Maurice "Mac" VerStandig on the Cumbersome Weight of a WSOP Bracelet
An expert on the American gaming scene, Maurice “Mac” VerStandig is well-versed in casino management from common issues of fraud and theft prevention to the Unlawful Internet Gambling Enforcement Act and Indian Gaming Regulatory Act. With a strong background in bankruptcy work, VerStandig is also skilled in the strategic valuation and monetizing of complex assets, and applies that knowledge to all areas of his practice, from fraud recoveries to traditional insolvency proceedings. Here, Verstandig takes a look at some of the often overlooked legal repercussions associated with winning a World Series of Poker bracelet.
As the roster of Main Event champions becomes increasingly littered with relative unknowns thrust into a heavily-sponsored spotlight, the awkwardly interwoven legal and financial risks of success become ever more abundant. While donning a gold bracelet is certainly not tantamount to opening the door and discovering a smiling Ed McMahon alongside a prop replete with zeroes, the irony-laced curse that has befallen so many lottery winners appears to be contemplating a new residence on West Flamingo Road.
Initially, it bears noting that not all legal issues encountered by hold’em champions are correlative to the spoils of victory. There is an old legal doctrine, rooted in a Latin fallacy, along the lines of “post hoc ergo propter hoc,” which stands for the simple proposition that not all events result from their linear predecessors. Stated otherwise, it would seem foolish to pin the legal hoopla of Stu Ungar’s purported drug use on the fact that he won the final hand of World Series play. Admittedly, stimulants have long been thought to aid elongated sessions on the felt, and street corner dime bags are certainly more affordable for those infused with freshly gathered cash, but suggesting one became a drug addict because he won the World Series of Poker is akin to suggesting a certain former rental car front man engaged in an armed robbery merely because he won the Heisman Trophy.
It is entirely sensible, however, to examine the not-so-peculiar cases of Jamie Gold and Jerry Yang, each in the contextual prism of someone who went from staring down the intimidating presence of a heads-up opponent to gazing blankly into the eyes of a process server. Each recent champion encountered directly the sort of issues that rarely encompass those who bring modest-sized racks to the nearest cage, but that too often envelope those who endorse the checks upon which hefty purses are gently scribed.
Mr. Gold’s dilemma proved particularly relatable, if only because it claims a common nexus with the now-familiar phenomenon of players being staked by others. There is a distinctly American aura to those home game regulars who pitch in a few dollars apiece to send a colleague to Las Vegas. On one hand, few things seem to more quintessentially embody the American spirit of generosity than friends each laying down a few thousand dollars so one of their own can hop a flight, relax in a hotel, and pay a sizable entry fee into a tournament that promises little more than daunting odds and almost-certain defeat. On the other hand, it is the equally American complex of seeking quick riches that invites these backers to salivate over a multi-thousand-percent return on investment as they place wrinkled currency in an envelope and hope for the best.
If there is a lesson to be drawn from both Mr. Gold and those legions of offices that send a singular employee to gather hoards of equally-split Powerball tickets, it is that written agreements are as preferable as they are rare. Trust runs oddly deep amongst the ranks of pals who regularly assemble for the express purpose of bluffing one another out of hard-earned money, and the flaunting of formal paperwork bears the unfortunate social appearance of being a violation of such trust. So rarely do these envelopes of cash accompany dotted lines, and, thus, rarely do the resulting disputes manifest simply.
The law does generally recognize that agreements – including entrepreneurial investment schemes – need not be reduced to writing. And so, if one can genuinely prove that he or she contributed a certain portion of a winner’s stake, most courts will be inclined to grant that person a proportionate split of the proceeds. Things turn tricky, however, when it comes to both establishing that proof, and – oddly – establishing that stake.
With regard to proof, cash is a notoriously fungible instrument. Witnesses, e-mails, text messages and those other distinctly modern communications may all be laid out as part of a suit. And it stands to reason that the crew from the Sunday night game will eventually be able to demonstrate – to a degree of legal satisfaction – that they bankrolled their colleague. But the fewer the investors, and the more discreet the collection efforts, the tougher it is to establish the illusive facts for which Jack Webb spent years searching. Inasmuch as courts are not in the business of redistributing wealth for sport, thin evidence should always be cause for concern. So, most broadly, while a written agreement is the safest means of couching an investment, be mindful that cash handshakes are always the least safe means of couching an investment, and that between those two extremes may be found a fairly wide spectrum across which relative risk runs proportionately.
Of course, proving an investment is only the first part of the equation – proving the size of the enterprise in which the investment is made can be equally daunting. While the buy in for the Main Event stands at a steady $10,000, it is nearly impossible to emerge from the November Nine for that sum alone. With airfare, hotel accommodations, food costs, and miscellaneous expenses, a tournament contender can easily rack up $15,000 in fees en route to a glistening fifteen minutes of fame, and savvy players realize this when passing the collection plate around their home game. It is by no means a Mel Brooks-style absurdity to raise 150% of the entry fee, but backers need to be cognizant that this saturation of monies reduces their relative stake. So a $1,000 investment may yield an entitlement to only one fifteenth of a player’s winnings, even though it covers fully one tenth of the same player’s entry fee. Then again, common sense suggests a well-pampered colleague is more likely to find their way into the money than someone slurping microwave noodles at an hourly motel a short drive from the Rio.
Then, as Mr. Yang recently reminded us, the IRS has the famed habit of investing nothing in a World Series run but nonetheless demanding much from those who gather a paycheck. While it is rather easy to turn a moderate chip stack into cash at a cage and, in turn, jewelry at an airport, all without inviting Uncle Sam’s scrutiny come April, it is nearly impossible to deposit seven figures in winnings without raising flags more thoroughly drenched in red than the queen of hearts.
If there seems a tension between the simplicity with which the average citizen renders unto Caesar and the oft-maligned complexity of the American tax code, it is owing mostly to the reality that the law’s seriously confusing provisions impact only the highest earners amongst us. And so, with a few gentle turns of the river, one can easily go from simply having a few dollars withheld from their recurring direct deposit to owing Uncle Sam enough money to buy every member of Congress a seat at next year’s Main Event. There are ways to minimize this burden, but they must be employed carefully. To be sure, if there is truth behind Mr. Yang’s claims that his charitable tendencies led to his champion bling landing in an auction catalogue, this very likely means that he received bad legal advice (or, worse, no legal advice at all). And so, at risk of being deliciously self-serving, please bear in mind that when coming into large sums of money, it is generally a wise investment to retain counsel for a relatively tiny fraction of those proceeds.
Of course, this invites another classic pitfall, which is the retention of the wrong counsel. Numerous athletes, lottery winners, and other once-wealthy persons find entirely too much ease in pointing a stern finger at the well-dressed, smooth-talking professionals who supposedly swindled riches and skipped town. Trust should be applied sparingly and with both credentials and references in tow. Lawyers, brokers, accountants, and certain other professionals all bear licenses and are all well regulated by various oversight bodies. It is somewhat mortifying that a population seemingly giddy to demand a used car history report when shelling out a few thousand dollars is often reluctant to call a state bar or FINRA when allocating management of a few million dollars.
Finally, as the Main Event nears and huddled masses take their seats with wide-eyed ambitions of starting life anew, reality suggests only the witness protection program can truly scrub one’s past. By most accounts, Darvin Moon experienced none of the troubles that plagued Messrs. Yang and Gold, yet it took little time for a news media down on uppers and up on downers to discover the checkers adorning his past. The comparatively minor rendezvous the 2009 runner-up experienced with the criminal side of the Maryland courts years prior seems largely unremarkable in nature. But the civil judgments pending against Mr. Moon at the time of his suited connector demise very much came into play courtesy of his appreciable second place winnings.
Those attorneys charged with collecting debts regard a large segment of the population as being “judgment proof.” While hyperbolic in nature, the term is meant to encapsulate those individuals whose meager assets are generally protected by certain barebones exemption laws, and who otherwise live paycheck to paycheck. Since such persons do not have any hefty bank accounts to garnish or lavish toys to auction, it is rarely worth the time – and expense – of legal counsel to pursue collection efforts once a civil judgment is secured.
But civil judgments, depending on the state in which they are entered, have remarkable spans of longevity. And should someone once deemed “judgment proof” happen to make a cameo appearance on ESPN, shuffling chips in their right hand while executing a nasty bluff, it stands to reason that creditors – and their lawyers – will take note. This is both unavoidable and likely immaterial to a player on the cusp of fame and fortune, but it still stands as yet another example of how that glistening bracelet can so quickly invite legal action.
Maurice “Mac” VerStandig is an attorney with Offit Kurman, P.A., where his practice focuses on the litigation of various commercial and private disputes, including claims of fraud and financial insolvency cases. He has considerable knowledge of the numerous legal issues encompassing the American gaming scene, and is licensed to practice law in Maryland, Virginia and Florida.