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.
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SOURCE U.S. Department of Justice
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Related links:
http://www.usdoj.gov
CONTACT:
U.S. Department of Justice, +1-202-514-2008,
or TDD, +1-202-514-1888
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