EX-NETELLER DIRECTORS CHARGED (Update)

Money laundering offences claimed by US Attorney General

The case against two ex-Neteller directors arrested Monday in the United States (see previous InfoPowa reports) was outlined late Tuesday this week by the US Attorney General in the Southern District of New York.

 

Although they no longer have management connections to the Isle of Man financial company, Neteller founders and Canadian citizens Stephen Lawrence (46) and John Lefebvre (55) have been charged with money laundering offences.

 

A statement from the office of AG Michael Garcia revealed that Lawrence and Lefebvre had been arrested in connection with the “creation and operation of an internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from US citizens to the owners of various internet gambling companies located overseas”.

 

Lawrence and Lefebvre were arrested in the early hours of Monday morning, January 15. Lawrence, who resides on Paradise Island in the Bahamas was arrested yesterday in the US Virgin Islands and will be presented in federal court in St Thomas by tomorrow. Lefebvre was arrested in Malibu, California, and will be presented in a Los Angeles court later today.

 

The charges against Lefebvre and Stephen Eric Lawrence were contained in two criminal complaints unsealed in U.S. District Court in Grand Mondial Casino
$2500 Free on Monday, U.S. Attorney Michael Garcia said.

 

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 and Lawrence were charged in connection with the creation and operation of an Internet payment services company that allegedly facilitated the transfer of billions of dollars of illegal gambling proceeds from U.S. citizens to the owners of overseas Internet gambling companies.

 

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. Together, the men owned as much as 35 percent of the company's outstanding shares, officials claimed.

 

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

 

As we went to press there was no information available on whether the two men would be released on bail.

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CLAIMS BY THE PROSECUTION

What the feds say Lawrence and Lefebvre did wrong

The two Neteller ex-directors now in US federal custody have the wealth and apparently the will to engage in a protracted legal battle against the allegations made against them. This has drawn attention to the details of the case, which has apparently been under investigation since June 2006, according to the FBI special agent responsible, Maryann Goldman.

 

Goldman entered the charges before the honorable Debra S. Freeman, a US Magistrate Judge in her court in the Southern District of New York. The "County of Offence" is listed as New York/Westchester.

The charges against Lawrence read:

1. From in or about June 1999, up to and including in or about January 2007, in the Southern District of New York and elsewhere, STEPHEN ERIC LAWRENCE, the defendant, and others known and unknown, unlawfully, willfully and knowingly did combine, conspire, confederate, and agree together and with each other to violate Section 1956(a)(2)(A) of Title 18, United States Code.
2. It was a part and an object of the conspiracy that STEPHEN ERIC LAWRENCE, the defendant, and others known and unknown, would and did transport, transmit, and transfer monetary instruments and funds from a place in the United States to and through a place outside the United States and to a place in the United States from and through a place outside the United States with the intent to promote the carrying on of specified unlawful activity, to wit, the operation of illegal gambling businesses in violation of Title 18, United States Code, Section 1955, the illegal transmission of wagers and gambling information, in violation of Title 18, United States Code, Section 1084, and the commission of gambling offenses in violation of both New York State Penal Law, Article 225, and anti-gambling statutes in other states. 

 

Goldman goes on to detail "overt acts" which include the formation of the Neteller group in company with Levfebre to provide online payment services to internet gambling businesses.

"Beginning in or about July 2000, and continuing up to in or about December 2003, LAWRENCE, CC#1, and others affiliated with the Neteller Group offered online payment services through Neteller Inc., a Canadian corporation, to various internet gambling businesses so that these businesses could illegally access customers in the United States, including customers in and around New York City," she continues. Similar claims are made regarding the period January 2004 to January 2007 regarding Neteller operations on the Isle of Man.

 

The special agent alleges that the accuseds and other Neteller employees raised $70 million in an IPO on the London Stock Exchange to expand the business.

 

Goldman reveals that she has been involved in an FBI investigation of the case since June last year, and claims: "The investigation has revealed that Neteller PLC conducts and facilitates illegal financial transactions between gambling customers in the United States and numerous offshore online gambling businesses."

 

She adds:  "This complaint is based upon my involvement in the investigation, my conversations with other law enforcement officials and witnesses, and my examination of reports, records, and tapes. Because this complaint is being submitted for the limited purpose of establishing probable cause, it does not include all the facts that I have learned during the course of this investigation. Where the contents of documents and the actions, statements, and conversations of others are reported herein, they are reported in substance and in part, except where otherwise indicated.

 

The investigation also involved checking the official statements and records of Neteller, describing the history, development and services of the group, from which she quotes details of the IPO prospectus and those involved. ".....more than 95 percent of the revenues generated by the Neteller Group, is derived from processing money transfers pertaining to the online gambling market; and that on or about March 1, 2004, Neteller PLC had 685,945 member accounts, of which approximately 88 percent belonged to North American residents," she quotes from the documentation.

 

Financial details published by the company in 2004, 2005 and 2006 are also described in some detail, including first half of 2006, when Neteller PLC processed $5.1 billion in financial transactions, and that approximately 85 percent of Neteller PLC's revenue during that period derived from individuals in North America.

 

Details of a Neteller conference call with financial analysts are discussed, and the agent reveals that as part of the investigation, US law enforcement officers and a cooperating American witness posed as gambling customers and conducted online monetary transactions with numerous online gambling businesses using online payment processing services provided by Neteller PLC to gamble on the Internet. Some of these are detailed.

 

Records of ACH, wire services and other financial instruments are also explained.

 

Finally, Special Agent Goldman details Neteller official public statements to show the active management involvement with the company (prior to standing down) of Lawrence, using these to indicate that he was aware that the US activity was illegal.

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