E-Gold founder fires back at indictments

Executive "vigorously denies the charges" of money laundering, other offenses handed down by a federal grand jury.
Written by Dawn Kawamoto, Contributor
In a lengthy rebuke, the founder of online-payment system provider E-Gold and its parent company disputed a four-count indictment that accused the company of turning a blind eye to child pornography and stolen credit card numbers.

E-Gold founder Douglas Jackson said he "vigorously denies the charges" a federal grand jury handed down Monday against E-Gold, parent company Gold & Silver Reserve, himself and company directors Barry Downey and Reid Jackson.

The grand-jury indictment alleged that the defendants engaged in money laundering, operated an unlicensed money-transmitting business and conspired to commit the offenses. It accused the defendants of allowing transactions to be processed between 1999 and December 2005, with very little restrictions or checks on an account holder's identity, even when they knew that a transaction was the result of criminal activity such as an investment scam or child pornography.

"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," Jackson said in a statement.

He noted that Nevis-based E-Gold is a founding member of the National Center for Missing and Exploited Children's Financial Coalition Against Child Pornography. He said the payment system is structured to allow the company to track transactions more closely than other heavily regulated systems

Gold & Silver Reserve also operates an online-exchange service, OmniPay, that follows a policy of accepting money payments only by bank wire, Jackson said.

"If bank wires aren't already 'clean,' then what is?" Jackson asked.

He also denied the money-laundering allegations, saying E-Gold runs a closed-payment system that does not accept money payments in any form and does not own any form of national currency.

As part of the indictments, the government issued warrants to seize most of the accounts that E-Gold and its parent company personally held, representing approximately $1.5 million in E-Gold funds. The seizures resulted in both companies losing most of their operating funds, Jackson said.

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