NETeller forfeits $136 million to U.S.

Mt. Rushmore
U.S. lines its pockets with NETeller settlement money.

The end is near for NETeller's legal troubles in the United States. The e-wallet company announced today it has entered into a two-year Deferred Prosecution Agreement that should bring a resolution to the U.S. Attorney's investigation into the company.

Per the agreement, NETeller will forfeit $163 million to the United States, which includes the $60 million the U.S. Attorney's Office has already seized, and the company will not be convicted of any federal crime.

Instead, the U.S. Attorney's Office will file a criminal information relating to transaction between U.S. customers at NETeller and online gambling sites. Once the company fulfills its obligations from the agreement in the next two years, the criminal information will also be dismissed.

The key terms for the DPA are:

  • NETeller admits it had operated in the United States as an unlicensed money transmitting business and had participated in the performance of financial transactions for the purpose of promoting unlawful transactions between internet gambling merchants and persons located in the U.S.
  • The company agrees to pay $136 million, which includes the $60 million already seized by the government. NETeller must pay $40 million of the remaining balance on or before Oct. 15, and the final $36 million must be paid on or before Jan. 17, 2008.
  • NETeller agrees to cooperate fully with U.S. authorities in all matters relating to the ongoing investigation by the U.S. Attorney's Office.
  • The company agrees to implement procedures and controls to prevent illegal transaction between internet gambling merchants and U.S. residents, and it will continue to retain Navigant Consulting Inc. to monitor its compliance with these procedures and controls.

"This agreement resolves the USAO's investigation relating to the company's former U.S. business activities," said Ron Martin, NETeller president and CEO. "We believe that this settlement is in the best interests of NETeller and its shareholders."

The shareholders will be happy to learn that NETeller plans to soon publish its audited annual accounts for 2006 and have its shares restored to trading on AIM as soon as possible after that.

"As stated in the company's announcement of 13 July, the company continues to make progress regarding the ongoing suspension of the company's shares from trading on AIM," says a press release from NETeller.

"The company is in discussions with its advisers and AIM and understands that the admission of the company's ordinary shares to trading on AIM has not to date been cancelled."

The news U.S. customers are waiting for, however, is when they'll be able to get their money that was frozen in their accounts.

"Our customers, employees and shareholders have all patiently waited for this resolution. We anticipate within the next few weeks that we will have fully implemented the plan for the return of funds to our US customers and are hopeful that, by that time, we will have restored the Company's shares to trading on AIM," Martin said.

The company's goal is to begin the process no later than July 30.

"We can now begin to refocus our efforts on building and strengthening the NETELLER business in the growing markets of the European and Asia Pacific regions. I look forward to sharing further information about the Company's progress over the coming months."

NETeller will communicate to U.S. customers via e-mail and through its Web site the exact date upon which customers can begin making withdrawel requests and the process to go through for it.

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