Betting exchange plans legal action to recover $3.5 million
Accounts show €1 million payment to former director
Troubled Irish betting-exchange Intrade is planning legal action to recover $3.5 million.
Troubled Irish-based betting exchange Intrade is planning legal action to recover $3.5 million following a month-long investigation into the causes of a shortfall that has left it unable to pay the full amount of cash due to its clients.
Intrade ceased trading last month after discovering a series of previously undisclosed payments to former director, John Delaney, who died in 2011, and other third parties.
Recently lodged accounts for 2011 for Intrade the Prediction Market Ltd show it made payments of €1.07 million to Mr Delaney.
Its parent Trade Exchange Networks Ltd paid him €612,283, and paid a further €265,483 to an un-named third party.
The current directors, US-based Ronald Bernstein and London resident Imants Auzins, say there is insufficient documentation and information relating to these payments to show what they were for.
Both companies’ accounts class the money as debtors receivable, meaning they believe that it is due to be repaid. It is not clear when the payments were made.
In a statement yesterday, Mr Bernstein revealed that the company has discovered a cash shortfall of $700,000 in its own and in client accounts.
“We are now very confident about the reasons which caused the current circumstance of the company; however, for legal reasons we are not yet at liberty to document them to you,” he said.
“I can confirm that the company, if it is able, intends to vigorously pursue two substantial monetary claims against two distinct parties for an aggregate amount greater than $3.5 million.”
Mr Bernstein, who became a director in November and is leading efforts to rescue the company, asked clients to accept half the money due to them now and a “solemn promise” that the company would make every effort to repay the balance.
Reports yesterday said that he was in talks with new investors.
However, yesterday’s statement warns that if enough clients have not agreed to the company’s “forbearance” proposals by next Tuesday, April 16th, the business will have to be liquidated.
Intrade allows clients to bet with each other on movements in commodity prices, stock market indices and world events.
Late last year, the US Commodity Futures Trading Commission (CFTC) began legal proceedings against the company for unlawfully allowing US customers to buy and sell options predicting movements in currency and commodity prices.