Bad O(f)fer: Shady past of the eldest of the Baazov brothers

Ofer (Joshua) Baazov has long been hiding in the shadow of his younger brother David who made one of the largest deals in the history of online gambling and became the subject of the largest insider trading investigation in Canada.

Ofer Baazov was born in Gori, a small town on the territory of modern Georgia. Shortly after his birth, the family moved to Israel and later to Canada. The childhood of a first-generation emigrant rarely passes easily. Perhaps, that was the reason why Ofer turned to quick means to get rich, both legal and illegal. In 1993, when he was 24 years old, Baazov was charged with cocaine trafficking. However, the case was later re-qualified as drug possession, and Ofer was in jail for only 90 days.

The second step is also the hardest, or self-cloning

One could consider this as a simple mistake of youth, but Ofer kept on going the same way. After serving his term, Ofer soon launched a TV shop. The company was deceiving the elderly people in the United States by drawing never-existing prizes among buyers of goods. The buyers never won a thing since nothing was actually drawn.

The Federal Trade Commission (FTC) of the USA became interested in this activity. It found out that Baazov’s company had tricked hundreds of elderly Americans into buying goods via a TV shop. The Ohio District Court issued a fine to the founders of the company, Joshua and Ofer Baazov, in the amount of $777,000. Paradoxically, Joshua and Ofer Baazov were the same person…

A bit earlier, our hero took advantage of the possibility to register a company in Canada without submitting a photo or a passport and registered himself as his partner. In the future, Ofer will often use the name Joshua since it sounds more common for English-speaking people.

Brother is better than a clone

Nobody knows what exactly made Baazov focus his further activities on gambling: either the fact that it was so easy to get money from people who tried their luck or the symbolism of a 777,000 fine. After all, three sevens is a lucky combination.

When his younger brother David grew up, Joshua no longer needed to create “clones” and began to use his brother as a frontman. Joshua preferred to hide in the shadow while controlling almost all the processes in companies.

David founded Amaya Gaming Inc, a computer game development company. According to official documents, Josh has never been an employee or shareholder of the enterprise. However, in the second half of the 2000s and the early 2010s, he negotiated several times on behalf of the company.

Amaya sold slot machines, handheld gaming devices, and software to casinos, cruise ships, and resorts. It was one of the many small companies that no one took seriously in the gambling world. From 2007 to 2009, the capitalization of the company increased six times from 1 to 6 million Canadian dollars. The company’s shares were listed on the TSX Venture Exchange. The company was growing by gradually acquiring slot machines and software makers.

All-in — big win

In 2014, Ofer and his brother David, who was controlled by Ofer, reached the pinnacle of their careers: they managed to conclude a deal to buy the famous Pokerstars brand for $4.9 billion. It is not so common that a relatively small company makes a deal worth several billion and acquires one of the leaders of the gaming market. To make this deal possible, the brothers attracted the American investment group Blackstone Group and a number of other investors. Ofer visited every potential investor personally and convinced them to contribute to the deal: “Ofer is Here to Offer a Deal!”

Once the deal was made, lots of newspapers wrote about David, the director of Amaya. They called him ” the young genius” and “the king of online gambling.” At the same time, David’s older brother hid modestly in the shadows.

However, pragmatic exchange market controllers did not tend to believe in luck, Cinderella-like stories, or any millionaires of the slums. Instead, they always tend to suspect such “lucky boys” in fraud and foul play. Therefore, Quebec’s securities regulator Autorité des marchés financiers (AMF) and a number of other regulatory structures started to audit Amaya. And they were right in their suspicion.

To increase the value of Amaya’s shares, the Baazov brothers and their partners were trading insider information about the company’s affairs to third parties. As a money-laundering channel, Ofer used a Montreal religious center.

Craig Levett, Ofer’s childhood friend, also took part in the machinations of the Baazov brothers. In the 2000s, Ofer and Levett created the gaming website BetonUSA. For some time, this portal was functioning normally and was expanding its client base. Then, it suddenly went bankrupt and shut down. As a result, the website users lost about $1 million. According to some sources, Ofer and Levett earned another additional $1.5 million from trading in information that was not supposed to be known to outsiders.

On March 23, 2016, David Baazov was charged on five counts. Among them, there were: insider information trading in order to influence the value of shares, trading on the basis of confidential information, disclosing information about the state of affairs of Amaya, etc. Right before making the deal to acquire Pokerstars, the company’s shares rose in value in a quite extraordinary way. According to AMF investigation, the surge in stocks was associated with “leaking” the information about the upcoming purchase.

Another discovery stated that 75% of the company’s shares de facto belonged to Josh Baazov and his partner, while the alleged brilliant brother-director had only 25% of the stake. That meant that the company decisions were made by Ofer, not David. These surprises were especially unpleasant for Amaya Gaming investors, so the value of the company’s securities fell by 21% at once.

With such grandiose fraud in Baazovs’ portfolio, other their “achievements” can barely be called any impressive: attempting to bribe the governor of New York, forging the signature of a Dubai investor, deceiving a charitable foundation, neglecting to pay salaries to an employee, etc.

The brothers were tried in court in 2018. Due to the colossal investigation mistake, or something else that they disguised as a mistake, the Baazov brothers escaped responsibility. The prosecution office accidentally sent 320,000 confidential documents to the defense, and then, they asked to send them back. The lawyers accused the AMF of trying to mislead the investigation. So, the judge closed the case. Could the staff of the Financial Markets Commission allow such a failure? Of course, after all, any person can make a mistake. But when it comes to one of the biggest scams in the Canadian securities market, such coincidences raise additional questions.

However, the company and former company management had to pay investors $30 million after the victims filed a class-action lawsuit.

To overcome the negative publicity, on August 1, 2017, the Amaya company was renamed Star Group.

To be continued…

The activities of the Baazov brothers kind of illustrate the saying “evil breeds evil.” Taking a short break after the scandal and the trial, in 2019 they came back to the gaming world: David and Ofer began building a casino on the territory of a small Indian community in the province of Quebec. Ofer signed an agreement with the group’s board to manage the casino for the following 20 years. The company managing the gambling establishment is registered in Delaware and has a single shareholder, whose identity has not been disclosed.

The situation is quite mysterious, just like everything associated with Baazov. Maybe, Joshua-Ofer has changed, and his new partners will be more fortunate than those who have experience of dealing with him before.