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Online payment processor Neteller has struck a deal with US authorities that will see the firm forfeit $136m (£66m) to avoid a prosecution related to its handling of online gambling proceeds.

The two founders of Neteller, Stephen Lawrence and John Lefebvre, were charged with conspiracy back in January as it was being used by US citizens to place bets through foreign-based internet gambling sites.

The company has reached a deferred prosecution agreement with the US Department of Justice, under the terms of which it admits 'the error of its ways' and has agreed to co-operate with authorities in return for a lighter penalty.

The Register calls this a 'supergrass agreement', as Neteller will tell US authorities all it knows about the industry. As it processed payments for 85% of online gambling firms, it may have a lot to tell.

Since it was sneaked through Congress last year, the US gambling ban has hit the industry hard, with many firms losing much of their value, while the US authorities have been keen to build cases against the management of these firms.

Some Democrats have attempted to revoke the ban, though without success so far. If a future US government chooses to legalise online gambling once more, it will be interesting to see whether these fines will be handed back.

Graham Charlton

Published 19 July, 2007 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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