Part IV: I fought the law.

Actually, Gold & Silver Reserves Inc.—the parent company of e-gold—although not partners as such, enjoyed a pretty solid working relationship with national and international law enforcement agencies (see Part III). With the help of the corporation disclosing account details when requested, criminals were more likely to get caught on the misplaced assumption that they were protected by anonymity when transacting in e-gold.

On the face of it, everyone apart from the criminals ought to have been happy: there were less malefactors at large, cops could celebrate their arrests in the strip clubs after hours, e-gold was still the remittance of choice for guest workers to send back home and the corporation were flying so high they daren’t look down. But this cosy arrangement with law enforcement agencies didn’t extend to all of them: the relationship with the Secret Service was much more frosty.

In a rare moment of cooperation instigated by a Secret Service agent who called to give the heads-up on a malware attack in late 2004, a meeting was arranged in Washington DC with the Secret Service and a host of national and international crime agencies from countries such as Australia and Britain. Dr Jackson’s hope was to get the Secret Service up to speed with his investigators on how best to track down the criminal class who utilised e-gold.

However, when he tried to obtain a travel voucher to pay for his flight to Washington in January 2005, the request was refused. When he then made his way there at his own expense and arrived at the venue, he discovered he was persona non grata and refused entry. That’s when Dr Jackson began to suspect that the Secret Service had a deeper agenda.  

He suspected that the Secret Service had only a token interest in fighting crime; and according to multiple law enforcement agencies he had spoken to, they would often plunge into their investigations to steal an easy catch and mess up the opportunity to haul in the big fish. A conspiracy theorist can make of that what they will, But Dr Jackson was convinced that the Secret Service acted primarily in order to protect the interests of a powerful cabal by putting would-be competitors out of business. They behave like the doorman to an exclusive club—if you don’t play by their rules, you’re out the door and blacklisted.

After the execution of multiple search warrants, asset seizures and the freezing of payments in December 2005 (see PART III)—all brought about on shaky legal grounds whereby the Secret Service had deliberately spiced up the allegations to convince the judge—the e-gold corporation sought to convince the now largely sympathetic judge to return the money. The judge had the power to do so but waivered and when it looked like he was about to do so, the government filed for a forfeiture action in a matter of hours rather than the usual months to ensure that option was quickly off the table.

Forfeiture laws mean that the onus is on the government to prove that the defendant has benefitted materially from criminal activity and not entitled to keep the proceeds. Dr Jackson and others have argued, regarding this area of law, that the burden of proof is actually unfairly placed upon the defendant to prove that the seized assets were legitimately acquired (they can also be seized even if the defendant has not engaged in wrongdoing). He and others have argued that forfeiture law is too easily applied and too difficult to disprove. It is outdated with roots in maritime law from the era of Queen Anne when the Royal Navy could seize any cargo from ships entering or exiting a British port that wasn’t flying a British flag regardless of any wrongdoing by the owner or their whereabouts.  

The Department of Justice addressed this general concern with the burden of proof issue in 2015:

2. Burden of Proof

Another frequent criticism of civil forfeiture is that owners of seized property are presumed “guilty” and thus have the burden of proving their “innocence” to regain their property. This, it is said, turns the bedrock legal principle of “innocent until proven guilty” on its head.

As previously noted, in all forfeiture proceedings, including civil forfeiture, the burden of proof is on the government. If the government fails to meet its burden of linking the property to criminal activity, it loses the case without the property owner having to make any showing of innocence. In other words, the property’s connection to crime must be proved by the government, not disproved by the owner. And while the Supreme Court has held that the innocent owner defense is not constitutionally required, the law nonetheless provides a claimant the opportunity to demonstrate that despite the government having met its burden, the asset should nonetheless not be forfeited. As Justice Kennedy has observed, in civil forfeiture, “only the culpable stand to lose their property; no interest of any owner is forfeited if he can show he did not know of or consent to the crime.” United States v. Ursery, 518 U.S. at 294 (concurring opinion; internal citation omitted) (DOJ, 2015).

So the money was gone. Round one to the government. Dr Jackson reflects with hindsight that after this shot across the bows, and notwithstanding the smears and dubious allegations, it is usual for a financial institution to acknowledge their ‘wrongdoing’, bend the knee and ask how to put things right; how to fly the right flag, so to speak. He didn’t know this at the time or was too taken with righteous indignation to comply and therefore resumed commercial activities, which is understandable for someone who feels they have done nothing wrong and have always acted with the best intentions. Unfortunately, the road to hell is paved with good intentions.

References

Justice.gov. 2015. STATEMENT FOR THE RECORD U.S. DEPARTMENT OF JUSTICE BEFORE THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE FOR A HEARING ENTITLED THE NEED TO REFORM ASSET FORFEITURE. [online] Available at: <https://www.justice.gov/sites/default/files/testimonies/witnesses/attachments/2015/10/06/doj_submission_for_the_record_re_asset_forfeiture_reform_act_15apr152_2_508_compliant.pdf> [Accessed 9 October 2021].