Ebay Inc Gets Letter From US Attorney Of Missouri
Monday March 31, 9:12 am ET
WASHINGTON -(Dow Jones)- EBay Inc. said Monday that the U.S. Attorney for the Eastern District of Missouri claims the company's PayPal operation violated part of the USA Patriot Act, according to its annual report filed with the Securities and Exchange Commission (News - Websites).
The auction service operator said a letter received Friday from the attorney's office claims PayPal violated a part of the law that prohibits transmission of funds known to have been derived from a criminal offense or intended to be used to promote or support unlawful activity. As a result, PayPal might have to forfeit the amounts it received in connection with such activities, and it also might be subject to criminal liability, the filing said.
EBay, San Jose, said the attorney's office offered a complete settlement of all possible claims and charges covering a purported amount of earnings PayPal derived from online gambling merchants between Oct. 26, 2001, and July 31, 2002, plus interest.
EBay said PayPal acted in good faith and believes that it didn't violate the USA Patriot Act.
The company said PayPal calculated that the amount of its earnings from online gaming activities was less than what was asserted in the letter. The filing didn't provide information on the amount of earnings claimed in the letter.
EBay said it would be harmed by negative publicity, costs of litigation and the diversion of management time if the investigation were to lead to a civil or criminal charge.
The company also said any finding of a civil or criminal violation, or potentially any settlement, could hurt PayPal's ability to obtain, maintain or renew money transmitter licenses in jurisdictions where it requires such licenses to operate, which would materially harm eBay's business.
Beginning in July 2002, PayPal provided documents and information related to its services to online gambling merchants in response to a federal grand jury subpoena issued at the request of the U.S. Attorney for the Eastern District of Missouri. . .
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