David Baazov, founder and former CEO of Amaya Gaming, the company that in 2014 acquired PokerStars, is set to stand trial in Quebec later this month on charges of financial crimes in what could prove the biggest insider trading scandal in Canadian history.
The trial against Baazov and five others is scheduled to begin Dec. 11 in Montreal.
According to the latest court filings, prosecutors contend that Baazov attempted to manipulate Amaya’s stock price prior to the poker site acquisition that would practically overnight take Amaya from bit player to one of the largest publicly traded online gaming companies in the world.
Amaya, now The Stars Group, purchased the parent company of PokerStars and the now defunct Full Tilt Poker in June 2014 for $4.9 billion.
Canadian finance regulators slapped Baazov in March 2016 with criminal charges, alleging the CEO committed multiple securities fraud violations in the run-up to the PokerStars purchase. Baazov took a leave of absence and officially resigned five months later.
Bad Actors
Being forced out of the company he founded wasn’t the low point for Baazov. Since leaving Amaya, many witnesses have come forward to testify against the man dubbed the “King of Online Poker,” and the Autorité des marchés financiers (AMF), an organization responsible for financial regulation in Quebec, appears to have a plethora of evidence that could send him to prison.
The prosecution laid out the basics of their case in the recently released “trial book.” They intend to show how Baazov, a childhood friend, and a Toronto financier bought up depressed shares of Amaya stock using insider information about the pending PokerStars purchase.
Baazov has vehemently denied the charges of wrongdoing.
In May, it became known that American federal investigators were looking at potentially illegal political contributions made by Baazov in 2014 to New York Gov. Andrew Cuomo, who was expected to be considering bills to legalize online poker in the state.
Charges in that case were filed against a Baazov associate.
“Insider trading” definition, per Investopedia.com:
Insider trading is the buying or selling of a security by someone who has access to material nonpublic information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still nonpublic.
Martha Stewart of Online Poker?
The prosecution appears to have found potential hard evidence against Baazov in an email Toronto financier Yoel Altman sent to the former Amaya CEO in 2014.
“We just need to get ahead of these shorters and prop desk guys like we have done before,” said a message found by AMF investigators.
Additional emails indicate Amaya had transferred C$1.4 million (US $1.1 million) to Altman’s investment firm, Diocles, money that was then used to purchase Amaya stock.
The prosecution has even more damaging information on the co-defendants. Altman is alleged to have made his own Amaya stock purchases less than two months before a deal to acquire PokerStars was made with its parent company, Rational Group.
The AMF contends that these stock purchases were made due to Baazov, Altman, and Baazov’s childhood friend Benjamin Ahdoot having non-public material information that Amaya would soon be acquiring the world’s largest online poker site, which would potentially lead to a massive stock surge for Amaya.
