Last month we began to chronicle the sad tale of NETeller, an international money transfer and payment processing company and that of one of its founders, Stephen Lawrence. We want to use the plight of NETeller and of Lawrence as an illustration of the not so nice side of the Transaction Processing Industry.

To recap, Lawrence recently pleaded guilty to racketeering, but then had the audacity to tell the courtroom, "I came to understand that providing payment services to online gambling Web sites serving customers in the United States was wrong."

It is at this point that we pick up this saga.

But while Lawrence's bold proclamation might have provided some unnecessary ammunition for the Department of Justice, the statement also rings of pure cowardice.

Does Lawrence really believe that what he was doing was wrong?

Let's be clear about something, NETeller did not take bets. They simply processed transactions between merchants in countries where the laws of those countries deemed what those merchants were doing was legal and bettors in the United States who to this day are still not acting illegally by placing bets online.

It is very possible that the only "wrong" party in this whole mess is the United States Department of Justice which appropriated themselves of $55 million from American consumers via NETeller's ACH system and then held that money hostage along with all other money in escrow at NETeller.

If NETeller is "wrong" for having provided payment services to U.S. citizens long before the Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted, then Visa was wrong, Paypal was wrong, Mastercard was wrong, etc. for offering any online services to American citizens. After all, prior to the passing of the UIGEA there was nothing remotely illegal about providing payment services online, gambling transactions included.

The statement by Lawrence was also a slap in the face of customers who did nothing more than use a service that he developed, offered and promoted.

Imagine going to Sears to purchase some furniture, paying in full for it, being nothing other than a loyal Sears customer over the years and then upon retiring from the company the former CEO of Sears makes a statement that he was wrong to have sold furniture to Americans and for supplying the products to outlets that sold to Americans. What a slap in the face!

Clearly not everyone can be like Jay Cohen (the co-founder of World Sports Exchange based in Antigua that returned to the U.S. to face charges of illegal bookmaking, and was eventually jailed) and actually be willing to fight for what they believe in and for a product and industry they worked hard to develop and promote, but at the very least Lawrence didn't have to kick the American bettors and the merchants that supported him on the way out.

Nevertheless, the question that now must be answered is what does this mean for Americans with money still tied up in this government prosecution?

NETeller released the following statement last month:

NETELLER is continuing to cooperate with the investigation being conducted by the USAO, under the advice of its legal advisers and in accordance with court orders in the Isle of Man. As announced on 4 June 2007, the Company is in discussions with the USAO for the purpose of resolving the investigation and has advised the USAO that it will use its best efforts to resolve the investigation. The Company does not currently believe that these developments will delay its efforts to resolve the investigation.

The Company's ordinary shares will continue to be suspended from trading. Further information will be announced as and when it becomes available.

Resolving this case sooner rather than later is clearly important to NETeller, because if the case is held up much longer than this summer, the company will not be able to resume trading on the AIM, essentially ensuring a financial death sentence. Consequently, the USAO and Navigant will almost certainly announce to the British authorities that things are resolved, which will allow the resumption of trading of NETeller stock even if the issue with American "hostages" isn't resolved by that time.

Americans must be getting more upset with each passing day and rightly so. Thus far neither NETeller nor the DOJ has really stuck to a firm deadline, thus making the statement in June by NETeller that it was getting close and will let Americans know something soon meaningless. And now the statement by Lawrence could actually indicate quite a few Americans may not see anything. After all, when queried on whether the NETeller money was gone for good, a former representative from the DOJ stated at that time, "We don't give drug money seized from dealers back to the junkies, so why would we give back this money to bettors if we deem those funds to be the proceeds of crime?"

And this, after all, was the proceeds of a crime for a wrongful action on behalf of NETeller. You don't believe that's true? Well Stephen Lawrence so much as told the judge just that in his plea agreement.

In this case, unfortunately, we may never really know who the bad people truly are!

We at TPAtlanta would love to hear from you and your thoughts on this case, on internet gambling, or on international transaction processing and what your company's posture is about these kinds of business activities.

Until we meet again, have a wonderful and safe Labor Day holiday weekend!

Calvin D. Johnson, Publisher
publisher@tpatlanta.com
Trans Atlantic Systems, Inc.