Wednesday, January 17, 2007

eBay Has Federal Marshals?

While kidnapping victim David Carruthers continues to wait for the kangaroo court to try him, word comes now that the founders of Neteller have been abducted.

Canadians Stephen Lawrence, 46, and John Lefebvre, 55, were arrested on Monday--Lawrence in the U.S. Virgin Islands and Lefebvre in Malibu, Calif.--U.S. Attorney Michael Garcia said.

They were charged on Monday in Manhattan federal court with conspiring to transfer funds with the intent to promote illegal gambling, according to two complaints made public on Tuesday.
Neteller PLC is located on the Isle of Man and is traded on the London junior stock exchange. Lawrence and Lefebvre took the company public in 2002. Lefebvre left the company in 2005. Lawrence left his post as a non-executive board member on October 13, 2006, the day President Bush signed the Unlawful Internet Gambling Enforcement Act and a day after Neteller issued a statement that the company would not immediately cease processing payments from US customers, but would monitor how the regulations were structured and enforced for 270 days.

I guess they have their answer.

So, just like Carruthers, foreign citizens from a publicly-traded, foreign company engaged in business that is perfectly legal in those countries have been abducted by US "authorities". Unlike Carruthers, however, this time the executives have not had anything to do with the company (other than owning its stock) since the US law in question has been enacted. It's stickier than that, but essentially Lawrence and Lefebvre are in jail for founding a company that goes where Ebay fears to tread.

eBay? Yes, eBay.

In 2002, PayPal, the #1 online payment processor, owned by eBay, swore off processing gambling payments, citing legal risks. A year later, it "paid $10 million to settle Justice Department allegations that it violated provisions of the Patriot Act barring the transmission of funds known to have been derived from a crime" (the "crime" in this case being online sports betting). The bulk of those transactions went to online rival Neteller.

As congress debated the
Unlawful Internet Gambling Enforcement Act in 2006, eBay lobbied heavily for it. You can't gamble on eBay, and PayPal hadn't taken a gambling transaction in four years. However, PayPal's brush with the DOJ taught them an important lesson; they, too, could use the brickbats of state to crush their competition.

This is just more proof that the
Unlawful Internet Gambling Enforcement Act is not about gambling, protecting families, or even tax revenues. It is about paying government officials to enact anti-competitive laws. It is about protecting state lotteries, horse racing, bricks-and-mortar casinos, and PayPal.

The link is unmistakable, and clearly on the minds of DOJ officials. The press release issued yesterday by the DOJ contained these two lobbed-on sentences:
Additionally, in July 2003, one of Neteller’s competitors, PayPal, and its parent eBay, entered into a civil settlement agreement with the United States Attorney’s Office for the Eastern District of Missouri to settle allegations it aided in illegal offshore and on-line gambling activities. As part of the agreement, PayPal agreed to forfeit $10 million, representing proceeds derived by PayPal from the processing of illegal gambling transactions.
The presser also mentions charges against BetOnSports founder Gary Kaplan, but strangely fails to mention Carruthers, who lobbied against eBay during the debates on the
Unlawful Internet Gambling Enforcement Act.

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