Founders of Internet company charged in New York City gambling case

  • Business
  • Wednesday, 17 Jan 2007

NEW YORK (AP) - Two founders of a company that processes Internet gambling transactions were arrested and charged with funneling billions of dollars (euros) in gambling proceeds to overseas betting operations, federal prosecutors announced Tuesday. 

The charges mark the latest in a series of crackdowns by the U.S. government against the online gambling industry. 

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. 

FBI Assistant Director Mark J. Mershon said the multibillion-dollar online gambling industry is "a colossal criminal enterprise masquerading as legitimate business.'' 

Neteller is an Internet payment services company that has grown in popularity as an increasing number of credit card companies have begun refusing to accept payments to online gambling sites. 

Neteller essentially acts as a middleman between gamblers and offshore betting operations.  

For example, a gambler who wants to place bets at offshore sports books can fund an account with Neteller, which in turn will transfer the money to the betting sites. 

Prosecutors say Neteller facilitated the transfer of billions of dollars of illegal gambling proceeds. 

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

Peter Neiman, a lawyer for Lawrence, said he had no comment. A lawyer for Lefebvre did not immediately return a telephone message seeking comment. 

In 1999, the men founded Neteller, which is based in the Isle of Man and is publicly traded in the United Kingdom. 

The company began processing Internet gambling transactions in 2000.Lawrence left the company's board of directors in October, while Lefebvre left in December 2005, prosecutors said. 

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

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. 

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 (euro5.6 billion) in financial transactions, 95 percent of which was derived from money transfers involving Internet gambling. 

Lawrence and Lefebvre were charged with conspiring to transfer funds with the intent to promote illegal gambling, and could face up to 20 years in prison if convicted. 

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