Judge Rules Against e-gold In Seizure Warrant Motion

Judge Rules Against e-gold In Seizure Warrant Motion

Mark Herpel, June 26, 2007

There was some bad news earlier today on a private email list which stated that last week’s motion by e-gold defendants to release their seized gold funds had been denied. The actual text is here:

MINUTE ENTRY ORDER denying [35], [36] Defendants’ Motion to Vacate Seizure Warrant and to Modify Restraining Order and Request for an Evidentiary Hearing. For the reasons stated at the June 21, 2007 hearing, in open court, the Defendants’ Motion is hereby DENIED. This is a final appealable order. See Fed. R. App. P. 4(a).

Signed by Judge Rosemary M. Collyer on June 22, 2007. (cdw)

The seized assets shall remain frozen.

If you are just tuning in, back in late April, a federal grand jury in Washington, D.C. indicted two companies, E-Gold Ltd and Gold & Silver Reserve, Inc, and their owners Dr. Douglas L. Jackson, Reid A. Jackson and Barry K. Downey on charges of money laundering, conspiracy and operating an unlicensed money transmitting business.

All of these charges have been vigorously denied by the e-gold camp plus e-gold is still operating and the e-metal issued by them is still widely used around the globe. Their primary dealer, OmniPay is on a quick hiatus and now has an ongoing move of their business out of the US and into a west African nation. We should hear move positive news on OmniPay in the coming weeks.

At the time of the indictment, the DOJ also issued two dozen seizure warrants on something like 60 e-gold accounts which they said currently held property involved with the alleged money laundering and/or the alleged unlicensed money transmitting business.

One or several of the seized accounts held the e-gold that was backing 1MDC (the fast and convenient payment system built around e-gold). 1MDC was a great online system that offered storage of your digital gold without monthly fees. Unfortunately, if you had a 1MDC account at the end of April, you lost all account value during the government’s seizure of the e-gold accounts!

1MDC accounts are still intact, but the units no longer have any value. Over the past few weeks, there has been some buying and selling of 1MDC between existing account holders below market prices. Not surprisingly, a few people had hopes that if 1MDC came back from the dead, they could profit from it’s resurrection.

If last week’s hearing had vacated the seizure and released the funds, 1MDC may have taken it's first steps towards value. That did not happen and I think any tiny hope of a 1MDC comeback is now fading.

It is a bit like understanding the Beatles will not be getting back together because you just realized today that some of them are already dead...it ain’t going to happen.

The hearing, which occurred last Thursday, was to vacate the Seizure Warrant and release the funds from the entire asset seizure. Unfortunately, the Judge denied it and consequently 1MDC shall remain worthless. All of these seized funds (all 58 accounts) holding an estimated $11-$16 million is still being held by the government pending an outcome from this mess.

In the recent NETeller founders case, the $50+ million in frozen US client funds was eventually stamped as ‘released’ by the DOJ after a plea agreement with the defendants.

I don’t have any inside information on the current e-gold legal matters, but it does not seem that the government or the defendants are looking for any type of plea agreement right now. Stay tuned…