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SEC: Ponzi Scheme Involved Gambling
By ANDREW RYAN
Day Staff Writer
Published on 10/17/2003
Blake A. Prater, the man the Securities and Exchange Commission says masterminded an alleged Internet Ponzi scheme based in Gales Ferry, also operated a “production gambling” company that paid employees to bet company money at craps tables at local casinos, according to court documents and Prater.
The company, Mpactplayers, Ltd., sent employees to Mohegan Sun and Foxwoods casinos in four-hour shifts, giving them between $300 and $2,400 with which to gamble, said two former employees. Working in five-member teams, the two former employees said, the players would use gaming techniques that Prater devised and taught at his Gales Ferry office.
The players always played craps, looking for patterns in the dice and placing bets accordingly, the two said.
Prater “would supply individuals with a set amount of money and ask them to play the game a certain way,” one of the former employees, said Henry MaComber, 40, of Griswold. “You had to watch for certain numbers to come up.”
In September the SEC filed a civil lawsuit that alleges that Prater, 51, was selling unregistered securities through Wellspring Capital Group, Inc. to fuel a Ponzi scheme designed to bilk consumers. In a filing for the lawsuit, the SEC describes the gambling company to bolster its claims that Prater sold unlicensed investments.
“Mpactplayers was a separate business that has nothing to do with Wellspring,” Prater said Thursday in a telephone interview from his Guilford home. “The two have no connection to each other. I'm not going let anybody muddy the water.”
The gambling company, which employed as many as 50, folded in the spring because Prater wanted to spend more time working with Wellspring, he said.
While he said Mpactplayers gambling money wasn't from Wellspring clients, Prater wouldn't say where the company got funds to bet.
“That's none of anybody's business,” he said.
In its lawsuit, the SEC says Prater solicited money from a Web site to fund the gambling business that promised $360 return on a $20 investment. In documents seized from Prater's home, Prater boasted of making $2.9 million from Connecticut casinos, the SEC says.
Prater said the documents describing the $2.9 million in revenue were projections from a business plan that he never implemented.
Traditionally, professional gambling teams focus on card games like blackjack where they can count cards. In most cases, the teams keep a low profile, using disguises and aliases and splitting their winnings after a day's work.
Mpactplayers, however, didn't hide from casino officials, MaComber said. They placed ads in newspapers, including The Day, to recruit more players. New employees started with an orientation class on a mock craps table at the company's offices in Gales Ferry. The same offices were used by Wellspring, but Prater said that was only after Mpactplayers broke up.
Unlike traditional gambling teams, they made an hourly wage and took home 10 percent of their winnings at the end of their shifts. But the company had trouble keeping employees because players often lied about their winnings and stole money, MaComber said.
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