After appearing in a California court Tuesday, John Lefebvre, one of the founders of NETeller, was granted bail of $5 million. The other founder, Stephen Lawrence, made his first court appearance today in the U.S. Virgin Islands and is expected to have his bail also set at $5 million in a hearing Thursday.
The NETeller founders and former directors were both arrested on Monday. They are being charged with conspiring to transfer funds with the intent to promote illegal gambling.
Lefebvre and Lawrence were arrested on warrants issued by the U.S. Attorney's office in New York and could face a maximum 20-year prison sentence if convicted. They are scheduled to appear in the New York District Court Jan. 26.
The men, who NETeller has said no longer have active roles in the company other than as shareholders, founded NETeller in 1999 in the Isle of Man. The company acts as a secure, online money transfer firm.
In 2000, NETeller began processing Internet gambling transactions, and in 2004 it became a publicly traded company in the United Kingdom.
According to a Forbes report, the prosecutors in the case cited NETeller's annual report from 2005 which showed that the company provided payment services to more than 80% of worldwide online gaming merchants.
It is their assertion that Lefebvre and Lawrence enabled the company to provide this service, which in 2005 alone processed more than $7.3 billion in transactions of which 95% came from Internet gambling money transfers.
On Tuesday, NETeller asked that trading of its shares be suspended immediately until the arrests and legal situation was clarified. Shares in the company had already taken a 60% hit since the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in the United States.
After the UIGEA was passed, industry experts noted that U.S. customers would still be able to use companies such as NETeller to pay for their online gambling. NETeller itself said it would continue to process business from U.S. customers until the UIGEA was clarified.
As the the largest independent online money transfer business in the world, NETeller is one of the most popular payment options used by Internet gamblers and poker players.
In the company's frequently asked questions section regarding the UIGEA, NETeller had this to say in regards to withdrawals and deposits:
"The anti-gaming legislation will not affect your ability to access and use your NETeller account. Once the U.S. Anti-Gaming legislation situation is clarified, it is possible that some forms of transaction to certain Web sites and merchants may not be permitted, but all other NETeller services would remain available to all members.
"Your NETeller account will remain accessible and available to you regardless of this U.S. legislation."