NEW YORK, Jan 24 (Reuters) – A U.S. judge on Wednesday set Feb. 14 as the date for a preliminary hearing for the two founders of UK payment processing company NETeller Plc (NLR.L: Quote, Profile , Research) who are charged with handling billions of dollars in gambling wagers and winnings.
The decision sets the stage for further federal court proceedings in the case against NETeller founders, Canadians John Lefebvre, 55, and Stephen Lawrence, 46, who were arrested earlier this month as U.S. authorities continued their crackdown on Internet gambling.
The magistrate judge at the U.S. Court for the Southern District of New York extended Lefebvre’s $5 million bail during a brief hearing on Wednesday. Lawrence appeared in court last week, when his bail was also extended.
Under the terms of the bail, Lefebvre has surrendered his travel documents and is restricted to traveling within parts of New York and California.
The government would have to file formal charges before the Feb. 14 hearing, said Lefebvre’s lawyer Vincent Marella.
Lefebvre declined to comment after the hearing.
If convicted, Lawrence and Lefebvre each face up to 20 years in prison.
Money transfer companies such as NETeller, based in the Isle of Man, allow gambling companies to transfer money collected from U.S. bettors to overseas bank accounts.
Most online gaming executives have avoided traveling to the United States since the crackdown on Internet gambling began last year with the arrest of BETonSPORTS’ (BSS.L: Quote, Profile , Research) David Carruthers.
Source: Reuters

The founder of a money transfer company is arrested and charged with laundering billions of dollars from illegal online gambling proceeds-a move by the feds who are cracking down on online gambling in the United States. Some companies, which receive most of their income from the industry, have lost billions since an anti-online gambling bill was signed into law last year.
By Laura Tate / Editor
Malibu homeowner John Lefebvre, a Canadian national, was released on a $5 million U.S Bond following his arrest last week on charges of allegedly laundering billions of dollars in illegal online gambling proceeds. Canadian Stephen Lawrence was also released on $5 million bail.
The two are former directors of NETeller, a company that transfers money globally for a fee. Lefebvre and Lawrence are accused of using the Internet payment services company to facilitate the transfer of billions of dollars of illegal gambling proceeds from the United States to Internet gambling companies overseas.
A former lawyer, Lefebvre launched NETeller in 2000, which was essentially a Web database that functioned as the middleman between companies operating online gambling casinos and offshore bank accounts.
The U.S. Attorney’s office stated in a press release that, “According to NETeller’s 2005 annual report, Lawrence and Lefebvre, through NETeller, provided payment services to more than 80 percent of worldwide gaming merchants.”
Lefebvre, according to the U.S. Attorney’s office, served as president of NETeller from 2000 to 2002, and was a member of the Board of Directors until approximately December 2005.
Reuters reported last week that the company closed its U.S. Internet gambling services on Thursday, causing it to lose more than 65 percent of its business. Shares in NETeller had fallen by 60 percent since September, following the passage of the Unlawful Internet Gambling Enforcement Act, and the arrests of two British executives from companies that were involved in online casinos. The anti-online gambling law makes it illegal for banks, credit card companies and online payment systems to process payment to online gambling companies. Nearly $8 billion in market value of shares in publicly traded companies such PartyGaming and Sportingbet were wiped out following the law’s passage.
The U.S. Attorney’s office reported that in 2005, NETeller processed more than $7.3 billion in financial transactions, and that, according to reports issued by NETeller, 95 percent of its revenue came from money transfers involving Internet gambling companies. In the first half of 2006, NETeller processed $5.1 billion in financial transactions, prosecutors said. As charged in the U.S. Attorney’s complaint, 85 percent of the company’s revenue from that period came from gamblers in North America, and approximately 75 percent of its North American revenue was generated in the United States.
“Internet gambling is a multibillion-dollar industry,” stated 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. The FBI is adamant about shutting off the flow of illegal cash.”
Since the arrest of two other former online gambling company executives in September, including Sportingbet chairman, Peter Dicks, most online gambling executives have been avoiding the U.S. However, this did not deter Lefebvre, who was arrested at his Malibu home last Tuesday, from staying away from the States.
In an Oct. 14, 2005 story from the University of Calgary campus newspaper, Lefebvre’s alma mater, he is described as a “man embodying the spirit of a generation.” Lefebvre donated $1.2 million to its fine arts faculty in 2005.
The article goes on to tell the rise, fall and then rise again of Lefebvre. According to the On Campus Weekly story, Lefebvre was “a lawyer by trade and a frustrated musician by passion.”
Lefebvre’s father died when he was 3, writes Tom Maloney, and his mother raised he and his two siblings while returning to school and earning an education degree and a master’s in counseling. After graduating law school, Lefebvre ended up running a storefront law clinic and then eventually worked from home.
“One of the reasons I didn’t get dragged into the downtown, upper-crust, law-circle things is, I never really did concede to working the long hours, as much as I could have or maybe should have,” he is quoted in the U of C newspaper. “It was always more compelling for me to get home to see my daughter.”
Facing a midlife crisis in his ’40s, he quit his job as lawyer and then begged in the train stations of Calgary for change to buy food, according to the campus newspaper. He ended returning to legal work to pay back friends and then met up with a former client, who later became chairman of NETeller, Stephen Lawrence. Lawrence was operating an online casino in Costa Rica, and wanted a more efficient money transfer system. Lefebvre worked with a computer programmer and built NETeller. The company gained a percentage off each transaction from the casinos, smaller than what the casinos had to pay credit card companies, and it provided better security against fraud.
Two years ago the company, based on the Isle of Man in the U.K. and listed on the London Stock Exchange, had a user base of two million customers worldwide and 1,700 merchant clients, according the U of C newspaper.
Trading of NETeller’s shares was temporarily suspended on Jan. 16, following the arrests of Lefebvre and Lawrence. A press release from the company was listed on the London Stock Exchange stating that other than as shareholders, neither of the two have any current position or connection to NETeller.
Lefebvre is to appear in Manhattan Federal Court Wednesday to have his bail terms reviewed. Although a Los Angeles federal judge ordered him not to leave Los Angeles, except to make his Manhattan appearance, he was also ordered not to leave New York before the end of February.
Source: Malibu Times

Like a brightly colored alien race descending for the Super Bowl, 8-foot-tall machines will be cropping up in casinos across Nevada, beckoning gamblers to make sports bets as quickly as withdrawing cash at an ATM or placing an order at a fast-food drive-through.
Called “iSports Stand,” these sports betting kiosks are like ATMs on steroids. They feature large touch screens and video monitors that flash as many as 50 ads every few hours – pitches that historically haven’t been welcome inside casinos.
Besides the betting action, gamblers can click on ads that pop up on the screen, printing out 2-for-1 coupons and other offers from local mom-and-pop businesses and national chains.
Like other advancements in casino technology over the years, the kiosks – more than three years in development – will replace some work now done by casino employees and allow gamblers to place their bets faster and more conveniently.
The devices can go anywhere in a casino – near the buffet line or near retail stores. Winners will be given credits, which they can cash out with a cashier or use for more betting.
Like movie ticket terminals that have sprung up outside cineplexes, the iSports Stand also has other functions for those who aren’t wagering-inclined. Slip in some cash and you can buy a show ticket or book a tee time at the casino’s golf course.
Bill Stearns, president of kiosk manufacturer ISI Ltd. of Las Vegas, says the machines won’t fully replace the sports book experience.
“Similar to banks, bank tellers still exist and have their functions,” Stearns said. “We’re ATMs for sports books.” Stearns said he expects sports wagering to increase overall as betting becomes more convenient.
As a rule, faster-moving games make more money for casinos. But there’s a side benefit to 24-hour betting kiosks besides the fact that they don’t take vacations or get sick. A 40 percent chunk of the advertising revenue from the sale of space on the touch screen as well as a video monitor at the top of the machine goes to casinos – revenue that can pay for the machine in a few months. Excluding that revenue, casinos pay $900 per month to lease the kiosks.
More than 30 Nevada casinos are renting the kiosks, including the Sahara, Riviera, Tropicana and the Silverton.
The machines were developed in partnership with American Wagering, a public company that owns more than 60 race and sports books in Nevada through its Leroy’s subsidiary and supplies most of the hardware and software Nevada casinos use to process sports bets.
Source: Las Vegas Sun

new federal law that targets online gambling hasn’t deterred Wheatfield resident Matt Wilkinson from playing Internet poker.
The legislation has been little more than an inconvenience for Porter resident and poker devotee Larry Austin, and it hasn’t impressed the head of the area’s largest gambling treatment program.
The Unlawful Internet Gambling Enforcement Act, tacked on to a port security bill and quietly signed into law by President Bush in October, makes it a crime to use credit cards or online payments to gamble. The federal Treasury Department and the Federal Reserve System have until July to set up regulations to enforce the law.
But the legislation is facing criticism from a rare pair: online poker players and people who help addicted gamblers.
As government moves to quell Internet gambling, its first few steps have drawn criticism from the far corners of the industry. Poker players are agitated that gambling sites are shutting out U.S. customers. Gambling treatment administrators worry that online gambling will be pushed further off-shore and out of their reach, and a Virginia lawmaker who spearheaded an initiative last year to ban online gambling believes the new law isn’t strong enough.
“What you’ll find is that rogue sites are going to pop up that have no interest in safe guarding the product,” said Michael Bolcerek, president of the Poker Players Alliance, a lobbying group formed in opposition to a federal bill proposed in 2005. “It has unintended consequences; that’s what you’ll see going forward with prohibition. Just like you saw the unintended consequences of alcohol prohibition — the speakeasies.”
The new law comes as the Internet is expanding the reach of sports betting and poker to living rooms across the country. It has never been easier for gamblers to access credit, play a round of Texas Hold ’em or place an online wager on a basketball game, and the government is starting to take notice.
In November, Queens District Attorney Richard A. Brown announced investigators had used existing criminal laws to take down a $3.3 billion online sports betting ring —the largest gambling bust in its history.
Until the bill passed in October, online gambling had gone virtually unregulated, operating in a shadowy area of the law. But the new legislation has done little to appease advocates of treating problem gambling.
Keith Whyte, executive director of the Washington-based National Council on Problem Gambling, believes the law will do little to slow the growth of online gambling.
“Will it impact gambling? Yes, but not much,” Whyte said. “I think it will make it a little bit less convenient for casual gamblers, but heavy gamblers and certainly problem gamblers will take the extra step and can easily find ways around this law.”
Whyte’s organization does not oppose or endorse gambling, but instead fights for more resources to be put toward the treatment and prevention of problem and pathological gambling.
The weakness of the law, Whyte and others believe, is that it doesn’t ban online gambling. It instead bars electronic payments to unlawful gambling sites and holds financial institutions responsible for blocking restricted transactions. The law excludes online horse betting and fantasy sports sites.
“How is your bank going to prove that four steps down the line your funds came from Internet gambling, especially if it’s companies that are not under U.S. jurisdiction?” Whyte asked. “It adds a couple of steps. It will inconvenience casual gamblers, but it’s not likely to stop problem gamblers.”
Rep. Bob Goodlatte, R-Va., a key sponsor to a previous online gambling bill passed by the U.S. House of Representatives, called the new legislation a “step in the right direction in the fight against online gambling,” but said shortly after it was passed that he was preparing a stronger bill to combat Internet gambling.
Portions of Goodlatte’s original proposal passed by the House were stripped from the final version of the Unlawful Internet Gambling Enforcement Act when it was passed by Congress as an addition to the Security and Accountability for Every Port Act of 2006.
Online poker players say it is relatively easy to find third-party sites that will handle online payments, making it difficult for banks or regulators to prove money is connected to gambling.
Matt Wilkinson, a Wheatfield sales manager who has been playing online poker on and off for five years, says the new law has frustrated players, but has done little to stop the game. When one site shuts down, Wilkinson said, players find another company.
Wilkinson believes lawmakers went after online gambling because companies that run the sites operate outside of their jurisdiction.
“Most of them are based in Costa Rica, Antigua, Barbados —places that don’t have a lot of laws in place to report their revenues,” Wilkinson said. “I don’t think the motivation behind passing the act has anything to do with problem gambling or trying to quell their habits.”
Like Wilkinson, 41-year-old poker player Larry Austin said the closure of some Web sites to U.S. customers has been merely an inconvenience.
“It criminalizes a game. To me, poker is like baseball, it’s a great American pastime. Who hasn’t really played poker at the kitchen table?” asked Austin, a writer who lives in Porter.
Austin objects to the way the federal law was passed. “They included it in a port security bill and they passed it in the middle of the night,” he said.
Renee Wert, a psychologist who runs a gambling recovery program for Jewish Family Services of Buffalo and Erie County, said poker can be just as devastating as other forms of gambling. Wert’s program, which until last year was the only provider of gambling treatment services in Western New York, has seen a rise in the number of people seeking help because of online gambling.
Wert says online gambling has a dangerous mix of easy access to gambling, instant credit and few barriers to underage players.
“The faster the rate of play, the more addictive potential something has,” said Wert, who is also vice president of the New York State Council on Problem Gambling. “Anything that’s going to make it easy for you to gamble quickly, there’s more of a tendency to develop a problem.”
The ease of online gambling —anyone with a credit card and a computer can access sites — has expanded gambling’s realm and raised the stakes for criminal investigators.
The November online gambling bust was the largest sports betting ring ever taken down.
The sophisticated online betting ring, Queens District Attorney Richard A. Brown said, booked more than $3.3 billion in wagers in little more than two years. The indictment included 27 people, including boss James W. Giordano of Pine Crest, Fla., and three corporations that included the firm that designed the operation’s Web site.
Investigators say the scope of the operation dwarfed traditional betting rings because the Internet allowed it to extended its reach.
Brown believes the indictment sends a strong message to Internet gambling operators.
“For the first time ever, an Internet provider and a Web designer were charged with directly participating in a billion-dollar-a-year global gambling operation,” Brown said. “This landmark prosecution has potentially far-ranging implications not just for Internet gambling sites, but for those who assist them in building their criminal enterprises.”
Source: Lockport Union Sun & Journal

This year’s Super Bowl is in Miami after last year’s stop in Detroit, but there will still be plenty of action this year not far from Ford Field — across the river in Windsor.
Legends Sports Lounge, Casino Windsor’s sports betting venue, which allows legal bets on the biggest gambling event of the year, is braced for a big boost from the Super Bowl.
On Sunday, the Chicago Bears and Indianapolis Colts won berths in Super Bowl XLI.
“Every time there is a playoff game, you’ll see our attendance peak,” said Holly Ward, a spokeswoman for Casino Windsor. “What Legends has done is offer a unique opportunity for sports fans in Michigan and elsewhere to come here.”
During the World Series, for example, patrons of Legends had to stand in line for two hours to place a bet, Ward said.
Since it opened last fall, about 80% of Legends’ business has been from Americans crossing into Canada to place bets. Ward said Casino Windsor has become a destination for sports gamblers from throughout the Midwest.
“Legends is really reaching a new kind of customer that we wouldn’t have attracted before,” Ward said.
Ward declined to provide attendance or revenue figures for the sports betting operation.
Windsor is uniquely situated among North America’s few legal sports betting venues. Unlike Las Vegas, which has none of its own big-time professional sports teams, and unlike a sports betting operation in Niagara Falls, Ontario, Legends is quickly accessible from a sports-obsessed major U.S. metro area.
Nevada offers the only legal sports book in the United States. The Oregon Legislature voted to end a lottery game after this season that allowed football gambling.
In Windsor, the opening of Legends was part of a $400-million renovation and expansion plan for Casino Windsor that began in 2005.
Visitors can bet on professional football, hockey and baseball, as well as college football and basketball — under Ontario Lottery rules that require combinations of bets. The minimum bet is $2 and the maximum is $1,000 per ticket.
The lounge is equipped with 36 televisions that broadcast sports from all over the world, Canada’s largest sports ticker and four outdoor heated smoking shelters. Smoking isn’t permitted in Ontario workplaces, which led to layoffs at the casino this summer.
One patron, Jody Hall, says he places bets on football and hockey every day.
“I spend $200 to $300 a day betting here,” Hall, a 35-year-old car salesman from Windsor, said Friday. “I’m definitely planning on making some money this weekend.”
Hall, who says the most he’s made on two bets is about $1,800, expects Super Bowl weekend to be even bigger than last year, when the casino saw 30,000 visitors, even without the sports book in place.
“This isn’t a traditional sports betting establishment,” he said. “It’s based on the Ontario Lottery, so I think a lot more people are going to be doing this come Super Bowl.”
Source Detroit Free Press

NEW YORK–A pair of Canadians accused of laundering billions of dollars in illegal online gambling proceeds originating in the United States are expected to face a preliminary hearing in New York next month –the first step in determining whether to proceed with formal charges.
John Lefebvre and Stephen Lawrence, both co-founders and ex-directors of Isle of Man-based NETeller Plc, have each been released on $5-million US bond following their arrests last week –Lefebvre in Los Angeles and Lawrence in Virgin Islands.
If convicted, each faces a maximum sentence of 20 years in prison.
Lefebvre, 55, will have his bail terms reviewed when he appears in Manhattan Federal Court Wednesday. Lawrence, 46, who appeared in the same court Friday, saw his bail terms upheld. A judge gave him until Friday to come up with $1 million US still outstanding after he posted $2.5 million in cash and $1.5 million against a New York condominium.
While a federal judge in Los Angeles ordered Lefebvre not to leave that city except for making his Manhattan court appearance, Lawrence has been ordered not to leave New York before the end of February. Even then, he must not leave the continental United States, and must provide the court with contact information for each night he is away from New York.
Both men are accused of conspiring to promote illegal gambling by transferring billions of dollars of cyberspace bets placed by U.S. citizens with overseas gambling companies. Lefebvre, a University of Calgary law graduate and well-known philanthropist in the city, was arrested at his Malibu, Calif., beach house, but also owns a home on Saltspring Island in British Columbia.
Fellow former Calgarian Lawrence’s ties to the city date to the 1990s, when he worked as a principal with Cavendish Investing Ltd., a Calgary-based private venture capital firm.
NETeller allows users to transfer money to global companies for a fee.
The men are former directors of the company and knowingly broke the law, according to an FBI special agent based in New York.
“Public filings acknowledge that a large chunk of their business was derived from handling wagers from American customers,” James Margolin said last week.
“Under U.S. law, gambling is a very tightly regulated industry and the solicitation of American bettors by offshore companies is illegal.”
According to the company’s 2005 annual report, payment services were provided to more than 95 per cent of gaming merchants around the globe, amounting to roughly $7.3 billion in financial transactions.
In the first half of 2006, the company reported processing $5.1 billion in transactions.
“There is ample indication these defendants knew the American market for their services was illegal,” Michael Garcia, U.S. attorney for New York, wrote in the indictment.
“The U.S. is exerting its long arm in an effort to totally stamp out online gaming in their country, and in this case are pushing as hard as they can” Michael Lipton, a Toronto lawyer who specializes in gambling law, told CanWest News Service.
Source Vancouver Sun

LONDON — Shares in European online gambling companies fell as much as 14 per cent yesterday on news that U.S. prosecutors had launched a probe into Internet gambling.
The U.S. Department of Justice has sent subpoenas to about 15 investment banks across Europe and in the United States, requesting information as part of a probe into gambling companies including Britain’s PartyGaming PLC and payment networks such as Neteller PLC, banking officials said.
The banking officials, who spoke on condition that they not be identified by name because they were not authorized to do so, said that the subpoenas were received shortly after Christmas.
Dresdner Kleinwort, Deutsche Bank, HSBC Holdings and JPMorgan Chase & Co. declined to comment on reports they were among the banks to receive subpoenas. Citigroup Inc. and Bank of America Corp. officials did not immediately return calls for comment yesterday.
The United States effectively banned online gambling last fall when Congress added a provision to a bill aimed at improving port security to make it illegal for banks and credit card companies to settle payments to online gambling sites. U.S. President George W. Bush signed the bill into law Oct. 14.
Several Europe-based online gambling companies collapsed after the decision and those still operating continue to reel from the costs of exiting the United States.
Sportingbet PLC and Leisure & Gaming PLC both sold their U.S. operations for a token $1 (U.S.). World Gaming PLC directors resigned, leaving the company in the hands of administrators.
PartyGaming PLC, the world’s largest online gambling company, and Betonsports PLC were among the others to suspend all real money gambling activities to customers in the United States.
British-based Neteller, which essentially acts as a middleman between gamblers and offshore betting operations, said last week that it stopped handling gambling transactions from U.S. customers.
The company’s move came three days after former directors were arrested and charged in the United States with funnelling billions of dollars in gambling proceeds to overseas betting operations.
Gambling stocks, already worth only a fraction of their values before the U.S. ban, slumped further yesterday on news of the probe.
In London, Leisure & Gaming shares fell 0.75 pence to 11.5 pence (26 cents). PartyGaming shares were 3 pence lower at 27.75 pence. Sportingbet stock slumped 6 per cent to 35 pence. 888 Holdings stock slipped 4.25 pence to £1.16. Neteller shares were suspended last week.
The British government has been strongly critical of the U.S. position on Internet gambling, with Culture Secretary Tessa Jowell likening it to a new form of the 1920s Prohibition on alcohol.
Source Toronto Globe and Mail