Investigation Into NETeller Began This Past June

According to a complaint unsealed Tuesday against two founder of NETeller.com, a publicly traded third party cash processor catering to the online gambling industry, an investigation into the company was begun prior to laws passed in the US that attempt to curb some forms of internet gambling.

Lefebvre and another man, Stephen Lawrence, were arrested Monday morning on opposite sides of the US.

While many companies panicked and pulled out of the United States following the signing into law of this act, Gambling911.com has long pointed out that the US Justice Department always considered certain activities illegal and that the passage of this new law would do little to change this stance. 

The Unlawful Internet Gambling Enforcement Act of 2006 requires banking institutions to monitor internet gambling transactions.  The banking sector has claimed they do not have the necessary means to do so.  The law was tacked onto a Port Security Act and written hastily by politicians with what many believe to be ulterior motives (i.e. horse racing was exempt from the new law as were state lotteries).

The US Justice Department, often acting in conjunction with local law enforcement agencies, regularly attempt to draw ties between organized crime and money laundering with online gambling activity, mostly because some "offshore" establishments are known to employ "agents" or "runners" who collect monies within the United States. 

Even BetonSports, a publicly traded company indicted this past July, was later shown to be scrutinized as a result of engaging in credit businesses within the United States. 

The Justice Department, in its case against NETeller, appears to find that the company was a major facilitator of such transactions.  The complaint further alleges that defendant "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."

Of interest is the fact that this investigation did not begin until June 2006. 

"Since in or about June 2006, the Federal Bureau of Investigation ("FBI") has been conducting an investigation of Neteller PLC, a company that is based in Isle of Man and is publicly-traded in the United Kingdom. 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."

NETeller was one of the few publicly traded internet gambling related firms that did not pull out of the US market following the signing into law of UIGE.  Shareholder pressure forced most firms such as BetCorp and PartyGaming to abandon their US customer base.  Most of these firms are publicly traded on the London Stock Exchange where online gambling is viewed as a legal and highly profitable industry.  PartyGaming was the single largest IPO when it went public in 2005. 

What most of these companies fail to realize is that pulling out of the US market will not make them less vulnerable to prosecution assuming an investigation was ongoing prior to the passage of UIGE. 

Gambling911.com will continue to monitor this story as it develops.

-----

Christopher Costigan, www.gambling911.com

Originally published January 16, 2007 3:04 pm ET