NETeller founders charged with money laundering

Stephen Lawrence, 46, and John Lefebvre, 55, have been charged with money laundering in the United States yesterday after they were both arrested on Monday as they travelled through the country.

Lefebvre was arrested in Malibu, California, and was scheduled for a court appearance at U.S District Court in Los Angeles yesterday. Lawrence, arrested in the U.S Virgin Islands will appear before a federal court on Wednesday. The two former directors and founding shareholders of NETeller, formed in 1999, are accused of laundering billions of dollars in illegal gambling proceeds. Both face up to a maximum of 20 years in prison, according to U.S Attorney Michael Garcia.

NETeller acts a means for online gamblers to transfer money into an account which can then be used to fund betting at offshore gambling companies. Its success has been almost wholly-dependant on the rise in popularity of online gambling throughout the world.

Prosecutors said that NETeller handled over $7.3 billion in transactions in 2005, with more than 95 per cent of its revenue derived from online gambling companies.

However, since last years introduction of the Unlawful Internet Gambling Enforcement Act in the U.S, shares in the company have fallen by 60 per cent. The company, traded publicly in the U.K, is now valued at around £211 million pounds.

Lawrence quit as a non-executive director of NETeller October 2006, after stepping down as non-executive chairman in May 2006, while Lefebvre resigned as a non-executive director in December 2005.

When Lawrence and Lefebvre took the decision to go public with NETeller in 2004 they knew they were taking a huge gamble with respect to US laws. According to FBI Assistant Director Mark J. Mershon, the multibillion-dollar online gambling industry is “a colossal criminal enterprise masquerading as legitimate business.”

Those harsh words don’t bode too well for the future of online gambling and seem to point towards more arrests of this kind down the line.

Editor, - 2007-01-17 11:01:28

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