NETeller signs deal with prosecutors to return U.S. funds

[vinism]

NETeller has signed a deal with the U.S. Attorney's Office and an independent accounting firm that will allow it present a plan within 75 days that outlines how U.S. customers will receive their funds, which have been frozen since just after the arrests of their co-founders in January.

Press Release

NETELLER Takes Positive Step Towards Returning US Customers’ Funds


Wednesday, 21 March 2007 – The NETELLER Plc Group (LSE: NLR), the leading global independent online money transfer business, today announced that it has signed agreements with each of the United States Attorney’s Office for the Southern District of New York (“USAO”) and Navigant Consulting, Inc. (“Navigant”).
On 8 February 2007, the Group announced that it was in discussions with the USAO to manage an orderly return of funds to US customers and that it was contemplated that a forensic accounting firm would be engaged, at the Group's expense, to assist in this process and to examine the Group's financial position.
The Group is pleased to announce that on 20 March 2007, it signed agreements with the USAO and Navigant which, among other things, outline terms and a timeline under which NETELLER will work toward the orderly distribution of funds to its US customers. Per the agreements, the Group anticipates that within the next 75 days it will announce a plan by which the funds will be distributed to US customers. Navigant will also provide a report to the USAO on the Group’s current financial condition.
“We continue to be committed to returning funds to our US customers and working with the US Attorney’s Office,” said Ron Martin, Group President and CEO. “Progress, while not always visible to the outside observer, has been steady and these agreements mark a milestone in the process.”
NETELLER is continuing to cooperate with the USAO’s investigation, under the advice of its legal advisers and in accordance with court orders in the Isle of Man.
Further updates with relation to the US situation will be made as soon as there are any material developments. In the meantime, US customers should visit updates.neteller.com for more information, including newly updated FAQs that provide additional clarity, where the Group is able, around certain issues currently being raised in a number of public forums. Additionally US Customers can contact NETELLER Customer Service on the web or by phone at 1-888-258-5859.

About the NETELLER Group

Trusted by millions of consumers in over 160 countries to move and manage billions of dollars each year, the NETELLER Group operates the largest independent online money transfer business in the world. The Group specializes in providing innovative and instant payment services where money transfer is difficult or risky due to identity, trust, currency exchange, or distance. Being independent has allowed the Group to support thousands of retailers and merchants in many geographies and across multiple industries.
The Group is quoted on the London Stock Exchange’s AIM market, with a ticker symbol of NLR. NETELLER (UK) Limited is authorised by the Financial Services Authority (FSA) to operate as a regulated e-money issuer. For more information about the Group visit www.netellergroup.com.
Media and Investor Contacts

Citigate Dewe Rogerson
Sarah Gestetner or George Cazenove
Tel: +44 (0) 207 638 9571

[GPWA Aaron]

Here's the story I've posted on our site ... Ryan will be making an update later on, hopefully with comment from the USAO.

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NETELLER signed an agreement with the United States Attorney’s Office for the Southern District of New York yesterday which outlines the terms and timeline for which it will return funds to U.S. customers.

The independent online money transfer business had no more than $55 million in U.S. accounts seized by the U.S. Attorney’s Office in the days following the arrest of the company’s co-founders Stephen Lawrence and John LeFebvre.

Within the next 75 days, NETELLER says it will announce a plan to distribute funds to U.S. customers.

“We continue to be committed to returning funds to our U.S. customers and working with the U.S. Attorney’s Office,” said NETELLER President and CEO Ron Martin in a release. “Progress, while not always visible to the outside observer, has been steady and these agreements mark a milestone in the process.”

NETELLER also signed an agreement with Navigant Consulting Inc., to provide financial consulting and oversee the process of returning funds to U.S. customers.

NETELLER has yet to announce its 2006 financial results, and company shares continue to be suspended on the London Stock Exchange.

[big fish]

hey... i will take it. the money is not paid back yet, but i am happy to hear that an agreement has been made and they will be announcing plans for payment in the next 75 days. i think we are finally turning around for the better now. lets keep this train steaming forward...

[Dominique]

I think they will announce after 75 days what their payment plan is.

They will pay "in an orderly fashion" - most likely one has to fill out forms....

[matted]

Probably need to provide proof of identity... Or require something like a social security number which I would not give out to any website. I doubt they are going to make it easy to get the money.

[The Buzz]

The Register has (as always) an interesting take on the situation with their news story/editorial ... http://www.theregister.co.uk/2007/03..._funds_return/

[Amateur]

Probably need to provide proof of identity... Or require something like a social security number which I would not give out to any website. I doubt they are going to make it easy to get the money.

Since they already have any and all id required to validate the account in the first place, seems like they'd just send an email notifying you they are ssending the money via check or whatever to the info in the account. If you have moved, then go into the account and change to your new address. The name is already with the account, and can't be changed anyway.

[MichaelCorfman]

Since they already have any and all id required to validate the account in the first place, seems like they'd just send an email notifying you they are ssending the money via check or whatever to the info in the account. If you have moved, then go into the account and change to your new address. The name is already with the account, and can't be changed anyway.

I'd bet they will be after more than just id information. If you play at a casino in the United States, and have a big win, there are reporting requirements and possible tax witholding. I'd expect some likelihood of witholding on monies that are gambling winnings unless evidence is presented otherwise. In other words, I think the US DOJ will make sure, at a minimum, that federal reporting and witholding requirements are enforced as part of the process.

Michael

[Amateur]

I'd bet they will be after more than just id information. If you play at a casino in the United States, and have a big win, there are reporting requirements and possible tax witholding. I'd expect some likelihood of witholding on monies that are gambling winnings unless evidence is presented otherwise. In other words, I think the US DOJ will make sure, at a minimum, that federal reporting and witholding requirements are enforced as part of the process.

Michael

Well, see that's the issue here, isn't it? How can they enforce laws against entities outside their jurisdiction? And the reason for a forensic accounting firm. To determine the source of the money in the accounts. From a bank account, or an internet payment.

But, if the internet payment is for "services rendered" and I've been declaring income and paying taxes on that income, and still get held hostage, it really, really burns. These guys are on a witch hunt, basically.

In the end, they still won't find any terrorists, or file any charges, but they will have made some enemies, some of which won't forget. You never know who you're dealing with, and it can come back to haunt you.

[matted]

I'd bet they will be after more than just id information. If you play at a casino in the United States, and have a big win, there are reporting requirements and possible tax witholding. I'd expect some likelihood of witholding on monies that are gambling winnings unless evidence is presented otherwise. In other words, I think the US DOJ will make sure, at a minimum, that federal reporting and witholding requirements are enforced as part of the process.

Michael

Problem with this is they got in too late. What if the player trying to collect money from neteller is simply licking his wounds from big losses? I suppose they can say the losses were in a different calendar year? The IRS/DOJ have no clue if players are up or down (and US tax return forms do not allow you to report gambling losses, only winnings)

I am generally not a pessimist, but when it comes to the US justice department it goes from bad to worse. I am still in shock from the ongoing fight over the US attorney firings.

[Amateur]

Problem with this is they got in too late. What if the player trying to collect money from neteller is simply licking his wounds from big losses? I suppose they can say the losses were in a different calendar year? The IRS/DOJ have no clue if players are up or down (and US tax return forms do not allow you to report gambling losses, only winnings)

I am generally not a pessimist, but when it comes to the US justice department it goes from bad to worse. I am still in shock from the ongoing fight over the US attorney firings.

Matt,

Actually, you can claim losses you can prove up to the amount of the winnings you report. I'd have to look up the schedule for it.

[bb1web]

I am still in shock from the ongoing fight over the US attorney firings.

ya that's scary. Even if the repubs lose the prez election in 2008 ..... they've now assured they will have key figures in prominent positions to help their agenda (notice I did not say cause).

[Amateur]

Matt,

Actually, you can claim losses you can prove up to the amount of the winnings you report. I'd have to look up the schedule for it.

From:
http://www.irs.gov/taxtopics/tc419.html

...
You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.

Hope this helps explain, Matt

[matted]

Right... So if I understand correctly, you can never deduct an overall deficit for the year. the IRS can assess taxes on winnings one year, but you cannot deduct those losses the next year.

[matted]

Neteller has updated their US Member Update. Says is was updated March 26, but I just looked for it now. No real new information, but gives some hope that this is actually going to happen:

http://content.neteller.com/content/...supdate_us.htm

Of importance:

When will US customers get their money back?
The recent agreements between NETELLER, Navigant Consulting, and the US Attorney’s Office (USAO) represent an important step in the process of an orderly distribution of funds to US customers. These agreements outline the terms and a timeline under which NETELLER will work toward distributing the funds. As a result, the Group anticipates that within the next 75 days it will be able to announce the plan by which the funds will be distributed to US customers.

What is preventing NETELLER from distributing funds back to US customers when other companies seem able to?
The situation for NETELLER is more complex than for those other companies who still continue to service the gaming market in the US. In mid-January the US authorities made formal complaints against two founders and former employees of NETELLER. These included the complaint that they had set up NETELLER to process gambling transactions for US residents, which the US authorities indicated that they considered to be illegal. NETELLER announced its intent to withdraw from the US market. At that time banks in the US started interrupting and declining transactions from NETELLER. Also the US authorities seized funds as they were being transferred through the US automated clearing house (ACH) system back to customers as the Group was exiting its US business. The Group is now working with the US authorities to make an orderly return of funds to its US customers.

Who is Navigant and what will they be doing?
In negotiation with the USAO, NETELLER has agreed to engage independent firm Navigant Consulting Inc., to provide financial consulting and forensic accounting services to the Group, including oversight of the process of returning funds to US customers.

How will funds be distributed to US customers?
The actual mechanism for how funds will be distributed to US customers will be determined during the next phase of the process. The USAO and Navigant must approve the distribution plan and we expect to be in a position to announce the distribution plan within the next 75 days.

75 days seems a long time to devise a plan for returning US customers funds, and are there any milestones on the way?
The Group is working as hard as it can to return funds to US customers. NETELLER and the USAO intend to ensure an orderly return of funds and such a process takes time to establish and execute. However it is a complex issue, with potentially millions of transactions that need to be accounted for and processed. The Group and the USAO have engaged the services of a forensic accounting firm Navigant Consulting Inc, to assist with this process. The Group is continuing to work toward the return of funds in the quickest manner.

[allsports]

I'm so p---ed off at Neteller and or DOJ for actually stealing my money and not giving me access against my will... They all should go to jail.... What would happen if the DOJ didn't have access to their funds???? Heads would roll and the problem would be fixed in a second....

[Ziggy]

...forensic accounting services...

Too see the above terminology is not a healthy, good sign. Forensic=criminal. I bet Neteller couldn't open the books fast enough. So much for privacy anywhere in the world.

And, its not about "getting the money." Its about "forensic accounting services" that lead to its final destination.

[ntaus]

You're right Ziggy. I see that we'll all be under scrutiny now that we're being identified.

This is not about the money NT is holding as you say. It's about accessing records of everyone who has/had an account with them - I wonder how far back they'll go...

ntaus

[Ziggy]

Since they are looking for publicity, I would assume if they go after anyone at all, it will be those "with the most bang for the buck."

The more "shock" monetary value, the DoJ will orgasim over it.

[pgaming]

Just maybe Neteller is the quilty party here? The situation Neteller finds themselves is a situation of their own making. I am beginning to think Neteller has broken many laws. Perhaps the U.S DOJ started investigating them a few years ago.

just a thought

greek39