NETeller 75 Day Promise of Payment Pleases Few

It was billed as such big news. NETeller, which has held US customer funds hostage for more than two months now while claiming most of the money was seized by US Justice Department authorities, has now promised payouts will be made in approximately two months. A helluva promise considering this is money that never belonged to NETeller in the first place.

NETeller, a third party payment processing system catering almost exclusively to the online gambling community, pulled out of the US market following the arrest by US authorities of two company co-founders. They were each held on $5 million bonds yet the US government is still trying to determine if they will actually be indicted.

The NETeller Customer Coalition is not exactly sitting back idle. Made up of affected NETeller customers, the Coalition is urging its members to now contact the US Justice Department in regard to this matter.

On the surface, NETeller hardly seems like a company that is about to blow away any time soon. They continue to do business with Europe while operators continue to support this coalition by accepting NETeller for their non-US customers. Surprisingly, this is not an issue raised by the coalition.

The agreements reached between NETELLER, the USAO, and Navigant pave the way for that process to be established.

Here is what the fine folks from Pokerati had to say about this "plan":

"Ah, so really, it’s more that you have a plan to have a plan to have a plan. Ah, OK, thanks for clarifying. Long time no money see. Gotcha.

"Here’s what irks me about this situation — and it should irk everyone, not just poker players, or at least raise some eyebrows about the future of online commerce. Why do they need the actual/virtual money? When cops raid a drug den (or poker room), they confiscate the money because it is hard, concrete evidence. But in the Neteller case, there is no money, no cash, no physical nothing to actually seize. They’ve got all the records of transactions … so why can’t they let the cash go?

"I mean cash doesn’t really exist online … but it exists somewhere. Is this the sort of jurisdiction we want to give American authorities in cyberspace?"

In the meantime, one poster on the NETeller Coalition Board made an observation that we are actually surprised nobody else has.

An attorney with one of the largest law firms in the country looked
into this for me last week. He says there is no public record anywhere
of any money seized in connection to the case against Lawrence and
Lefebvre.

If anyone knew where the money was seized, they could file a lawsuit
there. But since no one knows where the money is and who has it, any
lawsuit would probably have to be filed against NETeller in the Isle
of Man, the last place your funds were officially located.

It is quite possible that $55 million was never seized by the US, and
that $55 million is the total amount NETeller owes to its US
customers. What else does NETeller have besides its US customers'
accounts as leverage for negotiations with the DOJ?

Navigant Consulting is a "forensic accounting firm" that deciphers
highly complex financial information, analyzes huge piles of data and
sifts through billions of dollars in transactions. NETeller and the US
Attorneys Office don't need Navigant Consulting to figure out basic
information like how much is owed and to whom.

It is assumed that NETeller is cooperating with the Department of
Justice investigation to the extent that they are disclosing all
financial details about their company and customers.

Any information Navigant Consulting collects will almost certainly be
shared with the US Department of Justice, and quite possibly other US
governmental agencies. It is doubtful that any legal action would
prevent the disclosure of account details.

Most lawyers will not accept this case based on "contingency" (the
possibility they could win X). This is a risky case involving a
criminal investigation, gambling proceeds and money laundering.

The costs of any legal services will have to be paid by the
plaintiffs. Each participant would be invoiced for their portion.
Failure to pay invoices could get you dropped from the suit.

To be perfectly frank, we wouldn't believe NETeller's story about Federal Agents seizing funds if not for the fact that USA Today quoted a Special Agent Donovan, who confirmed the seizure and stated that this money belonged to customers of NETeller. Some of it, he implies, would not be returned to them.

The mystery deepens. One thing Gambling911.com would like to point out is that we have received a handful of emails - written in a similar style - from individuals professing to be either NETeller shareholders and/or customers, all of whom write from Yahoo, Hotmail and similar anonymous emails and none of which respond back to us.

Some of these "individuals" have begun posting on forums like the Yahoo Board and SportsbookReview in the guise of European customers basically telling their US counterparts they are to blame for NETeller (errr...the Justice Department) withholding funds. An interesting side note here is that a number of European countries have been even more steadfast in their stance against online gambling than the US government has been (we can point to France and Israel for starters).

If an online sportsbook was knowingly not paying European customers, many of us in the States would stop playing there and if we chose to continue, it's difficult to comprehend anyone rubbing it in the face of our fellow European gamblers.

All of this is odd. The NETeller Coalition should focus their attention on this mysterious Agent Donovan.

Who knows? Maybe he will email us....via his Hotmail account of course.

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Christopher Costigan, Gambling911.com

Originally published March 25, 2007 11:51 pm ET