Neteller execs charged in gambling case
Neteller execs charged in gambling case By LARRY NEUMEISTER, Associated Press Writer
28 minutes ago
Two founders of a company that processes Internet gambling transactions were arrested and charged with funneling billions of dollars in gambling proceeds to overseas betting operations, federal prosecutors announced Tuesday.
The charges mark the latest in a series of crackdowns by the federal government against the online gambling industry.
The charges against the former Neteller PLC directors, John David Lefebvre, 55, and Stephen Eric Lawrence, 46, both Canadian citizens, were contained in two criminal complaints unsealed in U.S. District Court in Manhattan on Monday, U.S. Attorney Michael Garcia said in a statement.
The prosecutor said the men knew when they took their company public that its activities were illegal. FBI Assistant Director Mark J. Mershon said the multibillion-dollar online gambling industry is "a colossal criminal enterprise masquerading as legitimate business."
Neteller is an Internet payment services company that has grown in popularity as an increasing number of credit card companies have begun refusing to accept payments to online gambling sites.
Neteller essentially acts as a middleman between gamblers and offshore betting operations. For example, a gambler who wants to place bets at offshore sports books can fund an account with Neteller, which in turn will transfer the money to the betting sites. Prosecutors say Neteller facilitated the transfer of billions of dollars of illegal gambling proceeds.
Lefebvre was arrested Monday in Malibu, Calif., and was scheduled to appear in U.S. District Court in Los Angeles on Tuesday. Lawrence, who lives in the Bahamas, was arrested Monday in the U.S. Virgin Islands and will appear in federal court on Wednesday.
Peter Neiman, a lawyer for Lawrence, said he had no comment. A lawyer for Lefebvre did not immediately return a telephone message seeking comment.
In 1999, the men founded Neteller, which is based in the Isle of Man and is publicly traded in the United Kingdom.
The company began processing Internet gambling transactions in 2000.
Lawrence left the company's board of directors in October, while Lefebvre left in December 2005, prosecutors said. Together, the men owned as much as 35 percent of the company's outstanding shares.
Prosecutors cited Neteller's 2005 annual report in saying that Lawrence and Lefebvre enabled the company to provide payment services to more than 80 percent of worldwide gaming merchants.
Garcia noted that the company acknowledged when it went public that U.S. law prohibited people from promoting certain forms of gambling, including Internet gambling and transmitting funds that are known to have been derived from criminal activity.
Lefebvre and Lawrence also conceded in the company's offering documents that they were risking prosecution by the U.S. government, he said.
Prosecutors said Neteller in 2005 alone processed more than $7.3 billion in financial transactions, 95 percent of which was derived from money transfers involving Internet gambling.
Lawrence and Lefebvre were charged with conspiring to transfer funds with the intent to promote illegal gambling, and could face up to 20 years in prison if convicted.
28 minutes ago
Two founders of a company that processes Internet gambling transactions were arrested and charged with funneling billions of dollars in gambling proceeds to overseas betting operations, federal prosecutors announced Tuesday.
The charges mark the latest in a series of crackdowns by the federal government against the online gambling industry.
The charges against the former Neteller PLC directors, John David Lefebvre, 55, and Stephen Eric Lawrence, 46, both Canadian citizens, were contained in two criminal complaints unsealed in U.S. District Court in Manhattan on Monday, U.S. Attorney Michael Garcia said in a statement.
The prosecutor said the men knew when they took their company public that its activities were illegal. FBI Assistant Director Mark J. Mershon said the multibillion-dollar online gambling industry is "a colossal criminal enterprise masquerading as legitimate business."
Neteller is an Internet payment services company that has grown in popularity as an increasing number of credit card companies have begun refusing to accept payments to online gambling sites.
Neteller essentially acts as a middleman between gamblers and offshore betting operations. For example, a gambler who wants to place bets at offshore sports books can fund an account with Neteller, which in turn will transfer the money to the betting sites. Prosecutors say Neteller facilitated the transfer of billions of dollars of illegal gambling proceeds.
Lefebvre was arrested Monday in Malibu, Calif., and was scheduled to appear in U.S. District Court in Los Angeles on Tuesday. Lawrence, who lives in the Bahamas, was arrested Monday in the U.S. Virgin Islands and will appear in federal court on Wednesday.
Peter Neiman, a lawyer for Lawrence, said he had no comment. A lawyer for Lefebvre did not immediately return a telephone message seeking comment.
In 1999, the men founded Neteller, which is based in the Isle of Man and is publicly traded in the United Kingdom.
The company began processing Internet gambling transactions in 2000.
Lawrence left the company's board of directors in October, while Lefebvre left in December 2005, prosecutors said. Together, the men owned as much as 35 percent of the company's outstanding shares.
Prosecutors cited Neteller's 2005 annual report in saying that Lawrence and Lefebvre enabled the company to provide payment services to more than 80 percent of worldwide gaming merchants.
Garcia noted that the company acknowledged when it went public that U.S. law prohibited people from promoting certain forms of gambling, including Internet gambling and transmitting funds that are known to have been derived from criminal activity.
Lefebvre and Lawrence also conceded in the company's offering documents that they were risking prosecution by the U.S. government, he said.
Prosecutors said Neteller in 2005 alone processed more than $7.3 billion in financial transactions, 95 percent of which was derived from money transfers involving Internet gambling.
Lawrence and Lefebvre were charged with conspiring to transfer funds with the intent to promote illegal gambling, and could face up to 20 years in prison if convicted.
Comments
http://www.neteller-group.com/press/en/122.htm
As they said at Neteller, nothing changes for Canadians. We can still transfer to and from casinos/poker rooms. Cashouts if made for now will be delayed (for obvious reasons), but I suspect that will work itself out within a couple of weeks.
It feels like Neteller is proactively making this business decision much like Party did. It is a publically traded company and while losing the US customers for now is obviously a blow, it is better to just avoid what would be eventual legal issues later on.
I did ask one question which mildly concerned me, namely would we have to switch the currency we had out neteller account in. This was based on the recent decision of Royal Bank to close a few US accounts of people with passports to countries that the US deems bad (ie Cuba Iran etc). The US can control how their currency is handled in this institutional level (basically with threats if needed) so Royal complied.
I did not think that they woul duse a similar approach on non US gamblers, but if we did have to change the currency base in our neteller account it would obviously cause a major problem as any transfer would be hit with an exhange fee (and this would really crush Neteller business). I was assured that the currency my account was in would not have to be changed.
The original founders being arrested really had nothing to do with anything, though the timing was not ideal.
For now we are in good shape, though it will be an annoying couple of weeks filled with variations of the world is ending.
After that everything is ok......