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Old 12-09-2006, 03:39 AM
Mason Malmuth Mason Malmuth is offline
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Join Date: Aug 2002
Location: Nevada
Posts: 5,654
Default Two Plus Two Statement on the PPA

To: Mason Malmuth, Two Plus Two Publishing

From: Mark G. Tratos, Managing Shareholder, Las Vegas Office of Greenberg Traurig

Date: December 8, 2006

RE: Poker Player's Alliance
____________________________________

Dear Mason:

You have asked us to undertake a review and analysis of the Poker Player's Alliance (PPA) in order to determine whether Two Plus Two should advocate for your patrons, support and membership in that entity. Our review has been extended several months as we have found it difficult to verify important factual information about the PPA during our due diligence investigation. What follows is our brief summary of our findings and the analysis that we undertook to complete the report. If you have any questions, please do not hesitate to call.

SUMMARY

Two Plus Two supports the proposition that poker is a game of skill and as such should not be placed in the same category as casino games where chance, luck or random occurrence solely control the outcome. Accordingly, Two Plus Two has opposed the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) and supports the call for legislative amendments exempting poker sites from UIGEA's broad coverage. Based upon this position, Two Plus Two, through its counsel undertook a background investigation of the Poker Player's Alliance to determine if Two Plus Two could endorse the PPA and encourage your patrons and participants on the Two Plus Two website to support the PPA through financial donations. Based upon our investigation, we do not believe Two Plus Two can actively encourage the financial support of the PPA because of the organizations lack of transparency.

Unlike most not for profit organizations that represent a large national interest group, the PPA is unusually difficult to obtain information from. It does not make information about its budgets, officer compensation, lobbying expenditures, advertising and marketing, and political agenda or strategy available to members or the public at large. The PPA's often repeated refrain that "it will try to keep poker legal" is not an adequate substitute for the full and open disclosure expected of any 501(c)(4) membership based organization. As a not for profit organization, the PPA is prohibited from allowing any part of the net earnings of the entity to inure to the benefit of any private shareholder or individual (26 U.S.C. S 501(c)(4)(a). However, PPA members cannot verify the organization’s compliance because it has never published an annual report, or made its budget information available to its donors or members. In fact, we have not seen a disclosure or list of any individuals who were compensated for their services to the PPA.

Moreover, all not for profit organizations achieve their tax exempted status through receiving an Internal Revenue Service “exemption letter.” Those letters are typically made available to donors and members. The PPA has not made such a determination letter publicly available.

Our investigation of the PPA’s Washington, D.C. office found a shared rented office space with a receptionist who stated that she rarely saw any PPA representatives physically at the Washington, D.C. location. Moreover, our investigative phone calls and e-mails either went unanswered or we were told the person answering the phone could not respond to our inquiry about the corporate structure or the tax deductibility of donations to the PPA.

Based upon this lack of information, we cannot recommend that Two Plus Two actively encourage membership in, or donations to the PPA, despite Two Plus Two’s agreement with the stated principal of “keeping poker legal.” The best way of accomplishing this important objective is for an organization that represents poker players to be above board in all of its dealings, and transparent in its organization and finances.

Simply stated, in order to adequately represent the position of poker players, the PPA must not act secretive in any way. Its actions and those of its employees should be a matter of public record. If the PPA believes that poker players’ activities on the internet are legitimate, PPA actions must be as well.

The only way for legitimacy to be evident is for basic financial information about the organization to be transparent. It is not. Thus, in summary, we cannot encourage Two Plus Two to actively promote or endorse the PPA.

ANALYSIS

Our review of the PPA revealed that it is a Nevada not for profit corporation formed June 13, 2005 (Corp. # NOR E0369522005-5). According to corporate records on file with the Secretary of State, one individual serves as the PPA’s president, secretary and treasurer. That individual is listed as Michael Bolcerek. The PPA’s website identifies itself as a (501)(c)(4) organization. Such organizations may engage in lobbying activities, however such organizations are statutorily prohibited from allowing any portion of their net earnings to be paid to any individual or private shareholder. Whether or not Principals or Board Members of the PPA receive any financial benefit for their services is not known, because the PPA has not seen fit to publish an annual report nor made any budget information available to its donors, members or the public at large.

The PPA website at <pokerplayersalliance.com/org> contains general information about the PPA’s activities, but fails to identify any specific political activity or lobbying efforts commissioned by the organzation. The site also does not identify who the organization has engaged as lobbyists, what the organization’s lobbying strategy is, nor does it state with any particularity how it intends to “keep poker legal.” Moreover the PPA does not provide instructions on specific efforts poker players should undertake to successfully challenge recent legislation that may affect the legality of online poker.

WEBSITE INVESTIGATION

The PPA Website does not contain any financial information, budgets, or information concerning how donors’ funds are used. Nevertheless, there are several links and messages, telling visitors to “show up, sign up, and donate” to the organization.

Perhaps most interestingly, a WHOIS search of the domain names associated with the PPA website identified the initial registrant as a different entity, the Professional Poker Players Association (PPPA). The PPPA is a Northern Nevada not for profit corporation that received a default of April 1, 2006, thus making it apparently inactive. The Nevada Secretary of State lists Samuel Gorewitz, the previous President of the PPA as the sole officer of the PPPA. The PPA’s website however, does not address the PPPA, it does not address why it is the listed owner of the website nor does it explain any connection that the two (2) not for profit organizations had or may have. Only recently, on November 21, 2006, was the registration information for these domains changed to the PPA.

LOCATION INVESTIGATION

In order to gain more information about the PPA we sent one of our attorneys to the PPA’s listed office at 1201 Pennsylvania Avenue, N.W., Suite 200, Washington D.C.20004. The investigation revealed that the address is a rented office space shared with about twelve (12) other companies. The receptionist in charge of handling correspondence for all of the businesses at that address indicated that no PPA employees were present and that she very rarely saw anyone associated with a PPA physically present at the Washington D.C. location. No other information such as membership information, tax exempt status letter, employee rosters, designated lobbyists or the like was available for inspection.

As additional follow-ups, attorneys and paralegals from our office directed phone calls and e-mails to the PPA over several days. We sought information regarding the deductibility of donations, the “not for profit” status of the organization, the availability of annual reports, projected budgets and the like. Unfortunately, our investigative efforts resulted in no further information as phone calls and e-mails were either not returned or the information that was returned was limited to a vague, non-specific assurance by the PPA that “any donation made would go towards keeping poker legal.” While the PPA’s website posts limited information about the Unlawful Internet Gaming Enforcement Act and its adoption, the website provides no more information than is available through public news sites and fails to provide important information about how it tries to achieve its stated purpose of “keeping poker legal. “

Two Plus Two has been subjected to a great deal of pressure to endorse, publicly support, and otherwise promote the PPA. Yet, the PPA has never provided its members with basic information critical to evaluating the organization. While the PPA’s stated purpose is embraced by Two Plus Two, it would be irresponsible of Two Plus Two to endorse, sanction, or promote the PPA which is supported by “member donations” when it does not know, and cannot easily determine how those donations are being used. We are not suggesting that the PPA has done anything improper, nor are we suggesting that the individuals involved are not well intended or that they are not working to support keeping poker legal. We mean only that given the great interest by poker players everywhere to preserve their legal right to continue internet play, the organization that purports to represent them should be transparent in every means possible. Its operations should be above reproach, its plans should be publicly stated, and its member supported budget should be made publicly available, its officers compensation should be a matter of record, its lobbying efforts should be known, and the lobbying it engages should be publicly disclosed.

CONCLUSION

Keeping internet poker legal is an important objective. In order to accomplish the objective, the organization that purports to represent poker players needs to be transparent and above board in all of its actions. Full disclosure of its operations, budget and lobbying efforts will be the best way to legitimize its good intentions and to sustain the viability of its purpose. In much the same way that other not for profit organizations explain how donations are being used, the PPA could add credibility to its argument supporting poker players across America if it demonstrated its credibility by being fully transparent. Two Plus Two has always taken seriously its obligation to keep its visitors fully informed about all aspects of poker.

Two Plus Two would be ill-advised to provide endorsements to any organization without conducting due diligence. If the due diligence results in a lack of credible information about any entity, Two Plus Two should not publicly endorse, sponsor, recommend nor promote the organization to its patrons.
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