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Inside the Lawsuit: Six Players Allege Borgata Negligence, Contract Breach in Lusardi Event

Inside the Lawsuit Six Players Allege Borgata Negligence Contract Breach in Lusardi Event

This week’s filing of a lawsuit by six of the “Final 27” players in the January 2014 Borgata Winter Poker Open tainted by the alleged introduction of counterfeit chips by Christian Lusardi was as predictable as rain, following last month’s ruling and ordered prize distribution by New Jersey’s Division of Gaming Enforcement (DGE).

In the lawsuit, filed by the Philadelphia law firm of Offit Kurman, P.A., players Duane Haughton, Michael Sneideman, Cuong C. Tran, Cuong V. Phung, Alvin Vatanavan and Christopher Korres seek more than $33,000 each in damages from the Borgata, over and above the more than $19,000 that each of the six will already receive as part of the DGE-ordered distribution from the prize fund remaining in the event when the DGE ordered play halted on January 17th, which totaled more than $1.4 million.

Only one of the six players lives in New Jersey, and several of the plaintiffs traveled several hundred miles to compete, including one player from Michigan.

The lawsuit, which your author obtained directly from attorneys for the plaintiffs, alleges four actionable claims for damages – two counts each of negligence and breach of contract – against the Borgata.  The negligence portion of the suit alleges several general points against the Borgata.  Among those are that the Borgata’s lax oversight contributed to scope of the problem and increased the likelihood that the counterfeit chips allegedly introduced by Lusardi (who remains in custody in connection with the case) went officially undiscovered for a full day or longer.

Those allegations contradict the DGE’s ruling last month that the Borgata was “in compliance” with state gambling regulations relating to the running of poker tourneys, including the casino’s internal controls, and it’s a safe bet that the Borgata’s own attorneys will lean heavily on the whitewashing DGE ruling should the case ever go to trial.

The defendants and their attorneys claim that:

• The Borgata was negligent in running the tournament, which led off the casino’s Winter Poker Open and drew over 4,800 entrants (including rebuys) over three flights and two starting days.  Specifically, that negligence including setting up extra tourney tables in nearby rooms with less security-camera surveillance than in the Borgata’s regular tournament room.

• The Borgata was negligently slow in recognizing that a larger number of counterfeit chips had been introduced, taking a day or longer to realize the extent of the compromised play.  This includes a specific allegation that multiple players complained about unusual, different-colored chips being in play, but were ignored by dealers and floor supervisors.  Of related interest is that the widely reported version of the Borgata finally realizing that counterfeits were in play, via a contact from the nearby Harrah’s casino, where more fake Borgata chips were discovered, appears nowhere in the action in its original form.

• The Borgata breached its contract, both formal and implied, by failing to “timely recognize” the fraud being perpetrated by Lusardi, to the eventual detriment of the event’s final 27 players, whose DGE-ordered payouts represented only about 35% of the remaining prize pool.  The alleged breaches also include the $60 tournament fee that was part of each player’s $500+60 entry, in that the expected use for that $60 includes the expected providing of security and operational control sufficient to protect against the situation that eventually unfolded.

Interesting Omissions and Inclusions in Lawsuit

The 17-page lawsuit doesn’t always adhere to the standard version of the reported story, however.  Significant omissions from the timeline include the Harrah’s discovery of hundreds of chips in the plumbing at that casino-hotel, allegedly flushed down the toilet in Lusardi’s room.

The lawsuit also omits a full explanation of the difference between the $19,323 that each player among the final 27 was ordered to receive per the DGE ruling, and the $53,079.44 that would be the equally chopped payout had the entire $1.433 million remaining in prize funds been paid to the final 27.  Instead, over $900,000 went to roughly 2,000 other entrants who could conceivably have come in contact with Lusardi at the event’s tables. 

In truth, most of those 2,000 players didn’t, and there’s no evidence that either the Borgata or the New Jersey DGE in its investigations made an attempt to determine exactly who played against Borgata or against other stacks that were indirectly tainted through table transfers.  It would’ve been a daunting task, to be sure, but there’s no indication that the DGE or Borgata seriously considered undertaking it.  Instead, the ruling as issued by the DGE likely overpaid many entrants, to the direct detriment of the final 27, as I explained in an evaluation of the ruling published a few weeks ago at FlushDraw.

That DGE ruling is not mentioned in the 17 pages of this lawsuit, but you can bet both sides will be planning for its introduction at some point.  The Borgata, assuredly, will say, “But this is what the state ordered us to do!”

And the lawsuit appears prepared for that eventuality.  Among the rumors floating around the pokerverse in the wake of last month’s DGE ruling regarding the event are that the Borgata may have sweetened the pot for several of the remaining 27 players, including the chip leaders.  It would be unusual for any casino to take such a step out of true good will, and with an admittedly cynical view, it’s at least as likely that the payments are part of a “divide and conquer” legal strategy being implemented by the Borgata to limit its long-term legal exposure.

Here’s what the lawsuit says about these alleged under-the-table deals:

41. Upon information and belief, the Borgata has privately agreed to pay monies over and above the Paid Sum to various members of the Final 27, in exchange for each such recipient executing, inter alia, a confidentiality agreement, and the Borgata has intentionally set out about ensuring the various members of the Final 27 not know how much money has been paid to select colleagues of theirs.

Whether the full extent of any of these deals becomes publicly known, assuming they did occur, remains unknown at this point.

There’s more.  Most of the allegations in the lawsuit appear to be valid complaints, based upon the general sequence of events that occurred.  One allegation isn’t so solid, however, a claim that the Borgata breached its duty by “failing to regular inventory the number of chips in play, and reconcile that inventory against the total number of Tournament Chips distributed.”

In this writer’s opinion, that’s an outlandish claim.  With the constant busting of players and steady shifting of players from broken tables to others, there’s virtually no way to conduct the type of “regular inventory” in an ongoing manner, perhaps several times each tournament day. 

At a large venue, there could be 100 or more tables in action, and it would take a healthy handful of staffers some time to count just the largest-denomination chips, much less each player’s entire stack.  Could it be done on a 15-minute break?  No way in hell.  On an hour-long lunch break?  Maybe, but it would take maybe 20 staffers, and transferring those counts into real-time info presents another labor cost and time lag that would quickly defeat the greater purpose – keeping the event moving.

So when the lawsuit claims that “each of these breaches represented a failure of the Borgata to abide by tournament norms,” I’d respond, possibly to the other alleged breaches, but not the inventory one.  Even end-of-day inventories rely on players’ self-reported chip counts and are notoriously inaccurate until the last couple of tables.

All told, however, the lawsuit is interesting and appears to have real legs.  The attorneys, Maurice “Mac” VerStandig and William H. Pillsbury, acknowledge that some others among the final 27 players may join in as plaintiffs at some later date, and that the lawsuit is expressly separate from an earlier class-action suit filed by Jacob Musterel, who busted from the event before cashing.  The Musterel case remains active in the New Jersey court system, and it has not been publicly stated as to whether he received one of the $560 refunds issued in connection with last month’s DGE ruling.

News by Haley Hintze
Haley Hintze - Freelance Contributor

Veteran poker writer and editor Haley Hintze offers a uniquely independent and entertaining look at many of the most newsworthy topics in poker.  Noted for her lengthy series that helped expose the cheaters behind the Absolute Poker and UltimateBet scandals, she remains a champion of consumer interests and fair play.

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