UPDATE 1-Bail set in U.S. for second NETeller founder
(Adds details throughout, background)
By Matthew Verrinder
NEW YORK, Jan 19 (Reuters) - A U.S. judge has set bail at $5 million for one of the founders of UK payment processing company NETeller Plc NLR.L, who is accused of handling billions of dollars in illegal online gambling proceeds, the U.S. Attorney's Office in Manhattan said on Friday.
Prosecutors said that Stephen Lawrence, 46, had posted $4 million of the bail with $2.5 million cash and $1.5 million through a Manhattan apartment. Lawrence's bail was set at a hearing in the Virgin Islands earlier this week, where he was arrested on Monday, prosecutors said.
The Virgin Islands are a territory of the United States.
Lawrence and another NETeller founder, John Lefebvre, 55, were arrested on warrants related to a charge of conspiracy to transfer funds with the intent to promote illegal gambling. The charge was brought by federal prosectors in Manhattan in a complaint unsealed on Monday.
Lefebvre was arrested on Monday in Malibu, California.
Money transfer companies like NETeller, based on the Isle of Man and traded publicly in Britain, allow gambling companies to transfer money collected from U.S. bettors to overseas bank accounts. The Isle of Man is in the Irish Sea.
Lawrence was extradited to New York and appeared at a hearing at Magistrate's Court in Manhattan on Friday.
Assistant U.S. Attorney Timothy Treanor argued that Lawrence was a flight risk because he owned a private jet and had founded a business in which the "entire premise" was to "stay outside the jurisdiction of U.S. law enforcement."
Treanor said that Lawrence knew which jurisdictions outside the United States were lax about extraditing fugitives wanted for money laundering offenses.
"It would be difficult for us to ever get him back again," Treanor said.
Lawrence's lawyer, Peter Neiman, argued at Friday's hearing that his client was not a flight risk because he has a wife and child in New York City and was buying a second apartment in the city, where he spends about 100 days a year.
According to federal prosecutors Lawrence resides in the Bahamas.
Under the terms of his bail set on Friday, Lawrence is not allowed to travel outside New York City until March 1. Thereafter, if he showed that he was not going to flee, he would be allowed to travel within the continental United States if he gave authorities five business days notice.
A judge in Los Angeles earlier this week set bail at $5 million for Lefebvre. He is expected to arrive for a court appearance in New York early next week, prosecutors said.
If convicted, Lawrence and Lefebvre each face a maximum 20 years in prison.
By arresting Canadians Lawrence and Lefebvre, U.S. prosecutors delivered a severe blow to online gambling companies that are flouting a U.S. ban on Internet gambling.
NETeller is the latest target of a U.S. crackdown on online gaming, which began with the arrest of BETonSPORTS BSS.L Chief Executive David Carruthers in Texas last July.
Lawrence and Lefebvre founded NETeller in 1999. Lawrence resigned as a nonexecutive director in October after stepping down as nonexecutive chairman in May. Lefebvre resigned as a nonexecutive director in December 2005.
NETeller closed its U.S. Internet gambling services on Thursday, erasing more than 65 percent of its business. (Additional reporting by Martha Graybow)
