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Founders of Neteller Arrested!

Nothing in the news or investor sections at Neteller, but they will only be opening for business in the Isle of Man in another couple hours (their time now is GMT 6AM)

Hopefully there will be some sort of statement on this at that time.
 
Neteller statement

Neteller have issued a statement, and Reuters have reported that shares are suspended at request of the company:


STATEMENT REGARDING FORMER DIRECTORS

NETELLER Plc, the leading independent online money transfer business, today issued the following statement regarding the speculation surrounding two of its former directors and founder shareholders, Mr Stephen Lawrence and Mr John Lefebvre.

While travelling separately in the US, Mr Lawrence and Mr Lefebvre, both former directors of the Company, were detained by US authorities on Monday, 15 January 2007.

Other than as shareholders, neither Mr Lawrence nor Mr Lefebvre has any current position with or connection to NETELLER.

The Group has not received any communication or correspondence from any US authority regarding this or any related matter.

Pending clarification of the situation the Board has sought immediate temporary suspension of NETELLER's shares.

Further information will be issued in due course.

Enquiries:
NETELLER
Andrew Gilchrist, VP - Communications + 44 (0) 1293 555 726

Citigate Dewe Rogerson + 44 (0) 207 638 9571
Sarah Gestetner/Sebastian Hoyle/George Cazenove

Further information

Mr Lawrence resigned as a non-executive director of the Company on 13 October 2006 having stepped down as non-executive chairman of the Company on 11 May 2006. Mr Lefebvre resigned as a non-executive director of the Company on 15 December 2005.


Mr Lawrence is the majority beneficial owner of Corvina International Ltd. which holds a total of 7,085,541 ordinary shares representing approximately 5.91% of the issued share capital of the Company. Mr Lefebvre is the beneficial owner of Eagle Medallion Fortress Investment Corporation which holds a total of 6,638,094 ordinary shares representing approximately 5.54% of the issued share capital of the Company.

Notes to Editors

The NETELLER Group
With over 3 million customers in 160 countries, 3,500 merchants, and over
$7 billion in annual transactions, the NETELLER Group operates the largest
independent online money transfer business in the world. The Group specializes in providing innovative and instant payment services where money transfer is difficult or risky due to identity, trust, currency exchange, or distance.

Being independent has allowed the Group to support thousands of retailers
and merchants in many geographies and across multiple industries.

The Group is quoted on the London Stock Exchange's AIM market, with a ticker symbol of NLR. NETELLER UK Limited is authorised by the Financial Services Authority (FSA) to operate as a regulated e-money issuer. For more information about the Group visit www.netellergroup.com.
 
I guess it's dangerous to speculate before all the facts are available, but right now this has the feel of a deliberately intimidatory move by US enforcement officials.

On the positive side, these two guys have the money (and in at least one case the grit) to bring in top legal eagles, so enforcement officials will be taking care to get their procedures and powers right for fear of a major lawsuit being launched against them.

I'm waiting to see what the official US statement has to say.
 
jetset said:
I guess it's dangerous to speculate before all the facts are available, but right now this has the feel of a deliberately intimidatory move by US enforcement officials.
Click to expand...

That is exactly the way i have intepreted this action also. Seeing how they no longer have an official capacity at the company.

In the Pinnacle press release last week they seemed to also mention this intimidation or fear of the US government. Very scary.


REOdeathwagon
 
Peter Dicks, board of directors at sportingbet, arrested just before G2E and CAC, some of the largest industry gatherings. Charged among other things with "promoting gambling", installing fear and putting a crimp into the conferences. Peter is released during the events with no charges pending.

2 Neteller founders, arrested just before ICE and CAPeuro, some of the largest industry gatherings. Charged with nothing so far......

'Tis a chilly wind that blows.....
 
By Miyoung Kim
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LONDON (Reuters) - U.S. authorities detained two former directors and founding shareholders of NETeller Plc, the UK online money transfer firm said on Tuesday, adding it had requested the suspension of trading in its shares.
ADVERTISEMENT

Stephen Lawrence and John Lefebvre were detained on Monday while traveling separately in the United States, NETeller said, becoming the latest victims of the U.S. crackdown on Internet gaming.

It said neither Lawrence nor Lefebvre had any current connection to the company other than as shareholders.

"The group has not received any communication or correspondence from any U.S. authority regarding this or any related matter," it said. "Pending clarification of the situation the board has sought immediate temporary suspension of NETeller's shares."

Shares in the Isle of Man-based company, which has grown fast with the rapid rise in online gambling, closed at 176 pence on Monday, valuing it at around 211 million pounds ($415.4 million).

The shares have fallen 60 percent since early September, hit by the arrests in the United States of executives from British companies involved in online sports betting and the passage in October of a U.S. law barring banks from transactions involving Internet gambling.

The passage of the U.S. law has led most operators to withdraw from the U.S. Internet gaming market.

"Today's news will obviously dent sector sentiment, however given that NETeller was the only company continuing to transact in the United States we think that any selloff in Playtech or 888.com shares could offer an excellent buying opportunity," Numis Securities said in a note.

Shares in online gaming group 888 Plc dropped 2.9 percent to 125 pence by 1015 GMT and gambling software maker Playtech were down 0.7 percent to 277p.

Lawrence resigned as a non-executive director of NETeller in October 2006, having stepped down as non-executive chairman in May, while Lefebvre resigned as a non-executive director in December 2005.

Lawrence holds a 5.91 percent stake of NETeller through his vehicle Corvina, while Lefebvre holds 5.54 percent of the company via Eagle Medallion Fortress.


REOdeathwagon
 
jetset said:
but right now this has the feel of a deliberately intimidatory move by US enforcement officials.
Click to expand...

I believe you and dominique are spot on. I have to add though that I can't help but to think there is more at play here... Going through this much trouble to enforce a law on people that are not directly involved in Neteller anymore? One thing I hope is that this actually results into a lawsuit of some sorts as that will challenge a law that imo is very weak especially in the US courts.

I am sure we all get angry at the deliberate attack on the freedom of the US citizens, but I feel the back of my head go cold every time I hear stuff like this!
 
"chilling" is a tactic employed when there is no actual way to enforce something except by creating an athmosphere of fear.

I doubt there will be a trial.

The "chilling" of the industry has worked like a charm for the US so far.

Of course I have been wrong with these things before and there is much we don't know about the two arrested folks...
 
From the Jan 12th, EOG interview with Pinnacles 'main man'.

He started to reflect at this point:

"When the U.S. focuses on something and says 'enough,' and when they go to 'war,' no individual company can possibly win in a fight of this nature."

"Since the Internet Gambling Bill went into effect, we have lost the ability to do business with many quality banks."

"Fortunately, 35-40% of our current gambling business is non US driven, and perhaps more importantly, we are experiencing stronger growth in Europe and Asia, than we are in the United States."

"So why live in fear?"


The threat of US DOJ intimidation seemed to be successful in this case.


REOdeathwagon
 
Holy cow. That is the end for me gambling if Neteller has to pull out.

The two individuals might not be involved with Neteller now, but that would not excuse them in any way for whatever charges are being cooked up.

Things are moving fast now and they are going after the big players. Last week it was Pinnacle and now Neteller.

I fear for my money and privacy.
 
Money Laundering? Unbelievable!!

Jan. 16, 2007, 1:08PM

Neteller Execs Charged in Gambling Case


By LARRY NEUMEISTER Associated Press Writer
2007 The Associated Press

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.
 
FBI Assistant Director Mark J. Mershon said the multibillion-dollar online gambling industry was "a colossal criminal enterprise masquerading as legitimate business."
Click to expand...

OMG. This really is the end isn't it?

I'm assuming they cannot seize funds or records, and that no one from Neteller will be stupid enough to visit the US or its territories again. But still, if Neteller can get taken down then there is no safe way to fund gaming for Americans.
 
Casino Thread

Looks like the pull out has begun in earnest. A poster has just complained that Neteller has pulled the plug on Instacash for all US players. Sadly, they didn't announce this, and US players are simply finding they get errors when trying to deposit, with the usual mess of unhelpful tips on how to resolve the issue.
It is not much more of a step for Neteller to do what athe casino operators have done in such a situation. Close US accounts, and tell players after the fact, when they start complaining they can't log on.
Given the actual charges in the case, ALL transactions involving US players and Neteller are being treated as "money laundering", and for Neteller to continue to allow this while no verdict has been reached would be dangerous for a listed company in case the verdict is "guilty".
US players should consider whether they wish to persevere with gaming, or request a withdrawal of the contents of their Neteller accounts while they still can. When other operators closed US accounts, it seems they implemented an unnecessarily long wait for US players to receive back their balances.
These actions are certainly having the desired effect. Even if these cases collapse, many US players will have been scared away, and so will many operators.
I can't see much prospect of the current case getting anywhere, as they seem to base the charges on the premise that gaming online has been illegal all along, which has not been the case except in 11 states.
Neteller's big mistake has been in concentrating on the gambling industry, and even refusing merchant accounts for requests coming from non-gambling retailers. Had Neteller serviced any market, but "just happened" to have a big hold on gaming, this charge could have been seen off by stating that their activities fall under the "safe ports" provisions, and they still have time to formulate a means of identifying the gaming transactions within the business, and blocking those involving US players. As far as the DoJ are concerned, Neteller is for gambling transactions, and nothing else, so coming up with the charges was made easier.
 
Don't assume that Neteller can't be touched or its executives can't be arrested outside of the US.

If you think the UK wont extradite then take a read here:

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The charges being leveled by the US are very serious and I would imagine that UK authorities will cooperate in seizing data or financial records if asked to do so.

The DOJ can also subpeona major US banks and financial institutions to report all transactions involving Neteller as they are tagging these as "money laundering" violations and subject to RICO and Patriot Act investigations.
These include transactions prior to Oct 13th 2006.

:eek2:
 
A copy of the complaint:

Neteller Lawrence Complaint: United States of America v. Stephen Eric Lawrence
16 January 2007

Approved: ______________________________
CHRISTOPHER P. CONNIFF
TIMOTHY J. TREANOR
Assistant United States Attorneys
Before: HONORABLE DEBRA C. FREEMAN
United States Magistrate Judge
Southern District of New York

- - - - - - - - - - - - - - - - - - - -
UNITED STATES OF AMERICA -v- STEPHEN ERIC LAWRENCE, Defendant.
Sealed Complaint
Violation of 18 U.S.C. 1956
COUNTY OF OFFENSE:
NEW YORK/WESTCHESTER
- - - - - - - - - - - - - - - - - - - - x
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.
9. 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.
b. Records of wire transfers obtained pursuant to subpoena from a bank in the
United States (the "US Bank") demonstrate that, from in or about January 2006 up
to and including in or about March 2006, a total of approximately $98 million
was transferred by wire from an account in the name of the Payment Company at
the US Bank in the United States to an account in the name of JSL Systems Inc.
at National Bank of Canada in Calgary, Alberta, Canada. Neteller PLC's 2004
annual report states that JSL Systems Inc. is a related company that is owned by
a director of Neteller PLC that processes transactions for Neteller PLC and is
paid a nominal fee for its services. In the Neteller IPO Prospectus, the Board
of Directors of Neteller PLC, including STEPHEN ERIC LAWRENCE, the defendant,
collectively states that LAWRENCE and CC#1 are partners in and/or directors of
JSL Systems Inc.
c. Records of wire transfers obtained pursuant to subpoena from the US Bank
demonstrate that, from in or about March 2006 up to and including in or about
April 2006, a total of approximately $50 million was transferred from an account
in the name of the Payment Company at the US Bank in the United States to an
account in the name of Cardload Inc. at National Bank of Canada in Calgary,
Alberta, Canada. Neteller PLC's 2004 annual report states that Cardload Inc. is
a wholly-owned subsidiary of Neteller PLC.
10. I have reviewed various business records of Neteller PLC that provide
information regarding the involvement of STEPHEN ERIC LAWRENCE, the defendant,
in the business affairs of Neteller Inc. and Neteller PLC, including the
following:
a. In the Neteller IPO Prospectus, the Board of Directors of Neteller PLC,
including LAWRENCE, collectively states the following: LAWRENCE founded the
Neteller Group in June 1999; LAWRENCE participated in developing the online
payment services of the Neteller Group and participated in raising capital for
the Neteller Group; LAWRENCE served as Chief Executive Officer of Neteller Inc.
until December 2002 and drew a salary and other compensation from Neteller Inc.;
LAWRENCE served as executive director of Neteller Inc. from 2001 to August 31,
2003; LAWRENCE was Chairman of the Board of Directors of Neteller PLC and would
continue to serve as Chairman upon admission of Neteller PLC to AIM; LAWRENCE
owned approximately 42 percent of Neteller PLC prior to the IPO, and LAWRENCE
would own approximately 36 percent of Neteller PLC after the IPO; and LAWRENCE
advanced to Neteller PLC approximately $3 million in an interest-free loan.
b. Neteller PLC's 2004 annual report states that Neteller PLC is the creation of
LAWRENCE who is a major shareholder of Neteller PLC; LAWRENCE served as Chief
Executive Officer of Neteller Inc. until December 2002; throughout 2004,
LAWRENCE was the Chairman of the Board of Directors of Neteller PLC; on or about
December 31, 2004, LAWRENCE was the largest shareholder of Neteller PLC, owning
21.94% percent of the outstanding shares of Neteller PLC; and during 2004, the
Board of Directors of Neteller PLC granted LAWRENCE options to purchase
additional shares of Neteller PLC.
c. Neteller PLC's 2005 annual report states that LAWRENCE served as Chairman of
the Board of Directors of Neteller PLC during 2005, but that LAWRENCE would step
down from his position as Chairman at Neteller PLC's annual general meeting in
2006; during 2005, the Board of Directors of Neteller PLC granted LAWRENCE
options to purchase additional shares of Neteller PLC; and during 2005, Neteller
PLC paid LAWRENCE compensation for serving as a director.
11. 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 laws. WHEREFORE, deponent
prays that a warrant be issued for the arrest of the above-named individual and
that he be arrested and imprisoned or bailed as the case may be.
________________________________
MARYANN GOLDMAN
SPECIAL AGENT
FEDERAL BUREAU OF INVESTIGATION
Sworn to before me this day of January 16, 2007
________________________________
UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF NEW YORK


REOdeathwagon
 
Last edited:
REOdeathwagon said:
11. 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 laws
Click to expand...

Could the DOJ, possibly be telegraphing their hand with this statement. And, if this is the case, would they freeze assets, while going through litigation.



REOdeathwagon
 
A thorough investigation, but why then was there any need for the "safe ports" act then, if this was all so "clearly illegal" under existing laws. Further, their methodology simply exposes that a single company cannot police the internet to the detail envisaged by the locations used in gathering the evidence. The evidence seems to pertain only to the placing of sports wagers, which would most likely be covered under the wire act, but in the submission, the data is used for the whole Neteller operation, not just sports betting. Until the "safe ports" act, there was no formal requirment for banks to determine the nature of transactions going through legitimate channels, arrangements were voluntary.

If these cases end up collapsing, I would hope that pension funds, hedge funds, and the like, who had interests in the shares of these businesses and lost out, go over to the US and file lawsuits against the FBI, and other parties, to recover the damages caused by manipulating the market values of companies by making arrests with no proper legal basis.

What about all those US company directors, polititians, etc who have aided illlegal acts outside the US while safely based within the US where the acts were deemed legal. Perhaps our police should start arresting all those hollywood stars, US retailers, etc that aided the UK citizen to purchase "video nasties" that were banned here as "too violent even for adults", but were widely available for public consumption in the more liberal USA at the time. They knew the UK had banned them, yet they still sent them, they often tried to conceal the nature of the content so that our customs officials let them through as something that was OK, such as a Disney video of "Bambi". This is not too dissimilar to how Neteller assisted US players to gamble online, an activity that is perfectly legal in the Isle of Man where they are based.
 
Great post VM, but you forgot the most important bit... The USA rule the world... They're fully entitled to impose their opinion and actions on the rest of us, regardless of if we like it, want it or ask for it.

The arrogance is matched only by the ignorance -- which pretty much sums up the George Bush Jnr US of A period...
 
Slotster! said:
Great post VM, but you forgot the most important bit... The USA rule the world... They're fully entitled to impose their opinion and actions on the rest of us, regardless of if we like it, want it or ask for it.

The arrogance is matched only by the ignorance -- which pretty much sums up the George Bush Jnr US of A period...
Click to expand...

Not too far off topic, but I suggest watching the movie "Team America: World Police". It's animated, and made by the creators of South Park ;)
 
winbig said:
Not too far off topic, but I suggest watching the movie "Team America: World Police". It's animated, and made by the creators of South Park ;)
Click to expand...

Seen it, loved it! Maybe that subliminally influenced my opinion!

"From what I.N.T.E.L.L.I.G.N.C.E has gathered, it would be 9/11 times 100".
"9/11 times a hundred? Jesus, that's..."
"Yes, 91,100."
"Basically, all the worst parts of the bible"

:D
 
(Jetset and all: I appreciate you folks keeping us posted on the latest news.)

I return home, exhausted from a 4 day gambling vacation, and find this damn thread!! I am so mad I can't put a sensible sentence together -- for the moment I can only spit and sputter profanities. I am also :barf:
 
vinylweatherman said:
What about all those US company directors, polititians, etc who have aided illlegal acts outside the US while safely based within the US where the acts were deemed legal. Perhaps our police should start arresting all those hollywood stars, US retailers, etc that aided the UK citizen to purchase "video nasties" that were banned here as "too violent even for adults", but were widely available for public consumption in the more liberal USA at the time. They knew the UK had banned them, yet they still sent them, they often tried to conceal the nature of the content so that our customs officials let them through as something that was OK, such as a Disney video of "Bambi". This is not too dissimilar to how Neteller assisted US players to gamble online, an activity that is perfectly legal in the Isle of Man where they are based.
Click to expand...

That's a little silly. It's not the US's responsibility to enforce other countries laws, ever.
 
Well, all we're missing now is the prototypical press release from NETELLER assuring us all as to how solid their stock is. I've got a funny feeling that if anyone has any money in Neteller, they're not going to be able to access it anytime soon, if ever.

What a colossal mess this is going to be.

Have a good one.
 
vinylweatherman said:
A thorough investigation, but why then was there any need for the "safe ports" act, if this was all so "clearly illegal" under existing laws.

Further, their methodology simply exposes that a single company cannot police the internet to the detail envisaged by the locations used in gathering the evidence. The evidence seems to pertain only to the placing of sports wagers, which would most likely be covered under the wire act, but in the submission, the data is used for the whole Neteller operation, not just sports betting.

Until the "safe ports" act, there was no formal requirment for banks to determine the nature of transactions going through legitimate channels, arrangements were voluntary.

If these cases end up collapsing, I would hope that pension funds, hedge funds, and the like, who had interests in the shares of these businesses and lost out, go over to the US and file lawsuits against the FBI, and other parties, to recover the damages caused by manipulating the market values of companies by making arrests with no proper legal basis.

What about all those US company directors, polititians, etc who have aided illlegal acts outside the US while safely based within the US where the acts were deemed legal. Perhaps our police should start arresting all those hollywood stars, US retailers, etc that aided the UK citizen to purchase "video nasties" that were banned here as "too violent even for adults", but were widely available for public consumption in the more liberal USA at the time. They knew the UK had banned them, yet they still sent them, they often tried to conceal the nature of the content so that our customs officials let them through as something that was OK, such as a Disney video of "Bambi". This is not too dissimilar to how Neteller assisted US players to gamble online, an activity that is perfectly legal in the Isle of Man where they are based.
Click to expand...

Very good post, VW and one worth reading for those who haven't yet as it makes some excellent points, especially in regard to the politicians' demand for legislation if the Justice Department is correct in its assessment of its global powers under US law.

Most of the evidence submitted by Special Agent Goldman seems to have been extracted from Neteller's own public accounts, reports and IPO documents, suggesting that being transparent as a responsible public company has its downside in these weird times we live in!

Whilst I can't fully buy in to the last paragraph of your post the point is well made, and I join you in hoping that if these arrests and charges are proved irregular the arrested men sue the ass out of the departments responsible for playing fast and loose with their personal freedom.

I have the feeling that the authorities are going to find they have bitten off rather more than they can comfortably chew this time in legal terms, and Lawrence and especially Lefevre are the men with the means and the determination to test the reach of the authorities in the courts.

The Carruthers case must come to trial this year, too and that could have some interesting and maybe even positive reflections on the claims to illegality made by the DoJ.

Unfortunately that will be too late to assuage the damage to business around the world caused by this latest jurisdictional hubris, and the effect on US players may be demoralising. I'm not so sure Neteller will go under though - downsize maybe - but not go under.

It doesn't look as if anything short of a major legal suit is going to rein in unbridled US extra-territorial enforcement at this stage.
 
Here's the official press release from the US government:



FOR IMMEDIATE RELEASE
January 16, 2007
CONTACT: U.S. ATTORNEY'S OFFICE
YUSILL SCRIBNER,
REBEKAH CARMICHAEL
PUBLIC INFORMATION OFFICE
(212) 637-2600


FBI
NEIL DONOVAN, JAMES MARGOLIN
PUBLIC INFORMATION OFFICE
(212) 384-2715, 2720


MICHAEL J. GARCIA, the United States Attorney for the Southern District of New York, and MARK J. MERSHON, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), announced today that STEPHEN ERIC LAWRENCE and JOHN DAVID LEFEBVRE were arrested yesterday 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 United States citizens to the owners of various internet gambling companies located overseas. According to the two criminal Complaints unsealed yesterday:

Neteller PLC ("Neteller"), formerly known as Neteller, Inc., is an internet payment services company that was founded by LAWRENCE and LEFEBVRE in 1999. Neteller is based in the Isle of Man and is publicly traded in the United Kingdom. Neteller began processing internet gambling transactions in approximately July 2000. Internet payment services companies, like Neteller, allow gambling companies to transfer money collected from United States customers to bank accounts outside the United States. According to Neteller's 2005 annual report, LAWRENCE and LEFEBVRE, through Neteller, provided payment services to more than 80% of worldwide gaming merchants.

Since founding Neteller, LAWRENCE and LEFEBVRE have held numerous senior management positions at the company. For instance, LAWRENCE served as Chief Executive Officer of Neteller until December 2002; as executive director of Neteller from 2001 to August 31, 2003; and as Chairman of the Board of Directors of Neteller until May 11, 2006. LAWRENCE left the Board of Directors on October 13, 2006. LEFEBVRE served as President of Neteller from 2000 to 2002; and was a member of the Board of Directors until approximately December 2005.

Furthermore, LAWRENCE and LEFEBVRE have both held significant ownership interests in Neteller. As of December 31, 2004, LAWRENCE was the largest shareholder of Neteller, owning 21.94% of the outstanding shares of Neteller PLC. As of the same date, LEFEBVRE was the second-largest shareholder of Neteller PLC, owning 13.44% of the outstanding shares of the company.

At the time that the defendants took Neteller public, the company acknowledged in its offering documents that United States law prohibited persons from promoting certain forms of gambling, including internet gambling, and transmitting funds that are known to have been derived from criminal activity or are intended to promote criminal activity. The company's directors, including LAWRENCE and LEFEBVRE, also conceded that they were risking prosecution by the government of the United States under existing or future federal laws.

In 2005, Neteller processed over $7.3 billion in financial transactions. According to reports issued by Neteller, 95% of its revenue was derived from money transfers involving internet gambling companies. On September 11, 2006, the President and Chief Executive Officer of Neteller described the "online gaming market" as Neteller's "main market," and stated that, in the first half of 2006, Neteller processed $5.1 billion in financial transactions. As charged in the complaint, approximately 85% of Neteller's revenue during that period derived from individuals in North America, and 75% of its North American revenue was generated in the United States. Both the operation of an internet gambling operation and the transferring of the proceeds from these businesses overseas are illegal under United States law. LAWRENCE and LEFEBVRE are both charged with conspiring to transfer funds with the intent to promote illegal gambling. If convicted, both defendants face a maximum sentence of 20 years' imprisonment.

LAWRENCE, 46, was arrested yesterday in the United States Virgin Islands and will be presented in federal court in St. Thomas by tomorrow. LEFEBVRE, 55, was arrested yesterday in Malibu, California and will be presented in Los Angeles federal court later today. LAWRENCE currently resides in Paradise Island, Bahamas.

This prosecution is part of the United States Department of Justice's effort to combat unlawful internet gambling through, among other things, the implementation of the federal anti-money laundering statutes. Other recent examples of the Justice Department's efforts in this regard include the indictments of two offshore internet gambling companies Worldwide Telesports, Inc., (indictment unsealed on May 17, 2006 in the United States District Court for the District of Columbia) and BetonSports, PLC, a publicly traded holding company that owns a number of Internet sportsbooks and casinos, and its founder, Gary Stephen Kaplan (indictment unsealed July 17, 2006 in the United States District Court for the Eastern District of Missouri). Additionally, in July 2003, one of Neteller's competitors, PayPal, and its parent eBay, entered into a civil settlement agreement with the United States Attorney's Office for the Eastern District of Missouri to settle allegations it aided in illegal offshore and on-line gambling activities. As part of the agreement, PayPal agreed to forfeit $10 million, representing proceeds derived by PayPal from the processing of illegal gambling transactions.

Mr. GARCIA praised the investigative efforts of the FBI and thanked the United States Custom & Border Patrol, United States Coast Guard, and Virgin Islands Police Department for their assistance in the investigation. Mr. GARCIA added that the investigation is continuing.

Mr. GARCIA stated, "Internet gambling has become a multibillion-dollar industry that derives a major portion of its revenues from United States citizens. STEPHEN ERIC LAWRENCE and JOHN DAVID LEFEBVRE knew when they took their company public that its activities, as well as those of the internet gambling companies it assisted, were illegal in the United States. Blatant violations of U.S. law are not a mere 'risk' to be disclosed to prospective investors. 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 MERSHON stated: "Internet gambling is a multibillion-dollar industry. A significant portion of that is the illegal handling of Americans' bets with offshore gaming companies, which amounts to a colossal criminal enterprise masquerading as legitimate business. There is ample indication these defendants knew the American market for their services was illegal. The FBI is adamant about shutting off the flow of illegal cash."

Assistant United States Attorneys TIMOTHY J. TREANOR, CHRISTOPHER P. CONNIFF, and CHRISTINE MEDING are in charge of the prosecutions.

The charges contained in the Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
 
IMO The first problem that the they will face is prooving beyond any reasonable doubt that the transactions was linked to or to trace the entire path too and from the different places. They are claiming this happened between 1999 and 2003, which causes further problems for them as far as their very weak laws are concerned. Their gambling laws are bounded by the state you live in... Need I say more?

This might just be what we waited for. This might backfire against the US government...
 
Whilst I can't fully buy in to the last paragraph of your post the point is well made, and I join you in hoping that if these arrests and charges are proved irregular the arrested men sue the ass out of the departments responsible for playing fast and loose with their personal freedom.

I have the feeling that the authorities are going to find they have bitten off rather more than they can comfortably chew this time in legal terms, and Lawrence and especially Lefevre are the men with the means and the determination to test the reach of the authorities in the courts.

This was also mentioned very much earlier in this thread, jetset, and I was a little more optimistic then, about the success these two gentlemen would have in their 'fight' against the DOJ. And the positive effect that these two heavyweights could possibly have, in fighting the DOJ, for the legitimate rights of punters here in the US and abroad. As well as fighting for the rights of the effected investors needlessly harmed by the major fluctuations in the legal equity markets where the gaming companies are capitilized.


Unfortunately, it seems that they will be charged with a combination of RICO (Racketeer Influenced and Corrupt Organizations act) and the wire act. The scary part of this, is that RICO, genererally comes with the forfeiture / seizure of funds. This happens before the judicial proceedings even begin. As you can see, this can severely limit a defendents resources for defense.
Our government does not fight fair, and the US citizens have not taken the effort to protect themselves from their government, to change this.

One would hope that in a perfect world, eventually the 'Bush Crime Family' will themselves, face the full force of the RICO act in the future.

To end on a more positive note, RICO has been beaten in the past, and can be beaten again. Lawrence and Lefevre, have many people on their side, vigorously rooting for them to succeed in this 'David vs Goliath' battle. And when done defending their personal honour, they can then sue the pants off the US government.


REOdeathwagon
 
Last edited:
The likely success of that sort of "temporary" confiscation would (I guess) largely hinge on where the accuseds' assets are (we know they have homes in the USA, but I'd be surprised if they had all their eggs in a US basket)

These are Canadian citizens of international means who have homes in the States but are also domiciled elsewhere (Lawrence lives on Paradise Island in the Bahamas)

And the willingness of global institutions to cooperate in a US court order in an allegedly criminal matter as yet unheard will also be pivotal. Much of the Goldman affidavit seems to be concerned with establishing "probable cause" so far.

The more one reads that US government press release above, especially the passages about other actions, the more it appears that this enforcement strategy is based not so much on successfully obtaining court convictions of individuals but scaring the bejasus out of companies, investors and even individuals in the industry in order to cripple it...both within and outside the US.

And that strategy is clearly having an impact. Whether it will be fatal is debatable.
 
Chatmaster said:
IMO The first problem that the they will face is prooving beyond any reasonable doubt that the transactions was linked to or to trace the entire path too and from the different places. They are claiming this happened between 1999 and 2003, which causes further problems for them as far as their very weak laws are concerned. Their gambling laws are bounded by the state you live in... Need I say more?

This might just be what we waited for. This might backfire against the US government...
Click to expand...

Chatmaster;
The three specific sporting wagers that were mentioned in the complaint, originated out of New York state, which is one of the 11 states with laws against internet wagering. ie. - not even RTG or MG, will allow residents of these states to open accounts.

The guilty verdict and sentence against the WSEX( ? ) founder, also originated out of New York state


REOdeatwagon
 
jetset;
Thank you for the quick reply. Very much appreciated sir.

The likely success of that sort of "temporary" confiscation would (I guess) largely hinge on where the accuseds' assets are (we know they have homes in the USA, but I'd be surprised if they had all their eggs in a US basket)

The way it was intepreted to me, when I had my car seized under this act years ago. Was that property was not protected by the same 'rights', as citizens are. The assets are adjudicated in a 'civil court.'


And the willingness of global institutions to cooperate in a US court order in an allegedly criminal matter as yet unheard will also be pivotal. Much of the Goldman affidavit seems to be concerned with establishing "probable cause" so far.

It seems we have to hold out hope, that the other governments and their financial authorities, stick up for themselves to the DOJ, when they come sniffing for assets.


The more one reads that US government press release above, especially the passages about other actions, the more it appears that this enforcement strategy is based not so much on successfully obtaining court convictions of individuals but scaring the bejasus out of companies, investors and even individuals in the industry in order to cripple it...both within and outside the US.

Pure speculation on my part, but possibly to get these two at the table, to make a deal of some sort. Then possibly testify against others, just guessing. But, in the past our prosecutors have used this tactic.


And that strategy is clearly having an impact. Whether it will be fatal is debatable.

Impact, yes. Fatal, doubtful.
NETeller, as well as Lawrence and Lefevre, will survive this.
 
VWM:

Absolutely great post, thank you. You are consistently right on the money. No wonder they bar you from the fruit machines.

A thorough investigation, but why then was there any need for the "safe ports" act then, if this was all so "clearly illegal" under existing laws. Further, their methodology simply exposes that a single company cannot police the internet to the detail envisaged by the locations used in gathering the evidence. The evidence seems to pertain only to the placing of sports wagers, which would most likely be covered under the wire act, but in the submission, the data is used for the whole Neteller operation, not just sports betting. Until the "safe ports" act, there was no formal requirment for banks to determine the nature of transactions going through legitimate channels, arrangements were voluntary.

The safe ports act, seemed to be passed as a backup plan if the very vague and outdated wire act were to fail. Which is a huge possibilty based on other legal opinions voiced. Frist just legislated a new proverbial 'ace in the hole' - IMHO.

The US banks want no part of the wasted resources, or associated costs in determining what is, or isn't, a 'gaming transaction.' And will fight vehemently, using those resources to avoid having to make these determinations themselves.
 
Chatmaster said:
IMO The first problem that the they will face is prooving beyond any reasonable doubt that the transactions was linked to or to trace the entire path too and from the different places. They are claiming this happened between 1999 and 2003, which causes further problems for them as far as their very weak laws are concerned. Their gambling laws are bounded by the state you live in... Need I say more?

This might just be what we waited for. This might backfire against the US government...
Click to expand...

I haven't read the entire complaint but I can guarantee you that this is anything but a State issue. Inasmuch as it appears as though they've filed this action under R.I.C.O. which entitles the government to ask for and receive assest forfeitures in advance of any finding of guilt.

Have a good one.
 
Quote from REO Deathwagon: Pure speculation on my part, but possibly to get these two at the table, to make a deal of some sort. Then possibly testify against others, just guessing. But, in the past our prosecutors have used this tactic.

Impact, yes. Fatal, doubtful.
NETeller, as well as Lawrence and Lefevre, will survive this. UNquote

I agree :thumbsup:
 

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