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Neteller reaches supergrass agreement with DOJ

US customers to get money back no later than 30 July

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Neteller has reached an agreement with American authorities concerning its financial transactions with American internet gambling customers.

The agreement, coming barely a week after two of its former founders reached plea agreements with the Department of Justice (DoJ), requires a forfeiture of $136m to the American government, a sum that includes approximately $60m in American customer assets frozen by the DOJ earlier in the year. Those disputed funds will be returned no later than 30 July.

The resolution of the Neteller case is good for Neteller's American customers, and good for the company itself, but very bad for virtually everyone else in the online gambling industry.

Neteller and the DOJ reached what is known as a deferred prosecution agreement (DPA), in which Neteller admits wrongdoing and agrees to cooperate with authorities in exchange for a conditional sentence. The DOJ files criminal information - basically an indictment without the grand jury hearing - in the Southern District of New York, and at the end of two years, if the DOJ considers Neteller's cooperation to have been sufficient, the charges are withdrawn.

The agreement also paves the way for Neteller shares to be relisted on the Alternative Investment Market (AIM) in London, and requires that financial auditing firm Navigant monitor its compliance with the terms of the agreement.

The end result of this is that Neteller will tell the DOJ everything it knows about the internet gambling industry regarding payment processing or whatnot. Since Neteller provided processing services for about 85 per cent of all online gambling sites, the DOJ stands to receive a treasure trove of inside information about the industry it loves to hate.

Ron Martin, president and CEO, claimed: "This agreement resolves the USAO's investigation relating to the company's former US 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 US 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. I look forward to sharing further information about the company's progress over the coming months."

That's not all they'll be sharing, to be sure. ®

Burke Hansen, attorney at large, heads a San Francisco law office

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