NETELLER PAYOUTS BEING HELD UP
BY U.S. AUTHORITIES
by InfoPowa
Legal discussions ongoing between e-wallet and
U.S. Attorney's Office for the Southern District of
New York
“The return of funds to our US customers is a top
priority for Neteller” says Ron Martin, President
and CEO.
Isle of Man based e-wallet Neteller has issued an
update on its ongoing problems with getting US
players paid following its withdrawal from the US
market - and it looks as if the US authorities are
primarily responsible for payout delays to US
players.
In a statement Thursday, Neteller dealt with the
delays, negotiations with the Americans and the
criminal charges against two of its founders laid
by U.S. authorities.
The statement reveals that on 19 January 2007, at
the request of Neteller, the group’s legal advisers
met with representatives of the United States
Attorney’s Office for the Southern District of New
York (“USAO”) to clarify the company's position with
respect to the complaints brought on 16 January 2007
against two of its founders, Stephen Lawrence and
John Lefebvre.
The statement emphasises that neither of the
arrested men are current employees or directors of
Neteller, and asserts that in the meeting the
company's representatives pledged to cooperate with
the USAO, indicating it was prepared to begin
document production promptly and discuss a potential
mechanism for arranging an orderly repayment of
funds to US customers.
Despite the time lag since January 19th, it appears
from the statement that the discussions are still
ongoing. Neteller is, under advice of its legal
advisers, commencing production of documents and
intends to cooperate with the USAO in its
investigation.
Neteller then describes recent developments since
January 16, when banks in the US began declining to
permit transactions involving the Isle of Man
company through accounts maintained at one or more
automated clearinghouses in the United States.
Additionally, Neteller was advised that the USAO has
obtained [unspecified] court-ordered seizure
warrants seizing funds pertaining to the Neteller
transactions with US players. Neteller stresses that
to the best of its knowledge, it believes that the
amount of funds seized by the USAO or otherwise
restricted by third parties does not exceed US$ 55
million. These funds were largely in the process of
being transferred from by Neteller to its US
customers or vice versa.
As a result of the restrictions placed by third
parties, court-ordered seizures, and related legal
concerns, Neteller is therefore currently unable to
make payments to US customers.
Nevertheless, discussions with the USAO continue
with the goal of managing an orderly return of funds
to US customers.
One option that has been discussed is that the USAO
will engage an independent forensic accounting firm,
at the Neteller's expense, to assist in this process
and to examine the companys financial position.
“The return of funds to our US customers is a top
priority for Neteller” said Ron Martin, Group
President and CEO.
Unfortunately, US customers wishing to withdraw
funds from their Neteller e-wallet accounts will
experience ongoing delays while these discussions
continue, the statement reveals, adding that a
further update will be provided once effective
repayment mechanisms are determined.
The statement asserts that no criminal action or
proceeding has been brought against Neteller, its
current officers or directors by the USAO.
"Nevertheless, there can be no assurance that the
Group will not be charged in a criminal action at
some subsequent time. The Group intends to work with
the USAO to seek a negotiated resolution of any
allegations relating to its US activities. Any
resolution of this matter may lead to potential
sanctions against the Group including material
financial penalties, fines and forfeitures," the
statement cautions in what must be seen as an
indication that a *settlement* may be on the books
as a result of negotiations with the Americans.
Once again, the company emphasises that in line with
it's standard business practices for all customers,
funds held for US customers are held in segregated
trust accounts. "The Group’s own cash position
remains strong and the Group currently has
sufficient working capital to fund all its
customers’ balances as well as ongoing requirements
of the business," the statement assures.
The statement also reiterates the Neteller strategic
position post-US withdrawal, pointing out that the
company remains committed to developing its
business, including geographical and product
diversification for all markets except the USA.
"The Group will focus on its continuing business and
the opportunities available in the growing markets
of Europe, Asia and the Americas outside of the
United States.
"Since the Group’s withdrawal from the US market on
18 January 2007, average daily new account sign-ups
of new customers from non-US markets has been around
1 400. This compares to average daily sign ups of 3
303 for the year to 31 December 2006. Daily fee
revenue since 18 January 2007 has averaged over US$
200 000 per day (excluding any revenues from Netbanx,
1-Pay and interest income).
"These metrics demonstrate the resilience of the
Group's ongoing business. Neteller customers not
resident in the US continue to be minimally affected
by this withdrawal from the US market," the
statement concludes.
However, notwithstanding these assurances the
company advises that in view of the continuing
uncertainty, Neteller shares will continue to be
suspended from trading on AIM for the time being.
NETELLER INTEREST
by InfoPowa
With millions in 'cold storage' who
gets the interest?
US players deprived of their Neteller
balances by the wrangle between the Isle of
Man e-wallet and US government officials
were this week asking the very valid
question: "If our frozen funds are being
safely held in a Neteller trust account what
interest is accruing on the money and will
we be getting it?"
It's a legitimate concern with some $55
million reportedly involved....but it's one
on which there was no information when
InfoPowa tried to get a direct answer to the
simple question, and a parallel enquiry of
whether Neteller solely controlled the trust
account or are independent trustees involved
in its administration.
A Neteller spokeswomen first suggested an
off-the-record call, which InfoPowa declined
on the grounds that we were looking for an
email documented public answer to a
legitimate client question.
The spokeswoman's response to this was: "On
the record, there is nothing to say over and
beyond the formal announcements we've made."
As we commented to the spokeswoman, this is
a pretty callous attitude to display toward
clients who are legitimately concerned about
what is happening to their money in
Neteller's care.
There was no response.
Neteller Halts
Instacash for American Residents
Neteller promises funds back to customers
