casinos faced with legal action
As one of the top online
casinos faces a meltdown, shareholders in the online casinos
firm are considering taking legal action against the online
casinos company's advisers - Evolution Securities and Baker
The online casinos company was brought to the London stock
market two years ago, but institutional investors in the online
casinos industry are unhappy that the history of the online
casinos firm’s founder Gary Kaplan was not made clear in the
online casinos company's offer document.
The online casinos firm’s representatives have insisted that
Kaplan was not a director of the online casinos company, so it
was under no obligation to detail his past, which includes a
brush with the law over gambling offences in New York in 1993.
Kaplan, who is wanted by the US Department of Justice, faces
possible charges of fraud and racketeering. He is said by those
close to the company to have left Costa Rica for Israel.
One of the biggest institutional shareholders in the online
casinos firm said: 'It [legal action] is possible given that
certain information was not circulated at the time of the float.
What's known now should have been known then. It's a disgraceful
situation that's hard to explain away but individually it will
be hard to get anywhere. Collectively, it's possible.'
The online casinos firm’s float was handled by Evolution Beeson
Gregory, now Evolution Securities. Baker Tilly was its auditor
and reporting accountant. Both firms have said they supplied all
the information that was required of them to the relevant
David Carruthers, the former chief executive of the online
casinos company, already accused of racketeering and fraud, has
been incarcerated in a Missouri jail. His lawyers and family are
believed to have raised $1m bail. Carruthers has pleaded not
guilty to the charges and should be released from jail tomorrow.
Last Friday the online casinos firm announced it was closing
down its US business, which generated most of its profits.
Industry insiders say the closure of its US business will be a
huge problem for the long-term viability of the company. Many
predict the company will see its share price become worthless if
it resumes trading. Its shares have been suspended for three
weeks since the US authorities arrested Carruthers in Texas.
The online casinos firm hopes its decision to stop taking US
bets will ward off any further legal action by US authorities.
American law makes it illegal for companies to take sport bets
from US citizens via the telephone and internet.
The company’s withdrawal from the US will result in the loss of
800 jobs and will see it leave Costa Rica and Antigua. The
company will now attempt to boost its presence in the
potentially lucrative Asian market, having last year paid £17.2m
for another top internet gambling company.
The controversy in the net gambling industry continues and one
thing is certain – much more controversy will come in the future
as firms continue to square off.