Digital Currency Business E-Gold Indicted for Money Laundering and Illegal Money Transmitting
WASHINGTON, April 27 /PRNewswire-USNewswire/ -- A federal grand jury in Washington, D.C. has indicted two companies operating a digital currency business and their owners on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today.
The four-count indictment, handed down on April 24, 2007, and unsealed today, charges E-Gold Ltd; Gold & Silver Reserve, Inc.; and their owners Dr. Douglas L. Jackson, of Satellite Beach,
Fla.; Reid A. Jackson, of Melbourne, Fla.; and Barry K. Downey, of Woodbine, Md., each with one count of conspiracy to launder monetary instruments, one count of conspiracy to operate an unlicensed money transmitting business, one count of operating an unlicensed money transmitting business under federal law and one count of money transmission without a license under D.C. law.
Subsequent to the indictment, the Department of Justice also obtained a restraining order on the defendants to prevent the dissipation of assets by the defendants, and 24 seizure warrants on over 58 accounts believed to be property involved in money laundering and operation of an unlicensed money transmitting business. The restraining order does not limit the E-Gold operation's ability to use its existing funds to satisfy requests to exchange E-Gold into national currency for customers of non-seized accounts, or its ability to sell precious metals to accomplish the same, once approval has been received.
According to the indictment, E-Gold's digital currency, "E-Gold," functioned as an alternative payment system and was purportedly backed by stored physical gold. Persons seeking to use the E-Gold payment system were only required to provide a valid email address to open an E-Gold account - no other contact information was verified. Once an individual opened an E-Gold account, he/she could fund the account using any number of exchangers, which converted national currency into E-Gold. Once open and funded, account holders could access their accounts through the Internet and conduct anonymous transactions with other parties anywhere in the world.
The indictment alleges that E-Gold has been a highly favored method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography. The indictment alleges that the defendants conducted funds transfers on behalf of their customers, knowing that the funds involved were the proceeds of unlawful activity; namely child exploitation, credit card fraud, and wire (investment) fraud; and thereby violated federal money laundering statutes. The indictment further alleges that the defendants operated the E-Gold operation without a license in the District of Columbia or any other state, or registering with the federal government, and thereby violated federal and state money transmitting laws. The indictment alleges that this conduct occurred at various times from 1999 through December 2005.
"As alleged in the indictment, the E-Gold payment system has been a preferred means of payment for child pornography distributors, identity thieves, online scammers, and other criminals around the world to launder their illegal income anonymously," said Assistant Attorney General Alice S. Fisher of the Criminal Division. "This indictment demonstrates that the Department of Justice, in cooperation with its law enforcement partners, will aggressively identify and prosecute those who knowingly enable and profit from transmitting the proceeds of criminal activity, online or offline."
"Douglas Jackson and his associates operated a sophisticated and widespread international money remitting business, unsupervised and unregulated by any entity in the world, which allowed for anonymous transfers of value at a click of a mouse," said U.S. Attorney Jeffrey A. Taylor for the District of Columbia. "Not surprisingly, criminals of every stripe gravitated to E-Gold as a place to move their money with impunity. As alleged in the indictment, the defendants in this case knowingly allowed them to do so and profited from their crimes."
"Today's indictment is the result of a two and a half year investigation by the U.S. Secret Service Orlando Field Office into an alternative payment system which has largely operated outside of normal banking industry regulations," said Secret Service Assistant Director for Investigations Michael Stenger. "This system has been exploited for more than 10 years by criminals who operate primarily via the Internet. Cooperation among investigators, including the IRS, the FBI and other state and local law enforcement, has enabled us to more effectively address emerging threats and evolving criminal methods, such as the use of electronic or digital currency to facilitate trafficking in illicit goods and services."
"The advent of new electronic currency systems increases the risk that criminals, and possibly terrorists, will exploit these systems to launder money and transfer funds globally to avoid law enforcement scrutiny and circumvent banking regulations and reporting," said Assistant Director James E. Finch, of the FBI's Cyber Division. "The FBI will continue to work closely with the Department of Justice and our federal and international law enforcement partners to aggressively investigate and prosecute any, and all, persons or organizations that use these systems to facilitate child pornography distribution, to support organized crime, and to perpetrate financial crimes."
"This is a new twist on laundering money through unlicensed money transmitters but it is nothing new for financial investigators," said Eileen Mayer, Chief of IRS Criminal Investigation. "The combined investigative skills of the law enforcement partners under the St. Cloud IRS Criminal Investigation and Secret Service Task Force proved to be a brick wall for E- Gold. We are proud to bring our financial expertise to this type of investigation that ultimately unravels fraud."
The conspiracy charge in the case relating to money transmitting carries a maximum sentence of five years in prison. The federal law violation of operating an unlicensed money transmitting business carries a maximum sentence of five years in prison. The D.C. Code violation for money transmission without a license carries a maximum sentence of five years. The conspiracy charge relating to money laundering carries a maximum sentence of 20 years in prison.
The case is being investigated by the U.S. Secret Service with the assistance of the IRS and the FBI. The case is being prosecuted by the U.S. Attorney's Office for the District of Columbia and the Computer Crime and Intellectual Property Section of the Criminal Division. Assistance is also being provided by the Child Exploitation and Obscenity Section and the Asset Forfeiture and Money Laundering Section of the Criminal Division.
An indictment is merely an accusation and the defendants are presumed innocent unless and until proven guilty.
Source: U.S. Department of Justice
E-gold Major Agents’ Accounts Seized By US Government and 1MDC Is No Longer Operational.
It now appears this morning that all large e-gold exchange agents doing business with US clients have had their e-gold accounts seized by US court order.
Here is what we know as of this morning.
Icegold, AnyGoldNow, 1mdc, Omnipay and other large exchange agents have all had their accounts blocked by a US government agency court order.
When attempting to log in on these accounts, the e-gold server responds that the account does not exist. It appears the accounts have been seized by the US authorities.
It is now not possible to unbail (withdraw) bars from e-gold Ltd.
From the 1mdc web site. http://www.1mdc.com/
Friday Apr 27 2007 - 4AM UTC
It appears that a U.S. Government court order has forced e-gold® to close down or confiscate all of 1mdc’s accounts. All 1mdc account’s have been closed at e-gold by order of the US Government.
Please note that it appears the accounts of many of the largest exchangers and largest users of e-gold have also been closed or confiscated overnight: millions of Euros of gold have been lost or confiscated in this event. Many of the largest exchangers are shutdown.
Realistically, it is extremely unlikely that this action will ever be reversed.
If the action is reversed, your e-gold grams remaining in 1mdc will “unbail” normally to your e-gold account.
You CAN spend your 1mdc back and fore to other 1mdc accounts. However you must be aware that it is likely your e-gold will never be released from e-gold.
Ultimately e-gold® is an entirely USA-based company, owned and operated by US citizens, so, as e-gold users we must respect the decisions of US courts and the US authorities regarding the disposition of e-gold and the safety and security of US citizens.
Even though 1mdc has no connection whatsoever to the USA, and most 1mdc users are non-USA, ultimately e-gold is USA based.
1mdc thanks it’s users and technical staff and support staff. From 1mdc’s point of view, 1mdc had only just started to generate income from spend fees so five years expense and experimentation was wasted.
It is the opinion of your 1mdc team that:
The early era of DGC privacy is over.
USA citizens will simply never be able to use DGCs.
The only DGCs that operate from now on will:
(a) Have no connection to the US
( Have no USA users (exactly as Swiss banks have no USA users)
© Will have higher ID requirements than e-gold currently does.
You are welcome to email “email@example.com” but, again, the realistic view is that the e-gold® will never be released. Note that of all e-gold confiscated by US court order, none has ever been released.
http://hyipblog.nobshyip.net/2007/04/27/e-...80%99-accounts/ - discussion
http://www.pr-inside.com/digital-currency-...ted-r107629.htm or http://www.usdoj.gov/opa/pr/2007/April/07_crm_301.html