[e-gold-list] Re: e-gold pleads guilty of money laundering charges

[Jim Davidson]

Dear Pete, 

I believe there are limits to what a defendant in a criminal
case of this sort can, or should, say about it.

To say that the criminal charges have been resolved is just
as accurate as saying that there has been a plea agreement
entered.  To say that everyone knows what to expect next
week, next month, and next year would be to assume facts not
in evidence - no one has a crystal ball.

Personally, I believe e-gold's statement is accurate, and
the rather extreme maximum sentencing guidelines which are
reported in the press release are puffery, at best.  If the
government's press relations system did not emphasise the
most dire possible consequence for every conceivable class of
criminal, many in the noxious "law and order" segment of the
population would think that the din of government was not
sounding right.

A plea agreement is intended to resolve the criminal case,
and I would anticipate whatever is in the e-gold statement
was very, very carefully vetted by e-gold's legal team. If
they could have said things another way without creating any
more difficulty, perhaps they would have done.

I had the pleasure of speaking with Doug Jackson briefly
today.  Without saying anything about what was said, I would
give a character of his mood as carefully upbeat.  He is
obviously concerned with what is not yet known about what to
expect, without being overwhelmed about it.  I think he is
very cognizant of the way the current situation affects the
e-gold users, the merchants who rely on e-gold as a payment
system, and the rest of the digital gold industry.  He is
obviously also aware of the government's position on the case
at hand.

Nobody can be sure what is going to happen, but I think there
is no reason to expect a really unpleasant result.  The
e-gold principals have no prior criminal record, there is
a longstanding pattern of complete cooperation with turning
over of records, complying with subpoenae and warrants, and
generally making information available even beyond what might
ordinarily be expected.  I am aware of extensive reasons to
suppose that e-gold pursues criminal wrongdoing very thoroughly.

> enough.  It's frustrating because I really believe that the e-gold 
> founders are honest, and the guilty pleas don't change that.

I believe that, as well.  Indeed, I think the ways in which the
"criminal justice system" deals with people, most especially
with merchants, represents a completely psychotic anti-property
world-view that was fashionable in the last century and which
is completely mistaken in many ways.  A great many of the laws
are written by legislators who have hateful views on the idea
of private property and on the merits of individual liberty. It
often appears that many prosecutors have equally grim views
on the concepts of free market economics.

> money transmitter because it transfers interests in gold.  Well, a 
> jeweller's shop also transfers interests in gold -- is that a money 
> transmitter?

The rules that the Treasury Department promulgated on this point
seem fairly clear, to me.  A jewelry store that buys gold from
the public and sells gold to the public, and does more than
$50,000 of business per year, is in effect a money transmitter.
The precious metals value of palladium or platinum in catalytic
converters creates a similar situation for car dealers.

One way to avoid tipping this scale is to note that the jewelry
store that buys from wholesalers and never buys from the public
is not a money transmitter.  In theory, at least, this would be
true of any gold retailer that sells gold to the public but does
not buy gold from the public.

>  What about eBay, which transfers interests in all sorts of 
> things?

The eBay company operates PayPal which is a direct transmitter
of money.  You should believe they are registered.

> Yes and actually I think this could help e-gold become more mainstream.  
> Revolutions are unusual, at least in the West.  Western societies tend to 
> change by baby steps, and they are changed by people who are close to the 
> political consensus.

Technological change is not something that Western societies
have any monopoly upon.  One of the obvious difficulties for
the USA government is a lack of any meaningful control over
information flow across borders.  This has become very notable
in the online gambling fiasco caused by the 2006 "Safe Harbors"
act.  A number of trade delegations are currently pursuing all
manner of grievances about how their people are treated in this
bizarre pogrom against online gambling.  The USA's position is
completely nuts.  And, I think the e-gold case further cements
the view now prevalent that innovations in online payments are
going to happen in Russia, or Malaysia, or New Zealand, but not
in the USA.  Which, given how similar Doug Jackson is to Alexander
Graham Bell, is something of a shame.

> 1.  What happens to the accounts that were frozen over the past couple of 
> years?  In particular, do the 1MDC people get their money back?

I believe there is a process for getting gold assets which
were seized to be returned to their owners.  That process
has been initiated by the Liberty Dollar people with regard
to the gold and silver for which the paper warehouse receipts
were redeemable.

I would suggest that one path forward for 1MDC users would be
for them to form a group, hire a law firm like the one that
now represents the Liberty Dollar people, and pursue a
recovery.  I have been talking to quite a few people about
whether this idea might be feasible.

> violate American law.  I'm sure you don't mean to say that I, as a Brit, 
> can use e-gold in a way that violates American law -- provided I obey 
> English law.

Well, you can almost certainly use it to buy into an
online gambling site without violating British law.

It is not at all clear whether e-gold wants to agree to
enforce USA law against non-USA persons.  There may also
be a question of whether it could, were it to seek to do so.

> Will there be a mechanism allowing an e-gold account to be attached to 
> two logins?

This upgrade has been contemplated for many years, I believe.

Regards,

Jim

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