The former chief technology officer of Liberty Reserve was sentenced today to serve five years in prison for conspiring to operate an unlicensed money transmitting business that processed more than $16 billion through Liberty Reserve’s digital currency system. The Court found that Marmilev understood the illegal nature of Liberty Reserve’s business and that he knew that a wide array of criminal enterprises used Liberty Reserve to further their criminal activity.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.
“Marmilev used his technical expertise to create a virtual currency business that was used extensively by criminals throughout the world,” said Assistant Attorney General Caldwell. “Marmilev boasted that the crime group was beyond the reach of U.S. law enforcement, but he couldn’t have been more wrong. Today’s prison sentence shows that those who hide their illegal activities on-line and off-shore will be caught and sent to prison.”
“Mark Marmilev spent years designing and maintaining the technological architecture that allowed Liberty Reserve to operate a global payment processor and money transfer system that catered to criminals,” said Manhattan U.S. Attorney Preet Bharara. “Now, he will pay for that crime with five years in federal prison.”
Mark Marmilev, 35, of Brooklyn, New York, pleaded guilty on Sept. 11, 2014, for his role in designing and maintaining the technological infrastructure for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services. In addition to the prison sentence, U.S. District Judge Denise L. Cote also ordered Marmilev to pay a $250,000 fine.
According to allegations contained in the indictment, and statements made in other court documents filed in Manhattan federal court and related court proceedings:
Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve was created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity because it provided an infrastructure that enabled cybercriminals to conduct anonymous and untraceable financial transactions.
Before being shut down by the U.S. government in May 2013, Liberty Reserve had more than five million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and processed tens of millions of transactions through its system, totaling more than $16 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes.
According to court documents, Marmilev was a longtime associate of Liberty Reserve founder Arthur Budovsky, and he served as Liberty Reserve’s chief technology officer. In that role, Marmilev was principally responsible for designing and maintaining Liberty Reserve’s technological infrastructure. Marmilev also promoted Liberty Reserve to criminals on the Internet, where, using aliases, he touted Liberty Reserve’s lack of anti-money laundering policies and its tolerance for “shady businesses.”
In conjunction with the sentencing, a civil forfeiture complaint was filed today seeking the forfeiture of Gourmet Boutique, a retail grocery business located in Brooklyn, New York, and the forfeiture of Marmilev’s interest in Grimaldi’s, a pizzeria located in the Coney Island area of Brooklyn, New York; according to the complaint, Marmilev purchased these business interests using more than $1.6 million in Liberty Reserve proceeds.
This case is being investigated by the Internal Revenue Service-Criminal Investigation, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, with assistance fromthe United States Secret Service’s New York Electronic Crimes Task Force. The Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police’s Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office also provided assistance.
This case is being prosecuted jointly by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit in the Southern District of New York, with assistance from the Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section.
Trial Attorney Kevin Mosley of AFMLS and Assistant U.S. Attorneys Serrin Turner, Andrew Goldstein and Christine Magdo of the Southern District of New York are in charge of the prosecution, and Assistant U.S. Attorney Christine Magdo is in charge of the forfeiture aspects of the case.