$9 Million Fraud Case Hits Online Gambling Sector as Las Vegas Operator Faces Charges

The owner of a Las Vegas-based online gaming company faces serious legal consequences after being accused of treating investor funds like his personal piggy bank. Robert Alexander, the founder of Kizzang, stands charged with fraud by the Securities and Exchange Commission (SEC).

According to SEC allegations, Alexander collected nearly $9 million from over 50 investors for his company Kizzang, which operated online gaming offerings including slots tournaments and fantasy sports until its insolvency in December 2017. A significant portion of the funds is reported to have been misappropriated for his gambling activities.

Specifically, filings in the US District Court for the Southern District of New York indicate that Alexander misused at least $1.3 million, with over $450,000 directly spent on gambling. Moreover, the remainder of the funds was diverted into a business venture that lacked any substantial revenue stream.

Former Take-Two Interactive Executive’s Fall

Before leading Kizzang, Alexander garnered respect within the video game industry, even sitting on the board of Take-Two Interactive, the parent company of Rockstar Games, known for blockbuster titles like Grand Theft Auto and Red Dead Redemption.

Despite this prestigious background, the SEC alleges he made dubious claims to investors about the potential returns, suggesting that they could see a tenfold increase on their investments. He also falsely implied a substantial personal investment in Kizzang and claimed involvement in the development of a successful video game.

For instance, on May 28, 2015, he requested additional funding via email, stating, “Monday is payroll, and I need $55k.” The following day, an investor transferred $10,000 to Kizzang. However, Alexander neglected to mention that from May 1 to May 26 of that year, he had already squandered over $20,000 of investor money on gambling across various casinos in Las Vegas and Indiana.

Legal Troubles Mount

In addition to his fraudulent activities, Kizzang found itself embroiled in legal challenges. In 2017, the NCAA sued Kizzang for copyright infringement related to its promotions that parodied the NCAA’s Final Four tournament. Alexander did not appear in court, resulting in a default judgment against him.

Simultaneously, Sports Illustrated, which had partnered with Kizzang for marketing worth $1 million and received no payment, also obtained a default judgment of over $1 million.

A key element of Kizzang’s business model aimed to monetize consumer traffic through advertising. However, from its inception in 2014 through its eventual insolvency in 2017, it reportedly never generated any significant income, leading to these serious allegations of fraud against Alexander.

Key Takeaways

• Robert Alexander allegedly misappropriated $9 million from investors.
• Involvement in high-profile legal disputes, including lawsuits from the NCAA and Sports Illustrated.
• Kizzang’s operations ceased after unsuccessful attempts to monetize its products effectively.
• False claims to investors about potential returns and involvement in video game development.

In summary, the case against Robert Alexander serves as a stark reminder of the challenges that can arise in the online gaming industry. Mismanagement of funds, misleading investor communications, and allegations of fraud can quickly unravel even the most promising ventures. As authorities continue to investigate, it will be critical for investors to exercise due diligence and maintain watchfulness in such dynamic markets.