NETeller Founders Arrested on Conspiracy Charges

NETeller, a payment processor, now has two former founders charged with federal crimes.

Stephen Lawrence, 47, has plead guilty to a conspiracy charge over the way Neteller handled billions of dollars in gambling proceeds obtained illegally. He faces a maximum prison sentence of 5 years on the conspiracy charge in this case, presided by U.S. District Judge P. Kevin Castel in Manhattan, New York. The judge has allowed Lawrence to travel inside of the USA and also the Bahamas and Canada.

The other Neteller co-founder was former company president John Lefebvre.

“Mr. Lawrence is very glad to have this episode over and looks forward to moving on to the next stage of his life,” said Lawrence’s attorny Peter Neiman.

What is NETeller?

They are a publically traded company, found on the London Stock Exchange Alternative Investment Market. They operate under the e-wallet brand names Neteller and 1-Pay, as well as Netbanx for credit card processing and debit card business. There are more than 3,500 online merchants across varied industries that accept Neteller payments. After-tax profits are very high for Neteller with $102 million in 2006. They accept Pounds Sterling, Euros, US Dollars, Canadian Dollars, Swedish Krona or Chinese RMB in their accounts – which are free for customers (merchants pay the cost). A customer, after signing up, can then load up their Neteller account with cash from their banking institution or a credit card (which has a fee). The big thing is that Neteller doesn’t accept United States customers at all – and Canada and Turkey are barred from using the service to fund their gambling accounts.

They started business in 1999, with a huge customer base in the United States. But then the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) passed into law, signed by United States President George W. Bush. Once authorities arrested the two founders, Lawrence and Lefebvre, Neteller abandoned all business in the United States, effectively dropping two-thirds of its business.

This is the message they have front page on their web site for United States users:

“As part of the NETELLER Distribution Plan, which began on 30 July 2007, all US members were given until 26 January 2008 to log in to their account to withdraw any funds from their account. During this time, several reminders were sent to members who continued to hold a balance in their account in an attempt to ensure they accessed their account prior to the deadline. As of 26 January 2008, US members will no longer be able to log in to their accounts.”

Most online poker and internet casino players I know are definitely not happy with the Neteller situation. After the sudden drop of the United States market from Neteller’s business plans, casino gamblers were left scrambling to find an alternate solution for their casino funding needs. But you can understand that with arrests of their two founders, they’d be a little skittish about staying in the USA market!

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