Indicted poker websites bound for bankruptcy

[BingoT]

This really sucks


Indicted poker websites bound for bankruptcy
Collapse of Absolute Poker and UB sites means U.S. players may lose deposits

One of three online poker companies named last month in a federal indictment will be forced to enter bankruptcy, leaving American card players with money on deposit with the Absolute and UB poker sites at least temporarily empty handed.
Madeira Fjord of Norway, which represents shareholders in the poker websites’ parent company, Blanca Gaming of Antigua, said in an email to shareholders this week that it planned to file for bankruptcy protection in Norway after being informed that the latter company had “no cash on hand and no prospects for any cash flow for the foreseeable future.”
“Most importantly, Blanca Gaming has provided notice … that it is currently unable to make any payments toward its debt obligations,” it said. “Additionally, Blanca has further advised that there will be no future payments.”
Meantime, a source in Costa Rica, where Absolute Poker and UB (formerly Ultimate Bet) have their operations center, told msnbc.com that more than 300 customer support and marketing employees – approximately 95 percent of the staff — had been laid off.
Blanca Gaming could not be reached for comment Wednesday.
Absolute Poker and two of its founders — Scott Tom and Brent Beckley — were named in an April 15 indictment by the U.S. Attorney’s Office for the Southern District of New York along with two other popular poker sites — Poker Stars and Full Tilt Poker. UB was not directly named in the indictment, but it has common ownership and shares operations with Absolute Poker through parent company, the Cereus Network, which is in turn owned by Blanca Gaming.
The indictment alleges that the sites committed bank fraud, money laundering and illegal gambling offenses by “tricking” U.S. banks into processing online gambling transactions, a violation of the Unlawful Internet Gambling Enforcement Act of 2006. The indictment seeks at least $3 billion in penalties and forfeiture.
By Mike Brunker

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[felicie]

Where'd their money go? forfeit to DOJ? Thanks BingoT

 

[vinylweatherman]

Where'd their money go? forfeit to DOJ? Thanks BingoT

Looks like DoJ may have put their foot in it this time. It is not just US players, but ALL players around the world that have lost all their money because the DoJ has shut the operation down, and confisacted all the money. It is clear that the money did NOT just belong to US players, but was probably their entire liquid cash bar some "small change" held elsewhere.

It DOES seem a bit odd though, a seizure of an account holding payouts for US players was enough to bring the whole operation down. It suggests that they were technically insolvent before this happened, but were able to hide this whilst they were able to take deposits from US players, and have them generate rake. Their liquid funds cannot have been enough to cover the money they held on deposit in player's accounts, but they banked on it being unlikely that all the players would withdraw all their money at the same time, something that has now happened.

If they go bankrupt, any wrongdoing will be discovered by the liquidator when they go through the accounts and assets to see how much money is available to pay creditors. It is possible that the owners were paying themselves dividends that the company could not afford to pay, and thus the company was driven heavily into debt, but was able to stay afloat by using the players' money. They must have known there was a real risk of the DoJ catching up with them, and shutting down the US side of their operations, yet they covered that risk with the players' money, rather than their own.
This could also be a serious embarrassment to the Kahnawake, as they would have been expected to be monitoring the operator to ensure they had enough money to cover their liabilities to players. Kahnawake were heavily criticised for letting them off lightly after the cheating scandal, rather than pulling their license.
It's possible that AP quietly moved to a different jurisdiction, unnoticed by many, rather than with the public tantrum thrown by Grand prive when they bailed from Kahnawake rather than pay the penalty for breaching their license terms.

 

[onlineprime08]

Since you said that they are bound for bankruptcy, I was thinking what would be next to AP after this.. Would they still be up publicly? Or would they still operate but not like before?