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Welcome to
the News desk.
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Founders of gambling accounts firm arrested |
17/01/2007 |
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Simon
Bowers and Andrew Clark Wednesday January 17, 2007
The two founders of the British "virtual wallet"
group Neteller, which provides gambling accounts to online punters, have been
arrested in America and charged with money laundering offences which carry
penalties of up to 20 years in prison.
Neteller's former chairman, Steve
Lawrence, 46, was detained in the US Virgin Islands on Monday and his
co-founder, John Lefebvre, 55, was picked up by the US authorities in the
millionaires' playground of Malibu, California.
They join a list of
companies and executives to fall foul of a crackdown on internet gambling,
which is illegal in the US. Congress tightened laws on electronic gaming in
October, plunging the industry into confusion. Some gambling companies,
including PartyGaming and 888, have since withdrawn from the US market but
Neteller has remained.
Both men are
Canadian citizens but they hold stakes of 5.9% and 5.5% respectively in
Neteller, which is listed on London's Alternative Investment Market and
incorporated in the Isle of Man. Trading was suspended in the company's shares
yesterday.
The US attorney's office in New York said the pair were
charged with conspiring to transfer funds with the intent to promote illegal
gambling. They are due to appear in court today. It said the
businessmen were well aware that their operation broke American law, and that
they had even warned investors in a prospectus for the company's 2004 flotation
that prosecution was a risk.
Prosecutor Michael Garcia said: "Blatant
violations of US law are not a mere 'risk' to be disclosed to prospective
investors. Criminal prosecutions related to online gambling will be pursued
even in cases where assets and defendants are positioned outside of the United
States."
Evidence cited by Mr Garcia includes a September conference
call with City analysts at which Neteller's chief executive said 85% of the
company's business was in North America, of which 75% concerned US customers.
At the US government's behest, a
"co-operating witness" in Florida placed a series of bets on American football
matches using Neteller's system - winning $200 on one wager before losing $250
on a second.
Neteller's e-wallets are particularly attractive to US
punters because they allow gamblers to open betting accounts which get around
laws barring credit card companies from dealing with gambling websites.
Neteller became the market leader in gambling e-wallets five years ago when
PayPal was forced to close its gambling payments business under the terms of
its takeover by eBay.
The company has continued to dominate in the US
since October, providing services to punters on sites such as Poker Stars and
Bodog, which remain active. At the time, the company said: "Various provisions
of the act, including the obligations of financial transaction providers such
as Neteller, remain unclear."
Mr Lawrence invented the payment software
behind Neteller in 1999 and teamed up with Mr Lefebvre, a lawyer, who helped
raise funds. The two shared a £3.6m windfall when the company floated and
they have sold more shares since, enjoying proceeds of more than
£60m.
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