[MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT AND CLAIMANT HOWARD LEDERER’S MOTION TO DISMISS THE VERIFIED SECOND AMENDED COMPLAINT’S IN PERSONAM CIVIL MONEY LAUNDERING CLAIM AND FIRST AND SECOND IN REM CLAIMS]
"The original complaint in this case made no mention of Howard Lederer at all. The First Amended Complaint (“FAC”) added Lederer, charging him in an alleged scheme to defraud customers of Full Tilt Poker (“FTP”), which was touted as a “Ponzi Scheme” in the United States Attorney’s press release. But when Lederer moved to dismiss that complaint, whose threadbare allegations stated no claim against him, much less a fraud claim, the government hoisted the white flag and went back to the drawing board. The result is the instant sprawling, 133-page Second Amended Complaint (“SAC”).
The SAC is so structurally complex that it takes a cartographer to understand what is being alleged and against whom. As to Lederer, the allegations of scheming to defraud customers, the centerpiece of the FAC, are gone. The centerpiece of this complaint as it pertains to Lederer is FTP 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. See United States v. DiCristina, ___F.Supp.2d ___, No. 11–CR–414, 2012 WL 3573895 (E.D.N.Y. Aug. 21, 2012). Unless the Second Circuit reverses DiCristina, the government’s IGBA theory here is likely dead on arrival. For the reasons Judge Weinstein so meticulously catalogued in DiCristina, poker is not “gambling” as defined by the IGBA, and FTP’s activities consequently fall outside of that statute’s ambit.
Apparently hedging its bets against the likelihood that its IGBA claim may hold no water post-DiCristina, the government has added a new claim in the SAC—an alleged violation of the Travel Act, 18. U.S.C. § 1952. But far from stating a cause of action against Lederer, the new Travel Act claim merely underscores the weakness of the government’s shifting arguments against him. In fact, this new claim stands on even shakier legal ground than the IGBA claim and must also be dismissed, since its mere existence relies on the Court ignoring explicit qualifying language in the very statute the government relies on for its application.
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. "