NETeller ex-directors on money laundering charges

NEW YORK Tue Jan 16, 2007 3:56pm EST

Related Topics

NEW YORK (Reuters) - Two former directors and founding shareholders of NETeller Plc, a British online money transfer company, have been charged in the United States with laundering billions of dollars in illegal gambling proceeds.

Canadians Stephen Lawrence, 46, and John Lefebvre, 55, were arrested on Monday -- Lawrence in the U.S. Virgin Islands and Lefebvre in Malibu, California -- U.S. Attorney Michael Garcia said.

They were charged on Monday in Manhattan federal court with conspiring to transfer funds with the intent to promote illegal gambling, according to two complaints made public on Tuesday.

Both face a maximum sentence of 20 years in prison, Garcia said in a statement.

Money transfer companies like NETeller, based in the Isle of Man and traded publicly in Britain, allow gambling companies to transfer money collected from U.S. gamblers to bank accounts outside the United States, Garcia said.

When Lawrence and Lefebvre helped take NETeller public in 2004, they "conceded that they were risking prosecution by the government of the United States under existing or future federal laws," according to Garcia.

Prosecutors said that NETeller processed more than $7.3 billion in transactions in 2005, and more than 95 percent of its revenue from transfers involved Internet gambling companies.

Lawrence will be presented in federal court in St. Thomas in the U.S. Virgin Islands on Wednesday. Lefebvre was to appear in federal court in California later on Tuesday.

Shares in the NETeller, which has grown fast with the rapid rise of online gambling, closed at 176 pence on Monday, valuing it at around 211 millions pounds ($415.4 million).

The company's shares have fallen 60 percent since early September, hit by the arrests in the United States of executives from British companies involved in online sports betting and the passage in October of a U.S. law barring banks from transactions involving Internet gambling.

The passage of the U.S. law has led most operators to withdraw from the U.S. Internet gambling market.

Lawrence resigned as a nonexecutive director of NETeller in October, having stepped down as nonexecutive chairman in May, while Lefebvre resigned as a nonexecutive director in December 2005.

Lawrence holds a 5.91 percent stake in NETeller through his vehicle Corvina, while Lefebvre holds 5.54 percent of the company via Eagle Medallion Fortress.

(Additional reporting by Miyoung Kim in London)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.