The investigation is apparently looking at possible antitrust violations and seeks to determine whether two competing online adult payment providers, as well as iBill, collaborated to set fees and if so, whether practices are anti-competitive.
The names of the competing payment providers were not disclosed.
Deerfield Beach, Fla.-based IBill, formerly known as Internet Billing Co., was recently acquired by Penthouse International Inc. in March from InterCept Inc. through its Media Billing LLC division. The company said it learned of the investigation after closing the deal.
Penthouse said iBill must provide Justice with data regarding certain one-time fees charged to merchants in 2003. The company, in the SEC 8-K filing, said it is cooperating with the inquiry.
Penthouse said in the filing it received a letter from attorneys of a former iBill client last month demanding to be reimbursed for “certain third-party costs, including Mastercard fines.” The letter, Penthouse said, sets forth an intention of a class action suit unless payment is made.
Penthouse believes potential damage claims relating to iBill could exceed the tens of millions of dollars.
Penthouse said it will withhold payments to InterCept until the probe is resolved or until InterCept posts "adequate" collateral to secure protective obligations to the company.
Also in the filing, the company revealed that InterCept is also seeking $3.8 million in cash from the largest shareholder of Penthouse International as part of its sale in April of iBill.
InterCept claims that Media Billing has defaulted on a $793,749 note issued in connection with the purchase of iBill.
Media Billing issued the note March 22 as part of its $10.25 million purchase of iBill platform, according to the filing, along with $750,000 in cash paid to InterCept and a further $2,804,000 in cash paid to First Data Merchant Services, a business partner of iBill.
The filing also indicated that InterCept claims Media Billing failed to cause First Data to release a $3 million letter of credit backing the iBill purchase, and that Media Billing owes Intercept around $3.8 million in cash under the terms of their March 16 purchase agreement.
Calls to the companies after business hours made by XBiz were not returned.