Bankrupt daily fantasy sports operator Fantasy Aces admitted that it co-mingled player funds and operational funds in its latest court filings.
The site filed in January in the bankruptcy court for the Central District of California. It later became apparent that it had spent or lost nearly all of its players’ funds, a sum totaling $1.3 million.
The filings come after the Wall Street Journal reported that Aces had retained a criminal defense attorney.
Fantasy Aces and the missing player funds
From the initial filings in bankruptcy court, it was already clear that Fantasy Aces had spent player funds. Aces told players it segregated funds, which should have been safe for players to access at any time.
Here is how the filing describes the situation:
Shortly after his appointment, Trustee met with Debtor’s management team, including Thomas Frisina, Bryan Frisina, and Trent Frisina. During this meeting, the Trustee learned that the Player Database contains approximately 30,900 names.
Debtor’s management explained that each Player had an “account” comprised of money owed by Debtor based on amounts “deposited” by each Player and money won by participating in Debtor’s DFS contests. Although Debtor was supposed to keep the amounts in the Players’ “accounts” in trust and separate from Debtor’s operating funds, it did not do so and all Player funds were used by Debtor to pay operating expenses.
What else we know about Fantasy Aces’ bankruptcy
Here’s some of the information we gleaned from the filings:
Fantasy Aces will be in court next week
There will be a hearing about the case on Feb. 27 at 2:30 p.m. at the courthouse in Santa Ana, Calif.
Fantasy Aces’ player database, and the FantasyDraft bailout
Another DFS operator, FantasyDraft, had agreed to pay back most of the players owed money by Fantasy Aces, pending approval of the bankruptcy court. As part of that deal, FantasyDraft will get access to the full Aces database.
From court documents:
The list of Debtor’s DFS Players (“Player Database”) is among Debtor’s more valuable assets, but its value is decreasing daily as Players open DFS accounts with other companies.Also, as soon as Debtor files its Schedule F and creditor matrix, the list will become public record available to any competitor that may seek to target such Players.
In order to realize value from this rapidly depreciating asset, the Trustee negotiated an expedited sale of the Player Database. The transaction requires that the Trustee transfer the Player Database “free and clear” of any interest in such property including liens. As such, the Trustee has also negotiated a stipulation that releases the only lien against the Player Database.
How many people are owed money by Fantasy Aces?
Fantasy Aces owes money to approximately 31,000 people, as outlined in the filing excerpt above. The full list of player accounts appears in a 742-page document.
There are 14 players that are owed in excess of $10,000. The most owed to any single player is $91,000.
Only one ‘creditor’ guaranteed to get money
The filing lists Social Growth Technologies, Inc., as the only “secured creditor” in the case:
In short, SGTI is guaranteed $185,000 by mid-July 2017.
That means the claim must be satisfied before any other creditor — Aces players included — will see any money, outside of the agreement for the purchase of the player database by FantasyDraft. SGTI agreed to give up its claim to the database to allow that transaction to go through.