A man who made billions processing internet gambling bets the U.S. government has declared illegal was arrested Monday, January 15, on St. John, according to a statement issued by the U.S. Attorney’s Office and the Federal Bureau of Investigation.
Stephen Eric Lawrence and his business partner, John David Lefebvre, who was arrested in Malibu, California, are both charged with conspiring to transfer funds with the intent to promote illegal gambling and face a maximum sentence of 20 years in prison if convicted.
Lawrence and Lefebvre founded Neteller, an internet payment services company that began processing internet gambling transactions in July 2000, according to the U.S. Attorney’s Office and FBI press release.
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.
Ordered To Move to New York
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 jurisdiction of the Southern District Court of New York.
Donovan would not discuss the circumstances surrounding Lawrence’s apprehension, including whether the V.I. Police Department aided the FBI in the arrest.
“I cannot add anything to the press release at this time,” said Donovan.
VIPD spokesperson Shawna Richards did not answer questions regarding the department’s role in Lawrence’s arrest.
It was not clear why Lawrence was on St. John at the time he was arrested.
Transferring Money Overseas
“Internet payment services companies like Neteller allow gambling companies to transfer money collected from United States customers to bank accounts outside the United States,” according to the release. “According to Neteller’s 2005 annual report, Lawrence and Lefebvre, through Neteller, provided payment services to more than 80 percent of worldwide gaming merchants.”
The company acknowledged they were breaking the law, according to the release.
“At the time that the defendants took Neteller public, 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,” states the release. “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.”
Reports Boasted of Transactions
Although the company’s directors knew that what they were doing was illegal, they issued reports boasting of their transactions, according to the government.
“In 2005, Neteller processed over $7.3 billion in financial transactions,” according to the release. “According to reports issued by Neteller, 95 percent of its revenue was derived from money transfers involving internet gambling companies.”
“On September 11, 2006, the president and chief executive officer of Neteller described the ‘online gaming market’ as Neteller’s ‘main market,’ and stated that, in the first half of 2006, Neteller processed $5.1 billion in financial transactions,” the official release continued.
The internet gambling that was serving as the company’s main market was illegal, according to the release.
“Both the operation of an internet gambling operation and the transferring of the proceeds from these businesses overseas are illegal under United States law,” the release stated.
An internet search of Neteller on Thursday afternoon, January 18, found several online gambling sites promoting the company as a way to transfer funds online.
Poker.com refers to Neteller as an “online wallet,” while alljackpots.com calls Neteller “an efficient and secure method to make online transactions.”
Combating Internet Gambling
Both men are Canadian citizens, and Lawrence currently resides in Paradise Island, Bahamas, the release continued.
The arrest is just one of many by the United States Department of Justice, which is aiming to combat unlawful internet gambling through prosecution and statutes.
“Internet gambling is a multibillion-dollar industry,” said FBI Assistant Director Mark Mershon. “A significant portion of that is the illegal handling of Americans’ bets with offshore gaming companies, which amounts to a colossal criminal enterprise masquerading as legitimate business. There is ample indication these defendants knew the American market for their services was illegal.”