NETeller Founders Arrested

[linrom1]

Link (http://business.guardian.co.uk/story/0,,1991485,00.html)

The American authorities have swooped on the founding shareholders of NETeller, the company which specialises in money transfers between online gambling sites and players.

Stephen Lawrence and John Lefebvre, both former directors of the firm, were detained in the US yesterday, while travelling separately.

NETeller called for a suspension of trading in its shares as it revealed the shock development this morning.

The online payment group said neither Mr Lawrence nor Mr Lefebvre has any current position with or connection to NETeller, other than as shareholders.

[ryesteve]

neither Mr Lawrence nor Mr Lefebvre has any current position with or connection to NETeller
Makes you wonder what exactly they're being charged with

[classhandicapper]

Makes you wonder what exactly they're being charged with

Enabling freedom? :bang:

[GMB@BP]

seems to much a coincedence that Pinnacle, the largest site shuts down and now neteller is in trouble.

[classhandicapper]

Most poker players have been waiting for Neteller to go out of the business in the US. In fact, a few poker sites have been encouraging poker players to use other ways to fund their accounts in recent weeks. I'm not sure what is related to what, but I think it's just a matter of time before Neteller pulls the plug on the U.S.

I'm also not so sure I would want to be one of the US poker players that owns Ultimate Bet or Full Tilt anymore either. They are basically defying the government by staying open and taking US customers. Even if they are legally correct, if I was doing something like that I'm not so sure I'd want to be a US citizen on US soil. The Feds seem to be making a lot of people's lives miserable outside the US, so IMO they aren't going to tolerate US citizens doing things either.

[spilparc]

I just put $1000 on Neteller. Should I pull it out?

[classhandicapper]

I still have a couple of grand at Neteller. I'm not really worried about it getting it back, but I wouldn't be surprised if I get a message or email telling me to remove it just like Pinnacle did. I wouldn't keep large amounts of cash or even amounts that could hurt you financially there though. I don't keep a real lot of money at any online site (poker, horses or other).

[Blackgold]

They have suspended their Instacash service to U.S. Customers, but you can still fund by ETF or CC. . . at least for the time being.

Since online horse racing is legal in my state, why can't I transfer based on the fact that I used Pinny for horse racing.

Nevertheless, as one person interviewed for the Neteller story tonite on CNBC said. . . prohibition won't do anything. . . and expect to see the Harrah's, MGM's, etc. of the world lobby for online gaming so Unk Sam can collect taxes.

Of course it indirectly helps the U.S. economy if more of our "Vinny's" take action on Super Bowl Sunday, instead of Pinny.

BTW- Who Dat Say Dey Gonna Beat Dem Saints!

[Suff]

They've charged them. Money laundering. To the tune of Billions.




Two founders of a company which processes Internet gambling transactions were arrested and charged with laundering billions of dollars in gambling proceeds, federal prosecutors announced Tuesday.

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.

"Blatant violations of U.S. law are not a mere `risk' to be disclosed to prospective investors," Garcia said. "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 Mark J. Mershon said the multibillion-dollar online gambling industry was "a colossal criminal enterprise masquerading as legitimate business."



Lefebvre was arrested Monday in Malibu, Calif and was scheduled to appear in U.S. District Court in Los Angeles Tuesday. Lawrence, who resides in Paradise Island, Bahamas, was arrested Monday in the U.S. Virgin Islands and will appear in federal court on Wednesday.

charged with conspiring to transfer funds with the intent to promote illegal gambling, could face a maximum of 20 years in prison if convicted.

[bigmack]

Feds are keyed up:
http://www.point-spreads.com/news/industry/neteller-founders-accused-of-money-laundering-and-tax-evasion-20070116.html

FBI testimony:
http://www.casinocitytimes.com/news/article.cfm?contentID=163594

[JustRalph]

that second link is one hell of a nice affidavit. Kudo's to that agent. For the writing prowess

[highnote]

One can only wonder why the Neteller founders risked traveling in the U.S.

One of the reasons I did not more vigorously pursue starting a betting exchange when I first got the idea on Breeders' Cup day in 1998 was because I didn't want to land in jail and I didn't want to leave the U.S.

In retrospect, I could have founded the company overseas and refused to take wagers from U.S. based customers. That might have been enough to keep me from landing in jail.

I don't think Neteller founders are guilty though. Why should they be responsible for police work on their customers? Why can't I open a Neteller account and use it to pay for non-gambling related goods and services? Is Neteller supposed to be responsible for every transaction that takes place?

Do drug dealers or members of organized crime have bank accounts with brick and mortar banks in the United States? Does that make the brick and mortar bank executives criminals because they allow individuals whose money comes from illegal activites to open bank accounts?

I encourage everyone to start writing letters to the editors of your local newspapers to protest the inclusion of online gambling prohibition in the Ports Act.

And another thing, I guarantee you I can go to my bank and tell them I am going to take a trip to a Vegas casino. I can ask my bank to expect a call from the casino verifying my creditworthiness. I can then wire the money to Vegas to be used for gambling or send the casino a check after I've returned home for the money I lost at roulette. I can go to an ATM machine to get money to use for betting. Shoudn't the bank executives be arrested for aiding and abetting a gambling operation?

It's all BULLSHIT.

[highnote]

And one more thing...

If Neteller is guilty of aiding and abetting gambling, then also every U.S. based bank that allowed money to be transferred from their banks to Neteller must also be guilty. Because if Neteller was supposed to know money was passing through their accounts to online gambling sites, then U.S. banks that do business with Neteller must have known the same thing.

The more I think about this the more presposterous it seems.

What a waste of my tax dollars.

[highnote]

And one more thing...

Neteller is a publicly traded company in the Great Britain.

Nevermind the fact that our number one ally in the war against terror, Great Britain, has built an entire industry based on internet gambling.

I guess we are just too immature in this country to be able to make grown up decisions about online gambling. But our European counterparts are mature enough. We are just little babies who need the protection of our big brother government. I feel so much better now knowing I have the breast of government to suckle -- now, if it just wasn't the hind tit I'd be a heluva lot happier.

[highnote]

And yet another thing...

Here's a quote from the article linked above by Ralph --
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."

He says... "Internet gambling is a multibillion-dollar industry." TRUE

He says... "A signficant portion of that is the illegal handling of Americans' bets with offshore gaming companies" TRUE

He says... ", which amounts to a colossal criminal enterprise masquerading as legitimate business." FALSE. It is a legitimate business that is wrongly characterized as a criminal enterprise.

Remember, our biggest ally in the war on terror is Great Britain. Online gambling is legal in the UK. Am I to assume that America is so full of terrorists and criminals that online gambling should be made illegal. I'm glad our legislators hold Americans in such high regard. Clearly, Great Britain respects it's citizens more than the U.S.

He says... "There is ample indication these defendants knew the American market for their services was illegal." TRUE. And I'm sure there is ample evidence that every U.S. bank who did business with Neteller knew the same thing. How many U.S. bank executives have been arrested?

Think about this... Betfair founders were given The Queen's Award for Best Innovative New Business. Online gambling pioneers in the U.S. are given jail sentences.

How can our country be so backward?

[Seabiscuit@AR]

There are plenty of people out there who see gambling as sin (which in their eyes makes it worse than a crime). Some of these people are elected representatives

You will never convince these people to change their views in their lifetime

The US government has decided to get tough and it looks like they are going to make an impact. If I lived in the USA I would not bet offshore anymore. The offshore firms that continue to take bets from USA citizens would not be trustworthy firms in my eyes

[highnote]

If I lived in the USA I would not bet offshore anymore. The offshore firms that continue to take bets from USA citizens would not be trustworthy firms in my eyes

And which offshore firms are those -- can you please be specific? Not all offshore firms are taking bets illegally.

[Seabiscuit@AR]

Why do I need to be specific? I have no specific firms in mind and was just speaking generally. I have seen a few firms claiming they will continue to take bets from USA citizens. I would not bet with those

My own view is that Pinnacle's stance is totally understandable. I would be happy to open an account and bet with them (given that I do not live in the USA I can do this).

Betfair do not take bets from US citizens. I am happy to bet with them

IAS in Australia (where I am) since these new US laws were announced straightaway put a message up on their website saying they would no longer take bets from US citizens

All these companies I would be happy to bet with.

I would not open an account with any outfit that is offshore and takes bets from US citizens.

Now you might be telling me that neither Pinnacle, Betfair nor IAS are breaking the law if they take bets from US citizens. But obviously these firms have legal advice to the contrary. And really with the law you can never be sure how it will be interpreted.

If I lived in America I would only bet with locally based firms

[alysheba88]

Why do I need to be specific? I have no specific firms in mind and was just speaking generally. I have seen a few firms claiming they will continue to take bets from USA citizens. I would not bet with those

My own view is that Pinnacle's stance is totally understandable. I would be happy to open an account and bet with them (given that I do not live in the USA I can do this).

Betfair do not take bets from US citizens. I am happy to bet with them

IAS in Australia (where I am) since these new US laws were announced straightaway put a message up on their website saying they would no longer take bets from US citizens

All these companies I would be happy to bet with.

I would not open an account with any outfit that is offshore and takes bets from US citizens.

Now you might be telling me that neither Pinnacle, Betfair nor IAS are breaking the law if they take bets from US citizens. But obviously these firms have legal advice to the contrary. And really with the law you can never be sure how it will be interpreted.

If I lived in America I would only bet with locally based firms

What does "locally based firms" mean?

[highnote]

Why do I need to be specific?

You don't have to be specific. But be aware you are wrong.

Not all offshore betting operations are illegal.

Telling people not to use offshore betting companies shows that you are not well informed.

There are legal, licensed wagering service providers that are based offshore and accept bets from U.S. based customers and the money from the bets they take gets sent back to the U.S. racetracks' betting pools and helps support the horsemen.

[Seabiscuit@AR]

By locally based firms I mean firms based in the USA

[Seabiscuit@AR]

OK swetyejohn now you can be specific

Give me some examples of these legal offshore businesses

Give me their name, physical address (bricks and mortar address) and internet address

I would like 3 examples if possible but more would be better and if you can only come up with one or two that would be fine

I just want to be better informed

[linrom1]

It's unclear what all of this has to do with betting on horse racing online through a foreign based wagering facility. As far as I can tell, it can not be deemed as criminal in any manner whatsoever if online wagering is legal in your state, however, the foreign based entity could be violating some state laws because it is most likely unlicensed to accept bets.

[highnote]

IRG, Curacao -- http://www.betirg.com/
RGS, St. Kitts -- rgs.net

are the two that come immediately to mind.

[highnote]

It's unclear what all of this has to do with betting on horse racing online through a foreign based wagering facility. As far as I can tell, it can not be deemed as criminal in any manner whatsoever if online wagering is legal in your state, however, the foreign based entity could be violating some state laws because it is most likely unlicensed to accept bets.

Good point. For example, I can not bet in-state or out-of-state online from Connecticut. However, I can have a phone based wagering account in-state or out-of-state because Connecticut allows telephone wagering. It's based on reciprocity.

If I can bet by phone in-state or out-of-state then shouldn't the same apply to another country? If I can call up Connecticut Autotote and make a wager on a U.K. race, then shouldn't I be allowed to open a phone account with Betfair and phone in my bet on a U.S. race? I know for a fact Betfair accepts telephone wagers. Maybe the fact they are not licensed is the sticking point. However, their must be U.K. based wagering service providers that are licensed in the U.S., right?


I will pose this question to my Attorney General.

[Seabiscuit@AR]

Thanks for those examples swetyejohn

I see that RGS state on their website the new laws do not apply to them. What distinguishes their case from Pinnacle? Their website does not explain unless you login

[Seabiscuit@AR]

Betfair always took bets from Australians before they got their Australian licence so the fact they do not have a licence in the USA is probably not the reason. Betfair takes bets from countries all over the world and as far as I know they have a UK licence and Australian licence and that is it (there must be plenty of places where they still take bets and still have no licence)

My impression has always been that Betfair does not deal with US customers due to USA laws although I do not know the specific laws

[Seabiscuit@AR]

swetyejohn

I have been looking at the website for this RGS business

It says on their website they are a Delaware corporation with their business located in St Kitts

Now does this mean that the company (the legal entity) is really based in the USA (in Delaware) while the company employees are offshore in St Kitts? So that RGS is really based in the USA and that is why its case is different from Pinnacle?

IRG does not spell it out as clearly but is it the same deal?

Both websites make it clear they are subject to USA laws with respect to withholding winning bets over certain amounts. Now USA laws with respect to tax issues can only apply if you are a citizen/resident of the USA (like a Delaware corporation)

[TurfRuler]

I have not found the courage to start an online or telephone account for wagering purposes since I returned to North Carolina, starting in 1988. But I detest "kill joys." People who view what you do as being morally wrong in their minds and don't want you to do it no matter what pleasure you may get from it. Something so simple as playing backgammon was once seen as being not considered worthwhile for commoners to play, only the elite of society, such as dukes, earls, kings, and lords of lords. I recently received a Happy Birthday greeting from allhorseracing.com, in communicating with the a member of the company here is a reply he sent me.

Hi ;

We have members from most every city in the state who wager on everything from horses and sports to virtual games and casino 365 days a year. What you choose to do is entirely up to you; regardless, we do accept wagers from members who reside in North Carolina.

All the best,

.

--
All Horse Racing
Bet with Confidence
www.allhorseracing.com <http://www.allhorseracing.com/>

[HEY DUDE]

I believe our goverment is becoming more like the USSR. Osama is kind of like that as well. Live life my way or else. It's a shame that we as a country have come to this. I just don't understand why they don't leave these two guys alone.


My two cents.

[44PACE]

I still have a couple of grand at Neteller. I'm not really worried about it getting it back, but I wouldn't be surprised if I get a message or email telling me to remove it just like Pinnacle did. I wouldn't keep large amounts of cash or even amounts that could hurt you financially there though. I don't keep a real lot of money at any online site (poker, horses or other).

A couple of thousand is a lot to lose.

[Premier Turf Club]

There are legal, licensed wagering service providers that are based offshore and accept bets from U.S. based customers and the money from the bets they take gets sent back to the U.S. racetracks' betting pools and helps support the horsemen.

Nice in theory, but rumor has it that not all the money quite makes it to the pools.

[acorn54]

[QUOTE=swetyejohn]And yet another thing...

Here's a quote from the article linked above by Ralph --


He says... "Internet gambling is a multibillion-dollar industry." TRUE

He says... "A signficant portion of that is the illegal handling of Americans' bets with offshore gaming companies" TRUE

He says... ", which amounts to a colossal criminal enterprise masquerading as legitimate business." FALSE. It is a legitimate business that is wrongly characterized as a criminal enterprise.

now only if the fbi was as adamant about illegal immigrants and their employers evading taxes maybe we would see a significant increase in the tax coffers
acorn

[highnote]

now only if the fbi was as adamant about illegal immigrants and their employers evading taxes maybe we would see a significant increase in the tax coffers
acorn

Agreed. You gotta love the way our country chases away what could be legitimate business. Why? Because it's new and competes with Lotto? We have always embraced entrepreneurs in the country. And now, we arrest them.

However, when people don't follow the law and cross our border to work nothing is done. And when employers hire illegal workers, such as in such as in a slaughterhouse and pay them more than teachers, again, nothing is done.

[highnote]

Nice in theory, but rumor has it that not all the money quite makes it to the pools.


Never heard that one before? Are you saying there is a rumor that a publicly traded company like Youbet has one of it's subsidiaries acting as a bookmaker?

Sounds to me exactly what it is -- a rumor.

[rrbauer]

Nice in theory, but rumor has it that not all the money quite makes it to the pools.

Either you know something....or, you don't. Since you veil your post as a "rumor" I assume that you don't know "something".

[Premier Turf Club]

Never heard that one before? Are you saying there is a rumor that a publicly traded company like Youbet has one of it's subsidiaries acting as a bookmaker?

Sounds to me exactly what it is -- a rumor.

I never said which shop it is, to be honest I wasn't given a name and am not interested in guessing. I was simply commenting that there is often a difference in theory and practice. True or not, it IS the perception of certain track operators that some of the money isn't making it's way to the pools. That much, I can say they've told me.

Let's leave it at that.

[highnote]

I never said which shop it is, to be honest I wasn't given a name and am not interested in guessing. I was simply commenting that there is often a difference in theory and practice. True or not, it IS the perception of certain track operators that some of the money isn't making it's way to the pools. That much, I can say they've told me.

Let's leave it at that.


Definately leave it at that -- unless there is a way of proving it.

What is to stop someone here of accusing your new company of the same thing, falsely or not? Nothing.

[trying2win]

Give me some examples of these legal offshore businesses

Give me their name, physical address (bricks and mortar address) and internet address

I would like 3 examples if possible but more would be better and if you can only come up with one or two that would be fine

I just want to be better informed

SEABISCUIT:

--I'm a Canadian and continue to bet with Pinnacle (can be a little smug about that, but for how long? Who knows)....

--I also bet sometimes with LINK2BET at www.link2bet.com They claim to send in bets through the tote system to Canadian and American racetracks. I don't bet that much with LINK2BET, yet they still give me a 5 % cash rebate. They do business a bit differently there, in that you have to tell them ahead of time via an email, how much you estimate you will bet per week, then they will quote you a rebate they will give you. I'm guessing that if you inquired, they would tell you what level you would have to bet to get each increment in the cash rebate offered. One drawback is that they might not carry all the tracks you like to bet on.

--And I also bet with HORSEPLAYER INTERACTIVE, but will be cutting back the amount of bets there in the future. They don't pay enough in the way of rebates in my opinion.


T2W

[Seabiscuit@AR]

swetyejohn

So is RSG an American based outfit with call centre etc based offshore? From my reading it is. As such it is not an offshore firm as legally when you bet with RSG you are betting with the company which is based in America not the person answering the phone in St Kitts

Your other example seems the same deal (IRG)

So people betting with RSG etc are betting with an American company not an offshore business

Companies like the Australian TABs have refused USA customers for years claiming it is illegal for them to take their business. Betfair has shunned US customers for years too. Now with the latest laws a lot more companies offshore are taking the same approach

I think the Neteller people might be in trouble. They should never have gone to the USA

[highnote]

.... American based outfit with call centre etc based offshore? From my reading it is.

Technically, your analysis sounds correct. In the U.S. racing press these firms are usually referred to as offshore betting shops. They should be referred to as licensed offshore betting shops so as to distinguish them from unlicensed offshore betting shops -- like Pinnacle.

It used to be the U.S. was the most forward thinking, progressive country in the world. But we have some real hangups here when it comes to betting. I see absolutely nothing wrong with a Betfair model. Neither do the powers that be in England. Yet, a high-tech country like the United States refuses to recognize the betting exchange as a legitimate business and meanwhile the racing industry is falling into a black hole of despair dominated by a middle eastern family. So all that slot money that is going to generate higher purses is going to end up in the hands of middle easterners. Now there's a good model for you.

Meanwhile, The Queen of England has given Betfair an award for most innovative new business.

The U.S. can't come to terms with something as simple as internet gambling -- yet we're going to put an end to sectarian fighting in Iraq. :bang:

Sorry to digress, but right now, our country has some serious incongruencies.

[Premier Turf Club]

What is to stop someone here of accusing your new company of the same thing, falsely or not? Nothing.

That's not exactly true. We are (actually will be) required to install the latest RCI (Association of Racing Commissioners) wager tracking software. With it, the racing commission can track every bet, can get a recording of every phone call in and out of the call center. Furthermore, we are required to be audited every year by the ND Racing Commission, and most likely by RCI. To my knowledge, none of the off-shores use this software, nor are they audited regularly by U.S. authorities. That's why a number of tracks won't allow them to take the signal (KEE, NYRA amongst them). As one racetrack executive said to us recently, "we have no way of knowing what happens once that wager is transmitted off-shore and it scares the hell out of us."

I'm truly sorry I mentioned it to begin with, but I don't want there to be any misconception about the level of scrutiny we are subject to relative to those that operate in the islands.

[Seabiscuit@AR]

http://www.bettingmarket.com/allfcknuts010206.htm

Looks like Neteller has decided to stop processing gambling transactions with offshore books by US citizens

[pic6vic]

Yes

Neteller will not transfer any money to gambling sites

[classhandicapper]

Yes

Neteller will not transfer any money to gambling sites

This has complicated the cash out process also.

My gambling accounts are adequately funded right now, but if I want to cash some out in a few weeks I'll have to find an alternative.

[BIG RED]

You think that maybe that was the 'deal' Wait and see if the founders walk?