Bill Reynolds - Life Real Loud - John Lefebvre, Neteller and the Revolution in Online Gambling

Treanor argues that Lawrence has an extensive travel history, something that snagged Lefebvre in L.A. as well. He paints Lawrence as an expert at moving large sums of money out of the U.S. undetected. Neiman counters that the government has already agreed to a bail package in the Virgin Islands, and his client, although he could have fled, showed up voluntarily today. Further, the claim that Lawrence moved money undetected is false. Neteller’s activities were never hidden. The company traded on the London Stock Exchange’s junior market AIM and was regulated by a financial services agency. Its books were audited by KPMG. It had major investors, including Goldman Sachs and HSBC. Its website openly declared that the company was in the business of money transfer services. Neiman also reminded the court that Neteller “cooperates historically with government investigations in the United States.”

And anyway, Neiman argues, it is not the business of the pretrial services officer to do the work of the government in determining a defendant’s assets. Since this is a money laundering case, it would be a mistake for any client to disclose this information when there is a forfeiture case against him. “By the way,” Neiman reminds the judge, “the money laundering they claim exists is essentially … providing money transfer services to merchants over the internet, and the claim of the government is that providing those kinds of transfer services to internet gaming operations that are licensed and lawful in the places where they exist is nonetheless a violation of U.S. law. That’s an untested hypothesis of the government. We think there are strong arguments against it.”

Then Neiman jabs at the flight-risk argument. He argues that Lawrence has arrived in New York as expected and on time, that he’s already posted four-fifths of his $5 million bail, in cash, even though he was required to pay only half by this juncture. Next, he admits that, yes, Lawrence is Canadian, but he has substantial ties to the U.S. When he was younger he worked in New York for a period of time. He currently owns one condo in New York and is in the process of buying a second. His wife, Perle, and toddler-age daughter, Audrey, are here now. He comes to New York regularly for both business and pleasure.

Neiman presents a picture of Lawrence as a straight shooter: “if you think about what the business was as described in the complaint, it was a business of handling other people’s money in a trustworthy fashion and people relied on that business to do that in an honest fashion and there’s been no allegation by the government that it was ever done in anything but a fully honest fashion.” He says Lawrence is a good man who wants to stick around and clear his name.

Lawrence is confined to the Southern and Eastern Districts of New York for the time being. His passport already surrendered, he is not allowed to go back to his home in the Bahamas or anywhere else outside the continental U.S. They argue back and forth over whether he should even be allowed, with sufficient notice, to move within the U.S. Treanor wants Lawrence to establish a track record before the government lets him move around. He says there is “hardly a white-collar case imaginable that would have more of a risk of flight than this case because this individual has the means.… We do not believe that Mr. Lawrence needs to be locked up in a prison pending the outcome of his case but we do want substantial assurances that he will remain here until the conclusion of the case against him.”

Judge Eaton doesn’t buy the argument. Lawrence has bounced in and out of New York about a dozen times and been in the U.S. about one hundred days in the past year. It sounds like he has ties to New York, and he has never tried to conceal the fact that he was crossing into the U.S. He’s always taken some form of commercial flight, not his own personal jet, when traveling here. “I am basically going to go along with the recommendation of pretrial services,” says Eaton. “I don’t think the drug testing is needed on the present record. For the time being we will call it a strict pretrial supervision.”

Lawrence gets to live in New York. He gets to travel within the U.S. so long as he tells the pretrial services officer exactly where he is going and where he’ll be staying each night. The judge even allows for the possibility of Lawrence’s business meetings superseding his weekly pretrial services meetings. He says the officer “should be flexible about that and allow you to report in person the next time you’re back in New York City.”

Treanor is losing his case, but he gives it another go. He asks Eaton to insist there be U.S. citizen co-signers on the bail money so that if Lawrence says goodbye to the money he’ll put others on the hook. He says, “There’s not a lot of moral suasion. I would ask that some who are citizens and present in the United States be required, at least for a significant portion of the bond.”

The judge tells Treanor that Lawrence has already coughed up four million bucks and has ties to the U.S. but no relatives, which might make it hard to find a U.S. citizen to agree to be on the hook for the other million or whatever the amount ends up being. He adds that while the government’s theory might be “novel,” he would leave it to the next judge to decide whether he in fact has left a loophole for Lawrence “to be playing games with the pretrial services” and to flee.

Treanor takes issue with this characterization of the government’s position, which leads to a discussion of the other defendant, Lefebvre. Treanor argues,

The government’s legal theory here is not in any way novel. The Court of Appeals has ruled that offshore internet gambling is an offense.… It’s plain on the face of the statute, not novel.… Your Honor, we conducted this investigation in a way that Mr. Lawrence would not have known the steps that we were taking and, in fact, we simultaneously arrested Mr. Lawrence in the Virgin Islands and his partner in Malibu, California.… Mr. Lawrence was arrested first and within five minutes Mr. [John] Lefebvre’s phone was ringing with the name of one of their other co-conspirators essentially, we believe, alerting him to flee the jurisdiction.

Judge Eaton has no idea who this Lefebvre doppelgänger from Malibu is. He finds out both men had the same bail conditions imposed upon them. Treanor explains, “He was released on similar conditions to report here in the Southern District” and that as far as he knows, Lefebvre is now in the marshals’ custody and is expected to arrive on Monday. He adds, “We believe they did not think that they were under investigation, and we believe that if they had known that they were they would have fled the jurisdiction immediately.”

Treanor continues,

That’s why Mr. Lawrence positioned himself in the Bahamas and not in Canada, where gambling is illegal, or the United States, where unlicensed gambling is illegal. There is another defendant in this industry … arrested by the Eastern District of Missouri. He’s a British citizen. He’s been placed on house arrest with electronic monitoring, required to establish a residence there under conditions. A man of less means than Mr. Lawrence or Mr. Lefebvre and placed under greater restrictions than the restrictions that Your Honor has ordered here today.

We would ask at a minimum that the restrictions of Mr. David Carruthers in the Eastern District of Missouri be placed upon Mr. Lawrence. In all honesty, Your Honor, we are not arguing that this individual be detained pending the outcome of this case. We are amenable to bail. We just don’t have a comfort level and knowing what we know from the investigation of this case and the fact that it played off of the strength of law enforcement’s inability to do certain things overseas that that is a tremendous risk of flight and we fear that we’re going to be left without the ability to prosecute this case on some level.