Unites States v. Pokerstars, et al

Filing 258

DECLARATION of Leonard A Rodes in Opposition 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 Avoine-Servico de Consultadoria e Marketing LDA. (Rodes, Leonard)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,
:
:
Plaintiff,
:
v.
:
:
POKERSTARS, et al.,
:
:
Defendants;
:
:
ALL RIGHT, TITLE AND INTEREST IN :
THE ASSETS OF POKERSTARS, et al., :
:
Defendants-in-rem. :
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11 Civ. 2564 (LBS)

DECLARATION

Leonard A. Rodes, Esq., hereby declares pursuant to 28 U.S.C. §1746:
1.

I am a partner in Trachtenberg Rodes & Friedberg LLP, attorneys for claimant

Avoine – Servico de Consultadoria e Marketing LDA (“Avoine”), and a member of the bar of
this Court. I respectfully submit this declaration in opposition to the Government’s motion (D.E.
237) seeking (1) approval of a settlement agreement unconditionally dismissing from this case
claimant Blanca Games and its affiliates (the “Blanca Entities”); and (2) an order under Rule
G(7) permitting seizure and sale of all of the intellectual property owned by Avoine (the “AP
Assets”).
Concerning the Rule G(7) Motion
2.

Earlier this summer, I had several telephone conversations with Assistant U.S.

Attorney Cowley regarding the Government’s intention to propose an interlocutory sale of the
AP Assets. In one of those conversations, in response to my questions, Mr. Cowley indicated
that the Government did not possess the operating software required to run the Absolute Poker
internet poker business (the “AP Software”). I rhetorically asked how the Government could sell
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something it did not possess and, moreover, how the Government expected to maximize the
proceeds of an interlocutory sale of the AP Assets when it was not in position to deliver the most
important component of those assets: the AP Software. At that point, Mr. Cowley could not
suggest answers.
3.

Several weeks later, Mr. Cowley called to say that the Government had been in

communication with a Korean company (I do not recall him mentioning the name of the
company) that claimed to have a copy of the AP Software, and that was willing to hand it over to
the Government. He said that the Government did not yet have it. I said that, in addition to
obtaining a copy of the software, the Government should obtain assurances from the Korean
company that (a) it had retained no copies of the software, and (b) it had no rights in or to the
software, and Mr. Cowley indicated that he believed those assurances were also obtainable.
4.

A few weeks later, the Government served its motion under Rule G(7) seeking an

order for the interlocutory sale of the AP Assets. There is nothing in the Government’s motion
papers to suggest that the Government has, in fact, obtained custody of the AP Software or the
associated assurances that would give potential buyers confidence that if they purchased the AP
Assets in a court-ordered sale they would not face conflicting claims to the AP Software from
foreign non-parties.
Concerning the Dismissal of the Blanca Entities
5.

The Blanca Entities1 are voluntary participants in this case – having filed a

verified claim asserting that they own the AP Assets. (D.E.85, the “Blanca Claim”) That claim

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As used herein and in the accompanying memorandum of law, “Blanca Entities” refers to the
collection of entities (and two non-entities) that the Government, in its moving papers, has referred to as
the “Named Absolute Poker Companies” or the “Absolute Poker Settlement Group” – to wit, SGS
Systems Inc., Trust Services Ltd., Fiducia Exchange Ltd., Blue Water Services Ltd., Absolute
Entertainment, S.A. and Blanca Games, Inc. of Antigua. The Government’s labels also include two
supposed entities which, in all of the Government’s papers in this case, have never been identified with
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irreconcilably conflicts with Avoine’s verified claim to the same assets. (D.E. 150, the “Avoine
Claim”).
6.

In part due to the conflicting claims of ownership of the AP Assets, Avoine

served upon the Blanca Entities both (a) a set of interrogatories (a copy of which is annexed
hereto as Exhibit A) and (b) a set of document demands (a copy of which is annexed hereto as
Exhibit B) (the interrogatories and document demands referred to herein as “Avoine’s Discovery
Requests”).
7.

The Blanca Entities did not assert any objections to Avoine’s Discovery Requests

by the noticed deadline (July 5, 2012). Nor have the Blanca Entities provided answers to the
interrogatories or documents responsive to the document demands. In fact, the Blanca Entities
have simply ignored Avoine’s Discovery Requests.
8.

Compliance with Avoine’s Discovery Requests has become even more important

in light of the Government’s recent motion to strike Avoine’s claim. (D.E.197-198). That
motion posits that the Blanca Entities are the true owners of the AP Assets, and that Avoine is a
mere “straw owner” of those assets. In other words, in the conflict between the Blanca Claim
and the Avoine Claim, the Government has taken the Blanca Entities’ side.
9.

While the Government’s motion to strike the Avoine Claim is a facial challenge

to Avoine’s standing (and purports to challenge its standing based only on the allegations in its
pleadings), if that motion is denied (as it should be – see D.E.247-248), then the Government
will certainly pursue a “factual challenge” to Avoine’s standing, based on the same “straw
ownership” theory, in later proceedings. For that reason, and also for reasons having to do with
reference to place of organization or business, and which we suspect are not entities at all – to wit,
“Absolute Poker” and “Ultimate Bet.”
How Blank Rome can purport to represent SGS Systems Inc. (a Belize company that no longer
exists, and is in fact a predecessor of Avoine) and Fiducia Exchange Ltd., the stock of which is owned
100% by Avoine, is a mystery.
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EXHIBIT A

EXHIBIT B