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Electronic Clearing House Shares Slide (tied to online gaming investigation)

Discussion in 'Casino Industry Discussion' started by Mousey, Mar 28, 2007.

    Mar 28, 2007
  1. Mousey

    Mousey Ueber Meister Mouse CAG

    Occupation:
    Pencil Pusher
    Location:
    Up$hitCreek
    You must register/login in order to see the link.

    Electronic Clearing Shares Slide; Intuit Cancels Deal (Update3)

    By Ron Day

    March 27 (Bloomberg) -- Shares of Electronic Clearing House Inc. plunged the most in almost 15 years after the company said it will hand over some profits in a government probe into online gaming and Intuit Inc. scrapped plans to buy it.

    Electronic Clearing will turn over $2.3 million in earnings to the U.S. government from its Internet wallet business, which collected payments to online gambling sites, the Camarillo, California-based company said today in a statement. The U.S. in October passed a law criminalizing the processing of credit-card payments for that industry.

    Intuit, maker of TurboTax software, had agreed on Dec. 14 to pay $142 million, or $18.75 a share for Electronic Clearing, a 25 percent premium to the share price that day. Intuit pursued the company to expand its online banking services to businesses. Electronic Clearing Chief Executive Officer Joel Barry said the company is open to other acquisition talks.

    ``That's not a mess Intuit wants to get into,'' said John Kraft, an analyst at D.A. Davidson & Co. in Portland, Oregon, who has a ``neutral'' rating on Electronic Clearing shares he said he doesn't own. After the company in October said it would exit the Internet wallet business, ``my sense was these guys were on the up and up, squeaky clean.''

    Electronic Clearing shares dropped $6.40, or 34 percent, to $12.21 at 4 p.m. New York time in Nasdaq Stock Market trading in their biggest decline since July 1992. The stock has fallen 2.8 percent in the past 12 months.

    Shares of Intuit, based in Mountain View, California, rose 18 cents to $27.55 in Nasdaq trading and have climbed 6 percent in the past year.

    `Always Be Open'

    Barry declined to comment on the federal investigation, saying only that it was in the company's best interest to cooperate with the government. Near-term results will be hurt by the payment and by expected investigation-related expenses, the company said in the statement.

    ``We didn't want to negotiate for a lower price'' with Intuit, Barry said on a conference call today. ``At this juncture we felt it was in the best interest to either close or terminate'' the deal, he said.

    Intuit spokewoman Holly Perez declined to comment.

    Electronic Clearing is ``fundamentally sound'' and will announce first-quarter results in May, Barry said.

    The company and Intuit released each other from all claims related to the acquisition, according to separate statements. A non-prosecution agreement with authorities is expected soon, Electronic Clearing said in its statement.

    Electronic Clearing in October said less than 10 percent of its sales were related to online gambling. It said at the time it would stop so-called Internet wallet services, which would hurt sales.

    To contact the reporter on this story: Ron Day in New York at This email is not visible to you. .

    Last Updated: March 27, 2007 16:05 EDT

    **************

    It's incredible how well extortion and coercion work for the US government.
     
    2 people like this.
  2. Mar 28, 2007
  3. Mousey

    Mousey Ueber Meister Mouse CAG

    Occupation:
    Pencil Pusher
    Location:
    Up$hitCreek
    Payment processor witness in a federal investigation

    For some that are still wondering what happened to the payment processors that pulled out and left the casinos and players high and dry... Here's a sample of what's going on behind the scenes...

    Interesting tidbits here You must register/login in order to see the link.

     
    1 person likes this.
  4. Mar 28, 2007
  5. dingo

    dingo Dormant account

    well, which Internet Wallet providers did Electronic Clearing House Inc. own/service ?
     
  6. Mar 28, 2007
  7. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    I think their operational brand was Echo - they provided a whole raft of financial services.
     
  8. Mar 29, 2007
  9. Mousey

    Mousey Ueber Meister Mouse CAG

    Occupation:
    Pencil Pusher
    Location:
    Up$hitCreek
    You must register/login in order to see the link.

    Internet gambling crackdown prompts large fine for payment facilitator


    By Frank Angst

    The federal government took another step in its crackdown on illegal Internet gaming on Wednesday when a company that processes online payments agreed to pay a fine and cooperate with the Justice Department as a witness.

    In signing a non-prosecution agreement, Electronic Clearing House Inc. (ECHO) agreed to pay $2.3-million and fully cooperate with the governments continuing investigation into illegal Internet gambling. ECHO chairman Joel Barry said the $2.3-million represents company profits since 2001 from processing and collection services provided to companies, known as e-wallets, that in turn provided financial transactions for illegal Internet gaming.

    On Wednesday, United States Attorney for the Southern District of New York Michael Garcia said ECHO would not face prosecution because it started to wind down its e-wallet processing in October and has frozen $21-million belonging to e-wallet companies. The biggest such company handled by ECHO was Neteller, which in January ceased operations with United States customers.

    Barry said the Camarillo, California, company would not face further prosecution.

    Its important to know that the government has assured us it will not pursue further prosecution, Barry said. We want to get on with our business.

    Last year, the United States passed the Unlawful Internet Gambling Enforcement Act, which makes it unlawful for financial entities to process financial transactions to illegal gambling Internet sites. Horse racing received an exemption in that bill.

    The Justice Department believes the federal Wire Act prohibited transactions to such gambling sites before that September law was passed. In January, the Federal Bureau of Investigation arrested two Neteller founders on charges of facilitating the transfer of billions of dollars in illegal gambling proceeds since July 2000.

    Barry said ECHO did not wish to contest the legality of the transactions completed before the Unlawful Internet Gambling Enforcement Act became law.

    Frankly, we did not feel like we had the time or money to challenge this [in court], Barry said. It would have been much more harmful for the shareholders to fight it.

    ECHO has cooperated with the government by providing requested documents and making employees available for interviews.

    In announcing todays agreement, ECHO also reported that a merger agreement entered in December with business software developer Intuit Inc. would be terminated
     
    1 person likes this.

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