Howard Lederer Issues a Public Apology for His Role in the Black Friday Scandal
Howard Lederer issued a public apology for his role in the Black Friday scandal, which rocked Full Tilt Poker and led to the demise of the U.S. poker industry. The apology came 5 years and 1 month after the U.S. Justice Department seized the domains for PokerStars, Full Tilt Poker, and several other prominent card playing websites. At the time, 13 people were indicted in the same scandal.
Full Tilt Poker had a special onus stemming from Black Friday, because it was revealed that the site did not have the funds to cover all player payments, which is required by federal law. This allowed the Justice Department to accuse Full Tilt of running a Ponzi scheme at the time. Though Howard Lederer was not the one who handled accounting, he was a co-founder and a public face for Full Tilt Poker, which no doubt caused many gamblers to use the site. He bore a responsibility for making certain the business ran in a legal and ethical fashion.
Apology on Full Contact Poker Journal
Howard Lederer’s apology was posted on Daniel Negreanu’s Full Contact Poker journal, one of the top poker blogs on the Internet. The heart of the apology is posted below.
Lederer wrote: “I take full responsibility for Full Tilt’s failure to protect player deposits leading up to Black Friday. The shortfall in player deposits should never have happened. I should have provided better oversight or made sure that responsible others provided that oversight.
“I was a founder in the company that launched Full Tilt, and I became the face of the company’s management in the poker community. Many of our players played on the site because they trusted me.”
Daniel Negreanu’s Opinion
The apology was introduced by Daniel Negreanu himself, who commented on Lederer’s last public statement on the Full Tilt Poker debacle. Negreanu discussed a radio interview and a published online interview conducted by Poker News on the “Lederer Files” website.
In his comments, Negreanu pointed out that Howard Lederer appeared arrogant, as he tried to deflect criticism from himself and sought to avoid taking responsibility for the lack of oversight. Negreanu speculated that Lederer was dealing with a combination of public perception and legal jeopardy at the time, and said, “My assumption is that Howard did those interviews to clear his name to some degree, but I think it just enraged people even more.”
The Road to the Apology
Howard Lederer’s full apology backed up much of Daniel Negreanu’s perceptions at the time. Lederer said, as late as 2014, he was still trying to minimize and justify his role in Full Tilt’s demise. In effect, he was focused on a limited and legalistic view of the events, instead of the wider role as an overseer he played in the company. Ultimately, those at the top bear responsibility for what their employees do, because the executives hired those employees and can remove them at any time.
Lederer discussed attending a friend’s wedding in 2014, and how the subject of Full Tilt was discussed. After hearing Lederer give his defense, this unnamed friend told Lederer that he bore personal responsibility and should stop justifying his role. Lederer wrote that this was like a slap to his face at the time, but after thought, it was exactly right. The conversation led him down the path to this apology.
In the full apology, Howard Lederer wrote, “During Full Tilt’s rise, I received a lot of praise. I couldn’t see it at the time, but I let the headlines change me.
“In the first couple of years after Black Friday, I made lots of excuses, to my friends, my family and myself, for why I wasn’t the bad guy or big-headed or wrong. In the months immediately following the crisis, I focused a lot of energy on trying to refute allegations that were factually untrue.
“I convinced myself that I was a victim of circumstance and that criticism was being unfairly directed toward me instead of others. I was missing the bigger picture.”
The PokerStars Factor
Some former Full Tilt Poker customers are likely to view the apology as mere words. They might see it as 5 years too late, or insufficient due to the lack of action behind it. Daniel Negreanu discussed that in the follow-up to the apology.
Eventually, Full Tilt Poker customers were paid the money they were due, which amounted to hundreds of millions of dollars. That happened, because PokerStars agreed to take over Full Tilt Poker and pay off the customers. Since then, the world’s number one poker site has operated the Full Tilt Poker brand, which once was a chief rival.
End of an Era
This week, it was announced by Amaya Inc., which owns both PokerStars and Full Tilt Poker, that it would merge the Full Tilt brand into its more popular PokerStars brand. That brings the Full Tilt Poker era to an end, and makes it a good time for Howard Lederer to issue an apology. Negreanu said that, at the time of the PokerStars/Full Tilt deal, Lederer was working on a number of deals which would have seen the FT players paid. He also wondered whether those deals would have been sufficient, were it not for the PokerStars save.
Whatever the case, Full Tilt Poker represented a novel approach to online poker. A group of celebrity poker players got together and built their own website, marketed their own brand, and cut out the usual middle man. Despite their backgrounds as accountants, math whizzes, and various types of intellectual wunderkinds, it might be that professional poker players were never meant to run a business that handled hundreds of millions of dollars a year.
While the ability was there to pour over the company’s financial data, people who choose to be poker pros likely choose poker because they enjoy the lifestyle. Such people, no matter how professorial they might seem, are not the ones to oversee the accounting department. That is not an excuse for Howard Lederer, who took on responsibilities and should have followed through on them, but it explains how otherwise well-meaning, capable individuals allow such a sorry state of affairs to happen.
