Lodge Card Club Raided / Grand Jury does not indict any Lodge employees

The latest update

I’m not a licensed attorney, but how was it that random message board posters (like me) were calling this out four plus years ago, while Doug’s attorneys apparently failed to understand the implications of not implementing AML compliance?

In my opinion, Doug may have been relying on some of the worst legal counsel imaginable when these AML concerns were first raised.

At this point, though, I’m starting to wonder whether he had legal counsel at all.

If Doug is actually being investigated for AML compliance issues, the corporate veil could potentially be pierced.

Given that, I can’t imagine it’s wise to publicly state that he has personally guaranteed player funds.

What attorney would advise a client to say something like that in the middle of a potential investigation?

It honestly makes me wonder whether he has legal representation at all.

I think his main concern is demonstrating integrity to the poker community. That’s his entire brand.

He does have to be careful making payments to certain parties and ignoring others like employees, vendors and landlord. Also, intertwining personal payments with business obligations will open him up to potentially being on the hook for everything.

It may be that it's specific patrons being investigated rather than leadership at the lodge

Whether you're right or wrong, my point from 4+ years ago still stands.

If authorities are freezing funds and obtaining warrants, that usually means investigators have probable cause that can prove there may have been AML or financial compliance issues somewhere in the system.

Four+ years ago I raised concerns about whether the lodge was following basic AML practices... things like suspicious activity monitoring and SAR reporting, etc etc.

When a gambling operation is facilitating large money transfers between patrons, regulators can view that specific activity through the same lens as other financial intermediaries.

At that point, my understanding is that obligations under the Bank Secrecy Act can come into play regardless of whether the business calls itself a “Social club.”

My personal opinion about Doug's public statement regarding "Guaranteeing player funds" is a legal blunder, which is why I am wondering if he even has legal representation?

Even if it’s meant to reassure the community, blurring the line between personal finances and business obligations can weaken the protection of the corporate structure if things escalate legally.

Let's call a spade a spade:

If regulators are looking to send a message, going after the largest and most high profile club in Texas would certainly do it.

Even if the "Social club" model survives under state law, authorities have shown their hand... They are obviously looking for different angles to shut these places down: For example: AML, financial compliance, tax issues... these investigations are exactly what I thought would happen years ago, and I predict they will inevitably shut down the social club loophole in Texas.

Maybe stop taking victory laps until you are actually proven correct because I doubt you will make an apology tour if you end up being wrong

You're right...

Shame on me for wanting to play in an environment where the IRS and TABC aren’t kicking in the door and holding player funds hostage.

Shame on you for playing strawman victim the moment someone tells you to chill out on your manic posting

A quick comment. A bunch of years ago when Internet poker was booming there was a lot of money available for affiliate ads where we could make money as a percent of the rake. Our legal advice was not to do this (and we never did) even though many of our competitors did accept these ads. Part of the reasoning was that this was a grey area of the law and if there was an aggressive district attorney out there who wanted to test this, twoplustwo.com would be the target since we would have quickly become the largest affiliate site.

I suspect that something like this has happened to The Lodge. My understanding is that they are the largest most successful poker room in Texas. Thus, if some official was in position to test the law, The Lodge would become the first target. And this would be the case even if there wasn't any reason to believe they had done anything wrong.

I hope this all works out so Lodge can reopen and all the players and staff will be protected.

Champions Club in Houston spent multiple millions obtaining and renovating a hotel to include a 20-table poker room. They appear to operate at a loss as they only get a few games/day when not running a big series.

My understanding is that Knighted Ventures who funded it believes that casino gambling will wind up approved in Texas, and they wanted a foothold in the state to show they complied with not taking a rake (like many Houston clubs are doing) and they also won a court battle out in the Dallas market as well.

So there's definitely groups with hundreds of millions or more that believe it's only a matter of time before gambling becomes regulated by the state.

Obviously the casinos in Oklahoma and Louisiana have a vested interest in pouring money into Texas politicians pockets to try and maintain the status quo, as losing the Texas patrons if it were legalized would be a massive blow.

Well, every time any major poker site or personality had issues, his brand was "just fix it, it's simple, stop hiding behind legalese". Not so easy when you're the one under the microscope, eh doug?

It's been like a week. He really would have 2 videos out by now if it was Hustler or ACR, Coin etc etc

He's discussing the relevant issues. He brought up Anti-Money Laundering 4 yrs ago and the TABC statement said Money Laundering is one of the reasons for the raid. He had a legit point. He's not coming off as celebrating the closure or taking victory laps. He's bringing up possible legit shortcomings of that business. Why would he have to make apologies if the business is cleared and reopens? He's not saying he'll be right about everything. Opinions are allowed right?

Great point here. Follow the money interests.

Where do you clowns get this stuff from? If these regulators are trying a novel legal issue, they go after the low hanging fruit, not the biggest player in the industry. You don’t even appear to know which agency or agencies conducted the raids or why. When the charges we willl have a much better idea of what. Is going on here.

Given that Doug was a mod here for many years, I am not surprised that other mods responding like this.

I was not going to dignify his response by responding, but your analysis is spot on.

Pocket_Zero's analysis years ago earlier in the thread is also correct and I shared Pocket_Zero's concerns years ago as well.

Mason's analysis also has merit, because when you embark on a business venture, simply analyzing one aspect of the business is often not enough. These decisions are often not binary, they are multi-faceted.

Like in Mason's example: Sure, 2+2 can exist as a publishing company, and it's common for publishing orgs to sell ads, but being the biggest and most notable publishing company in a space means the scope is trained on you first, should some sort of compliance issue arise.

Mason correctly identified a possible compliance risk that could arise, and mitigated that risk by taking his attorney's advice and mitigating the risk.

If Mason had assumed the risk, instead of mitigating it, it would have been in Mason's best interest to dot his I's, cross his T's and have his litigation team ready to respond to regulatory scrutiny.

This is a simple risk management framework that is taught in various business classes at the University level, I've heard it called SWOT analysis and various other things, but the items that people were sounding the alarm on years ago, were all valid. The fact that these issues have risen to the level of being investigated by the IRS and TABC... has simply validated that analysis.

Lawyers certainly telling him to layoff social media. He will have to address it in some fashion when he posts again.

Opens himself up personally to liability. Like when does he plan to make player chips whole? And why won’t he cover employees who are impacted even more?

It always felt strange how these poker rooms operated in a state without a gambling commission.

Regardless if he modded here I don't even like the guy, which is verifiable from my posting history, but I don't even think he modded here. Certainly not during the time that I've been a mod

Doug probably knows it's not a devestating amount of money to pay back? Or can he get into legal trouble paying people back?

2017 WSOP Player of the Year

This is one problem Doug can't solve with a HU challenge.

Maybe using #CodeDoug will make this all go away. Saying it 3 times in the mirror has always worked for me.