RICO Lawsuit Claims $200 Million Fraud in Lucky Bucks Case

Posted on: January 8, 2024, 07:19h.

Last updated on: January 8, 2024, 07:19h.

Former employees of the Georgia-based slot machine operator Lucky Bucks fraudulently siphoned ‘illegal dividends’ out of the company prior to its recent bankruptcy – that’s according to a RICO lawsuit filed by the company’s new management.

Lucky Bucks, Arc Gaming and Technologies, RICO suit
Lucky Bucks COAMS, above. These are “skill-based” machines that dispense vouchers or lottery tickets to winners in Georgia. The lawsuit claims previous management siphoned off $200 million before the company’s bankruptcy last year. (Image: Lucky Bucks/ Arc Gaming)

The lawsuit, filed last Thursday, accuses ten individuals and a dozen associated entities of looting the company of approximately $200 million before it collapsed into bankruptcy last year.

Lucky Bucks operated around 2,300 gaming machines in 345 locations throughout Georgia. These were not Las Vegas-style slots but “COAMS” (coin-operated amusement machines), as they’re known locally. These are “skill-based” gaming terminals that offer vouchers or lottery tickets as prizes.

Lucky Bucks filed for chapter 11 bankruptcy reorganization in June 2023. The company declared more than $500 million in debt, citing increased competition, rising interest rates, an economic environment that decreased consumer use of slot machines, and an escalation of regulatory enforcement against the COAM industry in Georgia.

‘Illegal Dividends’

Lucky Bucks was rescued by its primary lenders who have injected fresh capital and rebranded it as Arc Gaming and Technologies. Its chapter 11 plan was approved by a Delaware bankruptcy court in July last year.

But the new owners claim that Lucky Bucks’ founder and former owner, Anil Damani, and his team engaged in a scheme to borrow hundreds of millions of dollars from lenders and share the proceeds among themselves.

A state regulator prohibited Damani from being involved in the company’s operations in June 2020, according to the lawsuit.

In all, it names nine former high-ranking employees, one contractor, and a dozen associated entities. It accuses them of defrauding the company by diverting $200 million in “illegal dividends” prior to bankruptcy.

Methods included redirecting contracts away from Lucky Bucks, before selling them back at marked-up rates, and simply chiseling serial numbers off machines before selling them, the suit says.

‘Baseless Claims’

The plaintiffs also claim the defendants attempted to conceal their activities by communicating through an encrypted messaging app and by deleting files and business records from the company’s computers.

The alleged fraud was pieced together by the new management team’s investigators who analyzed IT systems and conducted interviews with employees, according to the lawsuit.

An attorney for Damani, Scott R. Grubman, told Bloomberg that the allegations were “baseless” and described his client as “a successful businessman and a pillar of his community.”

Grubman added that his client looked forward to defeating the claims in court.

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