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United States Attorney Southern District of New York
FOR IMMEDIATE RELEASE CONTACT:
U.S. ATTORNEY’S OFFICE
January 16, 2007
YUSILL SCRIBNER, REBEKAH CARMICHAEL
PUBLIC INFORMATION OFFICE(212) 637-2600FBI
NEIL DONOVAN, JAMES MARGOLIN
PUBLIC INFORMATION OFFICE(212) 384-2715, 2720
U.S. CHARGES TWO FOUNDERS OF PAYMENT SERVICES COMPANY
WITH LAUNDERING BILLIONS OF DOLLARS OFINTERNET GAMBLING
PROCEEDS
MICHAEL J. GARCIA, the United States Attorney for theSouthern District
of New York, and MARK J. MERSHON, the AssistantDirector-in-Charge of
the New York Office of the Federal Bureau ofInvestigation ("FBI"),
announced today that STEPHEN ERIC LAWRENCEand JOHN DAVID
LEFEBVRE were arrested yesterday in connection withthe creation and
operation of an internet payment services companythat facilitated the
transfer of billions of dollars of illegalgambling proceeds from United
States citizens to the owners ofvarious internet gambling companies
located overseas. According tothe two criminal Complaints unsealed
yesterday:Neteller PLC ("Neteller"), formerly known as Neteller,Inc., is an
internet payment services company that was founded byLAWRENCE and
LEFEBVRE in 1999. Neteller is based in the Isle ofMan and is publicly
traded in the United Kingdom. Neteller beganprocessing internet gambling
transactions in approximately July2000.Internet payment services
companies, like Neteller, allowgambling companies to transfer money
collected from United Statescustomers to bank accounts outside the
United States. According toNeteller’s 2005 annual report, LAWRENCE and
LEFEBVRE, throughNeteller, provided payment services to more than 80%
of worldwidegaming merchants.Since founding Neteller, LAWRENCE and
LEFEBVRE have heldnumerous senior management positions at the
company. For instance,LAWRENCE served as Chief Executive Officer of
Neteller untilDecember 2002; as executive director of Neteller from 2001
to
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-2-August 31, 2003;
and as Chairman of the Board of Directors of
Neteller until May 11, 2006. LAWRENCE left the Board of Directors on
October 13, 2006. LEFEBVRE served as President of Neteller from 2000 to
2002; and was a member of the Board of Directors until approximately
December 2005. Furthermore, LAWRENCE and LEFEBVRE have both held
significant ownership interests in Neteller.
As of December 31, 2004, LAWRENCE was the largest shareholder of
Neteller, owning 21.94% of the outstanding shares of Neteller PLC. As of
the same date, LEFEBVRE was the second-largest shareholder of Neteller
PLC, owning 13.44% of the outstanding shares of the company. At the
time that the defendants took Neteller public, the company acknowledged
in its offering documents that United States law prohibited persons from
promoting certain forms of gambling, including internet gambling, and
transmitting funds that are known to have been derived from criminal
activity or are intended to promote criminal activity. The company’s
directors, including LAWRENCE and LEFEBVRE, also conceded that they
were risking prosecution by the government of the United States under
existing or future federal laws. In 2005, Neteller processed over $7.3
billion infinancial transactions. According to reports issued by
Neteller, 95% of its revenue was derived from money transfers
involving internet gambling companies. On September 11, 2006, the
President and Chief Executive Officer of Neteller described
the "online gaming market" as Neteller’s "main market," and stated that,
in the first half of 2006, Neteller processed $5.1 billion in
financial transactions. As charged in the complaint, approximately 85%
of Neteller’s revenue during that period derived from individuals in North
America, and 75% of its North American revenue was generated in the
United States. Both the operation of an internet gambling operation and
the transferring of the proceeds from these businesses overseas are
illegal under United States law. LAWRENCE and LEFEBVRE are both
charged with conspiring to transfer funds with the intent to promote illegal
gambling. If convicted, both defendants face a maximum sentence of 20
years’ imprisonment. LAWRENCE, 46, was arrested yesterday in the
United States Virgin Islands and will be presented in federal court in St.
Thomas by tomorrow. LEFEBVRE, 55, was arrested yesterday in
Malibu, California and will be presented in Los Angeles federal court
later today. LAWRENCE currently resides in Paradise Island,
Bahamas. Both are Canadian citizens.
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-3-This prosecution is part of the United States Departmentof Justice’s
effort to combat unlawful internet gambling through, among other things,
the implementation of the federal anti-moneyl aundering statutes. Other
recent examples of the Justice Department’s efforts in this regard include
the indictments of two offshore internet gambling companies – Worldwide
Telesports, Inc.,(indictment unsealed on May 17, 2006 in the United
States District Court for the District of Columbia) and BetonSports, PLC,
a publicly traded holding company that owns a number of
Internet sportsbooks and casinos, and its founder, Gary Stephen Kaplan
(indictment unsealed July 17, 2006 in the United States District Court for
the Eastern District of Missouri). Additionally, in July2003, one of Neteller’s
competitors, PayPal, and its parent eBay, entered into a civil settlement
agreement with the United States Attorney’s Office for the Eastern District
of Missouri to settle allegations it aided in illegal offshore and on-line
gambling activities. As part of the agreement, PayPal agreed to forfeit $10
million, representing proceeds derived by PayPal from the processing of
illegal gambling transactions. Mr. GARCIA praised the investigative
efforts of the FBI and thanked the United States Custom & Border Patrol,
United States Coast Guard, and Virgin Islands Police Department for
their assistance in the investigation. Mr. GARCIA added that
the investigation is continuing. Mr. GARCIA stated, "Internet gambling has
become a multibillion-dollar industry that derives a major portion of
its revenues from United States citizens.
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. 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 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."
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-4-Assistant United States Attorneys TIMOTHY J. TREANOR,
CHRISTOPHER P. CONNIFF, and CHRISTINE MEDING are in charge of
the prosecutions. The charges contained in the Complaints are
merely accusations, and the defendants are presumed innocent unless
and until proven guilty.07-012### |
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