Neteller official pleads guilty in online gambling case

A Canadian man who helped create a company to process Internet gambling transactions pleaded guilty to a federal conspiracy charge Tuesday, about two weeks after another founder of Neteller PLC entered a guilty plea of his own.

John David Lefebvre, 55, a Neteller co-founder, entered the plea in U.S. District Court in Manhattan, where prosecutors are trying to stop companies that operate overseas from violating U.S. laws against Web-based gambling. Neteller PLC is based in the Isle of Man.

In a plea deal, he agreed to cooperate with prosecutors and testify if necessary. He also agreed to be partly responsible for the $100 million (€73 million) the government is seeking in restitution.

Although the conspiracy charge carried a potential prison term of up to five years, cooperation in the case was likely to greatly reduce any potential sentence.

The government has said that nearly all of the $5.1 billion (€3.7 billion) in transactions processed in the first half of 2006 involved online gambling — and most of the revenue was generated by U.S. customers.

Lefebvre said he agreed in 1999 to help create a set of companies that became Neteller.

Although the companies were originally created to enable the transfer of money online, the majority of the business eventually focused on Internet gambling transactions, he said. By March 1, 2004, the company had nearly 170 employees, 600,000 member accounts and 1,000 merchants registered.

He said he later "came to see that providing online services for gambling customers in the United States was wrong."

Neteller co-founder Stephen Lawrence previously pleaded guilty to criminal conspiracy, saying he learned as well that providing payment services to online gambling Web sites serving customers in the United States was wrong.

Both men were arrested in January after a probe of the company. Days after the arrests, the company, which was founded in 1999, stopped handling transactions for U.S. customers.

Lefebvre and Lawrence are no longer on the company's board of directors.