Statements issued by the FBI and SEC on July 21st reveal that three men connected to a group of rogue online casinos have been detained in Israel for unrelated securities fraud. The arrest documents explain how Gery Shalon and Zvi Orenstein were nabbed in Tel Aviv by request of the FBI for running a pump and dump stock scheme on penny stocks traded in the United States.
The arrests have no direct connection to online gambling yet, but those charges could be added any day now that the men are in the hands of US authorities. It appears that karma has finally caught up to the owners of a rogue group of online casinos that operate under the Affactive brand.
The Affactive Connection
The Affactive group runs a number of online casinos that have long been considered rogue among players and affiliates alike. Specifically, the group operates Begado Casino, Win Palace, Win Palace Play, Slots of Fortune, Slots Jungle, Casino Titan, Golden Cherry, Grand Macao, Mayflower and Jackpot Grand. These casinos have been accused many, many times for non-payment of players and affiliates.
Reputable webmasters stopped promoting this group years ago, but until now, has continued to survive by way of less reputable affiliates and its own advertising campaigns. Affactive holds the dubious distinction of having won Casino Meister’s “Worst Casino Group” award in 2011, 2012 and 2013. Long story short, this group has long been a black mark on the online gambling industry.
I have to make it clear that these men’s connection to Affactive has not yet been officially confirmed. However, webmasters that I trust have posted transcriptions of e-mails from the Affactive team stating that the program will be closing for good and no payouts will be made to affiiates. One e-mail from a competing affiliate program had this to say:
After recent events in the industry I am sure there are a lot of affiliates who will be swapping and changing out old links and adding new ones in. If you are looking for new partners to work with, or want to do more with us then get in touch on [e-mail address redacted] and we would be happy to discuss this with you.
Another e-mail reported by a different webmaster was published online as well:
Subject: Affactive/ Revenuejets Shut Down
As you might have read, the owners of Affactive and Revenuejets were arrested this morning and their offices raided. They are now in jail, awaiting extradition to the US. This almost certainly means that the affiliate programs and the casinos are shutting down for good.
That being said, I would like to introduce our current operating brands [names redacted] to you. We accept traffic from most non-US markets and our affiliate payment packages are exclusive and highly competitive.
We’re interested in replacing the existing ads for the Affactive and Revenuejets brands on your site and offer you an amazing deal with us.
Yet a third e-mail purported to come directly from Affactive simply said:
Please do not send us traffic as from now on.
Affactive will close its operations as of now.
You can reach me for a short while on this email or by Skype.
I am sorry the way it ends, something out of our control.
The JPMorgan Connection
The men are also believed to be behind major cyber attacks on US companies. Bloomberg was first to report on the connection between the men and a major breach of JPMorgan that resulted in 83 million customer accounts being compromised.
Tuesday’s complaint filed by the SEC (PDF here) explains how Gery Shalon, Zvi Orenstein and another man named Joshua Samuel Aaron conspired to buy shares in six penny stock companies and then manipulate the price upwards through artificial buying/selling and false e-mail reports before selling the stocks at a profit and leaving legitimate buyers empty handed.
It’s also interesting to note that the Affactive Group has been implicated in at least two different hacking schemes. In one, it was discovered that affiliates had hijacked millions of websites and inserted referral links to Affactive properties. Other reputable affiliate programs quickly closed the offending affiliate accounts and also killed any active links (so they would not reserve stolen traffic even after the affiliate account was closed). AffActive refused to act and continued to accept the stolen traffick.
In another instance back in 2011, AffActive was accused by another casino group of initiating DDOS attacks against the websites of competing online casinos. Although it is unlikely we will ever get the full truth behind either incident, it is certainly interesting that those arrested today have were also likely behind the JPMorgan hack.