Open Letter Of Complaint N° 3 – Cryptologic: Whereas Previous Open Letters Of Complaint Focused On Starnet Communications International, It Was Urgently Decided To Include Another Game Developer.
Whereas previous Open Letters of Complaint focused on Starnet Communications International, it was urgently decided to include another game developer. Double standards are unacceptable at the best of times, so why should one software supplier escape scrutiny if it subscribes to a set of standards that are broadly similar to those adopted by another bunch of liars and crooks? This Open Letter of Complaint focuses on the Toronto-based company known as Cryptologic Inc.
TO:
The Securities and Exchange Commission (SEC)
Enforcement Division
Washington DC
U.S.A.
Toronto Police Service
40 College Street
Toronto, Canada
M5G 2J3
Greater Toronto Area
Combined Forces Special Enforcement Unit (CFSEU)*
Officer in Charge
345 Harry Walker Parkway South
Newmarket, Ontario
Canada L3Y 8P6
Criminal Intelligence Program
(RCMP)
Toronto,
Canada.
Toronto and Regional Crime Stoppers
PO Box 993 Station F
Toronto ON M4Y 2N9
Toronto Stock Exchange
The Exchange Tower
130 King Street West
Toronto, ON
Canada
M5X 1J2
NOTE:* The primary mandate of the Combined Forces Special Enforcement Unit (CFSEU) is to investigate, prosecute, expose, and dismantle, organized criminal enterprises
A company hiding behind other companies and nominees set up to disguise the true ownership of those companies has become a modern, commonplace fact. Secrecy in banking and the ability of corporate lawyers to dress up the truth in a cloak of obscurity have led to fraud and money laundering problems on a huge scale.
When it comes to shareholders and obligations to shareholders, the SEC is the one hope of investor protection. They claim to be "the investor's advocate."
One licensee in particular, who has some serious complaints to make about Cryptologic, has approached Gambling Magazine with evidence to back up some very unpleasant facts. This licensee is not alone; we have received many other complaints in confidential documents sent direct to the Magazine.
Suspicions were raised by one simple question on Cryptologic's web site. In the FAQ section of their web site is the question:
"Does Cryptologic own or operate any Internet casinos?"
The answer on their web site is:
"Neither CryptoLogic nor its subsidiaries own or operate any online casinos."
The question does not ask about majority share holdings, just a black and white yes or no to ownership. The real answer is that Cryptologic's owners own one of the largest online casinos on the Internet, Intercasino.com, a casino that began operating as early as 1996. Gambling Magazine has received a sworn affidavit from one licensee, confirming the worst suspicions we had. Cryptologic directors, it appears, own 85% of Intercasino.com. A certain Bill Scott, reported in the press as a fugitive criminal, also financed Cryptologic in the beginning.
Can the SEC please make sense of that?
The fact that the owners may hide behind an offshore company, most probably with bearer shares and nominee directors, doesn't change the fact that they own it indirectly. They are the beneficial owners, even if someone else may show up at the front.
Another company, it is claimed, owns Intercasino.com: CCMH Ltd., known as "Caribbean Casino Management Holdings Ltd." Sorting out just who owns what in these kinds of dealings becomes an endless paper chase, where as soon as you think you have tracked down the company's owners, a lawyer waves a paper in your face, and you are presented with another name, then another, again and again, so that it becomes almost impossible to find out the name of the person, at the very end of the line, the one who slips the money into his pocket.
In money laundering cases and big criminal cases, very rarely does the beneficial owner show up as the direct owner, they often hide behind offshore set ups, and nominees. It doesn't stop the authorities going through all the layers and ending up with the real beneficial owners. You can hide behind 10 companies, but at the end of the line, someone puts the money into a personal bank account, or their pocket, and they are the beneficial owners.
There is no way that Cryptologic's books will reflect a real licensee that was signed up 4 years ago with all the accounting done in accordance with that agreement.
If they had to really share the revenues with a real licensee their figures would never be as good as they are.
One source has told us that after the raid on Starnet, they changed the set up, and separated the accounts to show a real licensee and different accounts. That created a huge hole in the revenues because they had to then officially pay the licensee, in this case themselves, under a different name.
About that time, they were desperate to sign up big players, like William Hill, to make up the stolen revenues from Intercasino.
Gambling Magazine would like the SEC to immediately begin an investigation into the beneficial owners of Intercasino. To recap on the facts:
- Cryptologic has openly said for years that they own Intercasino
- On the web site, Cryptologic say this is not the case
- If Cryptologic sold the business, were the shareholders notified of the price achieved?
- Does that event show up in Cryptologic's books?
- Who receives the 50% commission normally paid to the licensee, if Cryptologic is no longer the owner?
- Cryptologic has openly admitted to one source that it owns 85% of Intercasino.com, and a Bill Scott financed Cryptologic. (They omitted to say that this man is a fugitive from justice.)
If they own it, then they are lying on their web site and the shareholders are not getting their share of the revenues generated by Intercasino.
You have to ask, why also was only Starnet raided and not Cryptologic? They are both in a similar situation, both in Canada, with their effective management in Canada, support systems, banking, etc. At least it appears that Starnet tried to block bets from North America (through its "official" WorldGaming.net web site) but Cryptologic through Intercasino openly accepted such bets and made no attempt to stop them.
Here is another question for the SEC, the Toronto Stock Exchange, and the Organized Crime Agencies of Toronto, Ontario:
Are there different laws in Vancouver and Toronto?
The licensee also believes that Cryptologic are the worst sort of people to do business with. They think so highly of themselves, you'd think they were related to royalty. There is the same nepotism and cronyism.
Gambling Magazine wants nothing less than a full investigation and audit of Cryptologic's books and bank accounts. The authorities should treat them the same way they treated Starnet, without any favoritism.
A damning reflection overall is that Cryptologic was keen to do business with the licensees, especially the one who has complained vociferously. The company is believed to have used this licensee to make up the stolen money and the gaps in their accounts, and has meanwhile robbed the licensee blind by refusing to supply any figures.
Imagine a bank holding your money and the bank refuses to say how much interest or even how much money you still have in the bank! The reporting system used by Cryptologic is deficient in the extreme. There is one in place but licensees hardly know any of the real figures, and when they try to find out, they are met with silence.
Gambling Magazine will be publishing the next Complaint in the series next week. This will demand that the figures be revealed forthwith. What gives them the right to withhold vitally important information from their licensees?
The evidence is building up that Cryptologic is a junk company run by crooks and liars. Our request to the SEC and others is this: Please, start looking into this immediately and take appropriate action.
Note to Gambling Magazine readers:
Make a complaint to the SEC here with their Investor Complaint Form:
http://www.sec.gov/consumer/compform.htm
