Friday, January 19, 2007

Two founders of a company that processes Internet gambling transactions were
arrested and charged with funneling billions of US dollars in gambling
proceeds to overseas betting operations, federal prosecutors announced
Tuesday. The charges mark the latest in a series of crackdowns by the
federal government against the online gambling industry. The charges against
the former Neteller PLC directors, John David Lefebvre, 55, and Stephen Eric
Lawrence, 46, both Canadian citizens, were contained in two criminal
complaints unsealed in U.S. District Court in Manhattan on Monday, U.S.
Attorney Michael Garcia said in a statement.
The prosecutor said the men knew when they took their company public that
its activities were illegal. FBI Assistant Director Mark J. Mershon said the
multibillion-dollar online gambling industry is "a colossal criminal
enterprise masquerading as legitimate business." Neteller is an Internet
payment services company that has grown in popularity as an increasing
number of credit card companies have begun refusing to accept payments to
online gambling sites. Neteller essentially acts as a middleman between
gamblers and offshore betting operations. For example, a gambler who wants
to place bets at offshore sports books can fund an account with Neteller,
which in turn will transfer the money to the betting sites. Prosecutors say
Neteller facilitated the transfer of billions of US dollars of illegal
gambling proceeds. Lefebvre was arrested Monday in Malibu, Calif., and was
scheduled to appear in U.S. District Court in Los Angeles on Tuesday.
Lawrence, who lives in the Bahamas, was arrested Monday in the U.S. Virgin
Islands and will appear in federal court on Wednesday. Peter Neiman, a
lawyer for Lawrence, said he had no comment. A lawyer for Lefebvre did not
immediately return a telephone message seeking comment. 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. Garcia noted that the company
acknowledged when it went public that U.S. law prohibited people from
promoting certain forms of gambling, including Internet gambling and
transmitting funds that are known to have been derived from criminal
activity. Lefebvre and Lawrence also conceded in the company's offering
documents that they were risking prosecution by the U.S. government, he
said. Prosecutors 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.