Unites States v. Pokerstars, et al
Filing
239
DECLARATION of AUSA Jason H. Cowley in Support re: 237 MOTION For (1) the Entry of a Proposed Stipulated Order of Settlement Between the United States and Certain Absolute Poker-Affiliated Entities and (2) the Interlocutory Sale of All Assets of Those Entities. MOTION For (1) the Entry of a Proposed Stipulated Order of Settlement Between the United States and Certain Absolute Poker-Affiliated Entities and (2) the Interlocutory Sale of All Assets of Those Entities.. Document filed by United States Of America. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Cowley, Jason)
Exhibit B
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
————————————————— X
UNITED STATES OF AMERICA,
: Case No. 11-CV-2564 (LBS)
Plaintiff,
v.
:
:
POKERSTARS, et al,
:
Defendants,
ALL RIGHT, TITLE AND INTEREST
IN THE ASSETS OF POKERSTARS, et al.
DECLARATION OF
JAIME D’ALMEIDA
:
:
:
Defendants-in-rem.
:
————————————————— X
Jaime d’Almeida, deposes and says, and pursuant to Title 28, United States Code, Section
1746, declares, under penalty of perjury, that the following is true and correct:
1. Duff & Phelps, LLC (“Duff & Phelps”) has been retained by the U.S. Department of Justice
in connection with the above-captioned action. Duff & Phelps Corporation (NYSE: DUF) is
a leading provider of independent financial advisory and investment banking services,
principally in the areas of valuation, transactions, financial restructuring and dispute
consulting. Duff & Phelps Corporation has more than 1,200 employees worldwide through
offices in North America, Europe and Asia. Duff & Phelps Corporation and its affiliated
entities are collectively referred to in this affidavit as “D&P.”
2. I am a professional with over 15 years of financial analysis experience, which includes
advising clients in security and business valuation, valuation of intangible assets, solvency
analysis, commercial disputes or litigation, corporate finance, mergers and acquisitions,
investment decision making, performing independent fundamental research and due
diligence, strategic planning and financial analysis. I hold an M.B.A. from F.W. Olin
Graduate School of Business at Babson College, where I am also an Adjunct Lecturer for the
M.B.A program in the Finance Department. I hold a B.S. in Electrical Engineering and
Engineering & Public Policy from Carnegie Mellon University, and I also hold the
Accredited Senior Appraiser designation granted by the American Society of Appraisers
(“ASA”).
3. As a practitioner, I have analyzed hundreds of businesses and assets, including performing
detailed studies of their historical and projected performance for purposes of valuation,
Purchase Price Allocation (i.e., intangible assets valuations), solvency analysis, investment
considerations, advising on financing strategy, merger and acquisition analysis, financial
restructuring, dispute resolution, and other analyses. I have been involved with companies in
several industries including but not limited to gaming and entertainment, manufacturing,
distribution, life sciences, biotechnology, technology (hardware and software), financial
services, professional services, utilities, and telecommunications.
4. Additionally, I have provided consulting and expert services to numerous attorneys and
companies on matters of business modeling and projecting, valuation, solvency, damages,
corporate finance, and other matters. I have given presentations on valuation and solvency to
business groups and law firms.
5. My curriculum vitae is attached as Appendix A to this declaration.
6. I submit this declaration in connection with the Government’s application for approval of: (a)
the interlocutory sale of the assets of the Absolute Poker, Ultimate Bet, Absolute
Entertainment, S.A., Blanca Games, Inc., Hoop & Javelin Holdings Limited, Lacrosse
2
Holdings Limited, Hoop Payment Solution Services Ltd., and Morning Bliss Overseas Ltd.
(collectively, the “Absolute Poker Group”), and (b) the Stipulation and Order of Settlement
with Respect to Absolute Poker (the “Settlement Agreement”).
7. Pursuant to the Settlement Agreement, the Absolute Poker Group has agreed that all assets,
including property of all kinds, real and personal, tangible and intangible, goodwill, right or
non-physical resources of the Absolute Poker Group will be forfeited to the United States, for
disposition according to law, pursuant to 18 U.S.C. § 981. Blanca Games, Inc. (“Blanca
Games” or the “Company”), which principally operated the Absolute Poker companies, is a
claimant to assets restrained, seized or referenced in the Verified First Amended Complaint
(“Amended Complaint”) in this action.
8. It is further my understanding that Avoine Serviço de Consultadoria e Marketing, LDA
(“Avoine”) has filed a claim in this action, asserting an interest as an “innocent owner” in
certain of the assets the Absolute Poker Group has agreed to forfeit to the United States. It is
my further understanding that Avoine objects to the interlocutory sale by the United States of
any assets of the Absolute Poker Group until its claim is resolved.
9. In connection with this declaration I reviewed publicly-available information and held
discussions with:
Paul Leggett, Chief Operating Officer, Blanca Games
Jerry Bernstein, Blank Rome LLP, counsel to Blanca Games
10. On April 15, 2011, the Government instituted the instant forfeiture action relating to Blanca
Games, and other internet poker operators. Almost immediately thereafter, Blanca Games
3
effectively ceased its gaming operations. More recently, Blanca Games’s Absolute-Poker
related gaming license with the Kahnawake Gaming Commission lapsed.
11. During the period since Blanca Games effectively ceased its gaming operations in April
2011, certain assets of the Absolute Poker Group have begun to deteriorate in value. Prior to
that date, Blanca Games’ Absolute Poker and Ultimate Bet businesses, combined,
represented one of the top ten online poker gaming companies in the world (based on number
of players and active cash games). The value of Absolute Poker and Ultimate Bet included
their brands, trademarks, Domain Names, customers lists and software technology (together
the “intangible assets”). As time passes with no play on either site, the value of the
intangible assets diminishes. It is well understood that the value of intangible assets
deteriorates over time. Absolute Poker and Ultimate Bet’s intangible assets are precisely the
types of assets that would be valued for accounting purposes in the context of a Purchase
Price Allocation and amortized over time, recognizing that the value of these assets
deteriorates over time.
12. For example, as of April 2011, Blanca Games maintained an updated player list for the more
than six million players worldwide who frequented the Absolute Poker and Ultimate Bet
sites. This player list is essentially Blanca Games’ confidential customer list. It includes
demographic information, as well as performance information such as games played,
winnings, and frequency of games played. This player list will have value to operators of
competing internet poker sites located outside the United States, where such activity is legal.
However, such a player list is of value to another operator only to the extent it is current and
accurate. Thus, the value of Blanca Games’ player list to a potential purchaser diminishes as
time passes, as the list becomes increasingly outdated.
4
Appendix A
APPENDIX A
225 Franklin Street, 21st Floor
Boston, Massachusetts 02110
Tel: 617.378.9445
Fax: 617.830.6052
Cell: 617.799.4413
jaime.dalmeida@duffandphelps.com
JAIME C. D’ALMEIDA
Position
Director, Duff & Phelps, LLC
Education
M.B.A. – Entrepreneurship, FW Olin Graduate School of Business
Babson College
B.S. – Electrical Engineering/Engineering & Public Policy
Carnegie Mellon University
Professional
Affiliations
Adjunct Lecturer, Babson College, F. W. Olin Graduate School of Business
Accredited Senior Appraiser, American Society of Appraisers
Professional
Summary
Jaime d’Almeida is a Director in the Boston office of Duff & Phelps, and is part of the
Dispute and Legal Management Consulting Practice. Jaime has managed over 100 valuation
engagements, and has over 15 years of experience in economic and valuation analysis and
consulting.
Jaime participates in projects providing financial, economic and business advice to clients in
connection with litigation and other disputes related to shareholder and appraisal rights,
preference and fraudulent conveyance actions, breach of contract, fidelity and fraud
investigations, merger and acquisition disputes, patent, and copyright and trademark
disputes. Jaime has been involved in numerous dispute matters and has advised clients on a
wide variety of topics including: asset-backed securities, business valuation, solvency,
financial analysis, fairness opinions, commercial and economic damages, and analysis of
complex financial structures. Prior to joining Duff & Phelps, Jaime was a Senior Manager at
Ernst & Young in their Valuation and Business Modeling group. In prior positions he was a
Manager of Economic and Regulatory Policy for Cable & Wireless’ operating companies in
the Caribbean region. In that role he developed product profitability analyses, valuation
models and economic cost models for business and regulatory applications in the
telecommunications industry. He also participated in negotiations of liberalization
agreements with international governments, set up regulatory regimes, and developed
regulatory strategy. Prior to Cable & Wireless, Jaime was a Consultant at National
Economic Research Associates where he provided litigation and regulatory support in the
telecommunications industry on topics including antitrust analysis, economic cost models,
damage estimations, market entry issues, and economic analyses of modernizing
telecommunications networks. Jaime has also worked at the Massachusetts Department of
Public Utilities as an analyst in the telecommunications sector.
APPENDIX A
JAIME C. D’ALMEIDA
Page 2
Selected Dispute
Experience
California Superior Court, provided trial and deposition testimony and submitted Expert
Report on the valuation of common stock in an internet software and services company
with a complex capital structure, Kenneth Barton v. RPost International Limited, et al.
(YC061581).
New York Supreme Court, provided trial testimony and submitted Expert Report on the
valuation of preferred securities issued by an automotive industry supplier emerging
from Chapter 11 bankruptcy, Deutsche Bank Securities et al., v. Lexington Drake L.P.
et al. (603051/2008).
Delaware Court of Chancery, provided deposition testimony and submitted Expert and
Rebuttal Expert reports on the valuation of preferred and common stock in a health
services company, In Re Levinhar, et al. v. MDG Medical, Inc. (C.A. No. 4301-VCS).
Delaware Court of Chancery, submitted Expert Report on the valuation of a commercial
and residential power services firm, In Re McBride America, Inc. a Delaware
corporation, Assignor, To: LH Limited, LLC, Assignee (C.A. No. 5472-VCN).
Retained as testifying expert in an arbitration concerning the value of a landfill
operation in Massachusetts (settled before testimony).
United States Bankruptcy Court, Southern District of New York, Expert and Rebuttal
Expert Reports of Dr. Steven Pomerantz regarding red flags or warning signs under the
customs and practices of the investment management industry. Irving H. Picard,
Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, v. Saul B.
Katz et al. (11-CV-03605 (JSR) HBP).
Federal Court of Australia (Sydney), Expert and Reply Reports of James K. Finkel
regarding risks, attributes and customary practices associated with synthetic
collateralized debt obligations (“CDO”s).
Provided consulting services related to performance of residential mortgages and
residential mortgage backed securities (“RMBS”) in the context of an RMBS dispute.
North Carolina Superior Court, Expert and Rebuttal Reports of Paul Marcus regarding
damages arising from a post-purchase dispute over representations and warranties
related to certain customers of a company in the power protection industry.
United States Bankruptcy Court, District of Delaware, Expert Report of Tim Luehrman
with respect to valuation and solvency analyses of a company in the commercial real
estate industry.
Delaware Court of Chancery, Expert Report of John Levitske regarding damages
arising from a post-purchase dispute over representations and warranties related to the
customer base of a company in the oil and gas field services industry.
United States District Court, Northern Division of Georgia, Expert Report of Tim
Luehrman with respect to valuation and solvency analyses in a fraudulent conveyance
claim of a company in the energy industry.
Lipper Convertibles L.P. NASD Arbitration. Arbitration proceeding regarding hedge
fund valuation practices.
United States District Court Southern District of New York, John R. Black v. Harlan S.
Levinson, Expert Report of Mark Gallagher regarding the valuation of damages of a
company in the home furnishings industry.
CPR Institute for Dispute Resolution Arbitral Tribunal, Rebuttal Affidavit of William
E. Taylor in Arbitration V between BellSouth Telecommunications and Supra
Telecommunications & Information Systems.
APPENDIX A
JAIME C. D’ALMEIDA
Page 3
United States Bankruptcy Court, Northern District of Illinois, Eastern Division
Telesphere Liquidating Trust vs. Francesco Galesi, Adv. Proc. Nos. 95 A 1051 & 99 A
131: expert opinion of William E. Taylor regarding the condition of alternative operator
service provider and 900 service markets.
United States District Court, District of Nevada (Case No. CV-S-99-1796-KJD(RJJ) on
behalf of Broadwing Communications Services, Inc., affidavit of William E. Taylor
regarding damages from alleged misuse of trade secret information.
Expert Report: Shared Tenant Service Provider Market Penetration Analysis, William
E. Taylor, on behalf of Bell Atlantic.
Select Advisory
Experience
Advised examiner with respect to valuation and solvency of Lehman Brothers on behalf
of the examiner appointed by the US Bankruptcy Court while acting as the lead
financial advisor. Focused on asset-based securities, equity and debt instruments,
liquidity and capital structure.
Consulted a major consumables firm on solvency and litigation implications of a
potential spin-off of certain assets.
Consulted government agency on the value of an online gaming business.
Valued the total equity of numerous private companies, included private equity and
venture capital backed companies, and allocated value to each class of stock using
contingent claims analysis. Includes companies across multiple industries.
Valued intellectual property and intangible assets such as customer relationships, brand
names, technologies, and IPR&D in connection with post-transaction purchase price
allocations across multiple industries.
Valued technology and industrial businesses for the purpose of goodwill impairment
testing under SFAS 142.
Performed valuation analyses for various reporting units of a diversified manufacturing
and services company (with $40 billion in revenue) in connection with impairment
testing pursuant to SFAS 142.
Prepared valuation analysis of intellectual property, including life science patents, for
counsel of multinational life sciences company ($1.5 billion in revenue) for purposes of
a proposed transaction.
Prepared third-party valuation analyses as mediator for a dispute involving a retail
sporting goods firm.
Prepared sell-side advisory valuation analysis of total invested capital of a chemicals
manufacturer for purposes of strategic planning.
Prepared sell-side valuation analyses of high tech patent portfolio for purposes of
evaluating an offer.
Prepared sell-side valuation analyses of patent applicable to the construction and
engineering industry for purposes of strategic planning.
Select Regulatory
Experience
Before the Federal Communications Commission, WC Docket No. 03-135, Iowa
Telecommunications Service, Inc., Tariff FCC No. 1, cost model for the forwardlooking costs of interstate switched access.
APPENDIX A
JAIME C. D’ALMEIDA
Page 4
Rebuttal Declaration of Timothy J. Tardiff on the use of the HAI, Release 5.3 Model
for unbundled network elements costs, prepared for filing with the California Public
Utilities Commission on behalf of SBC California, Application Nos. 01-02-024, 01-02035, 02-02-031, 02-02-032, and 02-03-002.
Canadian Radio-Television and Telecommunications Commission (Public Notice
CRTC 2001-37) on behalf of Aliant Telecom Inc., Bell Canada, MTS Communications
Inc., and Saskatchewan Telecommunications: “Price Cap Review and Related Issues.”
Surrebuttal Testimony of Howard Shelanski and Timothy J. Tardiff on economic
principles for determining the costs of unbundled network elements, prepared for filing
with the Federal Communications Commission on behalf of Verizon-Virginia, CC
Docket Nos. 00-218, 00-249, and 00-251.
Before the Massachusetts Department of Telecommunications and Energy, testimony
on behalf of Verizon New England Inc. d/b/a/ Verizon Massachusetts, regarding
benefits of alternative regulation in Massachusetts since adoption of price cap plan.
The New Jersey Board of Public Utilities (Docket No. TO01020095), on behalf of
Verizon-New Jersey, panel testimony regarding subsidies and measurement of
economic cost.
Prepared for Inforcomm Development Authority of Singapore, “White Paper on Rate
Rebalancing Methodology.”
Delaware Public Service Commission (PSC Docket No. 00-205), on behalf of Bell
Atlantic-Delaware, direct testimony regarding intercarrier compensation for Internetbound traffic in arbitration with Focal Communications Group
Pennsylvania Public Utility Commission (Docket Nos. A-310200F0002, A311350F0002, A-310222F0002, A-310291F0003), on behalf of
Bell Atlantic
Corporation and GTE Corporation, rebuttal testimony of William E. Taylor regarding
economic issues raised in the proposed merger of Bell Atlantic and GTE.
The New Jersey Board of Public Utilities (OAL DOCKET Nos. PUCOT 11269-97N,
PUCOT 11357-97N, PUCOT 01186-94N AND PUCOT 09917-98N) on behalf of Bell
Atlantic - New Jersey: economic issues regarding alleged subsidization of payphone
services.
Comisión Federal de Telecomunicaciones de México (“Cofetel”), “Economic
Parameter Values in the Telmex Price Cap Plan,” arbitrator’s report on behalf of
COFETEL and Telmex regarding the renewal of the price cap plan for Telmex.
Before the Virgin Islands Public Service Commission, on behalf of the Virgin Islands
Telephone Company: testimony of Kenneth Gordon regarding the Industrial
Development Corporation tax benefit.
Before the Vermont Public Service Board, on behalf of Bell Atlantic-Vermont: rebuttal
testimony of Kenneth Gordon regarding economic consequences of granting CTC’s
request to allow assignment of BA-VT retail contracts without customer penalty or
termination charges.
Before the Virgin Islands Public Service Commission, on behalf of VITELCO:
testimony of Kenneth Gordon on use of consultants by regulatory commissions;
benefits of incentive regulation and treatment of tax benefits.
APPENDIX A
JAIME C. D’ALMEIDA
Page 5
Presentations,
Publications &
Articles
“FDIC Professional Liability Claims: Lack of Ethics and Accountability or Poor
Business Judgement,” DufF & Phelps’ Experts and Legal Management Insights,
November 2011, with Terence Rodgers and William Hrycay.
“Takeaways from Gallagher v. Commissioner,” Duff & Phelps Client Alert, August 15,
2011.
“Intellectual Property Valuation and Damages: Insights and Emerging Issues,” June
2011.
“From the Parlor to the Courtroom: The Use of A Company-Specific Risk Premium in
Valuations,” The Value Examiner, March/April 2011, with Seth Fliegler.
“Stock Options: Valuations for Financial and Tax Reporting,” presentation for graduate
class at Babson College, October 19, 2010.
“Churchill on Bilski,” Duff & Phelps Client Alert, July 15, 2010, with Chris Bakewell.
“Stock Option Valuations: What Survives Review,” presentation at CPA Seminar, June
17, 2010.
“The Madoff Mess One Year Later,” presentation at the Massachusetts Continuing
Legal Education, Inc., March 31, 2010.
“Valuing Distressed Companies,” presentation to Boston Bar Association, September
2009.
“Verizon Delaware: Infrastructure Development 1993-2002,” with William Taylor, July
17, 2003.
Prepared for Compañía Dominican de Teléfonos (Codetel), “Telecommunications
Industry in the Dominican Republic: An Assessment of Codetel’s competitors and the
competitive environment” confidential report, (with Agustin Ros, Christian Dippon,
Wayne Olson and Enrique Torres), June 2003.
Pennsylvania Public Utility Commission, on behalf of Bell Atlantic-Pennsylvania: A
report entitled “Promises Fulfilled Again; Bell Atlantic-Pennsylvania’s Infrastructure
Development.” November, 2002 (with William E. Taylor, and Charles J. Zarkadas).
“Review of CostQuest Associates’ Benchmarking Survey,” with William Taylor, Greg
Houston, Tom Hird, Augustine Ros, and Carol Osborne, May 2002.
“The ‘Specific Cost’ Element Contained in Telstra’s ULLS Price: A Report for Gilbert
& Tobin and One Tel,” with Greg Houston, Nina Shore, and Adrian Buckle, May 2001.
“An Economic Evaluation of Network Cost Models” August 7, 2000. Report
evaluating and explaining economic principles underlying Telcordia's SCIS and
CCSCIS network cost models.
Pennsylvania Public Utility Commission, on behalf of Bell Atlantic-Pennsylvania: A
report entitled “Promises Fulfilled; Bell Atlantic-Pennsylvania’s Infrastructure
Development.” Filed January 15, 1999 (with William E. Taylor, Charles J. Zarkadas,
and Agustin J. Ros).
“ISDN Incentives: Regulation and ISDN” with Kenneth Gordon, Harvard Information
Infrastructure Project, October, 1998.
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