On January 19, 2001 OmniPay received a series of 11 e-gold payments, each
constituting OutExchange orders for a combined total of USD 1.1 million to
be wired to a specified domestic US bank account.

It is our practice to perform additional due diligence prior to fulfilling
high value exchange orders to verify that we have adequate knowledge of the
identity of our customer.

The principals of Costa Gold have not responded to our due diligence

In cases where our customer will not comply with our due diligence
procedures, it is our practice to refund the e-gold to the e-gold account(s)
used to fund the exchange.  However, we have received conflicting
information from entities representing themselves to be Costa Gold that
preclude us from refunding the e-gold in this particular case at this time.

Specifically, we have received communications indicating that the
password(s) for Costa Gold have been compromised due to inadequate security
at Costa Gold, and have also received these conflicting instructions:

2.  Instructions to fulfill the orders immediately.

3.  Instructions to stabilize the value.

4.  Instructions to cancel the orders and refund the e-gold.

Therefore OmniPay has requested Smith & Downey, P.A., the US counsel for
Gold & Silver Reserve, Inc., to set up an escrow account to hold the
disputed e-gold balance until a proper disposition can be made. The account
balance in this escrow account is publicly viewable using the following URL:


Refund of the escrowed funds is contingent on provision of information from
the principals or authorized agents of Costa Gold confirming that they are
authorized to make disposition of the disputed value.

Reid Jackson
Managing Director
Gold & Silver Reserve, Inc.

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