The founder and chairman of e-gold has issued a scathing response to recent allegations by the US Department of Justice (DoJ), insisting that e-gold has been made a " scapegoat".  

Dr Douglas Jackson said that the charges of money laundering and enabling criminal transactions are the result of a political vendetta.

In an open letter posted on the company's website, Dr Jackson accused the DoJ of "subordinating actual crime fighting to a policy agenda".

E-gold was indicted late last week on charges of money laundering, conspiracy and operating an unlicensed money transmitting business.

"This case has nothing to do with criminal activity," the e-gold statement read. "It is about a DoJ that is out of control, cognisant of having made a horrible mistake but determined at all costs to preserve its turf."

Dr Jackson said that all of the charges are false and that the company has been a leader in the fight against child pornography. Using e-gold to launder money is nearly impossible, he stated.

"E-gold, as a matter of incontrovertible fact, is the most effective of all online payment systems in detecting and interdicting abuse of its system for child pornography related payments," said Dr Jackson.

He also pointed out that the company was a founding member of the National Center for Missing and Exploited Children's Financial Coalition to Eliminate Child Pornography. 

Dr Jackson added that, because the company deals strictly in precious metals and does not handle any currency, it would be impossible for e-gold to launder money.

"As far as the possibility of a criminal successfully obfuscating a money trail, e-gold is a closed system. The only way to obtain e-gold is by receiving a transfer from someone who already has some," he said.

A DoJ spokesperson told vnunet.com: "It is an interesting defence for them to raise at trial," declining to give any further comment on the statement. 

Dr Jackson claimed that the charges have their roots in a feud between e-gold and the US Secret Service, which handles the investigation and enforcement of counterfeiting and financial fraud in the US. 

The Secret Service had been organising a campaign against e-gold in an effort to scapegoat the company since 2001, according to Dr Jackson.

"During The Inquisition, accusations of witchcraft and heresy were used to sanctify torture and seizures of property. In post 9-11 America, child porn and terrorism serve as the denunciations of choice," said Dr Jackson.