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Poker News | Gambling and the Law

Neteller funds seized by US officials

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Neteller today (2/8/07) issued a press release confirming what has been rumored for several days, that US customer funds in transit have been seized by the US Attorney's Office as evidence in their ongoing investigation and prosecution of the two Neteller founders, Mr. Stephen Lawrence and Mr. John Lefebvre, neither of whom are American citizens or current employees of Neteller. The entire press release can be viewed here.

Funds currently in Neteller accounts are safe, but pending withdrawals or deposits by US citizens have been seized. This seizure happened days after the arrest of Lawrence and Lefebvre, as Neteller experienced a "run on the bank" following the news of the arrests. Peer-to-peer transfers, Neteller card use and EFT withdrawals for US citizens have all been suspended.

"The discussions between the Group's legal advisers and the USAO are ongoing. The Group is, under advice of its legal advisers, commencing production of documents and intends to cooperate with the USAO in its investigation."

This "document production" is a vague term that could affect only Lawrence and Lefebvre, but likely is much more important. Some have speculated that this could be an attempt by the US Attorney's Office to levy tax evasion charges against US gamblers who did not pay taxes on their revenue. It is unclear what documents are being provided by Neteller to the USAO, but it definitely appears that this action has far-reaching implications.

"Following upon the complaints dated 16 January 2007, banks in the US began declining to permit transactions involving the Group through accounts maintained at one or more automated clearinghouses in the United States. Additionally, the Group has been advised that the USAO has obtained court-ordered seizure warrants seizing funds pertaining to the Group's transactions. To the best of the Group's knowledge, it believes that the amount of funds seized by the USAO or otherwise restricted by third parties does not exceed US$ 55 million. These funds were largely in the process of being transferred from the Group to its US customers or vice versa."

This seizure of over $50 million in US gambler's money is reminiscent of the raid on WSOP final table player Richard Lee this summer, where cars, television and unrelated items to gambling were seized simply because they appeared to have been purchased with gambling money. This tactic of fundraising by seizure has long been a staple of the US government's war on drugs and now appears to have been adopted by the front lines of the war on poker as well.

"As a result of the restrictions placed by third parties, court-ordered seizures, and related legal concerns, the Group is currently unable to make payments to US customers. Nevertheless, the Group is in discussions with the USAO to manage an orderly return of funds to US customers. As part of these discussions, it is contemplated that the USAO will engage a forensic accounting firm, at the Group's expense, to assist in this process and to examine the Group's financial position."

While it is nice to hear that Neteller is working with the USAO to get the funds released and returned to players, the presence of a "forensic accounting firm" is a little chilling. It may be that this firm determines that people who received money through Neteller for non-gambling activities (like my fellow Pokerworks writers) can have that money, but money derived specifically from gambling or the promotion of gambling will be held as evidence. Not being a forensic accountant I'm not sure if that's the plan, but I envision Grissom and a team of cash-flow CSI investigators poring over the books, and we know nothing gets by those guys.

"‘The return of funds to our US customers is a top priority for NETELLER' said Ron Martin, Group President and CEO. US customers wishing to withdraw funds from their NETELLER e-wallet accounts will experience ongoing delays while these discussions continue, and a further update will be provided by the Group once effective repayment mechanisms are determined."

Neteller is obviously an honorable company, one that has been worthy of our trust for years in the online gambling world. They have no interest in stealing money from US players. They are simply caught in an untenable position, between the proverbial rock and the hard place, and are going to cooperate fully with the US government. Anyone in their right mind would do so. Certainly Neteller doesn't want to have to inform all of their employees that they are risking arrest anytime they change planes in the US, which is quite likely given the bullying tactics the US government is currently using in this fight against online gambling.

Neteller has suspended trading of shares in the company since the news of Lawrence and Lefebvre's arrests, and trading will remain suspended until these issues with the US have been resolved. There have been no charges filed against Neteller as a company in this witch hunt.

Thanks to Bill Rini for information contributing to this article.

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