Will US Online Poker Players be Repaid Neteller Funds Seized by US?

Extremely risk-averse US online poker players likely moved any remaining money out of Neteller after the October 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA), or particularly when reports of Neteller's inability to refund customers began to surface in January.

But hopefully with all the publicity, not too many of you were caught with sizeable funds still in Neteller earlier this week when USA Today reported FBI Agent Neil Donovan saying funds from Neteller were seized and are being held in court as potential evidence in the case against Neteller's two founders, Stephen Lawrence and John Lefebvre.

Yesterday, Neteller confirmed all this in their press release stating that "it believes that the amount of funds seized by the USAO or otherwise restricted by third parties does not exceed US$ 55 million," USAO being the United States Attorney's Office for the Southern District of New York which is handling the case against Neteller's two founders.

Also in their statement yesterday, Neteller confirmed that their legal advisors met with USAO representatives on January 19, just as US-based banks began declining NETeller-generated transactions. NETeller itself learned of the court-ordered $55 million seizure sometime after that January 19 meeting.

So- how can the US seize funds of US Poker Players from the British Company Neteller?

And will Poker Players get any of this money back?

First, at least Neteller is not going to run off with poker players' funds, since Neteller has had plenty of chance to do so already and hasn't, and they claim that deposited funds are still segregated from operating funds and that there is plenty of operating capital to keep the business going. Plus, trading of their stock remains suspended. All this indicates that Neteller intends not to disappear, but to stick it out and stick around.

A company that is planning to continue in business suspends their stock trading while regrouping, so they can assess the situation, do damage control, formulate a new plan, then announce the new plan and then reopen trading on their stock.

Regarding how the US government can seize money from a British Company- the US has a policy that any money or property acquired during an illegal act is subject to seizure. The US government claims to have the right to sell such property and keep the proceeds (you may even have received the pitch about how to make money from seized vehicles and boats being auctioned off).

That is why USA Today quoted Michael Tew, principal of gaming consultant CapitalHQ saying, "The truth is that the money is in limbo and the companies are not required to refund any money until a successful prosecution or settlement takes place."

Since Neteller does business with non-gambling companies, the government first has to sort through which funds are relevant to their case. So if you are waiting to receive a payment for writing a poker article, you may receive your money before anyone waiting to receive winnings from an online poker site.

But no one has said exactly how long any of this will take, except to say do not count on getting anything back for a long time.

Neteller mentioned to assist orderly return of funds to US customers that they are cooperating with the USAO, and will produce documentation likely showing transactions between gambling sites and U.S. residents. They also mentioned that "it is contemplated that the USAO will engage a forensic accounting firm, at the Group's expense, to assist in this process and to examine the Group's financial position. 'The return of funds to our US customers is a top priority for NETELLER,' said Ron Martin, Group President and CEO."

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