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David Baazov Insider Trading Scandal

After months spent on legal proceedings and talks, the trial against the founder and former Chief Executive Officer of Amaya Inc., David Baazov, was set to start in November.

Earlier this year, Quebec Court’s Judge Claude Leblond set the official start of the arguments for November 20th, after discussions with the counsel for the accused and the Autorité des marchés financiers’ (AMF) lawyers.

The trial is expected to be a lengthy one, as it will probably take about 13 weeks until a ruling is reached.

”Largest Insider Trading Investigation” in Canadian History

The AMF’s attorneys have projected that the trial is to be the “largest insider trading investigation” in the history of Canada. About 50 witnesses are planned to be called over the trial, with testimonies of employees of Amaya’s investment bank, employees of Canaccord Ganuity Securities and at least one informant who has not been previously named. The witnesses who are not residents of Canada, may be given the chance to provide their testimonies via video conference call.

The large number of witnesses is not the only reason why the trial is expected to be prolonged. Legal action is to be held in French, because the case has been started as a penal proceeding under Quebec’s securities act. According to a statement made by Judge Leblond, a bilingual judge could be attracted so that no additional time is wasted on translation. Still, some extra time could be added to the trial due to the evidence in the case is to be presented in English.

At present times, the lawyers of the Quebec’s securities regulatory body are preparing to lay out their case, which could really become the largest insider trading investigation in Canadian history.

As mentioned above, the start date for legal arguments was set for November 20th. At the time when the date was determined, an agreement could be reached in order for the trial to be avoided, but no such thing happened, so the legal proceedings are to be given a start soon.

David Baazov and His Associates Face Serious Accusations

The case against David Baazov dates back to 2014 – the time when the biggest online gaming transaction in the history of gambling took place. At the time, the then-Chief Executive Officer of the company led Amaya Gaming, now The Stars Group, in the process of buying out one of the largest poker brands on a global scale – PokerStars. After a short process of negotiations, Amaya reached an agreement with the privately-owned brand and acquired it for $4.9 million. After the transaction was carried out, Amaya became the only owner of the online operations of PokerStars as well as of the brand’s other properties and assets.

Allegedly, the then-Chief Executive Officer of Amaya, along with Benjamin Ahdoot and Yoel Altman, used insider information about the acquisition of PokerStars in order to unfairly gain advantage on the stock market. The insider-trading charges came after a probe, which was launched by the Autorité des marchés financiers (AMF) in March 2016.

A total of five offences have been filed, and 23 charges have been laid against the three defendants and three companies. In a hearing which was presented by Ms. Melchers in December 2016, the former Chief Executive Officer was accused in deliberately using confidential information to disguise trades in Amaya stock at the time when the takeover offer for PokerStars was made.

In addition, a non-penal case was opened separately against Mr. Baazov’s associates, accusing them in drawing profit from using privileged information provided by him for making trades. According to the Autorité des marchés financiers, the scheme was sophisticated, and some illicit payments were made in exchange for tips on a number of impending acquisition deals.

Mr. Baazov is accused of aiding with trades while he had privileged insider information which he used to influence the market price of Amaya securities. In addition to charges of insider trading and making an attempt to alter the fair market price of the company’s stock, the operator’s former Chief Executive Officer also faced charges of communication of privileged information.

The two other defendants – Benjamin Ahdoot, who is a childhood friend of David Baazov, and the Amaya adviser Yoel Altman, have also faced charges with insider trading and attempting to influence Amaya securities’ market price. Apart from the three of them, there are also three companies, including Sababa Consulting Inc., Diocles Capital Inc. and 2374879 Ontario Inc., have also been charged with similar offences.

All three defendants have pleaded not guilty. In case they are found guilty, they will not only face pretty large fines, but will also face prison terms.

Montreal Chabad Center Associated with the Insider Trading Scandal

A Montreal Chabad center has become one of the organizations associated with the legal case started against David Baazov and his associates. According to the French stock market regulator AMF, the Chabad centre may have been used as a money-laundering channel by the defendants.

Over a raid initiated by the financial regulator in June 2017, a total of CA$87,000 in cash as well as financial records were taken by force. According to the Autorité des marchés financiers, the money found in the car of Rabbi Shalom Chriqui, who is the Chabad center’s director, was transferred to the organization by Craig Levett, a former consultant at Amaya.

As a response, the organization’s lawyers have filed papers asking for the funds to be returned, claiming that the seizure was not legal as the money was not found on the property. The organization also claims that the confiscated money was accumulated via charitable fund-raising initiatives and voluntary donations.

Allegedly, Baazov headed an organized “pyramid” scheme that used shared confidential information regarding company takeover deals in order to generate profit through stock trades. According to Quebec’s financial regulatory body, Craig Levett and Josh, the brother of Baazov, were also part of the scheme. The group is believed to have generated approximately of CA$1.5 million in share dealing over a period of five years.