Third Dismissal Sought in Baazov Insider Trading Case

Baazov Insider Trading Charges

Counsel for former Amaya CEO David Baazov is seeking a stay of insider trading charges on the grounds that prosecutors accidentally shared too much information.

Attorneys representing former Amaya, Inc. president and CEO David Baazov have made their third attempt to have insider trading charges against their client dismissed. On Thursday, lawyers argued in a Quebec courtroom that the accidental disclosure by prosecutors to Baazov’s defense of roughly 320,000 “potentially privileged” documents should require the ongoing trial against Baazov, two other men, and two corporate defendants to be stayed.

The latest defense motion comes six weeks into the actual courtroom phase of the trial. Baazov and the other defendants were charged in early 2016 with various insider trading crimes generally involving several years of Amaya’s active corporate acquisitions and divestitures, up to and including Amaya’s reverse takeover of PokerStars corporate parent Oldford Group in 2014.

Baazov was subsequently forced out from his twin executive roles at Amaya and has since divested his ownership stake as well, while Amaya rebranded itself as The Stars Group and moved its corporate offices from Montreal to Toronto. Baazov faces five individual charges in the alleged long-term illicit behavior, including influencing and attempting to influence the price of Amaya’s publicly traded shares.

Two business associates of Baazov’s, Yoel Altman and Benjamin Ahdoot, face a combined 18 additional charges. Also, an investigation by Quebec securities regulators – dubbed Project Bronze – highlighted suspect activity on another two dozen or so Baazov associates, though no additional charges have yet been filed.

Accidental disclosure to defense

At issue in the latest motion to stay the charges is the accidental disclosure to Baazov’s counsel by AMF (Autorité des marchés financiers) prosecutors of about 320,000 possibly privileged documents that were obtained in searches related to Baazov’s case but likely have no direct impact on the case.

The documents were a small portion of a massive trove seized by the AMF in what has been claimed as Quebec’s largest-ever insider trading case. The AMF seized tens of millions of documents amid a series of raids, and the AMF admits that this batch of 320,000 shouldn’t have been shared with the defense.

Baazov’s counsel has countered with an argument that the document trove “can’t be unseen”, and according to a recent CBC update, argued that it’s like trying to wipe the memory of the documents’ existence, like using the fictional neuralyzer from the “Men in Black” movies.

The AMF countered in court on Thursday that a stay would be too draconian a solution for such a good-faith error, given that the AMF and Quebec prosecutors have been trying to comply with the defense’s ongoing discovery requests. There is often a balance between the defense’s right to know and the possibly unnecessary exposure of unrelated information obtained from third parties. As prosecutors argued on Thursday, this discovery process is imperfect, especially in cases where massive amounts of documentation and evidence are involved.

Third try at dismissal

It’s the third time that Baazov’s defense team has filed for a formal dismissal of the case. Last November, the discovery portion of the case figured into the first attempt, an asked-for dismissal on the grounds that the lengthy discovery process was denying the rights of Baazov and the other defendants to a speedy trial as required under Quebec law.

That motion was dismissed, and in the process introduced yet more delays at the beginning of the court-trial phase, which began in April. The trial’s beginning followed a second attempt to dismiss, yet again involving discovery disputes. That time, the issue surrounded a series of batches of documents forwarded from the AMF to Baazov’s defense this spring, as part of the ongoing sifting of the massive data trove by the AMF.

Those tardy disclosure batches led to an “abuse of process” claim by Baazov’s defense, which was dismissed. That set the stage for last week’s third attempt, this time over documents that shouldn’t have been part of the case.

A ruling on the latest motion has yet to be made, though it appears to be a long-shot effort by Baazov’s counsel, given its defeat on the two prior dismissal motions.

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