PayPal Pays Up
By staff
EBay Inc.'s PayPal unit agreed to pay $10 million to settle charges it aided in illegal offshore and online gambling activities, the U.S. attorney in St. Louis said.

The $10 million represents a forfeiture of money PayPal received from processing the transactions, U.S. Attorney Raymond W. Gruender said in an e-mailed press release.

EBay bought PayPal, which enables users to send and receive payments through credit cards or bank accounts, in October for $1.5 billion and shut down the company's gambling business because of regulatory issues. PayPal illegally transmitted money in violation of the federal Wire Wager Act as well as various state laws prohibiting online gambling from October 2001 through November 2002, according to the settlement.

San Jose, California-based EBay disclosed the settlement in its earnings release today. It said the settlement would be included as an adjustment to its purchase price of PayPal and not as a charge against earnings.

EBay spokesman Kevin Pursglove declined to comment beyond the release. EBay is the world's largest Internet auctioneer, and recently announced a 2-for-1 stock split after record profits.

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