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US authorities lose patience with e-gold
The men without the Midas touch.
By Gregg Keizer, Computerworld (US online) | Computerworld UK
Published: 10:06 GMT, 01 May 07
A federal grand jury has indicted online payment provider e-gold and three men on charges of money laundering and conspiracy.
According to a four-count indictment unsealed Friday, Dr. Douglas Jackson, Reid Jackson and Barry Downey, and their company e-gold, transferred funds even though they knew the monies were proceeds of child pornography, credit card fraud and bank fraud.
E-gold carried out these transfers over a six-year period from 1999 to 2005, the government said.
"Criminals of every stripe gravitated to e-gold as a place to move their money with impunity," Jeffrey Taylor, U.S. Attorney for the District of Columbia, said in a statement. "The defendants in this case knowingly allowed them to do so and profited from their crimes."
After the indictment was passed down, federal prosecutors seized funds in 58 e-gold accounts and froze the company's assets. E-gold can continue to operate under government supervision, however, and use existing funds to cash out unaffected accounts.
E-gold, which was founded in 1996, has been a favourite of online scammers because it is completely anonymous, said Ron O'Brien, a senior security analyst at Sophos. E-gold required only an email address to register, and as a digital gold exchange it is not required to perform background checks on users. "E-gold has attracted cybercriminals because of the anonymity," said O'Brien.
The service has also been favoured because payments are not reversible; once a payment is made, it can't be retracted by the sender. In fact, several "ransomware" attacks - malicious code that sneaked onto PCs, encrypted user files and then displayed a message demanding money to unlock the files - have used e-gold as the payment method between victim and criminal, O'Brien noted. E-gold payments have also been linked to the notorious ShadowCrew identity theft gang.
The two-and-a-half year investigation was led by the U.S. Secret Service, but investigators from the IRS, FBI, and state and local law enforcement were also involved.
If convicted on all four charges, Jackson, Jackson and Downey each face 35 years in prison.
"It's great that there is punishment doled out for these types of activities," said O'Brien. "But we'll have to see if [this indictment] serves as a deterrent."
As of late Monday, the e-gold website was still operating.
Add your commentComments
kojoD | Published: 11:21 GMT, 09 April 2009
I'm afraid, really afraid. What big brother is refusing to acknowledge is that e-Gold is a system; some sort of machinery that runs provided it is fuelled. It's all about the value and the case for anonymity. The Secret Service and all those cohorts are just robots; they always do the bidding of their programmers. There should be a little privacy in this world for God's sake. Why should big brother be everywhere? The e-Gold system has a set of guidelines and a code of ethics they have remained very faithful to regardless of whoever patronises their service. This is what big brother needs to learn from e-Gold, unflinching adherence to set rules of civilised conduct! Why should an innocent bus driver be made to pay for the offence of the masked gunman that boarded his vehicle (most probably he offered this service at gunpoint)? God save the world!
Joseph Burke | Published: 22:57 GMT, 07 May 2007
All the government needs to do these days to swing public opinion is tell people that their country or their children are under attack. They can destroy anyone using this tactic which is what they are doing to e-gold.
concerned | Published: 19:32 GMT, 04 May 2007
Big brother Again. Everywhere ! Very sinister.
Anonymous | Published: 14:52 GMT, 02 May 2007
35 years isn't enough for these guys they should get LIFE behind bars. They have commited multiple crimes and deserve to NEVER get out
Me | Published: 14:50 GMT, 02 May 2007
Hopefully these scammers go to jail for a very long time. Scumbags like them are not needed in this world.
Anonymous Coward | Published: 04:54 GMT, 02 May 2007
"It's great that there is punishment doled out" guilty till proven innocent, obviously this person believes everything the government says, including the weapons of mass distraction used to justify invading Iraq.
Dr. Douglas Jackson, Founder e-gold | Published: 12:44 GMT, 01 May 2007
My response e-gold.com/letter3.html contains hyperlinks that may be of interest. I am particularly interested in independent readings of the transcript from the emergency hearing before the Magistrate Judge in 12/29/05 and my correspondence with the USSS circa 11/04 - 1/05.
Bill Rogers | Published: 10:37 GMT, 01 May 2007
It was the intention by the secret services to taint e-gold beyond its ability to conduct business. The link to child pornography was clearly designed to terminate the business. A dead giveaway that the powers that be are out for the juggler. I’m surprised they didn’t go further and falsely link e-gold to Osama bin liner though they did falsely link e-gold to terrorism in a round about way. E-gold is subjected to a modern day witch hunt. In a witch hunt it's not about who is right and who is wrong. It’s more about right rests with might. Very soon Dr Jackson will face a kangeroo court in which they will accuse him of all kinds of black magic, spells and evil potions and then subject him to the modern equivalence to burning at the stake. One has to wonder if the Soviets fled Russia when the Berlin wall fell and joined the US secret service and Government. Seems like it’s the same people who ran that regime now controlling Uncle Sam.