August 2, 2012
You ever watch those infomercials about the bestest, safest way to buy gold? You ever get the uneasy feeling, like I do, that some of the folks pitching these gold buying opportunities are sleazeballs - you know, if you had to shake their hand, you would count your fingers afterwards?
Maybe you heard about e-Bullion, which claimed to offer precious metals for investment?
e-Bull . . .ion
According to Wikipedia, e-Bullion was incorporated in Panama in 2000 by Jim Fayed, Moorpark, CA, and started doing business in 2001. The company maintained its primary computer servers in Switzerland with back-up equipment maintained outside of United States jurisdiction.
The clever folks behind e-Bullion set up ebullion.com through which you could open your investment account. You funded your ebullion.com account with real money but once the coin or a particular realm was credited to your account, you then purchased "e-currency."
What the hell is "e-currency?" Great question! And frankly, it appears a question that all e-Bullion investors should have asked but, well, you know how this is going to go - not enough of those folks asked.
Assuming you raised the indelicate query of where your real dollars went and what's this virtual currency crap, the e-Bullion team would likely have replied that, hey, don't worry, your e-currency is fully backed by our precious metal reserves. You're not stuck with useless virtual currency. Course not. You can trade your e-currency with other e-Bullion investors.
What if you wanted to convert these internet dollars into real world bucks? Well, you know, we're gonna have to charge you a fee for that.
Ummm. . . sure, that's fine but where are these precious metal reserves that collateralize all of these loopy online dollars and can I get some verification?
Again, the well-oiled script would likely have come into play and you would have been assured that the reserves were the property of none other than James Fayed and perhaps by two entities that he controlled: Goldfinger Coin and Bullion ("GCB") and Goldfinger Bullion Reserve Corp ("GBRC").
e-Bullion accountholders could trade their e-currency with others on the company's website. Account holders often received a debit card linked to an account. Investors were told that GBRC held the precious metals in bullion storage vaults located in Los Angeles, Delaware, Zurich or Australia - allowing account holder to transfer the value of their e-currency in gold, silver, or US dollars. While there were no fees associated with establishing or funding an account on the e-Bullion website, there were fees associated with changing e-currency back into real money.
SIDE BAR: Some might ask - okay, I'll ask - why the need for all this subterfuge? You want to own gold - fine, go out and buy gold coins or bullion. Find a reputable storage facility. Leave it there. You don't want to own the physical commodity? Okay, there are tons of exchange traded funds and individual stocks through which you can get exposure: GDX, GLD, UGL, NEM, ABX, to name but a few. But, geez, you really want to send your hard earned bucks to a website where you're going to be given cyber-bucks and it's all (hopefully) collateralized by some offshore proposition?
Rinse And Spin Cycles
An investigation into e-Bullion and GCB by the Federal Bureau of Investigation and the Internal Revenue Service revealed that the e-Bullion operation was being used to evade global banking regulations. Scam artists who ran fraudulent "High-Yield Investment Programs" and other illegal investment schemes used e-Bullion as a conduit through which the crooks funneled their victims' funds to overseas accounts in the form of e-currency via GCB wire transfers.
As a result of the FBI and IRS's investigations, the U.S. government brought an asset forfeiture case, which charged that Fayed and his companies were aware of the illegal schemes utilizing the subterfuge of e-currency, profited on such criminal activity through the cash-out fees charges to the fraudsters, and further profited when they were able to retain abandoned funds from targets of the federal investigations. Isn't that just grand? Not only did e-Bullion further what appears to be money laundering and the evasion of banking regulations, but when some of the con artists using this cyber-laundry got cold feet when they thought the Feds were about to knock on their doors, e-Bullion seems to have taken over the abandoned dirty dollars.
Because of a number of Australian citizens victimized by this scheme, that nation's authorities also launched a comprehensive investigation. US and Australian authorities are attempting to recover about $24 million in assets. On July 23, 2012, an Australian court signed off on an agreement by GCB, GBRC, James Fayed, and Pamela Fayed's estate to forfeit approximately $13.3 million obtained when precious metals held by Fayed were liquidated.
Following the withdrawal of competing claims by GCB and GBRC to seized assets, on July 30, 2012, a US forfeiture judgment was entered awarding approximately $3.6 million in bank funds and $5.4 million worth of gold, silver, and platinum previously seized by the United States government.
During the e-Bullion criminal investigation and subsequent asset forfeiture litigation, the United States obtained information from e-Bullion's and GCB's encrypted computer servers in California and Switzerland, which may identify e-Bullion account holders and the value of their individual accounts. Such revelations may facilitate payments to innocent victims.
SIDE BAR: If you were victimized by e-Bullion, contact:
United States Attorney's Office
Asset Forfeiture Section
ATTN: e-Bullion Remission
312 North Spring Street,
Los Angeles, CA 90012
A Chilling Epilogue
As if this tale isn't bizarre enough, take a gander at these quotes from the Department of Justice press release: U.S. Prosecutors and Australian Authorities Collaborate to Recover More Than $24 Million from Fraudulent e-Bullion Website (August 1, 2012):
e-Bullion was operated by James Fayed, who is currently on California's death row in relation to a separate investigation that led to him being convicted in state court of contracting with hitmen who murdered his wife.
. . .
During the course of the criminal investigation into e-Bullion, Fayed hired hitmen to murder his wife and business partner, Pamela Fayed. James Fayed subsequently was prosecuted by the Los Angeles County District Attorney's Office and sentenced to death following the separate investigation by local authorities.