I promised that Volume 30 would be a doozy, so let's get right to it: Greg Pierson, the President and CEO of ieLogic and Iovation, the company behind the company behind UltimateBet, was another of the likely superusers behind the scandal. This will be a long post, but in this missive you'll find a good deal of the circumstantial net of evidence pointing to Pierson, and also learn of the virtual Pandora's Box (and the very sordid key) that almost certainly triggered what would become online poker's largest cheating scandal.
Let's start here by visiting some things that I wrote, way back in the very first "Just Conjecturin'" post, back in September of 2009:
"Now, I don't think Pierson was in any way a part of the actual cheating itself."
"My guess is that Hamilton got himself into some kind of financial jam in the early '00s, and went to Pierson with a cock-and-bull story about needing to check out reports of cheating going on during the games, under the pretense that only a "pro player" would be able to recognize more subtle forms of cheating."
Right track, wrong pony. When I started the series, I didn't have much for facts on the UB side, and some of my early theories turned out to be wrong. As you'll see later in this tale, there was indeed a "jam" of some sort going on, but it appears the jam was Greg Pierson's, not Russ Hamilton's, and the solution to the problem was to enable the superusing and scrape tens of millions of illicit dollars into various endeavors or off the site in its entirety. Now comes the sordid dirt, and the part I've really put off writing about because, well, it's sad and disgusting. But it cannot help but be the key to it all, and so it must be dug back up.
Greg Pierson was an up-and-coming Internet entrepreneur in the early 2000's, and his wife, Janelle Lynn Pierson, was a Portland-area high school teacher. According to this story from The Oregonian, Janelle Pierson surrendered her license after having a year-long affair with a 16-year-old male student at David Douglas High School, where she taught. The affair ran from January through November of 2002, according to the complaint, made by the youth's parents.
Other details from the Oregonian news brief also merit mention. Note that Janelle Pierson took a medical leave from teaching in September of 2002 but continued with the affair until November, and that the affair was first brought to authorities' attention in January of 2003. Note also that a private settlement was reached in March of 2003, with the figure undisclosed. Janelle Pierson was given five years probation, ordered to attend counseling and to provide 150 hours of community service. If you'd like to browse the official settlement findings, you can click here.
But, as always, there was far more to this story. Several former UB workers have told the story about how Greg Pierson went AWOL for two weeks in early 2003. He literally vanished from the face of the earth; no one knew where he went. Two weeks later he resurfaced in Costa Rica. At the risk of being accused of some dime-store psychology, this looks to be a classic instance of "fight or flight syndrome," with Pierson temporarily choosing the latter option.
But what to do? That's where the allegations run deep. The stories shared behind the scenes allege that Russ Hamilton fronted Pierson $50,000 just for lawyers' fees for Janelle's initial defense, and one source has stated to me that there wasn't one youth involved, but two. According to this allegation, the first one was the year-long affair, the second just a brief fling, but in any event, some significant cash settlement seems to have been reached.
The timeframe of all this -- early 2003 -- shouldn't be lost on any observer of the UB scandal. By all accounts, that's when the cheating started.
So, we have evidence that Pierson was the boss of this rising Internet-security company, which may have been doing well in billings by 2003. But was there a severe cash shortage? $50,000 in cash doesn't sound like much for a man who soon would be living in a Portland manse (complete with infinity pool) that would later get feted with the line "Nice pad, Greg!" by none other than UB spokesman Phil Hellmuth.
(Update: It appears that the Piersons lived in a nice but pre-mansion house in the Portland suburb of Gresham at the time. Nonetheless, any influx of cheating money, in addition to Janelle Peterson's settlement, could have been used to buttress ieLogic/iovation finances, or to help line Pierson's bank account in advance of the later mansion purchase. The Gresham residency, in any event, does not disprove motive. -- hh)
Perhaps the mansion itself was part of the problem, and my efforts to date to obtain the exact purchase details and ownership records have been unsuccessful, in part due to prohibitive cost. Perhaps all this was pre-mansionn. But either way, there's a chance the Piersons' house was jointly owned between Greg and Janelle, though Oregon is not a community-property state. Whatever the reason, though, it appears that Pierson was highly leveraged in 2003 and not cash-flush when the settlement(s) with his wife's affairs went down.
Pierson had a ready explanation, by the way, for his two-week disappearing act. To one worker, he said, "Someone raped my wife." This turned out to be not quite true.
This bit of nastiness, I believe, is what allowed the entire UB cheating enterprise to take place. The operational bosses of UltimateBet were always Russ and Mansour, Mansour and Russ, but the software stuff was Pierson's baby. Matloubi and Hamilton may have been schemers and dreamers with big business plans, but no one has ever suggested that either of them had any programming skills. Pierson did, but he seems to have tasked a special programmer with the task of creating God Mode, and this programmer's identity remains a closely guarded secret, because other workers believe he created the software under false pretenses, being given a plausible cover explanation by the boss, Pierson. This programmer is not, however, any of the well-known programming names already connected to ieLogic/Iovation/Excapsa in various online forums.
It was Pierson who had to held have the programming reins, and who reached an agreement with Hamilton and Matloubi to allow the God Mode code to be inserted into the UB client, which in turn allowed the cheating to take place.
As we know, the cheating itself began in 2003. Money seems to have been siphoned off to help with the Janelle situation, and a couple of percent of the cheated monies probably ended up in the trust funds of one or two Oregon high schoolers. Money no doubt left the site and large suns were laundered into the pockets of Hamilton and Matloubi. And later on, more cheating money was funneled over to the next pet project, the Ultimate Blackjack Tour. Millions are believed to have been redirected into UBT operations.
There are, however, several more specific allegations regarding Pierson. Remember the first round of Excapsa stock seizures in the battle between AP and UB ownership interests? As part of the announced findings, Russ Hamilton's shares in Excapsa were rather publicly and forcibly annulled. The second round of seizures, however, has been alleged to have been stock taken from three high-ranking Iovation (Excapsa) officials:
* Greg Pierson (who is Iovation's CEO).
* Jon Karl (Iovation's VP of Corporate Development, generally considered to be Pierson's right-hand man)
* Molly O'Hearn (Iovation's VP of Operations, who first surfaced as a court-appointed trustee during the Excapsa liquidation legal proceedings)
The obvious question to ask is, "Does this mean Karl and O'Hearn were superusers, too?" The answer is probably no. The tales surrounding Karl suggest that he simply backed Pierson's stories too strongly and thereby backed himself into a corner once Pierson's lies were uncovered, and as for O'Hearn, she was allegedly tricked into signing the wrong legal document by side-switching bad-guy counsel Dan Friedberg. Karl, for his part, was generally viewed by his co-workers as the man least likely to be able to pull off a poker bluff, and has been described as too straightforward and simple to have been involved in the actual cheating.
Pierson is also reported to be the owner of one the powerful internal transfer accounts at UB, with his likely bearing the screenname "-greg-". It is believed that there were at least six such transfer accounts, the most famous of which is the "-fred-" account used by Russ Hamilton to assist in moving money around between various other cheating accounts.
What is also widely known is that in 2009, Paul Leggett and Cereus terminated their continuing payments to Greg Pierson and Iovation for the continuing use of the ieSnare product and related software. These payments are alleged to have been about $400,000 per month, and the cessation of payments coincides reasonably well with the second round of known Excapsa stock seizures. Leggett is believed to personally despise Pierson, but Leggett nonetheless chose to withhold Pierson's name from the partial lists of names leaked out via Joe Sebok, perhaps to stop from adding more color to the then unfolding settlement talks regarding Cereus's failure to keep up with payments on the Blast-Off/Excapsa note.
Given that Leggett leaked out 28 names (including lots of fakes), and that there are now at least six more real names that by all rights should have been included, the whole "lists" thing as orchestrated by Leggett and Cereus remains a sham effort, too. Yet that is a different story.
In a recent blog post: Paul Leggett said this: "However, we do believe that prior to us taking over UltimateBet that software source code records were deleted as well as other evidence." Actually it's a safe bet that Leggett knows for damn sure that this is indeed the case, and is soft-footing the issue.
Pierson has also been alleged to me to have actively deleted player accounts and possible related hand histories, prior to the merger, possibly using the same unknown programmer mentioned above. One theory is that at some point, Pierson got cold feet about the cheating and decided to cover his own tracks while leaving other cheating accounts in place that could be easily tied to others, as in those pointing to Hamilton.
Despite all this, which was clearly known behind the scenes, Pierson was not named? Could it have been because of the possible business and industry repercussions? After all, Pierson's firm, Iovation, remains a software provider to dozens of online sites, notably sportsbooks, that form the heart of the business operated through the KGC.
All this strengthens the widely held beliefs that both the Kahnawake Gaming Commission and the present-day Cereus company continue to perpetuate a massive cover-up about the real nature of the UltimateBet cheating, for reasons not yet fully explained. In this scenario, it also becomes increasingly likely that Russ Hamilton -- though indeed a primary cheater -- was tabbed to be the agreed-upon fall guy after the cash trail to accounts in his name was posted by the Costa Rican blackmailer, brainwashdodo.
I'm guessing a lot of heads will be spinning and phones will be ringing. But don't worry; when I get around to it, there's always Volume 31.
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Update: Given the nature of these closet-bound skeletons, it's hard not to exclaim, "Oh, the irony!" when visiting the iovation website and seeing pressers for such events as this Thursday's "Circle of Fraud" seminar at the Wynn in Las Vegas, co-sponsored with HSN (Home Shopping Network) and Dell. Or that the website includes a blog with such entries as "Scammer Guilty of $2.7 Million Online Auction Fraud."
It reminds one of the ancient Chinese proverb to the point that any lock is only as good as the man who designed it.