Lawrence and LeFebreve were no longer employees of the company, nor do they currently have any affiliation with Neteller other than as stockholders. They are charged with money laundering as part of the Justice Department's crackdown on internet gambling. They are essentially being charged with money laundering for the creation of Neteller, and its development as a funding source for internet gambling sites.
Michael Garcia, US Attorney for the Southern District of New York said, "Internet gambling has become a multibillion-dollar industry that derives a major portion of its revenues from United States citizens. Lawrence and LeFebreve knew when they took their company public that its activities, as well as those of the internet gambling companies it assisted, were illegal in the United States. Blatant violations of U.S. 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."
FBI Assistant Director-in-Charge for the New York Office Mark Mershon stated: "Internet gambling is a multibillion-dollar industry. A significant portion of that is the illegal handling of Americans' bets with offshore gaming companies, which amounts to a colossal criminal enterprise masquerading as legitimate business. There is ample indication these defendants knew the American market for their services was illegal. The FBI is adamant about shutting off the flow of illegal cash."
This is a chilling turn of events for internet poker players and sports bettors, as NFL bets placed on a site funded through Neteller were one of the examples used to make the arrests, as FBI agents used civilians to create Neteller accounts and then make bets on NFL games, thus proving that US citizens in locales specifically outlawing NFL betting could wager on sporting events by using Neteller.
Neteller stock trading was halted Monday upon the announcement of the arrest, at the request of the current management of the company.
Statements from the FBI revealed Tuesday that the investigation into Lawrence and LeFebreve had been going on since June 2006, well before the UIGEA was passed by Congress. These arrests certainly create cause for concern for officials of other e-wallet companies that have already pulled out of the US market, as Lawrence and LeFebreve had not been employed by Neteller for some time upon their arrest, and are being charged with violations that potentially occurred some years in the past. Companies like PartyPoker and FirePay may not be insulated against prosecution just because they have ceased operations in the US.
In other Neteller news, the largest online gambling "e-wallet" indefinitely suspended its popular "Instacash" option to U.S. players. The Instacash option allowed online gamblers the ability to access electronic funds transfers (EFT) without having them first clear their financial institution.
Instacash was popular with online gamblers because players could use the deposited money instantly for a service charge. Traditional deposit methods force players to wait as many as 3-5 business days for the EFT to clear. Many fear that this is the first step to a complete Neteller shutdown in the US.