The Malta Independent Online newspaper published an article on the Bodog empire and its founder Calvin Ayre over the weekend, interesting not so much for its news content as for the details of a complex web of payment businesses introduced to the Mediterranean island to facilitate online gambling payments.
In the article at http://www.independent.com.mt/news.asp?newsitemid=81050, author David Lindsay recaps the legal hassles Bodog and Ayre have had with the US Department of Internal Revenue Services which are already well documented (see previous InfoPowa reports). The company has seen some $24 million seized from US banks by the authorities.
After examining court documents on file, and with its own local sources, the Malta newspaper reports that US officials claim that Bodog 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," writes Lindsay. "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."
Lindsay goes on to name Malta-based Stratham Finance, of which Calvin Ayre is apparently both a director and sole shareholder.
Interestingly, Lindsay comments: "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 (Malta) 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."
Lindsay writes that when the Bodog clash with US officialdom hit the headlines at the end of last summer, implicating Stratham Finance, the Malta online gambling licensing agency Lotteries and Gaming Authority issued a public notice. This advised 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 the Bodog websites are also registered to companies in Malta, claims Lindsay, noting that the US investigation 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," he reports.
"Moreover, Bodog's gaming websites – bodoglife.com and newbodog.com – belong to two companies registered at the same Ta' Xbiex address as Stratham Finance, along with eight other financing companies - Aragon Finance, Brompton Finance, Esser Finance, Kiel Finance, Lyon Finance, Milburn Finance, Savoy Finance and Sutherland Finance.
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 [sic] or his partner James Philip," the Malta Independent Online article claims. "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."
Lindsay acknowledges that since the US investigation came to light, Ayre 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.