Well, it appears that no one associated with UB is ever going to post in this thread, shocking. Anyway, below in bold are more questions for Paul Leggett and/or UB’s new PR rep Joe Sebok. Again, credit goes to mookman5’s posts on 2p2 discussing the issues below and linking various court documents. I realize this is very lengthy but this is actually a concise summary of various posts and court documents totaling thousands of pages.
On October 12, 2006, Excapsa sold a bunch of subsidiaries (which constitute a good chunk of if not the entirety of what would be considered Ultimate Bet, including most significantly Excapsa Services Inc. [“ESI”] and Game Theory Holdings Ltd. [“GTHL”]) to Blast Off, a company which in the past according to various filings had been associated with blackjack and Russ Hamilton and had been connected to Excapsa.
The timing of this sale is extremely curious, to say the least. In various court filings, discussed below, Excapsa’s liquidator represented to the Court that this sale was made “in anticipation of [the UIGEA]”. The UIGEA was passed by Congress on September 30, 2006, and signed into law by President Bush on October 13, 2006.
The idea that anyone would want to buy an online poker site at this moment, when there was tremendous uncertainty and many believed online poker in the US was going to die, is simply ridiculous.
Who were the shareholders of Blast Off at the time of this purchase on October 12, 2006? Was Russ Hamilton, either personally or via an entity, a shareholder of Blast Off at this time?
Some details of the Excapsa/Blast Off transaction are discussed above in my previous post, the bottom line is that Blast-Off provided $5 million in cash and the balance of the purchase price of $130 million was to be paid to Excapsa over time pursuant to a note provided by Exapsa [“the Note”].
Actually, the sale agreement, as written and as announced to the public, provided for an initial payment of $10 million, but in fact a payment of only $5 million was made. At the time of this transaction, some shares of Excapsa were publicly traded and accordingly some of its shares were owned by non-UB insiders.
After this sale Excapsa had no operating assets and pursuant to Canadian law a court proceeding was initiated to liquidate its assets which included, among other things, a fair amount of cash ($28 million was distributed to Excapsa’s shareholders in December 2006, and as of June 2007 Excapsa’s cash holdings totalled an additional $47 million) and the payments due under the Note.
Immediately prior to the liquidation proceeding, Excapsa changed its name to 6356095 Canada Inc. It’s hard to think of any reason for this to have been done other than to try to avoid public scrutiny of the liquidation proceeding. I continue to refer to the company as Excapsa to avoid confusion.
Blast Off stopped making payments on the Note in October 2007, which coincidentally (or not) was the month in which the AP superuser scandal broke. During this period of time, negotiations regarding the Note were allegedly taking place between Blast-Off and Excapsa. The UB scandal publicly broke in January 2008.
At some point later in 2008, Excapsa expressed willingness to loan money to Blast-Off to help Blast-Off deal with player refunds. For reasons that will never be known with certainty, Excapsa’s liquidator, Mintz & Partners, Ltd., refused to go along with this loan arrangement and was discharged as liquidator, replaced with XMT.
The substitution of XMT for Mintz & Partners as Excapsa’s liquidator required the consent of Excapsa’s shareholders. Signed consent forms for 56.4% of Excapsa’s shareholders appear in the court papers, which gave the public its first glimpse into the ownership structure of Excapsa, the alleged “old” owners of UB.
Among the shareholders, with 4,304,720 shares, was Russell Hamilton. He was not the only shareholder owning exactly 4,304,720 shares. Other recognizable shareholders included Mansour Matloubi, Fluffdog LLC (believed to be Annie Duke), and a trust of Jack McClelland. Many of the shareholders are corporations and trusts so there is no way to determine easily the individuals who were the true shareholders. There were 201,804,155 shares outstanding.
Eventually, Blast Off made a formal claim against Excapsa in the liquidation proceeding seeking amendment of the sale agreement with Excapsa due to the superuser scandal and the refunds associated with it. A settlement dated September 28, 2008, discussed below in detail, was reached, and ultimately approved by the court in the liquidation proceeding.
It was at this point, to the surprise of everyone, that Joseph Norton announced that he, through his company Tokwiro, was the owner of Blast Off. In the liquidation proceeding, he swore that he was the “sole beneficial owner” of all shares of Blast Off.
Beneficial ownership is a legal term denoting that you are the true owner of something, even though it is listed as being owned by someone else. Blast Off went to great lengths to protect the identity of its actual shareholders (who formally own the shares that Joseph Norton claimed to beneficially own) in the liquidation proceeding, only agreeing to provide information regarding them in connection with a confidentiality agreement:
The Liquidator has received a solemn declaration of Joseph Norton that he is the sole beneficial owner of all of the shares of Blast Off and its related entities (attached hereto as Appendix I). A detailed solemn declaration of the shareholders was also delivered by Mr. Norton but under strict condition and agreement that its contents be kept confidential and not revealed by the Liquidator.
Who at this time were the shareholders of Blast Off? Who are they currently? Why if Joseph Norton is the true owner of these shares were the shares not transferred to him or his company? Why the insistence on keeping the list of Blast Off shareholders confidential?