Police Arrest a Pixbet Partner as Operation Arena Finds a Curaçao Shell, PixStar

Diomar Tadeu Dantas de Farias was taken into preventive custody in Jacumã on Thursday morning as the second phase of the money-laundering inquiry served five more warrants against the bookmaker's leadership. The Receita Federal says offshore companies were set up to make a Brazilian-run operation look foreign; the law firm that represents Pixbet says it only ever did the lawyering.

• The Federal Police arrested Diomar Tadeu Dantas de Farias, a partner in Pixbet, in Jacumã on the Paraíba coast on the morning of 17 September, the principal target of a new phase of Operation Arena, iGaming Brazil reports from CNN Brasil
• The phase served five further search, seizure and asset-sequestration warrants against the platform's leadership; the first phase in August froze about R$1.1 billion across five states and led the Ministry of Finance to suspend Pixbet's licence
• The Receita Federal's cross-referencing of financial data found the group opened companies abroad "with the sole intention of forging the appearance that operations took place outside Brazil", while management and decisions stayed in the country; a Curaçao offshore called PixStar, described as a shell, was the key piece
• The payment trail between PixStar and the Brazilian operation had already put lawyer Nelson Wilians, who represents the bookmaker before the federal courts in Paraíba, under scrutiny in the first phase
• His firm, NWADV, said through Santiago Schunck that its relationship with Pixbet "is strictly professional and derives from the provision of legal services" and that it "repudiates any attempt to associate the professional work of its lawyers with the activities or conduct attributed to its clients"

The Second Phase Goes to the Top

Brazil's Federal Police returned to Pixbet on Thursday with a second phase of Operation Arena, arresting one of the bookmaker's partners and serving five further warrants against its leadership, iGaming Brazil reports, citing CNN Brasil. Diomar Tadeu Dantas de Farias was detained in the morning in Jacumã, on the coast of Paraíba, where the company is headquartered, under a preventive custody order; the police described him as the principal target of the new phase. The warrants cover search, seizure and the sequestration of assets. The first phase, on 13 August, executed search warrants in São Paulo, Rio de Janeiro, Sergipe, Paraíba and Paraná and froze up to R$1.1 billion, after which the Ministry of Finance suspended Pixbet's licence and a Paraíba court ordered its sites taken down nationwide over missing age checks.

The case the Receita Federal has built is about where the business really was. By cross-referencing financial data, its auditors found what iGaming Brazil describes as "a web of asset concealment": the group opened companies abroad "with the sole intention of forging the appearance that operations took place outside Brazil", while the evidence indicates that administrative, operational and decision-making management "always remained based on national territory", evading the Brazilian tax burden. The main element confirming the fraud, according to the report, was PixStar, an offshore based in Curaçao that investigators consider a shell. Police intelligence mapped a series of suspicious payments between that foreign company and the Brazilian operation.

The Lawyer in the Money Trail

That trail had already reached the bookmaker's lawyer. Nelson Wilians, who represents Pixbet in proceedings before the federal courts in Paraíba, came under the authorities' attention during the first phase because of the PixStar payments, iGaming Brazil reports. With the new arrests, his firm moved to separate itself from the allegations. "The relationship between the firm and Pixbet is strictly professional and derives from the provision of legal services," said Santiago Schunck, representing NWADV. "The firm's work for its clients is limited to the regular practice of law and is not to be confused with the business activities they carry out. The firm repudiates any attempt to associate the professional work of its lawyers with the activities or conduct attributed to its clients. Care is needed so that the legitimate practice of law is not improperly criminalised because of the nature or activities of those the lawyer represents."

The arrest follows messages seized in the Banco Master inquiry, reported this week, in which an associate of the jailed banker Daniel Vorcaro described him as Pixbet's real owner; Pixbet has denied that, and its registered owner is Ernildo Júnior. It also lands in the week the government's provisional measure against online gambling is expected, and a day after the Finance Ministry gave banks 24 hours to freeze accounts linked to unlicensed operators.

A Licensed Operator Being Prosecuted for Pretending to Be Offshore

The irony of the Receita's theory is worth stating plainly. Brazil built its licensing regime to bring offshore bookmakers onshore, and the allegation against Pixbet is that a bookmaker that was onshore all along dressed itself up as offshore to avoid the tax that came with being licensed. If that is proved, the company did not evade regulation by leaving the country; it evaded tax by pretending to. That is a different failure from the one the government is about to legislate against, and it is one the existing rules were supposed to catch at the point of licensing, when beneficial ownership and corporate structure were declared.

Every Phase Names Someone Closer to the Centre

The first phase took the money. The Banco Master messages named a possible hidden owner. The second phase has arrested a partner and reached the firm that argues the company's cases, which is as close to the centre of a business as an inquiry gets without charging the founder. NWADV's statement is carefully drawn, and the point it makes, that acting for a client is not the same as running the client's business, is one Brazilian courts have generally respected. But a lawyer's name in a payment trail is not the same as a lawyer's name on a pleading, and that is the distinction the Receita will be asked to explain.

The Timing Could Not Be Worse for the Licensed Sector

Pixbet held a federal licence. Every headline this week, the ownership messages, the shell company, the arrest, is about a company inside the regulated market, and it arrives as the president decides whether to shut that market's most profitable product by decree. The industry's argument is that regulation is what caught Pixbet. The Receita's account suggests the catching took a bank collapse and a police operation, not a licensing review. That is the weakness in the sector's case, and the government now has a worked example to cite.

The company that held the biggest shirt deal in Brazilian football is now a partner in custody, a shell in Curaçao and a law firm insisting it only did the lawyering. The regulator that licensed it is watching the police explain what it missed.