Money Laundering Via Author Impersonation on Amazon?

By: krebsonsecurity.com

https://krebsonsecurity.com/2018/02/money-laundering-via-author-impersonation-on-amazon/

Patrick Reames had no idea why Amazon.com sent him a 1099 form saying he’d made almost $24,000 selling books via Createspace, the company’s on-demand publishing arm. That is, until he searched the site for his name and discovered someone has been using it to peddle a $555 book that’s full of nothing but gibberish.

Reames is a credited author on Amazon by way of several commodity industry books, although none of them made anywhere near the amount Amazon is reporting to the Internal Revenue Service. Nor does he have a personal account with Createspace.

But that didn’t stop someone from publishing a “novel” under his name. That word is in quotations because the publication appears to be little more than computer-generated text, almost like the gibberish one might find in a spam email.

“Based on what I could see from the ‘sneak peak’ function, the book was nothing more than a computer generated ‘story’ with no structure, chapters or paragraphs — only lines of text with a carriage return after each sentence,” Reames said in an interview with KrebsOnSecurity.

The impersonator priced the book at $555 and it was posted to multiple Amazon sites in different countries. The book — which as been removed from most Amazon country pages as of a few days ago — is titled “Lower Days Ahead,” and was published on Oct 7, 2017.

Reames said he suspects someone has been buying the book using stolen credit and/or debit cards, and pocketing the 60 percent that Amazon gives to authors. At $555 a pop, it would only take approximately 70 sales over three months to rack up the earnings that Amazon said he made.

“This book is very unlikely to ever sell on its own, much less sell enough copies in 12 weeks to generate that level of revenue,” Reames said. “As such, I assume it was used for money laundering, in addition to tax fraud/evasion by using my Social Security number. Amazon refuses to issue a corrected 1099 or provide me with any information I can use to determine where or how they were remitting the royalties.”

Reames said the books he has sold on Amazon under his name were done through his publisher, not directly via a personal account (the royalties for those books accrue to his former employer) so he’d never given Amazon his Social Security number. But the fraudster evidently had, and that was apparently enough to convince Amazon that the imposter was him.

Reames said after learning of the impersonation, he got curious enough to start looking for other examples of author oddities on Amazon’s Createspace platform.

“I have reviewed numerous Createspace titles and its clear to me that there may be hundreds if not thousands of similar fraudulent books on their site,” Reames said. “These books contain no real content, only dozens of pages of gibberish or computer generated text.”

For example, searching Amazon for the name Vyacheslav Grzhibovskiy turns up dozens of Kindle “books” that appear to be similar gibberish works — most of which have the words “quadrillion,” “trillion” or a similar word in their titles. Some retail for just one or two dollars, while others are inexplicably priced between $220 and $320.

“Its not hard to imagine how these books could be used to launder money using stolen credit cards or facilitating transactions for illicit materials or funding of illegal activities,” Reames said. “I can not believe Amazon is unaware of this and is unwilling to intercede to stop it. I also believe they are not properly vetting their new accounts to limit tax fraud via stolen identities.”

Reames said Amazon refuses to send him a corrected 1099, or to discuss anything about the identity thief.

“They say all they can do at this point is send me a letter acknowledging than I’m disputing ever having received the funds, because they said they couldn’t prove I didn’t receive the funds. So I told them, ‘If you’re saying you can’t say whether I did receive the funds, tell me where they went?’ And they said, “Oh, no, we can’t do that.’ So I can’t clear myself and they won’t clear me.”

Amazon said in a statement that the security of customer accounts is one of its highest priorities.

“We have policies and security measures in place to help protect them. Whenever we become aware of actions like the ones you describe, we take steps to stop them. If you’re concerned about your account, please contact Amazon customer service immediately using the help section on our website.”

Beware, however, if you plan to contact Amazon customer support via phone. Performing a simple online search for Amazon customer support phone numbers can turn up some dubious and outright fraudulent results.

Earlier this month, KrebsOnSecurity heard from a fraud investigator for a mid-sized bank who’d recently had several customers who got suckered into scams after searching for the customer support line for Amazon. She said most of these customers were seeking to cancel an Amazon Prime membership after the trial period ended and they were charged a $99 fee.

The fraud investigator said her customers ended up calling fake Amazon support numbers, which were answered by people with a foreign accent who proceeded to request all manner of personal data, including bank account and credit card information. In short order, the customers’ accounts were used to set up new Amazon accounts as well as accounts at Coinbase.com, a service that facilitates the purchase of virtual currencies like Bitcoin.

This Web site does a good job documenting the dozens of phony Amazon customer support numbers that are hoodwinking unsuspecting customers. Amazingly, many of these numbers seem to be heavily promoted using Amazon’s own online customer support discussion forums, in addition to third-party sites like Facebook.com.

Interestingly, clicking on the Customer Help Forum link link from the Amazon Support Options and Contact Us page currently sends visitors to the page pictured below, which displays a “Sorry, We Couldn’t Find That Page” error. Perhaps the company is simply cleaning things up after being notified last week by KrebsOnSecurity about the bogus phone numbers being promoted on the forum.

 

Latvian Bank Faces U.S. Ban Over Money-Laundering Concerns

The U.S. Treasury Department took the severe step Tuesday of proposing to ban Latvia’s third-biggest bank from the American financial system, saying it helped process illicit transactions, including for entities with alleged ties to North Korea’s ballistic missile program.

Financial institutions in the U.S. would be barred from maintaining correspondent accounts for ABLV Bank AS, effectively ending its ability to transact in U.S. dollars, according to the Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN. ABLV had allowed transactions on behalf of blacklisted entities tied to North Korea’s effort to develop nuclear weapons, as well as corruption in Russia and the Ukraine, the department said.
“ABLV has institutionalized money laundering as a pillar of the bank’s business practices,” Sigal Mandelker, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in a speech Tuesday to compliance executives at a conference in New York. “We are resolved to use our economic authorities to take action against foreign banks that disregard anti-money-laundering safeguards and become conduits for widespread illicit activity.”
The U.S. Treasury relied on “unfounded and misleading information” in reaching its findings and didn’t take into account advances ABLV has made to prevent money laundering and terrorism financing, the bank said in a statement posted on its website.
The bank “shall make every care to rebut this outrageous defamatory information,” it said.

ABLV has 60 days to submit written objections to the finding. U.S. Treasury Secretary Steven Mnuchin has the final say on the imposition of the ban.

Latvia’s bank regulator said it’s cooperating with the European Central Bank, which directly supervises ABLV, and called on the bank to actively communicate with its clients.

ABLV is the 18th financial institution to be designated as a primary money-laundering concern by the Treasury Department since a law giving it authority to do so was passed in 2001. The most recent designation before ABLV was China’s Bank of Dandong in July. It was named for allegedly providing a gateway for North Korea to access the U.S. and international financial systems.

The U.S. made broad-based allegations about ABLV’s lack of anti-money-laundering controls and highlighted its recent transactions on behalf of entities related to North Korea. “ABLV facilitated transactions related to North Korea after the bank’s summer 2017 announcement of a North Korea ‘No Tolerance’ policy,” FinCEN wrote in a notice of proposed rulemaking.

Global Bank Pullback

As global banks have cut international services amid tighter regulations, steeper fines and declining profitability, Latvian banks as a group have seen access to the U.S. dollar tighten. JPMorgan Chase and Co. ceased offering dollar-clearing services in 2013 and Deutsche Bank stopped dealing with Latvian lenders last year. As a result, banks like ABLV have had to rely on other institutions that have accounts with New York-based lenders to transfer U.S. dollars.

Latvia’s banking regulator has also imposed tighter rules, record fines and annual checks for those working with foreign clients as part of an effort to shake off a reputation that the country’s institutions hold wealth with questionable origins.

The tighter dollar-clearing services have coincided with a series of money-laundering allegations. The Latvian regulator fined three banks a total of 5.5 million euros ($6.8 million) for handling accounts that were involved in a $1 billion Moldovan fraud in 2014, equivalent to about an eighth of that nation’s economic output at the time.

Five Latvian banks agreed last year to fines totaling 3.5 million euros for failing to perform adequate due diligence and gather sufficient information on transactions and beneficiaries of deals linked to North Korea.

ABLV, like the rest of the bank sector that primarily serves foreigners, has lost deposits due to the stricter enforcement regime.

The Latvian lender opened a subsidiary in Luxembourg in 2012, and ABLV Advisory Services opened an office in the U.S. in 2016. It also has representative offices in Moscow, St. Petersburg, Russia; Kiev, Ukraine; Odessa, Ukraine; central Asia, and Hong Kong.

Global Anti-Money Laundering (AML) Software Market To Reach $1.42 Billion By 2023, Reports BIS Research

BLOOMINGTON, MinnesotaDecember 27, 2017 /PRNewswire/ —

According to a new market intelligence report by BIS Research, titled Global Anti-Money Laundering Software Market – Analysis and Forecast, 2017-2023“, the global Anti-Money Laundering (AML) software market was estimated to be $690.1 million in 2016 and is expected to grow over $1.42 billionby 2023. The growth in the AML software market can be significantly attributed to the following factors: monitoring suspicious transactions, regulatory compliance requirements of financial institutions with international regulatory bodies along with analysis of historical consumer data analysis for risk management.

There is an increase in the penetration of Counter-Terrorism Financing (CTF) and Anti-Money Laundering (AML) regulations in the financial services industry, driving organizations to reinvent their compliance processes in order to act in accordance with the regulations and circumvent the possibility of fines and sanctions. Furthermore, with the wide-ranging scope of requirements for the regulations, it is essential that the compliance officers have a thorough understanding of the industry’s best practices and obligations. Utilization of anti-money laundering software provides several benefits to the financial institutes in effectively tracking transactions.

The anti-money laundering software market has witnessed a high growth rate owing to the increased need for automated transaction monitoring systems, continuous improvement in the anti-money laundering software by the regulatory organizations worldwide, and integration of big data analytics with anti-money laundering software. However, high implementation cost, the risk of security breaches, and AML software integration into the existing systems act as the major challenges for the growth of the market. Companies are developing efficient and effective Anti-Money Laundering (AML) software, including transaction monitoring software, currency transaction reporting software, customer identity management software, compliance management software, sanction screening software, and case management software, thereby meeting critical business obligations and coping with the entwined and highly complex operational and compliance risks.

According to Esha Bhatia, an Analyst at BIS Research, “Increasing penetration of anti-money laundering software in cryptocurrency market, adoption of AML in the emerging economies, and Robotic Process Automation (RPA) in AML and KYC are the major factors which are expected to create lucrative opportunities for the market in the next five years. The market is filled with advancements in anti-money laundering systems, in order to promote digital currency activities. The U.S. government is focusing on making virtual currency an official mode of payment, therefore, the vendors of AML software can leverage the opportunity to expand their market and ensure that money laundering does not take place. The increasing levels of interest to minimize money laundering activities is expected to drive the AML software market to grow at a CAGR of 10.78% during the forecast period.”

The market report provides a detailed analysis of the recent trends influencing the market, along with a comprehensive study of the future trends and developments. It also includes a competitive analysis of the leading players in the industry, including corporate overview, financials, financial summary and SWOT analysis. The overall market has been segmented by software type along with deployment type. The report also includes a comprehensive section on the geographical analysis which has been segmented into four major regions namely: North AmericaEuropeAsia Pacific and Rest of the World (RoW).

This report is a meticulous compilation of research on more than 50 major players in the AML Software industry. Moreover, it draws upon insights from in-depth interviews of key opinion leaders of more than 15 leading companies, market participants, and vendors. The report also profiles around 16 companies, which are leading solution providers, including Nice Actimize, ACI Worldwide, Experian PLC, BAE Systems, and SAS, among others.

Key questions answered in the report:

  • What are the major market drivers, challenges, and opportunities in the global AML software market?
  • What is the supply chain for the global AML software market?
  • What is the market value of AML software market for different software?
  • What is the market value of AML software market for different deployment type on the basis of on-premise and cloud?
  • What is the market value of AML software market on the basis of different geographical regions?
  • Which geographical location will dominate the AML software market?
  • What will be the growth rate of different segments of the AML software market during the forecast period?
  • Who are the key players in the AML Software market?
  • What are the key developmental strategies implemented by the key players to stand out in this market?
  • What is the market share of the leading players in the global AML software market for 2016?

About BIS Research:

BIS Research (Business Intelligence and Strategy Research) is a global B2B market intelligence and advisory firm which focuses on those emerging trends in technology which are likely to disrupt the dynamics of the market.

With over 150 market research reports published annually, BIS Research focuses on high technology verticals such as 3D Printing, Advanced Materials & Chemicals, Aerospace and Defence, Automotive, Healthcare, Electronics & Semiconductors, Robotics & UAV and other emerging technologies.

Our in-depth market intelligence reports focus on the market estimations, technology analysis, emerging high-growth applications, deeply segmented granular country-level market data and other important market parameters useful in the strategic decision making for senior management.

What distinguishes BIS Research from the rest of the players is that we don’t simply provide data, but also complement it with valuable insights and actionable inputs for the success of our clients.

U.S. GOVT. STOPPING PIRACY ACROSS THE GLOBE

By 

The U.S. Department of Justice (DOJ) has a reputation for providing cross-border assistance to countries in a variety of areas, all aimed at promoting the greater health and well-being of the global financial system. In response to the growing quantity and overall quality of threats found within it’s the borders and beyond, the DOJ has begun to take a more thorough, hands-on approach to the aid it provides to its international allies, leading the charge in one notoriously troublesome area in particular for many of the world’s lesser developed countries: Piracy. By definition, piracy is defined as the illegal copying of licensed and copyrighted materials from the Internet. This relatively broad definition has given many in today’s society, adolescents in particular, the impression that this activity simply pertains to the downloading of movies and music from online websites, when in actuality its scope and effects are far more harmful that one might think. The trend also pertains to software developed and produced in a multitude of industries, many of which offer pirates and those downloading these illicit files advanced capabilities for free or a far-discounted cost, typically through the ever-popular “bit torrent” file sharing platforms. Still not convinced this is a major issue? In 2014, the Institute for Policy Innovation estimated that the United States economy “loses $12.5 billion in revenue and other economic measures each year due to online piracy” in the music industry alone (Insurance laws, 2014). Couple this with the other sectors affected, in addition to the technology boom that has erupted in recent years, and it is very likely that these figures have multiplied exponentially in the years leading up to now.

Music theft is the largest form of piracy in the world today, leading to significant losses in jobs and wages within the industries affected, while also costing the U.S. government and the governments of many countries abroad a fortune in lost tax revenue. As of 2017, it has been estimated that “sound recording piracy leads to the loss of 71,060 jobs to the U.S. economy”, while also costing U.S. federal, state and local governments “a minimum of $422 million in tax revenues annually” (RIAA, 2017). In addition to it being illegal to violate the terms of copyrights and trademarks, opponents of piracy maintain that these acts are especially malicious in that they limit profits for production companies and the staff they employ, while also reducing the amount of money that key players in these productions such as the artists and programmers themselves, respectively, can ultimately obtain. The piracy trend has begun to impact more and more countries across the globe, as technology of some variety has been made available to all social classes in almost every region of the world. The aforementioned statistics are staggering, especially when considering that the United States has taken a stern approach to combatting piracy through legislation and enforcement via imprisonment and large fines for those partaking in activities of this nature. With that being said, the piracy epidemic has become far worse in countries without the infrastructure or adequate enforcement measures in place that the U.S. currently has.

Online piracy remains one of the largest issues facing the financial world today, and is a trend that does not appear to be slowing down. What makes this trend different from others that can be handled somewhat easier is that piracy is often a tricky form of crime to contain, as “pirate sites and services tend to operate in multiple jurisdictions and are purposefully set up to evade law enforcement” (Van der Sar, 2017). International cooperation is key in this regard, thus rather than sitting back and letting the economies of other countries fall victim to the effects of piracy, the U.S. has stepped up to the plate, leading a series of training programs for investigators and officials from countries such as Romania, Bulgaria, and Turkey over the course of November aimed at combatting online piracy.

The article “U.S. government teaches anti-piracy skills around the globe”, cited in BSA News Now on December 18th, explains that with piracy developing into a significant problem in Eastern Europe, the program lead by one of the more influential wings of the U.S. government set out to update participants on several important matters. These included legal issues that surround both the investigation and prosecution of online piracy, as well as common themes found in past piracy cases and convictions. The DOJ believes that after receiving adequate training through its seminars, local law enforcement within these countries will be better equipped to spot and subsequently deal with these problems. Also on hand for the seminars was the Director of the DOJ’s CCIPS Cybercrime Laboratory, who stressed the importance of computer forensics in solving cases of this nature, ultimately providing participants with forensic tools that could be implemented immediately following the conclusion of the conference. Another key note added by the presenters, a group that included law enforcement professionals from around the world, was that money laundering and tax offenses could be used in conjunction with piracy charges in order to inflict tougher penalties on criminals. According to transcripts from the training sessions, “Participants were encouraged to consider the use of statutes such as money laundering and tax evasion, in addition to those protecting copyrights and trademarks, since these offenses are often punished more severely than standalone intellectual property crimes” (Van der Sar, 2017). While still a work in progress, the U.S. DOJ’s interventions are likely to be quite beneficial for countries afflicted by piracy issues, and given their effectiveness, more conferences of this variety are likely to be scheduled in the near future.

ICE Agent: Cryptocurrencies Increasingly Used in Money Laundering

By: Nikhilesh De

Criminal organizations are increasingly using cryptocurrencies to launder money or otherwise pay for illicit activities, according to one U.S. Immigration and Customs Enforcement agent.

Child exploiters, drug smugglers, illegal firearm sellers and intellectual property rights violators are all beginning to use cryptocurrencies for their transactions, said Matthew Allen, ICE’s special agent in charge of Homeland Security Investigations (HSI).

Allen testified to the Senate Judiciary Committee on modernizing anti-money-laundering laws to limit both laundering and terrorist financing on Nov. 28, explaining that virtual currencies are the newest major method for hiding criminal proceeds.

In his testimony, he said:

“HSI agents are increasingly encountering virtual currency, including more recent, anonymity enhancing cryptocurrencies (AECs), in the course of their investigations. AECs are designed to better obfuscate transaction information and are increasingly preferred by [transnational criminal organizations].”

Some exchanges are beginning to design services specifically to thwart tracking by use of mixers that anonymize virtual currency addresses, making it even more difficult to determine which user conducted a particular transaction, Allen said.

Drug arrests

The department has had some success in identifying criminals who use bitcoin, however. Allen pointed to the November 2016 arrest of Utah resident Aaron Shamo, who allegedly ran a Xanax and fentanyl manufacturer group.

Shamo allegedly took his profits in bitcoin, and HSI seized approximately $2.5 million from him at the time.

Another alleged fentanyl vendor, Pennsylvanian Henry Koffie, was arrested this past July and had $154,000 seized. Allen said Koffie sold nearly 8,000 orders of the drug, “most of it paid for with bitcoin.”

https://www.coindesk.com/ice-director-cryptocurrencies-are-increasingly-being-used-in-money-laundering/

Turkish gold trader details money laundering scheme for Iran

Brendan Pierson

NEW YORK (Reuters) – A Turkish-Iranian gold trader described in a U.S. court on Wednesday how he ran a sprawling international money laundering scheme aimed at helping Iran get around U.S. sanctions and spend its oil and gas revenues abroad.

Reza Zarrab, who has pleaded guilty and is cooperating with U.S. prosecutors in the criminal trial of a Turkish bank executive, told jurors in federal court in Manhattan that he helped Iran use funds deposited in Turkey’s state-owned Halkbank to buy gold, which was smuggled to Dubai and sold for cash.

The testimony, given through Turkish interpreters, came on the second day of the trial of Halkbank executive Mehmet Hakan Atilla, who has pleaded not guilty.

U.S. prosecutors have charged nine people in the case, although only Zarrab, 34, and Atilla, 47, have been arrested by U.S. authorities. Prosecutors have said the defendants took part in a scheme that involved gold trades and fake purchases of food to give Iran access to international markets, violating U.S. sanctions.

The case has fueled tensions between the United States and Turkey, which are NATO allies. Turkish President Tayyip Erdogan’s government has said the case was fabricated for political reasons.

Standing before the jury in tan prison garb on Wednesday, Zarrab drew a multicolored diagram to illustrate the complex series of transactions he said he used to avoid scrutiny of U.S. banks and regulators. He explained how he falsified customs documents to make it appear that gold was bound for Iran, rather than Dubai.

Zarrab said Atilla was “the most knowledgeable person about the sanction rules” at Halkbank, and that he helped develop the scheme. He said Atilla and Halkbank’s then-general manager, Suleyman Aslan, instructed him how to carry it out.

“He made sure that the system and method worked,” Zarrab said of Atilla.

Zarrab said he began working with Halkbank on the scheme in 2012, after bribing Zafer Caglayan, then Turkey’s economy minister, to broker a deal with Aslan. He said Aslan had initially refused to work with Zarrab because he was too well known.

Zarrab said he paid Caglayan bribes amounting to more than $50 million.

Caglayan and Suleyman have also both been charged in the case. Turkey’s government has previously said that Caglayan acted within Turkish and international law. Halkbank has said that all of its transactions fully complied with national and international regulations.

Zarrab testified that before working with Halkbank, he handled Iranian transactions through Turkey’s Aktif Bank. He said the bank initially refused to let him open an account, but relented after Zarrab asked Egemen Bagis, then Turkey’s minister of European Union affairs, for help.

 Zarrab said Bagis set up a meeting between him and Aktif Bank’s general manager and that he was then allowed to open an account. However, Aktif Bank later shut down the account after receiving a warning from the United States, Zarrab said.

Reuters was not immediately able to reach anyone at Aktif Bank for comment after working hours on Wednesday.

Zarrab is expected to continue testifying on Thursday.

Inside Airbnb’s Russian Money-Laundering Problem

Russian crime forums have been using the home-sharing service to shuffle around cash under the table, sometimes with the help of legitimate Airbnb hosts.

As a recently unsealed indictment against former Trump campaign manager Paul Manafort showed, not even Airbnb is safe from money launderers. But Manafort isn’t the only one allegedly funneling dirty money through the mega-popular accommodation service. Scammers are leveraging Airbnb to launder dirty cash from stolen credit cards, according to posts on underground forums and cybersecurity researchers consulted by The Daily Beast.

The news shows how fraudsters will seize any opportunity they can, especially when there is an opening for pushing cash through online services, which sometimes require relatively little effort, a computer, and just a bit of creativity.

“People [have] been doing it forever,” one current and experienced credit-card scammer told The Daily Beast.

The Daily Beast found a number of recent posts on several Russian-language crime forums, in which users were looking for people to collaborate with to abuse Airbnb’s service. According to Rick Holland, VP of strategy from cybersecurity firm Digital Shadows, these operations rely on an individual or group using legitimate or stolen Airbnb accounts to request bookings and make payments to their collaborating Airbnb host. The host then sends back a percentage of the profits, despite no one staying in the property.

In essence, it’s a way to extract value out of stolen credit cards. In another case, fraudsters might buy electronic goods such as iPhones with stolen cards to then resell at a profit. This is the same idea of laundering funds, just with Airbnb.

“The money is 50/50,” one apparent scammer wrote on a Russian crime forum in August. “You receive the money within two days after the booking date,” it continues, and adds that there are “story-telling hosts” ready, likely referring to hosts who are in on the laundering.

Another poster on the same forum says they are looking for “hosts for cooperation,” and a third implies they will launder the funds specifically through Russian hosts who already have reviews on Airbnb.

JPMorgan busted for money laundering after accusing bitcoin of doing the same

The Swiss subsidiary of US bank JPMorgan Chase has been sanctioned by Switzerland’s financial regulator FINMA for money laundering and “seriously violating supervision laws,” according to the local weekly Handelszeitung.

The sanctions are reportedly related to breaches of due diligence in connection with money laundering standards. That literally means the Wall Street banking giant assisted in money laundering.

The ruling was reportedly issued on June 30, but the regulator did not make it known as JPMorgan has been actively trying to prevent the publication. The Federal Administrative Court has since dismissed an appeal by the bank.

It is two months since JPMorgan CEO Jamie Dimon slammed bitcoin, the world’s leading cryptocurrency, labeling it a fraud. According to Dimon, bitcoin could be useful “if you were a drug dealer or a murderer.”

Dimon also compared bitcoin to the 17th-century Dutch tulip mania bubble. At the time, the CEO predicted the eventual demise of the digital currency and pledged to fire any trader trading bitcoin for being stupid.

“A fiat currency is when a government says this is your legal tender, you have to give it and accept it, and of course the central bank can misuse it and inflate it. But what is the use case for bitcoin? You’re in Venezuela, North Korea, you’re a criminal. Great product!” he said during a news conference in Washington.

 

Bitcoin Scam Ends in Jail as Immigrant’s American Dream Fades

By: Erik Larson

A Florida software engineer who came to the U.S. from Ukraine as a teenager seeking the American dream was sentenced to 16 months in prison for his role in building an illegal bitcoin exchange — one that allegedly laundered money for a global hacking ring.

Yuri Lebedev, 39, was the technology guru behind Coin.mx, which tricked banks into processing bitcoin transactions by disguising them as restaurant-delivery charges and online purchases of collectible items. Lebedev was convicted in March of conspiracy and fraud following a monthlong trial in Manhattan.

U.S. District Judge Alison J. Nathan on Friday said Lebedev had abused his “impressive technology skills” to trick financial institutions, making them “unwilling participants in the scheme.”

 

Coin.mx was allegedly set up for use by a group of hackers who targeted financial and publishing firms including JPMorgan Chase & Co. and Dow Jones & Co. in a series of attacks in 2014. Lebedev wasn’t accused of money laundering or involved in the hacking, but his role in operating the exchange was critical, prosecutors said.

Lebedev, wearing a black suit, stood before sentencing to say he regretted getting involved with Coin.mx. All he wanted to do, he said, was create “cutting edge technology” and build something “that would make me exceptional.”

“I got carried away,” Lebedev said, adding he realizes now “there are no shortcuts.”

Less Time

Nathan gave Lebedev considerably less time than the maximum of 10 years recommended by U.S. sentencing guidelines, finding he was neither a leader nor a mastermind, and noting he had no criminal history.

“He did what he was told to do,” Nathan said.

The man giving the orders was Coin.mx’s operator, Anthony Murgio, who was sentenced to 5 1/2 years in June. He pleaded guilty in January and said he ran Coin.mx for the hacking scheme’s main Israeli architect, Gery Shalon, the self-described founder of a criminal enterprise that stunned Wall Street.

Prosecutors said the unregistered exchange sold bitcoins that were used in illegal online transactions and as payment in ransomware attacks. Lebedev’s role was to set up an array of servers that Coin.mx used to process its transactions, a critical element of the scheme that required constant attention to avoid detection by the banks, the U.S. said.

To help dodge regulators, Lebedev also conspired with his boss to bribe a New Jersey pastor to let them take over a credit union that was run out of a church, and use it to help legitimize the exchange’s operations. The scam eventually ruined the business, which is liquidating.

Better Life

It’s all a far cry from Lebedev’s goal of creating a better life for himself in the U.S., according to court papers. Born in Russia and raised in Ukraine, he was abandoned by his alcoholic father when he was 8 and raised by his scientist mother. After winning awards in biology, math and physics, he was selected to move to the U.S. as an exchange student at age 16.

“America has been given a genius from the Ukraine,” his math teacher said at the time, according to defense filings.

“Yuri, with his mother’s support, made the brave decision to move to the United States — without having a single relative or acquaintance in America — in order to improve his life,” his lawyer said.

Lebedev moved in with a host family in Georgia, according to court papers. After high school he double-majored in physics and computer science at Valdosta State University, and obtained post-graduate degrees including a Masters of Science and Physics from Florida State University, court papers show. He met his wife at college. They have three children.

Complex Web

Lebedev’s attorney, Eric Creizman, cited the wide-ranging nature of the scheme to portray his client as a husband and doting father who got caught up in something too big for him to recognize. In court papers, he described Lebedev as an “unlikely criminal defendant.”

But prosecutors used the idyllic life Lebedev had built against him in seeking a tough sentence, saying he wasn’t like criminals who needed money or had other such motivation to break the law.

“He basically could have ridden out the script for his life,” Assistant U.S. Attorney Won S. Shin said at the sentencing. People in Lebedev’s position “are even more culpable.”

Family and friends sent letters to the court supporting Lebedev, all of which described him as a man devoted to hard work and to his children. His host family said Lebedev tutored their child in math, while a college pal relayed how Lebedev washed dishes to avoid using a credit card for living expenses.

Shalon’s global network allegedly stole information on more than 100 million customers of banks and publishing firms and generated hundreds of millions of dollars in illicit proceeds from pump-and-dump stock scams and online gambling.

Murgio operated the exchange with Lebedev from about 2013 to 2015 through a front company, the Collectables Club Private Member Association, which lists Murgio’s West Palm Beach address, court papers show. At Murgio’s sentencing hearing, he wept and said he’d “screwed up badly.”

The case is U.S. v. Murgio, 15-cr-00769, U.S. District Court, Southern District of New York (Manhattan).

 

Bitcoin laundering suspect caught in US, Russia extradition spat

The two countries are fighting over where the Russian national should have his day in court.

By  for Zero Day

http://www.zdnet.com/article/bitcoin-launderer-suspect-caught-in-us-russia-extradition-spat/

Alexander Vinnik is a popular man, with both the United States and Russia fighting over which country has the right to charge the suspected Bitcoin laundering mastermind.

Vinnik, a 38-year-old Russian national, is at the heart of the fight as the suspected leader of a Bitcoin laundering scheme.

In July, Vinnik was arrested by US law enforcement for allegedly being involved in BTC-e, a cryptocurrency exchange platform which “washed” funds without taking customer information, allowing for laundering to take place.

According to US prosecutors, Vinnik owned a number of accounts on the platform and used them to launder cash — and may have also been involved in laundering Bitcoin received from the “hack” of now-defunct exchange platform Mt. Gox, as well as Tradehill, another dead exchange.

In total, the Bitcoin laundering scheme is believed to have laundered roughly $4 billion.

Mt. Gox was once a thriving Bitcoin exchange, but after its sudden collapse in 2014, investors lost roughly $375 million. Former CEO Mark Karpeles originally blamed the closure on unknown cyberattackers, but Japanese law enforcement is charging him with embezzlement.

It is believed that Vinnik not only funneled proceeds from Mt. Gox but has also been involved in identity theft and drug trafficking schemes.

US law enforcement wants to charge Vinnik on American soil with operating an unlicensed money service business, conspiracy to commit money laundering, money laundering, and engaging in unlawful monetary transactions.

If convicted, Vinnik could face up to 55 years behind bars.

The Russian national is currently being held in Greece, and a local court in Thessaloniki ruled on Wednesday that the United States is permitted to extradite him to face these charges.

However, the Russian government is not impressed with the Greek court’s decision.

On Friday, the Russian Ministry of Foreign Affairs said in a statement that the verdict was “unjust and a violation of international law.”

The ministry believes that as Vinnik is a Russian national, he should be prosecuted in his home country and this should overrule any other extradition requests. The Russian Prosecutor General’s Office requested an extradition order to Russia, but it appears this request has been ignored by the Greek authorities.

“Based on legal precedent, the Russian request should take priority as Mr. Vinnik is a citizen of Russia,” the ministry said. “The verdict is even more surprising in the context of the atmosphere of friendly relations between Russia and Greece.”

Vinnik has denied the charges but has agreed to be sent back to Russia, according to the Reuters news agency.

However, Vinnik’s legal team have appealed the ruling, and now the Russian national’s case will be considered by the Supreme Civil and Criminal Court of Greece, before being submitted to the Greek Minister of Justice for approval.

“We hope the Greek authorities will consider the Russian Prosecutor General’s Office request, and Russia’s reasoning, and act in strict compliance with international law,” the ministry says.

ZDNet has reached out to the US Department of Justice (DoJ) and Greek Ministry of Foreign Affairs and will update if we hear back.