U.S.: Online Payment Network Abetted Fraud, Child Pornography

Another Bush "Faith Based" organization indicted for fraud, child rape.

On Sat, 05 May 2007 16:12:03 -0700, barbz <xenubarb@netscape.net> wrote:

> http://www.offshore-services.biz/

> Thetaworld...holy crud!

How special. One of their payment processers is "e-gold," which has just

been indicted for money laundering and conspiracy, and is accused of aiding

and abetting fraud and child pornography.

Scientology ethics at work again!

And what's with the pictures? How does the picture of a dude hawking fruit

in the street evoke an image of financial stability? Exactly how big of a

fucking fool would someone have to be to sign up for a service with a web

spammer hawking overseas bank accounts and The Way to Happiness on

the same site?

http://www.washingtonpost.com/wp-dyn/content/article/2007/05/01/AR2007050101291..html

U.S.: Online Payment Network Abetted Fraud, Child Pornography

By Brian Krebs

washingtonpost.com Staff Writer

Tuesday, May 1, 2007; 5:56 PM

The principal owners of E-Gold Ltd., an online payment system where users

convert currency assets into equivalent amounts of precious metals, were

indicted last week for allegedly allowing the service to be used by

criminals engaged in financial scams and child pornography.

The indictment names the company's co-founders -- Douglas L. Jackson, of

Satellite Beach, Fla., and Barry K. Downey, of Woodbine, Md., as well as

Reid A. Jackson, of Melbourne, Fla. They are charged with conspiracy, money

laundering and operating an unlicensed money transfer business. The company

has offices in Melbourne, Fla., but is incorporated in the Caribbean island

of Nevis.

"The advent of new electronic currency systems increases the risk that

criminals, and possibly terrorists, will exploit these systems to launder

money and transfer funds globally to avoid law enforcement scrutiny and

circumvent banking regulations and reporting," said James E. Finch, of the

FBI's Cyber Division.

Founded in 1996, E-Gold is a unique take on Internet-based payment systems.

Its 4 million registered users 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. The company's business

was designed to appeal to persons engaged in cross-border financial

transactions, particularly for persons who prefer the relative stability of

precious metals to fluctuations in the value of national currencies. Over

the past 24 hours, the system processed a little more than $3.4 million in

transactions, according to the E-Gold Web site.

The government charged E-Gold and its parent, Gold & Silver Exchange, with

operating an unlicensed money transmitting business under federal law and

one count of money transmission without a license under D.C. law.

The indictment follows a two-and-a-half year investigation by the FBI, the

U.S. Secret Service and the IRS into E-Gold's operations. In December 2005,

the Secret Service and FBI raided the company's headquarters and seized

roughly $800,000 in assets. Last Friday, the government seized another $1.5

million in company assets, according to Jackson. The assets seized last

week were in the form of E-Gold deposits.

At the heart of the government's case are allegations that E-Gold

executives turned a blind eye to illegal activity on its networks, activity

that allegedly ranged from the transfer of proceeds garnered from pyramid

and investment scams to credit-card fraud and payments for child

pornography materials.

According to the federal indictment unsealed last month, the company's

directors monitored their users and were actively aware of which accounts

were engaged in illegal activity. Yet the indictment alleges that company

officials did little to stop transactions to and from these accounts. The

government also noted that E-Gold does not include any statement in its

user agreement prohibiting the use of its services for criminal activity.

The government also charges that E-Gold assigned only a single employee

with no relevant experience to monitor hundreds of thousands of accounts

for criminal activity, and that it encouraged users whose criminal activity

had been discovered to transfer funds to other E-Gold accounts.

Jackson, who is slated to surrender before a federal magistrate in

Washington on Thursday, strongly refuted the government's claims. He said

that over the past three years his company had turned over information on

more than 3,000 accounts that were used for either buying or selling child

pornography. E-Gold also turned over information on more than 2,000

accounts thought to be connected to credit-card fraud, Jackson said.

He also asserted that his company has been working with the U.S. Postal

Investigative Service and other law enforcement agencies to track hundreds

of problematic accounts and that E-Gold was repeatedly asked not to block

transactions to and from many of the accounts as it would interfere with

ongoing federal investigations into credit-card fraud and child pornography

rings.

"Quite frankly, the saddest element of all this is that because they

designated us the bad guys, a lot of the worst criminals are still out

there, when we could have helped haul them in," Jackson said. "Their

decision to close ranks has directly resulted in a gross misallocation of

resources, with the result that vicious criminals who might have been

brought to justice remain at large."

Richard Field, an attorney and consultant in payment systems law, called

the government's investigation of E-Gold "unusually intense."

"I haven't seen this level of focus or attention on other payment systems

before," Field said. "This aggressive action against E-Gold appears to be

intended to send a signal to others as well that you're responsible for

setting up your system in a way that does not enable this kind of

activity."

Experts say the global market for child pornography online is lucrative and

thriving. Ernie Allen, president of the National Center for Missing &

Exploited Children, in Alexandria, Va., said the demand for child

pornography has fueled a multi-billion-dollar-a-year business that is

increasingly Web-based.

Allen said roughly 90 percent of the U.S.-based payments industry has

joined a coalition to police their networks for indications of commerce in

child pornography, and that those efforts have forced child pornographers

to almost exclusively use online payment services.

"We believe this kind of effort is at least disrupting the child

pornographer's business model, and increasingly these individuals are

evolving to use more customized and exotic online payment methods," Allen

said.

The government strongly hinted that it plans to monitor online payment

systems as part of a larger effort to crack down on child pornography. The

FBI's Lynch said the agency "will continue to work closely with the

Department of Justice and our federal and international law enforcement

partners to aggressively investigate and prosecute any, and all, persons or

organizations that use these systems to facilitate child pornography

distribution, to support organized crime, and to perpetrate financial

crimes."

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Christian terrorism murders another half a million people:

http://www.cnn.com/2006/WORLD/meast/10/11/iraq.deaths/