Chalk up one more victory for the US Secret Service, IRS, FBI and US Department of Justice in their war to prevent online crime and keep us all safe from financial predators. E-Gold, the digital currency the Department of Justice labeled as a safe haven for internet scammers, online pyramid schemes, pedophiles and black market makers worldwide has been officially rendered defunct by the US government. Key to E-Gold’s demise was it’s anonymous nature and just like those Swiss Banks who booted US account holders at the IRS’s request last week, it’s become more than obvious that the US Government is engrossed with invasion of citizen’s personal and financial privacy on a level that would have our founding fathers turning over in their graves.

The Department ofJustice released the follwing press release entitled “Digital Currency Business E-Gold Pleads Guilty to Money Laundering and Illegal Money Transmitting Charges” :

WASHINGTON – E-Gold Ltd. (E-Gold), an Internet-based digital currency business, and its three principal directors and owners, pleaded guilty to criminal charges relating to money laundering and the operation of an illegal money transmitting business, Acting Assistant Attorney General Matthew Friedrich for the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today. E-Gold and its corporate affiliate Gold & Silver Reserve Inc. each pleaded guilty to conspiracy to engage in money laundering and conspiracy to operate an unlicensed money transmitting business. The principal director of E-Gold and CEO of Gold & Silver Reserve Inc. (Gold & Silver Reserve), Dr. Douglas Jackson, 51, of Melbourne, Fla., pleaded guilty to conspiracy to engage in money laundering and operating an unlicensed money transmitting business. E-Gold’s other two senior directors, Barry Downey, 48, of Baltimore, and Reid Jackson, 45, of Melbourne, each pleaded guilty to felony violations of District of Columbia law relating to operating a money transmitting business without a license. E-Gold, Gold & Silver Reserve and the three company directors were charged in an indictment returned by a federal grand jury on April 24, 2007. At sentencing, E-Gold and Gold & Silver Reserve face a maximum fine of $3.7 million. Douglas Jackson faces a maximum prison sentence of 20 years and a fine of $500,000 on the conspiracy to engage in money laundering charge, and a sentence of five years and a fine of $250,000 on the operation of an unlicensed money transmitting business charge. Downey and Reid Jackson each face a maximum of five years in prison and a fine of $25,000. Additionally, as part of the plea, E-Gold and Gold & Silver Reserve have agreed to forfeiture in the amount of $1.75 million in the form of a money judgment for which they are joint and severally liable. Sentencing for all defendants has been set for Nov. 20, 2008. In addition to the fines and prison sentences, each of the defendants agreed that E-Gold and Gold & Silver Reserve will move to fully comply with all applicable federal and state laws relating to operating as a licensed money transmitting business and the prevention of money laundering which includes registering as money service businesses. Also as part of the plea agreement, the businesses will create a comprehensive money laundering detection program that will require verified customer identification, suspicious activity reporting and regular supervision by the Internal Revenue Services’ (IRS) Bank Secrecy Act Division, to which the Financial Crimes Enforcement Network delegated authority according to federal regulations. E-Gold and Gold & Silver Reserve will hire a consultant to ensure their compliance with applicable law and hire an auditor to verify the companies’ claims that all transactions are fully backed by gold bullion. Under federal law and District of Columbia law, in addition to other jurisdictions, the E-Gold operation was required to be licensed and registered as a money transmitting business. However, according to information in plea materials, the E-Gold operation functioned as a money transmitting business without registering with the federal government and without a license in the District of Columbia. Because these businesses and individuals illegally failed to register and follow applicable regulations under federal and District of Columbia laws, the resulting lack of oversight and required procedures created an atmosphere where criminals could use “e-gold”, or digital currency, essentially anonymously to further their illegal activities. Specifically, according to information contained in plea materials, the E-Gold operation provided digital currency services over the Internet through two sites: www.e-gold.com and www.Omnipay.com. Several characteristics of the E-Gold operation made it attractive to users engaged in criminal activity, such as not requiring users to provide their true identity, or any specific identity. The E-Gold operation continued to allow accounts to be opened without verification of user identity, despite knowing that “e-gold” was being used for criminal activity, including child exploitation, investment scams, credit card fraud and identity theft. In addition, E-Gold assigned employees with no prior relevant experience to monitor hundreds of thousands of accounts for criminal activity. They also participated in designing a system that expressly encouraged users whose criminal activity had been discovered to transfer their criminal proceeds among other “e-gold” accounts. Unlike other Internet payment systems, the E-Gold operation did not include any statement in its user agreement prohibiting the use of “e-gold” for criminal activity. “By failing to comply with money laundering laws and regulations, the E-Gold operation created an environment ripe for exploitation by criminals seeking anonymity in conducting online transactions,” said Acting Assistant Attorney General Matthew Friedrich. “This case demonstrates that online payment systems must operate according to the applicable rules and regulations created to ensure lawful monetary transactions.” “The operations of E-Gold Ltd. and the other defendants undermined the laws designed to maintain the integrity of our financial system and created opportunities for criminal activity,” said U.S. Attorney Taylor. “Because of the successful prosecution of these defendants, digital currency providers everywhere are now on notice that they must comply with federal banking laws or they will be subject to prosecution.” “The Secret Service is pleased with the successful outcome of the E-gold investigation,” said U.S. Secret Service Assistant Director for Investigations Michael Stenger. “This case demonstrated that even the most sophisticated criminals cannot escape the combined resources of the Secret Service and our law enforcement partners. The Secret Service is committed to our mission of safeguarding the nation’s critical financial infrastructure and we will continue to pursue criminals seeking to use the Internet and new technologies to commit crimes.” The case was investigated by the U.S. Secret Service, IRS Criminal Investigation and the FBI. The case was prosecuted by Assistant U.S. Attorney Jonathan Haray of the U.S. Attorney’s Office for the District of Columbia, Senior Counsel Kimberly Kiefer Peretti of the Criminal Division’s Computer Crime and Intellectual Property Section and Laurel Loomis Rimon, Deputy Chief of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with assistance from the Criminal Division’s Child Exploitation and Obscenity Section. William Cowden of the U.S. Attorney’s Office Asset Forfeiture Unit assisted with forfeiture issues involved in the case. Source : http://www.usdoj.gov/opa/pr/2008/July/08-crm-635.html

The July 21, 2008 press release by the Department of Justice has many former E-gold customers scratching their head, wondering if their IP addresses and personal information will make them subject to further investigation by the feds but suffice to say, only the largest accounts, which made up 80% of the E-Gold system will have to worry if Uncle Sam will be shaking his bony finger in their direction.

Following the release of the DOJ information, Dr. Douglas Jackson made a public statement on the official E-Gold blog assuring that E-Gold would begin a process to become properly licensed to operate as a money services business in the United States.

In harmony with this transformation, we acknowledge that e-gold is indeed a Financial Institution or Agency as defined in US law and should be regulated as a Financial Institution. E-gold Ltd. has submitted an application to FinCEN to be registered as a Money Services Business and will be seeking licensure in all states that require it. Most importantly, working in conjunction with US government agencies, we will be exerting every effort to bring e-gold into compliance with US law and regulation as quickly as possible.

Many readers of this blog will remember that in the past, we have exposed Paypal as being allowed to operated their money services business in each respective state despite the fact that for over a decade Paypal has not been operating with proper licensing in each state they do business in.

Call this a conflict of interest or call it a government conspiracy, the truth is that both E-Gold and Paypal have been at odds for years. eBay, who owns Paypal, conveniently removed E-Gold as a valid payment processor for auctions several years ago, as they have removed every payment processor that threatens Paypal’s cash cow. Granted E-gold’s non-repudiation policy does not compare to Paypals supposed “buyer protection”, however anybody who has ever been scammed on eBay or somewhere else using Paypal, knows very well that Paypal doesn’t do very much to protect buyers and sellers using their service.

While it is not the intention of this blog to edify E-Gold’s legitimacy nor transmute Paypal’s squeaky clean image, it still seems rather ignorant that at a time when many US banks and financial institutions are imploding because of the mortgage crisis and the US dollar is being devalued against every major world currency, a payment system such as E-Gold which is based on the gold standard has more stability than a payment system based on the shrinking US Dollar. Not to mention, if the US keeps locking up citizens at the current rate of incarceration, there’s not going to be anybody left on the outside to pay the taxes which finance the booming prison industry.

Tagged : E-Gold, Department of Justice, Paypal, Douglas Jackson, FBI, IRS

A particularly nasty hoax has been spreading itself around the internet via spam messages to countless E-Gold account holders. The message claims that E-Gold founder Douglas Jackson was shot and killed by a police deputy on Friday evening. Here’s one of the emails that C4G Forum members have received :

E-gold founder, Douglas Jackson, 51, of Sheridan, Mont., was 4 times shot and killed Friday night on the Seventh Street ramp at East Seventh Avenue by off-duty County Deputy Daniel Montana Jr., police said. A spokesman for the Jackson’s family told Fox 31 that the autopsy details show the shots came from 3 to 7 feet away and were fired at a level angle, not from someone lying on the ground. The investigation is ongoing, said DA spokeswoman Pam Russell. More details at hyipops.com

This spam email is completely unfounded and the sources (hyipops.com or tellhyip.com in other spam emails) have zero credibility. There is no truth at all to this spam hoax and the people who have launched it should be prosecuted to the fullest extent of the law. Although many E-Gold account holders are aware that Jackson is not from Montana, evidently there are many who are oblivious to details. If you receive this hoax spam message, just dump it, it’s not true.

Update: The two sites listed in the spam hoax email (hyipops.com and tellhyip.com) are actually passing a Trojan to visitors’ browsers, so *DO NOT* visit the sites under any circumstances. Please see the report here.

I’d previously blogged about the Webmoney payment system in two articles detailing their services and announcing the fact they now have a “Gold Based” version of their Webmoney purse available. You can read those articles from the links at he end of this post. I’ve clearly stated my positive opinion of the Russian based Webmoney. At the moment, Webmoney seems to be the most promising payment processor next to V-Money. Their security is unparalelled and includes a complete software based solution to access your account or you can access your account through the X.509 root certificate based web interface. The ease of use globally makes Webmoney a true contender. The fact it is not located in the United States yet their customer support is absolutely exceptional is just one example of why Webmoney is “superior money”.

Potential Webmoney users and/or merchants will have to be aware that Webmoney requires verification of your account either through their WM Passport system or by sending an SMS Text Message from your cellphone. The WM Passport service had previously been available only in Russian language on the website but I just checked their site before writing this post and I was amazed to see the WM Passport is now available in English language as well.

In my case, I chose to activate by SMS on my handset but I was having a problem dialing the Russian phone number that I was supposed to send the SMS to. The phone number was shown as follow…

+7 (916) 805-46-12

Well, I’m not used to dialing international numbers but I tried about three text messages (to 79168054612) and none of them seemed to be getting through. I decided to try to just dial that number and see if it was in service and if I was connecting. That’s when I figured out that if you are dialing on a US based handset you have to dial the plus sign in the number. Well, I have one Samsung handset with T-Mobile for my personal use and a Motorola handset with Verizon for my business use. I was perplexed with both handsets as to how you get the plus sign in the number. I’m no stranger to text messages, but this one had me stumped. Well, I logged into my Verizon account and found out I’d have to add another monthy charge and change my service plan to be able to send an international text message. Ok, Verizon was out, so I just dialed support on my T-Mobile phone (I love T-Mobile dial 611 for support), anyway, I got a very friendly support person that let me know that T-Mobile allows any account to send international SMS messges for .20 per message. He also told me to dial the plus sign, on almost any handset, all you have to do is hold down the number “0″ until the plus sign appears. Armed with that information, I had my webmoney account verified in 5 minutes. Awesome service by both T-Mobile and Webmoney!!!

To open a Webmoney account and have a look for yourself, their site is available at the link below…
http://www.wmtransfer.com/

Opening an account is free of charge rest assured, Webmoney is worth a look just to see all of the features they offer. Plus, they show their daily stats on their front page, and today’s were rather interesting…

Total registrations in WebMoney Transfer: 4 094 626.
15-09-2007: 73337 transactions, turnover 3 535 391 USD,
3796 new registrations.

Seems like quite a few people are opening Webmoney account these days. As a footnote, I assume most of the people reading this post are aeware that Webmoney now offers a “gold backed” purse called Webmoney G. Thumbs up !! Below are two of my previous articles on Webmoney.

• Webmoney E-Currency Review
• Webmoney Goes Gold

Perhaps you’ve been to a website that displayed the GDCA accreditation logo pictured here at the the left. The GDCA accredited logo, which is meant to assure consumers that the site they are doing business with has been issued this logo because of satisfactory business practices. Although the issuer of these accreditation logos has no ties to any world governmental agencies. They have no “official” status in the financial community, the gold markets or any other affiliation of merit to lend validity to these accreditation logos they distribute except their own “self-proclaimed” authority. Many of you may also be familiar with the organization known as GDCA aka Gold Digital Currrency Association (http://www.gdcaonline.org) and the fact that they have recently issued a warning to E-Bullion users in July 2007, calling upon E-Bullion customers to abandon the processor in lieu of allegations that E-Bullion has frozen accounts . Exerpt below…

Exerpted from : http://www.gdcaonline.org/content/news.html

While many people find the reputation of GDCA to be an authority in the industry, a controversy has recently been unveiled by Mark Herpel at Digital Money World. In an very diplomatic, open letter to GDCA published on his blog Open Letter To The GDCA Regarding e-Bullion, Mark asks the GDCA for factual proof to the allegations regarding E-Bullion freezing accounts. If there is one person in this industry I truly have respect for and enjoy his take on prominent issues, it’s Mark and DMW. In the past I’ve exchanged opinions with him on a variety of topics and I’ve always found his approach to be based on intelligent research and facts before fiction.

The reason this blog post has the “Strang Bedfellows” tacked on at the end of the title is due to the discovery, on Mark’s blog, that the President of GDCA is none other than Robert, the owner of C-Gold, and owner of Cyfro Associates who is an anonymous web-hosting company based out of Malaysia that has harboured numerous scammer’s websites in the past and currently hosts Andy from XLO’s fraud CyberSpaceAtm payment processor. Although I have heard a complaint regarding E-Bullion freezing an account that was making a big out-exchange to GoldEx, it turned out the complaintant had been operating a frudulent HYIP program and was trying to get his hand on his ill gotten gains when E-Bullion froze the account, requesting identification information from the fraudster. Otherwise, I have not heard any allegations regarding E-Bullion from honest people who were accessing funds that were not obtained through fraudulent measures.

The fact that GDCA, and their President who is owner of C-Gold (see my C-Gold article here C-Gold : New Gold Based E-Currency or Hoax ?), especially take note of the comments section where “Robert” claims to not know how an autosurf program works, yet he is the President of GDCA, owns C-Gold and has been the domain registrar of both of scammer Andy’s XLO autosurf programs. You may also have seen Andy openly stating on ASAMonitor.com forums that his new program XLOTwo *is* a ponzi and his choice of hosting in Malaysia is to avoid any closure by the US Department of Justice.

Call it coincedence, call it what you will, but I call it Strange Bedfellows, and now that it’s been exposed, I must fully warn any of my blog readers from relying on GDCA information and/or from using C-Gold. It’s more than a conflict of interest, it’s a vested interest of the worst kind.

Editors note: At time of writing this article it appears C-Gold.com website has disappeared.

Once in a while you find a service that’s just so good you just have to tell everybody about it. For me, that would happen to be GoldEx. GoldEx is a full service eCurrency exchanger that also offers a reloadable debit card. They work with E-gold, Webmoney, Pecunix, V-Money and used to deal with E-Bullion but after a recent threat by E-Bullion to confiscate GoldEx’s funds, they have suspended services to and from that processor.

GoldEx is the first fully 128 bit SSL secured PGP encrypted internet based transaction website for the purchase of e-gold and other internet currencies within 12 to 24 hours. They are definitely the fastest and most reliable exchanger I’ve dealt with outside of the now defunct Omnipay. I am personlly a GoldEx debit card holder and I’ve never waited more than 24 hours for my card to be loaded regardless of the eCurrency used to load the card. The same can be said for my experiences doing echanges through GoldEx. Their support is the best in the industry and the owner Marco is one of the most pleasurable and friendliest person to deal with.

GoldEx offers buying, selling and exchanging of numberous eCurrencies. GoldEx has been operating since 2001 and has many very satisfied clients from every country in the world. GoldEx is currently accepting E-gold sales and funding to the GoldEx debit card. The debit card costs $50 and is shipped very quickly and well worth every penny that it costs to purchase one. Purchasing the card does not require any disclosure ofpersonal identification except for your name and mailing address, nor does funding your GoldEx card. Below is a list of the Goldex debit card’s fees and features.

GoldEx Card Fees and Features

• Monthly Maintenance Fee $4.95
• US ATM Monetary Transaction $1.25
• Domestic ATM Balance Inquiry $1.00
• Domestic ATM Decline Fee $0.75
• International ATM Monetary Transaction $4.00
• International ATM Usage Transaction $1.00
• NOTE International ATM Usage includes Balance Inquiry & Declined Transactions.
• PIN-Based Point-Of-Sale Purchase Transaction $0.55
• PIN-Based Point-Of-Sale Decline Transaction $0.55
• Card Funding e-gold 10.00% V-Money 3% - Pecunix 4% - WebMoney 5% - Minimum Fee $10.00
• Replacement of card (lost or stolen) $20
• Bank Funding Fee (per funding)$3.00
• Daily withdrawal limit : USD 3,000
• Maximum per ATM withdrawal: $500
• Maximum load amount: $7,500 daily $30,000 monthly
• No Name on the card
• 100% Security & Privacy
• Pay Merchants anywhere
• Ideal for Family & kids
• Easily convert your Gold or Ecurrencies to Cash
• Affiliated with the VISA PLUS Network.

The GoldEx card is affiliated with the STAR - VISA® - PLUS network, it is accepted at over 5 millions Points of Sale (POS) worldwide and in some 650,000 ATM machines displaying the ‘PLUS’ logo, throughout the world. The card can be funded by Egold, WebMoney, Pecunix or V-Money. Card fundings normally take place the SAME DAY, and usually within hours. Card will NOT be shipped to certain countries due to banking regulations, so make sure to check with GoldEx support before ordering.

If you’re interested in opening a GoldEx account, please click the banner below or visit http://www.goldex.net

Please feel free tocomment on this article and share your experiences with GoldEx. Also, GoldEx supporters, stay tuned for an interview with Marco from GoldEx in the near future.