GPWA Times Magazine - Issue 1 - May 2007

18 “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.” (U.S. AttorneyMichael Garcia) 2006 2007 Sept 29 U.S Congress passes the Unlawful Internet Gambling Enforcement Act. Oct 13 President Bush signs the UIGEA into law. Online- gaming industry leaders Party Gaming and 888 leave exit the U.S. market as planned. Dozens of online gaming brands and financial processors follow their lead. Oct 31 NETeller issues a press release stating its intention to stay in the U.S. market until regulatory statutes become more defined. Jan 15 NETeller co- founders Stephen Lawrence and John LeFebvre are arrested by the FBI. NETeller aftershocks still being felt Many U.S. players and affiliates still in limbo months after U.S. withdrawal By Ryan McLane A merican gaming affiliates and online gamblers are still reeling fromNETeller’s January withdrawal from the U.S. The move led to an avalanche of payment processors fleeing the U.S. — and eventually Canada — with very few ways for American affiliates or players to send or receive money. At press time, many affiliate programs were only paying affiliates via check or wire transfer. NETeller customers outside of North America can still use the service. The largest remaining question in the ongoing NETeller saga is whether or not U.S. customers, who saw up to $55 million frozen by the Department of Justice pending the NETeller investigation, will receive their money. In March, NETeller officials announced that they will work with the Department of Justice and corporate financial assistance firm Navigant Consulting to devise a plan to return the money. The company said the plan would be announced within 75 days. Navigant is a New York-based firm that specializes in “providing litigation, financial, healthcare, energy and operational consulting services to government agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress and significant change.” NETeller’s U.S. customers hope the 75-day- planning deadline and the agreements with the Department of Justice and Navigant will result in an effective process to return the money, but the payment processor has yet to say the money will definitely be redistributed. The issue will come to a head in early June. “We continue to be committed to returning funds to our U.S. customers and working with the U.S. Attorney’s Office,” said NETeller President and CEO Ron Martin in a statement. “Progress, while not always visible to the outside observer, has been steady and these agreements mark a milestone in the process.” Thousands of players and companies, who used the payment processor during NETeller’s reign as the leading provider of online gaming transactions, are anxiously awaiting the outcome of these negotiations. Horror stories Poker professional IsaacHaxtonhit the jackpot on Jan. 13, two days before the arrests of NETeller’s co-founders. He finished second in a field of 937 players to win $861,789 at the PokerStars World Poker Tour Caribbean Adventure. Haxton’s winnings were placed in his PokerStars account, and he immediately requested an $800,000 withdrawal into his NETeller account. But before Haxton could withdraw his winnings from NETeller – online transactions can take several days to complete – NETeller’s accounts had been frozen. Haxton never received his winnings and is currently the largest NETeller victim willing to go on the record. Other smaller, yet equally disturbing NETeller stories can be found in the YAHOO! group, “The NETeller Customer Coalition.” This group, started in February, looks to turnmanpower into clout, using their numbers to spur NETeller to release their money. A class action suit might be possible if the situation isn’t resolved, according to the site. As of early April, the group listed more than 700 members claiming to represent around $4 million in frozen money. The members report frozen totals ranging from $20 to $400,000 with five members posting missing monies of $100,000 or more. The arrests NETeller co-founders StephenLawrence and John Lefebvre were arrested by the FBI on January 15 and charged with laundering billions of dollars of Internet gambling proceeds, according to U.S. Attorney Michael Garcia. “Stephen Eric Lawrence and John David Lefebvre knewwhen 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,” Garcia said. “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.” Lawrence, 46, was arrested in the United States Virgin Islands. Lefebvre, 55, was arrested in Malibu, Calif. Both are Canadian citizens and both are still NETeller shareholders, but neither have current connections to the company, according to a statement released by NETeller. If convicted, Lawrence and Lefebvre will face a maximum of twenty years in prison. Three hearings have been scheduled to indict the pair, but each time attorneys for both sides have agreed to delay the proceedings. U.S. Attorney spokesperson Rebekah Carmichael said her office continues to have no official comment about the NETeller dealings. GPWA TIMES | NETELLER