NETeller explains U.S. withdrawal delay

8 February 2007

NETeller is unable to pay U.S. customer withdrawals because American banks have refused to do business with one or more of the e-wallet's U.S. based automatic clearinghouses, according to a NETeller press release issued Thursday morning.

The NETeller release also said that the U.S. Attorney's Office for the Southern District of New York has seized funds of no more than $55 million that were destined for or coming from American NETeller accounts, further impeding the withdrawal process.

The NETeller group said they are working with the U.S. Attorney's office to develop a mechanism to return money owed to U.S. customers, but that the withdrawals will continue to be on hold.

"The return of funds to our U.S. customers is a top priority for NETeller," Group President and CEO Ron Martin said.

The U.S. Attorney's office had no comment Thursday morning and would not confirm or deny details in the NETeller press release.

NETeller officials continue to say that American monies not seized by U.S. officials are held in segregated trust accounts. The release did not issue a timetable for U.S. customer withdrawals.

A group of NETeller legal advisers met with officials from the U.S. Attorney's office on January 19, three days after the FBI arrested NETeller co-founders Stephen Lawrence and John LeFebvre and charged them with money laundering.

The NETeller group pledged to cooperate with the investigation, initiate pertinent document production, and discuss a mechanism for returning money to NETeller customers located in the U.S., the release said.

"As part of these discussions, it is contemplated that the USAO will engage a forensic accounting firm, at the (NETeller) Group's expense, to assist in this process and to examine the Group's financial position."

The release stated that NETeller officials are continuing to operate under the assumption that no further charges would be filed, but added that there was "no assurances that the Group will not be charged in a criminal action at some subsequent time."

The NETeller financial position continues to be strong despite losing its massive stake in the U.S. market, according to the release.

New-account sign-ups, one measure of the e-wallets resilience, fell from a daily average of 3,303 new accounts per day in 2006, to 1,400 a day since January 18.

Still, the NETeller group claims they are fiscally sound with a daily revenue average of more than $200,000 per day from account fees produced by non-U.S. customers.

"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 release said.

NETeller Group shares continue to be suspended from trading on the London AIM.

Ryan McLane

Articles by Ryan McLane was a poker reporter for Casino City. Although he has a strong background in reporting, the same can't be said for his poker skills. He has never won a major tournament nor is he a professional player. He applied for this job thinking it was a joke, only to find it out that it's true, people will pay you to write about poker. His favorite word is ridiculous. After receiving his BA in History from Stonehill College in Easton, MA, he somehow ended up freelance reporting for a couple years before being deployed to Operation Iraqi Freedom III with the Massachusetts National Guard. He's back now and is a strong advocate of the phrase "God Bless America." Currently, Ryan lives in Boston and occasionally makes international treks to cover tournament poker and news. Feature writing is his passion and there is no need to ask for his opinion, he'll probably offer it first - free of charge.