Malibu homeowner John Lefebvre, a Canadian national, was released on a $5
million U.S Bond following his arrest last week on charges of allegedly
laundering billions of dollars in illegal online gambling proceeds. Canadian
Stephen Lawrence was also released on $5 million bail. The two are former
directors of NETeller, a company that transfers money globally for a fee.
Lefebvre and Lawrence are accused of using the Internet payment services
company to facilitate the transfer of billions of dollars of illegal
gambling proceeds from the United States to Internet gambling companies
overseas. A former lawyer, Lefebvre launched NETeller in 2000, which was
essentially a Web database that functioned as the middleman between
companies operating online gambling casinos and offshore bank accounts.
The U.S. Attorney’s office stated in a press release that, “According to
NETeller’s 2005 annual report, Lawrence and Lefebvre, through NETeller,
provided payment services to more than 80 percent of worldwide gaming
merchants.” Lefebvre, according to the U.S. Attorney’s office, served as
president of NETeller from 2000 to 2002, and was a member of the Board of
Directors until approximately December 2005. Reuters reported last week that
the company closed its U.S. Internet gambling services on Thursday, causing
it to lose more than 65 percent of its business. Shares in NETeller had
fallen by 60 percent since September, following the passage of the Unlawful
Internet Gambling Enforcement Act, and the arrests of two British executives
from companies that were involved in online casinos. The anti-online
gambling law makes it illegal for banks, credit card companies and online
payment systems to process payment to online gambling companies. Nearly $8
billion in market value of shares in publicly traded companies such
PartyGaming and Sportingbet were wiped out following the law’s passage.
The U.S. Attorney’s office reported that in 2005, NETeller processed more
than $7.3 billion in financial transactions, and that, according to reports
issued by NETeller, 95 percent of its revenue came from money transfers
involving Internet gambling companies. In the first half of 2006, NETeller
processed $5.1 billion in financial transactions, prosecutors said. As
charged in the U.S. Attorney’s complaint, 85 percent of the company’s
revenue from that period came from gamblers in North America, and
approximately 75 percent of its North American revenue was generated in the
United States.

“Internet gambling is a multibillion-dollar industry,” stated FBI Assistant
Director Mark Mershon. “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.”

Since the arrest of two other former online gambling company executives in
September, including Sportingbet chairman, Peter Dicks, most online gambling
executives have been avoiding the U.S. However, this did not deter Lefebvre,
who was arrested at his Malibu home last Tuesday, from staying away from the
States.

In an Oct. 14, 2005 story from the University of Calgary campus newspaper,
Lefebvre’s alma mater, he is described as a “man embodying the spirit of a
generation.” Lefebvre donated $1.2 million to its fine arts faculty in 2005.

The article goes on to tell the rise, fall and then rise again of Lefebvre.
According to the On Campus Weekly story, Lefebvre was “a lawyer by trade and
a frustrated musician by passion.”

Lefebvre’s father died when he was 3, writes Tom Maloney, and his mother
raised he and his two siblings while returning to school and earning an
education degree and a master’s in counseling. After graduating law school,
Lefebvre ended up running a storefront law clinic and then eventually worked
from home.

“One of the reasons I didn’t get dragged into the downtown, upper-crust,
law-circle things is, I never really did concede to working the long hours,
as much as I could have or maybe should have,” he is quoted in the U of C
newspaper. “It was always more compelling for me to get home to see my
daughter.”

Facing a midlife crisis in his ’40s, he quit his job as lawyer and then
begged in the train stations of Calgary for change to buy food, according to
the campus newspaper. He ended returning to legal work to pay back friends
and then met up with a former client, who later became chairman of NETeller,
Stephen Lawrence. Lawrence was operating an online casino in Costa Rica, and
wanted a more efficient money transfer system. Lefebvre worked with a
computer programmer and built NETeller. The company gained a percentage off
each transaction from the casinos, smaller than what the casinos had to pay
credit card companies, and it provided better security against fraud.

Two years ago the company, based on the Isle of Man in the U.K. and listed
on the London Stock Exchange, had a user base of two million customers
worldwide and 1,700 merchant clients, according the U of C newspaper.

Trading of NETeller’s shares was temporarily suspended on Jan. 16, following
the arrests of Lefebvre and Lawrence. A press release from the company was
listed on the London Stock Exchange stating that other than as shareholders,
neither of the two have any current position or connection to NETeller.