Thread: Liberty Reserve founder pleads guilty to money laundering

I.C.E. News Release

FINANCIAL CRIMES

01/29/2016

Liberty Reserve founder pleads guilty to money laundering

NEW YORK — The founder of Liberty Reserve pleaded guilty Friday in Manhattan federal court to conspiring to commit money laundering. The guilty plea stems from an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the U.S. Secret Service, the Internal Revenue Service-Criminal Investigation Division and the U.S. Attorney’s Office for the Southern District of New York.

Arthur Budovsky, 42, founded and operated Liberty Reserve, an underworld cyber-banking system that laundered hundreds of millions of dollars in illicit proceeds for criminals around the world.

According to allegations contained in the indictment filed against Liberty Reserve, Budovsky, and six other individual defendants, and statements made in related court filings and proceedings:

Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system.” At all relevant times, Budovsky directed and supervised Liberty Reserve’s operations, finances, and business strategy.

Liberty Reserve was specifically designed by Budovsky to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. Budovsky devoted himself to building and expanding Liberty Reserve so that the company could profit from attracting criminal customers, all while seeking to evade the scrutiny and reach of U.S. law enforcement authorities.

Liberty Reserve was born out of Budovsky’s unsuccessful experience running a third-party exchange service, called GoldAge, Inc., for another digital currency, called E-Gold.

In or about 2006, Budovsky was convicted in New York State of operating GoldAge as an unlicensed money transmitting business. In 2007, the operators of E-Gold were also charged with criminal offenses, including money laundering and operating an unlicensed money transmitting business, and subsequently ceased doing business. In the wake of his own criminal conviction, Budovsky set about building a digital currency that would succeed in eluding law enforcement where E-Gold had failed, by, among other things, locating the business outside the United States. Accordingly, Budovsky immigrated to Costa Rica, where he and other defendants began operating Liberty Reserve. Budovsky was so committed to evading U.S. law enforcement that he formally renounced his U.S. citizenship in 2011 and became a Costa Rican citizen, telling U.S. immigration authorities that he was concerned that the “software” his “company” was developing “might open him up to liability in the U.S.”

Liberty Reserve subsequently emerged as one of the principal money transmitting services used by cybercriminals around the world to amass, distribute, store, and launder the proceeds of their illegal activity.

Liberty Reserve functioned as a financial hub for the online underworld, favored for the ease with which it 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 5 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.

These funds encompassed proceeds of investment fraud, credit card fraud, identity theft, and computer hacking, among other crimes. As part of his plea agreement, Budovsky admitted to laundering more than $250 million in criminal proceeds through his operation of Liberty Reserve.

This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section (“AFMLS”), which is overseen by Assistant Attorney General Leslie R. Caldwell.

https://www.ice.gov/news/releases/li...ney-laundering

Digital money service forced offline


05-27-2013