e-Bullion update: Fayed's lawyers say feds seized $24 million in assets

Ian Lamont — Wed, 20 Aug 2008 09:27:34 -0700

A motion filed by the lawyers for e-Bullion's co-owner James Fayed claims that FBI and IRS agents seized "bank accounts, business records, property and precious metals holdings" worth $24 million on August 5, according to a new report on the Ventura County Star website. The motion also requests that the government release $300,000 to preserve electronic evidence, including e-mails, audit trails, transaction histories and other electronic records and data, says the Star. (Note: There is an update and a copy of the motion at the bottom of this article.)

Fayed is in jail, awaiting trial on a federal charge of operating a money transmitting business without a license. He is also a suspect in the July 28 murder of his estranged wife, Pamela Fayed, in a Los Angeles parking garage.

August 5 is the date that e-Bullion's account services were taken offline for "routine maintenance." The report in the Star does not mention e-Bullion, only an associated gold-trading company owned by James Fayed, Goldfinger Coin & Bullion. However, Fayed described the strong connections between e-Bullion and Goldfinger in an earlier court filing, and e-Bullion's services are heavily promoted on the Goldfinger website. The Star report says the motion states that the cost of maintaining "Internet servers and [the] computer network system" totals $100,000 per month, including staff-related costs. It further claims that crucial evidence on the system is at risk because of the seizure, and suggests this information would be lost if it were to go down.

The motion also states that the target of the federal investigation might not have been James Fayed and his gold-trading businesses. This could be a reference to the alleged scam outlined in a government memorandum filed earlier this month. The document says e-Bullion was used to transfer money belonging to victims of a massive "Ponzi scheme" in 2006, but does not accuse Fayed of devising the scam.

The Industry Standard is attempting to verify the information described in the Star report, and to determine whether the alleged seizures on August 5 are related to e-Bullion accounts being disabled on the same date.

Update: Paul Huebl has posted the motion cited in the Star article on his website, and you can also view it on the second page of this article. The "[Proposed] Order Granting Application for Release of $300,000 to Preserve Exculpatory Evidence" blames the ongoing e-Bullion.com shutdown on the FBI and IRS search and seizure warrants executed on August 5.

The $24 million cited in the proposed order includes gold and silver from Goldfinger's vaults that is "held for the benefit of thousands of e-Bullion customers." It further reveals that 466,300 user accounts have been created on e-Bullion since 2001, although it is not clear how many of those accounts were active as of August 5.

According to the motion, Fayed is offering to assist law enforcement authorities in investigating past and future transactions for evidence of criminal activity. It notes that in the past Fayed has "cooperated with inquiries" from the SEC, the FTC, U.S. Attorney's offices in several states, and various other federal, local, and state agencies.

The document warns that "disclosure of this indictment would certainly cause disruption, if not a complete shut-down, of the relevant Internet sites and would, accordingly, likely destroy any possibility of a proactive, ongoing investigation of very important targets."

Huebl has further analysis of the motion and the murder investigation on his blog. Mark Herpel of DGC Magazine has also written an analysis of the situation.

The court document follows: