In March of 2011, I was on top of the business world. I had invested in a unicorn online poker start-up and was making $250,000 per month in dividend checks. I had a paper net worth estimated at $100 million and was the go-to guy for many in the entrepreneurship and impact investing communities. Power brokers in D.C. honored me for my work in cancer prevention. I was given the opportunity to host TED talks and was featured in a book titled “Shake The World” for my entrepreneurial and investing efforts.

Then came a day known as “Black Friday” in the poker community — April 15, 2011, the day the U.S. government took legal action against the online poker industry and caused everything we’d built at Full Tilt Poker to come crashing to the ground. By September, my colleagues and I had made the front page of The Wall Street Journal: “US Alleges Full Tilt Poker Was Ponzi Scheme.” We faced a billion-dollar government forfeiture demand, and I was personally on the hook for massive financial penalties.

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The press and Twittersphere went nuts, causing an avalanche of Internet haters and turning millions of previously happy customers against us. My lawyers told me prison time was not out of the question. Then I went nuts, literally — I hit rock bottom in a hospital psych ward on New Year’s Day 2012, emotionally, physically, and spiritually exhausted.

This is the first time I have ever spoken candidly in public about those events. For years, I’ve remained silent while both traditional and online media outlets have spun partial information and half-truths into a narrative suited to their own agendas. I’ve allowed trolls and misinformed individuals to spread lies. I’ve watched my name get dragged through the mud, because I’ve been fearful of legal ramifications and the potential further damage my story could cause me and those around me.

Until now, I’ve said nothing. Hopefully, by finally coming forward, I can, at the very least, allow those seeking truth (or closure) to draw their own conclusions, and I can share a bit of the wisdom I’ve learned along the way.

Here’s What Really Happened

Full Tilt Poker was a thriving business. In December 2010, we employed approximately 500 people, were on a revenue run rate of almost a billion dollars and had an estimated enterprise value of four billion. There were 23 investors, the vast majority of whom were U.S. citizens (mostly poker pros), and they invested the seed capital to create the software and market the brand: Full Tilt Poker. The investors were organized as an LLC and I was a 2.5 percent owner of that entity as well as having a seat on its board of directors. All licenses and operations were in Ireland and various other non-U.S. jurisdictions.

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Unfortunately, this complexity was required to do business and served to protect everyone involved, including customers. The regulatory environment in the U.S. was becoming more complicated, while outside the U.S. most countries were embracing online poker at an accelerated pace. One thing that was always clear from the structure is that investor profits would be distributed in the U.S. and, thus, everyone was responsible and liable for paying taxes on their profits. However, one thing that was not clear — even to myself — was how little control the investor group had over Full Tilt Poker’s operations and key decisions.

In December 2010, two critical events occurred which would underscore the folly and danger of such financial complexity. The first was that the U.S. government took action against some key payment processors that enabled U.S. citizens to deposit money into online poker sites. The second was a bill before Congress that would have regulated and licensed online poker, creating billions in tax revenues in the process. That bill came close to being passed but lost to backroom politics caused by gaming industry infighting.

Meanwhile, at Full Tilt Poker, the operating CEO began crediting players’ deposits into their poker accounts without having the ability to fully process payment from their bank accounts. Very quickly, the cash flow deficit at Full Tilt became extremely large.

From December 2010 to Black Friday, the CEO hid the precipitous deterioration of the Full Tilt balance sheet from the board and investors. Prior to then, the company had always made sure that it had ample cash before distributing profits to the investor LLC. The operating company was under an explicit mandate to always maintain 100 percent coverage of player deposits in cash, and by continuing to distribute false profits, the CEO was committing fraud, a charge to which he eventually pled guilty.

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But this wrinkle masked the fact that the government case — which was really about illegal gambling — was never proven. There was not, and still to this day is not, any federal law which bans online poker or which classifies it as gambling.

Perhaps the powers that be saw their case evaporating with the near federal licensing in December 2010. Or perhaps the timing was strategically coordinated with the actions against the payment processors. Or perhaps it was just pure coincidence.

Regardless, five months later, in April 2011, the government took action against the three largest online poker enterprises in the world, including Full Tilt. By July, the company was forced to cease operations due to impending insolvency. In September, the government named me and the other investor LLC board members personally in their civil case. (There was a civil case and a criminal case, and I was named in the former, but not the latter.)

To understand just how devastating the cash crunch was to the company, you only have to look at what happened with our largest competitor, PokerStars. They had enough cash reserves to pay out all of their U.S. players right away and continue operations in the rest of the world, while successfully defending themselves from the government. For many months, Full Tilt tried to find a lender, equity investor, or a buyer who could stop the bleeding and reverse the impending insolvency. But the billion dollar forfeiture demand from the government was what ultimately scared away every suitor. Except one — PokerStars.

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The government cut a deal with PokerStars and Full Tilt Poker to settle both cases at once. The catch was that the LLC investors would have to relinquish all rights, PokerStars would end up with all of Full Tilt’s assets, the government would be responsible for reimbursing Full Tilt’s U.S. players, and the government would net $400 million in cash. As for me and the other two non-executive board members, we settled our individual civil cases with no admission of guilt or wrongdoing.

What It Was Like For Me

Full Tilt Poker is my biggest business success to date. It generated $440 million in profits to investors. The brand and operations survived the fallout from Black Friday and was purchased by a public company in 2014 along with PokerStars for a combined value of nearly $5 billion.

But Full Tilt Poker is also my biggest failure, and my biggest regret.

There are millions of customers and others in the poker world whose trust was misplaced and violated, and who perhaps will always resent me for my role in the company. I had some very close friendships which appear beyond repair, and my online reputation within the poker community is tainted with the scarlet letters “FTP.”

As you can imagine, I’ve replayed the events leading up to and since Black Friday to try to understand if there was anything my fellow investors and I could have done differently as a group, and also what I could have done differently, both personally and as a board member. Of course the answer is yes in hindsight.

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As a group, it seems like we investors could have pulled together with a capital call and began the remittance process ourselves. Or at the least, we could have been transparent with customers about what was going on behind the scenes and given them options for how and when they would be repaid. While it seems like a long shot, it is possible that the company could have pulled out of the nosedive and survived under different leadership. But instead, what occurred was an implosion. Fear and infighting took over within the investor group, and we couldn’t see the forest for the trees.

On a personal level, I realize now that as a board member in our convoluted structure, I put myself in a position of great responsibility for other people’s actions, but without any actual control. There was no good reason for me to serve on the board, and had I resigned on Black Friday, I would not have been personally named in the lawsuit. Instead, I would have just been seen as one of 19 other investors: anonymous and innocent, perhaps even a victim.

But I didn’t feel it was right to abandon ship. I thought the best way to protect the customers’ interests was to fight the legal battle and continue operations until we could repair the cashflow. Had we gotten a cash infusion, the players all would have been made whole in a matter of months. Instead, it’s been over five years, and — unlike the original PokerStars players, who were paid in full within months — not all Full Tilt Poker customers will receive the money they are due. This is not due to lack of funds, but rather because there is a lot of unnecessary friction and cost in a government-mandated and outsourced remissions process.

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As to whether I have made adequate reparations to the customers and paid a high enough price for my mistakes in business judgment, I hope and believe so. The money I forfeited, directly to the customer remuneration pool, and indirectly in fighting the false accusations, nearly bankrupted me. But even worse, I’ve damaged relationships that I cared about and cannot seem to mend.

In the poker world, one gets used to the idea that decisions are to be judged based on the information one has at decision time, not necessarily on the outcome that results. If I’d had better information, if I’d not been willfully deceived, and if it were possible to predict complex outcomes accurately, I would have made different choices.

One thing I do not regret, however, is that I always tried my best to do right by others, rather than to protect my own self-interest. I sleep well at night knowing that I never sacrificed my integrity in making (or not making) decisions relating to Full Tilt Poker.

What I Learned

I’ve had five years to come to terms with my actions and my online reputation. To reflect on who I really am has been a character builder. Being forced back into earning my living again has, I believe, made me a better colleague, a better friend, a better person. My wife and I are still together, stronger than ever, and we now have two amazing little boys. I’m not sure we would be as grateful for one another, or be as good of parents, if things hadn’t turned out the way they had.

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Books could be written on what I’ve learned since making a $50K investment in 2002 into a business plan along with a group of fellow poker players. But if there’s one piece of business advice that stands out for me, it’s this: Lean into transparency.

While Full Tilt Poker may not have risen to the heights that it did so quickly without the level of secrecy with which we operated, I now believe we would have been much more resilient on the downswing. The old adage rings true: Don’t do or say anything you wouldn’t want written about on the front page of The Wall Street Journal. So with that in mind, here is my advice to my future self:

1. Be transparent with yourself first.

In business there are legitimate reasons for privacy and secrecy. Most obviously, you don’t want to give away your competitive advantage. You don’t want to scare away investors by showing all your warts in the first meeting. You don’t want to undermine morale by sharing everyone’s compensation packages with each other. But you should always be transparent with yourself about your motivations for holding back information.

2. Presume transparency.

Is your motivation strategic, or out of fear? Fear of looking bad, fear of not getting your way, fear of getting fired? If your primary reason is fear, and there’s no strong strategic reason for keeping secret, then consider working through that fear and being transparent instead. Being an entrepreneur is about courage and rational risk-taking. Acknowledge the fear, but don’t let it stop you from doing the right thing. And remember, in the long run, “the right thing” is also the right thing for the business.

3. Consider all stakeholders in your decisions.

The reason to presume transparency is that you are making decisions for many stakeholders besides yourself: your employees, your shareholders, your creditors, your customers, your suppliers, the community in which you work, and so on. Since your decisions affect them in a material way, they deserve to have a say in your decisions (especially the biggest ones). Never mind that they may have delegated authority to you by investing in your company or hiring you. Authority to make decisions and what you do with that authority are two different things.

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Perhaps the right thing to do in certain cases is use your authority to bring some or all stakeholders into the decision making process. When there is an important decision to be made, consider whether stakeholders would be happy with the outcome you are trying to achieve by making that decision on their behalf. Consider whether they deserve a direct say in this decision. Most importantly, consider whether they would be happy with the fact that you chose to make the decision by yourself without giving them the information or option of dissent ahead of time.

4. Transparency can be an asset if used proactively.

Remember the lessons from Watergate and Enron (and perhaps Full Tilt Poker) regarding the dangers of groupthink. Remember the lessons from behavioral psychology and economics about cognitive traps like the availability bias. Remember the lessons from biology and ecology about how diversity of opinions lead to better decisions. Remember the lessons from your own experience in how honesty and transparency lead to feelings of mutual respect, trust, and love, while secrecy and privacy lead to feelings of abandonment, separation, fear, paranoia, and hatred.

5. Transparency can be a source of resilience.

When the shit hits the fan, regardless of whether it’s someone’s fault or there’s a clear decision that led to the trouble, newly enacted transparency can be the difference between survival and its opposite.

Unfortunately, our baser instincts and fear often work against baring our wounds to the world and asking for help. But your past experiences – if you are really honest with yourself – should remind you that your stakeholders will forgive you and embrace you…if you come to them right away from a place of trust, respect and humility. Moreover, your company’s wound is their wound, too. They will not only embrace you, but they will join you in healing the wound, and in trying to save the company. The earlier you sound the alarm bell and ask for help, the more likely your venture can be saved.

6. You may be the problem.

This is the crux of the matter, isn’t it? We resist transparency because we fear that it will reveal our incompetence. Or we fear being reprimanded, fired or publicly shamed. But here’s the deal — it doesn’t matter! The perception that you are the problem means that you are a problem. The company’s survival and prosperity are more important than your position and personal interest in it.

If you are a director, president, or CEO, and you have had more than a year to operate, yet you still have a hard time attracting investment, increasing revenues, hiring people you can trust or retaining those people, then guess what? You may not be suited to your position any longer.

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Err on the side of handing over the reins too early versus too late. Steve Jobs has famously said that his biggest mistake was in handing Apple over to John Scully. But the truth is, Apple would likely not have become the most valuable company in the world if it had not been given the chance to struggle under new leadership. The fact that his three successors each failed miserably was what made it possible for Jobs to be brought back with a mandate, to quiet the naysayers and to eventually skyrocket as a leader in the business world.

If you are still not compelled, consider this. Under the law, there is a doctrine called the business judgment rule, which states that you are not liable for the decisions you make in good faith that are a matter of judgment. However, you are not protected if you have a conflict of interest. So maybe it’s in the objective best interests of the company for you to remain in power. But maybe it’s not.

When a company is experiencing problems, the higher you are in the chain of command, the more you need to be totally transparent with yourself about your judgement and decision-making skills. In the face of a lack of faith by your shareholders, employees, and customers, are you prepared to retain control to the bitter end, and potentially drag the company and yourself into litigation?

7. Radical transparency will be forced upon you soon.

No matter what you desire, what you value, what you believe about the sanctity and right to privacy, as a business leader you have to come to terms with the truth: it’s only a matter of time before all secrets are knowable for the right price. And that price is decreasing exponentially, in lock-step with Moore’s Law.

In the brave new world, are you ready for your decisions to be second-guessed by everyone? Have you considered #1 through #6 thoroughly? You’ve dreamed about the glory of riding a unicorn, but have you considered the costs and the dangers?

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8. Transparency does not mean “tell all.”

Be transparent with those who have a right to know. It may be appropriate to tell your investors the company strategy but not the press, for instance. Be transparent with the appropriate timing. If you feel an employee is underperforming, but you agreed to give them a month to get results, wait until the month is over before sharing your concerns. Be transparent about that fact that you can’t be transparent. If a competitor asks to see your pitch deck, politely decline and tell them why.

9. Invest in Millennials.

In the culture war between transparency and privacy, the battle lines are clear: digital natives value transparency over privacy; older generations value the opposite.

For the business reasons listed above, plus the inexorability of generational succession, there’s no reason to invest in the past. The future belongs to the transparent, so invest in the future.

Rafe Furst

Author Rafe Furst

Rafe is an entrepreneur, impact investor, writer, producer and poker player. Beginning in Silicon Valley in the mid-1990s, Rafe has founded, invested in and advised dozens of startups, including Pickem Sports, Full Tilt Poker, and Crowdfunder. To date, his companies have generated over $1 Billion in revenue and $450 Million in liquidity to stakeholders. An avid poker player, he’s won a World Series of Poker Championship, produced an award-winning instructional video, and has helped raise millions of dollars for cancer prevention and other charitable causes. Rafe is a pioneer in Quantitative Venture Capital, a nascent field based on the convergence of equity crowdfunding, complexity economics and securities law reform.

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