28 April
2007 - هشتم اردیبهشت 1386
E-Gold Indicted for Money Laundering and Illegal
Money Transmitting
http://www.pr-inside.com/digital-currency-business-e-gold-indicted-r107629.htm
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
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