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Second Everleaf Gaming Executive Arrested in Malta

Maltese authorities have announced a second arrest connected to the fall of Malta-based Everleaf Gaming, an online poker and gambling company that ceased all effective operations in late 2012, failing to make good on roughly €1,000,000 due to former players and to Maltese regulators in the form of taxes and licensing fees.  Late last week, Malta news outlets reported the arrest of Austrian Jean Pavili in connection with the company’s failure.

everleaf-logoPavili, 42, is the second person arrested in connection with the company’s collapse.  Back in September, Malta’s official online-gambling regulators body, the Lotteries and Gaming Authority (LGA) of Malta announced the arrest of Swedish Everleaf exec Michael Zwi Oros, 33, on similar charges.

Pavili and Zwi Oros were both subsequently identified as “beneficial” owners of the Everleaf operation, although the LGA to date has not itself issued a presser in conjunction with the Pavili arrest, as it did with that of Zwi Oros.  The September LGA release did, however, note that an investigation into Pavili was also continuing at that time.

Pavili has received identical pre-trial release terms as those granted to Zwi Oros back in September: a bail deposit of €10,000 and personal guarantee of another €10,000, secured in an unspecified manner.  The reports announcing Pavili’s arrest reiterated the basic allegations in the case — that the Everleaf owners allowed the small online gaming company to collapse while owing about €800,000 in unrefunded player deposits to former players of the site, largely United States players, and owe at least at additional €100,000 to the Maltese government in unremitted taxes and licensing fees.  In addition to misappropriation, Pavili and Zwi Oros are also accused of attempting to relocate certain elements of corporate control — perhaps including bank accounts, though that is not specified — outside of Malta’s jurisdiction as the company crumbled in late 2012.

The Maltese bail order also dictated that €900,000 of Pavili’s assets, in Malta and elsewhere, be secured as collateral against the future trial.

The story of Everleaf’s collapse is well documented in industry media.  Everleaf first encountered legal headwinds after having $27,000 seized by American authorities in February of 2012 from a third-party payment processor, Causash Establishment who was assisting the company in processing deposits and withdrawals for American players.  Many offshore companies have suffered such operation hits while participating in the “grey market” service of the US, but in Everleaf’s case, it was widely rumored — though not officially detailed yet in the course of any trial or independent audit — that the company’s owners had long failed to keep player deposits protected and had long since absconded with those funds.  In Everleaf’s case, the transactions in question were more “black” than “grey”; the warrant was issued by State of Washington authorities in conjunction with services provided by Everleaf to that state’s residents, where both offering and playing online poker are felonies.

Everleaf quickly pulled out of the US market following the 2012 seizure while enacting a ridiculous series of conditions that essentially blocked its customers from attempting to reclaim or attempting to withdraw any of their online balances.  That led to massive protests about the site to Malta’s LGA, which did nothing for over a year as consumer complaints mounted.

The LGA’s lengthy ineptness and stonewalling of Everleaf customers was one of several instances in recent years where the LGA proved ineffective in safeguarding player interests, cementing the island nation’s unfortunate reputation as a so-called “rubber stamp” licensing regime.  The height of LGA ridiculousness was reached in July of 2013 when the regulatory body announced that it had finally suspended Everleaf’s gaming license, perhaps a full year after meaningful gaming activity on the site had already ceased taking place.

Since then, the LGA has conducted its own face-saving and image-remaking campaigns.  That includes both a reorganization of the LGA itself, with new officials at the rudder, and the press announcements and arrests of officials such as Pavili and Zwi Oros.

The apparent refocusing on player protection is also evident in recent LGA pronouncements, as in a quote given by new LGA boss Joseph Cuschieri in conjunction with Pavili’a arrest and bail hearing.  “We are committed to ensure that player funds are protected at all times,” Cuschieri told the Times of Malta,”and, to this effect, the LGA will be taking concrete measures to strengthen its player protection mechanisms well beyond the benchmarks in Europe and other jurisdictions.”

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