Shak Suggests Innocent Full Tilt Owners Make Deal

Dan Shak
Dan Shak doesn't have insider information, but he has the experience in both business and poker needed to understand this situation.

Four of the owners of Full Tilt Poker have been added to the Department of Justice’s civil complaint but Dan Shak says the remaining 19 would be well-advised to step forward now and cut a deal with the US government.

A former hedge fund owner who’s won poker tournaments with buy-ins as big as $100k, Shak believes that while the majority of the owners weren’t aware of the company’s wrongdoing, the money they made from their investments in Full Tilt won’t be safe from the DoJ.

A Deal Now is Better than a Drawn Out Legal Battle

“I really believe the majority of the owners were not knowledgeable about what was going on and if they act reasonably with the government I would hope the government would treat them reasonably,” Shak told at the 2011 WSOP Europe in Cannes.

“So I think if they settle with the government to leave themselves with a reasonable amount of money and a reasonable career ahead of them I think the government would be understanding.

“That’s what I think I would do if I was in this situation based on the legal costs of battling the government,” he added.

Details released in the civil complaint by US Attorney Preet Bharara point to over $440 million in distributions to the members of the board and other owners of FTP over the four years leading up to April 15, 2011.

The charges go on to explain that while owners were pulling money out of the company at a blistering rate, they were for all intents and purposes insolvent.

Estimates put the amount owed to customers at $390 million on March 31, 2011 and show under $60 million in actual assets at the same point in time.

And while Shak was quick to point out that he doesn’t have insider information, and that his opinions are based on interpreting the information available to everyone, he does hold a few insights into the situation.

“I think if [owners] step forward and return the money voluntarily then the government will go easy on them but if people fight them on it the Department of Justice is going to get pretty nasty,” Shak cautioned.

Tom Dwan
Tom Dwan has already come forward and volunteered to give back all the money he made in connection with Full Tilt Poker.

“Clearly the company didn’t make the $440 million, or at least they shouldn’t have taken the $440 million they got, so the government’s going to go after it.

“But the government doesn’t like to leave people destitute so it’s going to go better if people step forward and make reasonable offers to pay back reasonable sums of money once they prove what their assets are,” he said.

Owner Distributions May Be Seized for Player Refunds

The US government has so far not taken action against the other owners of Full Tilt Poker, but there are a few reasons to believe why they might.

“I think players will get their money back because ultimately the government, if they can grab all the money they can from whoever they can, will try to pay players back as full as possible,” said Shak.

The money to repay players must come from somewhere, and with the company’s assets only covering a fraction of player balances owners look to be the biggest target for the US government.

But there are also other things to consider.

Most notably there’s currently an offer on the table from the Bernard Tapie Groupe, a group of French investors who have signed a conditional agreement to acquire Full Tilt Poker that would ostensibly see players get their money back.

Shak isn’t the first critic of this deal’s chances, but he was clear in his lack of confidence in the current offer.

“The problem I see with the offer, from what I’ve read, is the structure of the offer is $300 million but they don’t want to put up the $300 million.

"They want the Department of Justice to return funds that have been seized and they want to finance part of it, and I don’t see either of those things happening,” he said.

“I hate to put a deal down but I don’t see any great potential in the sale of the company,” extending his assessment of Full Tilt’s chances beyond their dealings with French giant BTG.

“The only value that I can personally see in Full Tilt Poker is the software,” he continued.

“I’m not familiar with what the software value would be but I think the name value is a negative, and the player base has to be a negative.

“I think they’ve destroyed any credibility they had and I think unfortunately the name has become synonymous with disastrous business and disastrous management and bitterness of players so I don’t see how maintaining the Full Tilt name, other than name recognition, has any value whatsoever.

“The software still exists so at the end of the road if there’s a bankruptcy, the government’s going to sell the software to someone, so that’s another reason I think the chances are slim for a sale.

"If someone wants the software there’s a good chance they’ll be able to get it for cheaper in a bidding war anyway,” he concluded.

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