National Post

Quebec ups ante in Amaya case

Documents detail alleged kickback scheme

- Damon van Linde der

MONTREAL • Quebec’s securities regulator is showing more of its cards in the case involving David Baazov, the former CEO of online gambling giant Amaya Inc., saying it uncovered a kickback scheme for stock tips on impending takeovers and is investigat­ing related money laundering through a religious organizati­on.

The Autorité des marchés financiers ( AMF) says that in June it seized $ 87,000 in cash from Montreal’s Centre Chabad, suspecting the donations, from ex- Amaya consultant Craig Levett, were profit from i nsider trading.

The AMF f ound a bag containing 4,350 $ 20 bills in the car of Rabbi Shalom Chriqui while executing a search warrant on the cent re. The Centre Chabad says the money was illegally seized because it was found outside the address listed on the warrant and without evidence tying the cash to a crime.

AMF investigat­ions over t he spring and summer have also led to additions to court documents laying out the alleged insider trading activities of Baazov, his brother Josh and 12 others that stretch back more than six years, beginning even before the 2014 acquisitio­n of Rational Group Ltd. that made Amaya the biggest publicly traded online gambling company in the world.

“The allegation­s demonstrat­e a high level of organizati­on and sophistica­tion,” say the AMF documents seen by the Financial Post.

The documents say David Baazov provided details about upcoming t r ansactions to his brother and Levett, from whom the insider informatio­n trickled down to friends, family and business associates.

The AMF says the deals typically involved a 10 per cent kickback of net profits for the informatio­n, according to emails and text messages it obtained.

The regulators say that, in total, the group made about $ 1.5 million in the trading, with payments of cash, cheques and luxury items including Rolex watches noted in the documents.

“Mr. Baazov has been categorica­l: He did not receive anything,” wrote Baazov’s spokesman, Ian Robertson, in an email.

Baazov was charged in March with five counts, including influencin­g or attempting to influence the market price of the securities of Amaya.

Two other people and three companies face 18 additional charges stemming from the investigat­ion, and the AMF says it has executed search warrants and obtained cease- trade orders for 13 individual­s, who allegedly traded in different securities while in possession of privileged informatio­n.

Among t he i nvestigati­ons the AMF document includes are the deals in- volving Amaya’s acquisitio­n of Chartwell Technology in 2011, the Rational Group in 2014 and the attempted BWIN takeover in 2015.

However, not all of the transactio­ns directly i nvolved Amaya.

The AMF documents say that in early January, 2013, Baazov was contacted by Marlon Goldstein, a lawyer representi­ng Scientific Games during talks over the acquisitio­n of WMS Industries Inc.

Josh Baazov, Levett and others affiliated with Amaya bought shares in WMS soon after, and the AMF obtained emails and text messages allegedly discussing the transactio­n.

“Josh, I can’t reach your brother, any news on the stock?” says an email from Levett dated Jan. 30, 2013, a screen capture of which is included in the AMF documents.

On Jan. 31, 2013, Scientific Games announced the acquisitio­n of WMS at $ 26 per share, representi­ng a premium of 59 per cent over its closing price the previous day.

Shares of WMS belonging to those in the alleged communicat­ions were then sold in the following days.

The AMF says the accused used coded language in the exchanges, messaging about the opening of new “clubs,” when in reality they were exchanging informatio­n about stocks.

The documents also allege that some of the accused remained active in exchanging privileged informatio­n into this year, long after Amaya’s Pointe- Claire, Que., offices were raided by the RCMP and AMF in 2014.

Baazov pleaded not guilty to charges based on these allegation­s in May, and recently resigned as chief executive of Amaya after being on a leave of absence since March.

At a Montreal court on Wednesday, Baazov’s lawyer formerly filed a notice contesting the AMF’s allegation­s.

Baazov’s l awyers have asked to expedite the process in front of the AMF tribunal and for documentat­ion to be provided substantia­ting the allegation­s.

The AMF has scheduled two days of hearings on the Amaya affair that will begin on Sept. 12, while the next court appearance is slated for Nov. 23.

 ?? RYAN REMIORZ / THE CANADIAN PRESS FILES ?? Amaya’s Pointe- Claire, Que., offices were raided by the RCMP and AMF in 2014.
RYAN REMIORZ / THE CANADIAN PRESS FILES Amaya’s Pointe- Claire, Que., offices were raided by the RCMP and AMF in 2014.

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