Forfeiture Complaint Filed Against Accounts Maintained by E-gold, Ltd, Traceable to Criminal Offenses
Baltimore, Maryland - A civil forfeiture complaint was filed today for the forfeiture of the value of all e-metal accounts recorded and maintained by e-gold, Ltd (EGL ), a company that was engaged in the business of exchanging traditional forms of currency for precious metals held in electronic form (“e-metals” or “e-gold”) and settling payer initiated transfers of e-metals from one customer account to another.
The forfeiture was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge David Beach of the United States Secret Service – Washington Field Office.
According to the affidavit filed in support of the forfeiture complaint, in 2008, EGL pled guilty in the District of Columbia to operating an illegal money transmitting business. As part of its plea agreement, the company agreed that the value of all of the e-metal accounts remaining on its books were subject to forfeiture and agreed to identify any customer e-metal accounts that contained funds traceable to criminal activity. The company has fully cooperated and has identified a long list of e-metal accounts containing funds traceable to criminal offenses including child pornography, credit card fraud, identity theft, investment fraud, and the sale of stolen or non-existent goods on the internet. Over $19 million has been previously seized as a result of the criminal investigation. This complaint seeks the remaining funds located in 609 accounts, estimated to be worth approximately $8.6 million.
According to the affidavit, in 1996, EGL began offering e-gold as a digital currency, a medium of exchange offered over the Internet that is purportedly backed by precious metals and offers users a means of conducting the transfer of funds on-line. Digital currencies are generally marketed as offering global acceptance without the need for conversion between national currencies, and are valued at fluctuating rates tied to the price of a particular precious metal, especially gold. Digital currency is used for on-line commerce or for funds transfers between individuals for private purposes. In general, an EGL customer opened an e-gold account, and then could use the Internet to transfer the value in his or her account to any other EGL customer anonymously and instantaneously anywhere in the world. The recipient could then redeem the e-gold for any national currency. Because of the ease with which customers could purchase and transfer e-gold anonymously, outside of the confines of the traditional banking system, trading in e-gold became popular among persons looking for a way of laundering criminal proceeds and/or transferring criminal proceeds to third parties. In particular, e-gold was widely accepted as a payment mechanism for transactions involving credit card and identification fraud, high yield investment programs and other investment scams, and child exploitation. E-gold was not widely accepted by large or mainstream vendors.
United States Attorney Rod J. Rosenstein praised the U.S. Secret Service Washington and Orlando Field Offices and the SCIRS-SS Task Force for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Stefan Cassella, who is handling the civil forfeiture for the government.