ESI Pays U.S. $9.1 Million Penalty For Online Gambling Transfers

The U.S. did not go so far as to ground ESI and make the company go to its room, although prosecution has only been deferred and that possibility still exists.

ESI Entertainment Systems, a publicly traded company on the Toronto Exchange, reached an agreement with the United States Department of Justice to pay an exorbitant fine in order to avoid prosecution under U.S. law, even though ESI is a Canadian business and not under U.S. jurisdiction.

ESI's subsidiary, Citadel Commerce Corporation, had been used from 2002 until 2007 as a third party in processing cash payments to and from U.S. customers by online casinos. Prosecutors in New York claimed that Citadel had transferred as much as $2 billion over those years.

ESI prevented further legal difficulties with the U.S. government by agreeing to pay $9.1 million, admitting that what had transpired constituted criminal wrongdoing, and promising to use monitoring software and techniques to thwart future attempts to transfer funds for the purpose of gambling.

The U.S. did not go so far as to ground ESI and make the company go to its room, although prosecution has only been deferred and that possibility still exists.

ESI might have privately felt they were bullied into reaching this settlement, as the U.S. had shown ferocious tenacity in pursuing any way to attack those who broke its laws from beyond its rightful jurisdiction. Neteller, another company specializing in internet payments, found some of its executives arrested when they happened to travel onto U.S. soil.

After the Neteller incident, ESI stopped transactions involving U.S. citizens and online gambling, and began seeking a compromise with prosecutors.

ESI business has dropped dramatically since transfers concerning online casinos have been declined.