[The Judge]

FBI Freezes NETeller Funds
by Simon Bowers
6 February, 2007

The FBI has frozen funds held in customer accounts at NETeller, the "virtual wallet" payment processor, as part of its case against the firm's two Canadian founders who were last month arrested and charged with racketeering and money laundering.

NETeller refused to disclose how much had been frozen but company filings make clear huge sums were flowing between its U.S. customers' "e-wallets" and online merchants - particularly gambling websites - up until the firm was pressured to close its American operations in the wake of last month's arrests. Over a six-month period last year the company processed transactions worth $5.1bn (£2.6bn), with about 85 percent involving U.S. customers.

Less than three weeks ago, NETeller said in a statement to the stock exchange: "The funds of U.S. resident customers are held in segregated trust accounts and are fully secure and will be available for withdrawal by customers on demand."

Since then, advice on the group's website makes clear customer withdrawals have now been blocked. "As a top priority, we are working to resolve all withdrawal issues but in the meantime we continue to maintain these funds in trust on your behalf," customers are told. "Please check this page regularly for more updates."

The U.S. Congress passed tough anti-gambling laws last October but several rogue operators based in off-shore tax havens have continued to target U.S. punters, flouting the new legislation. They relied heavily on NETeller.

In the past five years, NETeller came to dominate gambling transactions in America because its e-wallets allowed users to get around CC blocks on gambling sites. Following the arrests of founders Stephen Lawrence and John Lefebvre, who face up to 20 years in jail if convicted, the decision was quickly taken to shut down U.S. operations. Trading in the company's shares was also suspended and remains so.

The FBI claim JSL Systems, a U.S.-based payment company owned by Mr Lefebvre, received customer funds in the U.S. for NETeller and then transferred them to accounts held by a NETeller company in Canada. Last month NETeller told the Guardian that wagered money no longer passed through JSL.

It is unclear whether the FBI will treat some or all of the funds as proceeds of illegal gambling. One U.S. newspaper report cited Neil Donovan, an FBI agent, saying the funds were being held in court as potential evidence. Some money may be returned to NETeller customers but no timescale was forthcoming, the report said. A spokeswoman for the Department of Justice last night refused to confirm details in the report, as did NETeller.


LINK to article

[Korchnoi]

All funds, not just US funds?

[jumper]

what is unclear is what percentage of the total funds were frozen.one would hope that neteller didn,t expose themselves to too much risk with u,s, liquidity.if neteller is as profitable as we are led to believe then they should be able to absorbe a relatively modest hit.we all know neteller will at the least be fined 10 million plus like pay pal.neteller is trying to survive by focusing on other areas then u.s. gaming transfers.if anyone would like to private message me i will share info on a costa rican land developer who is currently attempting to establish a neteller merchant acct.

[Pedro]

"In a shock move the FBI have frozen the funds held in US customer accounts at NETeller, "

http://www.jackpot.co.uk/online-casi...er-060207.html

According to that it only affects US customers...

Pedro

[knicknut]

I still don't get how they're allowed to steal US Citizens' money. If you want to take money from Neteller itself, sure, but how can they justify what's going on?

[BigDog]

Moving to Costa Rica sounds better every day....WTF is going on in our great US of A?

[louis]

Neteller is a public company and if this is true - funds are frozen by the FBI, don't they have to disclose this information to investors? What neteller has disclosed is that the funds are safely held in trust accounts.

It just doesn't make sense that the FBI can seize funds from a bank without a court order. Not a lawyer but don't some types of searches and seizures require a warrant - maybe a lawyers here can comment.

So far the only evidence the FBI has seized funds is a statement from an FBI agent quoted in the media.

[new2betting]

Let's not forget that this is not the fault of Neteller.

We should not blame Neteller.

[JoshW]

This is all based on one FBI agent quoted in the USA today. It could means as little as one payment processor or as much as them all. I don't think there is any way they could lock up the funds they had outside the US. It would be great getting more information on this story, but I can't find more.

[Aces]

This is all based on one FBI agent quoted in the USA today. It could means as little as one payment processor or as much as them all. I don't think there is any way they could lock up the funds they had outside the US. It would be great getting more information on this story, but I can't find more.

Its amazing and scary what they have been able to do. I quit saying what they couldn't do because it just keeps getting worse and worse each day.

[ourbet]

Interesting thread...thanks for posting!

I wonder though, if someone could throw some light on this hypothetical situation please?

If a payment processor was set-up in a country where the US has neither diplomatic relations nor extradition treaties (like Taiwan for example), would the US authorities be able to freeze, halt or hinder said payment processor's funds if used by US nationals to fund offshore accounts at all?

Would appreciate any constructive comments. Thanks!

[RickySteve]

This story is a sham.

[Bradster19]

US DOJ says that NETeller does something like 85% of its business with US customers. If anywhere close to 85% of NETeller's assets have been frozen by the FBI, NETeller would HAVE to disclose this to its shareholders.

NETeller will presently allow former US customers to transfer their balances out of their NETeller accounts once they are no longer considered US customers. It takes a bank statement for an account located outside of the United States and a copy of a utility bill with your name on it referencing a property outside of the US. I think it would be kind of hard to still do this if the FBI had control over 85% of their cash.

[Razz]

WTF is going on in our great US of A?

You must be referring to the USSA - United Socialist States of America.

[durito]

You must be referring to the USSA - United Socialist States of America.

Maybe United Fascist States of America. There's nothing remotely socialistic about the present government.

[pags11]

knew it had to be more than the BS excuses they were coming up with...

[Hulu]

Maybe United Fascist States of America. There's nothing remotely socialistic about the present government.

Thank you for pointing that out. This is fascism at work, not socialism.

[Dark Horse]

Fascists have been calling the shots for quite a while now. The amazing thing is that few people recognized it. Remember when criticism of the government was almost the same as treason? Or when patriotism was blind support of this government and all it stood for?

Its amazing and scary what they have been able to do. I quit saying what they couldn't do because it just keeps getting worse and worse each day.

When did it all start? There are many who say the 2000 election was stolen, but that is brushed off by the 'winners' on account of critics being 'poor losers'. Fine. But we can all agree that 9/11 was the turning point, after which the government assigned itself absolute power.

I have posted this link before, but it bears repeating. A picture is worth a thousand words. Even for those aware of most of this information, there is a stunning smoking gun around the 49-50 minute mark.

http://video.google.ca/videoplay?doc...90071483512003

Share this link with your friends. The pen is mightier than the sword. The more people know this, the better our chance of kicking out the most treacherous government in the history of the United States.

This is our country. The government is supposed to serve the people, not dictate us into what we can and can't do (as in the case of gambling). This was never supposed to be a dictatorship.

[Ganchrow]

I have posted this link before, but it bears repeating. A picture is worth a thousand words. Even for those aware of most of this information, there is a stunning smoking gun around the 49-50 minute mark.

http://video.google.ca/videoplay?doc...90071483512003

Share this link with your friends. The pen is mightier than the sword. The more people know this, the better our chance of kicking out the most treacherous government in the history of the United States.

While I'm certainly concerned about the direction in which the United States appears to be heading under this administration, I do not think that any good is served by paying heed to these ridiculous and unfounded conspiracy theories.

This website ably debunks most of the common 9/11 conspiracy myths.

[Dark Horse]

Watch the video, my friend.

[Starion]

I will agree with you in the respect that I feel we are far more in danger of the government than we are the terrorists.

I'm a major advocate of a smaller government. It is interesting to note, the same people who bitch here that the government shouldn't be dictating whether we gamble or not will be advocating universal health care and all kinds of government ecroachment into which it has no business. The job of government isn't to eradicate poverty, provide health care, or any of this nonsense people seem to think it should do. Its primary function is to protect the people militarily.

If you think the Democrats are less corrupt or want less government intervention, you are sorely mistaken. It is the governments nature to seize power during times of crisis because at any other time it wouldn't be permitted. Research your history, this isn't the first time.

The republicans have really endorsed the "fat cat government mentality" in recent years that the democrats have been so famous for in the past. There is no conservative party anymore and as such government will continue to expand and intrude upon the rights of the citizens.

The idea that 9/11 is an "inside job" is an absolute absurd assumption which I won't even comment on. Kinda like Bush sent Katrina to take out New Orleans huh?

[pags11]

how long they gonna keep the damn money for?...

[LGBoots]

Neteller Statement Released today to the London Stock Exchange...

http://www.lse.co.uk/ShareNews.asp?s...tors_in_US_yet

Thursday, 8th February 2007 12:13

NETeller says no charges brought against co or its directors in US yet

LONDON (AFX) - NETeller PLC said it is considering an orderly repayment of funds to its US customers after agreeing last month to stop processing online gambling transactions in the US following the arrest of two of its original founders and the seizure by the US Attorney's Office of up to 55 mln usd of its funds.

The online payments group said however, that in view of the continuing uncertainty, its shares will continue to be suspended from trading on AIM for the time being.

In January, two of the company's founders -- John Lefebvre and Stephen Lawrence -- were arrested and charged with funneling billions of dollars in gambling proceeds to overseas betting operations.

Banks in the US subsequently began refusing to deal with transactions involving NETeller through accounts maintained at one or more automated clearinghouses in the US.

Online gambling was outlawed in the US in October last year which sent shares across the sector into freefall.

NETeller said neither of the two arrested last month are current employees or directors of the company but as a result of the restrictions placed by third parties, court-ordered seizures, and related legal concerns, it is currently unable to make payments to US customers. It is currently in talks with the USAO to manage an orderly return of funds to its customers.

It added that its own cash position remains strong and it currently has sufficient working capital to fund all its customers' balances as well as ongoing requirements of the business.

The statement today added that no criminal action or proceeding has been brought but there can be no assurance that the group will not be charged in a criminal action at some subsequent time.

However it asserted it would work with the Attorney's Office to seek a negotiated resolution of any allegations relating to its US activities and that any resolution may lead to potential sanctions against it including 'material financial penalties, fines and forfeitures'.

Group president and CEO Ron Martin said: 'The return of funds to our US customers is a top priority for NETeller.

[Korchnoi]

"NETeller said neither of the two arrested last month are current employees or directors of the company but as a result of the restrictions placed by third parties, court-ordered seizures, and related legal concerns, it is currently unable to make payments to US customers. It is currently in talks with the USAO to manage an orderly return of funds to its customers.

It added that its own cash position remains strong and it currently has sufficient working capital to fund all its customers' balances as well as ongoing requirements of the business."

If the Govy seizes US customer funds, doesn't Neteller still have an obligation to pay the US customers their money? Despite the fact that the Feds froze US assets, shouldn't they still pay us with their current "strong capital position"? Liabilities are liabilities, right?

[JoshW]

Article seems like good news except that in order to get our funds back Neteller has to work it out with the US Attorney's Office.

[nosuzieno]

As a former crim defense attorney, I can sadly say i have had plenty of experience in the area of dubiously seized assets. Would guess in this case, gov will say it is being held as evidence and might even attempt to claim laundered drug/terrorist funds involved as well...

Regardless of where you reside, never forget men with guns have a unique ability to take things from those who don't, be it an armed robber, IRS, FBI, eminent domain actions, etc...

[Korchnoi]

No. If the FBI seized your money, Neteller does not owe it to you. The federal government does.

Sean

If I borrow $50 from you and am robbed on the street, whose money did the robber steal?

[bigloser]

Im not sure what the answer is to this. But I guess strictly speaking the money is in transit. So who legally has possession when it is stolen

[bigloser]

I think I am more inclined to believe it is the federal govt

[Korchnoi]

I think I am more inclined to believe it is the federal govt

I don't know if the law is different if it's held "in trust," but strickly speaking cash is fungible. If A steals money from B and give sit to C (buy something at a convenice store for example), A has no claim on C's money. A has a claim on B's money.

This is in contrast to a non-fungible asset like your mother's locket. If A steals that from B, and B sells it to pawnshop C, A can recover it from C.

[bigloser]

I don't know if the law is different if it's held "in trust," but strickly speaking cash is fungible. If A steals money from B and give sit to C (buy something at a convenice store for example), A has no claim on C's money. A has a claim on B's money.

I think the issue is that technically it wasnt stolen from A it was in transit , the money had left or was on its way to neteller and not with neteller

[imgv94]

Thanks SBR JOHN and Dark Horse for the great advice..

Thank God I deposited all my Neteller funds into the books..