Law enforcement officials are investigating the business of Florida oncologist-turned-Internet entrepreneur Dr. Douglas Jackson to determine if he had any knowledge of criminals allegedly using his gold-backed currency system to launder money or steal identities. In December the FBI raided Jackson's Melbourne business, Gold & Silver Reserve Inc., the parent company of e-gold Ltd., and his home in Satellite Beach. The E-Gold raid may be set off by an alleged digital currency scam by a minor digital currency company. The U.S. Department of Justice raided the offices and homes of the principals of INTGOLD which had been portrayed by some members of the DGC community as a Ponzi scheme in the weeks leading up. Some of the funds in INTGOLD traveled through exchange agents also dealing in E-Gold had been deposited or withdrawn through independent exchange agents. E-Gold, arguably the oldest DGC, did not appear to be anymore involved in the fraud than banks who unknowingly receive allegedly tainted funds. In the raid, federal agents took files and hardware related to e-gold, an on-line service Jackson started in 1996, which turns physical dollars into digital currency that is backed by gold repositories in London and Dubai. Some aspects of the company's operations were reported by Jackson to have been impaired. Bank accounts were seized and some funds were impounded. Jackson said the investigation has resulted in a loss of revenue when computer servers were taken off-line for 36 hours. "The worst effect, of course, is on our reputation," Jackson said. It "will surely impair our efforts to build strategic relationships with the host of businesses and individuals that would benefit from an embrace of e-gold." It seems there has been some on-going regulatory maneuvering by E-Gold to have its services classified as a currency rather than a payment system operator or money transmitter. Whether an on-line payment system or digital currency service meets the definition of a money transmitter pursuant to U.S. Banking Secrecy Act (BSA) regulations, though, depends upon its location and the ways in which it participates in or conducts transactions. Many on-line payment systems are based outside the United States and are not subject to US jurisdiction. Some on-line payment systems maybe be licensed in one country and maintain operations in various other countries without a physical retail presence anywhere. Determining which legal entity has jurisdiction for regulatory and enforcement purposes can be challenging for regulators. As a result, potential users around the world now are finding they can go on-line to access payment solutions that may be unavailable from a domestically-regulated service provider. In possible coordination with the raid an uncomplimentary and perhaps unfair piece about E-Gold was published by in January 9th issue of BusinessWeek magazine, with the article noting that e-gold and similar on-line payment systems are becoming the currency used by cyber-criminals to steal credit card information, sell identities and make ill-gotten cash disappear. Experts say similar issues will keep cropping up as the world moves to digital medium and online payment systems gain more mainstream acceptance. At e-gold alone, Jackson estimates his site has more than 1 million users moving billions of dollars a year for a small fee. Jackson denied he didn't adequately police his company, adding that he has an investigative staff that responds to inquiries from agencies inside and outside of this country that need information about e-gold customers. Jackson said, "E-gold has a long history of cooperation with law enforcement agencies in the U.S. and worldwide, providing data and investigative assistance in response to lawful requests" and that prior to the raid he had met with officials from the FBI, the Internal Revenue Service, the Securities and Exchange Commission and other federal agencies to ensure his company was compliant with the law. Jackson added that, on more than 300 occasions they provided the government with information regarding individuals government agencies believed were breaking the law. The case against G&SR, operators of the e-gold payment system, has been filed in Washington DC courts. Here are some of the filings, apparently from the PACER system, which is a US Government site for court documents. [Thanks to Ian Grigg and his excellent Financial Cryptography blogg https://www.financialcryptography.com/mt/archives/000640.html for the following links] www.financialcryptography.com/download/Complaint_e-gold.pdf www.financialcryptography.com/download/Doc3e-gold.pdf www.financialcryptography.com/download/Doc4e-gold.pdf www.financialcryptography.com/download/Doc5e-gold.pdf www.financialcryptography.com/download/Doc6e-gold.pdf www.financialcryptography.com/download/Doc7e-gold.pdf Steve [Portions of the preceding were excerpted from a January 6, 2006 article in Florida Today]