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e-gold Value Access Plan - Monetization Progress Report

This blog entry is to report the progress Gold & Silver Reserve, Inc has made towards monetizing all e-metal since my August 12, 2011 blog entry on this topic.

All Monetized Value noted below has been paid over to, and is currently being held by, the Federal Government who, pursuant to the terms of the Value Access Plan, will be returning value to account holders who have completed CIP.  For an outline of how the monetized value will be distributed, please see the e-gold Value Access Plan Overview.

e-metal Monetization Completed:

e-metal        Bullion Reserves    Monetized Value
-----------        ------------------------    -------------------------
e-gold           XAU 56,635.060    USD 89,677,031.54
e-silver          XAG 85,243.842    USD  2,421,743.46
e-palladium    XPD     396.473    USD     224,215.56

e-metal Monetization Remaining:

e-metal        Bullion Reserves       
-----------        ------------------------
e-platinum      XPT     400.000

e-gold Value Access Plan – Monetization Preparation

On June 3, 2011, a civil complaint was filed by the Government seeking forfeiture of all value being maintained by e-gold, Ltd. (“EGL”).  In addition, the Government has filed an application with the court requesting the issuance of an arrest warrant in rem seeking to arrest all of the e-metal accounts maintained by EGL.  On June 20, 2011, District Court Judge Ellen N. Hollander issued an arrest warrant in rem requiring EGL to monetize the value of all e-metal accounts maintained at EGL.  The arrest warrant requires Gold & Silver Reserve, Inc (“GSR”) to monetize this value in U.S. Dollars and deliver the proceeds to a Claims Administrator who will deposit the dollars in an interest bearing escrow account in the District of Maryland.

Pursuant to the arrest warrant in rem, GSR has begun the monetization process by coalescing all of the e-metal accounts, resulting in your accounts having a zero balance.  The current balance of your account is reported on the Balance page as the "Current Balance".  The balance of your account immediately before being coalesced in preparation for monetization is reported as the "Final Balance".

Final Balances of a given e-metal will be used to determine each account's proportional share of the monetized value of the circulation of that same e-metal.  For an overview of the e-metal monetization and distribution process, please click here.

e-gold Value Access Plan Overview

The following is an outline of the monetization and distribution process of the value for all e-metal accounts held in EGL accounts (“Value Access Plan” or “VAP”) as agreed to between the Government, e-gold Ltd (“EGL”) and Gold & Silver Reserve, Inc. (“GSR”) .  The agreement identifies three distinct groups of value: Criminal Proceeds Value (“CPV”), VAP Value, and Residual Value and sets forth the process by which each of these values will be monetized and distributed.

Criminal Proceeds Value Accounts 

EGL and GSR have advised the Government that they believe EGL has in its possession evidence establishing that certain accounts contain value that is traceable to criminal activity in which third-party e-gold account holders engaged.  Such accounts with a balance of one (1) ounce or more of e-gold are defined as CPV accounts.

Under the terms of the agreement, EGL will provide to the Government a list of names and contact information of the CPV account holders in order to provide those account holders with the requisite notice.  The government must provide notice for at least 30 days as well as direct notice to any person who reasonably appears to be known as a potential claimant for the CPV.

The deadline for filing a claim by a CPV claimant is at least 35 days after notice is sent (actual notice situation) or no later than 60 days after 1st day of 30 days of publication.  Upon judicial resolution of any CPV claims, the Government will request the court to issue an order forfeiting the CPV to the United States.

The value in these accounts will be monetized as required by the arrest warrant in rem, pursuant to the terms and conditions of the agreement with the proceeds being delivered to the Claims Administrator.

Value Access Plan and Set Aside Value

All remaining value in the system will be monetized as required by the arrest warrant in rem, pursuant to the terms and conditions described in the agreement.  The value of this monetization will be the “VAP Set-Aside Value”.   The Claims Administrator will deposit the VAP Set-Aside Value into an interest bearing escrow account.

The Value Access Plan  will be available to all account holders other than those whose accounts contain criminal proceeds.  VAP participants will be able to access the monetized value of their accounts upon satisfactory completion of EGL’s customer due diligence process subject to disqualification by the Government or the Claims Administrator.   The first step for an account holder will be to complete the Customer Identification Program (“CIP”) via the EGL website.  According to the CIP, account holders are required to provide certain identifying information that is required by U.S. anti-money laundering laws to be verified.

The agreement states that EGL will provide notice to account holders of the launch of the VAP and this notice will advise account holders that:

1. all claims must be submitted within 120 days;
2. distributions from the VAP Set-Aside Value attributable to VAP-Qualified accounts will be made to VAP-Qualified Claimants;
3. by agreement with relevant government authorities, all other value of e-metal accounts is subject to forfeiture action pending in the District of Maryland;
4. VAP-Qualified Claimants will be paid a sum of money representing each VAP-Qualified Account’s proportionate share of the monetized value of each applicable e-metal in the system as calculated by EGL;
5. the distribution of that money will be pursuant to court order; and
6. that such distribution will be in full and final settlement of all amounts due in respect of each VAP-Qualified Account.

As noted above, account holders will have 120 days from launch of VAP to file a claim.  Such claim will require, among other things, providing owner and user identification information.  EGL will collect and verify all identifying information provided by any VAP-eligible account holder and will send to the Claims Administrator on a monthly basis a list:

1. identifying VAP-eligible account holders who have submitted the requisite information as verified by EGL;
2. showing the account number(s) from which each such claimant seeks value; and
3. specifying the value in U.S. dollars of each corresponding account based on its proportionate share of the monetized value.

Both the Government and the Claims Administrator will review the list of VAP-eligible, CIP compliant account holders supplied by EGL.  Either the Claims Administrator or the Government may disqualify such claimant on the following grounds:

1. known engagement in criminal activity;
2. activity related to terrorism; or
3. residence in a country (other than Iran) subject to OFAC sanctions that would prohibit the Claims Administrator from paying the claimant.

The Government and Claims Administrator will have 10 business days to notify VAP-eligible claimant of disqualification.  In the absence of such disqualifications, the Government will submit a motion to the court to release funds for distribution to the VAP Qualified Claimants.  The Government will send a copy of these papers (or notice of disqualification) to the claimants and EGL.   The claimants will have 15 days to object to the amount of distribution and, in the case of a disqualified account holder, to such disqualification.

The agreement calls for distributions to VAP-Qualified Claimants in two tranches.  First, each VAP-Qualified Claimant will receive funds equal to 85% of their approved claim. After objections of other VAP-eligible claimants have been resolved, within 15 days of resolving the claims, the Government will move the court to order the release of so much of the VAP Set-Aside Value as necessary to pay all successful VAP claimants their final proportionate share of the monetized value of their account(s).

While this approach will delay full payment to successful account holders, paying in two tranches will enable successful claimants to receive 85% of their claim immediately while ensuring that all successful claimants receive a properly calculated proportionate share of the VAP Set-Aside Value.
 
Distribution of Residual Value 

If there is Residual Value remaining after forfeiture of the CPV, distribution of the VAP Value and, resolution of any disputed claims, the Government will provide notice to all potential claimants to the Residual Value following the same notice and claims process used for CPV accounts.  The Government will provide notice for at least 30 days by publication as well as the required actual notice to any person who reasonably appears to be a known potential claimant.  Deadline for filing a claim by Residual Value claimant:

1. at least 35 days after notice is sent (actual notice situation); or
2. no later than 60 days after 1st day of 30 days of publication.

Residual Value claimants will have up to 60 days from first date publication of notice by the DOJ to file their notice of claim.  Upon judicial resolution of any residual value claims and the merits of the forfeiture action against the Residual Value the Government will seek the forfeiture of the Residual Value.

All of these conditions are intended to ensure that qualified claimants, account holders receive the value from their account at the prevailing exchange rates at the time of monetization less reasonable exchange fees.    

E-GOLD VALUE ACCESS PLAN – GOVERNMENT FORFEITURE ACTION

FOR IMMEDIATE RELEASE

[Melbourne, Florida, US] – e-gold Ltd (“EGL") is pleased to announce an important step taken today in the process it initiated to provide e-metal account holders with access to the value in their accounts.

EGL originally contacted the government in 2009 and offered to assist it in recovering proceeds from criminal activity believed to be engaged in by certain third-party account holders while at the same time ensuring the return of value to qualified account holders.  This dialogue culminated in the development of a Value Access Plan (“VAP”) acceptable to EGL and the government.

Pursuant to the terms of the VAP, the government filed papers today to initiate the forfeiture of the value of all e-metal accounts, an important first step in the process of returning value to the e-metal account holders who satisfy certain specified requirements.  The VAP provides a process to facilitate the forfeiture of proceeds of criminal activity in which certain third-party account holders are alleged to have been engaged.  The VAP also sets forth a process to enable the return of value to e-metal account holders not alleged to have been involved in any illicit activity if they comply with EGL’s Customer Identification Program (“CIP”) requirements.  The filing of today’s civil action marks an essential step in winding down the current e-metal system.

Further details of the VAP process will be posted on the EGL website as they are implemented.

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About EGL

EGL issued currencies backed by precious metals (“e-gold”, “e-silver, “e-platinum” and “e-palladium”; collectively “e-metals”).  e-metal was integrated into a secure account-based payment system, operating globally 24/7, featuring instantaneous settlement with no chargeback risk, at lower cost.  At its peak, EGL settled over 85M Spends and held physical gold reserves exceeding 2.5 metric tonnes. In compliance with the terms of a plea agreement between the Department of Justice and EGL, account holder activity has been restricted since October 2008.

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Value Access Plan Update

We are pleased to announce that the U.S. Government has taken an important step towards implementing the Value Access Plan (VAP) .  As we announced in our posting dated December 31, 2010,  the VAP will permit owners of VAP-Qualified Accounts to be paid in U.S. dollars their proportionate share of the monetized value of the e-metals in their Accounts.‪
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Specifically, we have learned that the Government has nominated a Claims Administrator to oversee the VAP.  The Government is expected to apply for court approval of that nominee soon. Pursuant to our agreement with the Government, once the Claims Administrator is appointed by the court, we can provide our Account holders with notice of the launch of the VAP on this website and instructions on how to submit VAP claims. 

As we explained in our previous posting, once the VAP begins, there will be a 120-day period within which all claims must be submitted, and approved claims will be paid by the court-appointed Claims Administrator on a rolling basis.

‪We will continue to post updates on the Government's implementation of the VAP on this website.  We therefore would encourage you to monitor this site for further important updates.

e-gold Update: Value Access Plan Approved

As my November 2, 2009 blog entry advised, we have been working diligently to develop a Value Access Plan (VAP) to allow access to e-metal account value.  We are pleased to announce that we have finalized an agreement with government authorities that will permit owners of VAP-Qualified Accounts to be paid in U.S. dollars their proportionate share of the monetized value of the e-metals in such Accounts.  Completion of an agreed upon customer identification process is a prerequisite to participation in the VAP.  Please complete this process as soon as possible and respond to any request for additional information promptly.

A VAP-Qualified Account is one (1) that does not contain value derived from suspected illegal activity; (2) as to which all required customer information has been provided to, and verified by, e-gold Ltd.; (3) that consents to having a VAP claim processed, which involves our transmission of all  VAP-required customer information, account number, e-metal balance and monetized value to a Court-appointed Claims Administrator; and (4) after review by the Court-appointed Claims Administrator and the U.S. Government, is not disqualified by either of them on the basis of (a) known engagement in criminal activity, (b) activity relating to terrorism; or (c) residence in a country (other than Iran) subject to Office of Foreign Assets Control sanctions that would prohibit the Claims Administrator from paying the claimant.

More information on how to participate in the Value Access Plan will be posted here shortly, including when and how to submit Value Access Plan claims.  Please visit this site often.  Once the claims process begins, there will be a 120day period within which all claims must be submitted (the “Claims Period”).  Claims will be processed as they are received during the Claims Period, and VAP-Qualified Account claims will be paid by the Court-appointed Claims Administrator pursuant to Court Order on a rolling basis. 

e-gold scheduled downtime on 1 October 2010

e-gold scheduled downtime on 1 October 2010

Please note that the e-gold website will be offline as described below. Times provided are estimates only - actual downtime duration may be slightly shorter or longer.

• Scheduled Agio Collection
• System Maintenance
• Begins: Friday, October 1 2010 17:00 EDT (view in other timezones)
• Ends: Friday, October 1 2010 18:00 EDT (view in other timezones)

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