Haley's Poker Blog

No bad beats, but still a poker blog... hence the anguish.

Saturday, February 13, 2010

Just Conjecturin', Part...7?? (Help Me, KevMath, Help Me)

One of the questions regarding the transfer of UB operations from Excapsa to Blast-Off around the end of 2006 is, how clean have the new management's hands been in dealing with the online cheating scandal, which began to crack open in 2007. I was willing to grant them that status barring indicators to the contrary, and there is no doubt that UB is a much safer place to play today, all things considered. (Disclaimer: I haven't played there since 2007, and won't return; however, I wasn't cheated.)

Comparing the purchase and scandal timelines shows something unusual, which can be shown by merging the two:

October, 2006: Blast-Off Ltd. buys into and takes control of the UB operation in a corporate transaction made under duress of the UIGEA. An upfront fee of $5 million and monthly payments are the deal, and yes, I'll get back to this tres soon.

September, 2007 or October, 2007 [conflicting court-document dates exist]: Blast-Off Ltd. suspends payments to the old Excapsa ownership bloc. And I mean to Excapsa specifically, not connected to the other stuff going on at AP. The AP scandal went public at about the same time, but the two firms originally had separate ownership and separate software, as everyone knows. Ask yourself this: Why were the Excapsa payments stopped?

December, 2007: The last of the cheating at UB occurred in this month, according to the final KGC report.

January, 2008: The date when the KGC claims it began investigating reports of inside cheating at UB. The KGC report pointedly never addresses whether an internal investigation at UB preceded this date, though UB claimed an initial notification of January 12, 2008 in its March, 2008 interim statement.

February, 2008: UB first acknowledges the insider cheating scandal, and via KGC later states that the software holes were finally plugged as of 02/02/08.

August, 2008: Blast-Off, Tokwiro and others file US$81.4 million lawsuit against Excapsa. Not the $75 million as reported back then by MSNBC.

November, 2008: Blast-Off et. al. wins $14.625 million judgment (settlement) against Excapsa. The final KGC report (September, 2009) omits mention that the majority of the $22 million refunded to players was in fact obtained via this settlement. The payment was, in all essence, regurgitated as the second wave of payments made to cheated players. The almost $15 million represents a reasonably rough equivalence of the percentage of Excapsa stock held by its 2006-era owners, when held against the $22 million refunded to players.

During this period, the new UB also announced that it recalculated the formula under which refunds were distributed. Because of the obvious timing and amount connections, there is a strong chance that the recalculation was based in large part on the amount of the settlement Excapsa forked over, which was then likely converted into straight-line percentage payments against all known cheated hands. (And this is another part of why I want to get some of those hand histories from players who received refunds, meaning not Barry. I think it's possible to reverse-engineer the process and calculate the percentage awarded.)

. . .

Therefore, it seems to me that anyone who was cheated from September 2007 through the end of that year, and perhaps for a brief period before that, has a possible beef against the new management/ownership. The new UB chose to remain open and running continuously despite obvious indicators that a problem was present and ongoing, and I couldn't state this before because the timing problem wasn't in the documents available at the time. It's now fair to say that the new UB placed the maintenance of their revenue stream higher than the safety of their customers as they determined to stay operational, so no, they don't get the free pass they'd like. Blast-Off could likely have gotten its purchase back in its entirety in court had it just shut UB down, which must have been one of the options in play.

One small defense that UB does have is that they did not have options to port their customer base and balances over to another network, because most of those networks shut off access to the US in late '06 or early '07. They might have been able to do something like purchase the old Mansion Poker platform, lock, stock and barrel, but they chose not to do that.

The nature of the settlement between Excapsa and Blast-Off bears further examination as well, as does the smaller court case that dragged a lot of the stuff public, the one formally known as Ryan v. Excapsa. the liquidation process for Excapsa. It wasn't Ryan against Excapsa, as I may have previously mistyped elsewhere; that was just its title for legal filing needs. However, there is an open question regarding Ryan's departure from Excapsa in 2007, which we'll get back to at a later date.

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