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Neteller founders Stephen Lawrence and John Lefebvre have been charged with money laundering charges by the US Attorney General in the Southern District of New York.
A statement from the office of Michael Garcia added that Lawrence and Lefebvre had been arrested in connection with the “creation and operation of an internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from US citizens to the owners of various internet gambling companies located overseas.”
Lawrence was arrested yesterday in the US Virgin Islands and will be presented in federal court in St Thomas by tomorrow. Lefebvre was arrested in Malibu, California and will be presented in a Los Angeles court later today.
Lawrence and Lefebvre were arrested in the early hours of Monday morning, January 15.
Neteller suspended its share price this morning as the news broke.
In a statement released earlier today, Neteller said neither Lawrence or Lefebvre had any current position within the company. The statement added: “The group has not received any communication or correspondence from any US authority regarding this or any related matter.”
Lebebvre left Neteller in December 2005 while Lawrence left in October last year, just after the passing of the Unlawful Internet Gaming Enforcement Act.
The news of the Neteller arrests spelt more bad news for those operators that have not exited the US.
Said one legal source: “It’s a warning shot across the bows for those still taking money from the US.”
He added: “They are aiming their strategy at the finance provision. It is consistent with the Unlawful Internet Gambling Enforcement Act (UIGEA). It is a more effective strategy than going after the operators themselves, such as PokerStars. When you get the money providers, you get the portfolio of operators.”
One leading operator suggested this was particularly bad news for those poker operators that remain in the US market. “This could be terminal for the poker business in the US. The average punter won’t be willing to jump through the hoops (to get their payments through).”
Posted: 16-Jan-07
someone need to challenge is unlawfull internet gambling act in a big way soon.
Hell with dumping neteller, I think its time to dump this business! If they can trump this BS up and charge them with money laundering, they could do the exact same to affiliates. Those bastards over in NY have way too much time on their hands!
What’s scary is that they went after guys that had left the business once the new law went into effect. Does this mean they can still go after people at Party Gaming and the investment houses that promote them for “past behavior”?
Yes this is unbelievably terrible news – retrospective implementation of the law which was apparently illegal all along – how much have you ‘laundered’? Could you face a stretch in prison?
Neteller Execs Charged in Gambling Case
By LARRY NEUMEISTER Associated Press Writer
© 2007 The Associated Press
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NEW YORK — Two founders of a company which processes Internet gambling transactions were arrested and charged with laundering billions of dollars in gambling proceeds, federal prosecutors announced Tuesday.
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.
“Blatant violations of U.S. law are not a mere `risk’ to be disclosed to prospective investors,” Garcia said. “Criminal prosecutions related to online gambling will be pursued even in cases where assets and defendants are positioned outside of the United States.”
FBI Assistant Director Mark J. Mershon said the multibillion-dollar online gambling industry was “a colossal criminal enterprise masquerading as legitimate business.”
Lefebvre and Lawrence were charged in connection with the creation and operation of an Internet payment services company that facilitated the transfer to billions of dollars of illegal gambling proceeds from U.S. citizens to the owners of overseas Internet gambling companies.
Lefebvre was arrested Monday in Malibu, Calif and was scheduled to appear in U.S. District Court in Los Angeles Tuesday. Lawrence, who resides in Paradise Island, Bahamas, was arrested Monday in the U.S. Virgin Islands and will appear in federal court on Wednesday.
In 1999, the men founded Neteller, which is based in the Isle of Man and is publically traded in the United Kingdom.
The company began processing Internet gambling transactions in approximately July 2000, allowing companies to transfer money from U.S. customers to bank accounts overseas.
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.
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.
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 transmmitting 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, both charged with conspiring to transfer funds with the intent to promote illegal gambling, could face a maximum of 20 years in prison if convicted.
Here are statements that have been released thus far about the situation.
Statement released by the United States District Attorney’s Office (Southern District of New York) is available in pdf format at:
http://www.gpwa.net/news/neteller_arrests_pr.pdfCharges against Stephen E. Lawrence are available in pdf format at:
http://www.gpwa.net/news/neteller_lawrence_complaint.pdfCharges against John D. Lefebvre are available in pdf format at:
http://www.gpwa.net/news/neteller_lefebvre_complaint.pdfPS thank you, Michael, for making these publicly available.
With realization that the imposition of the new law on the Banking Industry would be unachievable and way too costly to implement, the DOJ (under direct governance of the Executive Branch of government….i.e., Bush) are playing strong-arm tactics, in an attempt to eradicate this business.
This will scare off more operators, no doubt. The question becomes how much muscle does NETeller and some of the bigger operators left have to combat this ???????????
Hopefully, Antigua is sending battleships over as we speak……….
So would it be safe to assume that the US can also charge it’s own banks with money laundering since they accepted Neteller transactions ?
nick777 wrote:So would it be safe to assume that the US can also charge it’s own banks with money laundering since they accepted Neteller transactions ?Sure why not? They were just as instrumental as was Neteller. Without either of the two in place doing their parts the transactions wouldnt have been possible.
But again this isnt about making a charge stick its about scaring the bejesus out of you. I wouldnt doubt by the end of this week that we will see a casino or two pull Neteller as a payment process. Once that starts its lights out, because it too will snowball.
Nick777
I would assume that that is true. I’d like to see them bring charges against Wachovia and Bank of America execs
I’m seeing a whole new world of legal possibilities here
If you choose to enforce a law at your own discretion then it’s not really a law is it.
If somebody commits murder then they are charged with murder, you don’t just go pick and choose which murderer you want to charge based on a whim.
If they have chosen this path then they should at least be consistent and charge everyone.
Lefebvre and Lawrence were charged in connection with the creation and operation of an Internet payment services company that facilitated the transfer to billions of dollars of illegal gambling proceeds from U.S. citizens to the owners of overseas Internet gambling companies.
There are enormous charges and the effort to prove that will be enormous too.
After many years someone discovered that this company was a criminal organization maybe in a fraudulent partnership with some offshore casinos.
Online gambling wasn’t illegal in the US before the bill.
It is not still illegal in many states.A lot of weak points in this matter.
Until I know Paypal was in the business during some time.
Why not Paypal executives?Until I know Paypal was in the business to during some time.
Why not Paypal executives?PayPal settled for a cool $10 mil.
it says there:
On or about August 12, 2006, a cooperating
witness (the “CW”), who at the time was located in Miami, Florida,
used a computer to open an account on Neteller.com (the “Neteller
Account”), and the CW electronically transferred $400 from a bank
account in Miami, Florida, into the Neteller Account. On or about
August 22, 2006, the CW, who at the time was located in Miami,
Florida, used a computer to open a wagering account with an online
gambling business based in Antigua (“Online Gambling Business #1),
by electronically transferring $400 from the Neteller Account to
Online Gambling Business #1. On or about August 24, 2006, the CW,
who at the time was located in Miami, Florida, used a computer to
access Online Gambling Business #1’s website, and the CW then
wagered $250 on a National Football League (“NFL”) football game
and won approximately $200. On or about September 7, 2006, the CW,
who at the time was located in Miami, Florida, used a computer to
access Online Gambling Business #1’s website, and the CW then
wagered $250 on an NFL football game and lost $250.and more of the same and then:
I have reviewed various business records obtained
from financial institutions that provide information regarding
international monetary transactions conducted by, or on behalf of,
Neteller PLC, including the following:
a. Records of automated clearinghouse (“ACH”)
transactions obtained pursuant to subpoena from an automated
clearinghouse located in the United States demonstrate that
Neteller processes a significant amount of customer transactions
through the automated clearinghouse system, including transactions
from customers in Manhattan. The ACH system permits Neteller to
handle internet-based customer transactions. These records further
demonstrate that Neteller uses a payment service company (the
“Payment Company”) to conduct its customers’ ACH transactions in
the name of the Payment Company. By doing so, Neteller PLC
conceals the nature of these financial transactions. The Payment
Company receives funds in the United States on behalf of Neteller
PLC, and then transfers the funds out of the United States to
accounts controlled by Neteller PLC in Canada.And later:
I have reviewed various business records of Neteller
PLC that demonstrate that STEPHEN ERIC LAWRENCE, the defendant, had
knowledge that he was participating in criminal activity in the
United States. For example, in the Neteller IPO Prospectus, the
Board of Directors of Neteller PLC, including LAWRENCE,
collectively states that criminal laws exist in the United States
that prohibit persons from promoting certain forms of gambling;
criminal laws exist in the United States that prohibit the
transmission of funds that are known to have been derived from
criminal activity or are intended to promote criminal activity;
that to date most of the criminal prosecutions related to online
gambling in the United States have been limited to cases where
assets or relevant individuals are located in the United States;
that the Neteller Group does not maintain offices or assets in the
United States; and that there can be no assurance that the
government of the United States will not try to prosecute the
Neteller Group under existing or future federal lawsSo this is based on the outdated wire act of sports betting eh..
