The $10m Cheque Was Not Honoured

Yesterday, I mentioned Matchbook's suspension by the Gambling Commission, but the good news based on my son's experience, is that funds can indeed by withdrawn currently with no issues or delays.

As to what led led up to the suspension, and who knows how long it might last, it appears that basically Matchbook extended generous lines of credit to some wealthy, but not very sharp gamblers. 

Being an exchange, the money these whales proceeded to lose in what appears to me almost record time, was won by others, but the credit was never fully repaid by the losers, leaving Matchbook to cover the losses themselves.

All very incompetent and reckless of course, if not illegal, and the best detailed explanation of the facts comes from Ireland's Independent and this article from the very Irishly named John Mulligan. Interestingly the article was published more than two weeks ago on January 30th, a while before the suspension. Here it is in full:

A gambling firm formerly operated by employees of Cork-based betting technology business Xanadu Consultancy has secured a judgment totalling $12.6m (€11.4m) in London against a number of defendants who laid bets of as much as $1m a day and engaged in what a judge described as a "co-ordinated deception".

The case shines a unique light behind the scenes of the world of global high-stakes betting.

The Channel Islands firm, Eurasia Sports, was part of online betting group Matchbook.

Xanadu Consultancy - which had no part in the deception - helped to procure high-rolling gamblers, including the defendants in the case, through Eurasia for Matchbook.

Xanadu is owned by an Isle of Man firm whose directors include the Cork company's CEO Mark Brosnan, as well as former Ryanair CEO and ex-RTÉ finance boss Conor Hayes.

Wealthy individuals were targeted directly by Eurasia to facilitate enormous wagers that could not typically be made via the Matchbook website.

"In essence, the service offered provided a brokerage product, working via Skype or over the telephone, which enabled large clients to bet considerable amounts quickly," noted the judge hearing the case.

All of the defendants in the case are businessmen who the court said were well-known in Peru or internationally, and all were known to each other.

One of the defendants, Lan-Chin Tsai, also known as Martin Tsai, was a "compulsive gambler", the court heard.

On September 2, 2014, Paul McGuinness of Xanadu, and Andrew Pantling, a director of a firm called Triplebet which trades as Matchbook, visited one of the defendants, Juan Omar Machi Aguad, at the Atlantic City Casino in Lima, which Mr Aguad owned.

Mr Aguad was keen to place bets of up to $500,000 on American football games that were held under the NFL in the US.

Eurasia was prepared to offer Mr Aguad $1m in credit without any security, given his reputation and what Mr Pantling said was the competition amongst betting firms for high-stake gamblers.

A day after the meeting, after due diligence paperwork was completed, Mr Aguad was given the $1m credit.

By the next day - the first day of the NFL season - he had lost it all after failed bets on matches. Further credit was advanced, and by September 7, Mr Aguad owed Eurasia $1.5m.

Mr Aguad offered a transfer of $500,000 to Eurasia via a business associate, if an account could be set up for that associate.

It was, but Mr Aguad also bet via that account and lost $500,000 on it. Days later, his associate transferred $500,000 to Eurasia.

Less than two weeks later, Mr Aguad said he would transfer $375,000 to Eurasia in part settlement of his account. He asked Mr McGuinness for more credit in that amount, which was allocated. The same day, Mr Aguad bet and lost all that $375,000.

In 2014, another of the defendants, Jose Roberto de Romana Letts, was to be appointed by Eurasia as an agent in Peru to introduce South American gamblers to the firm. In October 2014, he suggested that he provide security for the bets placed by the proposed new customers.

He said that because he had been involved in a tax investigation, he would provide the security via a $10m cheque.

On the basis of that cheque, further client accounts were opened, which also later benefited from credit from Eurasia, but which ultimately owed large sums to Eurasia after failed bets.

The $10m cheque was not honoured.

None of the defendants was represented in court for the case.

"I am in no doubt that this is a case involving well-informed and sophisticated defendants, most of whom have at some stage been legally represented and all of whom have been served with the claim form, the claimant's evidence and the trial notices in such a way as to have made them aware of the case being brought against them and the date of this trial," said the judge in the case.

"In my judgment the overwhelming probability is that the defendants' absence from the trial is due to a strategic decision on their part not to attend," he added.

It makes you wonder how some of these people ever accumulated such wealth. 

For me, Matchbook lost all credibility when they introduced a Premium Charge after smugly claiming that "they would never have to apply additional charges as some of our competition has chosen to do". 

Roll forward to 2018 and this news...  

Presumably neither of these thresholds applied to the targeted wealthy individuals, which is another issue altogether, but for us mere mortals, the lifetime limit is useless.

As I quoted Mark Iverson in the 2018 post on this topic:

It's all about the dream. Without that nobody starts.