NETELLER FOUNDER PLEADS GUILTY

6 July 2007

Lawrence could get five years on conspiracy charge

Making headlines across the mainstream media late Friday was the news that Neteller co-founder Stephen Lawrence (47) had pleaded guilty to a conspiracy charge over the handling of billions of dollars in illegal gambling proceeds.

During a hearing before U.S. District Judge P. Kevin Castel in Manhattan, Lawrence also agreed to cooperate with the government. He faces a maximum sentence of five years on the conspiracy charge for his role in the operation of the Isle of Man-based e-wallet.

Both Canadian citizens, Lawrence and co-founder John Lefebvre started the company in 1999, and were arrested by the FBI whilst on US soil in January this year, charged with conspiring to transfer funds internationally with the intent to promote illegal [online] gambling.

The arrests, which have resulted in a prolonged series of court continuances, triggered an exit from the US market by Neteller, which froze US player accounts and began cooperating with American Justice Department officials (see previous InfoPowa reports) The American exit wrote off the majority of the Neteller business, and the company suspended trading in its shares on the London AIM.

Speaking on behalf of his client, attorney Peter Nieman said: "Mr. Lawrence is very glad to have this episode over and looks forward to moving on to the next stage of his life."

Lawrence, who remains free on $5 million bail, declined to speak to reporters as he left the courtroom Friday.

Judge Castel gave Lawrence permission to travel within the United States as well as to Canada and the Bahamas pending sentence. He set a sentencing date for October 29.

Neteller processed billions of dollars in Internet gambling transactions for Americans, the prosecution claimed, saying the company was once one of the primary ways U.S. citizens placed bets with offshore Internet gambling operations. Prosecutors said Neteller processed $5.1 billion worth of transactions in the first half of 2006 alone. Nearly all involved online gambling. A majority of the company’s revenue came from customers in the U.S., and the FBI began looking at its operations in June 2006.

Lawrence, at one point, was the company’s largest shareholder. Both he and Lefebvre have since left the company’s board of directors.

The company wasn’t directly involved in either placing or receiving bets. It essentially served as a financial middleman, through which bettors could send and receive cash from Web-based operations located in countries with few restrictions on gambling.

Lawrence acknowledged in the federal courtroom that the operation was illegal. "I came to understand that providing payment services to online gambling Web sites serving customers in the United States was wrong," he told the judge.

His lawyers said he was cooperating with U.S. investigators, and had also agreed to be at least partly responsible for the $100 million the government is seeking from those involved in the operation.

The case against Lefebvre, who pleaded not guilty, is pending.

Online Casino News courtesy of InfoPowa