NETELLER PAYOUTS BEING HELD
UP BY U.S. AUTHORITIES (Update)
Legal discussions ongoing between e-wallet
and U.S. Attorney's Office for the Southern District of New York
“The return of funds to our US customers is a top priority
for Neteller” says Ron Martin, President and CEO.
Isle of Man based e-wallet Neteller has issued an update on its
ongoing problems with getting US players paid following its withdrawal
from the US market - and it looks as if the US authorities are primarily
responsible for payout delays to US players.
In a statement Thursday, Neteller dealt with the delays, negotiations
with the Americans and the criminal charges against two of its founders
laid by U.S. authorities.
The statement reveals that on 19 January 2007, at the request of
Neteller, the group’s legal advisers met with representatives
of the United States Attorney’s Office for the Southern District
of New York (“USAO”) to clarify the company's position
with respect to the complaints brought on 16 January 2007 against
two of its founders, Stephen Lawrence and John Lefebvre.
The statement emphasises that neither of the arrested men are current
employees or directors of Neteller, and asserts that in the meeting
the company's representatives pledged to cooperate with the USAO,
indicating it was prepared to begin document production promptly
and discuss a potential mechanism for arranging an orderly repayment
of funds to US customers.
Despite the time lag since January 19th, it appears from the statement
that the discussions are still ongoing. Neteller is, under advice
of its legal advisers, commencing production of documents and intends
to cooperate with the USAO in its investigation.
Neteller then describes recent developments since January 16, when
banks in the US began declining to permit transactions involving
the Isle of Man company through accounts maintained at one or more
automated clearinghouses in the United States.
Additionally, Neteller was advised that the USAO has obtained [unspecified]
court-ordered seizure warrants seizing funds pertaining to the Neteller
transactions with US players. Neteller stresses that to the best
of its knowledge, it believes that the amount of funds seized by
the USAO or otherwise restricted by third parties does not exceed
US$ 55 million. These funds were largely in the process of being
transferred from by Neteller to its US customers or vice versa.
As a result of the restrictions placed by third parties, court-ordered
seizures, and related legal concerns, Neteller is therefore currently
unable to make payments to US customers.
Nevertheless, discussions with the USAO continue with the goal
of managing an orderly return of funds to US customers.
One option that has been discussed is that the USAO will engage
an independent forensic accounting firm, at the Neteller's expense,
to assist in this process and to examine the companys financial
position.
“The return of funds to our US customers is a top priority
for Neteller” said Ron Martin, Group President and CEO.
Unfortunately, US customers wishing to withdraw funds from their
Neteller e-wallet accounts will experience ongoing delays while
these discussions continue, the statement reveals, adding that a
further update will be provided once effective repayment mechanisms
are determined.
The statement asserts that no criminal action or proceeding has
been brought against Neteller, its current officers or directors
by the USAO.
"Nevertheless, there can be no assurance that the Group will
not be charged in a criminal action at some subsequent time. The
Group intends to work with the USAO to seek a negotiated resolution
of any allegations relating to its US activities. Any resolution
of this matter may lead to potential sanctions against the Group
including material financial penalties, fines and forfeitures,"
the statement cautions in what must be seen as an indication that
a *settlement* may be on the books as a result of negotiations with
the Americans.
Once again, the company emphasises that in line with it's standard
business practices for all customers, funds held for US customers
are held in segregated trust accounts. "The Group’s own
cash position remains strong and the Group currently has sufficient
working capital to fund all its customers’ balances as well
as ongoing requirements of the business," the statement assures.
The statement also reiterates the Neteller strategic position post-US
withdrawal, pointing out that the company remains committed to developing
its business, including geographical and product diversification
for all markets except the USA.
"The Group will focus on its continuing business and the opportunities
available in the growing markets of Europe, Asia and the Americas
outside of the United States.
"Since the Group’s withdrawal from the US market on
18 January 2007, average daily new account sign-ups of new customers
from non-US markets has been around 1 400. This compares to average
daily sign ups of 3 303 for the year to 31 December 2006. Daily
fee revenue since 18 January 2007 has averaged over US$ 200 000
per day (excluding any revenues from Netbanx, 1-Pay and interest
income).
"These metrics demonstrate the resilience of the Group's ongoing
business. Neteller customers not resident in the US continue to
be minimally affected by this withdrawal from the US market,"
the statement concludes.
However, notwithstanding these assurances the company advises that
in view of the continuing uncertainty, Neteller shares will continue
to be suspended from trading on AIM for the time being.
__________________
"Many of life's failures are people who did not realize how
close they were to success when they gave up"
