FBI Freezes NETeller Funds

[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 credit card 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

[revnecro1273]

i just remembered...i have like 26 cents in my account...baztards

[pwherr]

I have 16 cents they can have that too.

[MightyMike]

Glad i closed out my account ..

[domafia]

[OldMan]

Our phuckin government SUCKS BIG HORSE BALLS.....So much more to be concerned with and to utilize manhours and resources for.

OldMan

[hammink]

From what I hear, this article is at best an exaggeration. The "seized" funds were exclusively from BetOnSports, not the money of every US Neteller user. The "US newspaper report" was a USA Today article that completely misrepresented the facts. Almost to a man, every rational person I know of believes Neteller will be able to pay everyone their money at some point. The questions is just, when?

[yoffff]

Originally Posted by OldMan

Our phuckin government SUCKS BIG HORSE BALLS.....So much more to be concerned with and to utilize manhours and resources for.

OldMan

I agree

[CecilBrown]

This story has grown legs... has it not? Based entirely on an "off the cuff" remark purportedly made by an FBI agent. First of all, do you really think the DOJ would allow an investigator to comment?If anything, they would purposely "leak" information to embolden their case, second, don't you think the Feds would be thumpin' their chests and telling anyone who would listen if this were truly the case?!?
Your honor... I OBJECT!

[The Judge]

Originally Posted by hammink

From what I hear, this article is at best an exaggeration. The "seized" funds were exclusively from BetOnSports, not the money of every US Neteller user.

Originally Posted by CecilBrown

This story has grown legs... has it not? Based entirely on an "off the cuff" remark purportedly made by an FBI agent. First of all, do you really think the DOJ would allow an investigator to comment?If anything, they would purposely "leak" information to embolden their case, second, don't you think the Feds would be thumpin' their chests and telling anyone who would listen if this were truly the case?!? Your honor... I OBJECT!

Despite your objections, NETeller issued a press release today confirming that as much as $55,000,000.00 in funds have indeed been siezed by US court ordered warrants:

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.

LINK to NETeller Press Release

[CecilBrown]

I stand corrected...

[doddi]

"It is unclear whether the FBI will treat some or all of the funds as proceeds of illegal gambling."

Most of it is LEGAL (or not explicitly illegal) in the jurisdictions in which the bets took place (and that includes the states in the United States that have no laws against placing a bet)! Bastards!

[CecilBrown]

Originally Posted by CecilBrown

I stand corrected...

I may retract my previous statement...

I just spoke with a friend (Law Professor at a State College) and asked him if a seizure order was subject to public record and he stated: "YES!"

Can anyone provide a link to said seizure order, the indictment makes no mention of it's implementation or existance!

[CecilBrown]

excerpts from the DOJ website RE: Asset Seizure and Forfeiture

"a verified complaint must be filed, in effect, charging the property with violating the law."

Types of Federal Forfeiture:

Criminal forfeiture is an action brought as a part of the criminal prosecution of a defendant. It is an in personam (against the person) action and requires that the government indict (charge) the property used or derived from the crime along with the defendant. If the jury finds the property forfeitable, the court issues an order of forfeiture.

For forfeitures pursuant to the Controlled Substances Act (CSA), Racketeer Influenced and Corrupt Organizations (RICO), as well as money laundering and obscenity statutes, there is an ancillary hearing for third parties to assert their interest in the property. Once the interests of third parties are addressed, the court issues a final forfeiture order.

How about 100's of thousands of irate Americans showing up at the "ancillary hearing"...

[The Judge]

Cecil, I think that you are confusing the trems "seizure" and "forfetiture". NETeller has acknowledged that up to $55 million of their funds have been seized by the US Justice Department and I think that admission is not one they would make if it were not true. I understand your frustration and concern as a stockholder but it seems that you are in denial over this situation.