NETeller Strikes Deal with USAO, Set to Return Funds

2007 July 18, Jonny Vincent

Online payment processor NETeller has agreed to a deal with the United States Attorney's Office for the Southern District of New York (USAO), which will allow the return of US players' funds, avoidance of criminal charges, and possible recommencement of trading in their ordinary shares on the Alternative Investment Market (AIM).

Details of the plan to release $60 million of US members' funds were published this morning on the company's website. US members have had their funds frozen since January, but will be able to begin claiming their money by the end of this month. US players with money frozen in their NETeller accounts will need to claim their funds by 26 January, 2008 – after that date, the funds will be forfeited to the US government.

At midnight (GMT) 26 January 2008, NETeller will lock all US players' accounts permanently and US members will no longer be able to sign in to the NETeller website.

NETeller requested a freeze in trading of its shares on the AIM in January after founders of the company were arrested on conspiracy charges. Trading in NETeller shares is still frozen, and the company was running out of time as, under AIM rules, they will be delisted this week if they do not request a recommencement in trading of their ordinary shares. NETeller executives will be relieved at being able to work out a deal with the USAO at this late hour, which should allow the company to announce that trading in its shares has recommenced.

NETeller announced it will pay the USAO $136 million in exchange for a deferment of prosecution on criminal conspiracy charges. After two years, the deferred charges will be dropped after NETeller proves it no longer caters to US residents.

Ron Martin, president and CEO of NETeller, had this to say about the settlement with the USAO:

"This agreement resolves the USAO's investigation relating to the company's former U.S. business activities. We believe that this settlement is in the best interests of NETeller and its shareholders. 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 U.S. customers and are hopeful that, by that time, we will have restored the Company's shares to trading on AIM. 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."

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In related news, NETeller also announced today it will discontinue online gambling transfers for Israeli residents in accordance with recent changes to legislation in Israel. NETeller will no longer perform any funds transfers to online gambling sites for Israeli residents after midnight (GMT) 31 July 2007. Israeli accounts will remain open however, should members wish to transfer funds to friends via peer-to-peer transfers, or transfer funds to and from non-gaming merchants.