Man took me 15 mins to copy it. For those too lazy to click a link here it is;
QUESTIONS ANSWERED HERE RELATED TO STARNET'S RECENT WOES (August 21,
1999)
WHERE ARE STARNET'S SERVERS LOCATED?
According to Terry Bowering, vice president of offshore operations for Starnet in Antigua,
"Starnet, which is based in Vancouver, B.C., is careful to do all bet-processing and money
transactions on servers here to guard against Canadian and U.S. police action."
According to a spokesperson from Players Only, "All of our sites use AI.net as our DNS
provider. When you make a request for one of our domains, ai.net then routes that request to
our server which is located outside of the United States. When you do to a domain, say
sportsbook.com, you are still on our servers and you are not on the gaming servers, it is not
until you actually login that you are then rerouted to the gaming servers in Antigua which are
owned and operated by Softec Systems Caribbean."
"As for the domain wallstreet.com. Again the DNS provider is in Arizona and they route all
requests to our servers located outside the U.S. Wallsteet.com is still controlled by the group
listed in Internic; however, they do NOT have ownership of the domain. Ownership of the
domain was transferred via a sale document on the date of the purchase. Control over the
domain will be relinqushed when the final installment payment is made on the domain."
IS STARNET LICENSED IN ANTIGUA?
Terry Bowering has paid his $100,000 annual license fee to Antigua. World Gaming is the
Starnet site that is licensed by the Antigua and Barbuda Free Trade Zone and DOES not
accept wagers from US citizens. Player's Casino and Sportsbook is said to be domiciled in
Antigua but they themselves are NOT licensed by the Free Trade Zone, nor are any of the
other licensees such as Casino on Air. If this were the case, these licensees would all be
paying the Antigua government $100,000 a year. If individual Starnet licensees were to run off
with client's money, the Antigua government would have no say in the matter. Antigua would
only be able to take action (whatever that action might be) against World Gaming if THEY
failed to pay their immediate clients. Ofcourse World Gaming can not be held responsible for
other Starnet licensees failing to pay clients monies owed. Bingo.com a few months back
proclaimed they were licensed in Antigua based on the idea that they were a subsidiary of a
licensed Antigua company, which they neglected to mention in their press release.
Bingo.com is closely related to Global Intertainment Corp., otherwise known as GGNC, and
they are NOT licensed in Antigua. GGNC is another Vancouver-based gaming company
currently under investigation by the SEC.
For a company to state they are licensed in Antigua, they can not make this claim based
simply on the premise that their parent company is licensed by the Free Trade Zone. Case in
point, Sands of The Caribbean is a popular on-line casino operating as part of World Wide
Telesports, both of which are based out of Antigua. Even though World Wide Telesports was
already licensed in Antigua, Sands of the Caribbean must maintain a separate gaming
license in order to operate there.
DOES STARNET ACCEPT WAGERS FROM US AND CANADIAN CITIZENS?
Starnet's own casino located in Antigua DOES NOT, however, a number of their licensees DO
and some of these licensees have registered addresses in Canada and the United States.
Some examples appear below:
DCI Inc. (GOLDDUSTCASINO-DOM) #206, 11062 156 Street Edmonton, AB T5P4M8 CA
Esquire Services Inc. (EASYROLLERS-DOM) 1200 Chapel Ridge Road Apex, NC 27502 US
Next Step Solutions (BETCASH2-DOM) 1935 Emerald St. San Diego, CA 92109 US
These are just a few. There are no indications that the above exists offshore. If the answer is
that the above operations simply connect to a server in Antigua or elsewhere, then it would be
assumed that I can register and operate an on-line casino from my own home in New York
City just as long as the transactions are conducted from a server offshore. Obviously it's not
that easy. So I am left to speculate as to whether all Starnet licensees are acting in
accordance with US law. One of the issues I have had with Starnet is their seemingly urgent
attempts to gain licensees.
WHO'S NEXT ON THE LIST OF CRACKDOWNS?
If history repeats itself as it often does, expect Cryptologic to be next on the list. They just
took on Claude Levy as a licensee and the last two companies that had him on board also
had the displeasure of being raided by the Feds shortly after his abrupt departure (FunScape
and now Starnet).
Coincidence? Well, one has to question why any establishment would allow the likes of
Claude Levy to be a part of their operation in the first place.
Cryptologic's laughable press release the day Starnet's offices were raided may give some
idea as to just where this company is headed:
"CryptoLogic Inc. Reports On Starnet Search Warrants TORONTO--(BUSINESS WIRE)--Aug.
20, 1999--In response to the press releases issued today about search warrants executed in
respect of Starnet Communications International Inc. relating to alleged illegal betting and
bookmaking and pornographic and other activities being investigated by the RCMP,
CryptoLogic Inc. (TSE:CRY - news) announces that no similar search warrants have been
executed against it or its officers and directors.
CryptoLogic Inc. has no affiliation or business relationship with Starnet Communications or its
officers and directors.
CryptoLogic has no information about the offences being investigated against Starnet other
than what is being reported in the press.
CryptoLogic's wholly owned Cyprus subsidiary owns Internet based gaming software which it
licenses to Internet casino operators located in Antigua, Curacao and Dominica. These
operators are all licensed by the relevant authorities in their respective jurisdictions to operate
virtual casinos on the Internet.
The Internet gaming industry is rapidly expanding and its legal status is uncertain and
evolving. A bill has been introduced for consideration by the U.S. Senate purporting to make
Internet gaming by U.S. residents illegal. At the same time, other jurisdictions, such as some
Australian states, have passed legislation legalizing Internet gaming. The Company continues
to monitor legal developments in the industry, including today's actions against Starnet
Communications.
CryptoLogic Inc. is a software development company with leading proprietary technology
enabling secure, reliable, high-speed private financial transactions over the Internet.
CryptoLogic continues to innovate and develop state of the art Internet software applications
for both electronic commerce and Internet gaming."
Thanks for rubbing salt in the wounds Crypto!
HOW LONG WAS THE INVESTIGATION OF STARNET EXPECTED TO LAST?
The investigation was expected to last through the weekend, during which time clients of the
company-licensed casinos and sportsbooks would expect to have trouble logging into such
sites.
HAS AN AUDIT BEEN CONDUCTED ON STARNET PREVIOUSLY?
Starnet was audited by Earnst & Young
WHO ARE THE PERSONS IN MANAGEMENT AT STARNET?
Directors and Senior Management:
John Carley DBA, CGA, FICB Chairman of the Board & Chief Financial Officer
Mark Dohlen B.Admin, MBA, LLB, FCIS, P. Admin Chief Executive Officer & Director
Paul Giles President, Director & Founder
Christopher Zacharias MBA, LLB, ACIS Secretary, Treasurer, Corporate Counsel & Director
Jason King BA Chief Operations Officer
Benjamin Wong BBA, CGA, CPA Vice President Finance
Michael Hiebert Vice President Software Development
Dr. Eugene Nizker Ph.D Vice President Technology & Development
Bret Conkin B.Commerce Vice President Marketing
Wolf Bergelt Chartered Accountant Director
Nicholas Jackson Director
Clare K. Roberts Director
HOW OFTEN IS JOHN CARLEY SELLING HIS SHARES?
The following transactions were listed on a Form 4 document filed with the SEC.
Transaction Detail Name: CARLEY JOHN ANDREW Title: Officer and Director Remaining
Shares: NA
Trade Date Transaction Quantity Price Value Share Type 07/29/99 Sold 10,000 $18.39
$183,900 Common Stock 07/26/99 Sold 10,000 $19.95 $199,500 Common Stock 07/21/99
Sold 10,000 $18.73 $187,300 Common Stock 07/13/99 Sold 10,000 $20.28 $202,800
Common Stock 07/07/99 Sold 10,000 $20.62 $206,200 Common Stock 06/30/99 Sold 10,000
$17.47 $174,700 Common Stock 06/23/99 Sold 10,000 $17.54 $175,400 Common Stock
06/17/99 Sold 10,000 $12.49 $124,900 Common Stock
HOW DOES BRITISH COLUMBIA PREMIERE GLEN CLARK FIT INTO ALL OF THIS?
British Columbia premier under criminal probe By Allan Dowd
VANCOUVER, Aug 20 (Reuters) - A political firestorm erupted around British Columbia
Premier Glen Clark on Friday, as authorities revealed he is under criminal investigation and
released information about a police raid on his home.
The British Columbia Supreme Court refused Clark's request to quash information contained
in a search warrant used in a March police raid, conducted as part of an investigation of
casino licensing and alleged influence peddling.
The information released included a police informant's allegation Clark was offered -- but
declined -- a bribe by a friend and neighbor, Dimitrios Pilarinos, who was seeking a license to
build a small-stakes casino in a Vancouver suburb.
The warrant does not allege criminal activity by Clark, but Attorney General Ujjal Dosanjh
confirmed on Friday that Clark has been under criminal investigation since March and that he
told the premier of the probe earlier this week.
''I want to be absolutely clear ... that it is not my intention in making these remarks to judge
the premier's innocence or guilt,'' Dosanjh told reporters, reading from a prepared statement.
A defiant Clark late on Friday vowed to remain in the post he has held since 1996.
''What's really unfortunate, of course, is that they have chosen to carry on this kind of
investigation when clearly I've done nothing wrong,'' Clark told CKOR radio in Penticton,
British Columbia, where he had been vacationing.
The court ruled on Friday it would not release the contents of wiretaps, which are believed to
contain the most politically damaging evidence against Clark, who already was under
pressure to resign as the premier of Canada's third most-populous province because of its
lagging economy.
Many political observers said it would be impossible for Clark to remain premier while the
subject of a criminal probe. Leaders of his New Democratic Party tentatively are scheduled to
meet on Saturday, officials said.
Justice Patrick Dohm on Friday rejected Clark's request to quash the warrant as improperly
obtained by the Royal Canadian Mounted Police and based on false information.
The news media has sought since March to publish the warrant and supporting information, a
move opposed by Clark and police on the grounds that it would harm the privacy of some of
the people under investigation and potentially hurt the probe.
Dohm said it was important to release at least some of the information to maintain ''public
confidence'' in the court system. Releasing the wiretaps could damage the privacy and legal
rights of some individuals involved, Dohm ruled.
The information released on Friday, such as police statements, appeared to dispute Clark's
claim that he had conducted no dealings with Pilarinos on the casino application. The
application received conditional approval over local objections, but eventually was rejected.
Critics said the group that proposed the casino should not even have been considered for a
license because of allegations it was connected with the pornography business and that the
hotel was frequented by known criminals.
Clark has acknowledged that Pilarinos, a construction contractor, built a deck on the
premier's private Vancouver home. Blueprints for the deck were among the items seized by
police, according to documents.
The warrant to raid Clark's home was one of 14 issued in the investigation. Police also seized
evidence from provincial offices and the homes and businesses of people associated with the
casino license application.
WHAT WERE SOME PREVIOUS EVENTS LEADING UP TO THIS RAID?
>Police raid home of British Columbia premier By Keith Jones 6 March 1999 On the evening
of March 2 the Royal Canadian Mounted Police carried out a raid on the home of British
Columbia Premier Glen Clark. This extraordinary event raises troubling questions about the
possible collusion of the RCMP and the Attorney-General's Department in the right-wing
campaign to unseat Clark's New Democratic Party government.
How did a reporting crew from BC's largest television station, the notoriously right-wing BCTV,
come to be outside the premier's Vancouver home, cameras ready, when three officers from
the RCMP's commercial-crime section arrived to execute a search warrant?
If Clark himself is not the target of a police investigation, as an RCMP spokesman has
asserted, why was it necessary for the police to obtain a warrant and raid his home? Do the
police, top officials in the Attorney-General's Department, and the judge who granted them
sanction to search Clark's home contend that the premier would not have cooperated with the
criminal investigation into the activities of his neighbor, Dimitrios Pilarinos, and suppressed or
destroyed evidence? Or was the RCMP raid a means of tarnishing Clark, for whose political
blood the capitalist media has been braying for months, as a criminal, and possibly fishing for
something that could be hung on him in the future?
At a press conference Thursday, Clark's lawyer, David Gibbons, said the police and press
actions smacked of McCarthyism. Said Gibbon's, "I am appalled at the way the premier and
his family have been treated, and at the way they have been portrayed in the media." Gibbons
vigorously denied any suggestion that Clark may have contravened conflict-of-interest rules
and assisted Pilarinos, who was arrested Tuesday for running an illegal gambling operation, in
obtaining a license to run a legitimate charity casino. Gibbons insisted the premier's only
connections to Pilarinos are that they are neighbors whose children sometimes play together
and that Pilarinos, who is a building contractor, did some renovations to the Clark family
home.
Speaking in Parliament Wednesday, NDP MP Svend Robinson denounced BCTV's broadcast
of lengthy extracts of the videotape its crew made of the two-hour police raid. Not content with
capturing images of the RCMP arriving at Clark's east Vancouver home and demanding and
gaining entry into the premises, the BCTV crew trained its camera through the windows of the
Clark home so as to record police officers searching through drawers and cupboards and
looking at papers, the premier and his wife answering police questions, and a visibly angered
Clark pacing the floor of his kitchen. "There is only one way [BCTV] could have found out"
about the police raid charged Robinson. "And that's a leak, a tip-off by the RCMP."
Socialists have no brief for Glen Clark. First as a senior minister and then as premier, he has
been a key figure in a right-wing social democratic government that has slashed social and
public services, closed hospitals, and threatened to deprive welfare benefits to jobless
persons who have come to BC from elsewhere in Canada.
But even if one were to draw the worst inferences from the information currently in the public
domain and accept that Clark's ties to Pilarinos are not entirely innocent--something, and this
bears repeating, not even the police have alleged--the events of this past week have been
extraordinary. Moreover, they must be seen in the context of a longstanding and increasingly
frenzied campaign on the part of big business to unseat BC's NDP government.
Because of the public outcry, the RCMP have had to announce an internal investigation into
how the BCTV crew learned of the impending raid on Clark's home. Those familiar with the
workings of the criminal justice system observe that the police, having seen a television crew
was present, could easily have chosen to delay the raid. Instead, the RCMP officers appear
to have relished the fact that their actions were being videotaped. The videotape shows that
when Clark's wife opened the door, an RCMP officer bellowed "There's three from the RCMP
and two media behind us."
Canada's most influential newspaper, the Globe and Mail, has virtually charged the police of
setting up Clark. Friday's issue says a "former highly placed RCMP official" told the paper "he
has little doubt that some sort of political agenda was at work, based on the media's
presence" during the raid. The Globe then cites its source as saying, "This is not a normal
situation. The point was to discredit someone before they had their day in court. And it
worked." In a second Globe article, a source, apparently the same top RCMP official,
declares, "This is not just anyone. This is the Premier of the province, and they've connected
him with strip club operators and gamblers. If you want to convict someone without a trial,
this is how you do it."
The Clark government has been subjected to a non-stop barrage of scathing media and
business criticism since it narrowly won reelection in May 1996, capturing a majority of the
seats in the BC legislature but trailing the Liberals in the popular vote. This campaign--which
aims to bring to power an extreme-right government modeled after the Tory regimes in Ontario
and Alberta, and committed to drastically slashing social and public services and gutting
workplace and environmental regulations--has grown ever fiercer in the past year as BC's
economy has been rocked by the fallout of the East Asian economic crisis.
Last month the Concerned Citizens of B.C. announced a "Total Recall Campaign" aimed at
gathering petitions to recall a sufficient number of NDP MLAs to force a new election. The
Concerned Citizens claims to be a grassroots organization, but enjoys lavish attention from
the media and undoubtedly hefty financial support from big business. BC's principal business
organizations themselves hosted a summit last fall to sponsor a united campaign behind the
Liberals to unseat the NDP and to pressure the Clark government still further right.
The social democratic NDP's response to this unrelenting pressure has been to cede, and
adapt, to it. Finance Minister Joy McPhail recently said she will cut the budgets for all
departments, except Health and Education, in the province's coming budget. At the
conclusion of a recent meeting with Reform Party leader Preston Manning, Clark said he
could do business with the leader of Canada's most right-wing party and that the historic
divisions between left and right have been rendered meaningless.<
Back in March of this year, Starnet denied allegations made by a Reuters news report that
Dimitrious Pilarinos was in any way connected with Starnet Communications International Inc
"In reference to Dimitrios Pilarinos, who has been charged with operating an illegal gambling
house, the company would like to clarify that Pilarinos does not currently, nor has ever in the
past, had a connection to the company or any of its subsidiaries either as a shareholder,
Officer, Director or employee."
Steve Ng, who has been tied by some reports to an investigation in Clark's involvement in
granting casino licenses, was also said to be involved with Starnet. The company vehemently
denied such an association.
"In reference to Steve Ng, the company would like to clarify that Ng does not currently, nor
has ever in the past, had a connection to the company or any of its subsidiaries as an Officer,
Director or employee of the company. Shareholder records indicate that in the past Ng held
some shares in the company, but at no time did that exceed 25,000 shares out of a total
issued capital in excess of 20 million shares, but those share sold in the fall of 1998."
HOW WILL STARNET LICENSEES BE AFFECTED BY THESE EVENTS SHOULD
STARNET BE FORCED TO SHUT DOWN OPERATIONS?
Obviously there will be a disruption in service. Additionally, there is the potential for casino
licensees to take advantage of the situation and point the finger at Starnet when it comes to
reasons for not paying clients. Most of these operators are "no-name" establishments
entering the industry for the first time, some without a clue. Sportsbooks belonging to the
Players Only Group should walk away relatively unscathed since these shops operated prior
to becoming Starnet licensees. Clients of these books, Players Only in particular (Starnet's
most profitable book), should be able to resume business as usual even if these operations
much sign on with other software providers. Players is the only "established" casino and
sportsbook operation within the Starnet famiy. Majestic is another that is separate from the
Players Group, however, they have not yet begun using the Starnet Software. Majestic
Casino and Sportsbook has been around for 3 years.
WHAT DOES THE FUTURE HOLD FOR STARNET?
From the Vancouver Sun: "Starnet is planning, through its 46 licencees, to ride what they
expect will be a tsunami of bettors washing through the Internet.
However, the list of licencees does not exactly read like a Who's Who in the gaming world.
For the most part, they are newly-minted private companies registered in offshore jurisdictions
such as Antigua or St. Kitts in the Caribbean.
Dohlen refuses to provide any information on the private licencees, making it difficult to
determine whether they have the financial or managerial capacity to create viable gaming
companies.
A half-dozen of the licencees are public companies that trade on the loosely-regulated OTC
bulletin board or the Vancouver Stock Exchange. Disclosure documents show they have
dubious track records, casting doubt on their long-term value to Starnet.
Dohlen says he is talking to large Las Vegas gaming operators and some European lottery
operators, including the Dutch government.
"I think over the next six months, you will see some names that you recognize," he said in an
interview from New York.
Dohlen was in New York to try to generate some big-league analyst coverage, which has
been noticeably absent to date. Among his stops were Deutsche Bank, Morgan Stanley
Dean Witter, Goldman Sachs and Salomon Smith Barney,
"Everybody says get off the bulletin board and we'll cover you," he said.
Starnet applied for a more respectable Nasdaq listing a couple of months ago, but Dohlen
said Nasdaq officials want to see the company's audited year-end results, to be released
Thursday, before they approve the listing.
Meanwhile, he said, Nesbitt Burns in New York has agreed to underwrite a $30-million private
placement. To help market the issue, Starnet will be conducting a road show during the first
two weeks of August.
The rapid rise in the company's share price has been attracting attention from short-sellers,
who view the stock as being wildly over-priced.
Short-sellers borrow stock and sell it into the market. Their bet is that the share price will
decline, so they can replace the borrowed stock at a lower price.
Because the bulletin board does not track short positions, it is impossible to quantify the
short interest in Starnet.
However, during the past few weeks The Sun has received several calls from well-known
short-sellers in Toronto and New York seeking information on the company. Several indicated
they have sold the stock short.
One area the short-sellers are delving into is the ownership of Murray Partners (BVI) Inc., the
British Virgin Islands company that owns 10 million of Starnet's nearly 30 million shares.
Starnet has so far disclosed only those officers and/or directors of Starnet that have an
interest in Murray Partners. They are Dohlen and chief financial officer Jack Carley, and
Mitchell White and Jason Bolduc, both of whom have left the company.
How many shares of Murray Partners they own, or the identity of the other shareholders, has
never been disclosed."
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