Malta-based companies abetting illegal Internet gambling operations - Monday 12th of January 2009

Malta has served as a payment distribution base for the multi-billion dollar Bodog gambling empire, which is embroiled in an American Internal Revenue Service investigation into illegal Internet gambling, which has already seen $24 million seized from US banks.

With Internet gambling illegal in the US, Bodog, according to US investigators, allegedly found a way to circumvent regulations so as to make payouts to American winners, who make up the bulk of the operation’s customer base.

The scheme involves a foreign payment processor wiring funds for US winnings to an American money processor, which, in turn, distributes winnings by cheque or electronic payment to winners with no indication that the money involved was the proceeds of Internet gambling.

According to court filings presented as part of the IRS investigation into the Bodog internet gambling empire, which takes in some $6 billion in bets a year, at least one of the several Malta-based companies owned by Bodog has played a central role in processing such illegal gambling payouts.

One such company is the Malta-based Stratham Finance, of which legendary Canadian Bodog tycoon Calvin Ayres is both a director and sole shareholder. Among the raft of evidence presented by the IRS, an unnamed “cooperating individual” – a certain highly placed person at MPS Processing Ltd located in the United Kingdom – gave evidence to the effect that the company he worked for was processing payouts on behalf of Bodog, and that Stratham Finance was the financing company for Bodog.

Moreover, the individual revealed that MPS Processing had received funds from the Ta’ Xbiex-based Stratham Finance, which would then be transferred to an American money processing company.

The US company would then, according to court filings, print and mail payout cheques as directed by invoice from Stratham.

When the story that the US authorities had clamped down on Bodog broke at the end of summer, and when the Malta-based Stratham Finance had been clearly implicated in the scheme, the Malta Lotteries and Gaming Authority had felt compelled to issue a public notice.

The notice simply stated that neither Bodog nor Stratham were in possession of any licence, permit or any other form of approval from the authority to “operate, promote or abet gaming services in Malta or from Malta”.

But while the processing of illegal payments destined for US winners clearly constitutes abetting, so could the fact that the Bodog websites are also registered to companies in Malta. The US investigation, however, is still in progress.

While the Bodog operation’s bases are on the Caribbean island of Antigua, and Costa Rica, it operates under the jurisdiction of the Kahnawake Mohawk Reserve in Canada and its finances are thought to be largely run from Malta.

Moreover, Bodog’s gaming websites – bodoglife.com and newbodog.com – belong to two companies registered at the same Ta’ Xbiex address as Stratham Finance.

Curiously, also registered at the same address are, in addition to Stratham Finance and the companies hosting the websites, eight other financing companies – Aragon Finance, Brompton Finance, Esser Finance, Kiel Finance, Lyon Finance, Milburn Finance, Savoy Finance and Sutherland Finance.

A company called Bodog Music (Europe) Limited is also registered at the same address.

While it is not clear if the other companies at the address form part of the illegal payout puzzle, all the companies’ directors and shareholders are either Bodog’s flamboyant billionaire Calvin Ayres or his partner James Philip. Philip, according to Canadian press reports, is a Vancouver chartered accountant who serves as chief financial officer of El Moro Finance Ltd – a British Virgin Island company that figured prominently in Bodog’s early development.

As for the flamboyant billionaire himself, Calvin Ayres is said to be avoiding the US, where he would most likely be placed under arrest on arrival and where he is the centre of an exhaustive investigation featuring witnesses, informants and former employees after several undercover operations showed that Bodog was illegally taking US bets.

Since the investigation came to light, Ayres has transferred ownership of Bodog to the Morris Mohawk Gaming Group, of the Kahnawake Mohawk Reserve, and retired from the company. In the meantime he is reported to be residing in various countries in Africa and Asia that do not have extradition treaties with the US.

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