Breaking News: U.S. Justice Dept. in $9.1 Million Deal with Citadel Parent Co.

5 June 2008

ESI Entertainment Systems Inc., the parent company of money transfer provider Citadel Commerce Corp., has agreed to pay the United States government more than $9.1 million to avoid prosecution for processing online gambling transactions in the United States.

Michael J. Garcia, the United States Attorney for the Southern District of New York, announced Thursday that ESI admitted wrongdoing with its participation in a conspiracy to conduct illegal Internet gambling.

Under the agreement, prosecution will be deferred for 18 months if specified conditions are met. Among other conditions, ESI is not allowed to participate in processing online gambling transactions with customers in the United States.

Between May 2002 and January 2007, Citadel processed online gambling payments in the United States for several companies, including CryptoLogic Ltd. and Microgaming Software Systems Ltd.

Citadel left the United States market when the two founders of Neteller, a British online money transfer business, were arrested in the United States in January 2007 on charges of conspiracy and money laundering in connection with illegal gambling.

ESI becomes the third payment processing company to agree to a deferred prosecution since the Unlawful Internet Gambling Enforcement Act took effect in October 2006. The act aims at blocking payments to illegal Internet gambling sites.

Neteller agreed in July 2007 to forfeit $136 million.

Electronic Clearing House Inc., based in California, entered a non-prosecution agreement with the government in March 2007 worth $2.3 million.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.