Canada Mounts Attack on Net Gambling

20 August 1999
Dozens of Royal Canadian Mounted Police (RCMP) officers raided the Vancouver office of Starnet Communications today at 5:30 a.m. as part of an 18 month-long illegal betting investigation. The houses of six company directors and officers were raided as well.

Computer equipment, software, documents and files have been seized. RCMP Corporal Frank Henley said that technicians from Ottawa have shut down the business and will likely be searching the premise and copying files for days to come. "It will last at least through the weekend," Henley said, pointing out that the facility's great size will slow things down considerably. "Right now they're trying to locate all the hard-drives and so-forth."

Starnet CEO Mark Dohlen says the business will continue to operate. "We do not anticipate any interruption to our services or our ongoing operations as a result of today's actions," Dohlen said. "But we are dismayed by this disruption of our three year-old operations, have retained legal counsel and will vigorously defend our rights.'

"It is regrettable that we were not given an opportunity to cooperate with authorities regarding their concerns," he added. "Cutting edge companies at the forefront of online services like Starnet are often misunderstood, but we are a fully reporting US public company and our international operations comply with the laws of their respective jurisdictions.'

Starnet attorney Chris Zacharias told Bloomberg.com that today's incident links back to a March controversy in which British Columbia Premier Glen Clark was investigated for the questionable granting of casino licenses. Zacharias said that a judge today ordered the release of the contents of the search warrant of Clark's house. "They are linking us to the premier,' Zacharias told Bloomberg. "That's absolutely incorrect.'"

The RCMP also reported that trading of the company's stock will be suspended pending the investigation. After rocketing from 1/2 in November to 26 in July, the stock took a hit when one of the company's former licensees, Las Vegas Casinos, announced it was suing the company for $1 billion dollars. The stock rebounded slightly and fluctuated throughout August, but plummeted today from 13 11/32 to 3 before finally closing the day at 4 5/32.

Starnet has grown tremendously in '98, boosting its number of licensees to 49. The company's rapid expansion and reports of simulcast horse betting on the horizon have left many tech investors infatuated with its stock, as evident in online tech stock bulletin boards. One such investor, who got in on stock at $.59, said he had purchased several shares today when it reached the $3 point. "I've been with them since the beginning," he said. "If this is it, I'm going down with the ship."