Private Equity Fund Manager Fined for Gambling €42M in Embezzled Funds

_{Lithuania’s gambling regulator tightens controls after a high-profile fraud case. (Image: D. Umbrasas / LRT)}

Olympic Casino Group has been hit with an incredible €8.4 million fine for failing to monitor the activities of a former private equity fund manager.

The case was brought by the Lithuania Gaming Control Authority (LPT), with businessman Šarūnas Stepukonis, a former partner at BaltCap Fund, at its centre. He is facing allegations of embezzlement.  

It is alleged that Stepukonis gambled with land-based and online casino operator Olympic Casino between 2016 and 2021. 

Failure of Operator to Cooperate With Regulator

Allegations suggest that Stepukonis embezzled large amounts of €42 million from several companies managed by the private equity fund BaltCap through gambling.  

The allegations include details of Stepukonis losing up to €6.4 million with Olympic Casino and the subsequent failure of the operator to cooperate with the regulator. The allegations were made public in January, and Stepukonis now faces trial. 

Details of the case emerged, including findings by LPT, which concluded its investigation into violations of anti-money laundering and gambling laws, identifying five legal breaches. 

Notably, Stepukonis incurred losses of €6.4 million while gambling at Olympic Casino, which was classified as the damage inflicted. 

Olympic Casino reportedly did not cooperate during the investigation, resulting in an aggravating factor that influenced the fine calculation. 

Obvious Signs for Suspicion Missed or Ignored 

In a statement, the LPT said: “Stepukonis’ transactions had obvious signs that should have raised suspicions against the gambling operator. However, the FNTT was not informed about this.” 

Stepukonis also moved his gambling activities to Estonia following a rule change, which meant that licensed operators in Lithuania were barred from providing users with a financial incentive so they could gamble and lose. 

Typically, the Estonia-facing Olympic Casino site should redirect a Lithuanian player attempting to register to the Lithuania domain. The LPT said that this was not the case for Stepukonis. 

The LPT said: “Instead of finding out whether Stepukonis had problems with gambling or informing the supervisory authority, Olympic Casino encouraged him to gamble even more. 

"An individual incentive package was prepared for him. These funds could only be spent on gambling. Other incentive measures were also allocated.” 

Operational Changes in Lithuania as Result of Investigation 

As a consequence of the investigation, LPT implemented operational changes to prevent similar cases, including requiring gambling operators to act on irresponsible gambling behaviours and to provide real-time case information to the LPT. 

LPT also pledged to increase the frequency of inspections of gambling operators. An audit by the Lithuanian Ministry of Finance found no significant operational deficiencies within the LPT.