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 emphasizes 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 company's 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 emphasizes 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.