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Tag: Money laundering

  • George Santos Was Finally Too Much for Republicans

    George Santos Was Finally Too Much for Republicans

    So long, George Santos, we hardly knew ye—and that was pretty much the problem.

    This morning, House members evicted one of their own for only the sixth time in history, terminating the congressional career of the Long Island Republican barely a year after he won election on a campaign of lies and alleged fraud. The vote to expel Santos was 311–114, easily clearing the two-thirds threshold needed to pass. As with most other consequential votes this year, a unified Democratic caucus carried the resolution along with a divided GOP, whose members struggled with the decision of whether to trim their already narrow majority by kicking Santos out of Congress. A slim majority of Republicans stood by Santos, while all but four Democrats voted to expel him.

    Santos’s tenure was as memorable as it was brief; to the bitter end—and it was bitter—he seemed to be auditioning for a reality show, or perhaps the title role in a sequel to Steven Spielberg’s Catch Me if You Can. Ultimately, a Republican Party that has largely embraced a former president indicted in four separate criminal cases was unwilling to offer the same support to a freshman member of Congress whom a large majority of GOP lawmakers would not have recognized before January. The vote suggested that some ethical line remains that a Republican politician cannot cross without reproach—at least if that person is not named Donald Trump. Where exactly that line sits, however, is unclear.

    Republicans largely stood by Santos through earlier efforts to oust him this year after a federal grand jury indicted him on charges of wire fraud, money laundering, false statements, and theft of public funds; just a month ago, the House overwhelmingly rejected an expulsion resolution across party lines. Then came a damning report by the House Ethics Committee that alleged in striking detail just how flagrantly Santos had deceived his campaign donors. He used campaign funds on OnlyFans and Botox, among other salacious tidbits investigators uncovered. “Representative Santos sought to fraudulently exploit every aspect of his House candidacy for his own personal financial profit,” the report concluded. “He blatantly stole from his campaign.”

    Santos denounced the report and generally denied the allegations, but he has refused to offer a specific defense of his actions. Still, Republican leaders resisted expelling him. Speaker Mike Johnson privately urged Santos to resign in order to spare his party the difficult vote of removing him. But Santos, who had already announced that he would not seek a second term next year, was done with party loyalty. “If I leave, they win,” he told reporters, accusing his colleagues of “bullying” him.

    Johnson tried to pressure Santos, but he would not lobby other Republicans to expel him. He described the expulsion resolution as “a vote of conscience”—which is Capitol code for “vote however you want.” But in the hours before today’s vote, he and Majority Leader Steve Scalise told reporters that they would vote to save Santos.

    The reason GOP leaders would protect Santos was plain: With such a small majority, they couldn’t spare a single vote, even one as ethically and legally compromised as his. “Do you think for a minute if Republicans had a 25-seat majority, they would care about George Santos’s vote?” Representative Pete Aguilar of California, the House Democratic caucus chair, asked earlier this week. “They needed him to vote for Speaker McCarthy. They needed him to vote for Speaker Johnson. That’s the only reason why he’s still a member of Congress.”

    A few House Republicans acknowledged that the party could ill afford to jettison Santos when it has had enough trouble passing bills as is. The contingent pushing most aggressively for expulsion was Santos’s New York Republican colleagues, who were both personally appalled that he had slipped into Congress alongside them and most likely to suffer politically from his continued presence. A handful of GOP-held seats in Long Island and upstate New York—including the one formerly held by Santos—could determine whether Republicans keep control of the House next year.

    Santos won his competitive seat in 2022 after somehow evading the scrutiny that usually accompanies closely fought House races; not until weeks later did The New York Times report that he had almost entirely invented his life story. Santos had lied about attending a prestigious prep school and earning degrees from Baruch College and NYU. He lied about working on Wall Street for Citigroup and Goldman Sachs. He said that his grandparents survived the Holocaust and that his mother was working in the Twin Towers on 9/11. Both were lies. “He has manufactured his entire life,” Representative Marc Molinaro, a fellow New York Republican, said yesterday in a floor speech arguing for Santos’s expulsion.

    Publicly, the Republicans who voted with Santos—mainly staunch conservatives—argued against his removal on procedural grounds. The only other lawmakers the House has expelled were either members of the Confederacy during the Civil War or convicted of crimes in court. Ousting Santos based on accusations alone, these Republicans said, would set a dangerous new precedent and overturn the will of the voters who sent him to Congress. Yet none of them was actually willing to vouch for him. “I rise not to defend Geroge Santos, whoever he is,” Representative Matt Gaetz of Florida said in a floor speech, “but to defend the very precedent that my colleagues are willing to shatter.”

    Santos was a performer until his very last moments in Congress. “I will not stand by quietly,” he declared on the House floor. It was one statement of his that was indisputably true. Santos was a ubiquitous presence in the days leading up to the vote, willing to attack anyone standing against him. During a three-hour appearance on X (formerly Twitter) Spaces, he accused his colleagues of voting while drunk on the House floor. When one Republican, Representative Max Miller of Ohio, called Santos a “crook” to his face, Santos replied by referring to him as “a woman-beater,” dredging up allegations that Miller had physically abused his ex-girlfriend. (Miller denied the accusations.) Finally, Santos attempted one last bit of retribution by filing a motion to expel Representative Jamaal Bowman of New York, the Democrat who pleaded guilty last month to a misdemeanor charge for falsely pulling a fire alarm en route to a House vote.

    “It’s all theater,” Santos declared yesterday with no hint of irony, on his penultimate day as a member of Congress. He had scheduled a press conference outside the House chamber, using the Capitol dome as a picturesque tableau. In the background, however, was a different icon: a garbage truck, presumably there to take out the congressional trash.

    Russell Berman

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  • Largest crypto exchange Binance fined $4 billion, CEO pleads guilty to not stopping money laundering

    Largest crypto exchange Binance fined $4 billion, CEO pleads guilty to not stopping money laundering

    WASHINGTON — The U.S. government dealt a massive blow to Binance, the world’s largest cryptocurrency exchange, which agreed to pay a roughly $4 billion settlement Tuesday as its founder and CEO Changpeng Zhao pleaded guilty to a felony related to his failure to prevent money laundering on the platform.

    Zhao stepped down as the company’s chief executive and Binance admitted to violations of the Bank Secrecy Act and apparent violations of sanctions programs, including its failure to implement reporting programs for suspicious transactions.

    “Using new technology to break the law does not make you a disruptor, it makes you a criminal,” said U.S. Attorney General Merrick Garland, who called the settlement one of the largest corporate penalties in the nation’s history.

    As part of the settlement agreement, the U.S. Treasury said Binance will be subject to five years of monitoring and “significant compliance undertakings, including to ensure Binance’s complete exit from the United States.” Binance is a Cayman Islands limited liability company.

    The cryptocurrency industry has been marred by scandals and market meltdowns.

    Zhao was perhaps best known as the chief rival to Sam Bankman-Fried, the 31-year-old founder of the FTX, which was the second-largest crypto exchange before it collapsed last November. Bankman-Fried was convicted earlier this month of fraud for stealing at least $10 billion from customers and investors.

    Zhao, meanwhile, pleaded guilty in a federal court in Seattle on Tuesday to one count of failure to maintain an effective anti-money-laundering program.

    Magistrate Judge Brian A. Tsuchida questioned Zhao to make sure he understood the plea agreement, saying at one point: “You knew you didn’t have controls in place.”

    “Yes, your honor,” he replied.

    Binance wrote in a statement that it made “misguided decisions” as it quickly grew to become the world’s biggest crypto exchange, and said the settlement acknowledges its “responsibility for historical, criminal compliance violations.”

    U.S. Treasury Secretary Janet Yellen said Binance processed transitions by illicit actors, “supporting activities from child sexual abuse, to illegal narcotics, to terrorism, across more than 100,000 transactions.”

    Binance did not file a single suspicious activity report on those transactions, Yellen said, and the company allowed over 1.5 million virtual currency trades that violated U.S. sanctions — including ones involving Hamas’ al-Qassam Brigades, al-Qaeda and other criminals.

    The judge set Zhao’s sentencing for Feb. 23, however it’s likely to be delayed. He faces a possible guideline sentence range of up to 18 months.

    One of his attorneys, Mark Bartlett, noted that Zhao had been aware of the investigation since December 2020, and surrendered willingly even though the United Arab Emirates — where Zhao lives — has no extradition treaty with the U.S.

    “He decided to come here and face the consequences,” Bartlett said. “He’s sitting here. He pled guilty.”

    Zhao, who is married and has young children in the UAE, promised he would return to the U.S. for sentencing if allowed to stay there in the meantime.

    “I want to take responsibility and close this chapter in my life,” Zhao said. “I want to come back. Otherwise I wouldn’t be here today.”

    Zhao previously faced allegations of diverting customer funds, concealing the fact that the company was commingling billions of dollars in investor assets and sending them to a third party that Zhao also owned.

    Over the summer, Binance was accused of operating as an unregistered securities exchange and violating a slew of U.S. securities laws in a lawsuit from regulators. That case was similar to practices uncovered after the collapse of FTX.

    Zhao and Bankman-Fried were originally friendly competitors in the industry, with Binance investing in FTX when Bankman-Fried launched the exchange in 2019. However, the relationship between the two deteriorated, culminating in Zhao announcing he was selling all of his cryptocurrency investments in FTX in early November 2022. FTX filed for bankruptcy a week later.

    At this trial and in later public statements, Bankman-Fried tried cast blame on Binance and Zhao for allegedly orchestrating a run on the bank at FTX.

    A jury found Bankman-Fried guilty of wire fraud and several other charges. He is expected to be sentenced in March, where he could face decades in prison.

    ___

    Johnson contributed from Seattle. Associated Press writer Ken Sweet in New York contributed to this story.

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  • Founder of Binance, world’s largest crypto exchange, pleads guilty to anti-money-laundering charge

    Founder of Binance, world’s largest crypto exchange, pleads guilty to anti-money-laundering charge

    WASHINGTON — The U.S. government dealt a massive blow to the world’s largest cryptocurrency exchange Binance as its founder, Changpeng Zhao, pleaded guilty to a felony charge Tuesday related to his failure to prevent money laundering on his platform.

    Binance also agreed to a roughly $4 billion settlement with the U.S. over violations of the Bank Secrecy Act and apparent violations of sanctions programs, including failure to put into place a suspicious transaction reporting programs. Zhao announced that he stepped down as the company’s chief executive.

    Over the summer, the company was accused of operating as an unregistered securities exchange and violating a slew of U.S. securities laws in a lawsuit from regulators. That case was similar to practices uncovered after the collapse of FTX, the second largest cryptocurrency exchange, last year.

    “Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed — now it is paying one of the largest corporate penalties in U.S. history,” said Attorney General Merrick B. Garland. “The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal.”

    Zhao pleaded guilty to one count of failure to maintain an effective anti-money-laundering program in federal court in Seattle. Binance is a Cayman Islands limited liability company.

    Binance said in a statement that it made “misguided decisions” as it quickly grew to become the world’s largest crypto exchange and that the settlement acknowledges its “responsibility for historical, criminal compliance violations.”

    “Ever since Binance launched its convertible virtual currency platform, it has knowingly evaded the U.S. laws designed to protect these systems,” Treasury Secretary Janet Yellen said. “Binance was allowing illicit actors to transact freely, supporting activities from child sexual abuse, to illegal narcotics, to terrorism, across more than 100,000 transactions.”

    The U.S. Treasury said Binance allowed Hamas’ military wing al-Qassam Brigades, Palestinian Islamic Jihad, al-Qaeda and other criminals to conduct transactions.

    “Binance processed these transactions, but it never filed a single suspicious activity report,” Yellen said. “And it also allowed over 1.5 million virtual currency trades that violated U.S. sanctions.”

    As part of a settlement agreement, Binance will be subject to five years of monitoring and “significant compliance undertakings, including to ensure Binance’s complete exit from the United States,” according to the U.S. Treasury.

    Magistrate Judge Brian A. Tsuchida set Zhao’s sentencing for Feb. 23, however that’s likely to be delayed. He faces a possible guideline sentence range of up to 18 months.

    The judge questioned Zhao to make sure he understood the plea agreement, saying at one point: “You knew you didn’t have controls in place.”

    “Yes, your honor,” he replied.

    One of his attorneys, Mark Bartlett, noted that Zhao had been aware of the investigation since December 2020, and surrendered willingly even though the United Arab Emirates — where Zhao lives — has no extradition treaty with the U.S.

    “He decided to come here and face the consequences,” Bartlett said. “He’s sitting here. He pled guilty.”

    Zhao, who is married and has young children in the UAE, promised that he would return to the U.S. for sentencing if allowed to stay there in the meantime.

    “I want to take responsibility and close this chapter in my life,” Zhao said. “I want to come back. Otherwise I wouldn’t be here today.”

    Zhao had previously faced allegations of diverting customer funds, concealing the fact that the company was commingling billions of dollars in investor assets and sending them to a third party that Zhao also owned.

    The cryptocurrency industry has been marred by scandals and market meltdowns. Sam Bankman-Fried, the 31-year-old founder of FTX, was convicted earlier this month of fraud for stealing at least $10 billion from customers and investors.

    Of his many depictions in the cryptocurrency industry, Zhao was best known as the chief rival to Bankman-Fried.

    Zhao and Bankman-Fried were originally friendly competitors in the industry, with Binance investing in FTX when Bankman-Fried launched the exchange in 2019. However, the relationship between the two deteriorated, culminating in Zhao announcing he was selling all of his cryptocurrency investments in FTX in early November 2022. FTX filed for bankruptcy a week later.

    At this trial and in later public statements, Bankman-Fried tried cast blame on Binance and Zhao for allegedly orchestrating a run on the bank at FTX.

    A jury found Bankman-Fried guilty of wire fraud and several other charge in October. He is expected to be sentenced in March, where he could face decades in prison.

    ___

    Associated Press writers Fatima Hussein in Washington, D.C. and Ken Sweet in New York contributed to this story. Johnson contributed from Seattle.

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  • Founder Of Binance Pleads Guilty To Anti-Money Laundering Charge

    Founder Of Binance Pleads Guilty To Anti-Money Laundering Charge

    The charge was similar to practices uncovered after the collapse of the second largest cryptocurrency exchange, FTX, last year.

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  • Backpage founder Michael Lacey convicted of one money laundering count; Arizona jury deadlocks on nearly all others

    Backpage founder Michael Lacey convicted of one money laundering count; Arizona jury deadlocks on nearly all others

    Backpage founder Michael Lacey convicted of one money laundering count; Arizona jury deadlocks on nearly all others

    ByThe Associated Press

    November 16, 2023, 6:58 PM

    PHOENIX — Backpage founder Michael Lacey convicted of one money laundering count; Arizona jury deadlocks on nearly all others.

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  • Not Just Crypto: AFP Raids Bust Currency Exchange Laundering Nearly $230M in Illegal Funds

    Not Just Crypto: AFP Raids Bust Currency Exchange Laundering Nearly $230M in Illegal Funds

    The Australian Federal Police (AFP) has uncovered a money laundering syndicate, named the Long River syndicate, which is alleged to have utilized the Changjiang Currency Exchange as a front for laundering around $229 million in illicit funds over the past three years.

    As part of Operation Avarus-Nightwolf, a series of targeted raids were executed, confiscating high-end properties and vehicles with an estimated value of $50 million.

    Changjiang Currency Exchange Exposed

    A major operation led by AFP has exposed the Long River syndicate, a money laundering network allegedly using the Changjiang Currency Exchange. Over the last three years, approximately $229 million in illicit funds have been laundered through twelve establishments across Australia.

    The investigation led to the arrest of four Chinese nationals and three Australians in Melbourne’s eastern suburbs, all accused of involvement in the syndicate. They are expected to face the Melbourne Magistrates Court in the coming days.

    The AFP’s Assistant Commissioner, Stephen Dametto, shed light on what led to the investigation, stating, “It was just a gut feeling – it didn’t feel right.” He explained that the expansion of the Changjiang Currency Exchange during the COVID-19 lockdowns raised suspicions, especially considering the decrease in international students and tourists.

    The AFP uncovered alleged connections between Changjiang Currency Exchange and known money laundering groups. Over the past three years, the exchange chain reportedly transferred over $10 billion, with the AFP claiming the company facilitated unlawful money transfers for organized criminals.

    Unveiling the Intricate Web of ML and Luxurious Lifestyles

    The business allegedly engaged in money laundering activities totaling $228,883,561 between 2020 and 2023, with suspicions that some funds originated from cyber-enabled scams, illicit goods trafficking, and violent crimes.

    According to the police, the syndicate aided its criminal clientele in fabricating business records, including forged invoices and bank statements. This allowed the criminals and the Changjiang Currency Exchange to present the illicit funds as originating from legitimate sources should authorities investigate them.

    Syndicate members led opulent lifestyles, frequenting extravagant restaurants, indulging in expensive wines and sake, traveling by private jets, driving high-end vehicles, and residing in multi-million-dollar homes. To evade detection, they reportedly acquired counterfeit passports at $200,000 each.

    Assistant Commissioner Dametto underscored the sophistication of the Long River syndicate, describing it as a highly intricate money laundering group deeply entrenched within the financial services industry. He expressed confidence that the charges filed in this case would effectively disrupt the inflow and outflow of illicit funds in Australia soon.

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    Wayne Jones

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  • Jurors hear opposite views of whether Backpage founder knew the site was running sex ads

    Jurors hear opposite views of whether Backpage founder knew the site was running sex ads

    PHOENIX — Jurors at the criminal trial of a founder of the classified site Backpage.com heard opposite views in closing arguments of whether the founder knew there were ads for prostitution on the site.

    Prosecutor Kevin Rapp told jurors on Thursday and Friday that Michael Lacey, who along with four former Backpage employees are accused of taking part in a scheme to knowingly sell sex ads, was aware of the content of ads that had text and images indicative of prostitution. Most of the site’s revenues came from adult ads, Rapp said.

    “It’s not coming from (ads for) apartments, automotive or jobs,” Rapp said.

    Paul Cambria, an attorney for Lacey, said his client was focused on running an alternative newspaper chain and wasn’t involved in day-to-day operations of Backpage and that there’s no evidence that Lacey saw the 50 ads at issue before his trial. Based on the site’s cooperation with law enforcement, Lacey had a good-faith belief that Backpage was being operated lawfully, Cambria said.

    “Why would you think you were breaking the law if the police were asking you to work with them?” Cambria asked jurors on Friday.

    It’s the second trial for Lacey and four former Backpage employees, whose first trial ended in a September 2021 mistrial when a judge concluded that prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.

    In all, Lacey and the group of former employees have pleaded not guilty to charges of facilitating prostitution. Of the five, Lacey and two others have pleaded not guilty to money laundering charges.

    Lacey had founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.

    The site’s marketing director has pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Additionally, the CEO of the company when the government shut the site down , Carl Ferrer, pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.

    Prosecutors say Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of giving free ads to sex workers and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.

    Authorities say Backpage employees would identify prostitutes through Google searches, then call and offer them a free ad. The site also is accused of having a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with sex workers.

    Backpage’s operators said they never allowed ads for sex, and assigned employees and automated tools to try to delete such ads. Their legal team maintains the content on the site was protected by the First Amendment. Prosecutors said the moderation efforts by the site were aimed at concealing the true nature of the ads.

    Rapp told jurors that Backpage was clearly on notice about the problems with its ads, saying news organizations and groups that advocated against sex trafficking had called out Backpage.

    Rapp pointed to testimony from Ferrer about when the National Center for Missing and Exploited Children told Backpage that it had sex ads on its site. Lacey got upset and said the group’s mission focused on exploited children, not on adult prostitution, Rapp told jurors.

    Cambria raised questions about the credibility of testimony by Ferrer and the other Backpage employee who pleaded guilty, saying they want the government to recommend a more lenient sentence for their cooperation.

    Lacey’s attorney also said Backpage cooperated with authorities by responding to subpoenas for records and that the assistance provided by the site led to charges against pimps and prostitutes.

    Cambria showed jurors a May 2011 certificate of appreciation that was issued to Ferrer and signed by then-FBI Director Robert Mueller for Backpage’s assistance in an investigation.

    A Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.

    The trial is scheduled to resume Tuesday, when lawyers for other defendants will making their closing arguments.

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  • Jurors hear opposite views of whether Backpage founder knew the site was running sex ads

    Jurors hear opposite views of whether Backpage founder knew the site was running sex ads

    PHOENIX — Jurors at the criminal trial of a founder of the classified site Backpage.com heard opposite views in closing arguments of whether the founder knew there were ads for prostitution on the site.

    Prosecutor Kevin Rapp told jurors on Thursday and Friday that Michael Lacey, who along with four former Backpage employees are accused of taking part in a scheme to knowingly sell sex ads, was aware of the content of ads that had text and images indicative of prostitution. Most of the site’s revenues came from adult ads, Rapp said.

    “It’s not coming from (ads for) apartments, automotive or jobs,” Rapp said.

    Paul Cambria, an attorney for Lacey, said his client was focused on running an alternative newspaper chain and wasn’t involved in day-to-day operations of Backpage and that there’s no evidence that Lacey saw the 50 ads at issue before his trial. Based on the site’s cooperation with law enforcement, Lacey had a good-faith belief that Backpage was being operated lawfully, Cambria said.

    “Why would you think you were breaking the law if the police were asking you to work with them?” Cambria asked jurors on Friday.

    It’s the second trial for Lacey and four former Backpage employees, whose first trial ended in a September 2021 mistrial when a judge concluded that prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.

    In all, Lacey and the group of former employees have pleaded not guilty to charges of facilitating prostitution. Of the five, Lacey and two others have pleaded not guilty to money laundering charges.

    Lacey had founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.

    The site’s marketing director has pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Additionally, the CEO of the company when the government shut the site down , Carl Ferrer, pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.

    Prosecutors say Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of giving free ads to sex workers and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.

    Authorities say Backpage employees would identify prostitutes through Google searches, then call and offer them a free ad. The site also is accused of having a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with sex workers.

    Backpage’s operators said they never allowed ads for sex, and assigned employees and automated tools to try to delete such ads. Their legal team maintains the content on the site was protected by the First Amendment. Prosecutors said the moderation efforts by the site were aimed at concealing the true nature of the ads.

    Rapp told jurors that Backpage was clearly on notice about the problems with its ads, saying news organizations and groups that advocated against sex trafficking had called out Backpage.

    Rapp pointed to testimony from Ferrer about when the National Center for Missing and Exploited Children told Backpage that it had sex ads on its site. Lacey got upset and said the group’s mission focused on exploited children, not on adult prostitution, Rapp told jurors.

    Cambria raised questions about the credibility of testimony by Ferrer and the other Backpage employee who pleaded guilty, saying they want the government to recommend a more lenient sentence for their cooperation.

    Lacey’s attorney also said Backpage cooperated with authorities by responding to subpoenas for records and that the assistance provided by the site led to charges against pimps and prostitutes.

    Cambria showed jurors a May 2011 certificate of appreciation that was issued to Ferrer and signed by then-FBI Director Robert Mueller for Backpage’s assistance in an investigation.

    A Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government, because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.

    The trial is scheduled to resume Tuesday, when lawyers for other defendants will making their closing arguments.

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  • Crypto Isn’t Primarily Responsible For Terrorist Financing, Says US Treasury Official

    Crypto Isn’t Primarily Responsible For Terrorist Financing, Says US Treasury Official

    U.S. Deputy Treasury Secretary Wally Adeyemo confirmed in a speech on Friday that crypto plays a relevant, but still relatively minor role in global terrorist financing operations.

    His comments bear a stark contrast to claims from a massive lineup of congresspeople earlier this month, asserting that crypto is responsible for over $130 million in Hamas terrorist funding.

    The Reality of Terror Financing

    During his remarks about terrorist groups, sanctions, and illicit finance, Adeyomo claimed that crypto is “not the vast majority of the ways that these groups are funded.”

    “The thing that we know about terrorist groups and those who look to move money illicitly is that they’re going to use any new technology to try to do that,” he said.

    “The thing that we’re going to do, though, is prevent it from becoming the way that they are funded in the future,” he continued.

    His remarks mirror those from a series of Treasury Department reports last year, which conceded that crypto’s use for money laundering “remains far below that of fiat currency and more traditional methods.”

    That said, cryptocurrencies present unique attributes that may make them useful to criminals under some circumstances – including peer-to-peer transfers and irreversible transactions.

    Adeyomo called them an “evolution” for terrorist money laundering efforts, which started to shift away front traditional finance in 2001 as firms like PayPal and Venmo took hold. While most crypto firms still strive to comply with the law, the Treasury spokesperson said that some industry companies “wish to innovate without regard to consequences.”

    “We will use every tool available to go after any person or platform that is facilitating the movement of resources for terrorists,” he added.

    The Treasury announced sanctions against a Gaza-based crypto exchange, Buy Cash, earlier this month for connections to terror groups like Hamas and ISIS.

    Crypto Terror FUD

    On October 17, over 100 members of Congress petitioned the White House to do more to stop crypto terror financing, claiming that only a “small percentage” of crypto flowing through such groups has been seized so far.

    However, blockchain surveillance firm Elliptic published a blog post on Wednesday asserting that there is “no evidence to support the assertion that Hamas has received significant volumes of crypto donations.”

    The $130 million figure cited by policymakers was sourced from a Wall Street Journal article that had based its estimate on Elliptic data.

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    Andrew Throuvalas

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  • The smiling face of Chinese interests in the Indo-Pacific: David Cameron

    The smiling face of Chinese interests in the Indo-Pacific: David Cameron

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    LONDON — It is a multi-billion-dollar plan to build a metropolis in the Indo-Pacific which critics fear may one day act as a Chinese military outpost.

    Now the vast Colombo Port City project has a new champion — former British Prime Minister David Cameron.

    Cameron has been enlisted to drum up foreign investment in the controversial Sri Lankan project, which is a major part of Xi Jinping’s Belt and Road Initiative — China’s global infrastructure strategy — and is billed as a Chinese-funded rival to Singapore and Dubai.

    Cameron flew to the Middle East in late September to speak at two glitzy investment events for Colombo Port City, having visited the waterside site in Sri Lanka in person earlier this year.  

    His spokesperson said the former PM had had no direct contact with either the Chinese government or the Chinese firm involved. But Cameron’s lobbying for the scheme has drawn severe backlash from critics, who say his activities will aid China in its geopolitical ambitions.

    Former Conservative Party leader Iain Duncan Smith, who was sanctioned by Beijing for criticizing its human rights record, said: “Cameron of all people must realize that China’s Belt and Road is not about help and support and development, it’s ultimately about gaining control — as they’ve already demonstrated in Sri Lanka.

    “I hope that he will reconsider the position he’s taken on this.”

    Tim Loughton, another Tory MP sanctioned by China, said: “The Sri Lankan project is a classic example of how China buys votes and influence in developing countries and then sends the bailiffs in when those countries can’t keep up the payments.”

    “Cameron should be working to help wean vulnerable countries off Chinese influence and debt rather than tying them in more tightly.”

    At the roadshow

    Dilum Amunugama, Sri Lanka’s investment minister who attended the investment events in the UAE last month, told POLITICO he believed Cameron was enlisted to convince Western investors to put their money into the project.

    Amunugama was at two events where Cameron spoke — one in Abu Dhabi with an audience of 100, and one in Dubai with an audience of 300.

    “The main point he [Cameron] was trying to stress is that it is not a purely Chinese project, it is a Sri Lankan-owned project — and that is the main point I think the Chinese also wanted him to iron out,” Amunugama said.

    Cameron is in charge of drumming up investment into the Chinese-funded Colombo Port City project | Ishara S. Kodikara/AFP via Getty Images

    The Sri Lankan minister said the decision to enlist Cameron “was taken by the Chinese company, not the government.”

    Cameron’s office said his involvement was organized by the Washington Speakers Bureau, a D.C.-based agency that books guest speakers for corporate events.

    His spokesperson said: “David Cameron spoke at two events in the UAE organized via Washington Speakers Bureau (WSB), in support of Port City Colombo, Sri Lanka.

    “The contracting party for the events was KPMG Sri Lanka and Mr Cameron’s engagement followed a meeting he had with Sri Lanka’s president, Ranil Wickremesinghe, earlier in the year.

    “Mr Cameron has not engaged in any way with China or any Chinese company about these speaking events. The Port City project is fully supported by the Sri Lankan government,” his spokesperson added.

    The spokesperson declined to say how much Cameron was paid for his time. Cameron traveled to Sri Lanka in January and visited the development, but his office said that he did so as a guest of the president and that there was no commercial aspect to that trip.

    Mired in controversy

    The Colombo Port City project has been controversial since its inception.

    It was unveiled in 2014 by China’s Xi and Sri Lanka’s then-president, Mahinda Rajapaksa. Three years later, Sri Lanka handed it over to Chinese control after struggling to pay off its debt to Chinese firms.

    Multiple concerns have been raised about the project, including its environmental impact; U.S. warnings it could be used for money laundering; and fears that it will ultimately be used as a Chinese military outpost.

    Analysts have warned repeatedly that China is using the project to extend its strategic influence in the region. Beijing has already used the nearby Hambantota port — also funded by Chinese loans — to dock military vessels.

    The main developer behind the Colombo Port City Project, CHEC Port City Colombo Ltd, has pumped in an initial $1.3 billion. Its ultimate owner is the China Communications Construction Company, a majority state-owned enterprise headquartered in Beijing.

    Golden era no more

    As prime minister, Cameron and his Chancellor George Osborne famously heralded a “golden era” of U.K. relations with China. Since leaving office in 2016, the ex-PM has come under heavy scrutiny over his lobbying activities, including for the now-collapsed finance company Greensill Capital.

    The ex-PM has come under scrutiny for his lobbying activities, including for the now-bankrupt company Greensill Capital | David Hecker/Getty Images

    For a period Cameron was also vice-chair of a £1 billion China-U.K. investment fund. The U.K. parliament’s intelligence and security committee said this year that Cameron’s appointment to that role could have been “in some part engineered by the Chinese state to lend credibility to Chinese investment.”

    Sam Hogg, a U.K.-China analyst who writes the “Beijing to Britain” briefing, said: “As the ISC pointed out, China has a habit of utilizing former senior-ranking politicians to give credibility to their companies and projects.

    “At a time when the Belt and Road Initiative is under intense scrutiny ahead of its 10th anniversary next week, Cameron’s involvement will raise a few eyebrows.”

    Luke de Pulford, executive director of the Inter-Parliamentary Alliance on China, added: “We can’t have a situation where the EU and U.S. are so concerned about the Belt and Road Initiative that they’re pumping billions into alternative projects, while our own former PM appears to be batting for Beijing.”

    Eleni Courea

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  • Suspended Miami city commissioner pleads not guilty to money laundering and other charges

    Suspended Miami city commissioner pleads not guilty to money laundering and other charges

    MIAMI — A suspended Miami city commissioner who is accused of accepting $245,000 in exchange for voting to approve construction of a sports facility has pleaded not guilty to multiple felony charges, including bribery and money laundering.

    Alex Diaz de la Portilla did not appear in court Friday, but his attorney, Ben Kuehne, entered the plea for him.

    Diaz de la Portilla and a co-defendant, Miami attorney William Riley Jr., were arrested Sept. 14.

    Gov. Ron DeSantis suspended Diaz de la Portilla, who is a fellow Republican, after the commissioner’s arrest. Kuehne said Friday that his client was campaigning for the Nov. 7 election to keep his seat on the commission.

    “We look forward to a vindication of these charges because Alex is not guilty,” Kuehne said at the Miami-Dade criminal courthouse, according to the Miami Herald.

    Kuehne requested that Diaz de la Portilla be tried separately from Riley, WPLG-TV reported.

    On Friday, Riley’s attorney also entered a not guilty plea for his client, who did not appear in court. Riley is accused of being the front for the business that allegedly gave money to the Diaz de la Portilla campaign in exchange for the right to build a sports facility on land that is now a downtown city park.

    Both men bonded out of jail soon after being arrested, and their next status hearing is Nov. 14. A trial date has not been set.

    Diaz de la Portilla is a former state legislator and was elected to the city commission in 2019.

    Investigators said Diaz de la Portilla and Riley accepted more than $15,000 for the Miami-Dade County Court judicial campaign of Diaz de la Portilla’s brother but did not report the money, as required by state law. Riley also controlled a bank account in the name of a Delaware-based corporation to launder about $245,000 in concealed political contributions made by a management services company in exchange for permission to build a sports complex, officials said.

    Investigators also said Diaz de la Portilla operated and controlled two political committees used both for his brother’s campaign and for personal spending. Records showed one of the committees reported donations of about $2.3 million and the other reported more than $800,000.

    Diaz de La Portilla and Riley are each charged with one count of money laundering, three counts of unlawful compensation or reward for official behavior, one count of bribery and one count of criminal conspiracy.

    Diaz de la Portilla is also charged with four counts of official misconduct, one count of campaign contribution in excess of legal limits and two counts of failure to report a gift. Riley is also charged with failure to disclose lobbyist expenses.

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  • Alex Murdaugh pleads guilty to federal fraud and money laundering charges | CNN

    Alex Murdaugh pleads guilty to federal fraud and money laundering charges | CNN



    CNN
     — 

    For the first time, Alex Murdaugh has pleaded guilty to crimes.

    The disgraced former South Carolina attorney, who was convicted in March of murdering his wife and son, pleaded guilty to nearly two dozen fraud and money laundering charges Thursday morning in a federal courtroom in Charleston.

    The plea is related to a scheme in which Murdaugh and a bank employee allegedly defrauded his personal injury clients and laundered more than $7 million of funds, according to an indictment. Murdaugh was accused of using the settlement funds for his “personal benefit, including using the proceeds to pay off personal loans and for personal expenses and cash withdrawals.”

    Murdaugh cried as he told the judge he was pleading guilty of his own free will. He said he was doing so because he was guilty of the crimes, but also so his son, Buster, could see him taking responsibility for his actions, as well as to help his victims heal, according to three attorneys present during the proceedings.

    Murdaugh agreed to plead guilty to 22 charges in all: one count of conspiracy to commit wire fraud and bank fraud; one count of bank fraud; five counts of wire fraud; one count of conspiracy to commit wire fraud; and 14 counts of money laundering.

    The majority of the charges carry a maximum federal sentence of 20 years, though four of the charges carry a maximum sentence of 30 years.

    US District Court Judge Richard Gergel accepted and signed the plea agreement between Murdaugh and federal prosecutors. Gergel will determine federal sentencing for Murdaugh at a later date.

    “Alex Murdaugh’s financial crimes were extensive, brazen, and callous,” US Attorney Adair F. Boroughs said in a statement. “He stole indiscriminately from his clients, from his law firm, and from others who trusted him. The US Attorney’s Office, the FBI, and SLED committed to investigating and prosecuting Murdaugh’s financial crimes when they first came to light. Today marks our fulfillment of that promise.”

    The agreement says that if Murdaugh cooperates and complies with the conditions of the plea agreement, the government attorneys agree to recommend to the court that any federal sentence he receives for these charges “be served concurrent to any state sentence served for the same conduct.” The agreement does not have a sentence recommendation included in it, as written.

    Notably, the agreement requires Murdaugh – who admitted under oath that he had previously lied to the police – to tell the truth.

    “The Defendant agrees to be fully truthful and forthright with federal, state and local law enforcement agencies by providing full, complete and truthful information about all criminal activities about which he/she has knowledge,” the agreement reads.

    If he is found in any way to break this portion of the agreement, the agreement would be voided.

    Much of the agreement is focused on Murdaugh working with the government to repay victims and locate missing assets. The agreement says Murdaugh must pay restitution to his victims and requests he forfeit a total of $9 million in assets. Further, he must submit to a polygraph test, if requested by the government, and could be called to testify before other grand juries or in future trials.

    Attorney Justin Bamberg, who represents several of Murdaugh’s victims in the financial crimes, criticized the plea agreement in a statement.

    “Given the severity and callousness of his crimes, Alex Murdaugh should never receive any incentive-based deal from the government, be it federal or state, and we respectfully disagree with the federal government’s voluntary decision to concede to a concurrent sentence in exchange for his guilty plea and agreement to ‘cooperate,’” he said.

    “We trust that the South Carolina Attorney General’s Office will remain steadfast in its commitment to hold Murdaugh accountable and will give him no breaks and offer no incentives; that ship sailed years ago,” he added. “Murdaugh’s victims are looking forward to seeing him receive the individual sentences he earned via his own individual criminal conduct towards each of them under South Carolina law.”

    The fraud charges are just the latest legal problems for Murdaugh, the scion of a prominent and powerful family of local lawyers and solicitors in South Carolina’s Lowcountry.

    Murdaugh was convicted in March of murdering his wife Maggie and son Paul in 2021 at their sprawling estate, and he was sentenced to two consecutive terms of life in prison without the possibility of parole.

    Days after his conviction, Murdaugh’s lawyers began the appeals process. However, earlier this month, his defense team filed a court motion to suspend the appeal, so they could request a new trial. The motion included bombshell allegations that the Colleton County Clerk of Court tampered with the jury.

    The South Carolina attorney general has asked the South Carolina Law Enforcement Division to investigate the claims.

    Last week, South Carolina Attorney General Alan Wilson asked the court to order Murdaugh’s defense team to correct their motion due to several “procedural defects.” The prosecutor’s office didn’t directly dispute the motion but noted the ongoing investigation has already “revealed significant factual disputes” that undermine the credibility of Murdaugh’s claims.

    Murdaugh’s attorney’s responded to the state’s request on Thursday, accusing prosecutors of attempting to delay the appeal suspension and prevent the defense from requesting a new trial. The defense attorneys argued the “procedural defects” raised by prosecutors are not relevant to the filing and asked the court to “expeditiously grant” a new trial.

    The South Carolina Court of Appeals has not yet issued a decision.

    In addition, the disbarred attorney remains entangled in several other state and federal cases in which he faces more than 100 other charges.

    Murdaugh is set to stand trial in November on charges related to stolen settlement funds from the family of the Murdaughs’ late housekeeper, Gloria Satterfield.

    They are the first of dozens of state charges he faces in alleged schemes to defraud victims of millions. The financial crimes he is accused of in the case include embezzlement, computer crime, money laundering and tax evasion.

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  • Puerto Rico bank linked to bribery scandal hit with $15 million BSA fine

    Puerto Rico bank linked to bribery scandal hit with $15 million BSA fine

    Bancrédito International Bank and Trust Corp. “processed millions of dollars in suspicious transactions throughout the United States on behalf of high-risk customers,” the Financial Crimes Enforcement Network says.

    Africa Studio – Fotolia

    A Puerto Rico bank seized earlier this year by regulators will pay a $15 million fine in the first enforcement action under a two-year-old federal rule aimed at closing gaps in anti-money-laundering enforcement.

    Bancrédito International Bank and Trust Corp. — which was placed in receivership this year by banking regulators in the U.S. territory amid a political bribery scandal — agreed to the fine after failing to properly monitor the flow of international funds through it into the U.S. financial system, according to a consent order issued by the Financial Crimes Enforcement Network.

    Bancrédito “willfully violated” the Bank Secrecy Act and its implementing regulations, according to the order, which was made public Friday. The order was signed by Ryan Marín, who became receiver of the bank after it was shut down by the Office of the Commissioner of Financial Institutions of Puerto Rico in January.

    Marín did not respond to a request for comment.

    Under the order, Bancrédito must surrender its license to operate in the U.S. as an international banking entity and preserve all business records related to BSA compliance.

    Bancrédito violated a BSA regulation known as the “gap rule,” which took effect in March 2021 as part of a regulatory effort to force banks that service international financial institutions to comply with anti-money-laundering rules, according to Fincen.

    Under the rule, international banking entities in Puerto Rico are now required to maintain anti-money-laundering programs similar to the broader banking industry, Candice Basso, a Fincen spokesperson, said in an emailed statement.

    Bancrédito “shirked this obligation,” Basso said in the statement.

    Between 2015 and 2022, Bancrédito inadequately monitored the transfer of funds from accounts linked to a Panamanian bank servicing companies and individuals in Panama and Venezuela, according to the order.

    During this period, the bank also failed to file suspicious activity reports or implement an “adequate” anti-money-laundering program, even after coming under scrutiny from regulators in Puerto Rico, the order states.

    Bancrédito provided “correspondent accounts to foreign financial institutions without the required due diligence and reporting” mandated by the BSA, Fincen Director Andrea Gacki said in a press release announcing the fine.

    “Bancrédito processed millions of dollars in suspicious transactions throughout the United States on behalf of high-risk customers,” Gacki said.

    Bancrédito was founded as an international banking entity in 2008 by Julio Herrera Velutini, who is a citizen of Venezuela and Italy. It provided banking services to foreign financial institutions primarily located in Central America and the Caribbean.

    In August of 2022, Velutini pleaded not guilty to charges of honest services wire fraud and bribery of former Puerto Rico Gov. Wanda Vázquez as part of an attempt to undermine an investigation into Bancrédito that began in 2019 amid Vázquez’s election campaign, according to a U.S. Department of Justice news release at the time and news reports.

    Around the same time, Vázquez was arrested on charges accusing the former governor of accepting campaign bribes.

    Enforcement of the BSA’s gap rule is “a long time coming” for entities such as Bancrédito, which can serve as a “first-line stop for where money gets into the United States,” according to Andrew Bernstein, a white-collar criminal defense lawyer at Armstrong Teasdale who wasn’t involved in the matter.

    Jordan Stutts

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  • Lawyers argue indicted Backpage employees sought to keep prostitution ads off the site

    Lawyers argue indicted Backpage employees sought to keep prostitution ads off the site

    PHOENIX — A former executive and two operations managers for classified site Backpage.com worked vigorously to keep the platform free of ads for prostitution even as strategies on how to do so constantly shifted, their attorneys said Tuesday at a federal trial in Phoenix.

    Defense lawyers for Scott Spear, Andrew Padilla and Joye Vaught had their turn to make opening statements against charges of facilitating prostitution and money laundering. They highlighted how all three made great efforts to work with authorities, whether it was by giving testimony, sharing key user information or taking calls in the middle of the night.

    “Backpage was viewed in law enforcement as the most cooperative site,” said Bruce Feder, the attorney for former executive vice-president Spear. “They thought they were doing good. They wanted to get abusers off their site.”

    Joy Bertrand described how Vaught “battled bad apples” for nine years. As the assistant operations manager, Vaught worked to keep ads that could be seen as proposing sex acts or were just “trashy” from being posted. Bertrand read from an email Vaught sent to a staff moderator in 2014 pointing out ads with several violations that had slipped through.

    “She was proud of the job she had. She bragged about it,” Bertrand said. “As you see each piece of the government’s evidence, please view it with skepticism.”

    Padilla’s attorney described how he rose from having an $11-per-hour job to becoming a full-time operations manager. At one point, he was helping oversee 200 site moderators out of an office in Dallas. But under Backpage CEO Carl Ferrer, the standards used to screen for potential prostitution ads were not clear, attorney David Eisenberg said.

    “This system constantly evolved, which led to confusion at his job,” Eisenberg said. “Who’s the guiding light here? Not my client.”

    The three are co-defendants alongside Backpage founder Michael Lacey and former chief financial officer John Brunst, whose attorneys made opening statements last month.

    This is the second trial of all five on charges in what authorities say was a scheme to knowingly sell ads for sex on the classified site.

    All five have pleaded not guilty to facilitating prostitution. Of the five, Lacey and two others have pleaded not guilty to money laundering charges.

    The first trial ended in a mistrial in September 2021 when a judge concluded prosecutors had too many references to child sex trafficking in a case where no one faced such a charge.

    Lacey founded the Phoenix New Times weekly newspaper with James Larkin, who was charged in the case and died by suicide in July. Lacey and Larkin held ownership interests in other weeklies such as The Village Voice and ultimately sold their newspapers in 2013. But they held onto Backpage, which authorities say generated $500 million in prostitution-related revenue from its inception in 2004 until 2018, when it was shut down by the government.

    The site’s marketing director has pleaded guilty to conspiring to facilitate prostitution and acknowledged he participated in a scheme to give free ads to prostitutes to win over their business. Ferrer pleaded guilty to a separate federal conspiracy case in Arizona and to state money laundering charges in California.

    Prosecutors say Backpage’s operators ignored warnings to stop running prostitution ads, some involving children. They are accused of giving free ads to prostitutes and cultivating arrangements with others who worked in the sex trade to get them to post ads with the company.

    Authorities say Backpage employees would aggregate more users by identifying prostitutes through Google searches, then call and offer them a free ad. The site also is accused of having a business arrangement in which it would place ads on another site that lets customers post reviews of their experiences with prostitutes.

    Backpage’s operators said they never allowed ads for sex and used people and automated tools to try to delete such ads. They maintain the content on the site was protected by the First Amendment.

    Prosecutors said the moderation efforts by the site were aimed at concealing the true nature of the ads.

    Lacey also is accused of using cryptocurrency and wiring money to foreign bank accounts to launder revenues earned from the site’s ad sales after authorities say banks raised concerns that they were being used for illegal purposes.

    At trial, the Backpage defendants are barred from bringing up a 2013 memo by federal prosecutors who examined the site and said at the time that they hadn’t uncovered evidence of a pattern of recklessness toward minors or admissions from key participants that the site was used for prostitution.

    In the memo, prosecutors had said witnesses testified Backpage made substantial efforts to prevent criminal conduct on its site and coordinated such efforts with law enforcement agencies. The document was written five years before Lacey, Larkin and the other former Backpage operators were charged in the Arizona case.

    A Government Accountability Office report released in June 2021 said the FBI’s ability to identify victims and sex traffickers had decreased significantly after Backpage was seized by the government because law enforcement was familiar with the site and Backpage was generally responsive to requests for information.

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  • Founders of crypto mixer arrested, sanctioned after US cracks down on Tornado Cash

    Founders of crypto mixer arrested, sanctioned after US cracks down on Tornado Cash

    WASHINGTON — U.S. government officials on Wednesday started cracking down on the co-founders of the virtual currency mixer Tornado Cash, just days after a federal judge decided that the government had the authority to sanction them.

    Treasury’s Office of Foreign Assets Control sanctioned Russian national Roman Semenov, one of the three co-founders of Tornado Cash, for allegedly supporting the North Korean hacking organization Lazarus Group, among other things.

    Also Wednesday, the Justice Department unsealed an indictment charging Semenov and Tornado Cash co-founder Roman Storm, from Auburn, Washington, with conspiracy to commit money laundering, operating an unlicensed money transmitting business and other crimes. Storm was arrested in Washington on Wednesday by federal officials.

    Semenov is believed to be in Dubai.

    Tornado Cash and other mixing services combine various digital assets, including potentially illegally obtained funds along with legitimately obtained funds, so that illegal actors can obscure the origin of the stolen funds.

    Tornado Cash was sanctioned in August 2022, accused of helping to launder more than $7 billion worth of virtual currency since its creation in 2019. The Justice Department says Tornado Cash facilitated more than $1 billion in money-laundering transactions, including hundreds of millions for Lazarus Group. Treasury says Tornado Cash systems were used, among other things, to launder more than $96 million drawn from the June 2022 Harmony blockchain bridge theft and August 2022 Nomad crypto firm heist.

    Federal prosecutors also charged Semenov and Storm with violating the sanctions against Tornado Cash.

    The penalties and arrest come after U.S. District Judge Robert Pitman decided Aug. 17 that Treasury did not overstep its authority in sanctioning Tornado Cash. A group of crypto investors brought a lawsuit against Treasury in September 2022, alleging that Treasury overstepped its authority in sanctioning Tornado Cash.

    The sanctions faced strong pushback from the crypto industry, which argued that the sanctions open the door to limiting Americans’ usage of privacy software.

    A third co-founder of Tornado Cash, Alexey Pertsev, was arrested in August 2022 on money laundering charges in the Netherlands.

    Last May, the U.S. sanctioned North Korean digital currency mixing firm Blender.io, which the country allegedly uses to launder stolen virtual currency and support cyber crimes.

    Blender is accused of helping Lazarus Group to carry out a $620 million digital currency heist in March, the biggest of its kind to date.

    —-

    Associated Press reporter Frank Bajak in Boston contributed to this report.

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  • Kansas City Superfan ‘ChiefsAholic’ charged with stealing almost $700,000 in bank heists

    Kansas City Superfan ‘ChiefsAholic’ charged with stealing almost $700,000 in bank heists

    KANSAS CITY, Mo. — A Kansas City Chiefs superfan known as “ChiefsAholic” and familiar for attending games dressed as a wolf in the NFL team’s gear has been indicted by a federal grand jury that accuses him of armed robbery and money laundering in a string of bank heists across four states that netted him almost $700,000.

    Xaviar Babudar robbed six banks — and tried unsuccessfully three other times — and laundered the proceeds at casinos and sportsbooks, according to the U.S. attorney for the Western District of Missouri. The 19-count indictment handed down Wednesday replaces and supplements a criminal complaint filed against Babudar in May.

    Babudar, 29, is scheduled to be arraigned on Friday, said his attorney, Matthew T. Merryman.

    “It’s now the fourth quarter of the most important game of Xaviar’s life,” Merryman said in a statement emailed to The Associated Press. “And his legal team believes his innocence will ultimately be proven to the public and we are confident that once all of the facts are known that he will be redeemed in the eyes of his supporters, admirers and the Chiefs Kingdom.”

    According to the U.S. attorney’s office, Babudar robbed banks and credit unions in Iowa, Nebraska, Tennessee and Oklahoma and used money to finance his Chiefs fandom. The charges include three counts of armed bank robbery, one count of bank theft, 11 counts of money laundering and four counts of transporting stolen property across state lines.

    Babudar was active on social media as “ChiefsAholic” and was well known for attending home and road games dressed in his wolf costume. The indictment says he used some of the robbery loot to bet on the team to win the Super Bowl and for quarterback Patrick Mahomes to win the game’s MVP Award — bets that turned $10,000 into $100,000.

    After receiving a check for his winnings, Babudar, who had been charged with robbing a Tulsa credit union and was out on bond, cut his ankle monitor and fled the state, the U.S. attorney said in a news release. He was arrested in California last month and remains in federal custody without bond, the release said.

    “The government’s announcement today of its 19-count indictment provides an unfair and unjust portrayal of Xaviar,” Merryman said. “The truth is that since 2018 Xaviar Babudar, aka ‘ChiefsAholic’ has entertained, inspired, unified and motivated Kansas Citians, the Chiefs Kingdom and hundreds of millions of fans around the globe.”

    ___

    AP NFL: https://apnews.com/hub/nfl

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  • The son of Colombia’s president says his father’s election campaign received money of dubious origin

    The son of Colombia’s president says his father’s election campaign received money of dubious origin

    BOGOTA, Colombia — The son of Colombian President Gustavo Petro acknowledged Thursday that his father’s 2022 election campaign received money of dubious origin, according prosecutors investigating the son for alleged illicit enrichment and money laundering.

    Nicolás Petro, who was a legislator representing a northern coastal region, agreed to cooperate with prosecutors in the probe after being charged Tuesday.

    Prosecutor Mario Andrés Burgos, who heads the investigation, said the younger Petro has revealed that unjustified increases detected in his assets came from two individuals being questioned by Colombian authorities. The money went partly into his own accounts and partly into the campaign that made his father Colombia’s first elected leftist president, the prosecutor said.

    On Tuesday, when he was charged, prosecutors said the younger Petro took thousands of dollars from drug traffickers and used it to buy luxurious homes and expensive cars. Nicolás Petro, 36, pleaded innocent to the charges, but agreed to cooperate with authorities.

    The case has come at a time when Colombia’s president is losing popularity and has been exposed to attacks by opposition parties, which have become increasingly reluctant to cooperate with his legislative agenda.

    The investigation stems from a shocking declaration made by the son’s former wife, Daysuris Vásquez, to local news magazine Semana in March.

    Vasquez said she was present at meetings where Nicolás Petro arranged a 600 million peso ($150,000) donation from a politician who was once convicted in Washington of drug trafficking and who wanted to contribute to Gustavo Petro’s 2022 presidential campaign.

    She accused her ex-husband of pocketing the money and said that the father’s presidential campaign had no knowledge of the donation.

    On Thursday, prosecutors said the “resources” in the case were around $270,000 that was delivered by Samuel Santander Lopesierra and Gabriel Hilsaca to Nicolás Petro.

    Lopesierra was convicted and extradited to the United States, where he was sentenced for drug trafficking. Hilsaca is the son of Alfonso Hilsaca, who is currently being prosecuted on charges of murder and criminal conspiracy in Colombia.

    Burgos said the president’s son has promised to deliver audio recordings and documentary evidence that would corroborate that part of the money he received was used to finance his father’s electoral campaign without being duly reported to authorities..

    Prosecutors also accused Vásquez of co-operating in the money laundering scheme and said she helped her husband hide thousands of dollars in cash in suitcases that the couple kept at their home.

    The couple, who no longer live together, were arrested Saturday and have been held at the headquarters of the Chief Prosecutor’s Office in Bogota.

    Thursday’s hearing was held to hear arguments on whether Nicolás Petro’s detention should be switched to house arrest.

    The president has said he would not interfere with the investigation, and wrote a message on X, the platform formerly known as Twitter, in which he said he hoped his son would “reflect on his mistakes.”

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  • ‘This isn’t some random dude with a duffel bag’: To catch fentanyl traffickers, feds dig into crypto markets | CNN Politics

    ‘This isn’t some random dude with a duffel bag’: To catch fentanyl traffickers, feds dig into crypto markets | CNN Politics


    Washington
    CNN
     — 

    The Biden administration has intensified its focus on tracing cryptocurrency payments that some of the most dangerous Mexican drug cartels use to buy fentanyl ingredients from Chinese chemical companies, the latest step in a renewed attempt to crack down on the multibillion-dollar fentanyl trade that kills thousands of Americans each year.

    The use of digital currency has exploded among fentanyl traffickers, with transactions for fentanyl ingredients surging 450% in the last year through April, according to data from private crypto-tracking analysis firm Elliptic.

    Federal agents are doing everything they can to catch up. While US diplomats have made fentanyl a point of emphasis in high-level talks with Mexican and Chinese counterparts, behind the scenes, a multi-agency effort is underway to keep pace with the rapidly changing nature of how fentanyl is financed and trafficked into the US. The work goes beyond the cartels to include tracking dark-web forums where Americans buy fentanyl.

    Current and former law enforcement officials from across the federal government described to CNN the digital-first tactics the administration is developing to disrupt the fentanyl trade.

    The Drug Enforcement Agency is investing in crypto-tracing software and identifying the cartels’ most sophisticated money launderers. The IRS has its most tech-savvy agents tracing payments on dark web forums. And a Department of Homeland Security investigations unit is leading a team of forensic specialists to pore over digital clues from stash houses near the Mexican border.

    Federal agents have been tracking the cartels’ finances and supply routes for years, but DHS, in particular, has ramped up its surveillance efforts in recent weeks, multiple US officials told CNN.

    There have been some notable busts recently, including nearly five tons of fentanyl seized this spring along the border. But there is still a lot of work left to do, officials caution, and the impact of the current surge may not be felt for months down the road.

    Agents have focused on the activities of two Mexican cartels, Sinaloa and Jalisco New Generation Cartel (CJNG), which officials say account for the majority of fentanyl on US streets. Sinaloa Cartel, in particular, has developed sophisticated crypto operations to finance its fentanyl business.

    “We’re dealing with a Fortune 50 company, which is what the Sinaloa Cartel is,” a US official with knowledge of the matter told CNN. “This isn’t some random dude with a duffel bag” selling fentanyl in daylight.

    Cryptocurrency has enhanced cartels’ ability to smuggle fentanyl into the US by allowing them to move vast sums of money instantaneously across a decentralized, digital banking system – all without having to deal with actual banks.

    “The speed the criminals can muster, it’s very hard for law enforcement to keep up,” said one top DEA official, who spoke to CNN on condition of anonymity to describe the agency’s counter-narcotics work.

    Cash is still king for the cartels and often preferred for local operations. But the expanded use of digital currency at both the supply and demand ends of the drug trade has made some traditional law enforcement methods obsolete. For example, drug dealers might hold fewer in-person meetings to hand over cash, reducing the opportunities for stakeouts by federal agents, said Jarod Koopman, head of the IRS’s Cyber and Forensics Services division.

    Cryptocurrency “eliminates the potential for hand-to-hand transactions,” said Koopman, whose team focuses on illicit financial flows, including dark-web purchases that are multiple steps removed from when the cartels get the drugs over the US border. “So now it’s … in a different world where some of the contacts might be online and we’re trying to facilitate or do transactions in a different manner.”

    But digital money also leaves a trail that investigators can follow.

    Federal agents have found cryptocurrency addresses written down on scraps of paper at stash houses in Arizona, Scott Brown, special agent in charge for Homeland Security Investigations (HSI) in that state, told CNN.

    In another case, DHS agents monitored a cartel-connected crypto account for over a year until it sent $200,000 to an accountant they were using to launder money, Brown said. After the accountant used the money to buy property in the US, federal agents are working to seize the property, he said.

    A “significant portion” of fentanyl is sold over the dark web and paid for in cryptocurrency, Brown said, adding: “That is a vulnerability that we can attack much like we attack the money movements in a traditional narcotics investigation.”

    Most of the fentanyl that enters the US comes from ingredients made in China that are then pressed into pills – or packed in powder – and smuggled in from Mexico by drug cartels, according to the DEA.

    A US indictment unsealed in June illustrates the scope of the problem. Just one Chinese chemical company allegedly shipped more than 440 pounds of fentanyl to undercover DEA agents in exchange for payment in cryptocurrency. It was enough drugs to kill 25 million Americans, according to prosecutors.

    The two cartels, Sinaloa and CJNG, have used their control of the fentanyl trade to develop sophisticated money-laundering techniques that exploit cryptocurrency, according to US officials.

    “We’ve identified people in the cartels that specialize in cryptocurrency movements,” the senior DEA official told CNN, describing longstanding efforts to surveil both the cartels.

    The Sinaloa Cartel has made hundreds of millions of dollars from the fentanyl trade, according to the Justice Department. Run by the sons of imprisoned drug lord Joaquín “El Chapo” Guzmán, the cartel has allegedly used airplanes, submarines, fishing boats and tractor trailers to transport fentanyl chemicals and other drugs. Four of the “Chapitos,” as Guzmán’s sons are known, are under indictment in the US for fentanyl trafficking, money laundering and weapons charges.

    With their father in jail, the younger generation of Sinaloa leaders is making more of an effort to cover their tracks and avoid law enforcement scrutiny, including by using cryptocurrency, the senior DEA official told CNN.

    In one case, the Sinaloa Cartel laundered more than $869,000 using cryptocurrency between August 2022 and February 2023, according to a US indictment unsealed in April. But that was likely just a fraction of the Sinaloa money laundered during that time, based on the huge profits the cartel has made in recent years.

    The scheme involved two of the cartel’s top money launderers directing US-based couriers to pick up cash from fentanyl traffickers and deposit the money to cryptocurrency accounts controlled by the cartel, the indictment said.

    “Not every seizure is going to get you to Chapo Guzman,” said Brown, the DHS official in Arizona. “It’s certainly more impactful when we can go after the people that are behind the production of the drugs, behind the production of the precursors, behind the movement of the money, behind running the transportation cells.”

    That’s why Brown and his colleagues are trying to make the most of a huge series of fentanyl busts in Arizona and California this spring, when agents seized nearly five tons of the deadly drug, worth over $100 million.

    Evidence was quickly shipped to a forensics lab in Northern Virginia, where DHS analysts hunted for digital clues – things like a common cell phone number called by drug runners near border towns or, better yet, a cryptocurrency account connected to one of the Mexican cartels, according to Brown.

    Based in Phoenix, Brown’s office oversees a recently announced federal task force that aims to thwart drug sales online by infiltrating dark-web forums and tracking crypto payments. The goal is to find “another vulnerability [in] the larger cartel infrastructure” that agents can attack, he said.

    The cartels “are very willing to invest in technology,” Brown said. “That’s one of the things that we need to be equally willing to do.”

    Crypto-based transactions can be traced publicly, giving US officials a much clearer picture of the Mexican cartels’ reliance on Chinese chemical companies to produce fentanyl.

    The Chinese government banned the sale of fentanyl in 2019. But Chinese chemical companies have since shifted to making fentanyl ingredients instead of the finished product, according to US officials and outside experts.

    A recent CNN investigation dug into the activities of US-sanctioned Chinese chemical companies that advertise fentanyl ingredients. When one sanctioned company shut down, another company launched, and told CNN it purchased the sanctioned company’s email, phone number and Facebook page to “attract internet traffic.”

    While the amount of fentanyl directly mailed to the US from China fell dramatically following the 2019 Chinese ban, according to a Brookings Institution study, US officials say Chinese companies are still producing and exporting large quantities of fentanyl ingredients.

    This January 2019 photo shows a display of fentanyl and meth that was seized by federal officers at the Nogales Port of Entry.

    Chinese companies selling ingredients to make fentanyl have received cryptocurrency payments worth tens of millions of dollars over the last five years, enough to potentially produce billions of dollars’ worth of fentanyl sold in the US and other markets, according to research from crypto-tracking firms.

    One of the firms, London-based Elliptic, found 100 China-based chemical companies touting fentanyl, fentanyl ingredients or equipment to make the drugs that accepted payments in cryptocurrency.

    Elliptic didn’t identify any cartel-controlled crypto accounts that sent money to the Chinese companies. That could be due to the cartels’ use of middlemen to buy ingredients and the fact that fentanyl traffickers in Europe also buy from the Chinese companies, according to US officials and cryptocurrency experts interviewed by CNN

    But that data is still only a partial picture of the problem. The Chinese chemicals industry is worth over a trillion dollars, according to some estimates, and comprises tens of thousands of companies, most of them doing legitimate business.

    “It’s impossible to know how many of [those companies] are actually sending chemicals over” to the US that can be used to make fentanyl, a former DEA agent who worked in Mexico told CNN. The former agent spoke on the condition of anonymity because they were not authorized to speak to the media.

    Barring more cooperation from the Chinese government on the issue, which US officials say has been limited, the Biden administration has sanctioned and secured federal indictments against several Chinese companies allegedly involved in the production of fentanyl. Federal agents, meanwhile, follow the money and look for opportunities to seize it.

    “You can at least try to pinch off the financial flow to [the Chinese companies] and then … follow that money trail to whether it’s the Mexican cartels or if it’s in Guatemala or other places, for the actual supply,” Koopman told CNN.

    Cryptocurrency has also allowed cartels to diversify the way they move money around the world. The cartels have a network of money launderers in dozens of countries, from Thailand to Colombia, the senior DEA official said.

    These money launderers, known as “spinners,” might receive drug money in one type of cryptocurrency and convert it to another to try to obscure the source of the funds.

    “They might take Bitcoin and then buy Ethereum with it, and then send the Ethereum to the cartel members,” the senior DEA official said, referring to different types of cryptocurrencies. “The cartels have insulated themselves so they’re not receiving the cryptocurrency directly.”

    The cartels also use “mixing” services, or publicly available cryptocurrency tools, to try to obscure the source of their digital money, the DEA official said. That process is also favored by North Korean hackers who launder stolen cryptocurrency to support Pyongyang’s weapons program, CNN investigations have found.

    The volatility of cryptocurrency means the cartels often quickly look to convert their crypto to cash by moving it through a series of virtual currencies, the senior DEA official told CNN.

    But there are moments in the laundering process where federal agents can strike. A cryptocurrency exchange serving a customer in Mexico might be headquartered in the US, allowing federal agents to issue a subpoena and potentially seize money.

    For Brown, the DHS agent in Arizona, the issue is personal: one of his employees had a family member who died of a fentanyl overdose after buying the drug online , he said.

    “My people are burned out, and yet they come to work and work exceedingly hard every day,” Brown told CNN.

    But he’s optimistic when the subject turns to high-tech methods to hunt the cartels.

    “Are they as anonymous as they think they are? Absolutely … not.”

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  • Guatemala sentences renowned journalist José Rubén Zamora to six years in money laundering case

    Guatemala sentences renowned journalist José Rubén Zamora to six years in money laundering case

    GUATEMALA CITY — A Guatemalan tribunal sentenced newspaper founder José Rubén Zamora to six years in prison Wednesday in a money laundering case, concluding a trial that press freedom groups decried as a political persecution aimed at silencing a critical voice.

    The three-judge panel convicted and sentenced the well-known journalist on a charge of money laundering that affected the national economy and stability of the financial system. The tribunal cleared Zamora of additional charges of blackmail and influence peddling.

    Guatemala President Alejandro Giammattei, and specifically his justice system, have been criticized internationally for backsliding on democratic principles and weaponizing the country’s prosecutors and courts to pursue perceived enemies.

    “I am innocent of the crimes,” Zamora said after his sentencing. “I continue being innocent and he (Giammattei) continues being a thief.”

    Giammattei has denied there was any political motivation.

    Zamora’s El Periodico newspaper was known as fiercely independent and published investigations about corruption in the administrations of Giammattei and his predecessors. Zamora’s work has been internationally recognized.

    In his final comments to the court Wednesday before the verdict was announced, Zamora said, “all of my rights were violated,” including the right to a defense. “They treated us like criminals, they destroyed evidence,” he said.

    Several of his defense lawyers were arrested in the run-up to the trial.

    After the hearing, Rafael Curruchiche, the Attorney General’s special prosecutor against impunity who brought the charges against Zamora, was visibly upset and raised his voice, insisting that prosecutors would likely appeal the sentence and ask for the 40-year sentence they had originally requested.

    He said the prison time Zamora would get is compensation for those whose “name and reputation” he and his newspaper destroyed.

    The charges stemmed from Zamora, 66, asking a friend to deposit a $38,000 donation to keep the newspaper going rather than depositing it himself. Zamora has said he did so because the donor did not want to be identified supporting an outlet in the sights of Giammattei.

    The tribunal fined Zamora an equal amount Wednesday.

    With Zamora in jail, El Periodico was forced to stop publishing a print edition Nov. 30 due to its financial difficulties. The outlet halted operations altogether May 15.

    Last month, the Guatemalan Association of Journalists said that at least 20 journalists have been forced to flee the country in recent years.

    Following the sentence Wednesday, the New York-based Committee to Protect Journalists condemned the proceeding.

    Carlos Martinez de la Serna, CPJ’s program director, said the “shameful” sentence was part of attempts by Giammattei’s government to “criminalize journalism,” and that it signaled an erosion of free speech in Guatemala.

    “Guatemalan officials must end the absurd charade of criminal proceedings against him. It is time for José Ruben Zamora to be released, for his only ‘crime’ has been the fearless exercise of his profession.”

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