Tuesday, February 07, 2006
Yikes, it seems that the SEC is going after Doyle Brunson's webmaster, of all things.
Poker icon's employee subpoenaed
The Fort Worth office of the Securities and Exchange Commission isn't bluffing when it says it wants to talk to several parties related to the agency's investigation of poker legend Doyle Brunson's July buyout offer for the company that produces television's popular World Poker Tour.
On Wednesday, SEC lawyers asked U.S. District Judge Terry Means to enforce the agency's subpoenas issued to Wallace Nakano. According to the filing, the SEC says Nakano operated Brunson's personal Web site, which publicized the July 8 buyout offer for World Poker Tour Enterprises.
Brunson offered $700 million for WPT, roughly twice the California company's market value at the time. The stock's value shot up in frenzied trading, then quickly slid when the offer expired four days later without further action.
Leonard Sharenow, a Los Angeles lawyer representing Nakano, said Thursday that he is contesting the SEC's subpoena because it wasn't properly served and instead went to the home of Nakano's brother. Sharenow also said "we really don't understand why they think" Nakano has any useful information regarding the case.
The SEC has already asked Means to compel two of Brunson's attorneys to answer more questions about the offer, said Katherine Addleman, head of enforcement at the Fort Worth SEC office. She said a response to that request was due soon.
The SEC's investigation came to light Dec. 14, when the agency sued the two attorneys, David Chesnoff and Chaka Henry, in Fort Worth federal court. Neither could be reached for comment Thursday.
In its suit, the SEC said Brunson's offer "caused WPT's stock price to rise sharply. But, soon after publicizing the offer, Brunson and his attorneys abruptly backed off the offer, refusing even to respond to WPT's requests for more information. This caused WPT's stock to nose-dive, costing investors tens of millions of dollars in lost market value."
"On its face," the suit alleges, "this conduct implicates possible violations of the anti-fraud provisions of the federal securities laws." The lawsuit says the agency will seek to discover why Brunson made the buyout offer and "whether anyone connected to Brunson or the offer improperly traded WPT's stock."
Brunson's offer for WPT (ticker: WPTE), which had gone public in August 2004 at $8 a share, was valued at about $34 a share. The stock jumped from $17.75 on the day before the offer to as high as $29.50 before closing at $26.50 on July 8. It then started sliding, falling below $10 a share by September. Thursday the stock closed at $7.09.
According to the SEC suit, when the agency subpoenaed Brunson's testimony in the matter, "He invoked his Fifth Amendment right against self-incrimination."
Brunson, who now lives in Las Vegas, could not be reached for comment.
Chesnoff and Henry "provided the Commission voluntary sworn testimony on a limited number of topics" in September, the SEC's suit says, but asserted attorney-client privilege in refusing to answer further questions about the buyout offer.
Brunson, 72, is a Sweetwater native and former Fort Worth resident who in a 2004 interview with the Star-Telegram said he learned to play poker in the notorious gambling parlors of Jacksboro Highway in the 1950s and '60s and in the Fort Worth Stockyards. "Texas Dolly," as he is known, became an icon of professional poker.
According to the World Poker Tour Web site, he has won more than $1.3 million on the show.
"On its face, this conduct implicates possible violations of the ... federal securities laws."
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