[e-gold-list] press release text

[James M. Ray]

This should appear shortly (but better-formatted, no doubt) in
the "News" area of the e-gold.com site. Click on "what's new."

Also, please see my next post for a big list.rule-change.
JMR



e-gold®  Founder Denies Criminal Charges
April 30, 2007
Melbourne, FL


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 of 
incontrovertible 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 courageously 
broke 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, the 
government 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 at 
any 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 both 
companies. 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 Identification 
Programs 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/


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