Electronic Clearing House Inc. (ECHO), a payment processing company, announced Thursday it agreed to pay the U.S. government $2.3 million in order to avoid prosecution for allowing online gambling transactions through its service.
The money is the estimated amount the company has profited from the processing and collection services it provided for Internet gaming companies, such as online poker and casino sites, since 2001.
ECHO agreed to give up that money to the U.S. government and continue to cooperate with the U.S Attorney in New York with their investigation into online gambling transactions.
"The company expects to incur additional legal expenses related to the federal investigation," ECHO said in a press release.
ECHO ceased processing and collection services for its remaining Internet wallet customers earlier this year. It had been processing payments to several e-wallets that in turn were used by people to send money to their online gambling accounts.
One of those e-wallets was NETeller, whose founders were charged by the U.S. Attorney in New York with money laundering because of the company's transactions to online gambling sites.
By cooperating and ensuring non-prosecution, ECHO is protecting its investors. However, the settlement also caused the termination of a merger agreement between ECHO and Intuit Inc., a money management company.
"We are disappointed that we could not conclude the transaction with Intuit," said Joel Barry, ECHO chairman and CEO.
According to Barry, the expenses from the merger combined with the amount being disgorged to the U.S. government will negatively impact the company's near-term financial results. But the company will still have the resources it needs.
"Additionally, the fundamentals of our business are sound and our long-term opportunity remains solid," Barry said.
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