Prejudiced investors in a Texas online poker enterprise have hit back at the entrepreneurs behind the failed venture, securing a grand jury indictment on securities fraud charges, alleging they misled the backers of their online poker business, reports the Brownsville Herald.
Apparently 13 investors were persuaded in late 2005 to back a venture branded LetsPoker.com by entrepeneurs Martin Graham Tyson Sr. and his son, Martin Jr. of the Marble Falls, Texas-based Panorama Global Realty Group.
But because the developers failed to disclose the true risks, the investors ended up losing their shirts, the Texas State Securities Board found this week after an Hidalgo County grand jury indicted Tyson Sr. and his son.
The father-son duo allegedly failed to inform investors of an ongoing civil fraud suit against their company; a state investigation into investment advisers working on their behalf and legalization then making its way through Congress that would ban online gambling financial transactions in 2006.
In all, the mostly middle-aged backers lost close to $300 000 in the venture, according to a two-count indictment filed in the case.
"You've got to disclose what you're doing with the money and then follow through with it," said Robert Elder, spokesman for the state securities board. "Otherwise, it's a criminal offence."
Prosecutors alleged that the Tysons first approached the investors in 2005 with a plan to develop LetsPoker.com, a Web site that would allow U.S. citizens to play for winnings over the Internet.
Working through intermediaries, they convinced the 13 men and women to hand over sums as large as $20 000 to fund development on the site.
But the company later spent those funds on purposes other than those originally promised, the indictment states. Some of the funds allegedly went to pay commission fees to the Tysons, while others were funneled into another company operated by Tyson Jr.
To make matters worse, federal lawmakers were already well into negotiations that would prohibit U.S. credit card and bank companies from making payments to online gambling sites.
Larry Dowling, an Austin-based attorney who has previously represented the men, said, however, that a preliminary version of LetsPoker.com was launched before Congress officially passed the [UIGEA] ban in October 2006. "It was generating revenue," he said. "At the time that it was shut down, it certainly wasn't the leading gambling site, but it had prospects."
Enforcement officers with the state securities board began investigating Panorama in 2005 and in December of that year raided the office of Richard A. Taff – an investment adviser working for the company who has since pleaded guilty to selling securities without a licence and is currently serving a sentence of six years probation.
Tyson Sr. and his son were arrested and arraigned late last week in state district court, where both pleaded not guilty. They were released later that day on personal recognizance bonds. If convicted, the father and son could face long prison sentences under Texas law.
Letspoker had a brief life using proprietary software and, according to some accounts, attracting less than 500 players. Shortly after launch slow-pay complaints started to surface around September 2006 and early in October 2006 the company announced it was closing due to the UIGEA.