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e-gold® Founder Denies Criminal Charges - Public Statement
Ecurrency News, MiscellaneousTags: E gold.
On April 24, 2007, a Federal Grand Jury handed down an indictment charging e-gold Ltd., Gold & Silver Reserve, Inc., and the Directors of both companies with money laundering, operating an unlicensed money transmitter business, and conspiracies to commit both offenses.
Dr. Douglas Jackson, Chairman and Founder of e-gold, speaking on behalf of his fellow Directors and both companies vigorously denies the charges, taking particular exception to the allegations that either company ever turned a blind eye to payments for child pornography or for the sale of stolen identity and credit card information.
Dr. Jackson states, “With regard to child pornography, the government knows full well that their allegations are false, yet they highlight these irresponsible and purposely damaging statements in order to demonize e-gold in the eyes of the public. During the Inquisition, accusations of witchcraft and heresy were used to sanctify torture and seizures of property. In post 9-11 America, child porn and terrorism serve as the denunciations of choice. e-gold, however, as a matter ofincontrovertible fact, is the most effective of all online payment systems in detecting and interdicting abuse of its system for child pornography related payments. e-gold Ltd. is a founding member of the National Center for Missing and Exploited Children’s (NCMEC) Financial Coalition to Eliminate Child Pornography. e-gold is the only member institution to demonstrate with hard, auditable data a dramatic reduction of such payments to virtually zero, while billions of child porn dollars continue to flow through other (heavily regulated) payment systems. [Most members, that is, all the banks and credit card associations are utterly unable to even provide an estimate of the volume of such payments processed by their systems. eBay’s PayPal subsidiary, who may have the ability to make such a determination, has refused to do so and has indicated they destroy payment records after two years.] What is worse, until August 2005 when NCMEC courageouslybroke ranks with US law enforcement agencies and began directly notifying e-gold of criminal sites via the CyberTipline, component agencies of the US Department of Justice purposely concealed their knowledge of child pornography abuses from e-gold’s investigators, subordinating actual crime fighting to a policy agenda designed to dirty up e-gold.”
In December 2005, the Secret Service (USSS) deceived a Federal Magistrate judge with bogus testimony in order to obtain search and seizure warrants authorizing the government to seize the US bank accounts of Gold & Silver Reserve, Inc. The seizure, which netted the government about $ 0.8 million, was designed to put e-gold out of business without due process, since G&SR serves as the contractual Operator of the e-gold system. At a subsequent emergency hearing, thegovernment made no effort to defend their (sealed) allegations of lurid criminality, falling back to a position that their action was warranted because of a licensure issue. At the hearing, G&SR described its ongoing dialog with the Department of Treasury, initiated by formal request of the company in Spring 2005, to determine a possible basis for regulating the company’s activities, since it was patently clear to competent authorities that G&SR’s exchange service was not encompassed within any existing regulatory rubric [subsequently re-confirmed by experts at the Federal Reserve]. The US Attorney for the District of Columbia, responsible for the prosecution, was completely unaware of this orderly proceeding, as well as Treasury reports issued the same week that acknowledged e-gold as an innovation not meeting definitions of a money services business or a money
transmitter.
Since this time, the government has been confronted with overwhelming evidence that the USSS had made a horrible mistake in its attack on the e-gold system and its repeated defamatory claims in the media that e-gold is anonymous, untraceable, and inaccessible to US law enforcement. They have concealed the fact that Dr. Jackson had personally arranged to come to USSS headquarters to train the USSS cybercrime squad in December 2004 (along with agents of the UK’s National High Tech Crime Unit, and the Australian Federal Police) on advanced techniques, particularly in the area of efficient interaction with e-gold’s in-house investigative staff, but was prevented when senior USSS management learned of the initiative and forbade the training on the grounds of a policy declaring e-gold as their designated boogey man.
The Department of Justice has had to determine whether to continue to stand behind their component agency. Their decision to close ranks has directly resulted in a gross misallocation of resources, with the result that vicious criminals who might have been brought to justice remain at large. An example of this is the Shadowcrew investigation, hyped by the USSS as a major success in disrupting international credit card thieves. The USSS did not subpoena records from e-gold atany time in their investigation, or engage with e-gold’s superb in-house investigative staff, with the result that the sophisticated hierarchy of the ring was unmolested and probably strengthened while the USSS hauled in the low hanging fruit, “a dime a dozen and relatively easy to track down and pop”.
Similarly, there is compelling evidence that the international cartel of commercial vendors of child pornography continues to operate because the FBI Innocent Images Unit and Special Agents within the Immigration and Customs Enforcement Agency have been forbidden to follow investigative protocols developed by Dr. Jackson, apparently for fear of further belying the party line that e-gold is itself a nefarious operation.
With regard to allegations of money laundering, Dr. Jackson notes “G&SR’s online exchange service, OmniPay, has for years followed stringent customer identification procedures and an absolute policy of only accepting money payments by bank wire. If bank wires aren’t already “clean” then what is? Furthermore, e-gold Ltd. can scarcely be construed as a money launderer since it does not accept money payments from anyone in any form and has never owned a single dollar, yen, euro or any other brand of legacy money. As far as the possibility of a criminal successfully obfuscating a money trail, e-gold is a closed system. The only way to obtain e-gold is by receiving a transfer from someone who already has some. e-gold is also the only payment system accessible by the public that maintains a permanent record of all transfers.”
On April 27, 2007, the government served seizure warrants on G&SR ordering it to freeze, liquidate and turn over to the government the operating e-gold accounts of G&SR and e-gold Ltd. The value seized, about $762 thousand worth of e-gold from e-gold Ltd. and about $736 thousand worth of e-gold from G&SR [on top of the $0.8 million seized from G&SR in 2005, and the approximately $1 million spent by G&SR so far in its defense] constitutes the bulk of the liquid assets of bothcompanies. Perplexingly, a post-indictment restraining order states “Nothing in the provisions of this restraining order shall be construed as limiting the e-gold operation’s ability to use its existing funds to satisfy requests from its customers to exchange e-gold into national currency, or its ability to sell precious metals to accomplish the same once approval has been obtained.” Having taken virtually the entire operating funds of G&SR and e-gold Ltd., that is, the e-gold in both companies’ own e-gold accounts, it is unclear if the government has even a basic grasp of the operations it has been investigating for three years at a taxpayer expense in the millions.
The most remarkable element of the restraining order is that the US government deputizes e-gold with plenipotentiary powers to act as judge, jury and executioner against any account user e-gold itself has deemed to be a criminal: “It is further ordered that upon receipt of this order the defendants are required to freeze, that is, not conduct or allow any further transactions in e-gold accounts that the e-gold operation itself has identified as being used for criminal activity”. Although not accompanied by an outright letter of marque, this commission (the financial equivalent to double ought status?) would appear to be an acknowledgement that e-gold’s ‘Know Your Customer’ prowess far exceeds that of any regulated financial institution, who would be obliged to rely on court orders or other legal writs to determine if freezing an account is warranted.
Concurrent with this latest attempt to knock e-gold Ltd. and G&SR out of business and thereby effectively deny them due process, the government also attacked other prominent exchange services that deal in e-gold; IceGold, The Bullion Exchange, Gitgold, Denver Gold Exchange, AnyGoldNow, and Gold Pouch Express, plus a sophisticated and secure alternative payment system called “1MDC”. All of the listed exchange services also follow stringent Customer IdentificationPrograms congruent with what would be required of a currency exchange business, if the law supported such a classification. Two of the services, IceGold and AnyGoldNow, are located in Europe and deal primarily with non-US customers. As a direct and immediate result of the seizures, these companies, all of who had built a reputation for honoring their obligations to customers in a timely fashion, have been disrupted, and, at least in the case of Gitgold, checks to customers issued in fulfillment of exchanges have bounced. This is a repeat of what happened to G&SR as a direct result of the 2005 seizure, when over 200 checks to customers bounced and refunds had to be sorted out with severely crippled liquidity and without a US bank account.
It must not be overlooked that the search warrant obtained by misrepresentations before a magistrate judge in 2005 resulted in the government helping themselves to the financial records of hundreds of thousands of American citizens [plus citizens of virtually every other country] who had not been accused of any wrongdoing. Since the initial raid, the prosecutor has caused the Grand Jury to order complete dumps of the e-gold data base on three additional occasions.
This case has nothing to do with criminal activity, at least not on the part of e-gold Ltd., G&SR, the named individuals or these other exchange services of high reputation. It is about a Department of Justice that is out of control, cognizant of having made a horrible mistake but determined at all costs to preserve its turf. In a meeting at the US Attorney’s office in Washington on December 29, 2006, a Chief Assistant US Attorney told us that the United States knew we weren’t “bad guys” and that the United States had no interest in sending any of us to prison or causing e-gold to go out of business. This was in virtually the same breath as proposing that the current defendants plead guilty to Federal felony charges.
The plain fact is that the repeated statements and actions of the government since 2001, especially the USSS, are directly responsible for crippling e-gold’s ability to market its service to mainstream businesses and consumers, slowing [but fortunately not stopping] e-gold’s continuous development of advanced anti-crime capabilities, subordinating US law enforcement’s cybercrime fighting efforts to the forlorn hope of destroying e-gold, driving market share to non-US based alternative payment systems and making the US law enforcement community the laughingstock of competent cybercrime fighting agencies worldwide because of its obstinate inability to back down from the USSS’s longstanding e-gold vendetta.
All inquiries should be directed to the law offices of:
http://www.fuerstlaw.com/
Popularity: 2% [?]
Oh dear - looks like Dr Jackson has made a total fool of the US secret service with his revealing defence of egold. Not only have they shown themselves to be incompetent, but also filthy hypocrites. With loose cannons like that in charge of the nations security it does make you worry about the future of civil rights in the US.
If Dr Jackson is telling the truth, and I am inclined to believe him, then I wish him every success in this David Versus Goliath Battle ahead.
Dollar Falls. Gold Raises. E-Gold Targeted.
I doubt that anyone can stop the assault on E-Gold even Dr Jackson’s brave defiance is hindered.
Post 9/11 you may well ask what happened to liberty or was liberty the real victim?
Judge for yourself !
Unfortunately, whether Dr Jackson is telling the truth or not (and I’m inclined to believe him) the USSS has no need to make a profit to continue to make other ppl’s lives difficult. By seizing the bulk of e-gold’s liquid assets it’s going to be a tough job for them to stay in business. This is even more true since many programs and processors have chosen to stop using/accepting e-gold, atleast, in the short run.
One thing I find strange in the rebuttal (not the content but the specifics of the previous raid) if the Gov was in the wrong….why didn’t the court order their $800K paid back? Is the same thing going to happen with the $1.5Million they got this time? “Oh, well, we have to hold that to help pay our expenses for harassing you. Sorry”. How about the $1 Million in legal costs to date? I thought that if you proved your innocence (rather than THEM having to prove YOUR guilt) the DOJ had to reimburse for legal costs? How about wrongful prosecution?
9/11 and rampant fear should not be enough to give enforcement agencies carte blanche to do as they please. Get a grip!
I am inclined to believe at least most of what Dr. Jackson says. I think his legal team will kick the prosecution’s fanny in court. Unfortunately, unless things take a dramatic turn, I’m afraid this is the end of e-gold. Not because of misconduct, but because these types of charges, no matter how baseless, are never going to stop. Thanks to heavy handed government meddling, E-Gold is now a tainted product, with undue risk to it’s customers. Looks like we’re going to loose another fine US company to overseas competition.
Somebody tell me I’m wrong.
Everyone has eyes to see and knows who’s in the wrong. I’m going to lean on E-gold for the win, even though it’s tough for them.
Yes, we are all cheering for a win but this is now two brawls with the federal government in as many years, if they win what happens in number 3? How about 4? I fear, e-gold bleeding cash from frozen accounts and legal defenses this one is almost over before it starts.
Like the Neteller situation, if e-gold is not allowed redemption for say…the coming 3-4-5 months and everyones funds are frozen during this time what will people wanting to do business use during that time and after?
Having to pick another digital money option this week for your programs where are most operators going? LibertyReserve, Pecunix, Virtualgold..etc?
I mean this e-gold situation could go a year or two before there is any other information on continuing the day to day operations or not. Who is going to wait that long?
Mark
I couldn’t agree with you more Mark. That’s the thing that worries me most, not on E-gold shutting down, but the duration of the case that will ultimately bring E-gold to its end.
Even till now, after a year or so, the EMO case is still on.
But there’s also another thing to take note; the other payment processors are slapped with charges, E-gold is now slapped with indictments, innocent until proven guilty.
Business should still be going on, despite having a few indictment charges.
Its hard to say but they can’t win. Face the facts about whats going on.
“Wars” were never win with facts but with power. E-Gold has much power, but not that of the US government. It will lose in the end.
By the way: eGold is almost anonymous. Dr Jackson knows that and the government too.
Honestly guys we cannot just leave e-gold behind because of this prosecution. They have the served the HYIP community virtually flawlessly and we should stand behind them and support them as they fight these unjust causes. I have a feeling that there will be plenty of ways to still sell e-gold, we just need to look! (I already know of a couple that are still going, but don’t want to mention them just in case BB is watching).
If e-gold have lost most of their cash, maybe they will struggle to defend this one more than last time.
Egold is still operating, there are exchangers that are still operating - try icegold or LGE. The problem seems to be with the 50 odd accounts that have been frozen. If the feds really wanted to stop egold, they’d just do it.
This statement is pretty silly though. If Jackson does expect a legal battle to ensue then making public statements of this nature will do him no favours.
I think egold will come out of this alright, but the impact on egold account holders confidence in the security of digital currency will take a huge knock in the process.
Its very rare to see any law firm allow their client, who has just been indicted, to make such a public statement.
I don’t think e-gold is operating, business as usual, I don’t think they can do any redemptions..bars to national currency without specific approval by the court first. So no one can ‘outexchange’ any big money. That is my understanding of it.
Mark
even the Jackson himself has no idea who is using egold, how to sue? wheres the proof?
given 100% co-operation to authority is more than enough!
US government better start closing down all airline company, because terrorist can be using one of those?
ROFL!
eCache is starting to look really interesting.. especially the complete anonymity part and the fact that you can’t track down who runs it, making it virtually un-stoppable
I know e-gold has fought off these allegations before, but let’s face it.. people’s confidence in e-gold has been damaged, e-gold’s money has been seized, I mean how can they turn the situation around at this point?
cashking has hit the target. It was the intention by the secret services to taint e-gold beyond its ability to conduct business. The link to child pornography was clearly designed to terminate the business. A dead giveaway that the powers that be are out for the juggler. I’m surprised they didn’t go further and link e-gold to Osama bin liner though they did link e-gold to terrorism in a round about way. E-gold is subjected to a modern day witch hunt. In a witch hunt its not about who is right and who is wrong. It’s more about right rests with might. Very soon Dr Jackson will face a kangeroo court in which they will accuse him of all kinds of black magic, spells and evil potions and then subject him to the modern equivalence to burning in the stake. One has to wonder if the Soviets fled Russia when the Berlin wall fell and joined the US secret service and Government. Seems like it’s the same people who ran that regime now controlling Uncle Sam.
Something tells me the government is going to come out of this one looking bad.
The same thing happened in the case of the three college Lacrosse players recently. District Attorney Mike Nifong got bitch slapped for false accusations and withholding evidence. I think the government is doing the same thing here. It is pretty obvious. Charging e-gold with abating child porn is ridiculous, especially since they belong to an organization that is helping to fight it.
They don’t just belong to an organization fighting child porn, Dr. Jackson founded the organization.
- Sharon
Hope Dr. Jackson comes out clean and puts all these false allegations to rest.
Our business www.investexgroup.com has had to change the way we do business due to the allegations surrounding e-gold, better to be safe than sorry. We will be reviewing more payment processors to adapt to changes if need be.
Hope all this works out for e-gold as alot are up for support for this company.
Regards
In my opinion, these latest actions against E-Gold by the U.S. government do not solely fit the behaviour patterns of ‘normal’ law enforcers, but resemble patterns used by organized crime.
Dutch criminal cartels use the same ‘law enforcement’ strategies against their adversaries when trying to make a ‘clean’ end to any obstructions put up against their control.
Though I don’t want to sound too negative about the U.S. government, I can’t help but see symptoms of more and more criminal offenses undertaken inside the ranks. If not stopped, these groups with their powerful form of shadow-government may ultimately destroy the country from within.
Well, here is my two cents worth…
From one side, I do admire Mr. Doug’s courage to still stay in US after all of what has happened before and face yet more charges. From the other side, I trully think he is either naive or silly (to say the least). There has to be a point in time where one average human being should be able to use logic and realism instead of morals, opinions and just plain arrogance. He may be a good businessman, but he is fighting a loosing battle, and probably putting customer’s money at risk. I think that any person by now would get the hint and not be based in US after goverment has given him so many hints. Unfortunatelly, even if you are right you can not always prove it, especially at times of lunacy, that US faces now. I kind of feel what he wants to prove and to whom, but in my opinion if he will not stop or relocate there is another waco coming. Goverment has invested so much into that battle of many years, and those who think that e-gold will be able to defend without any problems time after time, are silly. I doubt goverment, even if they will not win this battle, say something like “OK, never mind, sorry about the trouble, please do go on”. From what it looks like goverment is simply on a crusade against e-gold, and there may be additional reasons that we are not fully aware about. But, rest assured, that if e-gold is still there another raid will come and more charges will be filed, until they will seize to exist whether they like it or not, whether its constitutional or not - good defence cost very good money. And thus far they are out of a lot of money. It is very unfortunate, but lets be realistic, it is the wrong time, wrong goverment, wrong country and wrong president to have this fight with. As one of the guys here noted, if all other cases were dismissed or abandoned, how come no money was returned? Why there is no lawsuit for loss of business, etc, etc. There are some things that just do not add up. I honestly wish all the best to them, but simply am trying to be realistic.
You can out smart the goverment but they will overpower you.
Not Me,
I take your point. I believe Dr Jackson has always been an idealist. He believes in small government and is a liberterian. He’s right up there with Adam Smith’s Wealth of Nations and Milton Friedman’s liberal economics. Dr Jackson is a conservative with a big “C”. It’s surprising that a Republican government should oppose him. My view on the whole episode it that America is going insular. It’s closing the gates to International Trade. America will lose in the end. E-Gold should be a great America firm. Instead America is hostile. When a country turns in on itself its doomed. The only thing America has left these days is its military. It’s economy is in a bad shape. Time to use that miltiary to plunder. My guess is the attack on E-Gold is designed to shake users out of holding Gold deposits as a gradual step to preparing the ground for war with Iran.
Hey guys, a stupid or naive question here:
What would happen to our money if e-gold is told to close its services?
Javier,
We can only look at history for that answer. Government would appoint a pricey lawyer as a recipient. The lawyer would hire his high priced cronies to help. They would investigate, sell all the assets, and rack up expenses for years until the money well is dry. Then they would report that there isn’t any money to divide among the account holders (or give account holders 1-2 cents on the dollar, which is unlikely.)
That’s history. E-gold has its assets offshore (gold bars), so I’m not sure if the lawyers could get at it. With the bulk of assets offshore, there might be a different scenario.
The fact that e-gold is open for business as usual is a good sign that it is unlikely to close over this latest mess. The biggest damage will be to its reputation. There is no reason to panic at this stage. If you’re really worried, elminate or reduce your e-gold account down to where you wouldn’t care if you lost it. Personally, I like to keep less than $100 in any online account, except PayPal.
JMO,
Sharon
I think that the fact that e-gold itself is still operational only reperesents the goverment’s inability to understand how it works or even to care about it. They simply do not want to deal with all out-exchangers and assign any receivers. They are hoping that majority of people will “kind of” either find a way to get their money out OR simply abandon for the fear of prosecution for tax evasion or something else. And then they will just pocket what’s left. Much easier and very cost efficient. Legally, there is nothing wrong with e-gold’s business model and that is why they can not shut it down at will, otherwise they would have done it a long time ago. But, it surely is easier to deny them of any ability to conduct their business with costly interruptions via frivolous suits, and other tricks. Who will win? I’m afraid it’s obvious. To face such battles and win, you need to look at who has deeper pockets. And i think we do know who that is. Very sad and unfortunate situation that does not benefit US in any way and probably makes US looks funny to the rest of the world. But what can you do, we’re at the point where we have surpassed all applicable laws and now are trying to govern an industry by fines and theft rather than legal due process.
James.
In my View everything will be ok maybe it take few weeks but fact is this that USSS officers are just like new born Chickens they don’t know whats E-gold.
Dr. Jackson will definatly win the case and E-gold not shutting down. US govt maybe can seize US companies accts but other countries accounts like 1MDC icegold etc etc are out of US Court/Law Jurisdiction.
USA Jurisdiction is within USA. And such kind of acts will creat reason for a week USA from inside. Its Solders are dieing for no reason in IRAQ Afghanistan and now citizens will die by heart attacks and other mental attacks :).
Seized amount is not a small money hundrads of thousands peoples are working with e-gold within america Negative decision will definatly deface the USA democracy claims.
I think USSS putting this kind of issues to divert US citizens from what US policies are failing in IRAQ & Afghaniztan North Korea. Now whole world seeing what happend with USA Jurisdiction authorities.
USSS seeing nightmares why e-gold is becoming more popular day by day. USSS must stop BBB and alot of other Credit card payment processors who are working with Child Pornography and other illegal software pairacy etc etc.
Be positive E-gold will win this case and peoples have trust on egold lets stand behind e-gold to support Mr Jackson.
Be positive its just a aquisation egold didn’t declared guilty.
Pray as per your religions and stand with E-gold USSS and other authorities are also reading and watch these type of articals don’t let them feel that we are feeling week