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Neteller Pleads Guilty To Facilitating Gambling

Founder Of Neteller Enters A Guilty Plea

June 30, 2007

Earlier in the year, the original founders of payment processing giant, Neteller, were arrested in the United States on charges related to the online gambling industry. One of the two men, Neteller co-founder Stephen Lawrence, has now plead guilty to charges of criminal conspiracy and is cooperating with authorities. Sentencing is scheduled for October.

Stephen Lawrence and John David Lefebvre were the co-founders of the payment processing company, Neteller PLC. This publicly traded company served as a payment gateway for the controversial online gambling industry. The company, which was formed in 1999, processed billions of dollars worth of online gambling transactions for Americans who wanted to gamble online.

Although this was a lucrative market for the company to tap into, the U.S. Department of Justice says that processing these transactions is illegal, and arrested the duo last January as part of an ongoing war that the Department has waged against the online gambling industry.

The tricky aspect to the prosecution's case is the simple matter of jurisdiction. Both Lawrence and Lefebvre are Canadian citizens. The company founded by the two was physically located on the Isle of Man, and was a publicly traded company on the London Stock Exchange. The men were not in violation of the law in any of these jurisdictions, leaving many experts to initially believe that U.S. law did not apply to Neteller.

To further complicate matters, Neteller was not involved with either the placing or receiving or wagers on the internet. The company merely served as a financial gateway that gamblers used to purchase credits at online casinos, sportsbooks and poker rooms. Because the company was not directly involved with the betting aspect of the sites, combined with the fact that there was no U.S. presence for the company, most felt that Neteller was operating as legally as anyone could expect.

Unfortunately for Lawrence and Lefebvre, the Department of Justice did not agree. Following six months of investigations into the company, and indictment against the two was unsealed when they were apprehended in the United States. The charges centered around the decades old "Wire Act", which is intended to prevent gambling by way of a telecommunications device. Although this approach could very well be tested in a court of law, Lawrence opted to take the route of entering a guilty plea so that he can begin to put the issue behind him.

"I came to understand that providing payment services to online gambling Web sites serving customers in the United States was wrong," Lawrence told the judge. Lawrence currently remains free on a $5 Million bond until sentencing, which is expected to occur in October. It is expected that he will be ordered to pay part of the $100 Million that the Government is seeking in restitution from Neteller, but prison time will be little, if any, due to the fact that Lawrence is cooperating with authorities on the case. Lefebvre has not yet entered a guilty plea on the matter.