FBI freezes funds of 'virtual wallet' web payment firm
Simon Bowers
Tuesday February 6, 2007
Guardian
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 US 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% involving US customers.
Less than three weeks ago, Neteller said in a statement to the stock exchange: "The funds of US 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 US Congress passed tough anti-gambling laws last October but several rogue operators based in off-shore tax havens have continued to target US 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 US operations. Trading in the company's shares was also suspended and remains so.
The FBI claim JSL Systems, a US-based payment company owned by Mr Lefebvre, received customer funds in the US 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 US 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.
http://business.guardian.co.uk/story/0,,2006597,00.html
Simon Bowers
Tuesday February 6, 2007
Guardian
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 US 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% involving US customers.
Less than three weeks ago, Neteller said in a statement to the stock exchange: "The funds of US 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 US Congress passed tough anti-gambling laws last October but several rogue operators based in off-shore tax havens have continued to target US 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 US operations. Trading in the company's shares was also suspended and remains so.
The FBI claim JSL Systems, a US-based payment company owned by Mr Lefebvre, received customer funds in the US 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 US 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.
http://business.guardian.co.uk/story/0,,2006597,00.html
