PlayUp accused of falsifying documents as Mintas case expands scope

Former PlayUp US CEO Laila Mintas’ updated suit against the troubled gaming operator and its global CEO Daniel Simic accuses the business of falsifying documents, as the legal action expands in scope to the Australian parent company.

The updated suit, which is seeking approximately $100m in damages, details previously unheard allegations including PlayUp falsifying the dates on Australian government paperwork.

Mintas also alleges PlayUp manufactured and manipulated other documents submitted in response to discovery requests and accuses the operator of improper conduct throughout the legal action. There is also the allegation of PlayUp running a “concerted campaign” to ruin the former executive’s reputation.

Simic accused of falsifying of documents

In the third amended counterclaim – the latest filing from the Mintas camp in the legal fight – PlayUp and Simic are accused of making “egregious discovery abuses such as the falsification of corporate documents”.

PlayUp Mintas
the suit alleges playup falsified australian government documents

Specifically, the suit alleges PlayUp improperly backdated a filing with the Australian Securities & Investments Commission, “falsely representing” that the document was signed on 30 November 2021, “when in fact it was not actually signed until weeks later”.

The suit also claims PlayUp, including its officers, directors and general counsel, “manufactured and manipulated other documents” during the discovery process.

In addition to these allegations, Mintas also accuses PlayUp and Simic of lying in affidavits to the court and of withholding key evidence disproving their claims against Mintas.

As such, the suit argues PlayUp and Simic have been “engaging in fraud upon this court”.

Using PlayUp resources for “personal revenge

Additionally, the updated suit makes colourful allegations about the nature of Simic’s motivations.

According to the suit, Simic is harming shareholders by using PlayUp’s financial resources for his personal revenge against Mintas. This is allegedly because the former US CEO “acted as a whistle blower instead of accepting [Simic’s] offer to receive $25m for participating in his scheme”.

This refers to a prior incident in which Simic allegedly offered to give Mintas a $25m bonus for participating in a bid to include PlayChip, a separate business owned by the members of the board and Simic, in the company’s planned acquisition by FTX.

The suit says Mintas had previously warned about potential conflicts of interest and about the legitimacy of the process involved with the PlayChip side deal.

Campaign to ruin Mintas’ reputation

The suit also claims PlayUp and Simic have conducted a campaign to threaten Mintas as well as ruin her reputation.

Dr Laila Mintas
former playup us ceo Dr Laila Mintas

The legal action cites an email Simic sent to FTX on 30 December 2021 where he said that Mintas was making contract demands “on the eve of the proposed transaction” which would “increase the liabilities FTX assumed”.

The suit says this was after Simic and the other senior executives had agreed to the terms of Mintas’ contract extension months before.

The legal action also points to another incident in which Simic told PlayUp shareholder and adviser Ross Benson that Mintas had “extorted another gaming executive and stole agreement(s) from the company”.

According to the legal action, these “outrageous accusations” are without evidence.

“Simic is using his arbitrary accusations to harm Dr Mintas’ reputation in the industry,” reads the filing.

PlayUp alleged intimidation attempts

The suit also references alleged attempts by PlayUp and Simic to intimidate Mintas.

As evidence it highlights a January 2022 email sent to Mintas’ lawyers following the US District Court for Nevada which overturned the former CEO’s restraining order. The email stated:

“Simply as a reminder, despite Judge Navarro’s ruling today, the restraining order entered by Justice Jagot of the Australian federal court remains in full effect. Our expectation is that Dr Mintas will comply with the order’s restraints.”

The suit claims this injunction is irrelevant and does not apply to Mintas since she is not subject to Australian jurisdiction. It also asserts that Mintas’ employment agreement contained a clause choosing the state of Nevada as the location where the parties would settle their disputes.

Mintas adds Australian business to suit

The updated suit adds Play Ltd, the Australian parent company of PlayUp, to the claim. Previously, Mintas had been only suing the US business, as well as Simic.

According to sources close to the matter, the legal filing was expanded due to recent challenges experienced by PlayUp’s US business.

These include delayed wages to PlayUp US staff, who had been left without pay for the period 16-30 June, the revocation of the business’ New Jersey licence and the closing of operations in both states in which the company was previously active.

In its revocation letter the New Jersey Division of Gaming Enforcement (DGE) said one reason it opted to cancel the operator’s licence was PlayUp’s claim that it was investigating a fraud charge for a player who had requested withdrawal of funds.

Mintas PlayUp
the new jersey division of gaming revoked playup’s licence last month

However, the business failed to notify the DGE and could not explain the delay in the investigation. This comes amid unconfirmed rumours that in some circumstances PlayUp users have faced difficulties withdrawing funds.

According to sources, PlayUp has now paid its former US staff for the 16-30 June period. Staff have been told that severance and paid time off (PTO) will be addressed next, but there is no clear timeline on when this will happen.

Sources claim that Simic was concerned that reports of PlayUp’s difficulties would put the rumoured pending transaction to sell the business to an unnamed US operator at risk. However, Simic has told key people the deal is still going ahead.

Third time lucky?

This is despite speculation that PlayUp’s licence revocation and its market exits means the business does not have many assets left to sell.

The deal to the unnamed US operator is the third time PlayUp has attempted to sell its US business. It follows the company’s aborted $350m attempt to list on the Nasdaq via special purpose acquisition company IG Acquisition Corp.

The suit alleges the deal collapsed because PlayUp was not able to produce the necessary financial documents by the required deadline. The operator has also yet to file its 2022 financial report, despite it being due.

FTX reported limited entangled with PlayUp

Simic has repeatedly blamed the eventual collapse of FTX as heavily impacting the business. Sources contest this, claiming the financial entanglement between the two was limited. Only one transaction went through, a $35m senior convertible note made out to PlayUp in the wake of the failed bid.

Earlier this month, Simic told the Australian Financial Review that the note’s terms prevented the company from raising more than $10m. According to Simic, this is due to a clause in the note which would increase FTX’s equity in the Australian business.

However, a source familiar with the matter said this was inaccurate, although they were unable to cite any hard evidence due to the terms of the note being confidential.

If the terms of the note are true however, it is not clear how exactly this would work in practice considering the cryptocurrency exchange’s collapse in November 2022.

Next steps for suit

All the filings have been submitted to the court and both parties are waiting for a decision from the US District Court of Nevada.

PlayUp’s current attorneys are only the latest legal firm the business has engaged in the case. This is after the business’ previous lawyers Zumpano Patricios Popok & Helsten sent PlayUp a lien due to lack of payment.

While no deadline has been set for the trial, sources say a decision is widely expected this year. It is also possible that a trial might be avoided and the matter settled out of court.

Original Article