Sunday, January 21, 2007

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 from the US Attorney General's office that
reported the arrests 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 anouncement 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."