Neteller agreed today to forfeit $136 million in profits and return $94
million in American online gamblers' funds it is holding as part of a plea deal
for violating U.S. gambling laws. The publicly traded, British-based
Netseller's principal business is transferring funds to offshore gambling
sites.
The deal, which includes 18 months of monitoring by the U.S. government,
allows Neteller to avoid a criminal conspiracy charge. If Neteller avoids
transferring U.S. funds to offshore gambling sites over the monitoring period,
all charges will be dropped.
Earlier this month, John David Lefebvre and Stephen Eric Lawrence, Neteller's
co-founders, pleaded guilty to conspiracy to promote Internet gambling by
providing payment services to Internet gambling sites. Both face up to five
years in prison and a maximum fine of $250,000.
In addition, Lefebvre and Lawrence each agreed to personally forfeit $100
million to the U.S. before their Oct. 29 sentencing.
Last year, Congress approved
the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 that requires
banks, credit card companies and other transfer firms to refuse payments to
the estimated 2,300 offshore gambling sites located outside U.S.
jurisdiction.
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According to court documents, Neteller over the last few years processed more
than $10 billion in transactions for U.S. gamblers making payments to online
betting sites. The transfers continued until January when Lefebvre and
Lawrence were arrested in New York.
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"Neteller moved billions of dollars offshore, serving as a financial conduit
that enabled Internet gambling businesses to prosper by violating United
States laws," Michael J. Garcia, U.S. attorney for the Southern District of
New York, said in a statement. "Supporting illegal gambling is not a business
risk, it is a crime."
Garcia said Neteller was allowed to enter into the deferred prosecution
agreement because of the company's "frank acknowledgement" of its misconduct
and its cooperation with U.S. investigators. Garcia also cited Neteller's
decision to cease transferring U.S. gambling funds and its implementation of
controls to prevent the company's services from being used by Americans to
transfer funds.
Even before Congress passed UIGEA, the U.S. Department of Justice (DoJ) has
been engaged in a high profile campaign against Internet gambling.
In July 2006, law enforcement officials arrested former BetonSports CEO David
Carruthers while changing planes in Fort Worth, Tex. In March, Gary Kaplan, a
BetonSports co-founder, was arrested in the Dominican Republic. Both face
multiple felony counts for promoting illegal gambling.
BetonSports, a British-based online gambling company, ultimately pleaded guilty
to federal racketeering charges. The company faces a minimum fine of $500,000
and possible forfeitures. The company is also subject to a permanent
injunction that requires it to repay money received from U.S. gamblers held by
the company as of June 1, 2006.
In November of last year, BetonSports settled a
22-count civil suit brought by the DoJ by agreeing to a permanent injunction
barring the company from doing business in the United States.
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Craps! Neteller to Forfeit $136M