The Justice Department unsealed the 28-page indictment Friday after spending two and a half years probing e-gold and its operating company, Gold & Silver Reserve.
Justice Department officials said that the company grew into a “highly favored” method of payment for operators of investment scams and criminals on virtual bulletin boards who swap stolen credit card numbers and other sensitive information, as well as online vendors of child pornography.
The indictment accuses company executives Jackson, Barry Downey and Reid Jackson of allowing such transactions without imposing meaningful restrictions or conducting checks on an account holder's identity, even when they were allegedly aware criminal activity was occurring.
“As alleged in the indictment, the defendants in this case knowingly allowed them to do so and profited from their crimes,” U.S. Attorney Jeffrey Taylor said.
But Jackson, who also founded e-gold, denied the charges, taking particular exception to the allegations that either company ever turned a blind eye to payments for child pornography or for the sale of stolen identity and credit card information.
“In post 9-11 America, child porn and terrorism serve as the denunciations of choice. e-gold, however, as a matter of incontrovertible fact, is the most effective of all online payment systems in detecting and interdicting abuse of its system for child pornography related payments,” Jackson said in a statement disseminated to the media.
“e-gold is the only member institution to demonstrate with hard, auditable data, a dramatic reduction of such payments to virtually zero, while billions of child porn dollars continue to flow through other heavily regulated payment systems,” said Jackson, who noted that e-gold is a founding member of the National Center for Missing and Exploited Children's Financial Coalition to Eliminate Child Pornography.
The 11-year-old company mainly engages commerce over the Internet. It has 4 million registered users who deposit funds into an e-gold account and those funds are converted into equivalent amounts of gold and silver that is stored in banks in Europe and the Middle East.
With the indictments, the Justice Department also served seizure warrants on Nevis, Lesser Antilles-based e-gold and its parent, ordering it to freeze about $1.5 million, Jackson said.