There's Something About Barry:
A Look at Barry Greenstein's Full Tilt Debts

February 11, 2012

In the endless saga of "Will-We-Or-Won't-We-Get-Our-Full-Tilt-Money-Back", the latest chapter involves a not-so-surprising revelation that various pros borrowed millions from Full Tilt and never paid back.

The total debts are said to be $18 million. Some of the names involved include Phil Ivey, David Benyamine, Mike Matusow, Erick Lindgren, Layne Flack (LOL), and Barry Greenstein.

The two getting the most attention are Flack and Greenstein. The others have been known or assumed for quite some time. Flack was notable because he's known as a has-been in poker for many years, and his 2007 loan of $2 million serves as a glaring example of the money mismangement that was occurring on Full Tilt.

Greenstein, who only owes about $400,000, is notable for a different reason. Unlike the others, Greenstein was not a Full Tilt pro or part-owner, but instead represented Tilt's main competition over at Pokerstars. In addition, Greenstein was generally known as an honest man, and generous to a fault. He was said to have given away most of his tournament winnings to children's charities. Could this saint of a poker pro really have a 5-year-old bad debt of nearly a half-million dollars? And why was he borrowing from the competition?

Normally a story like this would just serve as poker gossip material. Everyone always loves a good "TV Pro is Actually Busto" story. It makes these often carefree and seemingly untouchable pros a little bit more human -- a little bit like the rest of us. However, in this case, the story took an ugly turn to become a lot more than just idle chit-chat. It has intersected with the story of Full Tilt's insolvency, and these debts are now said to be the main roadblock standing in the way of the much-anticipated sale of the site to Groupe Bernard Tapie.

A successful sale of the site to Tapie will mean that the players will get paid. Anyone -- or anything -- getting in the way of such a sale immediately draws the ire of the poker community, impatient to collect about $300 million collectively owed since April 15, 2011. Groupe Tapie's lawyer explained that these debts were unexpected, and that "It could put the deal in serious jeopardy."

Simply put, Groupe Tapie is sending a strong message to the poker players that still owe money to Full Tilt: Pay up, or you will be the ones at fault if this deal doesn't go through.

That's a pretty powerful message. But is it fair? Is it even accurate? Is the deal really in jeopardy because of this?

Barry Greenstein Speaks Out

While most of the other pros have been silent about the matter, Barry Greenstein finally addressed the issue on the 2+2 forums.

The cliffs notes from Barry's response are as follows:

The response to Barry Greenstein's 2+2 statement was extremely mixed. Some praised him for his openness and honesty in dealing with the situation. Others attacked him with scorn, insisting that he only addressed this due to the public fallout over the situation, and that he was a scumbag for allowing this debt to remain for so long. Some blamed Barry for allowing this to hold up the Full Tilt sale, thus continuing to deprive the community of their money. Even others took this statement as confirmation that Barry was broke, or very close to it.

So what's the truth here? Is Barry Greenstein broke? Is he a fraud and a scumbag? Is he really one of the people at fault for holding up the Tapie acquisition of Full Tilt? Or is he still a fine, upstanding gentleman who just happened to let a debt to a company drag on for a bit too long?

Tapie Pretends an Asset is a Liability

To really get to the bottom of what is happening here, we need to step back from the tabloid-esque "busto pro" stories, put aside our fading hopes about getting paid from Full Tilt, and look at this rationally.

Say that I was owed $500,000 collectively by various busto or semi-busto poker pros. Say that I offered to sell you these debts for $0. That is, you would get any money ever paid back from these debts, and in return for that privilege, you would give me... nothing. Would you accept this deal? Unless you were a complete moron, the answer would be a resounding YES because you'd have nothing to lose! Either these debtors would pay you free money that was actually owed to me, or in the worst case, you'd get nothing and would break even. It would be a complete freeroll!

Why am I presenting this ludicrous example? Because that's exactly the situation Groupe Bernard Tapie is in with these pros that owe money to Full Tilt.

Tapie never thought they were buying assets from Full Tilt. When they agreed to purchase the company, they fully understood that the company was flat broke, and that they were paying for the brand, the software, and the database of players. While they were unaware that various poker pros owed Full Tilt a collective $18 million, finding this situation is a good thing for Tapie, not a bad one. It's potentially found money from a company that was otherwise broke and had no assets left. Had it been reversed, and Tapie found that Full Tilt owed an additional $18 million to these pros (rather than the other way around), that would be a legitimate reason to balk. However, in this case, at worst Tapie breaks even from this discovery, and at best makes an additional $18 million that they never expected from the deal!

So, that being the case, why is Tapie complaining? Why would they insist that this might jeopardize the deal, and could ruin everything?

The answer is simple: It's the best and smartest way to get these pros to pay up.

Tapie has a lot of power and clout in the poker world right now, because they're our only saviors. If they buy Full Tilt, we get our money. If they don't, we get nothing, and it's not likely that anyone else would be willing to purchase Full Tilt at this point. Tapie is using that clout in order to blackmail these pros into paying what they owe. If they were to wait until the actual sale went through, and we all had our money, nobody would give a crap if Barry Greenstein or the others paid Tapie. It would make for interesting gossip, but that would be it. It wouldn't affect us. It wouldn't affect our money or livelihood, because the deal would already be done, players would have been paid, and it would then be nothing more than a dispute between various individuals and a large company.

As it stands now, Tapie is making it (falsely) seem that these debts are jeopardizing the deal. This will, in turn, cause the antsy poker community to pressure these pros to pay what they owe, because we are so desperate to see the deal happen. It's a clever tactic, but in reality, this will have no effect on whether or not Tapie purchases Full Tilt, other than to perhaps delay it to see if any of these pros actually will take the bait and fork over money.

Do you remember as a kid, when your dad told you that tomorrow's planned trip to Disneyland would be canceled because you didn't clean your room? The 8-year-old you would hurry upstairs to finally tidy up that room, because you really wanted to go to Disneyland, and your messy bedroom was putting the trip in jeopardy! In reality, your dad already went through a lot of hassle to plan the Disneyland trip, and there was no way he'd actually cancel it for such a trivial reason. But his threat would work, and indeed, your room would end up looking cleaner than it ever had before.

Take the above story, substitute Tapie for your dad, the Full Tilt sale for Disneyland, paying back debts in place of cleaning your room, and the debt-ridden poker pros for the 8-year-old you. That's pretty much what's happening here.

Should Barry Pay?

Barry Greenstein is taking a lot of heat, and I feel that most of it isn't deserved -- at least in this case.

Before I get into this, I want everyone to understand that I have no reason to defend Barry Greenstein. I was one of the biggest critics of his stepson, Joe Sebok, and Barry angrily scolded me on radio last year for "being really mean to Joey." I would venture to say that Barry Greenstein doesn't particularly care for me.

Looking at this realistically, Barry should not have to pay Tapie -- at least not yet. There are various reason for this:

  1. Groupe Tapie doesn't own Full Tilt yet. Therefore, the money isn't morally or legally owed to them.

  2. It is not clear if Groupe Tapie will keep their promises regarding the way they operate the "new" Full Tilt, and how they pay out non-US players. Remember that the DOJ is only interested in seeing the US players get paid. What Tapie does after the sale with non-US players is their own business, and the US government will likely not get involved, even if Tapie ultimately cheats them. Therefore, it would be wise for Greenstein to wait to see how Tapie operates before sending them money.

  3. It is not clear if players -- both US and otherwise -- will get paid their full balances. If there ends up being a "fund" that only pays people a certain percentage of their balances, it would be morally proper for Barry to contribute to that fund rather than give the money to Tapie.

Tapie doesn't necessarily want Barry to pay right now, but they at least want him to sign a legal document indicating a promise to pay. Barry should not do that. He should wait until Tapie actually owns Full Tilt, and observe how the entire situation shakes out from that point. Only then should he decide where to send his money. It is unreasonable to expect him to do otherwise.

Barry's statement on 2+2 generally said the above, but it was somewhat flawed. First, he shouldn't have made stupid excuses as to why he didn't pay the loan in the first place. They just made him look like a liar and a fraud. He should have simply admitted that he had an unpaid debt, and that he agrees he needs to take care of it. There is simply no way to give a rational-sounding explanation as to why you owed 400k for 5 years without looking bad. Barry should have avoided the discussion as to "why" and moved straight to his intentions.

His second mistake was unintentionally being callous toward the non-US players. He only seemed to express concern over US players getting paid, and claimed he only would give the money to a fund to pay US players. Not surprisingly, foreign players were angry at that statement, and rightfully so.

His third mistake was not being clear enough about the reasons he didn't want to pay Tapie right now. He would have best been served with a statement like this:

Barry didn't make the above statement. However, had the above been his post on 2+2, it would have been very tough to attack or criticize. Regardless, Barry has the right idea, and I support what he's doing here, at least for now.

So is Barry Really Broke?

Much of the fascination with this situation comes from the fact that the highly admired Greenstein is involved.

How does one go from donating millions of tournament winnings to charity, to being so broke that he has to borrow $400,000 from a competitor? How does one of the seemingly most ethical, good guys of poker have such a large and long-running debt? Are there any decent people left in poker?

I am not Barry Greenstein's accountant, so I can't tell you how much money he does or doesn't have. I will say that, around 2007-2008, I did notice he suddenly stopped playing the nosebleed stakes in Bobby's Room at Bellagio, and instead dropped down to the $300-$600 type limit games. Those games are still considered very high limit, but are a far cry from the $4000-$8000 games he used to spend his days playing. That was an indication to me that something was wrong.

Greenstein, like many poker players, has an ego. Players with egos don't like dropping down in stakes. It's considered an admission of failure. It's thought to be a waving of the white flag -- an acceptance that you could not beat the stakes where you once played. Players like Barry Greenstein don't drop down stakes like that unless they have to.

I heard lots of rumors that Barry was broke. Of course, these were just rumors. You know how rumors are in the poker world -- or anywhere for that matter. Some are 100% true, some are half-true, and some are complete crap.

Still, I think the rumors probably had some validity. I don't think Barry is flat broke, but I believe he might be struggling financially. A sum like $400,000 -- something he probably won and lost in single sessions 5 years ago -- is now a pretty big deal to him. I imagine that, if and when he does pay that money, it won't be all at once, but probably through some sort of installment plan.

The fact that Barry took a $400k loan in the first place pretty much validates the "broke" rumors, at least to some degree. There are two kinds of loans in the poker community. There's the "I have the money but can't get it online right now (or alternatively, to the live card room), so let me borrow some and I'll pay you back tomorrow" type of loan. And then there's the "I don't have the money, but loan it to me because I'm a good player and will win with it" type of loan. It looks like Barry took the latter, because if the 400k was simply a matter of getting money online to play, he could have paid it back in cash/chips at Bellagio to one of many Full Tilt nosebleed pros that he saw every day.

What about the many millions he gave away to charity? I think a lot of that was exaggerated. While I admire Barry's generosity to these children's charities, I never believed that he donated ALL of his winnings there, nor did I ever hear Barry say that. I think that was a myth that grew over time. In reality, Barry probably made a lot of nice, generous charitable contributions, but likely kept most of his winnings. It's simply not possible to donate your winnings to charity and stay in high limit action, unless you are hugely wealthy outside of poker.

Does any of this make Barry a bad person? No. Good people go broke every day -- both in poker and the outside world. Perhaps Greenstein managed his bankroll poorly, or played too high for what variance would inevitably do to him. Perhaps other players improved to where he was no longer a favorite in the big game. None of this is really any of our business, and it's definitely nothing to use to look down on him.

What about the loan from Full Tilt? He took $400k from them and let years go by without paying it back. Does that make him a bad person? Again, no. Full Tilt was willing to give him an interest-free loan. They did not put a lot of pressure on him (or any pressure, from what I can tell) to pay it back. While it is morally proper to pay back all loans, regardless of pressure to do so, it's hard to see someone rushing to pay back a loan to a large company that isn't asking for it, and to where interest is not accruing. You can get on your moral high horse and say that Barry should have bent over backwards to make sure all of his loans were paid, but put yourself in his shoes. If you were struggling financially, and a large company had loaned you $400k awhile back and wasn't asking for it, where would your priorities be? Owing money to a large company and owing to an indvidiual are very different things. A personal loan from an individual is a favor from one friend to another, and those should be treated with care and paid back as soon as possible. A loan from a large company is a business matter. While it is right to pay back ALL loans, if the company loans you interest-free money and doesn't come asking for it, it's not the same thing as failing to repay a friend.

In summary, while I believe that Barry is struggling financially, he is correct to take a wait-and-see attitude when it comes to Tapie. I do believe he should pay the 400k to someone -- whether somehow distributed to affected players, or to Tapie itself if they have their act together. However, it's too early to expect him to cut any checks or make any promises. Let's wait and see what happes, and then we can make our further judgments about Barry Greenstein's character.

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