Neteller Executive Charges – Court Filing

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UNITED STATES OF AMERICA -v- STEPHEN ERIC LAWRENCE, Defendant.
Sealed Complaint
Violation of 18 U.S.C. § 1956
COUNTY OF OFFENSE:
NEW YORK/WESTCHESTER
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SOUTHERN DISTRICT OF NEW YORK, ss.:
Maryann Goldman, being duly sworn, deposes and says that she is a Special Agent with the Federal Bureau of Investigation and charges as follows:

COUNT ONE
1. From in or about June 1999, up to and including in or about January 2007, in the Southern District of New York and elsewhere, STEPHEN ERIC LAWRENCE, the defendant, and others known and unknown, unlawfully, wilfully and knowingly did combine, conspire, confederate, and agree together and with each other to violate Section 1956(a)(2)(A) of Title 18, United States Code.

2. It was a part and an object of the conspiracy that STEPHEN ERIC LAWRENCE, the defendant, and others known and unknown, would and did transport, transmit, and transfer monetary instruments and funds from a place in the United States to and through a place outside the United States and to a place in the United States from and through a place outside the United States with the intent to promote the carrying on of specified unlawful activity, to wit, the operation of illegal gambling businesses in violation of Title 18, United States Code, Section 1955, the illegal transmission of wagers and gambling information, in violation of Title 18, United States Code, Section 1084, and the commission of gambling
offenses in violation of both New York State Penal Law, Article 225, and
anti-gambling statutes in other states.

OVERT ACTS
3. In furtherance of said conspiracy and to effect the illegal object thereof,
STEPHEN ERIC LAWRENCE, the defendant, and others known and unknown, committed the following overt acts, among others, in the Southern District of New York and elsewhere:

a. In or about 1999, LAWRENCE and a co-conspirator (“CC#1”) founded a group of businesses (the “Neteller Group”) to provide online payment services to internet gambling businesses.

b. Beginning in or about July 2000, and continuing up to in or about December 2003, LAWRENCE, CC#1, and others affiliated with the Neteller Group offered online payment services through Neteller Inc., a Canadian corporation, to various internet gambling businesses so that these businesses could illegally access customers in the United States, including customers in and around New York City.

c. Beginning in or about January 2004, and continuing up to in or about January 2007, LAWRENCE, CC#1, and others affiliated with the Neteller Group offered online payment services through Neteller PLC, a corporation based in the Isle of Man, to various internet gambling businesses so that these businesses could illegally access customers in the United States, including in and around New York City.

d. On or about April 14, 2004, LAWRENCE, CC#1, and others affiliated with the
Neteller Group raised approximately $70 million through an initial public
offering of shares in Neteller PLC on the Alternative Investment Market (“AIM”)
of the London Stock Exchange (“LSE”) in order to, among other things, expand
their online payment business. (Title 18, United States Code, Sections 1956(h).) The bases for deponent’s knowledge and for the foregoing charge are, in part, as follows:

4. Since in or about June 2006, the Federal Bureau of Investigation (“FBI”) has
been conducting an investigation of Neteller PLC, a company that is based in
Isle of Man and is publicly-traded in the United Kingdom. The investigation has
revealed that Neteller PLC conducts and facilitates illegal financial transactions between gambling customers in the United States and numerous
offshore online gambling businesses.

5. I have been personally involved in the investigation of this matter. This
complaint is based upon my involvement in the investigation, my conversations with other law enforcement officials and witnesses, and my examination of reports, records, and tapes. Because this complaint is being submitted for the limited purpose of establishing probable cause, it does not include all the facts that I have learned during the course of this investigation. Where the contents of documents and the actions, statements, and conversations of others are reported herein, they are reported in substance and in part, except where otherwise indicated.

6. I have reviewed various business records of Neteller PLC. These records
describe, among other things, the history and development of the Neteller Group and the services that it provides. For example, in the prospectus from Neteller PLC’s initial public offering on the AIM (the “Neteller IPO Prospectus”), the Board of Directors of Neteller PLC, including STEPHEN ERIC LAWRENCE, the defendant, collectively states that Neteller Inc., a Canadian corporation, was founded in 1999 by LAWRENCE and CC#1; that on January 1, 2004, the Neteller Group began doing business as Neteller PLC, a corporation based in Isle of Man; that Neteller PLC specializes in providing online payment processing services to online merchants and customers; that Neteller PLC, and previously Neteller Inc., offers services through Neteller.com; that the primary service provided by Neteller PLC, and previously by Neteller Inc., is a “virtual wallet” account that enables customers to deposit, withdraw, or transfer funds with any merchant
that supports the Neteller online payments system; that Neteller PLC generates its revenues on a fee-for-service basis for any transfer of money between any combination of members or merchants; and that Neteller Inc. began processing transactions in July 2000.

7. I have reviewed various business records of Neteller PLC that provide
information regarding the scope of the online payment services provided by
Neteller PLC, including the following:

a. In the Neteller IPO Prospectus, the Board of Directors of Neteller PLC,
including STEPHEN ERIC LAWRENCE, the defendant, collectively states that more than 95 percent of the revenues generated by the Neteller Group, is derived from processing money transfers pertaining to the online gambling market; and that on or about March 1, 2004, Neteller PLC had 685,945 member accounts, of which approximately 88 percent belonged to North American residents.

b. Neteller PLC’s 2004 annual report states that, in 2004, Neteller PLC
processed $3.4 billion in financial transactions; and Neteller PLC provides
gambling customers with access to more than 80 percent of the online gaming
merchants in the world.

c. Neteller PLC’s 2005 annual report states that, in 2005, Neteller PLC
processed over $7.3 billion in financial transactions; Neteller PLC provides
gambling customers with access to more than 80 percent of worldwide gaming
merchants; and in 2005, Neteller PLC had $172.1 million in revenues and $91.5
million in net profit.

d. In Neteller PLC’s half yearly report for the six-month period ending June 30,
2006, dated September 11, 2006, the President and Chief Executive Officer of
Neteller PLC described the “online gaming market” as Neteller PLC’s “main
market,” and stated that, in the first half of 2006, Neteller PLC processed $5.1
billion in financial transactions, and that approximately 85 percent of Neteller
PLC’s revenue during that period derived from individuals in North America.
e. The transcript of a public conference call that occurred on or about
September 11, 2006, between officers of Neteller PLC and financial analysts,
reflects that the Chief Financial Officer of Neteller PLC stated during the
conference call that approximately 75 percent of the revenue of Neteller PLC
originated from customers in the United States.

8. As part of the investigation, law enforcement officers and a cooperating
witness posed as gambling customers and conducted online monetary transactions with numerous online gambling businesses using online payment processing services provided by Neteller PLC. The following are examples of some of the transactions that I have either participated in or learned about:

a. 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.

b. On or about September 26, 2006, I was present with the CW at a public library located in Westchester County, New York. At that time, I observed the CW access the internet using a public computer at the library. The CW then used the computer to access Online Gambling Business #1’s website, and the CW then withdrew $200 from his wagering account with Online Gambling Business #1 and transferred it electronically to the Neteller Account. Thereafter, the CW then placed a $50 wager on an NFL football game on Online Gambling Business #1’s website using money that had previously been deposited with Online Gambling Business #1 using the Neteller Account.

c. On or about December 29, 2006, in Westchester County, New York, I used a computer to access the Neteller Account by logging on to Neteller.com. At that time, the balance in the account was $100. I then transferred $25 from the Neteller Account to a wagering account with an online gambling business based in Costa Rica (“Online Gambling Business #2”). I then transferred $25 from the Neteller account to a wagering account with another online gambling business based in Costa Rica (“Online Gambling Business #3”). Then, I logged on to Online Gambling Business #1’s website and used a link to Neteller.com to transfer $25 from the Neteller Account to the wagering account with Online Gambling Business #1 that previously had been opened by the CW.