United States Returns Nearly $12 Million to Victims of Illegal Money-Transmitting Business Called e-Bullion
LOS ANGELES—The United States has returned approximately $11.7 million in civilly forfeited fraud proceeds to more than 1,000 victims who invested or deposited money with e-Bullion.com, a website that operated for years as an illegal money-transmitting business.
The funds were disbursed to e-Bullion victims last week after federal prosecutors successfully obtained a civil forfeiture order against money and precious metals seized from the illegal money-transmitting business and its operator. The $11.7 million included bank funds and liquidated reserves of gold, silver and platinum seized from James Fayed and his companies—e-Bullion.com, Goldfinger Coin and Bullion (GCB) and Goldfinger Bullion Reserve Corp.
The recent disbursement of funds follows another distribution of funds in December 2014, when $1.8 million in civilly forfeited funds was returned to over 300 victims who invested in an illegal scheme operated under “Kum Ventures” that was run through e-Bullion.
e-Bullion purported to provide opportunities to invest in precious metals. Through the e-Bullion.com website, individuals opened accounts with real money, which they used to purchase virtual “e-currency” purportedly backed by precious metal reserves maintained by Fayed’s companies in the United States and Australia. e-Bullion accountholders could then trade their e-currency with others on the website. 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.
In practice, e-Bullion allowed individuals engaging in fraud to move money around the world while remaining virtually anonymous and avoiding many international banking reporting requirements. An investigation into e-Bullion and GCB by the Federal Bureau of Investigation and IRS Criminal Investigation revealed that operators of fraudulent “high-yield investment programs” and other illegal investment schemes used e-Bullion to collect millions of dollars of e-currency from victims, much of which was wire transferred by GCB to overseas accounts. The asset forfeiture case prosecuted by the United States Attorney’s office alleged that Fayed and his companies not only allowed these illegal schemes to use e-Bullion to operate—collecting substantial fees when the fraudsters cashed out—but also profited by retaining monies abandoned by fraudsters who believed they were under investigation by law enforcement or were about to be caught.
“e-Currency is not beyond the reach of the law,” said United States Attorney Eileen M. Decker. “The Department of Justice has recouped and will continue to recoup criminal proceeds for crime victims in the digital age.”
During the course of the criminal investigation into e-Bullion, James 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 the Los Angeles Police Department.
The United States obtained information from e-Bullion’s and GCB’s encrypted computer servers in Switzerland, and that information was used to identify e-Bullion accountholders and the value of their individual accounts. Last week, Analytics Consulting LLC, the claims administration company retained by the United States Department of Justice, distributed the forfeited funds to the innocent accountholders through a process known as “remission,” which allows the government to use forfeited monies to compensate domestic and international victims of crime. The e-Bullion victims resided in several countries, including the United States, Australia and Canada.
The United States Attorney’s Office, the Federal Bureau of Investigation and IRS Criminal Investigation, with the assistance and cooperation of the Australian Federal Police and Australian prosecutors, also secured the forfeiture of approximately $12 million in precious metals held by Fayed and his companies in Perth, Australia. Efforts to repatriate the Australian proceeds for distribution to the e-Bullion victims are ongoing.