Last week, I analyzed the arrests of Canadians Stephen Lawrence, 46, and John Lefebvre, 55, former executives of NETELLER, who helped take the company public in 2004. To the extent that the charges filed against them relate to online poker transfers, I think they are on solid ground. However, I want to suggest two caveats.
For many years, I have been preaching to my friends in the industry about a law, little known to the poker community, which makes it illegal to "help" an offshore site by performing certain actions within the United States.
Breaking Federal Law
Federal Code section 18 U.S.CS §1955 (2003) prohibits the operation of an illegal gambling business where such gambling is a violation of law in the state where it is operating. The code section essentially says that anyone involved in the gambling
business shall be imprisoned in state prison for no more than five years and have
all their assets confiscated if the state proves:
1. The gambling violates a state law.
2. There are five or more people involved running the whole operation.
3. The company is in continuous operation for a period in excess of 30 days or has a gross revenue of $ 2,000 in any single day.
If a gambling operation is not licensed by a state, that gambling business is illegal and therefore this statute applies. What §1955 means is that the gambling business, the servers, the workers, the telephone operators, the coffee makers, and certainly the decision makers
cannot operate within the borders of the United States.
The offshore sites are not housed in the U.S.; therefore, they are not regulated by U.S. laws. However, this particular law widens the scope of illegality by including helpers. I am not speaking of the gambler, but rather, individuals who assist the offshore sites by engaging in certain behaviors within the borders of the U.S.
Too Much Help May Be Illegal
The U.S. Supreme Court held that in order to convict under 18 U.S.CS §1955, the jury must find that gambling business involved five or more persons who "conduct, finance, manage, supervise, direct, or own all or part of such business"; the word "conduct" includes all who participate in the operation of the gambling business, regardless of how minor their jobs or how they are labeled, excepting the person who simply places the bet.
To "conduct" business within the meaning of 18 U.S.CS §1955 means to perform any act, function, or duty necessary to or helpful in ordinary operation of business. In other words, if an offshore company had an office here with pencils, staplers, computers, and the like, for the purpose of furthering the business, this would violate the section.
I raise this issue because I do not know precisely what behavior the founders of NETELLER engaged in. I don't know if they conducted business within the boundaries of the U.S., which
would create legal liability within the U.S. for someone directly assisting an offshore site and
may create liability for NETELLER workers who
indirectly assist the sites and are considered one step removed because they merely provide the funding.
Ex Post Facto
Another basic concept to understand is the ex post facto law. This rule of law, basic to the constitution, says that the government cannot pass a law and then hold one responsible for an act that occurred before the law was passed. The reason behind this is that a society is built upon known rules and regulations and there would be havoc if we were bound by laws not yet on the books. The 14th Amendment to the U.S. constitution protects all of us by holding that no person shall be deprived of life, liberty, or property, without due process of law. Due process of law is another way of saying we will be treated fairly; and it is unfair to charge a citizen with a crime that was legal when committed.
So, to clear up a common misunderstanding, the former NETELLER executives
cannot be charged under the new law that was recently passed because the UIGEA was not in effect when they were executives in 2005. If the news reports are correct that Lawrence resigned in May of 2006 and Lefebvre resigned in December of 2005, they cannot possibly be charged with violating the UIGEA which wasn't signed by the president until 10 a.m. EST on Friday, October 13. 2006.
Assisting Sports Betting
The second caveat I want to address is the activity of sports betting. The now famous 1961 Wire Act does emphatically apply to sports betting. Therefore, to the extent that Lawrence and Lefebvre funded sports betting sites, this behavior
may be found to violate the Wire Act. I say it
may violate the Wire Act, because funding an American's offshore account by an offshore publicly traded company is not a violation all by itself; however, the specific circumstances and what precisely occurred within the U.S. may cause the behavior to come under the Wire Act.
These are uncharted waters. Some of the laws with which we have become familiar will finally have to be given a judicial interpretation.
When Will I Get My NETELLER Money?
That's the legal side of things. What about the practical side of things? I have received a ton of mail asking about NETELLER.
NETELLER is the largest independent online money transfer business in the world. It is publicly traded and operates in over 160 countries, moving billions of dollars each year. The company is not going belly up and it is not going to cheat people out of their money, as some of my readers have suggested.
However, for some it will be a great inconvenience, because NETELLER is saying it will take about six to eight weeks to get money back. Don't shoot the messenger.
What E-wallet Is Available?
To get money into a site, epassporte.com has become very popular because it is instantaneous and players can fund this e-wallet with either their bank accounts or the use of their credit cards.
New companies are springing up as I write this article. Today I read that a London-based technology company, Seed Capital Ltd., introduced a new payment processing service, YouTeller.com.
"We will start in March with a revolution in simplicity of worldwide online payments. Everybody who can download songs or play online games will now be able to pay for that instantly," said Johannes Knierzinger, CEO and cofounder.
On Monday, the British Financial Services Authority (FSA) granted YouTeller the right to operate as an e-wallet. "The FSA has already given us the green light. We will begin services after the server-security testing period is completed," said Florian Schweitzer, company spokesman and cofounder, who added: "We have no overseas branch in a NAFTA-country like NETELLER or Citadel, so we are not affected by U.S. legislation."
There is no way a $6 billion-a-year industry is just going to shut its doors. There is money to be made in the area of e-wallets and the new companies will learn from the mistakes made by their predecessors.
Another company, www.nucharge.net, offers a payment option at Bodog. Although I have no personal experience or knowledge about nucharge, many players report that it is easy to use and instantaneous.
New e-wallet companies will come into existence even though the government is making it more and more difficult. The government is engaging in bullying tactics by arresting people, putting out scary press releases, and serving subpoenas in order to go on a fishing expedition. This serves to shock people into compliance with the DOJ's agenda.
Outrage
However, I have to tell you that what really galls me is that we of the poker community have not stepped up to the plate
outraged that our freedoms are slowly being taken away. I am proud to be on the board of the Poker Players Alliance, because I believe that when individuals band together to have one voice, that voice is stronger and more resonant. The reason there is a horseracing carve-out is one simple thing: Horseracing cohorts came together and formed one loud and powerful voice that the government could not ignore. There are two things I suggest to everyone concerned:
1. There is just no excuse for not joining the PPA. It's only $20 and if you play poker you cannot afford not to join. Click
here to join.
2. As the saying goes, the squeaky wheel gets the grease. Write your Congressman and write often! Tell them how outraged and indignant you feel about what happened last year.
