By Mike Brunker, msnbc.com
Eight?poker players who say they were victims of a cheating scheme?on the popular Ultimate Bet website are suing a Canadian company and unnamed individuals, alleging they violated U.S. laws aimed at combatting organized crime, defrauded players and?negligently offered?crooked card games.
The lawsuit, filed last Friday in U.S. District Court in California, alleges that the defendants?? 6356095 Canada Inc., formerly known as Excapsa Software Inc., and up to 10 Jane or John Does?? violated the federal Racketeer Influenced and Corrupt Organizations?(RICO) Act, committed fraud and exhibited negligence by enabling the theft of at least $20 million from high-stakes poker players who gambled on the Ultimate Bet website.
It seeks compensation of at least $1.73 million and far more in punitive damages on behalf of the plaintiffs: Daniel Ashman, Brad Booth, Thomas Koral, Greg Lavery, Dave Lizmi, Daniel Smith, Joseph Sanders and Dustin Woolf.
Possibly more important in unraveling the longstanding mystery of the largest known case of online poker cheating, the lawsuit seeks documentation?that Ultimate Bet's shadowy parent companies and regulators with the Kahnawake Gaming Commission (KGC) have never made public.
The KGC, the regulatory agency of the Mohawk Council of Kahnawake in southern Ontario, announced in September 2008 that its investigation found that a single individual ? former World Series of Poker champ Russ Hamilton??? was behind the cheating case.?But many players believe that it was the result of a broader conspiracy.
Among them is Haley Hintze, a former writer and editor of PokerNews and now a poker blogger who is working on a book on the cheating scheme due out by summer. In it, she told msnbc.com on Thursday, she will identify at least three others who directly participated in the theft and attempts to cover it up.
Representatives of Excapsa Software could not be reached for comment on the lawsuit. A spokesman for the GC had no comment on the lawsuit or whether it would respond?to any subpoenas.
Ultimate Bet acknowledged that?$20 million was stolen from players at the site between 2003 and 2008, and that the operators of Ultimate Bet refunded most or all of that money. But the suit alleges that the company ?substantially underestimated? the losses by failing to consider money that wasn?t wagered when the cheaters realized their opponent had them beat.
Read 2008 story?about the case: Poker site cheating plot a high-stakes whodunit
?The key to the massive success of the cheating players is not simply that they were able to profit by bluffing when their opponent was weak or betting when they had the best hand, but that they were able to fold and not play ? whenever their hand was strong (but) not the best,? it argues. ?Thus every time a player had a flush, the cheater would fold a lower flush or straight; every time a player had a full house, the cheaters would fold a flush.?
?There are significant doubts about the methodology of the refunds given to players,? said Alan Engle, a partner in the Meador & Engle law firm in Anaheim Hills, Calif., who filed the suit. ?That?s always been a closed process and there are inherent difficulties in calculating the amount of the theft.?
Engle said the early part of the case will probably?focus on jurisdictional issues, but he said he is confident that he can prevail on any challenges because Ultimate Bet focused its marketing on U.S. bettors.
?Anyone victimized by someone in a foreign nation over the Internet is in no way required to bring a case in a foreign nation,? he said.
Excapsa Software, now known as 6356095 Canada Inc., is currently in the midst of liquidation proceedings in Canada.
Sheldon Krakower, who is handling the corporate dismemberment for XMT Liquidations of Montreal, said he would soon seek guidance from the Ontario court overseeing the case before responding to the lawsuit.
?We will be filing our seventh report to the Ontario court specifically addressing this matter imminently,? he told msnbc.com on Thursday. ?? We need direction from the court on that.?
In a report to Excapsa shareholders in May 2011, Krakower indicated that $7 million U.S. had recently been released to shareholders, and that $4.2 million was being held in escrow until the end of the year.?It is not clear whether that money remains in escrow.
Ultimate Bet, which merged with another online gaming site, Absolute Poker, in 2008 to form the Cereus Poker network, was among a handful of online Poker sites that had their U.S. operations shut down in April of last year when the U.S. Justice Department indicted them on charges of violating the Unlawful Internet Gambling Enforcement Act?of 2006, money laundering and other charges. The feds also froze bank accounts holding the bankrolls of U.S. players, many of whom have yet to be repaid.
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