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Article #223: FBI Raids: Pertinent or Paranoid?

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Business always moves faster than releases issued by the investigating
government ... It's no surprise that a authorities have always been very
great deal of lawmakers' time is spent specific in their nature, because major
reacting to advances in commerce and banks have enough financial and political
science. It's also no surprise that one clout to strike back at anything less. An
of their favorite tactics is to call on example of a precisely identified
their enforcement agencies to bring transgression is the Citigroup private
scrutiny against any topic about which banking scandal in Tokyo in 2004. The
they're struggling to understand. We're Japanese authorities said the bank helped
now seeing this applied against at least clients manipulate accounting records
two e-currency operations. One of them, through improper real estate
INT Gold, saw their head offices in Texas transactions, failed to process tax
raided by the FBI in December. No arrests refunds for clients and mismanaged
were made and no disclosures were customers' confidential information. As a
presented to indicate the reason for result, they ordered Citigroup's Japanese
their actions. The only auspices private banking operations to close, but
mentioned were that they were pursuing an took measures to ensure all unaffected
ongoing fraud investigation. It's now investors would be minimally affected
been over a month and nothing further has while they moved their accounts. Rarely,
happened. At roughly the same time, total loss to depositors happens. The
e-Gold was also served with a search Silverado collapse in Colorado sent
warrant. It seems the justification was Charles Keating to prison for what should
petty --- they allegedly didn't have a be a thousand life terms, as more people
'required' currency-exchange license --- than that lost their life savings. It's
and they were upset enough to place the notable that this occurred in what was a
following posting on their website: laissez-faire junk bond scenario. Raids
e-goldÂ(R) welcomes US Government review only receive mention when it serves the
of its status as a privately issued authorities' purposes to do so. One
currency January 20, 2006 "Starting in reason for this is because the searches
mid-December 2005, Gold & Silver Reserve, and/or seizures don't yield sufficient
Inc. (G&SR), contractual Operator and results to merit charges being filed.
primary dealer for e-gold, has been the There can exist a vast gray area in
subject of a warranted search of its modern financial activities, and when the
premises and records, had its domestic fine print of a certain situation is
bank accounts frozen, and been the target scrutinized, it often occurs that,
of a precisely timed, extraordinarily perhaps those activities have sailed
misleading attack by a major business close to the legal wind, but they did not
publication. "In an emergency hearing in take the airs of disrepute. It remains to
US District Court January 13, 2006, the be seen what they're investigating at INT
freeze order on G&SR's bank accounts was Gold. As opposed to their treatment of
lifted. Though numerous criminal claims major banks, the nature of the
had been made in obtaining the search and authorities' announcement of this raid
seizure warrants, the Government has not was quite vague, which I'm sure was by
sustained these allegations and the only design. So, the issue is one of whom they
remaining claim is a contention that G&SR were attempting to stir. However,
has operated as a currency exchange American law says the parties involved
without the proper license. G&SR had are innocent until proven guilty, so they
previously proposed to the Government should duly be accorded that right. Until
that e-gold be classified for regulatory the entire story comes to light, it's
purposes as a currency, enabling G&SR to improper to cast aspersions. After all,
register as a currency exchange. In a as with most raids at major banks that go
Treasury report released January 11, unpublicized, it may be that the
2006, however, the Department of Treasury transgressor is not the company, but a
reaffirmed their interpretation of the client who has abused its privileges
USC and CFR definitions of currency as within that company's facilities. The
excluding e-gold. "G&SR, for nearly a e-currency investigations are surely a
year, has been engaged with an agency of result, in part, of one government's
Treasury in a BSA (Bank Secrecy Act) indecision as to how to regulate
compliance examination it had voluntarily e-currencies within their borders when
initiated. G&SR, though preferring that those currencies are neither fiat nor
the venue was not a courtroom, welcomes necessarily domiciled within those
the opportunity to extend its discussions borders. This reminds me of
with the Government on how best to broadcasting's early days, when the Feds
achieve appropriate statutory or were perplexed about how to best cope
regulatory cognizance of e-gold while with radio signals that only obeyed the
continuing to build e-gold's market share laws of physics and thus had the ability
as a medium of international commerce. to cross state lines without governmental
"Despite the unfounded charges and permission. As ridiculous as that sounds
adverse misleading publicity that have today, the thought of a particular
severely damaged both e-gold and G&SR, technology being more advanced than
G&SR has continued to meet all financial political and/or geographical
obligations and remain completely delineations was of deep concern to them.
operational. e-gold remains highly It ultimately took nearly 15 years for
committed to its goal of bringing, for the American government to create the
the first time in history, to people of Federal Communications Commission to cope
any financial means across the globe, a with such an 'advanced' business as
secure payment mechanism at a fraction of interstate broadcasting. Given the fact
the cost of any other system. e-gold that e-currencies are privately generated
fully expects to transcend the and administered, and given that no
unfortunate events of the past month and central monitoring system exists to aid
resume its exponential growth. "Further in their regulation, it is no surprise
information can be found at: The under the current environment of American
proactive approach by e-Gold should be laws to now see a bustle of authoritarian
applauded. INT Gold should have done the attention directed toward them. Until
same thing. If more of the public only they are able to determine a palatable
knew how many times search papers were policy, the best they can do is assume a
served on financial institutions for one self-righteous position in the interests
reason or another, they'd no doubt be as of 'consumer protection' and cast
skeptical as I am about the publicity the aspersions by means of rationalization.
authorities have given their actions It's not particularly fair, but as we've
against these two e-currency companies. seen in related online forums, it's quite
Let's consider how authorities move effective. Hopefully, the issue will be
against major banks when wrongdoing is settled in a much more expeditious manner
suspected. One characteristic which than it was in broadcasting.
becomes quickly evident is that any






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