Thoughts on the Neteller Case

[fnord_too]

I probably missed the thread tallking about this, so sorry if this is a duplication.

Here are some thoughts I kicked out in a thread in El Diablo's forum:

What will happen to the two erstwhile neteller executives that were arrested?

I think this case will be extremely interesting if it goes to court because one of the key issues is where do internet transactions take place. For instance, if the Neteller guys are found guilty for violating US law, then states can start trying to force on line merchants to collect sales tax for them, using this ruling as a precedent if the law gets challenged. I think there is a moratorium on this issue right now on a federal level, but to sucessfully prosecute the neteller guys they will have to show evidence that they broke the law, and since congress left legality up to the states, they will have to show they broke a state law. This really muddies the waters and I don't think 1.) the courts will want to rule on this issue since they would effectively be passing law and 2.) congress really does not want them to rule on this issue because they are still uncertain how to deal with it, except I am sure they want to be the ones to deal with it and not some court.

So, there are a few possibilities here:

No Trial: this breaks down into cases where the Neteller execs plea bargain and cases where either the DoJ or Courts decide they will drop the matter. I think most likely the DoJ will push for a plea bargain, but will have to back off if there is a lot of push back.

Trial: This would likely go on for years if it goes to trial, and would likely end up at the Supreme Court. The ramifications of any decision (other than possibly the law is too unclear to enforce) are just too great. The issue is just incredibly complex. For instance, one angle would be that since the federal government is the only body empowered to make and approve international treaties, and since international commerce is covered by said treaties, state law is immaterial in this case. This would completely cut the legs out from under the current stance if the courts bought into it, since congress has put the question of legality in the states hands.

It would be good to know how the neteller lawyers are planning to proceed and to make sure they have thought about all these issues. Just because they are likely high priced laywers does not mean they are considering all the possible defences. Also, it would be very good if the neteller execs do not roll over and demand for the courts to rule. Them taking something like a fine would be absolutely horrible. Additionally, how is the government planning to penetrate the corporate veil here? It really seems like this is just a scare tactic and any real resistance will send them packing.

I don't buy this funds seizing report yet, but I think the points above are valid regarless. Again I just hope that Neteller fights back and does so intelligently. Forcing the case to court and making it a case that clearly defines where internet transactions take place would be a strong tact to take. The implications of saying that local laws govern transactions are staggering, and I don't think any court would rule on something of that magnitude without clear law existing. (I think there have already been these sort of jurisdiction cases, at least one with a porn site and some BFE counties laws against indecency. IIRC, the porn site won on appeal. Maybe someone with access to Westlaw can research this).