‘Ottawa’ Former Amaya CEO Linked to Kickbacks From Insider Trading, Money Laundering, Alleges Quebec Watchdog
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 insider trading.
The AMF found a bag containing 4,350 $20 bills in the car of Rabbi Shalom Chriqui while executing a search warrant on the centre. 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 the 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 transactions 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 the investigations the AMF document includes are the deals involving 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 involved 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 CEO after being on a leave of absence since March.
“As Mr. Baazov has previously stated, he is innocent of any wrongdoing and eager to present his defence,” Robertson said.
At a Montreal court on Wednesday, Baazov’s lawyer formerly filed a notice contesting the AMF’s allegations. Baazov’s lawyers have asked to expedite the process in front of the AMF tribunal and for documentation to be provided substantiating the allegations.
It took Baazov, 35, just a decade to transform his online gaming company from a penny stock with revenues of $6 million into the current industry leader with revenue of $1.37 billion in 2015.
Baazov is the company’s largest shareholder and in February announced his intention to lead a group of buyers in a plan to take Amaya private for about $2.8 billion.
Although a formal offer has not been made, Amaya said it had entered into discussions with a number of parties about buying the company, and that some of these talks have progressed.
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.