Flutter / Stars Group: The Invoices Passed, the Work Went Unchecked

In the Flutter / Stars Group FCPA case, Flutter agreed to a $4 million civil penalty over approximately $8.9 million in Russian consultant payments. The Securities and Exchange Commission alleged inaccurate books and failed controls over that spending. If you prepared invoices, approved expenses or questioned what a consultant actually delivered, the case turns on decisions you would recognize: the company allegedly checked whether payments fit the budget while leaving the work unchecked.

In its March 6, 2023 order, the agency named Flutter Entertainment as successor to The Stars Group. The FCPA settlement addressed the Foreign Corrupt Practices Act’s accounting requirements, including allegations that payments were inaccurately recorded as lobbying fees.

The Acquisition Brought the Consultants With It

Stars Group inherited the Russian consultants when it bought Oldford Group on August 4, 2014. The acquisition brought PokerStars, other online gaming brands and Russian operations into the business. Flutter then acquired Stars Group on May 5, 2020, which explains why Flutter appears in the SEC order over its predecessor’s conduct.

Stars Group’s shares traded on NASDAQ from 2015 until Flutter acquired it and the shares were delisted. Its SEC registration brought the Canadian gaming company’s accounting within the agency’s reach, and the order named its Irish successor, Flutter.

According to the SEC, the business already had policies requiring background checks, references and written contracts for third parties. Yet the agency alleged that nobody performed due diligence on the Russian consultants when they were first retained, during the PokerStars acquisition or in the months afterward. The acquired business carried its consultant relationships forward, along with the missing checks.

That is the acquisition question an insider can illuminate. The deal file may describe the business being bought, while the people processing its next invoices know which outside relationships continued and who approved the spending. We connect those accounts to see how the inherited relationships were actually supervised.

Russian Poker Revenue Depended on Government Decisions

The Russian business gave the consultants a commercially important assignment: help legalize poker and expand operations. The SEC described Russian users as a significant source of revenue and Russia as a market where poker was neither affirmatively permitted nor explicitly prohibited during the relevant period. According to the order, the company’s strategy relied primarily on a lobbyist, a legal adviser on Russian gaming law and a Moscow businessperson who headed a business interest group.

The order describes a more immediate pressure on the online business: Roskomnadzor, the Russian agency administering internet censorship filters, repeatedly blocked the company’s poker sites. The same government whose officials the consultants sought to influence could interrupt customers’ access to the product.

For someone inside that operation, a lobbying expense had a business context. A message about a legislative proposal or a blocked website could explain the urgency behind an invoice much better than its generic service description.

What the Invoices Said and What Was Missing

The SEC alleged that, until 2019, a company employee prepared and submitted invoices for the Moscow businessperson, whom the order calls Consultant C. It also alleged that no employee substantively reviewed the consultants’ invoices to determine whether services had been provided before that year. Approval depended on whether the amount stayed within the overall Russian consultant budget.

We see a remarkable substitute for checking the work: checking whether there was room to pay for it. The specific transactions show what that substitution allowed to pass through the business.

A Legislative Bill and an Urgent Payment

The SEC alleged that, in June 2015, Consultant C submitted an invoice equivalent to $57,000 for drafting and submitting a bill. The consultant said the money would reimburse the cost of retaining legal professionals to draft legislation for the Duma, Russia’s lower house of parliament. The order alleged that there was no record identifying who had been retained or whether draft legislation reached the Duma.

The order quoted an employee’s email pressing for payment that week:

The agency alleged that the employee responsible for approving the invoice made no further inquiries and the company paid it on June 10, 2015. The message tied the payment to a legislative outcome, while the file lacked the work that supposedly justified it. For an insider who knew the proposed legislation or the people commissioned to draft it, that gap would be concrete.

An Agency Payment Entered as Lobbying and Rent

The SEC alleged that, in 2016, Stars Group made two payments totaling approximately $22,000 to Consultant C as expense reimbursements. In its account, supporting emails described payments concerning or to Roskomnadzor, but no receipt or other proof of payment to the agency was provided. The SEC said the company recorded the payments as lobbying fees and office rent.

That accounting description matters because Roskomnadzor had been blocking the company’s websites. An employee who knew why the reimbursements were requested could connect the operating problem, the internal email and the expense entry. The payment trail would also distinguish money sent to the consultant from the onward payment the consultant supposedly made.

New Year’s Gifts Entered as Lobbying Costs

The SEC alleged that, from March 2017 to January 2018, Stars Group made six payments totaling approximately $139,000 to Consultant C as lobbying fees or costs without supporting documentation. According to the order, emails at the time indicated that some funds reimbursed New Year’s gifts to people including Russian government officials, contrary to company policy.

The order also alleged a separate mismatch for the legal adviser, Consultant B: payments were consistently recorded as lobbying or marketing expenses even though the engagement supposedly concerned legal services. The alleged accounting failures concerned both the description entered in the books and the missing review that should have tested it.

Russian Legislative Work, a Belize Company and a Latvian Account

The order also describes a consulting company that Stars Group retained to advise on Russian gaming legislation and liaise with officials. According to the SEC, the company paid it $2 million during 2015 without any indication that it supplied the contracted services.

The order alleged that the consulting company was registered in Belize and maintained its payment account in Latvia, jurisdictions unrelated to the proposed Russian services. It also alleged that management initially heard the payment would be a success fee for getting legislation passed, before the explanation changed to a retainer to engage legal professionals and other consultants to draft legislation.

The SEC alleged that due diligence amounted to a public records database search, with no investigation of the firm’s principals or ultimate beneficial owner. The order said the services contract was never countersigned and lacked the anticorruption provisions company policy required. It alleged that monthly invoices supplied no detail, and nobody approving the payments checked whether the firm actually delivered services.

In the SEC’s account, the explanation for the fee changed while the firm’s ownership went unchecked. The person who saw both versions of the proposal could explain a discrepancy that the final invoice would never show. A signed approval, the earlier proposal and the ownership file each answer a different part of that question.

A New Policy Still Let the Payments Through

According to the order, by at least 2016 the Stars Group board had begun reviewing possible improper payments through company personnel or outside consultants. The agency said the company voluntarily contacted it and other U.S. and Canadian regulators, then adopted a policy requiring risk-based diligence, written contracts and chief executive or general counsel approval for consultants. The policy prohibited payment until those steps were complete.

The agency alleged that payments to the Russian consultants nevertheless continued in violation of the policy, and Consultant C had no written contract until late 2017 despite having been retained years earlier. The order described new contracts that year requiring detailed monthly invoices, supporting documents and activity reports. It alleged that the invoices still gave generic service descriptions, and the company neither received nor requested the required reports.

The gap between a control and its use appears in Fresenius Medical Care too. In its settled order concerning the dialysis company, the SEC alleged that a directive prohibiting use of a Serbian agent was circumvented by approving payments through a transport vendor. The vendor then paid doctors, according to the order.

The 2022 Journal of Forensic and Investigative Accounting paper Fresenius Medical Care: A Case Study on the FCPA examines how managers kept payments moving despite flagged transactions and policies. Its analysis sharpens the question for an insider: what happened to the next payment after someone identified the problem? In the Stars Group account, the promised reports were missing, yet the approvals continued.

Why the People Who Explain a Payment Matter

The SEC credited Stars Group and Flutter with sharing findings from their internal investigation and forensic accounting reviews. Their cooperation included translated documents, witness statements and encouragement for people the agency could not compel to provide evidence. That account shows why the people who can explain a payment matter alongside the documents recording it. The order also credited Flutter with steps to strengthen its controls and with ending its relationships with the lobbyist and Moscow businessperson in March 2021, before leaving the Russian market in March 2022 following Russia’s invasion of Ukraine.

What an Insider Can Add to the Consultant File

In a case built around unsupported services, whistleblower evidence can connect the promised work to the decision to pay anyway. An employee may know who wrote the invoice, whether the activity report existed, what an internal payment request meant or why a service description changed. We examine those connections with you, including the earlier warning and the approval that followed it.

Acquisition records, consultant agreements, ownership information, bank records and ledger entries show different parts of the transaction. Your knowledge of the business can explain how they fit together. A finance employee who processed a payment and an operations employee who knew what the consultant actually did may each hold a consequential part of the same story.

SEC whistleblower awards can total 10% to 30% of qualifying collected sanctions for eligible whistleblowers. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Those are separate programs. For information about foreign consultant payments and false company records, we assess the SEC opportunity with you.

You Know What the Consultant Was Paid to Do

If you know why a consultant’s invoice was approved despite missing work, talk with our whistleblower experts about the payment. We build the case with your knowledge of the business, bring in foreign-bribery whistleblower lawyers who understand consultant payments and company accounting, and stay beside you through the process.