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Payback at What Cost? A Look at the Latest NETeller Situation...By Hartley Henderson

There finally seemed to be some good news in the NETeller situation, when the company issued a press release stating that it had worked out an agreement with the U.S. DOJ to have money released back to Americans. The press release stated that an announcement would be made within 75 days with details on the repayment plan, but it would first have to pass through forensic accountants. This statement has raised more questions than it has resolved. For example, why is there a delay of 75 days before the company can release any details, and why is a forensic auditor involved? Why is the Southern District New York Court, i.e. the same court that is prosecuting NETeller's founders the one that entered into the agreement? And finally, the press release stated it will announce a plan to distribute funds seized by U.S. prosecutors to its U.S. customers within the next 75 days. What about the money held in escrow?

Without a doubt the timing is ominous considering the statement was made only one week after the case against Lefevre and Lawrence was continued again in the same Southern District of New York court. Conspiracy theorists may actually believe that the U.S. DOJ has worked out some sort of agreement in the last week which will see a sweetheart deal for NETeller's founders and the company while sending American customers down the river. Clearly if an accountant is involved, it is only because the IRS wants to determine exactly who has been gambling, how much they have gambled and whether the gamblers have declared any gains on their tax returns. Perhaps the government realized there could be bigger fish in the sea than a couple of former NETeller managers. How many years exactly will the accountants go back?

A letter was sent to the head of the NETeller Customer Coalition for some comments, and while he was somewhat pleased with the announcement, he was also cautious. In a letter to the Coalition, the spokesperson wrote: "While I'm happy with the announcement, I don't want to back off until the money is back in our pockets." The spokesperson also stated that he believed the organization was mostly responsible for NETeller's announcement, since it was made only one day after the coalition sent out "An Open Letter to NETeller" which in turn convinced a NETeller representative to spend 40 minutes looking at their site. Clearly the threatened lawsuit didn't hurt either. Having said that, NETeller did state in February that it was trying to work out a deal with the DOJ to have the money returned to U.S. customers. Thus, the coalition's letter may have just convinced the company to make a statement a bit earlier than planned. When asked whether the group was concerned about the IRS getting involved, the spokesperson didn't seem too concerned. His reply: "In terms of IRS concerns etc., I think that will need to be worked out with everyone's accountants." The group clearly just wanted the money returned. The details of how that is going to happen are irrelevant to the group.

So the question has to be asked: If NETeller does indeed return the money to U.S. customers in the near future, at what cost will that be? In due time we will all know.

Regardless, will continue to seek answers until the money is back in customer's pockets.

Hartley Henderson

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