Case 1:07-cr-00109-ABJ Document 214 Filed 09/28/20 Page 1 of 26

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA *

*
v. * Case No. 1:07-cr-00109 (ABJ)
*
E-GOLD, LTD, *
GOLD & SILVER RESERVE, INC. *
DOUGLAS L. JACKSON, *
BARRY K. DOWNEY, and *
REID A. JACKSON *
*
Defendant-Petitioners. *

UNITED STATES’ OPPOSITION TO DEFENDANTS’

PETITION FOR A WRIT OF ERROR CORAM NOBIS

The United States, by and through its attorney, the United States Attorney for the District of

Columbia, respectfully submits this Opposition to Defendant-Petitioners’ Petition for a Writ of Error

Coram Nobis (“Def. Pet.”), filed by e-gold, Ltd. (“EGL”), Gold & Silver Reserve, Inc. (“GSR”),

Douglas L. Jackson (“Douglas Jackson”), Barry K. Downey (“Downey”), and Reid A. Jackson

(“Reid Jackson”) (hereinafter, the “defendants”). Dkt 211. The defendants have filed a Petition for

a Writ of Error Coram Nobis, asking the Court to vacate their convictions. They argue that the

government violated its Brady obligations by allegedly suppressing an informal advisory opinion

from the Florida Office of Financial Regulation (“Florida OFR”) that stated that the defendants

were not subject to the regulator’s authority because they were not considered “funds transmitters”

or “foreign currency exchangers” under Florida law. According to the defendants, had they known

about the Florida OFR’s conclusions while they were being prosecuted, they would have sought a

similar advisory opinion from the D.C. Department of Insurance, Securities, and Banking

(“DISB”), the regulatory authority that supervises money transmitters in the District of Columbia.
 Case 1:07-cr-00109-ABJ Document 214 Filed 09/28/20 Page 2 of 26

They claim that a DSIB advisory opinion would have been favorable to them and thus been

exculpatory material in their prosecution. The defendants argue that they suffered an “error of the

most fundamental character” as a result of the government’s alleged actions.

The defendants’ petition for coram nobis relief is meritless and should be summarily

denied. First, the defendants did not pursue this claim diligently as they could have challenged

their conviction as early as 2008, but failed to do so. Second, the Florida advisory opinion is not

exculpatory material as it only addresses whether the defendants violated Florida law, which was

not the basis of the defendants’ criminal prosecution in this case. In addition, it is not clear that the

defendants would have received a favorable opinion from the DISB, exonerating them from D.C.

Code violations, had they sought an advisory opinion. Finally, the defendants were criminally

prosecuted in this case for federal, as well as state law offenses, yet the defendants provide no

evidence that shows that they were not guilty of violating the federal law. For these reasons, the

defendants’ Petition for a Writ of Error Coram Nobis should be summarily denied.

RELEVANT BACKGROUND

On April 3, 2008, a federal grand jury in the District of Columbia returned a Superseding

Indictment against the defendants EGL, GSR, Douglas Jackson, Barry Downey, and Reid Jackson

charging each with: (1) Conspiracy to Launder Monetary Instruments (Count 1), in violation of 18

U.S.C. §§ 1956 (a)(1)(A)(i), (a)(1)(B)(i), (a)(2)(B)(i), 1956(h), and 1957; (2) Conspiracy to

Operate a Unlicensed Money Transmitting Business (Count 2), in violation of 18 U.S.C. §§ 371

and 1960; and (3) Operating an Unlicensed Money Transmitting Business (Count 3), in violation

of 18 U.S.C. § 1960. See Dkt. 104 at ¶¶ 28, 49, 77. Defendants Douglas Jackson, Downey, and

Reid Jackson were also indicted for violating the District of Columbia’s Money Transmitters Act

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(“MTA”), D.C. Code § 26-1023(c), and engaging in the business of money transmission without a

license (Count 4), in violation of D.C. Code § 26-1002.

The Superseding Indictment arises from the defendants transmitting money on behalf of the

public, but not acquiring the necessary license to do so from the District of Columbia, failing to

register with the federal government, and facilitating transactions that they knew to be illegal, such

as child pornography and credit card fraud. As summarized in the Superseding Indictment, the

defendant corporations – EGL and GSR – operated a system that allowed customers to buy and

sell gold and other precious metals on the Internet under the rubric of “e-gold.” GSR operated the

e-gold system while EGL issued the digital currency. Dkt. 104 at ¶¶ 14, 15. The e-gold operation

conducted thousands of transactions per day. For example, on November 25, 2005, the defendants

advertised on www.e-gold.com that there were 2,500,942 then-existing e-gold accounts. Id. at ¶

67. Douglas Jackson and Downey co-founded EGL and GSR and Reid Jackson was the Managing

Director. Id. at ¶¶ 16-18.

The digital currency was widely accepted as a means of payment for transactions involving

credit card and identification fraud, high yield investment programs and other investment scams, and

child exploitation. Id. at ¶ 2. “E-gold” was a highly-favored method of payment for those who sold

child pornography over the Internet. In some instances, “e-gold” was the only method of payment

available on websites offering child pornography for sale. Id. at ¶ 26. According to the Superseding

Indictment, the e-gold operation facilitated $474,754 worth of transactions selling child

pornography. Id. at ¶ 44. The defendants profited from the system by collecting a fee on every

transfer of e-gold from one EGL account to another and by collecting a monthly maintenance fee,

which was based on the average daily value in the account. Id. at ¶ 27.

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In order for a customer to use the system, he or she had to complete four steps: (1) open a

digital currency account with E-GOLD; (2) convert a national currency into “e-gold” to fund the

account; (3) use “e-gold” to buy or sell a good or service or transfer funds to another person; and (4)

exchange “e-gold” back into a national currency. Id. at ¶ 3. In order to make the system successful,

the system needed merchants or individuals who would accept “e-gold” as payment for goods and

services or allow it to be transferred between them and another. Id. In addition, the system needed

digital currency exchangers, who would convert national currency into e-gold, or vice versa. The

digital currency exchanger took national currency from account holders and exchanged it for e-gold.

Id. at ¶ 4. It then exchanged e-gold back into national currency. Id. at ¶ 5. In addition to operating

EGL, GSR offered a digital currency exchange service (known as OmniPay) for customers who

wished to purchase, transfer, and/or sell e-gold. Id. at ¶ 15. Although the defendants operated out

of Florida, they provided services to District of Columbia residents and transferred money to and

from banks located in the city. Id. at ¶¶ 14, 42, 76.

As described in Count 1 of the Superseding Indictment, from about 1999 through

December 2005, the defendants conspired to facilitate financial transactions that they knew were

being used in criminal activity, such as child pornography, so that they could increase GSR’s

profitability and their personal wealth. Id. at ¶ 28-48. According to Counts 2 and 3 of the

Superseding Indictment, from October 26, 2001 through at least December 2005, the defendants

conspired and then provided money transmitting services to the public even though they were not

licensed to do so in Washington, D.C. and failed to comply with the money transmitting business

registration requirements under 31 U.S.C. § 5330. Id. at ¶ 49-78. According to Count 4, the

defendants violated District of Columbia law by failing to obtain a money transmitting license

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from the Superintendent of the Office of Banking and Financial Institutions of the District of

Columbia, as required by D.C. Code § 26-1002. Id. at ¶ 79.

On February 11, 2008, the defendants filed a motion to dismiss Counts 2, 3, and 4 of the

Superseding Indictment. Dkt. 93. The defendants argued that Count 2 (Conspiracy to Operate a

Unlicensed Money Transmitting Business, in violation of 18 U.S.C. §§ 371 and 1960) and Count

3 (Operating an Unlicensed Money Transmitting Business (Count 3), in violation of 18 U.S.C.

§ 1960) should be dismissed because § 1960 only applied to businesses engaged in cash

transactions. They also argued that Count 4 (engaging in the business of money transmission

without a license in violation of D.C. Code § 26-1002) should be dismissed based on the Court’s

discretion not to exercise jurisdiction over an alleged state offense. The defendants moved, pursuant

to Federal Rule of Criminal Procedure 12(b)(3)(B), to dismiss Count 2 for failure to state an

offense under § 371, and to dismiss Count 3 for failure to state an offense under § 1960. The Court

denied the defendants’ motion, holding that the defendants’ business was a money transmitting

business under § 1960 and that their motion to dismiss was based on a mis-reading of the statutory

text. Dkt. 110.

On July 21, 2008, the defendants entered into plea agreements with the government, and

pled guilty to the following counts of the Superseding Indictment:

1. Defendants EGL and GSR pled guilty to Count 1 and Count 2;

2. Defendant Douglas Jackson pled guilty to Count 1 and Count 3; and
3. Defendants Barry Downey and Reid Jackson pled guilty to Count 4.

See Dkts. 130, 133, 136, 139, 142.

For their crimes, the Court sentenced the defendants as follows:

1. Defendants EGL and GSR – 36 months of probation and a $300,000 fine;

2. Defendant Douglas Jackson – time served and 36 months of supervised release; and

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3. Defendants Barry Downey and Reid Jackson – suspended sentences of 180 days’
imprisonment and 36 months of probation.

See Dkts. 180, 182, 184, 189, 198. Defendants did not note an appeal.

On July 2, 2020, the defendants filed this Petition for Writ of Error Coram Nobis. Dkt. 211.

They allege that the government violated their constitutional rights as recognized in Brady v.

Maryland, 373 U.S. 83, 86 (1963) and its progeny by allegedly suppressing a 2006 Florida Office

of Financial Regulation (OFR) informal advisory opinion that stated that EGL and GSR were not

considered “funds transmitters” or “foreign currency exchangers” under Florida law. Id. at 2-10. 1

They allege that the Florida OFR informal advisory opinion is exculpatory material because it

shows that the defendants were not required to register as money transmitters under Florida state

law. They also argue that the opinion contradicts the government’s central theory that the

defendants operated a money transmitting business without registering as such in the states in

which the defendants operated. Dkt. 211 at 23. The defendants ask the Court to vacate their

convictions with prejudice.

The government hereby responds to defendants’ coram nobis petition, and submits that the

petition should be summarily denied because it is meritless.

1
As noted, the defendants allege that the government intentionally suppressed material that they believe was
exculpatory in nature. The government does not concede that the defendants’ factual allegations are true or that the
characterizations are accurate. In order to investigate the defendants’ allegations further, the undersigned counsel
diligently tried to locate and review the government’s case files from this matter. However, due to the COVID-19
pandemic, these efforts were unsuccessful as the United States Attorney’s Office (USAO) Special Proceedings
Division has transitioned almost entirely to teleworking, and almost all of the federal records centers have been closed
until further notice, except for a narrow set of emergency requests. Therefore, we have been unable to obtain our
physical case file. Moreover, due to the age of the case, the original lawyers that worked on this matter have left the
Office and the undersigned has been unable to contact them and would be hesitant to do so without first obtaining the
physical file so that the trial attorneys could have the benefit of reviewing that file to refresh their recollection
regarding this matter. As discussed herein, however, it is not necessary to more fully address the defendants’ factual
allegations to resolve this motion. Based on all the reasons explained above, the defendants’ motion fails. In the event
the Court believes that it is necessary to have additional information regarding defendants’ Brady claim, the
government respectfully reserves the right to submit additional briefing.

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ARGUMENT

I. Legal Standards

A. Money Transmitting Business Laws and Bank Secrecy Act Requirements

1. 18 U.S.C. § 1960

The federal prohibition on operating an unlicensed money transmitting business, 18 U.S.C.

§ 1960, was created in 1992 as part of the Annunzio-Wylie Anti-Money Laundering Act. “Title

18 U.S.C. § 1960 was enacted in order to combat the growing use of money transmitting businesses

to transfer large amounts of the monetary proceeds of unlawful enterprises.” United States v.

Velastegui, 199 F.3d 590, 593 (2d Cir. 1999). “From its inception… § 1960 sought to prevent

innovative ways of transmitting money illicitly.” United States v. Murgio, 209 F. Supp. 3d 698,

708 (S.D.N.Y. 2016). Section 1960 sets out three categories of prohibited conduct: (1) operating

without a required state money transmitting license, in violation of § 1960(b)(1)(A); (2) failing to

comply with federal money transmitting business requirements, in violation of § 1960(b)(1)(B);

and (3) otherwise transmitting known criminal funds or promoting unlawful activity, in violation

of § 1960(b)(1)(C). Each of these categories, standing alone, constitutes a crime.

Section 1960 (b)(1)(A) (the state prong of § 1960), makes it a federal crime to operate

without a required state license. As relevant here, the District of Columbia Money Transmitters

Act of 2000 (“MTA”) provides that in the District of Columbia, anyone engaging in the “business

of money transmission” must obtain a license from the Superintendent of the Office of Banking

and Financial Institutions of the District of Columbia, which in practice, is administered through

the D.C. Department of Insurance, Securities, and Banking (“DISB”). D.C. Code § 26-1002(a);

see also D.C. Reg. § 26-C2299. Under D.C. law, engaging in the business of money transmission

without a license is punishable as a felony. Id. § 26-1023(c).

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Section 1960(b)(1)(B) (the federal prong of § 1960), criminalizes operating a money

transmitting business that “fails to comply with the money transmitting business registration

requirements under section 5330 of title 31, United States Code, or regulations prescribed under

such section.” 18 U.S.C. § 1960(b)(1)(B). This subparagraph references § 5330, which is part of

the Bank Secrecy Act (“BSA”) and requires all “money transmitting businesses” to register as a

“money services business” (“MSB”) with the Financial Crimes Enforcement Network

(“FinCEN”), a division of the U.S. Department of Treasury. See 31 U.S.C. § 5330(a)(1). Registrants

must comply with federal regulations designed to combat illicit money laundering. MSBs are

required to establish and maintain programs designed to detect and report suspicious activity, and

to maintain certain records “where they have a high degree of usefulness in criminal, tax, or

regulatory investigations or proceedings.” 31 U.S.C. § 5311; see, e.g., 31 U.S.C. § 5318(h)(1); 31

C.F.R. § 1022.210(a) (anti-money laundering programs); 31 U.S.C. § 5318(g)(1); 31 C.F.R.

§ 1022.320(a)(1) (suspicious activity reporting).

Finally, § 1960 was amended as part of the USA PATRIOT Act of 2001, Pub. L. 107-56,

115 Stat. 272. Among other things, the PATRIOT ACT created the third prong of the statute,

§ 1960(b)(1)(C), and it criminalizes operating any money transmitting business that “otherwise

involves the transportation or transmission of funds that are known to the defendant to have been

derived from a criminal offense or are intended to be used to promote or support unlawful activity.”

2. District of Columbia’s Money Transmitter Act of 2000

The District of Columbia’s MTA defines money transmission as “engaging in the business

of receiving money for transmission or transmitting money within the United States, or to locations

abroad, by any and all means, including but not limited to payment instrument, wire, facsimile, or

electronic transfer.” D.C. Code § 26-1001(10). Under § 26-1002 “[a] licensee may conduct its

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business in the District of Columbia at one or more locations, directly or indirectly owned by the

licensee, or through one or more authorized delegates, or both, pursuant to the single license

granted to the licensee.” Operating a money transmission business without a license violates D.C.

Code § 26-1023(c), which provides that “[a]ny person who engages in the business of money

transmission without a license as provided herein shall be guilty of a felony and, on conviction

thereof, shall be fined not more than $25,000, or imprisoned for not more than 5 years, or both.”

B. Coram Nobis

“[T]he authority to grant a writ of coram nobis is conferred by the All Writs Act, which

permits ‘courts established by Act of Congress’ to issue ‘all writs necessary or appropriate in aid

of their respective jurisdictions.’” United States v. Denedo, 556 U.S. 904, 911 (2009) (quoting 28

U.S.C. § 1651(a)). The writ of coram nobis is “an extraordinary tool to correct a legal or factual

error,” id. at 912-13, and “provides a way to collaterally attack a criminal conviction for a person

. . . who is no longer in custody and therefore cannot seek habeas relief under 28 U.S.C. § 2255 or

§ 2241,” United States v. Newman, 805 F.3d 1143, 1146 (D.C. Cir. 2015) (internal quotation marks

and citation omitted). “[J]udgment finality,” however, “is not to be lightly cast aside,” and “courts

must be cautious so that the extraordinary remedy of coram nobis issues only in extreme cases.”

Denedo, 556 U.S. at 916. Accordingly, the bar for attaining relief under coram nobis is high, and

the writ “is not ‘a free pass for attacking criminal judgments long after they have become final.’”

United States v. Faison, 956 F. Supp. 2d 267, 270 (D.D.C. 2013) (quoting United States v. Reidl,

956 F.3d 1003, 1004 (9th Cir. 2007)). Relief under coram nobis is therefore “rarely granted.”

Faison, 956 F. Supp. 2d at 269 (quoting Craven v. United States, 26 Fed. Appx. 417, 419 (6th Cir.

2001)).

“[T]he precise contours of coram nobis have not been well defined,” Denedo, 556 U.S. at

910 (internal citation omitted), and “the D.C. Circuit’s precedent in this area is thin,” United States

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v. Williams, 630 F. Supp. 2d 28, 32 (D.D.C. 2009). Courts in this jurisdiction have recognized,

however, that a four-factor test is generally applied “to determine whether coram nobis relief is

warranted: (1) a more usual remedy is not available; (2) valid reasons exist for not attacking the

conviction earlier; (3) adverse consequences exist from the conviction sufficient to satisfy the case

or controversy requirement of Article III; and (4) the error is of the most fundamental character.”

United States v. Verrusio, 2017 WL 1437055, at *8 (D.D.C. Apr. 21, 2017) (collecting cases)

(internal quotation marks omitted), aff’d, 758 F. App’x 2 (D.C. Cir. 2019); see also Faison, 956

F. Supp. 2d at 269; United States v. Lee, 84 F. Supp. 3d 7, 9 (D.D.C. 2015); United States v.

Hansen, 906 F. Supp. 688, 692-93 (D.D.C. 1995).

Defendants bear the burden in this matter. United States v. Morgan, 346 U.S. 502, 512

(1954). “It is presumed the proceedings were correct and the burden rests on the accused to show

otherwise.” Id.

II. Defendants Do Not Have a Valid Reason for Not Attacking Their Convictions
Earlier

As noted above, one of the requirements that the defendants must show to prove that they

are entitled to the extraordinary remedy of coram nobis relief is a valid reason for not attacking their

convictions earlier. Here, defendants’ convictions became final in 2008, but they did not file the

instant petition until 2020, approximately 12 years later. The defendants argue that they were unable

to challenge their convictions sooner because the government intentionally suppressed the Florida

OFR informal advisory opinion, which they allege prevented them from bringing this Petition or

otherwise acting on the existence of the Florida OFR informal advisory opinion before they

completed their sentences. Dkt. 211 at 16. They claim had they known about the Florida OFR

informal advisory opinion, then they would have sought an advisory opinion from the DISB. The

defendants’ claim is meritless as they could have attacked their prosecution or conviction at three

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points in the past, yet they did not. The defendants therefore are not entitled to coram nobis relief

because they failed to pursue this claim diligently.

First, the defendants could have sought an advisory opinion from the DISB or the Florida

OFR when the government filed a motion in civil forfeiture proceedings claiming that GSR failed

to register as a money transmitter in both D.C. and Florida. However, they did not. On December

30, 2005, the government alleged that funds held by GSR, as part of its business as an e-gold

dealer, were used in violation of § 1960. See Dkt. 211 at 3-4; see also In Rem, United States v. All

Funds Seized From Or On Deposit In SunTrust Account Number 1000028078359, In The Name

Of Gold And Silver Reserve, Inc. et al., No. 1:05-cv-02497-RMC (Dkt. 1 at ¶¶ 17-19, 30) (Dec. 30,

2005) (hereinafter In Rem Forfeiture Complaint). In its complaint, the government alleged that

GSR failed to register as a money transmitter with the DSIB and the Florida OFR. In Rem

Forfeiture Complaint, Dkt. 1 at ¶¶ 22-24. This served as a notice to the defendants of the

government’s allegations against them. 2

On January 12, 2006, GSR filed its answer to the government’s complaint, denying that it

violated § 1960. See Dkt. 14. At that time, the defendants were aware that the government was

pursuing legal action in civil court against GSR, in part, for not registering with the DSIB or the

Florida OFR. Yet, for some reason they did not seek an advisory opinion from either regulatory

authority. Their failure is particularly glaring because had they received a favorable opinion (a

result that the government doubts and that will be discussed in more detail below), the opinion

could have provided potentially beneficial exculpatory material to their defense. However, the

defendants’ petition does not address why the defendants failed to seek advisory opinions from

2
The civil complaint against GSR was filed before the criminal indictment was filed against the defendants in this
case. The criminal indictment put the defendants on notice as well. See Bousley v. United States, 523 U.S. 614, 618
(1998) (stating the fact that a defendant was provided with copy of indictment prior to pleading guilty gives rise to a
presumption that defendant was informed of the nature of the charge against him).

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either regulatory authority during their forfeiture proceedings or after they were formally indicted

in this case.

Second, in the defendants’ plea agreements in this criminal case, the defendants

acknowledged that the e-gold operation was a money transmitting business within the meaning of

§ 1960. They also acknowledged that they were prohibited from operating the e-gold system

without a money transmitting license in states were such a license was required and that they failed

to register with FinCEN. See Dkts. 130, 133, 136, 142 at ¶ 10; see also Dkt. 139 at ¶ 12. Pursuant

to those agreements, within 30 days of the defendants entering their pleas, the defendants were

required to either obtain money transmitting licenses or obtain advisory opinions that evaluated

whether they were considered money transmitters under the laws in the states in which they

operated. According to the defendants’ agreements:

within thirty (30) days of entering this Plea Agreement, [the defendant] will submit
applications to obtain State licenses in States that require licensing of businesses
engaged in money transmitting or submit a request for an advisory opinion from
such a State that the [defendant] is not required to be licensed. [The defendant] shall
obtain any State license to engage in money transmitting (or an advisory opinion
stating that a license is not required) within in six (6) months of entry of this Plea
Agreement or stop conducting business in any State where such money transmitting
license (or advisory opinion) has not been obtained.

See id. (emphasis added).

The defendants entered their respective plea agreements on July 21, 2008, which means

that the defendants were required to seek money transmitting licenses or advisory opinions from

state authorities, including the Florida and D.C. regulatory authorities, no later than August 20,

2008. Had the defendants fulfilled the requirements of their plea agreements, they may have

received advisory opinions that they could have used as evidence to challenge their convictions in

2008 – 12 years ago. Yet, the defendants did not and they provide no explanation for why they

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failed to seek advisory opinions from the appropriate regulators after they pled guilty when that

was a condition of their plea agreements.

Third, given that the defendants could have sought an advisory opinion at any time during

their prosecution or immediately after they pled guilty, had they done so they could have used that

opinion to attack their conviction by filing an appeal or a § 2255 motion. The defendants claim

that they never had an opportunity to pursue “a more usual remedy” in the form of a writ of habeas

corpus because they did not serve a custodial sentence for the convictions they challenge. Def.

Mot. at 15-16. However, their claims are false. A defendant who is physically confined to prison

may file a § 2255 motion. However, a defendant may also be in “custody” for § 2255 purposes

when he suffers from other restraints on his freedom that are “not shared by the public generally,”

because he was convicted of a crime. Jones v. Cunningham, 371 U.S. 236, 240 (1963).

Contrary to the defendants’ claims, they were “in custody” for § 2255 purposes until

December 2011 and could have filed a § 2255 motion up to that point.

To meet the “in custody” requirement, a petitioner must have been in custody at the
time the habeas petition was filed. The custody requirement may be met where a
petitioner is not imprisoned, so long as there were “significant restrictions” placed
on the petitioner’s liberty…A petitioner who is on parole, probation, supervised
release, or released on bail is deemed to be “in custody” for habeas purposes.

Banks v. Gonzales, 496 F. Supp. 2d 146, 149 (D.D.C. 2007) (internal quotations omitted)

(emphasis added).

Each of the defendants were sentenced to either 36 months’ probation or supervised release

after they were sentenced on December 2008. 3 Therefore, they were “in custody” for § 2255

purposes and could have challenged their convictions. Had the defendants done their legal due

3
Defendants Downey, E-Gold, GSR, and Reid Jackson’s sentences were entered on the public docket on December
16, 2008. See Dkts. 180, 182, 184, and 186. Defendant Douglas Jackson’s sentence was filed on December 18, 2008.
See Dkt. 189.

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diligence, or fulfilled the conditions of their plea agreements, the defendants could have filed

§ 2255 motions attacking their convictions until December 2011. But once again, for a third time,

they failed to pursue their claims diligently.

In order to deflect from their failures, the defendants raise Brady violation allegations in

what appears to be an attempt to distract the Court from closely examining the defendants’ failure

for not seeking a DISB or Florida OFR advisory opinion while they were prosecuted or after they

pled guilty. Had the defendants done their legal due diligence and received a favorable opinion,

which the government doubts and will be discussed in more detail below, they could have

challenged their convictions over a decade ago. Their failure to take prudent legal steps to aid their

defense or challenge their conviction, in no way is the fault of the government. Contrary to the

defendants’ claims, the government’s alleged actions did not prevent the defendants from seeking

advisory opinions and without more evidence to excuse the defendants’ failure, the defendants

have not shown – as is their burden – that a valid reason exists for not attacking their convictions

more promptly. Hence, their motion fails.

III. Defendants’ Coram Nobis Petition Also Fails Because They Have Not Shown An
Error “of the Most Fundamental Character”

A showing of fundamental error is required to win coram nobis relief. See United States v.

Addonizio, 442 U.S. 178, 186 (1979) (holding that “coram nobis jurisdiction” exists only “in those

cases where the errors were of the most fundamental character, that is, such as rendered the

proceeding itself irregular and invalid.” (internal quotation omitted)). An error is fundamental if it is

“(1) an error of fact; (2) unknown at the time of trial; (3) of a fundamentally unjust character which

probably would have altered the outcome of the challenged proceeding if it had been known.”

Faison, 956 F. Supp. 2d at 271.

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The defendants argue that the government intentionally suppressed the Florida OFR informal

advisory opinion and that such actions amount to a fundamental error because the alleged act violated

the defendants’ constitutional rights as recognized in Brady and its progeny. Dkt. 211 at 22. The

defendants cannot win coram nobis relief because the Florida OFR informal advisory opinion is not

exculpatory in nature and therefore is not material that needed to be turned over to the defendants.

Since the government did not violate its Brady obligations, the defendants have not shown that a

“fundamental error” occurred and that the legal proceeding was “irregular and invalid.” Therefore,

the Court should summarily deny their petition.

“The Constitution’s ‘fair trial guarantee’ requires the prosecution to timely turn over any

information in the government’s possession that is materially favorable to a criminal defendant ....”

United States v. Straker, 800 F.3d 570, 602 (D.C. Cir. 2015) (per curiam) (quoting United States v.

Ruiz, 536 U.S. 622, 628 (2002)); see also Brady, 373 U.S. at 87. In Giglio v. United States, 405 U.S.

150 (1972), the Supreme Court held that “evidence that could be used to impeach government

witnesses” falls within the Brady rule. United States v. McGill, 815 F.3d 846, 922 (D.C. Cir. 2016).

However, in cases where the defendants plead guilty, such as this one, the Constitution does not

require the government to disclose impeachment information prior to entering the plea agreement

with the criminal defendant. Ruiz, 536 U.S. at 629 (“We must decide whether the Constitution

requires that pre-guilty plea disclosure of impeachment information. We conclude that it does not…

the Constitution does not require the prosecutor to share all useful information with the defendant.”).

There are three components of a Brady claim:

First, the evidence at issue must be favorable to the accused, either because it is
exculpatory, or because it is impeaching. Second, the evidence must have been
suppressed by the government, either willfully or inadvertently. And third, prejudice
must have ensued. To satisfy the prejudice component, the defendant must show that
there is a reasonable probability that, had the evidence been disclosed to the defense,
the result of the proceeding would have been different.

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United States v. Sitzmann, 893 F.3d 811, 826 (D.C. Cir. 2018) (internal quotations and citations

omitted).

A. The Florida OFR Informal Advisory Opinion Is Not Exculpatory.

The Florida OFR informal advisory opinion is neither exculpatory nor impeaching material

because the defendants were not indicted and thus not criminally prosecuted in this case for failing

to register as a money transmitter under Florida law. As is clear from the Superseding Indictment,

D.C. and federal code violations were the bases of the defendants’ prosecution.

In Count One, the defendants were charged with conspiracy to launder money or proceeds

that they knew were being used in child exploitation, wire fraud, or access device fraud, in violation

of 18 U.S.C. § 1956, a federal law that does not require a state law violation in order to be prosecuted.

See Dkt. 104 at ¶ 29. However, as noted above, a state law violation can serve as the basis for

violating § 1960. Under § 1960 (b)(1)(A) (the state prong of § 1960), it is a federal crime to operate

without a required state license. As reflected in the Superseding Indictment, a state law violation

was one of the bases for the defendants’ prosecution under Counts 2 and 3. Under Counts 2 and 3,

the defendants were not criminally prosecuted for violating Florida state law, but rather for violating

D.C. law. See Dkt. 104 at ¶¶ 68, 78. Also, in addition to being prosecuted for D.C. Code violations,

the defendants were charged with violating the federal prong of § 1960 for not registering with

FinCEN, as required by the statute. Id. Finally, the government prosecuted the defendants for

transmitting funds that they knew were being used to support criminal activity, an offense not based

on a state law violation. Id. In Count Four, Doug Jackson, Reid Jackson, and Downey were

prosecuted for violating a state law, but not Florida law. The government alleged that they failed

to obtain a license from the D.C. regulatory authority, the DISB, as they were required to do under

D.C. Code § 26-1002. Although the government alleged that the defendants needed to be licensed

in Florida in order to legally transmit funds on behalf of the public, see id. at ¶ 13, as is clear from

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the Superseding Indictment, the government never actually criminally indicted the defendants in

this case for violating Florida law.

Moreover, the Florida OFR informal advisory opinion is silent on whether the defendants

violated laws other than those of the state of Florida. It makes clear that the defendants’ actions were

only analyzed to determine whether they violated Florida law. Not only does the subject line of the

opinion state that it is an informal opinion analyzing whether the defendants are subject to Florida

statutes, the opinion itself only analyzes Florida state law. Dkt. 211, Def. Ex. 8. The opinion also

states on the last page that the opinion’s conclusions are only applicable to Florida. It states, “[t]his

writer has no knowledge that any other federal or state regulator has held that [the defendants’]

activity is within the jurisdiction of their money transmitter code.” Id. at 4. The implication of the

author’s notation is that the legal conclusions contained within the opinion cannot be used to

determine if the defendants violated the laws of the federal government or another state.

In sum, the Florida OFR informal advisory opinion is not exculpatory material because the

defendants were not criminally prosecuted in this case for violating Florida law, but rather for

committing D.C. and federal code violations. In addition, the opinion clearly states that it does not

opine on whether the defendants violated D.C. or federal code. Since the defendants were never

criminally prosecuted for violating Florida law in this case, a legal opinion opining on whether they

violated the laws of Florida is not exculpatory in this case where they were prosecuted for D.C. and

federal code offenses. Moreover, the opinion is not impeachment material because it does not

contradict the government’s argument in its criminal case that the defendants operated a money

transmitting business without first registering with the DISB or with FinCEN, a requirement under

D.C. and federal law. And even if it were impeaching material, the Supreme Court has held that the

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Constitution does not require the government to disclose impeachment information before entering

a plea agreement with defendants.

B. Defendants Did Not Suffer Prejudice.

The defendants also argue that they suffered prejudice as a result of the government

allegedly not disclosing the Florida OFR informal advisory opinion. Dkt. 211 at 24-25. They argue

that there is a reasonable probability that the result of the proceeding would have been different

had the government revealed the opinion’s existence to the defendants before they entered their

guilty pleas in this proceeding. They claim that if they had known about the Florida OFR informal

advisory opinion, then they would have sought an advisory opinion regarding the regulatory status

of the e-gold system from DISB. They believe that the agency would have given them an advisory

opinion that would have exonerated them under D.C.’s MTA. In an attempt to buttress this claim,

they point to a 2016 DISB advisory opinion that COEPTIS (the “DISB COEPTIS Letter”), a global

payment system, received from the DISB stating that it did not need a license because the agency

did not consider it to be a “money transmitter” under the MTA. See Dkt. 211-13. The defendants

claim that they would have received a similar opinion because, according to them, COEPTIS’s

payment system was “extremely similar to the e-gold System.” Dkt. at 12. As discussed below,

this claim is without merit.

1. The DISB COEPTIS Letter Is Unpersuasive Regarding Defendants’ Obligations Under

the MTA.

The defendants’ claim is meritless because it is far from clear if the outcome of this case

would have been different had the defendants submitted a letter to the Court substantively similar

to the DISB COEPTIS Letter. The analysis contained within the letter is unpersuasive regarding

the company’s obligations under the MTA and it does not reflect the probable outcome of the

proceeding had the defendants chosen to proceed to trial. The DISB COEPTIS Letter rests entirely

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on a single definition of the term “money” in Black’s Law Dictionary. The DISB COEPTIS Letter

did not consider other dictionary definitions, the way e-gold was used in the illegal economy,

analogous federal case law, or the aims and purposes of money transmitter regulation under the

MTA.

As evidence that the Court would have found that the defendants violated the MTA had

they chosen to proceed to trial, the government points to a recent decision by this Court that ruled

that another virtual currency – bitcoin – qualifies as money under the MTA. 4 See United States v.

Harmon, No. CR 19-395, 2020 WL 4251347 *6-19 (D.D.C. July 24, 2020). In Harmon, the

defendant, Larry Dean Harmon, was indicted for conspiracy to launder monetary instruments

(Count 1), operating an unlicensed money transmitting business (Count 2), and unlawfully

transmitting money without a license in the District of Columbia (Count 3), similar charges to the

defendants’. Id. at *1. In that case, the defendant operated Helix, an underground tumbler for

bitcoin, a form of virtual currency, and a platform that “enabled customers, for a fee, to send

bitcoins to designated recipients in a manner which was designed to conceal and obfuscate the

source or owner of the bitcoins.” Id.

Harmon filed a motion to dismiss Counts 2 and 3, arguing that “bitcoin is not money” under

the MTA, and that Helix, as a bitcoin tumbler was not a money transmitting business. Id. at *6.

The Court denied the defendant’s motion, ruling that bitcoin qualified as money under the MTA,

and that the indictment sufficiently alleged that the bitcoin tumbler was an unlicensed money

transmitting business. In reaching its decision, the Court engaged in a thorough and far-reaching

analysis of the MTA’s statutory text, based on the ordinary meaning of the term “money,” the

functional use of bitcoin as a “medium of exchange, method of payment, and store of value,”

4
“Bitcoin is a decentralized form of electronic or digital currency that exists only on the [i]nternet.” United States v.
Lord, 915 F.3d 1009, 1013 n.1 (5th Cir. 2019).

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analogous federal case law, the interplay between the MTA and other provisions of the D.C. Code,

the “purposes and objects” of the MTA, as well as the historical public practice of DISB and the

legislative history of the MTA. The Court also considered – and rejected – the very same Black’s

Law Dictionary definition that formed the sole basis for the DISB COEPTIS Letter’s conclusion.

See id. at *7 n.6 (acknowledging definition in Black’s but finding that “the D.C. Council intended

for money to take its ordinary meaning in the MTA” rather than a specialized legal definition).

The Court also cited DISB’s historical practice of licensing virtual currency businesses, id. at *12-

13, but the agency’s practice formed only a small part of the Court’s overall analysis. In denying

the defendant’s motion, the Court conducted a thoughtful and fulsome legal analysis – an analysis

that went beyond simply resorting to the dictionary.

Undoubtedly, as the defendants may argue, an agency’s interpretation of its own statutes

may be considered persuasive, but the non-public DISB COEPTIS Letter is not entitled to any

particular deference under the circumstances here. See United States v. Mead, 533 U.S. 218, 227-

234 (2001) (declining to grant Chevron deference to agency ruling that was “far removed…from

notice-and-comment process,” “stop[ped] short of third parties,” and was “conclusive only as

between [the agency] and the [party] to whom it was issued”). Given the minimal analysis

contained in the DISB COEPTIS Letter, and the fact that the Harmon Court considered

substantially similar analysis, rejected it, and then came to a different conclusion as a matter of

law, there is little doubt the defendants have not suffered prejudice. The outcome of this proceeding

would have been the same had the Court considered the DISB COEPTIS Letter – namely, the

Court would have concluded that the defendants violated the MTA.

2. The DISB COEPTIS Letter’s Legal Conclusion Does Not Apply to the Defendants.

Even if the Court ignores the fulsome legal analysis in Harmon and accepts the more

limited legal analysis contained in the DISB COEPTIS Letter, the legal analysis in the letter itself

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does not exonerate the defendants of violating the MTA. The defendants operated a payment

platform that was different from COEPTIS’ platform in meaningful and significant ways. As

described in Defense Exhibit 12, COEPTIS operated a two party system that was a

closed/centralized settlement platform that was used to make internet payments. Dkt. 211-13 at 1.

National currencies were not received, dispensed, or used on the settlement platform. This aspect

is similar to the platform operated by the defendants. Where COEPTIS and the defendants

meaningfully differ is in regard to who was responsible for converting national currencies to virtual

currencies. COEPTIS did not convert any of the virtual currency into national currencies or vice

versa. This function was filled by an independent financial institution. Id.

However, according to the Superseding Indictment, the defendants facilitated money

conversions through their currency exchanger, OmniPay. See Dkt. 104 at ¶¶ 57-58, 75. Unlike

COEPTIS, who required an independent financial institution to convert its customers’ virtual

currency into national currencies, GSR internalized this process through OmniPay, the business

that it owned and operated. Id. at ¶¶ 6, 15. As such, according to the DISB COEPTIS Letter, the

defendants are appropriately characterized as operating a three party business model, which

“involves selling or exchanging virtual currency through the use of an intermediary.” Dkt. 211-13

at 2. Under the DSIB’s legal analysis, the three party virtual currency business model:

requires a license because it requires a party to receive money, that is, real currency,
in order to purchase the virtual currency, that is later transferred to a third party
through the use of an intermediary…As a result, the intermediary receiving the real
currency for transmission to facilitate the purchase of the virtual currency pursuant
to a third party virtual currency business model would require a license under the
Act.

Id. at 7. Based on the DISB’s legal analysis, the defendants were required to secure a license in

order to transmit money in D.C. Therefore, even if the Court analyzed a letter that contained the

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same legal reasoning as the DISB COEPTIS Letter, the outcome of the defendants’ case would

have been the same since such a letter would not have exonerated them of violating the MTA.

3. Defendants Were Also Indicted For Committing Federal Offenses and They Have
Offered No Defense to the Federal Charges.

Finally, even if the Court assumes arguendo that the Florida OFR informal advisory

opinion is exculpatory material or accepts the defendants’ claim that they would have received a

favorable opinion from the DISB that stated that the defendants were not money transmitters under

the MTA, the defendants still did not suffer prejudice and have not established an error of the most

fundamental character. Defendants EGL, GSR, and Douglas Jackson pled guilty to violating two

federal offenses: the federal prong of § 1960 and § 1956. Moreover, while defendants Downey and

Reid Jackson only pled guilty to violating the MTA, they too were indicted for committing federal

offenses. Notably, these defendants have not proffered any defense to these charges. Given this,

the defendants have not shown that the legal proceedings would have been different.

With regard to defendants EGL, GSR, and Douglas Jackson, in addition to being indicted

on Counts 2 and 3 for conspiracy to violate or violating subsection (b)(1)(A) – the state prong of

§ 1960 – the defendants were also indicted and pled guilty to violating subsection (b)(1)(B) – the

federal prong, for failing to register with FinCEN. See Dkt. 104 at ¶¶ 50, 68, 78. In order to convict

the defendants of violating § 1960, the government only had to prove that the defendants violated

one prong of three potential alternatives. See Harmon, 2020 WL 4251347 at *4 (stating that

according to § 1960(b)(1) an unlicensed money transmitting business violates the law in one of

three ways); see also Griffin v. United States, 502 U.S. 46, 56-60 (1991) (holding that the

government is entitled to prove criminal acts in the disjunctive, notwithstanding that the indictment

charges them in the conjunctive). Therefore, even if the defendants possessed exculpatory material

that proved that they did not violate the state prong of § 1960, they were nonetheless guilty of

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violating the federal prong of this statute. Each of these three defendants agreed in their respective

Statement of the Facts that:

Under District of Columbia law and federal law, in addition to other jurisdictions,
defendant [ ] was required to be licensed and registered as a money transmitting
business. However, the defendant operated the E-GOLD money transmitting
business without a license in the District of Columbia, and without registering with
the federal government.

See Dkt. 134 at 2-3; 137 at 2-3; 140 at 2-3 (emphasis added).

The Florida OFR informal advisory opinion or a letter similar to the DISB COEPTIS Letter

would only be relevant as to whether these three defendants violated the state prong of § 1960.

Such evidence in no way addresses whether the defendants violated the federal prong by not

registering with FinCEN.

In addition to being indicted and pleading guilty to violating the federal prong of § 1960,

defendants EGL, GSR, and Douglas Jackson were also indicted and pled guilty to conspiracy to

commit money laundering, a violation of § 1956, a federal law offense. In pleading guilty, these

three defendants admitted they broke federal law by knowingly transmitting funds that were used

to facilitate criminal activity, such as child pornography, wire fraud (investment scams), and access

device fraud (credit card and identify theft). See Dkt. 134 at 5; 137 at 5; 140 at 6. Again, the Florida

OFR informal advisory opinion or a letter similar to the DISB COEPTIS Letter is irrelevant to

these three defendants’ guilt as to this count.

With respect to defendants Downey and Reid Jackson, while they only pled guilty to

violating the MTA, they too have not shown that the outcome of this case would have been

different. First, as explained above, the analysis contained within the DISB letter is unpersuasive

and does not reflect the probable outcome of a court’s decision had the defendants chosen to litigate

the matter, as evident by the Harmon decision. Second, even accepting for the sake of argument

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the legal analysis contained in the DISB COEPTIS Letter, it does not apply to the defendants since

they operated a third party virtual currency business model, which according to the DISB’s

analysis required a license under the MTA. Finally, in addition to be indicted for violating the

MTA, defendants Downey and Reid Jackson were also indicted for violating § 1956 and the federal

prong of § 1960. In pleading guilty to violating the MTA, the government agreed to dismiss the

remaining counts alleged in the Superseding Indictment. See Dkt. 130 and 142 at ¶ 1. However,

the defendants have not presented evidence that shows that the government would have forgone

prosecution on Counts 1, 2, and 3 had they not pled guilty to Count 4. Even with a favorable DSIB

opinion, the government could have continued their prosecution of defendants Downey and Reid

Jackson for violating § 1956 and the federal prong of § 1960.

Notably absent from the defendants’ petition is any proffer of evidence that shows that the

defendants did not violate § 1956 or the federal prong of § 1960. Rather, the defendants choose to

hang their hats on one dubious allegation of a Brady violation, which even if true, would only

address one of the many offenses for which the defendants were indicted and ultimately to which

some pled guilty. Put differently, even if the defendants were exonerated for violating subsection

(b)(1)(A) – the state prong of § 1960 – or the MTA, they still faced indictment for committing two

separate federal offenses. As in other similar federal cases, to prevail on their motion, the

defendants are not only required to show that they are innocent of violating the state law claims,

they must also show that they are innocent of the federal code offenses. See, e.g., Bousley, 523

U.S. at 624 (stating in regards to § 2255 motions, “[i]n cases where the Government has forgone

more serious charges in the course of plea bargaining, petitioner’s showing of actual innocence

must also extend to those charges.”). Without additional evidence showing that they are innocent

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of these federal offenses, the defendants have not shown that the outcome of the proceeding would

have been different.

Ultimately, the defendants have not shown an error “of the most fundamental character”

based upon their Brady claim, and their coram nobis petition should be denied on this basis as well.

CONCLUSION

For the reasons stated above, the United States respectfully requests that the Court summarily

deny defendants’ Petition for a Writ of Error Coram Nobis.

Respectfully submitted,

MICHAEL R. SHERWIN
Acting United States Attorney
N.Y. Bar No. 4444-188

MARGARET J. CHRISS
Chief, Special Proceedings Division
D.C. Bar No. 452-403

By: /s/ Jared English

JARED ENGLISH
Assistant United States Attorney
D.C. Bar No. 1023-926
Special Proceedings Division
555 4th St., N.W.
Washington, D.C. 20530
Jared.English@usdoj.gov

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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that I caused a copy of the foregoing motion to be served by

electronic means, through the Court’s CM/ECF system, upon counsel for the Defendants on
September 28, 2020:

/s/ Jared English

JARED ENGLISH
Assistant United States Attorney

26