Founders of Neteller Arrested!

[winbig]

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

A former hippie testify against others? That'll never happen

 

[cipher]

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


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.

I do not think NETELLER has the ability to weather this storm and I do not think NETELLER'S Investors are going to be real happy with these two morons waltzing around here in the U.S. and or it's possessions knowing full well (or should have known full well) that they were on the top of the Justice Department's hit list. I mean talk about a case of DUMB and DUMBER!

Have a good one.

 

[lots0]

Press Release from Neteller

Here is the URL to a Press Release from Neteller released this morning.

Statement Regarding Former Directors

16 January 2007 - NETELLER Plc (LSE: NLR), 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.

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[winbig]

Here is the URL to a Press Release from Neteller released this morning.

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They can try and distance themselves from these gentleman as much as they want to, but the fact remains that it won't do any good.

 

[jetset]

Quote: A former hippie testify against others? That'll never happen Unquote

Ah, but this hippy is also a lawyer!

Whether these two guys (who probably thought they were good to go, even in the US, having disassociated themselves from executive positions in the company) are dumb or not is arguable but one signal here is very clear - even with hindsight - the USA is out of bounds for any senior online gambling exec. Period.

 

[winbig]

Quote: A former hippie testify against others? That'll never happen Unquote

Ah, but this hippy is also a lawyer!

Whether these two guys (who probably thought they were good to go, even in the US, having disassociated themselves from executive positions in the company) are dumb or not is arguable but one signal here is very clear - even with hindsight - the USA is out of bounds for any senior online gambling exec. Period.

Do you think affiliates that advertise to US players are going to be safe in the future? Even if they have an overseas hosting company?

 

[cipher]

Here is the URL to a Press Release from Neteller released this morning.

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If that's the best they can do, they (NETELLER) are in serious trouble.

Have a good one.

 

[jetset]

Latest info from DoJ:

$5 MILLION BAIL for EX- NETELLER DETAINEE (Update)

John Lefebvre to be released but must remain in the USA

Late breaking news Wednesday morning in the USA is that former Neteller executive and founding shareholder John Lefebvre has been granted bail following an appearance in court in Los Angeles.

Department of Justice spokeswoman Rebekah Carmichael said, "He will be released after satisfying the bail conditions of $5 million fully secured by cash or property; pre-trial supervision; surrender of all travel documents; and travel restricted to the Central District of California, except for trips to Southern District, New York for Court."

Fellow accused in money laundering charges (see previous InfoPowa reports) Stephen Lawrence is currently in court in St Thomas in the US Virgin islands.

Both defendants are being directed to appear in the Southern District, New York on January 26, 2007.

 

[Casinomeister]

Do you think affiliates that advertise to US players are going to be safe in the future? Even if they have an overseas hosting company?

This is when you need to talk to a lawyer and find out the legalities of what's up in cyberland.

 

[jetset]

ANOTHER SHOT ACROSS ONLINE GAMBLING'S BOWS

US enforcement appears convinced that the world is their jurisdictional oyster

The recent arrests of Neteller ex-directors Stephen Lawrence and John Lefebvre whilst visiting the United States highlights once again that if American officialdom can get its hands on Internet gaming executives, it is prepared to bring charges that stride over international boundaries.

Anyone reading the press release that reported the arrests from the US Attorney General's office can have little doubt from the tone and content that the officials involved know very well how effective threats and aggression can be, even in an industry that has hitherto thought itself safe through companies positioning themselves outside US legal jurisdiction.

Apart from announcing the factual details and allegations of wrongdoing against the former Neteller execs, who appear to be the unfortunate pawns in a bigger game to intimidate Isle of Man-based Neteller, the arrest announcement was redolent with historical examples of previous enforcement actions and "we-mean-business" news bytes.

Take a look at the following, for example:

"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."

and this:

"Mr. GARCIA [the United States Attorney for the Southern District of New York] 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.'"

and this:

"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, whilst the FBI Special Agent charged with the responsibility for the investigations is Maryann Goldman.

The announcement closes with a reminder to all - including the enforcement officials: "The charges contained in the Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty."

 

[REOdeathwagon]

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.

I agree cipher, that this is not a state, but federal matter. But it seems like the origination state (NY) of the sport bets, may have some effect on the legal bearings of the case.
New York state being one of the 11 states, explicitely outlawing sport bets in their state law.

IIRC, RICO can be applied in state issues as well as federal complaints.

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.

Wish I could have originally stated this as clearly and concisely, as you did, my friend. Well put.

 

[REOdeathwagon]

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.


The above statement, in the first paragragh of the complaint. Would lead me to assume that this is just the first in a series of arrests / indictments, involving NETeller.

Conspiracy, is generally used as a fishing attempt of sorts, to ensnare more fish (defendents). Then the government starts playing 'lets make a deal'

 

[cipher]

The trouble with this whole friggin mess is the plain and simple fact that no one, not PAYPAL, not BOS, not WWTS and now not NETELLER have taken any steps whatsoever to play hardball with the U. S. Attorney's office and it's not going to get any better as the legal counsel that these guys are relying upon are scared to death and totally ineffective.

It's a damn shame!!!

Have a good one.

 

[lots0]

The above statement, in the first paragragh of the complaint. Would lead me to assume that this is just the first in a series of arrests / indictments, involving NETeller.

Nope that is just legal speak, perdy much standard wording for this kind of a document.

 

[jsp377]

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

This won't end with this trial. Even if a judge rules that RICO and the Wire Act don't apply (that could go through an appeals process and last years), the US would still be able to arrest and prosecute under the UIGEA in a separate trial which would last just as long.

 

[lots0]

On a related note...

Money tracking system will take years to build

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Big Brother is coming... And I aint talking about the TV show...

 

[Reef]

Although the individuals arrested were NETeller shareholders, they are
not currently employed by NETeller, nor have they been for several
months.


-----
This has not been mentioned enough

 

[winbig]

Although the individuals arrested were NETeller shareholders, they are
not currently employed by NETeller, nor have they been for several
months.


-----
This has not been mentioned enough

It has, and doesn't matter. Whether or not they're found guilty, or if it even goes to trial doesn't matter either. They're using these guys to go after the bigger fish.

Re: Money tracking system.

It's total BULLSHIT that they scream "We're fighting terrorism!" every time they want to get something pushed through congress/the house/whatever.

At a minimum, the information on these transfer includes the name and address of the sender, the amount of the transfer, any payment instructions, the name and address of the beneficiary and the beneficiary's financial institution.

What a joke.

 

[Stanford]

I have no more patriotism

The trouble with this whole friggin mess is the plain and simple fact that no one, not PAYPAL, not BOS, not WWTS and now not NETELLER have taken any steps whatsoever to play hardball with the U. S. Attorney's office and it's not going to get any better as the legal counsel that these guys are relying upon are scared to death and totally ineffective.

It's a damn shame!!!

Have a good one.

That's true. There would be a lot of us that would contribute to a defense fund if the good guys would just stand up and fight.

America has lost it.

Stanford

 

[misty113]

It's total BULLSHIT that they scream "We're fighting terrorism!" every time they want to get something pushed through congress/the house/whatever.
What a joke.

AMEN!!! Sometimes I think the real terrorists are the ones sitting in Washington right now. Seems the US is losing its freedoms little by little and all because we have a Monarchy now with King George instead of a Democracy we've had for centuries. If they wanted to fight terrorism why havent they concentrated their efforts on Bin Laden instead of every Tom Dick and Harry????????

 

[winbig]

Bin Laden

Ben who?


Sorry, it's just a name I never hear of anymore.

 

[jetset]

NETELLER BARS TRANSFERS TO GAMBLING SITES FOR U.S. PLAYERS

Funds are held in seperate independent trust accounts and are safe, says e-wallet.

It appears that the Isle of Man based Neteller has caved in to pressure from the US Department of Justice, exerted through the recent arrests of ex-founding directors Stephen Lawrence and John Lefevre. The e-wallet company has put up a notice advising US players that effective immediately they will not be permitted to make transfers to or from online gambling sites.

The following is the content of the notice, which is followed by a FAQ explanatory column. The ban does not affect non-U.S. users:

"US member update

"Effective Immediately

"Due to recent US legislative changes and events, effective immediately, US members are no longer able to transfer funds to or from any online gambling sites.

"All US members will continue to be able to use their NETELLER e-wallet account to safely transfer funds to and from non-gambling merchants and are not required to close their account or withdraw their funds.

"Please note that we are experiencing higher than normal support volumes and recommend that you read the FAQs for more information."

The final sentence in the note gives an indication of the consternation and panic that the announcement clearly caused among American players particularly, but other users are posing worried questions and comments on the Internet this morning.

In an FAQ following the announcement, Neteller explains: "The US government has recently introduced new legislation in the form of the Unlawful Internet Gambling Enforcement Act. To best protect the interests of NETELLER members, employees, shareholders and business partners, NETELLER will no longer provide service to US members to transfer funds to and from online gambling merchants. Read the press release." The press release refers to the arrest of the two ex-directors this week.

The FAQ also deals with continued use of US players' accounts, assuring them that immediate withdrawal is not required and that "All US members and non-US members will continue to be able to use their NETELLER e-wallet account for safe online transfers to and from non-gambling merchants, secure peer-to-peer transfers and NETELLER Card withdrawals at ATMs around the world."

Unfortunately the choice of "non-gambling merchants" offering Neteller is almost non-existent; the company depends heavily on gambling related transactions.

Neteller also advises on the safest and quickest ways to make withdrawals: "The NETELLER Card is the quickest and most convenient withdrawal option. When you transfer funds from your NETELLER e-wallet account to your NETELLER Card, you can withdraw those funds from any ATM cash machine on the Cirrus/Maestro network and Pulse Star network, depending on your country of residence. You will have to pay a nominal fee for NETELLER Card withdrawals, but your funds will be available from 15 minutes to an hour after they are transferred to your card."

Company Support personnel advised that US players could still use EFT and check withdrawal options to clear their accounts if desired. However, due to the anticipated backlog there is likely to be a 2 week delay for EFTs and 6 week delay for cheques.

Perhaps the most burning question of account balance safety is addressed, too: "...your money is safe with NETELLER. All members can hold their funds safely in their NETELLER accounts until such time as they decide to move the funds.

"NETELLER protects all members funds (all deposited, in-transit and un-cleared funds) by holding the value in independent trust accounts. As the largest independent online money transfer business in the world, we maintain our head office in Europe and are a publicly quoted company on the AIM market of the London Stock Exchange. NETELLER UK Ltd is authorised and regulated by the Financial Services Authority."

There was immediate criticism from US players at the abrupt nature of the US ban, which gave players no time to clear their accounts to and from gambling sites. Neteller accounts are not interest bearing, and card charges are perceived as being high, which created further bitterness to the perception that US players were being summarily abandoned.

Anger at the US authorities for precipitating the disruption and concern was also being expressed.

The US goverment and Congress's focused actions against online gambling when many other forms of gambling are allowed to flourish, and online operations of horse racing and lottery organisations are encouraged by exemptions from the legislation, will continue to raise temperatures.

This has been exacerbated by the zealous manner in which authorities continue to arrest individual executives and damage companies, especially public companies susceptible to the fears of investors, in other countries.

Opinions are divided on whether Neteller can survive the ban on American players, whose business comprised around 70 to 80 percent of its revenues.

Perhaps forseeing this week's dramatic turn of events, the company has for the past 18 months or more been vigorously developing other geographical markets in Europe and Asia. It has substantial resources and reserves, and if investors keep their nerve it has a strong chance of coming through the crisis as a definitely smaller but still successful Internet financial services company.

For US players, their worse fears that Neteller will abandon them have been realised and their ability to spend their money on a pastime of their choice has been further restricted, primarily by the actions of their own government.

 

[jetset]

The trouble with this whole friggin mess is the plain and simple fact that no one, not PAYPAL, not BOS, not WWTS and now not NETELLER have taken any steps whatsoever to play hardball with the U. S. Attorney's office and it's not going to get any better as the legal counsel that these guys are relying upon are scared to death and totally ineffective.

It's a damn shame!!!

Have a good one.

Never a truer word, Cypher - the DoJ has cowed everyone without having to test their powers and opinions in the courts. It's a strategy that works...and they know it.

 

[winbig]

If they've been working on developing markets in Asia and Europe for the past 18 months, why does the US STILL account for 70-80% of their customers?

Bye Bye, Neteller. RIP.

 

[jetset]

You don't build up financial services to that level in a heartbeat - it takes planning, investment, marketing and effort.

Back to the Neteller guys; I was shocked to read the following AP report which describes the court appearance of Lawrence, which for me creates a disturbing image - was it really necessary to drag him into court in ankle chains (come to think of it they did the same to Carruthers in St. Louis)?

Perhaps it's standard operating procedure for US enforcement, but it seems drastic and unnecessary - the guy's not a murderer.

Oops! Forgot the piece - here it is:

Web Co. Founder Arrested on N.Y. Warrant in Virgin Islands

CHARLOTTE AMALIE, U.S. Virgin Islands (AP) -- A Canadian man who founded a company that processes Internet gambling transactions was led into a U.S. Virgin Islands court in ankle chains to face money laundering charges on Wednesday.

Stephen Eric Lawrence, 46, was accused of funneling billions of dollars in illegal gambling proceeds to overseas betting operations. The former Neteller PLC director was arrested on the island of St. John on Monday on a warrant from the U.S. Attorney's office in New York, said FBI agent Donald A. Neily.

District Court Judge Geoffrey Barnard said he intended to set bail at $5 million. Bail would be set in a Thursday hearing, he said.

Lawrence, who lives in the Bahamas, and John David Lefebvre, 55, are former directors of the Internet payment services company, a type which has grown in popularity as an increasing number of credit card companies have begun refusing to accept payments to online gambling sites.

Lefebvre was arrested Monday in Malibu, California. Both men are Canadian citizens.

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.

Prosecutors in New York 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, authorities said.