BY TOM SOMACH

Embattled e-wallet NETeller has agreed to forfeit $136 million–and admit wrongdoing for violating U.S. laws against facilitating Internet gambling–in a deal to avoid prosecution on a criminal conspiracy charge.

The deal was approved earlier this week in U.S. District Court in New York by Judge Kevin P. Castel, following a meeting by the board of directors of NETeller on the Isle of Man, where the company is based.

The company also agreed to return $94 million it held in the accounts of U.S. customers.

The U.S. government said nearly all of the $5.1 billion in transactions processed by the company in the first half of 2006 involved online poker and other online gambling, with most of the revenues generated by U.S. customers.

The deal with prosecutors also requires that the company be monitored for 18 months, to ensure that NETeller does not again llow Internet-based gambling to occur with U.S. customers.

John Carroll, a lawyer for NETeller, said: “The company hopes to put this behind us. We look forward to getting money back to our customers and growing the business.”

The deal was announced after two top executives of the company in the last month entered guilty pleas to charges that they violated U.S. laws against Internet gambling through their work with NETeller.

John David Lefebvre, 55, a NETeller co-founder, said during his July 10 guilty plea to a conspiracy charge that the company was originally created in 1999 to enable the transfer of money online, but eventually concentrated almost solely on Internet gambling transactions.

Prior to Lefebvre’s plea, NETeller co-founder Stephen Lawrence pleaded guilty to criminal conspiracy, saying he had learned that providing payment services to online gambling Web sites serving customers in the United States was wrong.

Days after their January arrests, the company, which was founded in 1999, stopped handling transactions for U.S. customers.

(E-mail Tom Somach at tomsomach@yahoo.com.)