The connection between money-laundering and TelexFree has been a long-standing one.
A lot of the time Ponzi schemes launder stolen funds through offshore jurisdictions, that’s par for course. But with TelexFree, it always felt a bit more organised – cartel’esque even.
We first learned of the links above and beyond what you’d normally expect to find in a Ponzi scheme, when back in June 2013 Brazilian police announced they’d
opened an inquiry into whether the management of Telexfree committed crimes against the economy and money laundering.
That was a very specific inquiry that appeared to above and beyond that of TelexFree being an obvious Ponzi scheme.
That same month TelexFree was effectively shut down in Brazil, by way of a crippling injunction granted in the state of Acre. As Acre’s money laundering investigation continued, specific details as to what they’d found remained elusive.
Judge approves Four Oaks Bank’s $1.2 million settlement
Posted by David Ranii on April 28, 2014
A federal judge in Raleigh has approved a settlement that calls for the corporate parent of Four Oaks Bank & Trust in Johnston County to pay a $1.2 million civil penalty.
The settlement between Four Oaks Fincorp and the U.S. Justice Department was approved Friday by Judge Terrence Boyle.
Four Oaks agreed to the settlement in January a day after federal prosecutors filed a civil lawsuit accusing it of facilitating fraud by routing more than $2.4 billion in transactions for “fraudulent Internet payday lenders” through the national money transfer system. Four Oaks received more than $850,000 in fees for this service.
The bank, which has more than a dozen branches, didn’t admit to any wrongdoing. However, the bank’s board of directors “felt that this settlement was in the bank’s best interest in order to avoid a lengthy and protracted legal fight and so that the bank could continue to focus on its primary business, which is serving its local communities.”
The lawsuit accused Four Oaks of deliberately ignoring warning signs that the fraudulent payday lenders were “deceiving consumers about the terms of payday loans, making loans that are unlawful and unenforceable under state and federal laws.”
Reinvestment Partners, a Durham consumer advocacy group, praised the civil penalty when it was announced in January.
“Four Oaks has put its profits ahead of the interest of consumers,” Adam Rust, research director with Reinvestment Partners, said in a prepared statement. “Hopefully this will make all banks think twice about being passive accomplices to illegal lending.”
Now, in a followup report released by the Ministry, the Rwandan government is accusing TelexFree of tax evasion, exploitation and money laundering.
The TelexFree Ponzi plague arrived on Rwandan shores in mid 2013, with the company registering itself nationally as “PLI TelexFree (Rwanda) Ltd”. Then, over the next nine months, the company set about fleecing Rwandan affiliates and transferring their money offshore.
When you see my name associated with a particular company out there, I always tell clients… I make it clear they’re not allowed to use my name in any sort of promotional fashion.
Number one it looks horrible. Mainly from a marketing standpoint it’s a bad idea, in my opinion, to lead with lawyers. Right?
You don’t see the big companies out there like Amway and Herbalife saying, “look, we’re a clean company because our lawyer says we’re clean.” When you do that you’re all but implying your program has some significant problems.
-Kevin Thompson, appearing in a YouTube video uploaded February 12th, 2014.
Argent Network (52 week ROI Ponzi scheme, advertised as “a mixture of Zeek Rewards and TelexFree”)
1BuckAdShare ($1 a position Ponzi scheme)
The above is just a sample list I was able to put together after conducting a small amount of research, I’m sure there are others. But what the above list should give you is an idea of the types of companies i-Payout have no problems providing ewallet and payment processor services to.
Effectively it would appear that if you can show i-Payout the money, “Welcome aboard!”
I personally found myself in communication with i-Payout when they took objection to me calling them out for providing TelexFree with ewallet services in the US.
TelexFree are currently under investigation in multiple countries and facing legal action in Brazil. Public Prosecutors in the Brazilian state of Acre have announced that pending charges against TelexFree for money laundering and embezzlement.
Manhattan U.S. Attorney Announces Charges Against Bitcoin Exchangers, Including Ceo Of Bitcoin Exchange Company, For Scheme To Sell And Launder Over $1 Million In Bitcoins Related To Silk Road Drug Trafficking
FOR IMMEDIATE RELEASE
Monday, January 27, 2014
Defendants Sold Bitcoins to be Used to Buy and Sell Illegal Drugs Anonymously on the Silk Road Drug Trafficking Website
Preet Bharara, the United States Attorney for the Southern District of New York, James J. Hunt, the Acting Special-Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the unsealing of criminal charges in Manhattan federal court against ROBERT M. FAIELLA, a/k/a “BTCKing,” an underground Bitcoin exchanger, and CHARLIE SHREM, the Chief Executive Officer and Compliance Officer of a Bitcoin exchange company, for engaging in a scheme to sell over $1 million in Bitcoins to users of “Silk Road,” the underground website that enabled its users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement. Each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business. SHREM is also charged with willfully failing to file any suspicious activity report regarding FAIELLA’s illegal transactions through the Company, in violation of the Bank Secrecy Act. SHREM was arrested yesterday at John F. Kennedy International Airport in New York, and is expected to be presented in Manhattan federal court later today before U.S. Magistrate Judge Henry Pitman. FAIELLA was arrested today at his residence in Cape Coral, Florida, and is expected to be presented in federal court in the Middle District of Florida.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road. Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”
DEA Acting Special-Agent-in-Charge James J. Hunt said: “The charges announced today depict law enforcement’s commitment to identifying those who promote the sale of illegal drugs throughout the world. Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way. Drug law enforcement’s job is to investigate and identify those who abet the illicit drug trade at all levels of production and distribution including those lining their own pockets by feigning ignorance of any wrong doing and turning a blind eye.”
IRS Special-Agent-in-Charge Toni Weirauch said: “The government has been successful in swiftly identifying those responsible for the design and operation of the ‘Silk Road’ website, as well as those who helped ‘Silk Road’ customers conduct their illegal transactions by facilitating the conversion of their dollars into Bitcoins. This is yet another example of the New York Organized Crime Drug Enforcement Strike Force’s proficiency in applying financial investigative resources to the fight against illegal drugs.”
According to the allegations contained in the Criminal Complaint unsealed today in Manhattan federal court:
From about December 2011 to October 2013, FAIELLA ran an underground Bitcoin exchange on the Silk Road website, a website that served as a sprawling and anonymous black market bazaar where illegal drugs of virtually every variety were bought and sold regularly by the site’s users. Operating under the username “BTCKing,” FAIELLA sold Bitcoins – the only form of payment accepted on Silk Road – to users seeking to buy illegal drugs on the site. Upon receiving orders for Bitcoins from Silk Road users, he filled the orders through a company based in New York, New York (the “Company”). The Company was designed to enable customers to exchange cash for Bitcoins anonymously, that is, without providing any personal identifying information, and it charged a fee for its service. FAIELLA obtained Bitcoins with the Company’s assistance, and then sold the Bitcoins to Silk Road users at a markup.
SHREM is the Chief Executive Officer of the Company, and from about August 2011 until about July 2013, when the Company ceased operating, he was also its Compliance Officer, in charge of ensuring the Company’s compliance with federal and other anti-money laundering (“AML”) laws. SHREM is also the Vice Chairman of a foundation dedicated to promoting the Bitcoin virtual currency system.
SHREM, who personally bought drugs on Silk Road, was fully aware that Silk Road was a drug-trafficking website, and through his communications with FAIELLA, SHREM also knew that FAIELLA was operating a Bitcoin exchange service for Silk Road users. Nevertheless, SHREM knowingly facilitated FAIELLA’s business with the Company in order to maintain FAIELLA’s business as a lucrative source of Company revenue. SHREM knowingly allowed FAIELLA to use the Company’s services to buy Bitcoins for his Silk Road customers; personally processed FAIELLA’s orders; gave FAIELLA discounts on his high-volume transactions; failed to file a single suspicious activity report with the United States Treasury Department about FAIELLA’s illicit activity, as he was otherwise required to do in his role as the Company’s Compliance Officer; and deliberately helped FAIELLA circumvent the Company’s AML restrictions, even though it was SHREM’s job to enforce them and even though the Company had registered with the Treasury Department as a money services business.
Working together, SHREM and FAIELLA exchanged over $1 million in cash for Bitcoins for the benefit of Silk Road users, so that the users could, in turn, make illegal purchases on Silk Road.
In late 2012, when the Company stopped accepting cash payments, FAIELLA ceased doing business with the Company and temporarily shut down his illegal Bitcoin exchange service on Silk Road. FAIELLA resumed operating on Silk Road in April 2013 without the Company’s assistance, and continued to exchange tens of thousands of dollars a week in Bitcoins until the Silk Road website was shut down by law enforcement in October 2013.
* * *
FAIELLA, 52, of Cape Coral, Florida, and SHREM, 24, of New York, New York, are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison. SHREM is also charged with one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years in prison.
Mr. Bharara praised the outstanding investigative work of the DEA’s New York Organized Crime Drug Enforcement Strike Force, which is comprised of agents and officers of the U. S. Drug Enforcement Administration, the New York City Police Department, Immigration and Customs Enforcement – Homeland Security Investigations, the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, the U.S. Marshal Service, New York National Guard, Office of Foreign Assets Control and the New York Department of Taxation and Finance. Mr. Bharara also thanked the FBI’s New York Field Office.
Mr. Bharara also noted that the investigation remains ongoing.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Serrin Turner is in charge of the prosecution, and Assistant United States Attorney Andrew Adams of the Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
An address in Happy Valley cited for Hong Kong firm Extension Asia.
Hong Kong and mainland China are vital links in the US$6 billion money laundering network run by global currency exchange Liberty Reserve, which is facing criminal charges in the United States.
A Hong Kong company, Extension Asia, deposited part of Liberty Reserve’s “ill-gotten” funds now demanded by the US authorities at the Hong Kong branch of Bank of Communications, one of China’s biggest banks, and a bank in Shenzhen, alleges a US court indictment filed by US prosecutors.
On Tuesday, US federal prosecutors charged Liberty Reserve and seven current and former executives of the firm in the largest international money laundering prosecution by the US government.
“We strike a severe blow against a money laundering enterprise charged with laundering over US$6 billion in criminal proceeds. Liberty Reserve was a financial hub for cyber-criminals, Ponzi schemers, child pornographers, identity thieves, and other criminals seeking to hide, launder, and use ill-gotten funds,” Mythili Raman, acting US assistant attorney-general, told a press conference in New York on Tuesday, laying the charges.
Liberty Reserve operated a global digital currency system that provided criminals a way to launder their profits, said Raman. It was used by credit card thieves and computer hackers around the world, including Hong Kong, the mainland, Vietnam and the US, according to the court indictment filed by the US prosecutors.
Liberty Reserve and the defendants have been ordered to forfeit to the US government assets including US$6 billion of laundered money, US$36.92 million deposited in Westpac Bank in Australia and funds deposited in 42 bank accounts in Costa Rica, Cyprus, Russia, Morocco, Spain, Latvia, Hong Kong and mainland China.
These 42 bank accounts include one account in Bank of Communications (Hong Kong) and one account in “Shenzhen Bank (China)”. There is no bank with the exact name “Shenzhen Bank”, but there are two banks with similar names, Shenzhen Development Bank and Shenzhen Commercial Bank. Both have now merged into Shenzhen-listed Ping An Bank, a subsidiary of Ping An Insurance Group.
The money was deposited in these two bank accounts by a Hong Kong company called Extension Asia, whose address is registered in corporate records as Flat A302, Village Court, 19-25 Village Terrace, Happy Valley. Extension Asia is wholly owned by a British Virgin Islands company named China Elite Asia, according to Hong Kong corporate records.
A Ping An Bank spokeswoman said: “So far, our legal department and our anti-money-laundering department have not asked the US and other authorities any questions regarding this matter. We have always strictly adhered to the anti-money-laundering requirements of the People’s Bank of China.”
A Bank of Communications spokeswoman said: “As judicial proceedings are under way, it is not appropriate for us to comment on the case. Bank of Communications’ Hong Kong branch has taken and will continue to take appropriate actions to ensure compliance with relevant laws and regulations.”
This article first appeared in the South China Morning Post print edition on Jun 01, 2013 as Liberty Reserve tied to HK, mainland
Another day, another alleged fraud. But this one—brought to light by the federal indictment of Liberty Reserve, which prosecutors said was one of the world’s largest online money operations—sounded a little bit too familiar.
According to the charges, the operators of Liberty Reserve constructed an extremely complex international network for financial transactions that allowed its customers to transmit vast sums of money around the globe, all while operating under layers of anonymity. As a result, the indictment says, “Liberty Reserve was in fact used extensively for illegal purposes, functioning in effect as the bank of choice for the criminal underworld.”
If that rings a bell for any of you fraud aficionados, think back to 1991 and the virtual financial explosion of a shadowy international institution called the Bank of Credit and Commerce International, best known as B.C.C.I. While the two scandals have their differences, in both instances—if the charges against Liberty Reserve are true—the companies established virtual international spiderwebs of financial links, giving both the ability to avoid effective regulation of their operations.
Just read the descriptions in official documents. From the Liberty Reserve indictment: “Throughout its operation, Liberty Reserve and its principals sought to thwart effective regulation by anti-money laundering authorities and to evade the reach of law enforcement.” Then B.C.C.I. as described in a Senate report about the bank: “The structure was conceived . . . for the specific purpose of evading regulation or control by governments.”
Then the alleged crimes. Liberty Reserve, as described in the indictment: “The company grew into a financial hub of the cybercrime world, facilitating a broad range of online criminal activity.” B.C.C.I., from the Senate report: “(The principals) developed in BCCI an ideal mechanism for facilitating illicit activity by others.”
Many of the specific crimes described are identical: money laundering, investment fraud, narcotics trafficking, and the like. Each had alleged crimes that are not mentioned in the other case. For example, Liberty Reserve is accused of laundering money from child pornography, while investigators concluded that B.C.C.I. was doing the same for arms traffickers and terrorists.
The Liberty Reserve also links to E-Gold, another Internet currency used for money laundering. According to the indictment, two of the Liberty Reserve principals had operated an entity called Gold Age Inc. In December 2006, the two men—Budovsky and Kats—were convicted of operating the company as an unlicensed money transmitter. E-Gold was used in a variety of frauds, including one involving a criminal who conned thousands of small investors out of $50 million in a matter of weeks. Eventually, in 2008, the principals of E-Gold pleaded guilty to using the business as a money-laundering scheme.
Why do these similarities matter? Because these days, there are plenty of people who should know better singing the praises of online financial currencies and other broad operations that operate outside the controls and oversight of governments. This, the fans proclaim, prevents government manipulation. But, as B.C.C.I., E-Gold, and now, perhaps, Liberty Reserve show, avoiding government is exactly the goal of criminals.
So, before the honest folks engaging in financial transactions with unregulated entities continue to crow about their virtues, perhaps they should consider the fates of the innocents who proudly placed their money with other mysterious networks like B.C.C.I. and Liberty Reserve that have all come crashing down.
Manhattan U.S. Attorney Announces Charges Against Liberty Reserve, One Of World’s Largest Digital Currency Companies, And Seven Of Its Principals And Employees For Allegedly Running A $6 Billion Money Laundering Scheme
FOR IMMEDIATE RELEASE
Tuesday, May 28, 2013
Liberty Reserve Allegedly Processed at Least 55 Million Illegal Transactions for at Least One Million Users Worldwide Facilitating Global Criminal Conduct
Investigation and Takedown Believed to Be the Largest International Money Laundering Prosecution in History, Involving Law Enforcement Actions in 17 Countries
Preet Bharara, the United States Attorney for the Southern District of New York, Mythili Raman, the Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice (“DOJ”), Steven G. Hughes, the Special Agent-in-Charge of the New York Office of the U.S. Secret Service, Richard Weber, the Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and James T. Hayes, Jr., the 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 today 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; VLADIMIR 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, New York, 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 (see attached list) 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 today 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.
Manhattan U.S. Attorney Preet 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 today 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.”
Acting Assistant Attorney General Mythili 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 today we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”
Secret Service Special Agent-in-Charge Steven G. 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 today 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 Richard 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 James T. Hayes, Jr. 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.”
Well, it looks like things are getting worse and worse for Liberty Reserve, a well known “PIMP”. One can only hope the US DOJ and US Treasury Department go after all the Ponzi Payment Processors and soon.
Below are links to the filings and a press release from the Treasury Department
A confidential source has told me of a recent Zeek update floating around that makes reference to Troy Dooley’s recent video in which he extrapolated that the Receiver, Kenneth Bell, who had once ferreted out those with terrorist tendencies and that his appointment as Receiver must mean there could have been terror cell money laundering going on in Zeek Rewards or some such stuff. I suppose that all makes sense to someone but not to me.
Mr. Bell is a former Assistant US Attorney in what used to be known as the Justice Department’s “Terrorism and Violent Crime Section” and was involved in the case of Mohamad Youssef Hammoud, who was sentenced to 30 years for Terrorism Financing back in 2011. I suppose that one could also infer that since a similar 2003 terror case had Judge Graham Mullen presiding and he is also presiding over the SEC/Zeek case, there has to be some other sinister ties involved. I would not make that connection but it seems some people are not working with full mental capacities or else they like to grandstand.
As some of you may remember. there was also speculation of terrorist/drug cartel money laundering suspected in the ASD/Bowdoin case. Several of suitcases full of cash headed to back rooms at the rallies and all, cash no one really knew where it ended up. Many people observed this, even those who professed to be pro-Andy.
It was also inferred that Mr. Bell is somehow responsible for the SEC coming after Zeek with its unfounded claims and that those claims can be attributed to Mr. Bell. I think these people are suffering from Hypoxia (lack of oxygen) from having their heads firmly inserted into their rectum for far too long.