Thursday, September 18, 2008

UltimateBet Online Poker Cheat Scandal Blown Wide Open! $85 Million Lawsuit Filed Against Canadian Software Company! Hellmuth and Annie Duke Cited!

MSNBC Reports:

Poker site cheating plot a high-stakes whodunit!
$75 million claim filed against Canadian software firm with murky pedigree!

Phil Hellmuth, the winningest player in the history of the World Series of Poker, makes a grand entry to this year's event in Las Vegas in his guise as general of the "Ultimate Bet Army." The company that owns has stated that players in high-stakes online poker games were victimized by a vast, long-running cheating scheme.

Allegations that cheaters manipulated the software powering a leading Internet poker site so they could see their opponents' hole cards have triggered a $85 million claim against a Canadian company, has learned.

The alleged subterfuge on — one of the 10 top poker sites — is the biggest known case of fraud targeting an Internet gambling site and its customers, according to the company that owns the site. It is similar to a case of cheating that occurred last year on UltimateBet’s sister site,, but this time the thieves ran the scheme for far longer — at least from January 2005 to January 2008, it said.

Word of the $75 million U.S. claim ($80 million Canadian) — the first indication of the scope of the alleged cheating — emerged this week when contacted a court-appointed liquidator overseeing the voluntary dismemberment of Excapsa Software Inc. of Toronto, which formerly owned and licensed the poker software to UltimateBet and other gambling sites. The claim was filed by Blast-Off Ltd. of Malta, a private company that currently has an ownership interest in Ultimate Bet.

“We’re taking it seriously and are in contact with the stakeholders with a goal of settling the claim,” said the liquidator, Sheldon Krakower, president of XMT Liquidations Inc. “… It’s a very touchy situation. We’re just trying to get everything done.”

Krakower said the amount of the claim did not directly correlate with the amount believed to have been stolen from UltimateBet players, but he declined to provide additional details. He said he was hopeful that the parties were nearing a settlement.

The unprecedented claim is just the latest twist in a slowly unfolding whodunit that began more than nine months ago when poker players posted comments about suspicious play on UltimateBet in an Internet poker forum. It’s a mystery steeped in international intrigue and featuring a cast of characters that includes some of the world’s most famous poker players, the former grand chief of a Canadian Mohawk community and executives of a secretive Oregon Internet security company.

The company that claims ownership of UltimateBet — Tokwiro Enterprises, headquartered in the Kahnawake Mohawk Territory in southern Canada — has issued some refunds and promised to repay any players who lost money once an outside investigation is completed. But many players who haven’t received credits remain fearful they will never see a dime.

‘Who's going to make them pay?’
“I know I’m not going to get my money,” one dejected player, Daniel Cardoso of Utah, told Cardoso believes he lost several thousand dollars through the alleged scheme but has not been able to obtain records from UltimateBet to verify that. “I know there are thousands of people who aren’t going to get reimbursed.”

Adding to the sense of mistrust is the fact that Tokwiro Enterprises apparently is owned by Joseph Norton, the former grand chief of the Kahnawake Mohawks, who helped establish the territory as North America’s only bastion of Internet gambling.

“Who’s going to make them pay?” asked Nat Arem, a professional poker player and blogger who helped unravel the alleged cheating rings at UltimateBet and Absolute Poker, referring to Excapsa. “What court is this going to end up in?”

Though most forms of Internet gambling, including online poker, are considered illegal by the U.S. government, millions of players routinely risk their cash on the virtual version of the popular card game, ignoring the fact that many of the Web sites are unregulated or loosely regulated and are based in jurisdictions where a player would likely have no legal recourse in the event of wrongdoing.

UltimateBet is a popular destination for these players, largely because of its television advertisements featuring famous players such as Phil Hellmuth, the winningest player in the history of the World Series of Poker, with 11 victories, and Annie Duke, arguably the best-known female poker pro. UltimateBet and other poker sites are able to advertise on television by promoting free “play for fun” sites instead of their cash games, which are just a few clicks away.

As was the case in the Absolute Poker scandal last year, the UltimateBet case was uncovered by the players rather than Tokwiro Enterprises or the Kahnawake Gaming Commission, the agency charged with regulating online gambling from the Kahnawake territory, just south of Montreal across the St. Lawrence River.

Players aired suspicions in January
Suspicious players wrote in a Jan. 8 post on the Two Plus Two online poker forum that they had noticed that certain players in the highest-stakes games on UltimateBet were playing extremely unusual strategies and winning at an unbelievably high rate. (Click here to read a synopsis of the early posts.)

Two of the players — known by the screen names “trambopoline” and “dlpnyc21” — reviewed their hand histories and found that one account in particular, using the screen name “NioNio,” was making a killing, having banked an astonishing $300,000 profit in just 3,000 hands. They turned to the Web site, which tracks high-stakes online tournaments, where many thousands of dollars can change hands, and found that NioNio had won in 13 of the 14 sessions recorded there, cashing out with approximately $135,000.

When that information was posted, Michael Josem, a mathematics-minded Australian poker player, charted NioNio’s results in comparison to the results of 870 “normal” accounts with at least 2,500 hands recorded by poker-tracking software. The result, seen at left, showed that NioNio’s win rate was 10 standard deviations above the mean, or less likely than “winning a one-in-a-million lottery on four consecutive days," Josem said.

As the players continued to dig, they concluded that NioNio was at the center of a web of accounts that were able to change user names with ease, making it harder for victims to detect the cheating.

“They would get a regular player, one of the accounts would play them, then that account would leave and the other account would come play them,” said one poker player who helped uncover the cheating, speaking on condition of anonymity. “… They were careful to only play each player a few times, and then they went and created new account names."

Tokwiro said it was alerted to the accusations by UltimateBet players on Jan. 12 and immediately launched its own investigation.

‘Unauthorized software code’
Tokwiro issued an “interim statement” on March 6 stating that it had determined that NioNio’s results were indeed “abnormal.” Then, on May 29 — nearly five months after the first poker forum post —the company acknowledged that NioNio and other player accounts “did in fact have an unfair advantage” obtained through “unauthorized software code that allowed the perpetrators to obtain hole card information during live play.”

The company blamed the intrusion on “individuals … (who) worked for the previous ownership of UltimateBet prior to the sale of the business to Tokwiro in October

Tokwiro’s chief operating officer, Paul Leggett, in a Two Plus Two Poker podcast on June 2, said that the cheaters were able to evade UltimateBet's anti-fraud protections by “setting up these accounts so they appeared as VIP poker professionals. Because these players had this kind of status, they were able to get fast withdrawals and basically bypass our security.” He also said that the company was “pursuing our options, both criminal and civil.”

(Tokwiro spokeswoman Anna Molley told that Leggett had stopped giving interviews at the request of the Kahnawake Gaming Commission pending completion of an independent investigation.)

The explanation is similar to that given by Tokwiro after the Absolute Poker cheating scandal, which it blamed on a “high-ranking, trusted consultant … whose position gave him extraordinary access to certain security systems.” The alleged cheater in that case has never been publicly identified because Tokwiro, in a private settlement, agreed to withhold his or her identity. The site did repay the players who lost money, however.

By blaming employees of a prior owner, Tokwiro might have resolved the mystery had UltimateBet not been the rubber ball in an international shell game.

A murky corporate pedigree
Published accounts indicate that the poker software used by UltimateBet was developed in the late 1990s by ieLogic, a Portland, Ore., company. After that, things quickly become murky.

An undated and unbylined article on the Web site, titled “The history of online poker,” alleges that ieLogic founders Greg Pierson and Jon Karl created the UltimateBet site at the end of 2000, along with “some secretive high stakes poker players.” The article did not identify the players, but it stated that Russ Hamilton, winner of the 1994 World Series of Poker Main Event and a well-known Las Vegas gambler, was employed as a consultant and began recruiting some big-name poker players, including Hellmuth, to promote the site.

An UltimateBet spokeswoman boasted about the presence of the poker pros in a May 2001interview with, saying, "UltimateBet is lucky to have so many world poker champions choose to be a part of our project. ... (They) have helped us develop a site that is true to the game."

Barry Greenstein, a respected professional poker player, has publicly stated that some of the players involved in the development of the site were given an ownership interest as compensation. “They are all very concerned that with these bad things happening, they’re not going to get their money,” he said in an interview on Poker Road Radio on July 16.

IeLogic never acknowledged any ownership interest in UltimateBet, saying only that it licensed its “multiplayer online games” software to the site. Then the company sought to disassociate itself from the Internet gambling business entirely by selling its gambling software to a newly incorporated Canadian company, Excapsa Software Inc., in the spring of 2004.

Pierson and Karl held onto the other portion of ieLogic’s business — “a system for predicting online fraud” — and changed the name of their company to Iovation, according to a January 2005 article in the Portland Business Journal, which first reported the sale of the gambling software.

But it is unclear to whom —and even whether — the software business was sold.

Excapsa Software, incorporated in April 2004 in British Columbia, eventually went public, making an initial stock offering on the London Stock Exchange’s Alternate Investment Market in Feb. 16, 2006, that gave it a market capitalization of approximately $393 million. Documents filed in connection with the offering listed nearly 40 percent of the shares as being held by insiders — CEO Jim Ryan and five irrevocable trusts that provided no clue as to the identity of the beneficiaries. (A spokesman for Ryan, who is now CEO of Party Gaming, operator of the Party Poker Web site, declined’s request for an interview, saying questions should be directed to Excapsa.)

In an earnings announcement on Aug. 16, 2006, Excapsa stated that it had a 20-year license agreement with UltimateBet’s owner, which it identified as eWorld Holdings Ltd. of Antigua.

Lines not clearly drawn
But the lines between ieLogic, Iovation, Excapsa and eWorld Holdings were not always clearly drawn.

When UltimateBet issued a news release on July 25, 2002, announcing a joint venture with another poker site, it for the first time identified eWorld Holdings as the owner of the site and listed Jon Karl, co-founder of ieLogic, as the person to contact for further information.

IeLogic also was the first company to register the UltimateBet trademark with the U.S. Patent Office in June 2000. A little more than a year later, the company abandoned the mark and it was re-registered by eWorld Holdings.

And Melissa Gaddis, identified as the public relations manager at ieLogic in a May 2001 article on, also is identified in papers filed in connection with Excapsa’s liquidation proceedings in Toronto as a “director of Excapsa since November 2006” … and a “beneficial shareholder.”

IeLogic co-founders Pierson and Karl, and other officials at Iovation, did not respond to’s repeated phone calls seeking comment and refused to meet with a reporter who visited the company’s Portland headquarters. Gaddis did not return a phone call to her home.

Excapsa’s run as a public company was short-lived, as it sold all its assets to Blast-Off Ltd., a privately owned Excapsa licensee based in Malta, on Oct. 12, 2006, and was delisted from the AIM exchange. Blast-Off Ltd., had previously been listed in filings as an Excapsa license holder for Elimination Blackjack, a tournament version of the popular card game invented by Hamilton, the ieLogic consultant.

U.S. legislation prompted sale
The sudden sale of Excapsa’s assets for $130 million, with $120 million deferred, was prompted by President Bush’s looming signature of the so-called Safe Port Act, which contained a provision barring U.S. banks and other financial institutions from doing business with Internet gambling operators. That effectively put to rest the argument that companies could legally provide Internet gambling to Americans because federal law on the matter was ambiguous, and heightened the legal risks faced by owners of gambling Web sites.

Nearly a year later, Tokwiro claimed ownership of both Absolute Poker and UltimateBet. It later said it had acquired UltimateBet in October 2006 — the month Excapsa announced the sale of its gambling software to Blast-Off Ltd. — but it has never explained how or under what terms it had acquired the site.

Krakower, the court-appointed liquidator overseeing Excapsa’s bid to cease to exist as a corporate entity, said that Blast-Off and Tokwiro “are somewhat one in the same,” but added, “Blast-Off … that’s the key name.”

The tangled corporate trail has persuaded some players that Tokwiro is a false front created to obscure the true ownership of both UltimateBet and Absolute Poker.

“(Norton) may be the plurality owner, he may be the majority owner, but there’s no way he owns 100 percent,” Arem said of the former Kahnawake Mohawk grand chief, who did not respond to requests for an interview.

The ownership question could be cleared up at the conclusion of an outside investigation of the UltimateBet cheating ordered by the Kahnawake Gaming Commission. On July 27, the KGC announced it had asked Frank Catania, a former New Jersey state gaming regulator, to conduct “a full forensic audit/investigation” of Tokwiro to ensure that UltimateBet’s games are fair and anyone connected to the alleged cheating ring is removed from the company.

‘The first significant incident’
“We are all well aware of the criticism that this has drawn and are doing our best to update and implement modifications to ensure that this never happens again,” said Chuck Barnett, a spokesman for the gaming commission, which has licensed more than 470 gambling Web sites operated by 55 different operators. “... In the KGC’s past decade of i-gaming regulatory enforcement, this is without doubt, the first significant incident.”

Some players questioned the selection of Catania, noting that he had helped the KGC develop its gaming regulations and could hardly be considered an independent investigator. But in an interview with he insisted he would pull no punches in getting to the bottom of the cheating allegations as well as the ownership issue — regardless of Norton’s stature in the Kahnawake Mohawk community.

“We’ll go in and look at reports from (auditor) Gaming Associates, we’ll look at employees, including ownership, look at the software … whether the games are fair and honest and what protections have been put in place,” he said. “It’s going to be a complete examination of the company and no one will get any special preferential treatment because of a past position with the tribe or anything like that.”

While the official investigation grinds on, the Internet sleuths have settled on a leading suspect: A professional poker player who was associated with ieLogic in the early days.

Their version of a “smoking gun” came from what they say is information on several of the cheating accounts leaked by company insiders. Arem discovered that one of the accounts, which used the screen name “sleepless,” was established using the address of a Las Vegas residence formerly owned by the poker player.

Poker pros visit prime suspect
After Arem published that information, poker pro Greenstein posted on Two Plus Two that he had spoken with other players who confirmed that they had received fund transfers from the player via the “sleepless” account.

Greenstein and his stepson, Joe Sebok, also a poker pro, said the player agreed to tell his side of the story on the Poker Road radio show on July 16, but later backed out on the advice of his attorney.

Instead they arranged to speak to the player in his lawyer’s presence — the only people believed to have done so. (Despite numerous attempts through multiple channels, was not able to contact the player.)

While the player told the men he couldn’t answer many of their questions, they said he maintained his innocence and predicted that his name will be cleared when the investigation is complete.

Both Greenstein and Sebok, who as poker players put a lot of credence in gut instincts, said they arrived at the interview all but persuaded of the man’s guilt, but left feeling less certain.

“We expected him to be dodgy, but he was just very comfortable discussing the situation as much as he could legally … that once everything did come out, he would not be among the people incriminated,” Sebok told

Greenstein applied his mathematical perspective to the situation in a posting on Two Plus Two forum: “Before I talked to (him), I thought it was more than 95 percent likely that he was involved in cheating. … Now I think it’s more than 99 percent that he knows people who cheated well enough to transfer money with them, but I think it’s less than 50 percent that he actually cheated or knew that the people were cheating at the time.”

In an e-mail interview with, Greenstein said he believes it is likely that the KGC’s investigation will confirm that the crime was carried out by an employee or employees of the former ownership of the site — whether it be ieLogic, Excapsa or eWorld Holdings —not the professional poker players who lent their expertise to the site’s developers.

‘A bunch of kids ... who jump to conclusions’
“There is no evidence to the contrary, except for some circumstantial evidence against (him) and a bunch of kids on Two Plus Two who jump to conclusions every time they are given a name,” he said. “… I'm not saying these people (the poker pros) are clean. I don't know for sure. But just because someone's name is associated with a company where there was cheating, it doesn't mean that the person was involved.”

Arem, however, said he remains unconvinced by the player’s protestations of innocence. But he said he’s open to the possibility that the circumstantial evidence leaked by the company insider could have been an attempt to shift the blame.

“(The player) has said that within three months all the information will come out and he’ll be cleared,” he said. “… In my mind, it’s a tiny chance, but if I was the one being accused, I’d want someone to give me the benefit of the doubt.”

Tran Organization Baccarat Cheat Scam Keeps Getting Bigger!

Casino Dealing Couple Started Casino Cheating System That Netted Tens Of Millions!
Their Devious Gang Hit More Than Two-Dozen Casinos in the US and Canada

When the dealer at Table #206 at Ontario's Casino Rama started flipping cards for a mini-baccarat game, there was little doubt among the high rollers who would win. On that hand, dealt at 8:42 p.m. on Oct. 24, 2003, two players raked in $6,500.

That was chump change, however - just one hand in an astonishingly successful swindle.

When the gang hit the tables in earnest, they walked away from the Orillia casino with $2,062,927 in winnings, according to U.S. prosecutors.

Over the next five years, the joint Canada-U.S. gang stripped casinos of tens of millions of dollars with a cheating system built around corrupt card dealers and mini radio transmitters bought at a commercial spy-gadget shop in Toronto.

It eventually sparked the largest casino-cheat investigation ever undertaken in Canada or the United States. The sprawl of the gang continues to be unveiled in courts on both sides of the border. A long list of conspirators has already pleaded guilty and, this week, another 11 people were freshly indicted in California, partly on evidence from a Canadian who is co-operating with authorities.

After so many years of making a killing at casino after casino, the gang could be forgiven for thinking their system was foolproof.

The bosses - most of whom were related, extending to three generations of family members working the scheme in Canada - were living a life of luxury, dripping with flashy diamond-and-gold jewellery, multiple homes and fancy sports cars.

The casino cheat team, however, had humble beginnings.

The system was concocted by a husband and wife who were both dealers at a casino on an Indian reservation in California.

Phuong Quoc Truong and Van Thu Tran mastered a "false shuffle" that, in 2002, allowed friends to win small amounts at their casino. Truong was later caught and fired.

Undaunted, they joined with Tran's brother, Khai Hong Tran, 49, who lived in Windsor and over years finessed their system into a high-tech, cross-border effort worthy of a Hollywood movie.

First, they sought out casino dealers who were offered bribes - often thousands of dollars - to join the conspiracy.

"For the system to work, they needed people on both sides of the card table to be involved," said Ontario Provincial Police Detective-Constable Dave Balun, who investigated the Canadian portion of the case.

In hotel rooms, dealers were trained to perform a false shuffle in which a block of cards appears to be shuffled properly, but is really left in the same order they were dealt in the previous game.

"This allowed the members and associates of the enterprise to track the cards ... and predict the order in which they were dealt in the next game," according to a U.S. indictment.

Once a corrupt dealer was in place, members of the group would sit at his casino table and play blackjack or mini-baccarat.

One member of the team was designated as the "tracker." It was his job to record the order of cards used during play. For blackjack, he would use a miniature microphone, transmitter and cellular telephone to relay the order of cards to another conspirator, who entered the order of the cards into a computer. (For baccarat games, the cards were often just written down on a paper form casinos provide players in the normal course of play.) After using the cards once, the dealer would perform the false shuffle.

When the cards started coming out in the same order, the computer operator would predict the winner of each hand and radio it to the tracker who had a miniature earpiece to receive the call.

The tracker would then tell the players - sometimes by flipping a cigarette, other times by rubbing an eyebrow - which hand would win. The appropriate players would then dramatically increase their bets.

The system averaged US$50,000 in winnings each 10 minutes of play, according to U.S. indictments. On one occasion, the group made off with US$868,000 in just 90 minutes of play at a casino near Chicago.

The players then passed their large piles of casino chips to co-operating movers, who cashed them in amounts under US$10,000 to avoid the mandatory reporting of large transactions by casinos to the government.

Often gathering back in a hotel room, the bosses then paid out a portion of the winnings to the other participants.

Authorities traced the Tran organization's swindles to at least 15 U.S. casinos and two in Canada: Casino Rama and a charity casino in Brantford, Ont.

Things started going awry for the gang in 2006. Investigators had begun to probe the losses. Some of the bribed dealers co-operated with police in return for not being charged.

On June 6, 2006, Truong met with a man he thought was a Mississippi casino dealer but was really an undercover U.S. agent. The agent was trained in the art of the false shuffle in a hotel room.

In the United States, 30 people have been indicted, more than half of whom have since pleaded guilty.

In Ontario, police arrested 19 people, including seven casino employees, last year. Of those, 12 have since resolved their charges with pleas, co-operating with police, or with charges being stayed.

Earlier this month, Windsor's Khai Tran pleaded guilty to participating in a criminal organization. He received a sentence of more than 2½ years, believed to be the longest sentence given in Canada for a gambling offence.

Other defendants in Canada have a preliminary hearing currently underway.

Wednesday, September 17, 2008

New Anti-Online Poker Cheating Room In The Works!

Finally, after all the recent online poker cheat scams, an American man has decided to create an online poker website that really reduces the possibilites of cheating--not only cheating from the outside by the players but cheating from within. That's right, he wants to do away with all the insider scandals that have rocked online poker the last few years.

You might say that there’s gambling when launching a new online company, but then there’s Gene Gioia’s startup. The Denver entrepreneur is trying to translate his lifelong love of poker into creating a website players can trust because it deals hands based on the automated shuffling of real cards. He came upon the idea during a career as a JD Edwards consultant who audited the installation of software systems for large companies nationwide. Gioia would unwind by playing poker online in his hotel room at night. But that was very different from sitting at a table with other players and handling real cards. For example, his three-of-a-kind and full-house hands frequently got topped. “I even got beat with a straight flush by a higher straight flush — things I’d never seen at a real table,” Gioia said.

Audit trails and checking the integrity of things are in his blood. Gioia thought about starting his own poker site, where players could verify the authenticity of the deal. His business idea was dormant for several years, until his daughter pointed out a 2006 newspaper article about online gambling that highlighted the financial success of a popular poker site. She whacked Gioia with the paper and told him: “You should’ve done this,” he said.

And so he started Gioia Systems LLC. His biggest challenge was how to differentiate his site from the fast-growing number of popular Internet poker sites. “The answer was almost instantaneous: Play with a real deck of cards,” he said. Gioia turned to his brother, Andy Gioia, who worked for a company that made high-speed printers. They configured a machine they call the “Real Deal” to shuffle and deal cards continuously. It has the ability to transmit the results to computer servers that can manage hundreds of games simultaneously, Gioia said. The system stores information about every hand dealt and makes it available for later audit should players want it. That could be a big draw when tens of thousands of dollars are at stake, as they often are in online poker tournaments, Gioia said.

Gioia assembled $1.1 million in investment from friends and family and built his company, which employs five people. Gioia Systems plans to launch a demonstration site,, in a month, hosting games for no money. By attracting players, Gioia hopes to secure an angel investment and fund a full-fledged poker site on servers in the British Channel island of Alderney, the host of many international online gaming website servers.

He hopes to have the poker website hosting real wager games and drawing revenue this year. A 2006 law prohibits U.S.-based sites from handling money connected to gaming. Setting up servers overseas and accepting money only from players outside the United States avoids running afoul of the law. Gioia has been in touch with congressional representatives, hoping to legalize online poker in the United States. The 1 million-member Poker Players Alliance nonprofit, led by former New York Sen. Alphonse D’Amato, is leading the push, arguing that recent cheating scandals among online sites show the need for legalization and domestic regulation of the industry.