Founders of Neteller Arrested!

[Slotster!]

This is, quite frankly, UNBELIEVABLE!

Truly.

The USA really has gone mental, hasn't it.

I weep for the future...

 

[winbig]

Does anyone in the UK or Australia need a roomate?

*half serious*

 

[REOdeathwagon]

Am I reading this wrong, or are they grandfathering the UIGEA???

If you are referring to item # 8, a-c. These would fall under the wire act, I think.
They are referencing specific NFL sporting wagers.


REOdeathwagon

 

[Slotster!]

I just thought... What about the impact on casino revenues!!!!!

This really is going to tip some of them over the edge!

 

[REOdeathwagon]

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

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

 

[winbig]

I just thought... What about the impact on casino revenues!!!!!

This really is going to tip some of them over the edge!

I have one suggestion to everyone that has a neteller account:

GET YOUR MONEY OUT OF THERE ASAP

 

[vinylweatherman]

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.

 

[Slotster!]

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...

 

[winbig]

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...

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

 

[Slotster!]

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

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"

 

[Mousey]

(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

 

[jsp377]

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.

That's a little silly. It's not the US's responsibility to enforce other countries laws, ever.

 

[winbig]

That's a little silly. It's not the US's responsibility to enforce other countries laws, ever.

I wish someone would tell that to George W.

 

[REOdeathwagon]

That's a little silly. It's not the US's responsibility to enforce other countries laws, ever.

UUHH...we are the worlds police.


REOdeathwagon

 

[cipher]

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.

 

[jetset]

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.

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.

 

[jetset]

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.

 

[Chatmaster]

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...

 

[REOdeathwagon]

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

 

[jetset]

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.

 

[REOdeathwagon]

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...

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

 

[REOdeathwagon]

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.

 

[REOdeathwagon]

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.

 

[cipher]

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...

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.

 

[jetset]

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