Ten years ago, Douglas Jackson was an affluent physician, an oncologist. Then he decided to start E-Gold. After he cooperated with authorities and helped them catch money-launderers, those same authorities came for him:
After a year-and-a-half of court wrangling and negotiations, Jackson pleaded guilty last year to conspiracy to operate an unlicensed money transmitting service and conspiracy to commit money laundering. In November he was sentenced to 36 months of supervised released — including six months of house arrest and electronic monitoring, and 300 hours of community service. In addition to forfeiting about $1.2 million to the government, his two companies — Gold and Silver Reserve and E-Gold Limited — were fined $300,000, to be paid in $10,000 monthly installments beginning last month.The plea agreement is conditional on Jackson revamping his business to comply with regulations governing money-transmitting services — a goal that, Jackson concedes, faces many hurdles. To begin the process of compliance, he suspended the creation of new accounts. Existing customers are now required to submit a government-issued photo ID and proof of residence to authenticate their name, address and other details, and are limited to $1,000 to $3,000 a month in transactions until they pass muster. Customers in high-risk countries — such as Nigeria, Russia and Ukraine — are suspended from making any transactions at all for now. Their money is locked indefinitely in E-Gold’s servers.
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Although E-Gold was occasionally profitable, Jackson only drew a salary, like his employees. The two upscale homes he once owned with his wife are long gone. Now his wife and 12-year-old son occupy half a duplex in Pennsylvania near her family, and Jackson lives in a one-bedroom apartment in Melbourne with his 17-year-old son, while the latter finishes high school, and Jackson and his staff attempt to rebuild the business.