A Forbes magazine report says government authorities are preparing to unveil a new multicount fraud and money laundering indictment against James Fayed and his gold-trading companies, Goldfinger Coin & Bullion and e-Bullion. However, the attorney representing the now-shuttered companies has told the Standard that he has not seen any new evidence, and further stated that the IRS and FBI seizure of approximately $24 million from the firms in August was not authorized.

The Forbes report was published over the weekend and suggests that the scope of Fayed's alleged illegal activities was much larger than originally claimed by the government. The report, quoting unnamed authorities, says that from 2002 Fayed allowed e-Bullion to become a conduit for dozens of high-yield investment plans (HYIP), international ponzi schemes organized through the Internet. In addition, the Forbes report says Fayed issued digital gold currency in excess of e-Bullion's supposed physical gold holdings.

An unnamed source cited by Forbes says Fayed will soon be charged in a "multicount grand jury indictment accusing him of fraud and money laundering." Fayed is currently being held on murder charges relating to the July 28 slashing death of his wife and e-Bullion co-owner Pamela Fayed.
The Standard has asked the U.S. Attorney's Office in Los Angeles to confirm whether new grand jury charges are pending, but has yet to receive a reply.

James Spertus, the attorney representing e-Bullion and Goldfinger, told the Standard he had not heard of any new evidence or indictments, and expressed shock at the way the government has handled the case.

When asked about the allegations in Forbes that e-Bullion and Goldfinger were closely tied to HYIP scams, the attorney said they represented a "ridiculous allegation." Spertus said that prosecutors routinely request information from banks whose clients are allegedly involved in money laundering, but the financial institutions themselves are not charged. "We fully cooperated with the government when they asked us who the account holders were," he noted.

Spertus criticized the government's seizure of gold and other funds from the offices of e-Bullion and Goldfinger on August 5. "The government had no lawful authority to seize account holders' assets," he declared. "The government did not have a seizure warrant, and the search warrant did not authorize the seizure of the gold."

According to Spertus, the government is now trying to use a "forfeiture theory" to justify keeping the assets. He said that the U.S. District Court had refused to hear the motion for the return of assets, adding that the delays were denying his client the right to a speedy trial.

Spertus also revealed that he could no longer represent e-Bullion or Goldfinger in court, because the government claimed that he had a conflict of interest involving the companies' customers. "I cannot appear at trial ... I am no longer permitted to file on behalf of the company, because of the conflict of interest issue," he said, adding that he was now looking for another law firm to represent the companies.

Sources cited, referenced, or consulted: Forbes, Mark Herpel (DGC Magazine), James Spertus, Thom Mrozek (United States Attorney's Office, Central California)

Background:

• Feds drop charge against James Fayed, company still under indictment
• e-Bullion co-founder charged with murder
• e-Bullion's lawyer calls government's actions "extreme"
• e-Bullion update: Fayed's lawyers say feds seized $24 million in assets
• Why use e-Bullion? An investor explains
• Court papers indicate James Fayed had absolute control over e-Bullion
• Daughter seeks control of mother's ownership interest in e-Bullion
• Not all e-Bullion customers are worried by outage
• e-Bullion still down for "routine maintenance"
• e-Bullion co-founder jailed on money transfer charge
• Report: Feds investigating e-Bullion in fraud inquiry
• E-Gold directors escape jail time with guilty plea
• Where are they now: Flooz