e-Gold indicted on money-laundering charges

e-Gold, in Melbourne, Florida issued the following shock announcement on their website.

“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.”

If half of what they claim is correct, they are being subjected to overreaching and unfair treatment by the US Justice Department. Obviously this is a legal area that challenges the most experienced legal & financial minds and breaks new ground on long-founded laws, designed to deal with bricks and mortar institutions (banks) and bricks of actual gold.

They go on to claim that their security measures are more stringent than those of banks, and that as they only ever accept bank-to-bank transfers (no cash or check operations), they cannot be accused of money laundering as no money is involved.

They are presenting themselves as the scapegoats for a DOJ witch hunt and, by seizing almost the entire working assets of the company they have put them out of business (while laughably at the same time saying that they can continue to operate as usual).

I predict uproar in the ‘alternative payments’ world over this – many MLMs, HYIPS and other on-line B2B services use this system and they must now be scrambling to see if they have lost their money.

In their case against e-Gold, the DOJ say this:

“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.”

I only wonder if ‘PayPal’ is next? PayPal has always insisted it isn’t a bank (to avoid regulatory control) but the spotlight must turn there next?

I wouldnt mind betting that the big boys in the big glass offices in the financial district are behind much of this…..

References:

  1. http://www.fuerstlaw.com/ (Law Firm representing e-Gold)
  2. http://www.usdoj.gov/opa/pr/2007/April/07_crm_301.html
    (Department of Justice Press release on eGold indictment)

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