A spokesperson for the Royal Canadian Mounted Police (RCMP) told Interactive Gaming News Friday that the online betting services using gaming systems by Starnet Communications would be shut down pending the outcome of a criminal investigation regarding illegal betting and pornography distribution charges. He also said that trading of Starnet's stock would immediately be suspended. As it turns out neither statements were accurate
The company's headquarters, along with six houses of company directors and officers, were raided Friday morning by Canadian Authorities. At this point no criminal charges have been filed, and Starnet has reported that Canadian authorities have vacated company premises. Speculation was that all Starnet sites were being shut down until the investigation was complete, however, the company's servers are still firing on all cylinders.
Despite the RCMP statements, Starnet issued a press release today stating that it will continue its business operations and share trading.
"We are pleased to announce that our company will continue its operations and proceed with its strategic plans following minor interruptions to service over the past weekend," CEO Mark Dohlen said. "On the basis of solid legal advice, we will continue to offer shares of the company to the investing public. We are a company that is fully compliant with all applicable laws and regulations. We are confident that our operations will be reviewed positively by the appropriate authorities here in Canada and in the countries in which we conduct our business.
"We believe the selective investigation into the operations of our company is a result of a misunderstanding of Internet issues as they relate to the process of our business and the venues in which our services are offered. There is little or no legal precedent relative to this business.'
According to Dohlen, minor interruptions over the weekend were a result of the company providing temporary access to its server to the authorities. No further interruptions are expected.
Starnet officials also noted the company's financial capability to cover successful customer wagering has not been impacted by the investigation.
In a related story, Starnet has officially put its porn assets up for sale, a move Dohlen has spoken publicly about doing for the past year. Its flagship sites, www.sizzle.com and www.chisel.com, as well as nine other revenue generating sites and approximately 50 other promotional sites are being auctioned, reportedly so the company can concentrate on its gaming software business.
Meanwhile Starnet's stock ("SNMM"), which dipped as low as $3 a share, has climbed back to nearly $6.