according to the Operating Agreement, can Lederer please advise these quarterly dates, which Board members voted in favor of the distributions, at least in 2010 and 2011, and because it was his fiduciary responsibiity as a Board member to verify that sufficient funds, above and beyond player account balances and operational expenses were available from profits to make these distributions, what financial information he relied on and what steps he took to assure those numbers were correct.

Since player pool payments were being made to sponsored pros right up until Black Friday as well, can Lederer please advise what numbers were relied upon to arrive at the pool number which should have totaled a max of 5% of company profits?

If Lederer were advised of the nine figure backlog of outstanding e-checks just hours before he was due to leave for Dubai for his USO poker tour appearances, can he please advise what steps he took, while on down time in Dubai, to put in motion any gathering of the information he says he lacked regarding the impact this may have had on the company.

Lederer had reinforced several times that he spent zero energy in trying to find out what happened and who was responsible for putting the company in the financial position it was in, in large part due to his time being better spent trying to find investors and at the same time keep the company functioning for rest of world customers. Sources have said that Lederer arrived in Dubln directly from Dubai following Black Friday and left for the U.S. in late May 2011. Sources have also said that he never returned to Dublin after that, never met with any investors on site after June 1, never took part in any further investigations within the confines of the company, never took part with any meetings on site with Sam, whom he (as part of the Board) agreed to give exclusivity to for critical weeks following the suspension of the license to operate, never took part in the meetings with Groupe Bernard Tapie and Full Tilt employees, either before or after being bound by contract, which meetings went on for months and could have brought to light sooner the unacceptable terms of that deal that cost precious months, and never met with PokerStars

It’s important to determine to what extent Lederer was surprised by Black Friday. I wish he had been asked specifically about those months immediately preceding April 15, 2011. For example:

Do you agree that you took part in possible settlement negotiations with SDNY during 2010/early 2011, up to just prior to Black Friday, that could have potentially avoided Full Tilt from being named to the extent that it was? If so, under what parameters were you willing to settle and avoid Black Friday?

If there were no accceptable parameters in your view, isn’t that because you knew you didn’t have the money to repay US players, which clearly would have been evident had you been required to pull out of the US market?

Slots inferno free bonus codes no deposit. Or was it because you always believed that FTP operating in the US, and everything that goes along with that, was legal and you were willing and planning to fight?

If you were planning to fight, why didn’t you immediately take steps to do that?

What happened to the warchest (tens of millions of dollars) that FTP was supposedly building with profits to help support the litigation to fight?

Since there were no full membership calls/meetings between Fall 2008 and May 1, 2011, how did you convey to other shareholders the decisions that were being made (by the Board of Directors or otherwise) in that two and a half year period?

How many weeks/months did you collect the cash coverage report that you insisted that the finance department begin preparing for you in 2008? Since you were still receiving this report after April 21, 2011 when you claim to have found out the true financial state of the company, what steps did you take to hire outside forensic accountants to come in to prepare independent reports? Who did you distribute the report to once you knew that the numbers were not correct?

Did you include, or approve others to include, these figures which you knew to be false in any pitch decks or other financial information given to any prospective investors?

How many investors walked away from continuing negotiations when they found the numbers offered to them by Full Tilt did not match the numbers their own accounting people amassed during due diligence?

Some sources have said that you were one of the first people to solicit appraisals on your properties to determine what value you may be able to liquidate in order to, along with other owners, help recapitalize the company. Why is it then, that you never committed to inject even $ 1.00 for that purpose, even though other members did so, and even though you pushed for Transition 2.0 to happen, including for the specific purpose of raising internal capital?

Why did you fight the Board overthrow attempt with such fervor while now stating, repeatedly, that that was the recourse that the other members had to change the direction of the company if they were unhappy with it’s current state of affairs?

Although you said that you were not very familiar with the seizures that had taken place over the years, when asked in the Pokercast interview why those distributions had not increased, and you answered “because of the seizures”. Why is it that seizures of just a few million dollars several years ago caused you to not increase distributions, but much more massive seizures in the following years, caused no change in distributions at all?

Also, a few more questions that are a bit more current, including with respect to Lederer’s personal case:

Why is it that you think that the IGBA ruling in another case should have any bearing on the fraud claims or forfeiture claims against you, caused by the financial position of your company and not related at all to the question of whether online poker is legal or not?

Howard Lederer Atec

While you advised, in your Pokercast interview, that SDNY prohibited you from speaking about Black Friday publicly, isn’t it true that their warning was only not to speak about the details of the pending contract negotiations with potential deals, ie with the particulars of the GBT and/or PokerStars deals with DOJ? Isn’t it therefore true that SDNY never prohibited you from speaking publicly or answering questions about anything else post Black Friday?

Since you were hosting parties before the deal was complete, both “A” list and “B” list parties, isn’t it true that you were planning your return to the live poker arena, and possibly even to be playing in WSOP 2012, as soon as any deal for PokerStars to acquire the assets of the former Full Tilt was complete, and that the message in those parties was specifically to solicit support for doing so?

Howard Lederer Interview

Since you avoided the direct question so many times in prior interviews, we can ask again: How do you reconcile your decision to allow the site to continue doing business with “rest of world” customers post Black Friday, and accepting additional deposits from those customers, knowing, as you now admit to doing, that the company was not able to back up their account balances?

You mentioned in your Pokercast interview that you still do not feel responsible for any monetary considerations in this case since the players will presumably be compensated for their losses by virtue of the DOJ deal with another party. What is the reason that you feel as if you should be totally vindicated, financially or otherwise, because another party (PokerStars) made a deal in their own case to potentially facilitate repayments to customers that were harmed by actions of a company in which you were a Manager and a Board of Directors member?

Finally, you admit to not taking any steps, exerting “zero energy” in fact, to investigate what happened at Full Tilt Poker to cause the financial situation that resulted in the downfall of the company and it’s customers being separated from over $ 300 million of their own money for well over a year, and possibly much more. You’ve mentioned that your reasons for avoiding doing so was that your energy was better spent trying to bring a deal to the table. That deal is now complete. Since there is nothing else standing in the way of getting those answers, what have you done, or what are you doing now, to get to the bottom of those questions, to conduct that investigation? What explanation can you offer your previous customers as to what happened, and do you not think you owe them that explanation?

The answers to many of the above questions, and those raised in the previous installments, are already known to this author and others, but there is no question that they should be asked of Lederer. There are a hundred more questions that could be asked, and perhaps they will be sometime in the future.

Author’s note: I apologize profusely for the length of time this project has taken to complete. The original plan was to provide perhaps up to five installments with a summary to follow, all in a week’s time. Obviously it was a much more arduous project than I expected. Because I was not asking the questions directly, I wanted to re-verify some of the things I had learned from so many sources over the last 18 months. None of the information used above was gleaned from sources anonymous to me, but much of it was originally off the record and I needed permission from all of those sources to use the information. That alone took weeks to accomplish. Amidst that process, I found myself, friends and family near ground zero of an epic storm on the east coast, and following that, some unforeseen personal business kept me from giving the project my full attention, which it deserved. I do vow, however, to continue to investigate who and what was responsible for the financial beating that was bestowed upon millions of people as a result of hundreds of millions of dollars being unavailable to it’s rightful owners, the players.

Howard Lederer Atec

Edit: 12/11/12 minor clarification as to wording