Man sentenced for stealing over 712 bitcoin subject to forfeiture – April 27, 2023
Gary Harman (31) from Ohio has been sentenced to four years and three months in prison for stealing cryptocurrency that was the subject of pending criminal forfeiture proceedings in a case involving his brother, Larry Harman.
Larry was arrested in February 2020 for operating a darknet cryptocurrency-laundering service called Helix. Assets including a cryptocurrency storage device containing illegal proceeds were seized, but police were unable to recover them due to the device’s security features.
Gary used his brother’s credentials to covertly transfer 712 bitcoin, valued at $4.8m at the time, to his own wallets, then laundered the proceeds through two mixer services before using the bitcoin to finance a number of large purchases.
The theft carried out by Gary Harmon also obstructed the pending criminal investigation.
He entered a plea of guilty to the charge of money-laundering conspiracy, and agreed to forfeit the stolen assets, which total around $20m at today’s prices.
US entertainer convicted of engaging in foreign influence campaign – April 26, 2023
Pras Michel (50), former rapper with the band the Fugees, has been convicted of conspiracy, concealment of material facts, making false entries in records, witness tampering, and serving as an unregistered agent of a foreign power. He faces a maximum of 20 years in prison.
Michel funnelled money from now-fugitive Malaysian financier Low Taek Jho, known as Jho Low, to Barack Obama’s 2012 re-election campaign, tried to have embezzlement proceedings in connection with the 1Malaysia Development Berhad (1MDB) scandal quashed, and lobbied to have a Chinese national sent back to China at the behest of the Vice Minister of Public Security for the People’s Republic of China.
“Mr. Michel sought to use his celebrity and access to influence US government officials on behalf of undisclosed foreign interests,” said Assistant Attorney General Matthew G Olsen of the Justice Department’s National Security Division. “This is an affront to the rule of law, and we will use the full range of tools at our disposal to hold accountable those who would covertly aid foreign actors seeking to interfere with our democratic system of government.”
Michel directed millions of dollars of Low’s money into Obama’s re-election campaign through 20 straw doners. He also caused a presidential joint fundraising committee and an independent expenditure committee to submit false reports to the Federal Election Commission (FEC).
Three Nevada men convicted in multimillion prize notice mail scheme – April 26, 2023
The trio have been charged for orchestrating a prize-notification scheme that stole more than $6m from victims. The participants, many of whom where retired, were tricked into believing that they could claim a large cash prize if they paid a fee of $20 to $30.
According to the charges, Mario Castro (55), Miguel Castro (58), and Jose Luis Mendez (49), ran the fraud scheme from 2010 to February 2018 when the operation was shut down by a court order.
The defendants and their co-conspirators also received multiple cease and desist orders from the US Postal Service, which they ignored. Instead, they changed the names of their companies to continue the fraud scheme.
The trio have been convicted of conspiracy to commit mail fraud and various counts of mail fraud. The sentences will be announced on August 23. If convicted, the defendants face a maximum of 20 years in prison on each count of mail fraud and conspiracy to commit mail fraud.
Four other people; Patti Kern (65), Andrea Burrow (43), Edgar Del Rio (45), and Sean O’Connor (54), earlier pleaded guilty to conspiracy to commit mail fraud in connection with scheme.
“The defendants mailed fraudulent prize notices to prey upon and trick victims, many of them elderly, out of millions of dollars.”
Jason M Frierson, US Attorney for the District of Nevada.
Trio solicited millions in contributions to scam PACs – April 25, 2023
Matthew Nelson Tunstall (36), Robert Reyes Jr. (40), and Kyle George Davies, (31) have been sentenced for running a scheme to solicit millions of dollars in contributions to two political action committees (PACs) – claiming falsely that the funds would be used to support presidential candidates.
From 2016 through at least April 2017, Tunstall, Reyes, and Davies operated two PACs – Liberty Action Group PAC and Progressive Priorities PAC – where they solicited funds from the public via robocalls and radio and web advertisements.
However, instead of supporting the presidential nominees, the trio used the funds to enrich themselves and to fund additional fraudulent solicitations. During the 2016 election cycle and subsequent months, the two PACs raised approximately $4m.
To conceal the operation, Tunstall and Reyes instructed a third-party vendor to withdraw around $353,000 from the two PACs and then deposit the funds into shell company accounts which they controlled.
On April 24, Tunstall was sentenced to 10 years in prison. He previously pleaded guilty to one count of conspiracy to commit wire fraud and to cause false statements to the Federal Election Commission (FEC), and one count of money laundering. Reyes Jr. was sentenced to seven years in prison under the same counts. Davies was sentenced to five years of probation, and previously pleaded guilty to one count of conspiracy to commit wire fraud and to cause false statements to the FEC.
New York attorney pleads guilty to conspiring to commit money laundering to promote sanctions violations – April 25, 2023
Attorney Robert Wise pleaded guilty to taking part in a scheme to make approximately $3.8m in payments to maintain six New York properties owned by sanctioned oligarch Viktor Vekselberg.
Vekselberg was classified as a Specially Designated National (SDN) by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) in April 2018 and again in March 2022. Prior to his designation, Vekselberg had purchased six New York properties worth a combined total of $75m.
Wise had been retained to help with the acquisition of the properties and manage their finances. He did this with funds transferred to his interest on lawyer’s trust account (IOLTA account). After Vekselberg was designated, approximately 25 wire transfers totalling $3.8m were sent to the account. Wise used these funds to make various US dollar payments to maintain and service the properties, knowing that he was promoting sanctions violations.
The offences carry a maximum penalty of five years in prison.
Five individuals charged in $2m virtual asset and securities manipulation scheme – April 24, 2023
Three people have been charged with conspiring to manipulate the market for the virtual token HYDRO, and two others have also been charged in separate filings for their roles in the scheme.
Allegedly, from around June 2018 through April 2019, Michael Kane (38), Shane Hampton (31), and George Wolvaardt (38) conspired to manipulate the market for HYDRO, and defrauded participants by creating the false appearance of supply and demand. This made participants trade at times and prices that they otherwise would not have.
Allegedly, the defendants used a trading bot to place thousands of “spoof orders”, including making thousands of “wash trades” where the bot bought and sold tokens to itself through the same account. By this, the trio allegedly made $2m in profit.
In connection, Tyler Ostern (29), the former CEO of Moonwalkers, and Andrew Chorlian (29), a blockchain engineer at Hydrogen Technology, were also charged for participating in the fraud scheme.
Kane, Hampton, and Wolvaardt are all charged with one count of conspiracy to commit securities price manipulation, one count of conspiracy to commit wire fraud, and two counts of wire fraud. If convicted, they each face a maximum of five years in prison on the conspiracy to commit securities price manipulation count, and 20 years on each of the other counts. Ostern and Chorlian are both charged with one count of conspiracy to commit securities price manipulation and wire fraud, which can result in five years imprisonment.
North Korean foreign trade bank representative caught in crypto laundering conspiracies – April 24, 2023
Foreign Trade Bank (FTB) representative Sim Hyon Sop (Sim) (39), has been charged for his role in money laundering conspiracies, which were designed to generate revenue for the Democratic People’s Republic of Korea through cryptocurrency.
According to court documents, Sim conspired with over-the-counter (OTC) crypto traders to use stolen funds to buy goods for North Korea, and conspired with IT workers to make revenue through illegal employment at blockchain companies in the US.
Allegedly, various North Korean IT workers gained employment by using fake identities, and then laundered their ill-gotten gains through Sim for the benefit of the North Korean regime.
Sim and three others, Wu Huihu (Wu), Cheng Hung Man, and the user of the online moniker “Jammy Chen”, also conspired to launder stolen cryptocurrency and then used those funds to purchase goods through Hong Kong-based front companies on behalf of North Korea, including recruiting others to sham front the companies and facilitate the payments to avoid US sanctions against North Korea.
According to court documents, Sim operations are linked to the Reconnaissance General Bureau, which is North Korea’s primary intelligence and clandestine operations unit, holding both Lazarus Group and Advanced Persistent Threat 38. APT38 has been responsible for conducting destructive cyber-attacks to generate revenue for its ballistic missile and WMD programs.
North Korean hackers have executed crypto-related thefts to generate revenue for the regime since 2017, and Sim and his OTC trader coconspirators have sent funds to an address connected to the regime.
Wu has also been separately charged with operating an unlicensed money transmitting business where he operated as an OTC trader and conducted over 1,500 unlicensed trades for US customers.
The charge of conspiring to launder monetary instruments can bring a maximum of 20 years in prison, and five years for the charge of operating an unlicensed money transmitting business.
“The charges announced today respond to innovative attempts by North Korean operatives to evade sanctions by exploiting the technological features of virtual assets to facilitate payments and profits, and targeting virtual currency companies for theft.”
Kenneth A Polite, Jr, Assistant Attorney General
IRB Brasil agrees to pay shareholders $5m in connection with securities fraud scheme – April 24, 2023
Brazilian reinsurance company, IRB Brasil Resseguros SA has agreed to pay $5m in victim compensation as a result of a securities fraud scheme to fraudulently prop up its stock price by spreading false information that Berkshire Hathaway Inc. had invested.
IRB Brasil admitted it had executed the scheme under former CFO Fernando Passos, beginning in February 2020. It was then that a report questioning the accuracy of IRB’s financial statements had been published by an investment company that announced it would be taking a short position against IRB’s stock. IRB’s stock price dropped, so Passos developed and executed a scheme to mislead shareholders and the investing public by disseminating and causing to be disseminated materially false information that Berkshire Hathaway had invested in IRB, despite knowing that Berkshire Hathaway had not made any such investment.
The fake news was widely reported until Berkshire Hathaway issued a statement saying it had no intention of becoming an IRB shareholder. That sent the stock price down still further, causing significant losses to shareholders.
IRB admitted the facts of the case, has agreed to continue cooperating with the Justice Department in other related investigations, to continue to implement a compliance and ethics program as set forth in the NPA, and to report to the department regarding the company’s remediation and implementation of the compliance measures as described in an NPA.
Shareholder losses are estimated to be significantly more the $5m, but IRB made representations to say it could not cover the full loss. The DOJ investigated and came to the conclusion that the requirement to pay more than $5m would threaten IRB’s continued viability, exposing shareholders to the risk of further loss.
Passos has been indicted and is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
