TO:
The Securities and Exchange Commission (SEC)
Enforcement Division
U.S.A.
Toronto Police Service
Toronto, Canada
Greater Toronto Area
(CFSEU)*
Canada
Criminal Intelligence
Program
(RCMP)Toronto, Canada
Toronto and Regional
Crime Stoppers
Toronto, Canada
Toronto Stock Exchange
Toronto, Canada
NOTE* The primary mandate of the Combined Forces Special Enforcement Unit (CFSEU) is to investigate, prosecute, expose, and dismantle, organized criminal enterprises
CONTINUING THE SERIES of Open Letters of Complaint, No. 4 focuses again on Toronto-based Cryptologic Inc. Their reporting system is totally deficient complains one major licensee; whenever Cryptologic is asked (justifiably in our opinion) to supply up-to-date figures, the licensee is met with a wall of silence.
When Gambling Magazine first published details of how a tiny speck in the Pacific Ocean was introducing strict controls for the supply of gaming licenses, we had to approve. Norfolk Island was making much more of an effort than Antigua, for example. In Australia, the requirements are even stricter. Software suppliers should ensure not only that players are treated properly but also that their licensees, whose online casinos use the software, get a package that is honest, fair, and to use that old cliché from gambling history, above board.
Can you imagine what would happen if the people who own and run land-based casinos were not allowed to know the extent of their daily takings? While owners and management welcome their guests to the casino, players who won would of course be paid, but at the end of the day, a group of men would arrive to empty the slots, and the only reason they need is that they designed the software for the sslots and video poker machines. Perhaps they supplied some unique roulette and blackjack tables too, so they'd grab all the takings, and disappear in silence to a secret location where the money would be counted. After deciding how much they wanted to keep, the remainder would be sent to the owners of the casinos. It's not such a far-fetched scenario. Who knows if the figures are accurate if nobody is allowed to find out what they are?
These kinds of arrangements, all those between licensees, franchisees, lessees, etc., tend to create problems of one kind or another unless there are clear and fair rules scrupulously honored. If a licensee of an online casino wants to see the figures, what gives the licensor the right to withhold them? The figures relate to the business done inside the licensee's casino and not inside the software developer's office.
What often happens is that the licensor effectively ties up the licensee with page after page of conditions and provisos, all neatly dressed up in "legalese" and the licensee can do nothing to challenge the impositions of unfair terms and conditions without hiring a team of lawyers who charge exorbitant Wall Street fees. Of course, even then the small print is a legal minefield.
A damning report just published by the Organization for Economic Cooperation (OECD) development says that Internet banks are a dangerous haven for money launderers. Fraudsters and money launderers are able to hide behind the anonymity of the Internet to create false identities to siphon the proceeds of crime. Internet banking is "a money launderer's dream."
The report also gave warning that Internet gambling businesses are ideal operations for money laundering, along with financial trusts.
Lawyers, accountants and notaries were also criticized for helping money launderers to set up companies and mechanisms to disguise ill-gotten gains. To this list, you could be forgiven for thinking that software suppliers such as Starnet and Cryptologic should immediately be added. When the accountants are crooked as well, as happened with Starnet's auditors, the figures amount to nothing more than pages of neatly transcribed lies.
The only way to sort this mess out is to let the licensees have what they want. They are demanding nothing less than a full investigation and audit of Cryptologic's books and bank accounts. At least investors have the SEC on their side but licensees have nothing.
