NETeller Confirms US Seizes Funds
"The amount of funds seized by the USAO or otherwise restricted by third parties does not exceed $55 million (28 million pounds)," said NETeller, which abandoned 65 percent of its business by quitting the United States.
Reuters confirmed reports appearing on Gambling911.com earlier this week that the US Federal government had seized funds from the company and a widening investigation was likely.
NETeller said it was cooperating with an investigation by the United States Attorney's Office (USAO) for the Southern District of New York. Last month, two of the company's co-founders were indicted on various charges including money laundering and racketeering.
The move is the latest in a U.S. crackdown on online gaming, which began with the arrest of BETonSPORTS' (BSS.L: Quote, Profile , Research) Scottish Chief Executive David Carruthers in Texas last July.
An industry source earlier told Reuters, "It's not NETeller stopping customers getting to their cash. It's the FBI."
But frustrated gamblers are not necessarily buying this argument. NETeller, which operates legally in the Isle of Man, a tightly regulated online gambling jurisdiction just off the coast of England, had cut off all communication with its US customers.
"As a result of the restrictions placed by third parties, court-ordered seizures, and related legal concerns, the group is currently unable to make payments to U.S. customers," said NETeller.
"U.S. customers wishing to withdraw funds from their NETeller e-wallet accounts will experience ongoing delays," said the group.
"The return of funds to our U.S. customers is a top priority for NETeller," said Chief Executive Ron Martin.
NETeller requested its shares be suspended in January, just after the arrests. The two founders are scheduled to attend a New York court hearing on February 14.
A partial statement from NETeller reads:
On 19 January 2007, at the request of the Group [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 Group's position with respect to the complaints brought on 16 January 2007 against two of the Group's founders, Mr. Stephen Lawrence and Mr. John Lefebvre. Neither are current employees or directors of NETELLER.
In that meeting, the Group pledged to cooperate with the USAO, indicated it was prepared to begin document production promptly and discussed a potential mechanism for arranging an orderly repayment of funds to US customers.
The discussions between the Group's legal advisers and the USAO are ongoing. The Group is, under advice of its legal advisers, commencing production of documents and intends to cooperate with the USAO in its investigation.
To the Group's knowledge, no criminal action or proceeding has been brought against the Group, 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.
It is emphasized that in line with the Group's standard business practices for all customers, funds held by the Group 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.
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Christopher Costigan, Gambling911.com
Originally published February 8, 2007 9:14 pm ET
