Approved: ______________________________
CHRISTOPHER P. CONNIFF
TIMOTHY J. TREANOR
Assistant United States Attorneys
Before: HONORABLE DEBRA C. FREEMAN
United States Magistrate Judge
Southern District of New York
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UNITED STATES OF AMERICA -v- STEPHEN ERIC LAWRENCE, Defendant.
Sealed Complaint
Violation of 18 U.S.C. ยง 1956
COUNTY OF OFFENSE:
NEW YORK/WESTCHESTER
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SOUTHERN DISTRICT OF NEW YORK, ss.:
Maryann Goldman, being duly sworn, deposes and says that
she is a Special Agent with the Federal Bureau of Investigation and
charges as follows:
COUNT ONE
1. From in or about June 1999, up to and including in
or about January 2007, in the Southern District of New York and
elsewhere, JOHN DAVID LEFEBVRE, the defendant, and others known and
unknown, unlawfully, wilfully and knowingly did combine, conspire,
confederate, and agree together and with each other to violate
Section 1956(a)(2)(A) of Title 18, United States Code.
2. It was a part and an object of the conspiracy that
JOHN DAVID LEFEBVRE, the defendant, and others known and unknown,
would and did transport, transmit, and transfer monetary
instruments and funds from a place in the United States to and
through a place outside the United States and to a place in the
United States from and through a place outside the United States
with the intent to promote the carrying on of specified unlawful
activity, to wit, the operation of illegal gambling businesses in
violation of Title 18, United States Code, Section 1955, the
illegal transmission of wagers and gambling information, in
violation of Title 18, United States Code, Section 1084, and the
commission of gambling offenses in violation of both New York State
Penal Law, Article 225, and anti-gambling statutes in other states.
OVERT ACTS
3. In furtherance of said conspiracy and to effect the
illegal object thereof, JOHN DAVID LEFEBVRE, the defendant, and
others known and unknown, committed the following overt acts, among
others, in the Southern District of New York and elsewhere:
a. In or about June 1999, LEFEBVRE and a coconspirator
("CC#1") founded a group of businesses (the "Neteller
Group") to provide online payment services to internet gambling
businesses.
b. Beginning in or about July 2000, and continuing
up to in or about December 2003, LEFEBVRE, CC#1, and others
affiliated with the Neteller Group offered online payment services
through Neteller Inc., a Canadian corporation, to various internet
gambling businesses so that these businesses could illegally access
customers in the United States, including customers in and around
New York City.
c. Beginning in or about January 2004, and
continuing up to in or about January 2007, LEFEBVRE, CC#1, and
others affiliated with the Neteller Group offered online payment
services through Neteller PLC, a corporation based in the Isle of
Man, to various internet gambling businesses so that these
businesses could illegally access customers in the United States,
including in and around New York City.
d. On or about April 14, 2004, LEFEBVRE, CC#1, and
others affiliated with the Neteller Group raised approximately $70
million through an initial public offering of shares in Neteller
PLC on the Alternative Investment Market ("AIM") of the London
Stock Exchange ("LSE") in order to, among other things, expand its
business.
(Title 18, United States Code, Sections 1956(h).)
The bases for deponent's knowledge and for the foregoing
charge are, in part, as follows:
4. Since in or about June 2006, the Federal Bureau of
Investigation ("FBI") has been conducting an investigation of
Neteller PLC, a company that is based in Isle of Man and is
publicly-traded in the United Kingdom. The investigation has
revealed that Neteller PLC conducts and facilitates illegal
financial transactions between gambling customers in the United
States and numerous offshore online gambling businesses.
5. I have been personally involved in the investigation
of this matter. This complaint is based upon my involvement in the
investigation, my conversations with other law enforcement
officials and witnesses, and my examination of reports, records,
and tapes. Because this complaint is being submitted for the
limited purpose of establishing probable cause, it does not include
all the facts that I have learned during the course of this
investigation. Where the contents of documents and the actions,
statements, and conversations of others are reported herein, they
are reported in substance and in part, except where otherwise
indicated.
6. I have reviewed various business records of Neteller
PLC. These records describe, among other things, the history and
development of the Neteller Group and the services that it
provides. For example, in the prospectus from Neteller PLC's
initial public offering on the AIM (the "Neteller IPO Prospectus"),
the Board of Directors of Neteller PLC, including JOHN DAVID
LEFEBVRE, the defendant, collectively states that Neteller Inc., a
Canadian corporation, was founded in 1999 by LEFEBVRE and CC#1;
that on January 1, 2004, the Neteller Group began doing business as
Neteller PLC, a corporation based in Isle of Man; that Neteller PLC
specializes in providing online payment processing services to
online merchants and customers; that Neteller PLC, and previously
Neteller Inc., offers services through Neteller.com; that the
primary service provided by Neteller PLC, and previously by
Neteller Inc., is a "virtual wallet" account that enables customers
to deposit, withdraw, or transfer funds with any merchant that
supports the Neteller online payments system; that Neteller PLC
generates its revenues on a fee-for-service basis for any transfer
of money between any combination of members or merchants; and that
Neteller Inc. began processing transactions in July 2000.
7. I have reviewed various business records of Neteller
PLC that provide information regarding the scope of the online
payment services provided by Neteller PLC, including the following:
a. In the Neteller IPO Prospectus, the Board of
Directors of Neteller PLC, including JOHN DAVID LEFEBVRE, the
defendant, collectively states that more than 95 percent of the
revenues generated by the Neteller Group, is derived from
processing money transfers pertaining to the online gambling
market; and that on or about March 1, 2004, Neteller PLC had
685,945 member accounts, of which approximately 88 percent belonged
to North American residents.
b. Neteller PLC's 2004 annual report states that,
in 2004, Neteller PLC processed $3.4 billion in financial
transactions; and that Neteller PLC provides gambling customers
with access to more than 80 percent of the online gaming merchants
in the world.
c. Neteller PLC's 2005 annual report states that,
in 2005, Neteller PLC processed over $7.3 billion in financial
transactions; that Neteller PLC provides gambling customers with
access to more than 80 percent of worldwide gaming merchants; and
that, in 2005, Neteller PLC had $172.1 million in revenues and
$91.5 million in net profit.
d. In Neteller PLC's half yearly report for the
six-month period ending June 30, 2006, dated September 11, 2006,
the President and Chief Executive Officer of Neteller PLC described
the "online gaming market" as Neteller PLC's "main market," and
stated that, in the first half of 2006, Neteller PLC processed $5.1
billion in financial transactions, and that approximately 85
percent of Neteller PLC's revenue during that period derived from
individuals in North America.
e. The transcript of a public conference call that
occurred on or about September 11, 2006, between officers of
Neteller PLC and financial analysts, reflects that the Chief
Financial Officer of Neteller PLC stated during the conference call
that approximately 75 percent of the revenue of Neteller PLC
originated from customers in the United States.
8. As part of the investigation, law enforcement
officers and a cooperating witness posed as gambling customers and
conducted online monetary transactions with numerous online
gambling businesses using online payment processing services
provided by Neteller PLC. The following are examples of some of
the transactions that I have either participated in or learned
about:
a. On or about August 12, 2006, a cooperating
witness (the "CW"), who at the time was located in Miami, Florida,
used a computer to open an account on Neteller.com (the "Neteller
Account"), and the CW electronically transferred $400 from a bank
account in Miami, Florida, into the Neteller Account. On or about
August 22, 2006, the CW, who at the time was located in Miami,
Florida, used a computer to open a wagering account with an online
gambling business based in Antigua ("Online Gambling Business #1),
by electronically transferring $400 from the Neteller Account to
Online Gambling Business #1. On or about August 24, 2006, the CW,
who at the time was located in Miami, Florida, used a computer to
access Online Gambling Business #1's website, and the CW then
wagered $250 on a National Football League ("NFL") football game
and won approximately $200. On or about September 7, 2006, the CW,
who at the time was located in Miami, Florida, used a computer to
access Online Gambling Business #1's website, and the CW then
wagered $250 on an NFL football game and lost $250.
b. On or about September 26, 2006, I was present
with the CW at a public library located in Westchester County, New
York. At that time, I observed the CW access the internet using a
public computer at the library. The CW then used the computer to
access Online Gambling Business #1's website, and the CW then
withdrew $200 from his wagering account with Online Gambling
Business #1 and transferred it electronically to the Neteller
Account. Thereafter, the CW then placed a $50 wager on an NFL
football game on Online Gambling Business #1's website using money
that had previously been deposited with Online Gambling Business #1
using the Neteller Account.
c. On or about December 29, 2006, in Westchester
County, New York, I used a computer to access the Neteller Account
by logging on to Neteller.com. At that time, the balance in the
account was $100. I then transferred $25 from the Neteller Account
to a wagering account with an online gambling business based in
Costa Rica ("Online Gambling Business #2"). I then transferred $25
from the Neteller account to a wagering account with another online
gambling business based in Costa Rica ("Online Gambling Business
#3"). Then, I logged on to Online Gambling Business #1's website
and used a link to Neteller.com to transfer $25 from the Neteller
Account to the wagering account with Online Gambling Business #1
that previously had been opened by the CW.
9. I have reviewed various business records obtained
from financial institutions that provide information regarding
international monetary transactions conducted by, or on behalf of,
Neteller PLC, including the following:
a. Records of automated clearinghouse ("ACH")
transactions obtained pursuant to subpoena from an automated
clearinghouse located in the United States demonstrate that
Neteller processes a significant amount of customer transactions
through the automated clearinghouse system, including transactions
from customers in Manhattan. The ACH system permits Neteller to
handle internet-based customer transactions. These records further
demonstrate that Neteller uses a payment service company (the
"Payment Company") to conduct its customers' ACH transactions in
the name of the Payment Company. By doing so, Neteller PLC
conceals the nature of these financial transactions. The Payment
Company receives funds in the United States on behalf of Neteller
PLC, and then transfers the funds out of the United States to
accounts controlled by Neteller PLC in Canada.
b. Records of wire transfers obtained pursuant to
subpoena from a bank in the United States (the "US Bank")
demonstrate that, from in or about January 2006 up to and including
in or about March 2006, a total of approximately $98 million was
transferred by wire from an account in the name of the Payment
Company at the US Bank in the United States to an account in the
name of JSL Systems Inc. at National Bank of Canada in Calgary,
Alberta, Canada. Neteller PLC's 2004 annual report states that JSL
Systems Inc. is a related company that is owned by a director of
Neteller PLC that processes transactions for Neteller PLC and is
paid a nominal fee for its services. In the Neteller IPO
Prospectus, the Board of Directors of Neteller PLC, including JOHN
DAVID LEFEBVRE, the defendant, collectively states that LEFEBVRE
and CC#1 are partners in and/or directors of JSL Systems Inc.
c. Records of wire transfers obtained pursuant to
subpoena from the US Bank demonstrate that, from in or about March
2006 up to and including in or about April 2006, a total of
approximately $50 million was transferred from an account in the
name of the Payment Company at the US Bank in the United States to
an account in the name of Cardload Inc. at National Bank of Canada
in Calgary, Alberta, Canada. Neteller PLC's 2004 annual report
states that Cardload Inc. is a wholly-owned subsidiary of Neteller
PLC.
10. I have reviewed various business records of Neteller
PLC that provide information regarding the involvement of JOHN
DAVID LEFEBVRE, the defendant, in the business affairs of Neteller
Inc. and Neteller PLC, including the following:
a. In the Neteller IPO Prospectus, the Board of
Directors of Neteller PLC, including LEFEBVRE, collectively states
the following: LEFEBVRE is a lawyer who co-founded the Neteller
Group in 1999; LEFEBVRE participated in developing the online
payment services of the Neteller Group and participated in raising
capital for the Neteller Group; LEFEBVRE served as President of
Neteller Inc. from 2000 to 2002 and drew a salary and other
compensation from Neteller Inc.; LEFEBVRE is a member of the Board
of Directors of Neteller PLC and would remain a director upon
admission of Neteller PLC to AIM; and prior to the IPO, LEFEBVRE
owned approximately 25 percent of Neteller PLC, and after the IPO,
LEFEBVRE owned approximately 22 percent of Neteller PLC.
b. Neteller PLC's 2004 annual report states that
LEFEBVRE is a co-founder and director of Neteller PLC; on or about
December 31, 2004, LEFEBVRE was the second-largest shareholder of
Neteller PLC, owning 13.44% percent of the outstanding shares of
Neteller PLC; during 2004, the Board of Directors of Neteller PLC
granted LEFEBVRE options to purchase additional shares of Neteller
PLC; and during 2004, Neteller PLC paid LEFEBVRE consulting fees
for services rendered.
c. Neteller PLC's 2005 annual report states that
LEFEBVRE served as director of Neteller PLC until on or about
December 15, 2005; during 2005, the Board of Directors of Neteller
PLC granted LEFEBVRE options to purchase additional shares of
Neteller PLC; and during 2005, Neteller PLC paid LEFEBVRE
compensation for serving as a director.
11. I have reviewed various business records of Neteller
PLC that demonstrate that JOHN DAVID LEFEBVRE, the defendant, had
knowledge that he was participating in criminal activity in the
United States. For example, in the Neteller IPO Prospectus, the
Board of Directors of Neteller PLC, including LEFEBVRE,
collectively states that criminal laws exist in the United States
that prohibit persons from promoting certain forms of gambling;
that criminal laws exist in the United States that prohibit the
transmission of funds that are known to have been derived from
criminal activity or are intended to promote criminal activity;
that to date most of the criminal prosecutions related to online
gambling in the United States have been limited to cases where
assets or relevant individuals are located in the United States;
that the Neteller Group does not maintain offices or assets in the
United States; and that there can be no assurance that the
government of the United States will not try to prosecute the
Neteller Group under existing or future federal laws.
WHEREFORE, deponent prays that a warrant be issued for
the arrest of the above-named individual and that he be arrested
and imprisoned or bailed as the case may be.
________________________________
MARYANN GOLDMAN
SPECIAL AGENT
FEDERAL BUREAU OF INVESTIGATION
Sworn to before me this
day of January 16, 2007
________________________________
UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF NEW YORK