Monday, January 18, 2010

Just Conjecturin’, Part 6: More on Excapsa: The Missing 2.6 Million Forfeited Shares

It's been a couple of months since I delved into the fallout from the long-running UB online poker scandal, and I left off at that time with a bit of a cliffhanger. Let's resume the discussion with two numbers, which are the total extant shares of UB-software licensor Excapsa, before and after the limited resolution of the scandal as published by the KGC:

Excapsa, 2006: 201,804,155 shares
6356095 Canada (formerly Excapsa), 2009: 194,880,883

The difference between the two is 6,923,272 shares, which seems to represent the total number of shares cancelled due to the scandal. Of those, 4,304,720 comprised a single share bloc solely owned by Russ Hamilton, the UB co-founder publicly outed in the KGC's findings as the primary culprit in the scandal. But what about those other 2,618,552 shares? In the court documents, these other shares were described as being transferred back to Excapsa, but it seems as if they were cancelled outright, perhaps as part of an agreement by other shareholders to not be publicly outed.

An additional complication is that not all of the original UB ownership is known. 56.4% of the original ownership was made public when Excapsa found it necessary to switch liquidators, and of late an additional 25% -- some 49.3 million shares -- has become public knowledge as that portion of Excapsa which was acquired by Joe Norton's Blast-Off Ltd. interests in late 2006. This leaves roughly 19% of the shares still unknown, though it is my personal belief that most of those are Phil Hellmuth's for reasons detailed in an early post.

Still, one can't help looking at the list of known share blocs and trying to piece together that 2.618 million. Click here to examine that list of the known 56.4%. Right... there's no direct match.

But before exploring other possibilities, let's note this: In terms of actively participating in the online cheating, any other owner with shares totaling more than 2.618 million can be presumed innocent. This includes Annie Duke, Phil Hellmuth (other idiocies aside), secret owner Ted Forrest, even Mansour Matloubi, whose reputed failure to heed a prop player's warning back in 2006 (as detailed in one of the lengthy 2+2 UB scandal threads), may have cost affected players several millions more. But being dense, perhaps even intentionally so, isn't the same as actively participating in the cheating.

From here on we have to enter the land of conjecture, meaning that these are opinions and theories only, and anyone with evidence or reasonable alternatives are invited to share. (And save the idle threats for someone who's likely to be influenced by them... and that's not me.) But in sifting through the tens of thousands of posts on the matter, I was intrigued by the references to the "Fred" account reported by posters to be intrinsically involved in the money transfers to and from Russ and other players. At least one other poster reported that this "Fred" was Fred David, which is likely the same "Fred J. David" listed as originally owning 1,680,000 Excapsa shares.

1,680,000, however, is not 2,618,552. Let's run with this hypothesis, though:

Unknown forfeited shares: 2,618,552
(less David bloc:) 1,680,000

Possible unknown shares TBD: 938,552

Ruh-roh... 938,552 doesn't match anything either. But wait! There's an entry for the TipTop Irrevocable Trust for 9,385,822 shares, which is almost exactly 10 times the 938,552 we seek under this scenario. It's a matter of 30 shares, which could possibly be explained by a transposition of a single number. Note that the share totals were obtained from proxy ballots where the share amounts were handwritten, meaning that such a single-digit transposition is not unreasonable to assume, or at least to speculate about.

Now, who says that these trusts have to have single owners? Perhaps 10% of the Tip-Top Irrevocable Trust belonged to Hamilton or another presumed guilty party as part of a group package, and it was forfeited along with the 4.3 million bloc solely owned by him at the time. It's at least a possibility.

What's more than just a possibility is that Russ was not the only cheater, and the KGC has refused to release the other 31 names involved. Is Fred David's name among those 31? I believe that on the basis of the math alone, that's a reasonable speculation. Then again, perhaps there is another bloc among that missing 19% for a similar 1,680,000 shares. Come to think of it, 1,679,970 would work even better.

I should also point out that even if all this turned out to true, it doesn't mean that David necessarily was an active cheater. Instead, his presumed actions (as reported in those lengthy 2+2 threads) may have facilitated the cheating, which might well be grounds for the shares' forfeiture.

Still, someone in addition to Hamilton forfeited his Excapsa shares. Maybe more than one someone. This is at least one possibility.

Mr. David? Would you care to refute this hypothesis?

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