One of the World’s Largest Digital Currency Companies and Seven of Its Principals and Employees Charged in Manhattan Federal Court with Running Alleged $6 Billion Money Laundering Scheme. (PART I) | WPN World People News

Mythili Raman, Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice; Preet Bharara, U.S. Attorney for the Southern District of New York; Steven G. Hughes, Special Agent-in-Charge of the New York Office of the U.S. Secret Service; Richard Weber, Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI); and James T. Hayes Jr., Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), announced the unsealing of an indictment charging Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, and seven of its principals and employees with money laundering and operating an unlicensed money transmitting business. Liberty Reserve is alleged to have had more than one million users worldwide, including more than 200,000 users in the U.S., who conducted approximately 55 million transactions – virtually all of which were illegal – and laundered more than $6 billion in suspected proceeds of crimes including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.

Five defendants were arrested on May 24, 2013, including Arthur Budovsky, the principal founder of Liberty Reserve, who was arrested in Spain; Vladmir Kats, the co-founder of Liberty Reserve, who was arrested in Brooklyn, New York; Azzeddine El Amine, a manager of Liberty Reserve’s financial accounts, who was arrested in Spain; and Mark Marmilev and Maxim Chukharev, who helped design and maintain Liberty Reserve’s technological infrastructure, who were arrested in Brooklyn and Costa Rica, respectively. Two other defendants, Ahmed Yassine Abdelghani (Yassine) and Allan Esteban Hidalgo Jimenez (Hidalgo), are at large in Costa Rica.

In addition to the criminal charges brought in the indictment, five domain names were seized, namely, the domain name of Liberty Reserve and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites seeking the forfeiture of the exchangers’ domain names because the websites were used to facilitate the Liberty Reserve money laundering conspiracy and constitute property involved in money laundering. The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with Liberty Reserve and were listed on Liberty Reserve’s website as “pre-approved exchangers.” The investigation and takedown involved law enforcement action in 17 countries, including Costa Rica, the Netherlands, Spain, Morocco, Sweden, Switzerland, Cyprus, Australia, China, Norway, Latvia, Luxembourg, the United Kingdom, Russia, Canada and the U.S.

In a coordinated action, the U.S. Department of the Treasury and its Financial Crimes Enforcement Network announced that Liberty Reserve has been named as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. This action includes a notice to the Federal Register proposing to prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving Liberty Reserve.

Acting Assistant Attorney General Raman said: “As charged, Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace. The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system. By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, forfeiting domain names, and seizing servers in countries around the globe, our message is clear: money launderers can run, but they can’t hide from the U.S. justice system. Combating the threat of global illicit finance requires using every tool we have at our disposal, and we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”

U.S. Attorney Bharara said: “ As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”

Secret Service Special Agent-in-Charge Hughes said: “These arrests are an example of the Secret Service’s commitment to investigate and apprehend criminals engaged in the misuse of virtual currencies to conduct global monetary fraud. Cyber criminals should be reminded that they are unable to hide behind the anonymity of the Internet to avoid regulated financial systems. We are grateful to our many law enforcement partners throughout the world for assistance in this investigation, especially in Costa Rica, Spain and the Netherlands.”

IRS-CI Chief Weber said: “We are now entering the cyber age of money laundering. Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity. What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world.”

ICE HSI Special Agent-in-Charge Hayes said: “The actions of the U.S. Secret Service, IRS, and HSI in dismantling the Liberty Reserve operation are critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection. HSI is proud of its partnership through the Global Illicit Financial Team and will continue to aggressively target financial institutions that deliberately enable businesses and individuals to evade global financial systems in furtherance of criminal schemes.”

Source: U.S.Department of Justice