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legal
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 Posted: Wed Jan 17, 2007 11:33 am Post subject: U.S. DOJ and NETELLER, Firepay, Citadel Commerce |
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U.S. nabs two Canadians from Neteller over Internet gambling:
The Vancouver Sun
Multi-billion-dollar charges for B.C. man
Saltspring man alleged to have promoted illegal gambling through his Internet company
Jan. 17/04
| Quote: | ... in a sudden reversal of fortune Monday, (Saltspring Island resident John) Lefebvre, 55, was arrested by FBI agents at his Malibu home and charged with conspiring to promote illegal gambling by transferring billions of dollars of cyberspace bets placed by U.S. citizens with offshore gaming companies. He was jailed at the Metropolitan Center, the federal holding facility in downtown Los Angeles, and appeared in Los Angeles Court Tuesday afternoon. Bail was set at $5 million US. At press time Tuesday, it was not clear whether he posted that bail.
NETeller co-founder Stephen Eric Lawrence, 46, formerly of Calgary, was also arrested in the U.S. Virgin Islands and similarly charged with transferring funds with the intent to promote illegal gambling. He was to appear in federal court in St. Thomas today.
If convicted, both men face a maximum sentence of 20 years in prison.
Based in the Isle of Man, NETeller describes itself as "the largest independent online money transfer business in the world" with more than three million customers in 160 countries, 3,500 merchants and more than $7 billion US in annual transactions. The company's shares are listed on the London Stock Exchange's AIM market. In a release Tuesday, the U.S. Justice Department said 95 per cent of NETeller's revenues are derived from Internet gaming, and the majority of those revenues come from U.S. residents. |
Gobe and Mail
Uncle Sam nabs Net millionaires
U.S. gambling crackdown ensnares two Canadians
By Sinclair Stewart and Shirley Won
Jan. 17/07
| Quote: | In the past couple of years, John Lefebvre has helped found the Dalai Lama Center for Peace and Education, thrown his support behind David Suzuki, and donated more than $1-million to the fine arts program at his alma mater, the University of Calgary. ... Vincent Marella, Mr. Lefebvre's lawyer, was unavailable for comment. Peter Neiman, a New York lawyer representing Mr. Lawrence, declined to discuss the charges.
... Both Mr. Lefebvre and Mr. Lawrence got very rich from Neteller, cashing out hundreds of millions of dollars worth of shares before they departed. It was an unlikely fortune for Mr. Lefebvre, a rock 'n' roll enthusiast who quit his career as a lawyer to busk in Calgary's train stations, before teaming up with Mr. Lawrence. The shaggy-haired philanthropist now lives on Saltspring Island, where he collects art and is helping to rejuvenate a local pub. Mr. Lawrence, who earned his MBA from the University of Western Ontario's Richard Ivey School of Business, worked as a venture capitalist at Cavendish Investing Ltd., and was also active as a Calgary property developer before moving into his Internet career. At the time that the defendants took Neteller public (2004), 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. |
A few flaws in DoJ's logic, in our view :
| Quote: | 1. U.S. Internet gambling law was anything but clear in 2004, the year Antigua claimed its first of - count 'em! -two victories at the World Trade Organization (WTO). Or were we to assume the U.S. never intended to abide by the panel ruling in that case or any other not in its favor - even though America was aggressively pursuing CAFTA, an agreement which, interestingly, includes provisions for foreign gambling services? One of the more obvious benefits to WTO Members is being able to avoid this type of piecemeal, regional litigation, which in the case of the U.S., involves at least 50 regulatory schemes for gambling alone. And it's not as if any of these is clear even to Americans. Consider Casino City's First Amendment challenge in response to DOJ's efforts to chill I-gaming advertising in 2004, while in California that year, a pair of disgruntled gamblers seeking to recoup gambling losses threatened to take out the search engines in a super-sized lawsuit that continues to roll to a close. Uncertainty must have been at least partly behind the latest U.S. effort to keep out foreign suppliers.
2. Is it mere coincidence that Neteller is incorporated and regulated in the UK, a powerful player at the EC, which is likely to be the most vocal of Third Parties in support of Antigua at the upcoming WTO U.S. compliance review?
3. The charges are still unclear, but it would be a dark day indeed if the U.S. determined to apply broad, post-9/11 legislation intended to combat terrorism - especially the expanded money laundering provisions - against Neteller, wich appears to be fully in compliance with the regulatory scheme at its home location. |
| Quote: | Governing Law
Your use of this Site is governed by the laws of the Isle of Man. All disputes arising out of or relating to these Terms of Use and Privacy Statement shall be resolved by the Courts of the Isle of Man.
Transparency and Accountability
The NETELLER Group is a publicly traded company on the London AIM Stock Exchange under the symbol NLR and as such, we are governed by principles and requirements for transparency and disclosure.
Authorised and Regulated
Our wholly owned subsidiary, NETELLER (UK) Limited, is authorised and regulated by the Financial Services Authority (FSA) in the UK as an e-money issuer. This authorisation is passported into over 20 other countries where we operate. The NETELLER Group strictly adheres to the FSA’s guidelines for operations across all of our companies, including integrating identity verification, KYC and anti-fraud controls into our systems and procedures. Our regulated status and public transparency means that over 3 million consumers in 160 countries trust us to send over $7 billion each year.
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Here's what we found when we searched the FSA Register:
| Quote: | Basic details for:
229737 - Neteller (UK) Ltd
Current status: Authorised
Effective Date: 20/10/2004
Address: First Point
Buckingham Gate
London Gatwick Airport
Gatwick
West Sussex
RH6 0NT
Phone: 44 0870 735 1478
Fax: 44 0870 735 1481
Email: No email address supplied
Website
Notices: UK authorised firms who have a deposit-taking permission do not usually need to obtain separate permission from the FSA to receive money from clients. |
View Neteller's press release Jan. 16/07:
| Quote: | 16 January 2007 - NETELLER Plc (LSE: NLR), the leading independent online money transfer business, today issued the following statement regarding the speculation surrounding two of its former directors and founder shareholders, Mr Stephen Lawrence and Mr John Lefebvre.
While travelling separately in the US, Mr Lawrence and Mr Lefebvre, both former directors of the Company, were detained by US authorities on Monday, 15 January 2007.
Other than as shareholders, neither Mr Lawrence nor Mr Lefebvre has any current position with or connection to NETELLER.
The Group has not received any communication or correspondence from any US authority regarding this or any related matter.
Pending clarification of the situation the Board has sought immediate temporary suspension of NETELLER's shares.
Further information will be issued in due course.
Further information
Mr Lawrence resigned as a non-executive director of the Company on 13 October 2006 having stepped down as non-executive chairman of the Company on 11 May 2006. Mr Lefebvre resigned as a non-executive director of the Company on 15
December 2005.
Mr Lawrence is the majority beneficial owner of Corvina International Ltd. which holds a total of 7,085,541 ordinary shares representing approximately 5.91% of the issued share capital of the Company. Mr Lefebvre is the beneficial owner of Eagle Medallion Fortress Investment Corporation which holds a total of 6,638,094 ordinary shares representing approximately 5.54% of the issued share capital of the Company.
About the NETELLER Group
With over 3 million customers in 160 countries and more than US$ 7 billion in annual transactions, the NETELLER Group operates the largest independent online money transfer business in the world. The Group specialises in providing innovative and instant payment services where money transfer is difficult or risky due to identity, trust, currency exchange or distance. Being independent has allowed the Group to support over 3,500 retailers and merchants in many geographies and across multiple industries.
The Group is quoted on the London Stock Exchange’s AIM market, with a ticker symbol of NLR. NETELLER (UK) Limited is authorised by the Financial Services Authority (FSA) to operate as a regulated e-money issuer. For more information about the Group visit www.netellergroup.com.
Media and Investor Contacts
Citigate Dewe Rogerson
Sarah Gestetner or George Cazenove
Tel: +44 (0) 207 638 9571
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Link to this entry
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legal
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| Posted: Mon Jan 22, 2007 12:56 pm Post subject: |
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U.S. sealing borders, sealing business, too:
The Globe and Mail
Their gambling divide
Jan. 19/07
| Quote: | The U.S. crackdown on Internet gambling, a crusade that seems to involve arresting law-abiding citizens of other countries and threatening them with long prison terms, continues to claim new victims. The latest are Stephen Lawrence and John Lefebvre, two Canadian businessmen who founded a company called Neteller, which handles payments for online gambling sites.
While U.S. authorities would like to paint the two as criminal masterminds, the fact is that they have broken no laws in either Canada or Britain, where their company is based. Instead, they have run afoul of the hypocritical U.S. desire to restrict gambling on the Internet while allowing it to flourish at home, where it produces billions of dollars in tourism and tax revenue. ... The impetus for the arrests was legislation (passed in October) that made online gambling a crime in the United States. Until then, authorities had to rely on a 1961 law that banned "gambling by wire" (the law under which the Betonsports CEO is being held); arrests were rare. Now, executives of online gambling-related companies avoid even changing planes in the United States for fear of being arrested.
In other words, gambling is not only permitted but encouraged when it takes place at a racetrack, lottery office or casino somewhere in the United States, but becomes a heinous crime when it takes place on the Internet. The absurdity of that position makes a mockery of the law the U.S. authorities seem so eager to enforce. (emphasis added) (From the lead editorial, p. A12) |
One-way NAFTA:
Monterey County Herald
New passport requirement for U.S. entry
By Juliana Barbassa
Associated Press
Jan. 22/07
| Quote: | | A law that takes effect Tuesday requiring Mexicans, Canadians, Bermudans and U.S. citizens flying into the United States to have passports is leading to some confusion and long lines at consulates. The new requirement affects travelers who were previously able to use birth certificates or other documents to enter the country. The regulation was recommended by the 9/11 Commission and mandated by Congress with the intent of ensuring the country's safety... Canadian consulates are seeing an increase in applications from people seeking passports as ''snowbirds,'' the approximately 70,000 Canadians who spend winter in the United States. Mexican consulate officials are also struggling to meet demand for passport applications, which in some locations are three times higher than usual...The only valid alternatives to the passport will be a NEXUS Air card, used by some American and Canadian frequent fliers; a document used by U.S. merchant mariners; and the ''green card'' carried by legal permanent residents. Active members of the U.S. Armed Forces are also excluded. ... The next step in increasing border safety - expected as early as January, 2008 - will require travelers entering by land or sea to hold valid passports. That rule would affect many more people as nearly three times as many travelers come into the United States by land or sea as do by air. |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=301#301
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legal
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| Posted: Fri Jan 26, 2007 10:12 am Post subject: |
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New York court date of Feb. 14/07 set for Neteller founders:
Poker News
Neteller Founders to Contest All Charges
Jan. 26/07
| Quote: | A preliminary hearing in relation to the charges faced by the two founders of Neteller has been set by a US judge for 14th February. The charges relate to allegations under US law of conspiracy to transfer funds with the intent to promote illegal gambling.
The two plaintiffs, John Lefebvre and Stephen Lawrence are currently out on bail and restricted in where they may travel. Both have stated that they will be fighting all the charges laid against them.
The lawyer for John Lefebvre has said, "He's going to be contesting everything we know about the charges right now." With regard to the approach taken by the authorities, he added, "I think they want to stress the point that they are serious about enforcing gaming laws". In relation to the issue about Neteller plc not being a US corporation nor based there, the lawyer said, "I don't know why they (the US authorities) are bothering with this now, or why at all. It's not clear that this is a liable area of law enforcement." |
St. John Tradewinds
Billionaire Internet Gambling Moneyman Arrested on St. John
By Andrea Milam
Jan. 22/07
| Quote: | ... Lawrence, 46, was arrested on St. John according to FBI spokesperson Neil Donovan, and appeared in federal court on St. Thomas Thursday, January 18, when his bail was set at $5 million.
A Canadian citizen, Lawrence was releaed on his own recognizance and ordered to travel to New York City and establish a residence there to face charges in the Southern District Court of New York. |
MSNBC
Neteller official pledges to fight charges
By Daniel Pimlott, FT.com
Jan. 24/07
| Quote: | ... Mr Lefebvre is on $5m bail and has had his passport confiscated after being arrested in Los Angeles last Monday. At the hearing on Wednesday, he appeared confident and relaxed. He refused to comment on the charges against him, and spoke only to say "end global warming".
The judge ruled that his travel should be restricted to the central district of Los Angeles and the southern and eastern districts of New York, where the charges against him are filed. |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=308#308
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legal
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| Posted: Thu Feb 08, 2007 6:44 pm Post subject: |
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What can you tell me about Youteller?
| Quote: | We couldn't help noticing the hooplah surrounding the launch of Youteller, a new E-wallet company asserting that it's registered with the British Financial Services Authority. The company is preparing to begin service in March, 2007, according to the website Feb. 8/07, but visitors are invited to set up an account immediately.
Before you take the company up on its offer, see the ]heads-up at rec.gambling.poker[/size] posted Feb. 6/07 by Professor77. We, too, were unable to locate the new company's registration data at the FSA register. |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=314#314
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legal
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| Posted: Tue Jun 05, 2007 1:12 pm Post subject: |
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The Register
Citadel, FirePay asset seizures pay out DOJ
By Burke Hanson
May 20/07
| Quote: | The US Department of Justice (DoJ) continued its orgy of online gambling asset seizures this week, issuing seizure warrants for $9.25 mil from Citadel Commerce and $4.2 mil from FirePay. Both companies are Canadian, and neither is currently taking money from American gamblers. The fact that both companies have already withdrawn from the US market, at least as far as servicing the online gambling world goes, is irrelevant for the DoJ. Criminal statutes of limitations being what they are in the US, people all over the globe could well find themselves in hot water for years with American authorities. (emphasis added)
The Citadel funds had originally been frozen late last month at the behest of some of its payment processors, the company had let out then in an unusually brief and uninformative press release, but the DoJ took it one step further this week by formally taking control of the funds in question.
This is the latest in a string of DoJ legal actions against the rather murky payment processing segment of the internet gambling industry, and, if nothing else, it demonstrates a renewed determination on the part of the DOJ to prosecute those connected to the online gambling world in the face of mounting criticism at home. Although two online gambling bills have been introduced in Congress the last few weeks – one by Rep. Barney Frank seeking outright repeal and regulation, and one by Rep. Berkley proposing a year-long study of the industry – the prohibitionist instinct at the DoJ appears to be alive and kicking.
Of course, as anyone who follows the DoJ knows, federal investigations take their sweet time producing fruit, and the DoJ typically does not just drop investigations; there could be any number still in the pipeline, ripening up. The busts in Utah last week are just a fragment of far-flung prosecutorial activity that will keep a small army of white-collar law and order types in cozy desk jobs for years to come. Neteller, Citadel, FirePay, CurrenC – these are in the run up to the UIGEA, which actually takes effect next month. |
Poker News
House Committee to Consider Regulation of Online Gambling in U.S.
By Martin Harris
June 5/07
| Quote: | The U.S. House Committee on Financial Services will conduct a hearing on Friday, June 8th at 10 a.m. to discuss the feasibility of regulating online gambling in the United States. The hearing,
'Can Internet Gambling Be Effectively Regulated to Protect Consumers and the Payment System?'
will take place at the Rayburn House Office Building on Capitol Hill.
The list of witnesses initially invited to testify ...includes pro player Howard Lederer; Radley Balko, the Senior Editor of Reason Magazine; Jon Prideaux, Chief Executive of Asterion Payments; Gerald Kitchen, CEO of SecureTrading, Ltd., and Pastor Greg Hogan. Hogan is the father of Greg Hogan, Jr., the Lehigh University student who robbed a bank in December of 2005 and claimed that it was his online-poker debts that forced him to do so. ... Such a hearing marks an initial step in the committee's deliberations regarding the IGREA - a crucial stage in the legislative process out of which most bills never pass. With 70 members, the House Committee on Financial Services is one of the largest in Congress. Party representation on the committee follows that of the entire House, with Democrats holding a slight majority. Since introducing the bill, Frank has spoken of the IGREA receiving bipartisan backing from committee members, and has in particular cited committee members Ron Paul (R-TX) and Peter King (R-NY) as having already indicated their support of the bill as co-sponsors.
One way to forecast how the IGREA might fare in committee is to consider how its members voted on the Internet Gambling Prohibition and Enforcement Act (H.R. 4411) on July 11, 2006. Unlike what occurred in October of last year, when Congress voted on the UIGEA as an amendment to the Safe Port Act, the House was able to consider the issue separately last summer when its members voted in favor of H.R. 4411 by a 3-to-1 margin. Of the 70 current members of the Financial Services committee, 55 voted on H.R. 4411 back in July, with 46 of those 55 votes supporting the bill. Eight of the nine voting against the Internet Gambling Prohibition and Enforcement Act were Democrats (including Frank), with Congressman Paul the lone Republican to have opposed the bill.
Congressman King's example shows that not everyone who supported H.R. 4411 necessarily will oppose the IGREA. The bill nevertheless likely faces an uphill battle, even in committee. As of today, a total of 19 of Frank's 69 committee colleagues (including Paul and King) have listed themselves as co-sponsors.
Friday's hearing should also have some influence on the fate of the recently-proposed bill to provide for a study of internet gambling by the National Academy of Sciences (H.R. 2140), proposed by Rep. Shelley Berkley (D-NV). Berkley's bill currently awaits deliberation by the House Ways and Means Committee. |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=382#382
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legal
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| Posted: Wed Jul 25, 2007 1:52 pm Post subject: |
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Neteller cops U.S. DOJ's Kafka-esque 'ostensible deferral'.
The Trial
DVD
Adapted from the novel by Harold Pinter
| Quote: | NETELLER Plc (LSE: NLR), the independent global online payments business, today announces that the Company has entered into a Deferred Prosecution Agreement (“DPA”) with the United States Attorney's Office for the Southern District of New York (“USAO”). The DPA represents the resolution of the USAO’s investigation into the Company.
Pursuant to the DPA, the Company has consented to the filing of a criminal information relating to transactions between Internet gambling merchants and persons located in the United States. The USAO has agreed to defer the prosecution of any federal charges and, as a consequence, the Company will not be convicted of any federal crime, as long as the Company fulfils the set conditions of the DPA during the two- year term of the agreement. At the conclusion of the two-year term, the criminal information will be dismissed. The key terms of the DPA are set out in more detail later in this announcement. The United States District Court for the Southern District of New York has approved the deferral of the prosecution. As part of the DPA, the Company has also agreed to forfeit US$ 136 million to the United States. This amount includes the approximately US$ 60 million that the USAO has previously seized.
... As announced on 4 June, the Company has agreed to a plan for the distribution of funds to its US customers. The agreed plan details the process and mechanisms by which US customers will be able to initiate the return of their funds after the plan is implemented. NETELLER is using its best efforts to start implementing the plan as soon as possible and, in any event, by no later than 30 July 2007. The Company will communicate to US customers via email and through its website the exact date upon which such customers will be able to make requests. ...
Download PDF of the full DPA and Exhibits
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What in heck is a deferred prosecution agreement (DPA)?
Washington Legal Foundation
Legal Opinion Letter
Deferred Prosecution Agreements: What is the cost of staying in business?
By Michael R. Sklaire and Joshua G. Berman
Vol. 15, No. 11
June 3/05
| Quote: | In the January, 2003 Department of Justice memorandum relating to the prosecution of business organizations, Deputy Attorney General Larry Thompson expanded prior guidance on prosecuting corporate fraud by focusing on cooperation. He instructed federal prosecutors to consider amnesty or pre-trial diversion for corporations that completely cooperate with investigators in a timely fashion. In light of these marching orders, federal prosecutors have increasingly relied upon “deferred prosecution agreements” as a form of pre-trial diversion to exact corporate reforms, large-dollar restitution, and cooperation from companies under investigation. (emphasis added)
Deferred prosecution agreements give corporations a period of probation, during which time charges are held in abeyance, so that they can clean house and cooperate. While these agreements provide corporations the ability to swiftly resolve investigations and reassure shareholders and employees of the company’s continued viability, the agreements also create risks through increased exposure to civil liability and financial penalties and heightened tensions between the company and its employees resulting from the waiver of attorney-client and work-product privileges. (emphasis added)
Under a deferred prosecution agreement, a corporation is given a period of time, usually 18 months to several years, during which the Justice Department will hold off on filing an indictment. In exchange, the corporation will acknowledge that the government can prove its case, will fully cooperate with the investigation of its culpable employees, and will enact Sarbanes-Oxley-style reforms relating to management, reporting requirements, and audit procedures. If the company can demonstrate reform, at the end of the probationary period the Justice Department will dismiss all charges. |
| Quote: | Law.com
Justice Deferred: DOJ Gets Companies to Turn Snitch
By Vanessa Blum
March 25/05
| Quote: | | ... The loser in a deferred prosecution agreement, say white-collar defense lawyers, is an individual defendant like (ex-WorldCom chief Bernie) Ebbers. In order to avoid prosecution, the corporation is asked to roll over on rogue employees like a defendant seeking a reduced sentence in a drug case. That, defense lawyers say, gives the government an unfair advantage over individual defendants. |
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Doesn't an accused in the U.S. have the right to be presumed innocent?
| Quote: | | Alas, not anymore, at least, not under a DPA, though such a shift of the burden of proof from the prosecution onto the accused would not likely survive a constitutional challenge in Canada thanks to the Charter right to be presumed innocent. Nor for the same reason would a DPA likely survive a challenge under Article Six of the European Convention on Human Rights. How many more casualties like the DPA's erosion of the presumption of innocence can the U.S. sustain, we wonder, and still count itself among common law jurisdictions? What effect might these casualties have on treaties and private contracts? Send your comments to legal@pokerpulse.com. We'd love to hear from you. |
Have any Neteller employees been shopped yet?
Forbes
Magazine Subscription
Ex-Neteller chairman pleads guilty to conspiracy charges
By David Caruso
Associated Press
June 29/07
| Quote: | The co-founder of Neteller, which processed billions of dollars in Internet gambling transactions for Americans, pleaded guilty Friday to a charge of criminal conspiracy. Stephen Lawrence, whose company, Neteller PLC, was once one of the primary ways U.S. citizens placed bets with offshore bookies, acknowledged in a federal courtroom in Manhattan that the operation was illegal. "I came to understand that providing payment services to online gambling Web sites serving customers in the United States was wrong," he told the judge. His lawyers said he was cooperating with U.S. investigators and also had agreed to be at least partly responsible for the $100 million the government is seeking in restitution.
Lawrence and another Neteller director, John David Lefebvre, were arrested in January as part of a U.S. crackdown on the online gambling industry. Both men are Canadian citizens. Their company was based in the Isle of Man and traded on the London Stock Exchange. Some experts initially believed that Neteller's offshore status put it beyond the reach of U.S. law. The company also wasn't directly involved in either placing or receiving bets. It essentially served as a financial middleman, through which bettors could send and receive cash from Web-based operations located in countries with few restrictions on gambling.
Prosecutors read U.S. law differently, and charged Lawrence with violating decades-old acts prohibiting the use of electronic wires to send or receive information that facilitates illegal gambling.
Lawrence, who remains free on $5 million bail, declined to speak to reporters as he left the courtroom Friday. "Mr. Lawrence is very glad to have this episode over and is looking forward to moving on to the next stage in his life," said his attorney, Peter Neiman. He said Lawrence intended to return to his home in the Bahamas until his sentencing, which has been scheduled for October.
It wasn't immediately clear whether Lawrence will face prison time. He faced a statutory maximum of five years, but any punishment is likely to be reduced by his cooperation in the case.
The case against Lefebvre, who pleaded not guilty, is pending.
... Prosecutors said Neteller processed $5.1 billion worth of transactions in the first half of 2006. Nearly all involved online gambling. A majority of the company's revenue came from customers in the U.S., and the FBI began looking at its operations in June 2006.
Lawrence, at one point, was the company's largest shareholder. Both he and Lefebvre have since left the company's board of directors. |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=390#390.
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legal
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| Posted: Fri Aug 07, 2009 1:12 pm Post subject: |
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U.S. targets Allied Systems, Account Services and now Doug Rennick.
The Globe and Mail
Canadian indicted in U.S. on online gambling charges
By Tu Thanh Ha
Aug. 7/09
| Quote: | In the summer of 2007, a Canadian citizen named Douglas Rennick opened a business account at a California branch of the Washington Mutual Bank. This, prosecutors in New York allege, was the first step in a money trail that led them to charge Mr. Rennick yesterday with bank fraud, money laundering and illegal gambling as part of a crackdown against foreign online gambling. According to an indictment unsealed in New York yesterday, Mr. Rennick opened a series of accounts in the United States to transfer $350-million from a bank in Cyprus to U.S. online gamblers who had played poker, slot machine "and other casino games."Mr. Rennick, 34, is currently in Canada, U.S. officials say.
Yusill Scribner, a spokeswoman for the office of the U.S. Attorney for the Southern District of New York, declined to comment when asked about the prospect of extraditing him. Canada will extradite its citizens only if the laws under which they are charged are similar to Canadian laws.
"It raises the issue whether one country can apply its law to citizens of another country," said Javad Heydary, a Toronto lawyer with experience in gaming law. "We do not have anything close to the U.S. legislation," he said, alluding to the U.S. Unlawful Internet Gambling Enforcement Act. Mr. Heydary said that while, technically, Mr. Rennick is charged with offences that exist in Canada, the United States has been much more aggressive in attacking online gambling.
Because it is harder to shut down offshore servers, U.S. prosecutions have focused on third-party transaction processors such as Mr. Rennick, or people who could be arrested in the United States.
An industry lawyer questioned yesterday's charges, saying that Mr. Rennick intentionally handled only winnings from poker games. As a game of skill rather than chance, poker is legal in New York State, said Jeff Ifrah, a lawyer for the Interactive Gaming Council, the Vancouver-based group that represents online gambling companies. Mr. Ifrah said the indictment against Mr. Rennick followed the New York prosecutors' attempts earlier this summer to freeze accounts belonging to two companies, Allied Systems and Account Services, which held millions of dollars owed to people who won at online poker. According to the indictment, Account Services was one of several firms Mr. Rennick controlled to disburse funds from offshore Internet firms.
The indictment alleges that Mr. Rennick tried to camouflage his financial transactions, telling the banks that the accounts he had opened were for issuing rebates, refunds, sponsorship checks and minor payroll processing.
U.S. prosecutors have focused on foreign operators while allowing private U.S. companies to run online horse betting games, said Toronto lawyer Michael Lipton, a specialist in gaming law. In 2007, two Canadians, Stephen Lawrence and John Lefebvre, the founders of Neteller PLC, a Britain-based company that processed Internet gambling transactions, were arrested in the United States and charged with criminal conspiracy. The two later pleaded guilty and Neteller was forced to close its U.S. services. This focus on foreign operators even led Antigua to protest before the World Trade Organization, Mr. Lipton said. |
What did Rennick do wrong?
| Quote: | | Since at least 2007 through June 2009, RENNICK opened a number of bank accounts in the United States under various corporate names, such as KJB Financial Corporation, Account Services Corporation, and Check Payment Financial Co. In opening the accounts he and his co-conspirators falsely represented that the accounts would be used for such purposes as issuing rebate checks, refund checks, sponsorship checks, affiliate checks, and minor payroll processing. In fact, RENNICK and his coconspirators used the accounts to receive funds from offshore Internet gambling companies that offered, variously, poker, blackjack, slots, and other casino games. RENNICK and his coconspirators then disbursed those funds via checks to United States residents seeking to cash out their gambling winnings. RENNICK and his co-conspirators provided false and misleading information to United States banks about the purpose of the accounts because the banks would not have processed the transactions had they known they were gambling-related. (emphasis added) (From U.S. Attorney's press release Aug. 6/09, p. 1) |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=673#673 |
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legal
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| Posted: Mon Aug 17, 2009 12:11 pm Post subject: |
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From the PokerPulse Gambler's Guide to Safe Bets post-Prohibition 2.0:
FBI affidavit June 24/09 names Rennick, Poker Stars and FullTilt:
| Quote: | 4. ... there is probable cause to believe that the Defendant Account contains property that constitutes or is derived from proceeds traceable to the operation of an illegal gambling business, in violation of 18 U.S.C 1955, and the illegal transmission of gambling information, in violation of 18 U.S.C. 1084, and property used in the operation of an illegal gambling business and commision of the gambling offense. As such, the contents of the Defendant Account are subject to forfeiture to the United States pursuant to 18 U.S.C. 981 (a) (1) (C), 984, and 1955 (d).
BACKGROUND
5. For approximately three years FBI agents have been investigating illegal internet gambling businesses which, although typically based offshore, predominantly serve players based in the United States. These gambling business offer "real money" casino games, poker, and sports betting to United States players, in violation of multiple federal criminal statutes ... Although these gambling businesses are based offshore, the vast majority of their customers are in the United States. Consequently, these internet gambling businesses necessarily rely on the United States financial system to move funds between the offshore accounts of the gambling businesses and the United States bank accounts of their customers. And because the internet gambling is illegal in the United States, the gambling companies must, in most instances, deceive United States financial institutions about the nature of their accounts in the United States and the purposes of their financial transactions.
6. Internet gambling bsuinesses based offshore use the United States financial system to transfer payments to the United States customers ... One method that internet gambling bsuinesses use to transfer funds to United States customers is to transfer large amounts of money from offshore accounts into a United States bank account and then mail payout checks from this account to the United States bank account to their United States customers. ...
ACCOUNT SERVICES' HISTORY OF PROVIDING PAYMENT SERVICES FOR ONLINE GAMBLING COMPANIES
8. Account Services has previously provided payment services for companies providing online gambling services, including Pokerstars and FullTilt Poker, the largest internet poker businesses in operation. As set forth in greater detail in the Conte Wells Fargo Affidavit, there is probable cause to believe that the Wells Fargo Account Services Account was providing payment services for these online gambling companies in 2008 and 2009, including the following: (names are blacked out) (-- pgs. 5-8, 23-24) See also DOUGLASS RENNICK'S HISTORY OF DISBURSING GAMBLING PROCEEDS beginning at p. 25. |
Link to this entry
http://pokerpulse.com/legal/viewtopic.php?p=680#680 |
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