Fwd: Bullion and Bandits: The Improbable Rise and Fall of E-Gold

[R.A. Hettinga]

Begin forwarded message:

> From: Steven Schear <steven.schear at googlemail.com>
> Date: June 11, 2009 1:07:23 PM GMT-04:00
> To: "R.A. Hettinga" <rah at shipwright.com>
> Cc: Various Other People
> Subject: Re: Bullion and Bandits: The Improbable Rise and Fall of E-
> Gold
>
> I have little sympathy for Jackson. For years, he was repeatedly
> warned by
> his largest exchangers and supporters that the Feds would not treat
> him
> fairly, just as they have not treated fairly foreigners operating
> offshore
> gambling sites which accept American players. He was pushed and
> prodded to
> establish a rational and jurisdictionally distributed legal and
> operating
> structure and either become and ex-patriot and/or sell key parts of
> the
> business to foreigners to insulate him and the business from just
> the sort
> of events that later transpired, but his follow through was
> incomplete.
>
> His ego and naivety were his undoing. If nothing else, his plight has
> educated and served as the primary example, to new entrants in digital
> currencies, what paths not to follow.
>
> Steve
>
>
> <http://www.wired.com/threatlevel/2009/06/e-gold/>
>
>
> Bullion and Bandits: The Improbable Rise and Fall of E-Gold
>
> By Kim Zetter  June 9, 2009  |  12:00 am  |  Categories: Crime, The
> Courts
>
> MELBOURNE, Florida  In a sparsely decorated office suite two floors
> above a
> neighborhood of strip malls and car dealerships, former oncologist
> Douglas
> Jackson is struggling to resuscitate a dying dream.
>
> . . .
>
> 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 in a press release. 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.
>
> Clement, the attorney, disputes the governments depiction of
> Jackson. They
> automatically assume that E-Gold somehow made it easy for these people
> involved in money laundering, or [sought criminals] as clients, says
> Clement. But thats completely the opposite of Dougs attitude
> toward any
> kind of illegal behavior. It would be crazy for somebody to seek out
> that
> kind of business.
>
> Jackson, whod hocked his future to start E-Gold, now faced the
> potential of
> a federal prison term. He was frustrated and confused.
>
> It never crossed my mind that anyone could seriously want people
> like us in
> prison, he says. But I guess my bigger fear was that we would go
> bankrupt,
> and there would be a train wreck of people that had trusted value to
> us who
> couldnt get their money.
>
> Timberlake, the economics professor, is convinced that Jacksons
> radical
> dream, his goal of upsetting the economic status quo and overturning
> the
> governments monopoly on money, is what really got E-Gold targeted.
>
> No matter how innocent a person is you can always find a law that
> government agents can use to convict him of something, Timberlake
> says,
> And this is a perfect example of it. Any time anybody tries to
> produce
> money, the federal government is going to be on their tail.
>
> After a year-and-a-half of court wrangling and negotiations, Jackson
> pleaded
> guilty last year to conspiracy to operate an unlicensed money
> transmitting
> service and conspiracy to commit money laundering. In November he was
> sentenced to 36 months of supervised released  including six months
> of
> house arrest and electronic monitoring, and 300 hours of community
> service.
> In addition to forfeiting about $1.2 million to the government, his
> two
> companies  Gold and Silver Reserve and E-Gold Limited  were fined
> $300,000, to be paid in $10,000 monthly installments beginning last
> month.
>
> The plea agreement is conditional on Jackson revamping his business to
> comply with regulations governing money-transmitting services  a
> goal that,
> Jackson concedes, faces many hurdles. To begin the process of
> compliance, he
> suspended the creation of new accounts. Existing customers are now
> required
> to submit a government-issued photo ID and proof of residence to
> authenticate their name, address and other details, and are limited to
> $1,000 to $3,000 a month in transactions until they pass muster.
> Customers
> in high-risk countries  such as Nigeria, Russia and Ukraine  are
> suspended
> from making any transactions at all for now. Their money is locked
> indefinitely in E-Golds servers.
>
> Jackson, who always considered himself one of the good guys,
> acknowledges
> today that he might have done a better job of policing his system
> from the
> start. In hindsight theres any number of things that would have
> been a
> smarter or better way of approaching things, he says.