“Executives banned from the US after defrauding a British bank of $32 million. Although they live in Canada, GalaxiWorld is based in Gibraltar, with the casino operated from St. Kitts …”
The top executives of GalaxiWorld.com Ltd., which operates an online casino under that name, have been convicted of defrauding a British bank of US$32 million. The Globe and Mail, a Toronto newspaper, reported that a state court in New York accepted a plea agreement in the case Wednesday.
Jack Banks, the chief executive, and Larry Weltman, the chief financial officer, agreed to fines totaling only $1 million. Also, according to the Globe and Mail, they are on probation for five years and cannot return to the US, unless a court orders them to do so. They are prohibited from serving as officers of a public company or holding more than 9 percent of the stock in one.
Banks and Weltman live in the Toronto area, the newspaper reported. They borrowed $32 million in 1995 from the New York office of Coutts & Co., the private banking arm of a prominent British bank, National Westminster Bank.
According to a March 2 Bloomberg News report on the indictment of Banks and Weltman, their loan was secured by stock in Laser Friendly Inc., a predecessor company to GalaxiWorld. But the pair artificially inflated the value of the stock, the District Attorney said, by not telling the bank that they didn’t have the licenses required to operate one of the companies that Laser Friendly had acquired.
GalaxiWorld has been a live site since December 1998. The company is based in Gibraltor, but its casino is operated from St. Kitts. The company is a member of the Interactive Gaming Council.
It developed its own gaming software. In an interview with RGT Online at the World Gaming Congress in September 1999, Esther Banks said GalaxiWorld was the only online casino whose software works well on Web TV.
Esther Banks is the daughter of Jack Banks. At various times she has been the company’s marketing director, human resources director and director of investor relations. Esther and Jack Banks sometimes use the surname, Benquesus. Jack Banks has been known as Jacque Banques, Jacques Banquesus and Jacques Besquesis.
GalaxiWorld had a large display of pkv poker at last year’s World Gaming Congress, an annual event in Las Vegas that is the gaming industry’s largest trade show. The casino was also a sponsor of the show.
In April 1999, Playboy Online – the Internet division of Playboy Enterprises – and GalaxiWorld announced the opening of the Playboy Play 4 Fun Casino. This was a co-branding deal under which GalaxiWorld operated a play-for-fun site using the Playboy name. There was a link to it from Playboy’s site.
That collaboration has apparently ended. The GalaxiWorld Web site still has a “play4fun” section, but there is no mention of Playboy. Playboy has a section called “playboyplay4fun,” but there are no links to online gaming, either free or real-money.
A year ago, GalaxiWorld was planning to be one of the first online casinos to pay an independent company to test its software. But that project was abruptly canceled.
Last November, GalaxiWorld announced that a firm called Ostel Management, which is apparently based in Monaco, was buying GalaxiWorld. Ostel offered $1.50 a share to holders of outstanding shares in GalaxiWorld, which had reached a high of $26.50 a share in December 1998.
In December, 1999, that deal was concluded and GalaxiWorld ceased being a public company.
One of the companies that Banks and Weltman had acquired through Laser Friendly was Gaming Lottery Corp., which had been a supplier of paper used for lottery tickets. After the acquisition, they changed the name of Laser Friendly to Gaming Lottery Corp.
More name changes followed. In September 1998 the name became GLC Ltd., and in July 1999 the company adopted the name GalaxiWorld.com Ltd.
The bank, Coutts & Co., lost $28 million of the $32 million it loaned to Banks and Weltman. It closed its New York branch in 1998 after losing about $100 million, according to Bloomberg News.
The Bloomberg report, at the time of the indictment, quoted an investigator in the New York District Attorney’s office as saying that Banks indicated he had resources of more than $50 million, including homes in Canada, Florida, Gibraltar and Israel.
The plea agreement lets Banks and Weltman off easily. They had been indicted on charges of fraud and grand larceny. The latter can be punished by as much as 25 years in prison.
According to the Globe and Mail, prosecutors called the bargain a victory because it keeps the two criminals out of the US. But the newspaper said a defense lawyer said the deal illustrates the weakness of the government’s case against Banks and Weltman.
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