JAX asking Fanduel to return 20M in embezzled funds lost gambling

[ET80]

1 hour ago, Soggust said:

If you win too much, too fast, you get your account flagged. If you are a professional athlete, they often have no trouble figuring out your occupation.

This guy was averaging like 120k a week in losses for like 3.5 years and FanDuel's AML program didn't even consider checking his background or flagging for potential money laundering risk?!?

Idk, FanDuel should be fined heavily imo, regardless of whether or not Jacksonville gets their money back, simply for ineptitude in their program. 

Do we know if the account was flagged? We really don't know what happened on the FD side. We just know the fallout, the action itself took place a few months back.

It seems as if you have AML knowledge (fun to talk AML/BSA at parties, amiright?) so I have a theoretical question for you - outside of velocity/"average ticket" flagging, what else could FD have done? For all intents and purposes, Amit Patel was an authorized signer on that Jaguars account. What he did was clear cut misappropriation of funds, but what Compliance-based guardrail is there that shows where FD (the merchant of record) has to prevent an authorized signer from accessing their funds?  Patel also blew through money buying a Tesla, a few Rolex watches and a condo - where's the recourse on those instances? How are those transactions different from a Compliance perspective?

Genuinely interested in your thoughts. 😀

[Soggust]

21 minutes ago, ET80 said:

Do we know if the account was flagged? We really don't know what happened on the FD side. We just know the fallout, the action itself took place a few months back.

It seems as if you have AML knowledge (fun to talk AML/BSA at parties, amiright?) so I have a theoretical question for you - outside of velocity/"average ticket" flagging, what else could FD have done? For all intents and purposes, Amit Patel was an authorized signer on that Jaguars account. What he did was clear cut misappropriation of funds, but what Compliance-based guardrail is there that shows where FD (the merchant of record) has to prevent an authorized signer from accessing their funds?  Patel also blew through money buying a Tesla, a few Rolex watches and a condo - where's the recourse on those instances? How are those transactions different from a Compliance perspective?

Genuinely interested in your thoughts. 😀

You're giving me entirely way too much credit for researching my takes than I deserve.

I can't argue anything you are saying, I'm just saying that forest from the trees it feels like they had to have misstepped somewhere, but to your point - I can't really prove that lol.

tbh I didn't even know you could deposit on sportsbooks via credit cards.

What's to prevent someone who's username rhymes with Roggust from maxing out my their CCs in FD deposits and cashing out asap to pay back just to rack up points?

Edited February 3 by Soggust

[Trentwannabe]

1 hour ago, Thomas5737 said:

Not sure how you could get money back as a content creator but I guess you could try.

See you Sunday.

[ET80]

2 hours ago, Soggust said:

I can't argue anything you are saying, I'm just saying that forest from the trees it feels like they had to have misstepped somewhere, but to your point - I can't really prove that lol.

It's absolutely a "common sense vs letter of the law" discussion. Common sense says that FD deserves a good talking to by NACHA/Card Brands, but as far as monetary action? There's nothing really written to hold FD against.

I see FD issuing a statement, making a few internal changes with their money reviews and being done with it. Jaguars are still out the money, though (unless there's some sort of "good faith" motion by FD for good press; Hey Jags, here's $500,000 for your stupidity, don't let it happen again...)

2 hours ago, Soggust said:

tbh I didn't even know you could deposit on sportsbooks via credit cards.

Depends on a lot of factors, actually. Visa/MC/Discover/AMEX can support the transaction (and won't turn down the opportunity to collect those switch fees) but the onus of approving the transaction will always come down to the bank/credit union. I know some banks outright state they will not support online gaming/gambling transactions (Capital One is probably the most well known) so it's always good to ask your bank if you can use your cards for that - a LOT of factors can determine that.

2 hours ago, Soggust said:

What's to prevent someone who's username rhymes with Roggust from maxing out my their CCs in FD deposits and cashing out asap to pay back just to rack up points?

Similar names isn't going to work - online card transactions need to be accompanied by a CVV (3 digit number on the back of the card) and AVS data (5 digit zip code).

If Roggust HAS all of that information and runs up $10,000? Then Soggust files a dispute with their bank, the old card number/CVV is cancelled and a new card (with new CVV) is issued. Soggust is now back to normal, they do not owe anyone anything - pretty much every card has zero fraud liability for any non-PIN transaction. The bank is now out the $10,000

After that, the bank files a dispute with Visa/MC for the $10,000 transactions - the network presents it to FD and says "ok FD, prove to me you validated this account and transaction" and FD has [xx] amount of data to present the information back to the network.

- If FD presents the data: Visa says "sorry bank, you're out $10,000"

- If FD doesn't present the data: Visa says "OK FD, you're liable for this $10,000. We're going to debit your daily settlement for $10,000 and credit the banks' daily settlement $10,000."

One thing that's lost in financial improprieties such as this - at the end of the day, someone is out that money. Could be the bank, could be the consumer, could be the merchant. In this particular case, I don't see a reasonable way to say that anyone BUT the Jaguars (the consumer in this scenario) is out the money. 

[LeotheLion]

22 hours ago, TheKillerNacho said:

That's the only thing i could think of too, but even in this case, I'd argue it's more the Jaguars' responsibility to make sure someone doesn't steal their money than FD's.

To put it another way... if the Jaguars weren't aware the guy was stealing their money, how the heck can you expect FD to know that?

I agree that ultimately the Jaguars are clearly responsible. And while 20m is a ton of money, there's plenty of idiots that have had a ton of wealth through luck or inheritance. FD shouldn't be expected to due diligence on its repeat customers.

And I absolutely hate all these internet gambling companies. It's one of the most predatory legal businesses now. 

[Ragnarok]

On 2/2/2024 at 2:03 PM, LeotheLion said:

The only thing I'd wonder is if the Jaguars could make a case that FD should have known it was stolen money, but also they arent the police. 

Short of an email or text or recorded conversation between the Jags guy and a FD employee confirming that they knew, no chance. 

That's assuming his account name wasn't 'EmbezzlingJag' or something. 

As ET said, these companies have robust compliance/authorization departments, so my guess is that this guy did enough to pass their protocols(which are not insignificant).  I'm sure he used his signatory authority to place money into account and then moved the monies from account to account to account beforehand to cover his tracks, and FanDuel does not have to trace deposits back to their most original source.

I am certain that FanDuel is preparing a countersuit and the NFL is PISSED at the Jags for suing one of their new gambling sponsors.

[LeotheLion]

2 minutes ago, Ragnarok said:

Short of an email or text or recorded conversation between the Jags guy and a FD employee confirming that they knew, no chance. 

That's assuming his account name wasn't 'EmbezzlingJag' or something. 

As ET said, these companies have robust compliance/authorization departments, so my guess is that this guy did enough to pass their protocols(which are not insignificant).  I'm sure he used his signatory authority to place money into account and then moved the monies from account to account to account beforehand to cover his tracks, and FanDuel does not have to trace deposits back to their most original source.

I am certain that FanDuel is preparing a countersuit and the NFL is PISSED at the Jags for suing one of their new gambling sponsors.

The argument I'd make which I literally have zero idea if it'd win in court is that these gambling companies are tracking it's customers wins/losses. We know that they will refuse or limit wagers for people that are too profitable, but they never limit bets from people that continously loses money. 

Obviously this makes sense from a business end but I'd wonder them being selective about who can and cannot play does open them up to more trouble. Because that's different from a lot of businesses. 

[Ragnarok]

57 minutes ago, LeotheLion said:

The argument I'd make which I literally have zero idea if it'd win in court is that these gambling companies are tracking it's customers wins/losses. We know that they will refuse or limit wagers for people that are too profitable, but they never limit bets from people that continously loses money. 

Obviously this makes sense from a business end but I'd wonder them being selective about who can and cannot play does open them up to more trouble. Because that's different from a lot of businesses. 

It would not work in court.  Otherwise casinos wouldn't exist.

[LeotheLion]

52 minutes ago, Ragnarok said:

It would not work in court.  Otherwise casinos wouldn't exist.

Casinos have lost court cases before. 

[DoleINGout]

Calvin Ridley strikes again

Edited February 3 by DoleINGout

[ET80]

38 minutes ago, LeotheLion said:

1 hour ago, Ragnarok said:

It would not work in court.  Otherwise casinos wouldn't exist.

Casinos have lost court cases before. 

Not for this, though. They've lost in the other direction - bettors hitting the progressive slots and not getting paid $30mm because of an error on the machine is more likely to lead to a judgement against a casino. Understand - there are no laws that dictate a casino needs to stop someone from accumulating losses. Their only obligation is to share information on resources that can help gamblers with a gambling problem which DK and FD do frequently in all of their ads - "gambling problem? Call 555-1234" is a requirement, it is the extent of what the law asks of them. 

Casinos are not altruistic organizations - by and large, Patel was one of their favorite clients because he was losing a lot money. They did everything they are required by law to do, and they're not going to deviate from what they're required to do by law, because that runs counter to their best interests. 

The reality is Patel had access to funds and Patel misappropriated funds. That's on the Jaguars for giving him access, not for FD for validating he had access to those funds - much like how it's not the jewelers fault he bought a Rolex watch or how it's not the Tesla dealership's fault he bought a car. He had the money and there's nothing in law requiring to trace the origin of those funds. 

Signing authority is a significant safeguard built into just about all corporate/Treasury management product. Patel had signing authority - and from the looks of the fallout, there was little oversight in what Patel could sign for, he didn't have to present a work order or a paper trail, didn't have to get approvals for large dollar transactions, nothing at all.

This is a $20mm lesson for the Jags - build a better process for Treasury to catch this level of misappropriation. 

[Soggust]

3 hours ago, ET80 said:

If Roggust HAS all of that information and runs up $10,000? Then Soggust files a dispute with their bank, the old card number/CVV is cancelled and a new card (with new CVV) is issued. Soggust is now back to normal, they do not owe anyone anything - pretty much every card has zero fraud liability for any non-PIN transaction. The bank is now out the $10,000

After that, the bank files a dispute with Visa/MC for the $10,000 transactions - the network presents it to FD and says "ok FD, prove to me you validated this account and transaction" and FD has [xx] amount of data to present the information back to the network.

- If FD presents the data: Visa says "sorry bank, you're out $10,000"

- If FD doesn't present the data: Visa says "OK FD, you're liable for this $10,000. We're going to debit your daily settlement for $10,000 and credit the banks' daily settlement $10,000."

One thing that's lost in financial improprieties such as this - at the end of the day, someone is out that money. Could be the bank, could be the consumer, could be the merchant. In this particular case, I don't see a reasonable way to say that anyone BUT the Jaguars (the consumer in this scenario) is out the money. 

Sorry, I think I misstated my question here - Forget two different people and the whole KYC/AML discussion for a moment, because I think I'm in agreement there.

If I can deposit money via CC, what's stopping me from dropping a 40k deposit via VISA, cashing out immediately before placing any bets, paying back my CC and getting 80,000 CC points worth ~800 bucks? And doing this every two days or whatever the turnaround is?

I know I'm going to jail, just trying to figure out for how long.

[ET80]

2 hours ago, Ragnarok said:

I am certain that FanDuel is preparing a countersuit and the NFL is PISSED at the Jags for suing one of their new gambling sponsors.

I'm interested in the wording used here - Jags aren't suing for anything, they're *asking* which tells me the Jags know they have no case here... But are hoping their status as an NFL franchise to generate some good faith between the two organizations. 

This article sort of alludes to this as well as a few more things that just make me shake my head in disbelief. I know about this because this is an industry I run adjacent to in my career and... Yipes, this is just baffling from a corporate governance perspective.

https://www.espn.com/nfl/story/_/id/39444143/jacksonville-jaguars-fanduel-amit-patel-stolen-millions

This is just a sign the Jags really didn't have any sort of protocol in place, and they're lucky it's just $20mm lost. Patel - a mid-level employee, not even a VP - had unlimited access to this account and the Jags didn't even know until the NFL said "yeah, this guy has been stealing money from you guys..."

The Jaguars gave their wallet to a crackhead for safekeeping... and are now surprised the crackhead used that exact same wallet to buy crack.

[LeotheLion]

18 minutes ago, ET80 said:

Casinos are not altruistic organizations

While this is true, I think they should be forced to operate differently. If casinos limit their profitable/worst customers winnings then they should be forced to limit its best customers losses. They clearly have the ability to do so. 

18 minutes ago, ET80 said:

This is a $20mm lesson for the Jags - build a better process for Treasury to catch this level of misappropriation. 

The Jags are clearly most at fault and should have prevented this whole thing. I just think that FD should be forced to operate differently. Usually the victims here aren't big businesses like the Jaguars. 

Edited February 4 by LeotheLion

[ET80]

10 minutes ago, Soggust said:

If I can deposit money via CC, what's stopping me from dropping a 40k deposit via VISA, cashing out immediately before placing any bets, paying back my CC and getting 80,000 CC points worth ~800 bucks? And doing this every two days or whatever the turnaround is?

I know I'm going to jail, just trying to figure out for how long.

Ahhh, rewards. Gotcha.

Really, there's nothing stopping you from doing that. Only controls in place are that points are traditionally considered within the card ecosystem, and can be held in delay/pending in perpetuity; There is no law like with deposits or payments where funds are made available within 24 hours (or if there's a hold placed on your account, you have to specify when those funds are available).

Points don't expire, but there's no expectation that they're made available immediately. That's the only safeguard I'd see in this, but I'd surmise there's a use case where this did take place.