Wednesday, December 03, 2008

Kahnawake Gaming Commission And Excapsa Speak Out Over "60 Minutes" Online Poker Cheat Segment

KGC and Excapsa React to 60 Minutes Poker Scandal Show

Clarifications have been flying left and right after the airing of this past Sunday's CBS '60 minutes' show titled "The Cheaters" covering the Ultimatebet and Absolute Poker scandals. On Monday, the Kahnawake Gaming Commission (KGC) issued a public statement to clarify several important points they felt were left out of the show which reflected badly on them. Then Tuesday Dec.2, XMT Liquidations Inc. (XMT), the court-appointed liquidator for former Excapsa Software Inc., issued a press release correcting points that KGC brought up in their statement concerning Excapsa's ownership of Ultimatebet.


1. The Ultimate Bet (UB) cheating was initiated while UB was owned and operated by Excapa (a public company whose Board of Directors included several high-profile Canadians). Pursant to a settlement agreement finalized in November, 2008, Excapsa agreed to pay Tokwiro ENRG US $15,000,000.

2. All players that were adversely affected by cheating (both AP and UB) were fully reimbursed. In the case of UB, these refunds amounted to over US $20,000,000. The reimbursement of UB players was affected within days after the Excapsa settlement. The KGC played a key role in facilitating and monitoring reimbursements.

3. The KGC and its agents have reviewed AP/UB operations and systems and have confirmed that all necessary steps have been implemented to prevent against cheating in future. Migration to the CEREUS software platform was approved and closely monitored by KGC.

4. Contrary to claims made in the 60 Minutes story, in addition to significant penalties levied under its Regulations (eg. fines totaling US $2,000,000), the KGC has initiated a criminal complaint against at least one cheater (Russ Hamilton) and is cooperating with law enforcement authorities. Other such complaints may follow.


The press release dated December 2 by XMT Liquidations Inc. on behalf of Excapsa Software Inc says that KGC's clarifying comments, in response to the CBS' 60 Minutes show, erroneously stated that: "...the Ultimate Bet ("UB") cheating was initiated while UB was owned and operated by Excapsa."

The XMT release stated that: "Excapsa never owned UB. UB was a licensee of Excapsa's gaming software and was owned and operated by an arm's-length third party. Moreover, it is a matter of public record and well-known to the KGC that Excapsa acquired the software code from a third party in July 2005, more than a year after the cheating on the Ultimatebet sites began."

It points out that KGC's own statement supports this timing:

"The Commission found clear and convincing evidence to support the conclusion that between the approximate dates of May 2004 (emphasis added) to January 2008, Russell Hamilton, an individual associated with Ultimatebet's affiliate program, was the main person responsible for and benefitting from the multiple cheating incidents."

The president of XMT, Sheldon Krakower, commented:

"It is disappointing that, without any prior consultation, the KGC chose to hastily issue a press release containing inaccurate and contradictory information. As we previously disclosed, XMT does not believe that management of Excapsa had any knowledge of the cheating tool and, importantly, there was absolutely no admission of liability or wrongdoing pursuant to the recent settlement with Blast Off. The settlement was an important step in Excapsa's liquidation process, avoiding costly litigation and reinstating payments under Blast Off's promissory note. Excapa obtained security for the $15 million settlement payment and the balance of the note payments, and also acquired an ownership interest in Blast Off's gaming software to hopefully generate further value for shareholders."

Mr. Krakower went on to say: "The KGC asked us to work with them to ensure that the $15 million settlement payment was used exclusively for player refunds. We took the lead in monitoring the disbursement process and gave the KGC full access to our files and records."