Sunday, May 20, 2007

FirePay, Citadel Commerce Targeted in Ongoing NY Investigations

It turns out that NETeller wasn't the only gambling-friendly online payment processor targeted by the New York State federal prosecutors continuing their investigation into the Lefebvre/Lawrence case and online gambling in general.

Both Optimal Group (the parent company of FirePay) and Citadel Commerce parent ESI have announced the seizure of millions of dollars held mostly in merchant reserves. The total of the CSI/Citadel funds now held under U.S. warrant is about $9.25 million, while the Optimal/FirePay seizures add up to a little over $19 million. Both companies are in ongoing 'discussions' with U.S. authorities regarding the seizures, though there's little doubt that the U.S. is pressing its narrow edge as its case against the NETeller founders winds toward another hearing near the end of the month.

Citadel was one of the companies that exited the U.S. in the wake of the arrests of the NETeller founders, while FirePay was the first major online-processor to depart the business, doing so immediately after the UIGEA's passage.

Several related topics are coming to a head in the next few weeks. We're also nearing the end of the initial 270-day window for the issuance of financial-transaction guidelines as dictated by last fall's UIGEA, though there's been no indication that major banking systems are in any hurry to comply. Recent federal indictments issued by a Utah-based prosecutor also highlight the current administration's intent to crack down on online sports wagering in particular, no matter what the laws themselves have to say on the matter.

It'll be an interesting summer.

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