Friday, November 11th: Jamie Gold 101

Apologies for the break -- when law school exams call, I've got to bear down and give them #1 priority sequence.

Thought I'd offer the benefit of my legal education to those wanting to know just what's up with the lawsuit that was filed against Gold by a man named Crispin Leyser ("CL"), claiming that Gold owed him half of his $12 Million WSOP prize. I've more or less had enough of reading the completely ludicrous opinions of others, who have no understanding of the legal system. So I'm going to do my best to explain the story here, in as understandable a manner as possible -- this is actually kind of fun to follow: the equivalent of law-student porn, if you will.

The basic facts (on which both sides more or less agree)

Gold befriended CL a little while before the WSOP; they had both worked in television, and were fans of playing some poker. Bodog Poker had agreed to sponsor Gold to play in the WSOP Main Event (although it's not clear why; e.g. whether he won an online satellite, or whether they were paying for his $10,000 entry fee for some other reason.) At some point, Gold told CL that he thought if CL (who had some connections to the entertainment industry) could get some celebrities to wear Bodog apparel during the WSOP, that Bodog would sponsor CL to play in it too. CL had apparently suggested that he could get Matthew Perry and Matthew McConaughey. But it didn't pan out, and CL only got two D-list celebs: Dax Shepard (from the Punk'd TV show), and Matthew Lillard. Bodog did not end up paying for CL's entry fee.

Now things get interesting: at some point Gold agreed verbally to give CL 50% of any money he won at the WSOP. Just why he agreed to do that is a matter the parties debate, but I'll get back to that soon. There is no doubt that Gold had promised to give CL half. The night before the final table (at which point Gold was already guaranteed to get at least $1 Million in prize money), he called CL's answering machine and left the following message (I have put the important parts in bold):

Hey, it’s Jamie, thank you for your message. I slept pretty well so we should be fine. I have a real good plan on what to do for today. Thank you for all your help. I wanted to let you know about the money. You’re obviously very well protected, everything will be fine but nothing’s going to happen today, that’s for sure. I have the best tax attorneys and the best minds in the business working for me from New York and LA and what we’re probably going to do is set up a Nevada Corporation and it’s going to … I have to pay you out of the corporation. I can’t just pay personally because I could get nailed. So it might take a few days, so please be patient. I promise you — you can keep this recording on my word — there’s no possible way you’re not going to your hal … after taxes. So please just be with me. I can’t imagine you’re going to have a problem with it. I just don’t want any stress about any money or any of that [censored] going on today, or even after the end of the day. I’m sure you’re going to be fine; you’re going to be very well taken care of, absolutely fairly. We’re just trying to handle this properly and after now I don’t even want to talk about it or think about it. But please just trust me. You’ve trusted me the whole way, you can trust me a little bit more. I promise you that there’s no way anybody will go anywhere with your money. It’s your money. Alright, I send you love, thank you for your support …

The preceding voicemail has set the poker world abuzz, with many people (who have no clue what they're talking about) claiming that it's the 'smoking gun' that will ensure Gold loses in court. This is poppy-cock, which I'll explain in a moment.

Aaaaaanyway, after Gold won $12 Million, he immediately got in touch with accountants and tax professionals to start working through the most advantageous way to take ahold of his winnings (there's all sorts of perfectly-legal measures you can take; such as incorporating yourself, or the like that can result in slightly-lower tax liability...and when you're dealing with $12 Million, even a small reduction in taxes can amount to like a quarter-million more in your pocket.)

While this was still going on, CL (apparently worried that Gold was going to back out of paying him the half that he'd promised) filed a lawsuit, seeking an injunction to prevent Harrah's from paying out half of Gold's winnings, on the theory that it actually belonged to him. A judge granted that injunction, so Gold was paid $6 Million, and the other half is still with Harrah's, awaiting resolution of this matter. P.S. an "injunction" is sort of like a temporary restraining order -- it doesn't mean that CL actually WON the case or anything (we're still months away from that). All it means is that the judge agreed that there was a viable enough question about who the money belonged to tell Harrah's to hang on to it. The law allows for these "injunctions" to be granted to prevent people from taking hold of assets and then disposing of them before a claim can be made by an opposing party...for example, theoretically Gold could have taken his $12 Million, and immediately bet it all on one spin of the roulette wheel and lost it, leaving no money for CL to recover should he then file a lawsuit. (But in this case, filing for the injunction was one of the all-time greatest bonehead moves, as I'll explain below.) Apparently miffed by CL immediately pulling the trigger on a lawsuit, Gold seems to have reneged on his promise, and decided that he isn't going to give CL a dime.

And that's where we stand; still with me?

The Legal Stuff

Alright, this is where things take a turn for the sexy.

Yes, there's no doubt that there was (at one time) a promise by Gold to pay CL half his WSOP winnings. Neither side disputes that. And as I wrote before, that's the 'smoking gun' that a lot of people are clamoring proves Gold's "guilt." The problem is that most of the general public watches a tad too much Judge Judy, and thinks that our legal system works something like that: i.e. that each side gets 15 minutes to tell the court what happened, win as many trailer-trash points as they can, and then a judge exercises common sense to determine what decision would be most "fair." Sorry to burst your bubble, but you're living in a dream world.

(By the way, if any of you are wondering just how Judge Judy or any of those other judge shows work: well Judy is indeed a former judge. But what you see on TV isn't actually connected to the country's judicial system in any way. It's just one big TV production. But what about the disclaimer you see that "the cases are real...the plaintiff and defendants are real..."?, you might ask. Well, they are. What happens is that the show's producers scour the docket of the small claims courts, looking for cases that look...well...ridiculous; i.e. where both parties look pretty juvenile, and the facts of the case look like they'd make for some good "wow, those-people-make-my-own-life-seem-so-satisfying-and-relevant" TV. Then they approach the parties and ask them if they'd like to be part of the TV show...if they agree, both parties sign a contract agreeing to appear on the show and be bound by the decision of the "judge", and drop the proceedings from the docket of the "real court." But the fact that Judge Judy actually did used to be a judge really has no value...it could be Kato Cailin in a Big Bird suit up on the bench, and the parties would still be bound by his decision...because they agreed by contract to be bound by it...not because the "judge" has any actual disciplinary discretion.)

Anyhow, back to the matter at hand: Here's the thing (and pay attention here): one of the most fundamental principles of contract law is that promises are not legally binding. Yep, any first-year law student can tell you that. In other words, that voicemail means nothing. Zilch. Zero. Nada. Gold could have stood up on the final table in front of an audience of thousands, dropped his pants, and announced through a bullhorn: "I, Jamie Gold, promise to give CL half of my winnings today", and it wouldn't mean a damn thing. The voicemail may be evidence that Gold is a scumbag for going back on his word, but as far as forming the basis for CL's legal claim to that money, no dice.

So that's what the law ISN'T. Here's what it is. The "full" law about promises is this: promises, without consideration, are not legally binding. "Consideration": that's the operative word here. Roughly speaking, it means that each side must give something up to make the agreement binding. Otherwise, it's just a "promise", or a "gift", and that means bupkiss. In fact, that's exactly what Gold's argument is: that his 'agreement' with CL was just a promise to make him a gift of 50% of his winnings, and not any sort of binding contract. For example, if I say to you: "I promise to give you the deed to my house, if you let me borrow your car next weekend, then there IS consideration: it's you letting me borrow your car -- and hence the promise is binding because the other party is giving up something in return. BUT, if you just say "I promise to give you the deed to my house", it's not binding, because there's no "consideration". Now, there's no requirement that what each side gives up needs to be of equal, or even fair value. For example, in the case above, the deed to a house is probably worth way more than the ability to borrow a car for the weekend, but courts don't really concern themselves with that -- they just need to see something given up in return to make the promise binding.

Hope you followed the above -- so how does that fit into the Jamie Gold case?? Well, Gold is arguing, as I mentioned above, that there was no consideration, and hence the 'agreement' was only a promise to make a gift to CL of 50% of his winnings, which isn't binding. BUT, CL tells a different story: he says that the agreement he had with Gold was to get celebrities to endorse Bodog during the WSOP, in return for 50% of Gold's winnings. And he did just that. They may not have been the A-list celeb's he originally thought he could get, but his argument is that the agreement he had with Gold was a binding contract, conditional on him acquiring the celebs, which he did, and that's what constituted the "consideration" necessary to make the promise a binding contract. Got it? Here's where things get murky, because it's really unclear from the facts that have come out so far just what was the nature of the agreement Gold and CL had. Gold claims that once he saw that the D-list celebs that CL had acquired for Bodog weren't good enough to get Bodog to sponsor him, he simply "felt bad", and decided to promise to make a gift to CL of half his winnings. CL, on the other hand, claims that Gold told him prior to him getting the celebs that he would gift to him 50% of his winnings if CL were able to get them to wear Bodog clothing...and he argues that the fact that the celebs weren't the A-listers he originally thought he could get is irrelevant. Oh, one more thing: in case you were wondering, "past" consideration usually doesn't suffice to make a promise binding; in other words, if Gold had said to CL: "Great job on getting those celebs for Bodog -- sorry they didn't think it was good enough to sponsor you, but you know what: I know how hard you worked to get them, and in return I'm going to give you half of my winnings." That wouldn't be good enough to make it binding. You might think that CL's work in getting the celebs might constitute his "consideration", but notice how it occurred before Gold agreed to give him 50%? That's called 'past consideration', and usually isn't accepted by courts...it has to be consideration that's bargained for at the time of making the agreement. The outcome of this case will depend largely on the terms of 2 agreements: i) the one between Gold and CL, and ii) the one between CL/Gold and Bodog (e.g. just what was the deal with the celebs?? Did Bodog ever agree to sponsoer CL in return for getting them?)

We just don't know the answer to those Q's yet -- all that's been filed with the court are each side's briefs...meaning their "side" of the argument. Early next year, we'll probably get to the "discovery" phase, at which point both parties are required by law to exchange all the documentation they have about the case...once we see that info, we'll have a better idea of whether the promise should be considered a binding contract, not.

Now here's my general commentary on why both sides completely butchered this situation:

#1: Why Gold is an idiot
He reneged on a promise, plain and simple. Doesn't necessarily make you a criminal, but does make you a grade-A jerk, and for a person who's supposed to be an ambassador for a game where honesty and integrity go a long way, it just doesn't reflect well on the way he was raised, or how he'll represent the interests of the nation's poker players . Gold's argument in this case boils down to "yeah, sure I had made a commitment at one time to pay him half my winning, but on account of how much he pestered me during the event, and then his cheekiness in filing the injunction lawsuit, I've decided to change my mind." CL seems like something of a lowlife too, but Gold is essentially saying "yeah, I admit that I went back on my promise, but Leyser did it to himself by being such a jerk." That's an argument that would barely hold water during 6th grade recess, let alone among professional adults.

#2: Why Leyser is an idiot
There are many thigns I could write about here (starting with his failure to get somethig in writing from Gold or Bodog,) but I'll restrict my discussion here to one point: CL -- and possibly his lawyers -- are complete idiots for filing for the injunction vs. Gold so damn early. Why? Because it appears from all indications that Gold did actually intend to pay CL his promised half (see voice message above -- you don't really leave a msg like that if you're intending on ducking out on the guy), but just wanted to take some time to work out the most advantageous way to structure the arrangement for tax purposes: a reasonable request, and one that would seem to be in CL's best interests, in addition to Gold's. Why on Earth would you file a lawsuit and risk pissing off a guy who has agreed to give you millions of dollars and apparently intends to follow through (but does not have a conclusive obligation to do so). CL did not file this lawsuit on his own -- he had lawyers help him draft it; if those lawyers were worth a dime, they should have taken a look at the facts of the case presented to them by their client, evaluated just how strong his claim to the money was, and (once realizing that it might not be a binding contractbecause of the absence of consideration) immediately counseled CL to reconsider for fear of immediately poisoning the guy's perception of you (when he has no legal obligation to pay you the money.) This situation is akin to walking into your boss' office and cursing him out the day before he decides what your annual discretionary bonus will be. There's positively nothing to gain, and everything to lose. Remember, CL's lawsuit was NOT a direct claim to half the money; it was only a suit for an injunction, preventing Harrah's from paying out the other half to Gold until the matter was sorted out. The only way this action makes sense is if CL had a legitimate concern that Gold would dispose of the money and leave nothing for CL to collect. But there's just no way in hell that's realistic. Gold's has a lot of money and modest celebrity -- he simply doesn't fit the profile of someone who's going to flee the country, or somehow put that money beyond CL's reach. It would be another story entirely if Gold had already backed out of his agreement to pay CL half...then a lawsuit laying claim to half the money by CL would be perfectly reasonable...but a suit for an injunction is completely ludicrous, when there's no real risk of flight, and every risk that the guy might simply change his mind regarding a non-binding promise. No upside; huge downside. Lawyers really dropped the ball on this one.