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.

 

[The Dude]

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.

 

[winbig]

20 YEARS?


This is the last straw. If they fucking treated CHILD MOLESTERS like they're doing these guys, and gave the MOLESTERS 20 years automatically, OUR CHILDREN WOULD BE SAFE.

Instead, we have child molesters out there, getting slaps on the wrist, little or no jail time, and they'll continue to do it. Why? Because their punishment is not harsh enough.

Instead, they want to go after online gambling???

GET A CLUE BUSH & CO.

 

[jetset]

Off at a tangent for a moment, Majorwager has carried an interesting article about relocating to Canada LOL!!!!

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[Chatmaster]

Sigh, really disappointing! I hoped Neteller would stand up to these idiots. But, who can blame them?

 

[jetset]

Neteller withdrawal was planned since November????

And back on topic, I found this Reuters report intriguing, because it implies that the Neteller ban on US players was not a fear-induced reaction to the arrest of Lawrence and Lefebvre, but a long-planned withdrawal from the US.

If that was the case, why didn't they give the market, and especially the players, more notice and a grace period to clean their accounts?????

The relevant part of the Reuters report says:

"The operations linked to U.S. gambling account for about 65-70 percent of sales," said a source close to the company.

[Note that percentage - I may have been wrong in estimating US Neteller business at 70-80 percent]

"NETELLER said that after the United States effectively banned online gaming in November, it had experienced slowing fourth quarter growth.

"NETeller has always said it was waiting to see the detail of the regulations before making a decision. It had its shares suspended on Tuesday after the two founders were arrested on Monday -- Lawrence in the U.S. Virgin Islands and Lefebvre in Malibu, California.

"Today's withdrawal from the U.S. market by NETeller is the culmination of months of careful planning," it said in its statement on Thursday.

"These decisions will allow the group to focus on opportunities available in the growing markets of Europe, Asia and the Americas outside of the United States," it added.

 

[Chatmaster]

"Today's withdrawal from the U.S. market by NETeller is the culmination of months of careful planning," it said in its statement on Thursday.

Yah right!

 

[REOdeathwagon]

"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."


I, have only done business with NETeller for online wagering. But, would have to assume that when PayPal left the market. The same sort of 'end of the world' threads were going on then in these forums, in 2000.

As a matter of fact, I originally opened my PayPal account, to fund an old Paradise Poker (the biggest room at the time) account, and found out Paradise no longer accepted PayPal. Wow, I still have the records for the account, but have still never used PayPal.
Maybe, I do have an online gambling problem, Thanks, Mr. Frist.

 

[REOdeathwagon]

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.

The whole industry has made hundreds of millions (if not billion) of dollars, in pure profit on US punters.

And, a fortune on advertising' in the US market, snubbing their nose at the US government. And, these ads are still running on network TV.

And will spend another fortune on legal fees defending itself, from an overzealus US government.

Instead of initially funding a well capitilised lobbying campaign, to work within the US governments 'well oiled' system. Never once (that I know of), has this industry 'bonus abused' our crooked electoral process, to avoid all this mess in first place.

 

[REOdeathwagon]

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.



What a joke.

Terrorism is todays catch all phrase, and the great mass majority of idoits in america, eat it up. And will gladly give up their hard fought for rights, to fight against this percieved threat.

In all of the daily propaganda shoved down american throats regarding 'terrorism'. Change that simple word to "drugs', and it would have applied equally as well 20 years ago. Change that word to 'communism' and it would have applied equally as well, 20-50 years ago. Change it to 'jewish' and it would have applied in nazi germany. (sorry 'meister)
Insert the word "online gambling', and it applies well for their purposes today. Who Knows, tommorow the US government may not even give a rats ass about 'online gambling'. There will be another new 'industry', to shake down.

The only threat to the great mass majority of americans today, are his fellow americans. Or government policies, that are passed in the name of fighting terrorism, communism, drugs, online gambling, or whatever new war will be waged on the american citizens constitutoinal(sp?) rights.

sorry about the off topic rant...

 

[jetset]

WAS NETELLER'S BAN ON U.S. PLAYERS PREMEDITATED?

If the ban on US players has been planned since November, why was more warning not given?

For the players, it was an unexpected shock when notices suddenly went up on the Neteller site abruptly advising that "with immediate effect" all US player transactions with online gambling sites would be banned (see previous InfoPowa report) But Reuters reported today that the Isle of Man-based e-wallet had been planning such a move since November.

The revelation immediately begs the question: "If this move has been in process for so long, why weren't players notified in advance and given a window of opportunity to clear their accounts instead of the current scramble?" Investors may be asking the same question as they face a share that has already endured a 60 percent nosedive since last October and is now suspended at the request of the company.

Fellow payments processor Citadel has also announced its official and equally abrupt exit from the US market.

The (for some sudden and surprising) move by Neteller came two days after founders and former directors Stephen Lawrence and John Lefebvre were detained by US authorities and charged with money laundering related to online gambling.

Reuters quoted a Neteller statement as commenting: "Todays withdrawal from the US market by Neteller is the culmination of months of careful planning.

"Along with this action, the group is actively assessing what further steps it may take in light of the two arrests made earlier this week to clarify the companys position in this matter.

"These decisions will allow the group to focus on opportunities available in the growing markets of Europe, Asia and the Americas outside of the United States."

The company added that all US customer funds were held in segregated accounts and were fully secure and are available for withdrawal by customers on demand.

In its statement today, Neteller said the group had experienced slowing fourth quarter growth in terms of receipts and new customer sign-ups. It said it would continue with its focus on geographic diversification through further product launches in Europe and Asia.

The statement added that US customers made up 76 percent of its active customers in the fourth quarter. Of new sign-ups over the period, 74 percent were from North America.

Average daily receipts for the fourth quarter stood at US$5.75 million. Average daily new customer sign-ups were 3 493. Revenue for the full year was expected to fall between US$255 million and US$260 million. The loss of the US market could mean an overall dip in revenues of 65 percent or more.

Neteller spokesmen revealed that the company has already taken steps to develop country blocking software.

The Citadel news came in a statement by parent Canadian company ESI Entertainment, which said the move came ...in light of recent US Department of Justice enforcement actions against financial processor executives.

US customers contacting Neteller support for withdrawal information were advised to take out a Neteller card for use in ATMs - not a popular option due to the heavy charges the processor levies. Alternatives are the EFT and check withdrawal options. However, due to the anticipated backlog there will be a 2 week delay for EFTs and 6 week delay for checks, players were told.

The delays in activating these options caused several players to remark that for a crisis which had been forseen this did not indicate very good organisation and planning.

U.S. prosecutors, using mainly the companys own transparent information as a public company, claimed that Neteller processed more than $7.3 billion in transactions in 2005 and more than 95 percent of its revenue from transfers involved Internet gambling.

From the point of view of vulnerability to arrest by US officials, most online gaming executives and founders have shunned traveling to or through the United States since the arrest of Bet on Sports' David Carruthers and the later detention of Sportingbet's chairman Peter Dicks last year.

However Neteller's Lawrence and Lefebvre, who together founded the company in 1999, apparently did not heed the warnings of other executives.

 

[misty113]

"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."


I, have only done business with NETeller for online wagering. But, would have to assume that when PayPal left the market. The same sort of 'end of the world' threads were going on then in these forums, in 2000.

As a matter of fact, I originally opened my PayPal account, to fund an old Paradise Poker (the biggest room at the time) account, and found out Paradise no longer accepted PayPal. Wow, I still have the records for the account, but have still never used PayPal.
Maybe, I do have an online gambling problem, Thanks, Mr. Frist.

PayPal left when Ebay took them over. Rumors have it PayPal was mismanaged and those within that organization pissed off some Government people and that was the start of their demise. Ebay buying out PayPal was way before (several yrs.) the online gambling act was passed. Ebay was on a power trip back then and instead of setting up their own pay system at that time and seeing PayPal was the main payment company used by their bidders, they decided to corner the market and put all the eggs in their basket under their control.

I think the Dem's need to revisit the Port Security Act and pull that gambling act out of there and kill it as it had no place being in there in the first (Frist) place!!!!
He threw that in there because he promised his buddies who paid him well to get the gambling act passed and knew it stood little to no chance passing on its own merit so he slid it in the Port Security Act knowing full well that act would pass hands down. Just one of many of the slick dirty deeds done by this Repuk'in Congress we had at the time.

 

[REOdeathwagon]

I think the Dem's need to revisit the Port Security Act and pull that gambling act out of there and kill it as it had no place being in there in the first (Frist) place!!!!

I agree that it had no place being in there, 100%.
Would be nice if they would kill it, but they won't. The republican media would distort the change as being 'light on terrorism'.


He threw that in there because he promised his buddies who paid him well to get the gambling act passed and knew it stood little to no chance passing on its own merit so he slid it in the Port Security Act knowing full well that act would pass hands down.

This safe ports act would not have been passed with the UIGEA provision in it, if this industry would have thrown a little money around themselves.
Instead, they got greedy, and now, they are on the outside looking in.
Now they are using that money instead, to pay for lawyers, to analyse the extradition treaties their governments have with the USA.

It was no secret that Frist, Leach, and Kyle, had a hard on for online gambling. It was also no secret that each of them were in the toughest races of their senatorial careers.
Each of the aforementioned candidates would have gladly accepted campaign contributions from online interests, and simply looked the other way.
Frist(?) and Leach, lost their races. And Kyle won by slimmest of margins.


Just one of many of the slick dirty deeds done by this Repuk'in Congress we had at the time.

I have been a lifelong Repuk'in hater. But the Dems, all signed this bill as well.

 

[jsp377]

And Kyle won by slimmest of margins.

Don't kid yourself. Kyl won by, what, eight percentage points? It was a miracle in itself that number was in single digits.

I have been a lifelong Repuk'in hater. But the Dems, all signed this bill as well.

Are you really supporting the view that a domestic security bill ought to have been vetoed because an amendment that the vast majority of Americans don't care about has been attached?

 

[lots0]

Are you really supporting the view that a domestic security bill ought to have been vetoed because an amendment that the vast majority of Americans don't care about has been attached?

YES!

A port security bill that does not secure our ports and an attack on our civil rights... You bet this whole damned thing should be thrown out.

FYI - The ONLY Reason people didn't care about this issue is because they didn't know about it...

When the US government secures its southern border so Terrorests can't just walk accross the border anywhere they want... I'll believe they are trying to secure our ports... Until then this is all this 'securing' the Homeland talk is pure bullshit and just another way to strip our Rights away.

 

[REOdeathwagon]

Don't kid yourself. Kyl won by, what, eight percentage points? It was a miracle in itself that number was in single digits.




Are you really supporting the view that a domestic security bill ought to have been vetoed because an amendment that the vast majority of Americans don't care about has been attached?

Kyle represents the senate district that I have lived in my entire life. This district is a hugely conservitive(sp?) district, always has been, always will be. That an unknown Democrat can come in and take on an incumbent Republican senator in this district, and only lose by 8%, is huge.
If Kyle didn't lose in the last election cycle, he never will, IMO. He will now retire from that office, whenever he chooses.
Unless, he gets caught with a 'live boy', or a 'dead girl'.


I support the view that the whole of 'safe ports act' was just another case of bad legislation. Based on 'terrorism and immigration' hyperbole.
I certainly don't feel any safer since it's passing.

 

[REOdeathwagon]

The revelation immediately begs the question: "If this move has been in process for so long, why weren't players notified in advance and given a window of opportunity to clear their accounts instead of the current scramble?" Investors may be asking the same question as they face a share that has already endured a 60 percent nosedive since last October and is now suspended at the request of the company.

To their credit Party Poker, was the only company that notified me in advance, of their decision to leave the US market. IIRC. ( I cannot beleive i just gave Party credit for anything, besides poor customer no service)

In NETellers defense, US customers did have advance notice. The passing of the UIGEA.

 

[lots0]

In NETellers defense, US customers did have advance notice.

Well... Neteller did say in press release right after the UIGEA passed that they were looking at the issue and did expect to provide services to Americans until the 270 period laid out by the UIGEA had passed.

Nope Neteller has been lieing to us all along... If they planned to exit the US market on the 16th of this month.

But I find it funny that Neteller would think we are all so stupid that we would believe that they had planned to exit the US Market without notice and it was just pure chance that Neteller exited the market the day the two founders were arrested...

And Neteller did stop some payments to the US on the 15th...

 

[vinylweatherman]

Neteller

Neteller MAY have planned on an exit from the US as they say, but what just happened was NOT in it!

They went to great lengths last October to reassure US players that they were going to continue servicing transactions despite the fact that large numbers of casinos either pulled out altogether, or restricted play from the 11 states where no online gambler wants to be living.

What they probably had in mind was the fact that after the 270 day window was up they would HAVE to close all US player's accounts, but in October they simply were not prepared to suffer the sudden loss of revenue. They had 270 days to aggressively expand into other markets in the hope that the US would be a smaller share of the market at "crunch time". The mere fact that facilities were pulled several hours BEFORE any official announcements were made indicates the plans had to be rushed forward in a panic. Even on Monday, they denied, when asked, that the pull out was total - claiming instead that it was purely a matter of removing Instacash as an option for US players. If at this time, when telling players they could still use EFT and bank wire, they had preplanned a total exit the next day, they committed a serious financial crime - procuring pecuniary advantage by deception (the money deposited by US players through Neteller on the Monday and early Tuesday was done so on the premise that Neteller to casino transactions were going to continue - Neteller made fees, plus keep the interest on the funds now stuck for 6 weeks or so, hence the "pecuniary advantage").
If they had not suspended shares when making the innacurate announcements on Monday, they would be in even deeper trouble. Now, they dare not relist the shares as the impression is of a "headless chicken" running around Neteller HQ making contradictory announcements from one day to the next. Investors will not be fooled, they will know that the ONLY thing that US account holders will be looking to do is empty their Neteller accounts at the earliest possible opportunity. If this is 70% of their market, this may also be a loss of 70% of the money they have on deposit (and they benefit from the interest on this while players are waiting for the next casino to offer a playing opportunity).
It is likely that ALL Neteller customers will experience long delays in getting withdrawals processed, but they dare not admit that - it makes sense though, I doubt they have a special team to process non-US business so that the US problems will have no impact.
On my next Neteller withdrawal to my bank, I will see how, if at all, this situation has affected the speed of processing and I end up waiting 2 weeks instead of the usual 4 to 5 working days.

 

[jetset]

Neteller founders in NY, and worried Canadians

EX-NETELLER DETAINEE NOW IN NEW YORK

Lawrence pays massive bail and is extradited to New York

The retired Canadian businessman and ex-Neteller director Stephen Lawrence is now in Manhattan under strict bail conditions that prevent him from leaving the United States.

The Neteller founder was released into the custody of an FBI agent this week and escorted to New York after posting $5-million US bail in the Virgin Islands following a court appearance before District Court Judge Geoffrey Barnard.

Prosecutors said that Lawrence (46) had posted $4 million of the bail with $2.5 million cash and $1.5 million through a Manhattan apartment.

Lawrence and another Neteller founder, John Lefebvre (55) were arrested on warrants related to a charge of conspiracy to transfer funds with the intent to promote illegal gambling. The charge was brought by federal prosecutors in Manhattan in a complaint unsealed last Monday.

Lefebvre was arrested on Monday in Malibu, California.

On his arrival in New York, Lawrence appeared at a hearing at Magistrate’s Court in Manhattan on Friday.

Assistant U.S. Attorney Timothy Treanor argued that Lawrence was a flight risk because he owned a private jet and had founded a business in which the "entire premise" was to "stay outside the jurisdiction of U.S. law enforcement."

Treanor said that Lawrence knew which jurisdictions outside the United States were lax about extraditing fugitives wanted for money laundering offences.

"It would be difficult for us to ever get him back again," Treanor said.

Lawrence’s lawyer, Peter Neiman, argued at Friday’s hearing that his client was not a flight risk because he has a wife and child in New York City and was buying a second apartment in the city, where he spends about 100 days a year.

According to federal prosecutors Lawrence resides in the Bahamas.

Under the terms of his bail set on Friday, Lawrence is not allowed to travel outside New York City until March 1. Thereafter, if he showed that he was not going to flee, he would be allowed to travel within the continental United States if he gave authorities five business days notice.

Lawrence has founded and built a number of companies both in and outside the online sector, according to Neteller's online financial statements.

His ties to Calgary in the Alberta province of Canada date back to the 1990s when he worked as a principal with Cavendish Investing Ltd., a Calgary-based private venture capital firm.

Lawrence, according to Neteller's online statements, spent time in the Alberta property development industry and became interested in the emerging online e-commerce sector.

He identified the concept of the Neteller System in 1999 and served as CEO of the Neteller Group until December 2002.

A judge in Los Angeles earlier set bail at $5 million for Lawrence’s companion Neteller founder, John Lefebvre. He is expected to arrive for a court appearance in New York on January 26, prosecutors said.

Neteller, which abandoned its huge US business and more than 65 percent of its income immediately following the arrests, is the latest target of what seems to be a U.S. crackdown on online gaming, beginning with the arrest of BetonSports Chief Executive David Carruthers in Texas last July.


MEANWHILE, BACK IN CANADA NETELLER WORKERS WORRY

It’s not just execs and players who are concerned about the Neteller pull-out from the USA

The abrupt ban on US players by Neteller last week has not just discomforted jailed former executives, investors and American online gamblers….there is consternation north of the US border as well.

Calgary regional media report that the sudden decision to shut off over 65 percent of the company’s business by banning US players could be about to have a ripple effect in Calgary where Isle of Man registered Neteller operates a call centre with more than 700 employees.

More than 300 of those workers operate telephone Support for mainly US clientele. The company handled more than $7 billion worth of transactions in 2005.

Some employees in the Calgary branch are reportedly concerned that business will take a hit. Several workers at Neteller's northeast office told the local newspaper The Herald that they were bracing for layoffs, and some said there had already been more than two dozen people let go in recent weeks.

The employees asked that their identities not be published, as they were under strict orders by management to not speak with the media.

Inside the call centre, employees enjoyed a catered lunch, reports The Herald. "I think it's to make us feel better," one woman said.

Beyond Lefebvre and Lawrence, Neteller has several Calgary connections within its board of directors.

According to Neteller.com, Gordon Herman was appointed chief operating officer of the Group in September 2002. He has since stepped down, but remains chairman of the board. Herman was previously a managing director of Chell.com, a Calgary-based application services provider, and reportedly cashed in Cdn$24.6 million of his shares in 2005.

Another former Calgary man was also involved in the company. Dale Patrick Johnson, listed as executive director of Neteller in 2005, attended the University of Calgary where he received a management diploma.

 

[Rollo]

Yes, this looks very serious. If one can be charged with conspiracy to transfer money, then sites that try to take money directly from players can be charged with the same thing, you don't need an intermediary for a conspiracy charge. The DOJ can't stop all US gaming or those willing to take the risk, but it's clear that now any site or money transfer outfit that tries it is doing something illegal and runs the risk of being prosecuted so "large", "professional" and "trusted" organizations will be a species more endangered than the buffalo.

I think one or two more arrests (say a poker site or a casino) and all of the decent organizations or all types will pull out of the US completely. I bet some already have sealed indictments waiting for them. Reading the indictment, these sites are just plain sitting ducks. Pokerstars taking the position that poker isn't a game of chance as their defense is going to get absolutely clobberd. Bodog is going to stay in until arrested becuase they aleady have sealed indictments waiting I'd guess.

I don't think this will end with the US, I suspect some Asian and even some EU contries may follow suit at some point. Which other countries ban online gambling currently? Does anyone know?

Arresting the Neteller dudes may prove a bigger blow than UIGEA. A bad day for sure. I've pretty much bailed out of online gamling, and don't live in the US anymore, but it's sad to see our freedoms disappear.

For we webmasters, I guess there's still all-American wholesome goodness in pharmaceticals and porn to promote...

both viagrameister.com and analmeister.com are available!

 

[REOdeathwagon]

Yes, this looks very serious. If one can be charged with conspiracy to transfer money, then sites that try to take money directly from players can be charged with the same thing, you don't need an intermediary for a conspiracy charge. The DOJ can't stop all US gaming or those willing to take the risk, but it's clear that now any site or money transfer outfit that tries it is doing something illegal and runs the risk of being prosecuted so "large", "professional" and "trusted" organizations will be a species more endangered than the buffalo.

In America we have now entered the true 'sleazy online gambling age'. What's the O/U on number of weeks before there are no PAB's for American players at all.

I do think that the original extinction of the buffalo, was also sanctioned by the US government.

I think one or two more arrests (say a poker site or a casino) and all of the decent organizations or all types will pull out of the US completely. I bet some already have sealed indictments waiting for them. Reading the indictment, these sites are just plain sitting ducks. Pokerstars taking the position that poker isn't a game of chance as their defense is going to get absolutely clobberd. Bodog is going to stay in until arrested becuase they aleady have sealed indictments waiting I'd guess.

I would think this might be a positive in the end result for US players. PokerStars would have adequate resources to mount a solid defense. And PokerStars not being affiliated with a sportsbook or a casino, would only help in their defense against DOJ.

The american public 'might' [I doubt it] stand up behind online poker. The challenge in going after a site like PokerStars definitely would up the ante for the DOJ. This may be why they want to set the legal precedents first with sportsbooks and then casinoes ?
Even with the recent UK ruling against pokers 'skill'. There being no 'fixed odds' in poker, would help ?

And poker is as American as apple pie. [...or placing a bet on the SuperBowl...LOL]

I don't think this will end with the US, I suspect some Asian and even some EU contries may follow suit at some point. Which other countries ban online gambling currently? Does anyone know?

IIRC, Italy, China may have some restrictions for licensing ?

Other countries have huge B&M monopoly interests too. Once the legal precedent is set in the WTO of the US saying "NO" first. It just becomes much easier for other countries to protect their onshore gaming industries.

Arresting the Neteller dudes may prove a bigger blow than UIGEA. A bad day for sure. I've pretty much bailed out of online gamling, and don't live in the US anymore, but it's sad to see our freedoms disappear.

Yup, NETeller were the backbone of the whole industry. Look at the havoc this has created. "To the DOJ - nice hand sirs, well played. CHEERS!"

It is "sad to see our freedoms disappear", but to the average american dumbass John and Jane Doe, they're are more important things. For instance, fighting communism, organized crime, drugs, and now terrorism.

both viagrameister.com and analmeister.com are available!

Man, I could not believe analmeister.com was still available. I just got it locked up on the back end.
I will send your monthly tribute Rollo, in a NETeller peer to peer transfer.