NEW YORK, NY – Former Neteller Inc. executives Stephen Eric Lawrence and John David Lefebvre have been arrested on charges connected to the “creation and operation of an internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from United States citizens to the owners of various internet gambling companies located overseas,” according to a joint statement issued by the Office of the United States Attorney for the Southern District of New York and the New York Office of the Federal Bureau of Investigation.According to the Reuters news service, the two men were detained Monday while traveling separately in the U.S. The Bloomberg news service further reported that Lawrence, the founder and former chairman of Neteller, was arrested Monday in the U.S. Virgin Islands, while Lefebvre was arrested in Malibu, CA on the same day. Both men are Canadian citizens.
“Internet gambling has become a multibillion-dollar industry that derives a major portion of its revenues from United States citizens,” said Michael J Garcia, the United States Attorney for the Southern District of New York, in the statement released Tuesday morning. “Stephen Eric Lawrence and John David Lefebvre 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,” Garcia added. “Criminal prosecutions related to online gambling will be pursued even in cases where assets and defendants are positioned outside of the United States.”
According to the joint U.S. Attorney/FBI press release, Lawrence and Lefebvre held a number of “senior management positions” at Neteller since founding the company in 1999. Lawrence served as Neteller CEO until December 2002, as “executive director” of the company from 2001 to August 31st, 2003; and as chairman of the board of directors of Neteller until May 11th, 2006. Lawrence ultimately left the board in October of last year. Lefebvre, meanwhile, served as the president of the company from 2000 to 2002, and was a member of the Neteller Board until around December of 2005.
Neteller has released a statement distancing the company from its former directors and noting that the company has not been contacted by U.S. law enforcement with regards to the arrests or any manner of investigation into Neteller.
“While traveling separately in the U.S., Mr. Lawrence and Mr. Lefebvre, both former directors of the Company, were detained by U.S. authorities on Monday, 15th January 2007,” Neteller acknowledged in a written statement. “Other than as shareholders, neither Mr. Lawrence nor Mr. Lefebvre has any current position with or connection to Neteller. The Group has not received any communication or correspondence from any U.S. authority regarding this or any related matter.”
The company also stated that it the Neteller Board has sought immediate temporary suspension of the company’s shares “pending clarification of the situation.”
Neteller has previously stated its intent to comply with U.S. law regarding online gambling, including the Unlawful Internet Gambling Enforcement Act of 2006 that was passed by the U.S. Congress in October of last year.
“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,” asserted FBI Assistant Director Mark J. Mershon in a written statement issued Tuesday.
“There is ample indication these defendants knew the American market for their services was illegal,” added Mershon. “The FBI is adamant about shutting off the flow of illegal cash.”
Following the arrests of executives from BetOn Sports in July of 2006, stocks in the internet gambling sector began to tumble, and that tumble has continued with the passage of the Unlawful Internet Gambling Enforcement Act in October.
Reuters reports that shares in Neteller have dropped almost 60-percent since early September of 2006.
