Australia proposes stronger money laundering rules, includes bitcoin

SYDNEY (Reuters) – Australia said on Thursday it would strengthen its money laundering laws, including bringing bitcoin providers under the government’s financial intelligence unit, days after a fresh scandal at one of the country’s biggest banks.

The government said a coming bill would be the first stage of reforms to strengthen the country’s Anti-Money Laundering And Counter Terrorism Financing Act.

“The threat of serious financial crime is constantly evolving, as new technologies emerge and criminals seek to nefariously exploit them. These measures ensure there is nowhere for criminals to hide,” Minister of Justice Michael Keenan said, without specifying when the legislation would be introduced.

The bill will also aim to bolster the investigative and enforcement powers of the financial intelligence agency AUSTRAC.

The announcement comes just days after the agency accused the Commonwealth Bank of Australia (CBA.AX) of “serious and systemic” breaches of money laundering laws.

But the move is more than two years after global watchdog Financial Action Task Force (FATF) found significant deficiencies in Australia’s anti-money laundering framework.

The next and more challenging phase of legislative reforms in Australia will be to extend the rules to lawyers, accountants, real estate agents and dealers in high-value goods.

Under Australian regulations, one can pay millions in cash for precious stones or a prime property without having to identify themselves or the source of their funds.

Australia had agreed in 2003 to extend strict controls to these sectors, but has yet to act on those promises.

“Stopping the movement of money to criminals and terrorists is a vital part of our national security defenses and we expect regulated businesses in Australia to comply with our comprehensive regime,” Keenan said.

The digital currency exchange sector, which includes bitcoin, will be regulated for the first time, Keenan added.

The Australian Digital Currency & Commerce Association welcomed the reform, saying it will increase safeguards and provide regulatory certainty to digital currency businesses.

https://www.reuters.com/article/us-australia-moneylaundering-idUSKCN1AX06N?il=0

Photo: Jason Lee

CBA scandal blamed on ‘outdated’ banknotes

THE Commonwealth Bank money-laundering scandal has given ammunition to the anti-cash crusade, with one analyst asking whether “outdated” $100 and $50 notes are the “root of the problem”.

The nation’s largest bank is facing allegations of more than 53,000 breaches of anti-money laundering and counter-terrorism financing laws, the majority relating to large cash deposits made at CommBank ATMs.

In a note earlier this month, UBS analyst Jonathan Mott said the CommBank scandal raised “four critical questions”.

“Is the root of the problem the outdated high denomination cash notes?” he wrote. “Should Australia move to phase out cash given its role in the black economy (including: proceeds of crime, money laundering, tax avoidance, welfare fraud)?”

In November, Mr Mott penned a note arguing that removing large-denomination banknotes would be good for the economy and the banks.

“Benefits may include: reduced crime (difficult to monetise); increased tax revenue (fewer cash transactions) and reduced welfare fraud (claiming welfare while earning or hoarding cash),” he wrote.

“From the banks’ perspective there would likely be a spike in deposits — if all the A$100 notes were deposited into banks (ignoring hoarded A$50s), household deposits would rise [roughly] 4%. This would likely fill the banks’ Net Stable Funding Ratio (NSFR) gap and reduce reliance on offshore funding.”

That coincided with the federal government announcing a review of the $100 note as part of its Black Economy Taskforce. The Reserve Bank later came out in support of the $100 note, saying removing it would do little to stamp out crime — because criminals prefer $50s.

In its interim report released in May, the Taskforce made 35 recommendations, including for an “economy-wide” cash payment limit.

“The level of any cash payment limit will require careful consideration (however $10,000 is a possible option),” wrote Taskforce chair Michael Andrew. “Wider payment system policy considerations will also need to be taken into account.”

The report also floated using biometric data such as “fingerprints, palm prints, iris and facial structure” to monitor the black economy. “Fingerprints are already widely used on smart phones and their wider use could bring down payment fees and enable better data checking,” Mr Andrew wrote.

“The Taskforce will consider whether increased used of biometrics (subject to privacy protections) would assist to reduce black economy participation, along with a broader look at the issue of digital identities which some initial consultations have noted should be considered.”

Another recommendation argued the need for “consumer-focused action” to crack down on cash payments, saying while current anti-black economy laws focused on businesses, consumers are “part of the problem”.

“We intend to examine the merits of consumer-focused sanctions, including the loss of consumer protections, warranties and legal rights for people who make cash payments without obtaining a valid receipt,” Mr Andrew wrote. “This is not simply a matter of imposing new penalties, but part of a wider cultural change agenda.”

It comes after Mr Andrew last month floated the idea of using “nano-chips” to keep track of “disappearing” $50 and $100 notes, which could also be subject to “expiry” dates to prevent hoarding of cash under pensioners’ beds and in foreign countries like China.

Estimates for the size of Australia’s so-called black economy vary from $23 billion to $50 billion. The government claims tax avoidance through cash payments costs the budget up to $10 billion in revenue, money that could go towards funding welfare and other services.

According to the Reserve Bank, cash withdrawals from ATMs have fallen by about 3.4 per cent annually since 2009, while credit card transactions are growing at 7.3 per cent per annum, driven by tap-and-go technology.

There are currently around 300 million $100 notes in circulation, almost three times the number of $5 notes, and 92 per cent of all currency by value is in $50s and $100s.

“I don’t know too many people who walk around with $100 notes, I certainly haven’t sighted one in a long time, but the point is that there is clearly an issue that we need to grapple with,” Revenue and Financial Services Minister Kelly O’Dwyer said earlier this year.

The Black Economy Taskforce’s final report is due in October.

http://www.news.com.au/finance/economy/australian-economy/cba-scandal-blamed-on-outdated-banknotes/news-story/020786aeb45c9131602c60a6c1b23f81

Israeli Billionaire Beny Steinmetz Detained Over Suspected Bribery, Money-laundering

Israeli billionaire Beny Steinmetz, a prominent political consultant Tal Silberstein and four other businessmen were detained for questioning under caution on Monday over allegedly using fake contracts to move and launder money. The homes and offices of some of them were raided by law enforcement Monday morning.

The suspicions center on forgery, use of a forged document, money laundering, fraud, breach of trust, obstruction of justice and more. Steinmetz was arrested in December for his suspected role in a sprawling corruption case involving tens of millions of dollars.

Among the four other suspects arrested was Tal Silberstein, a former political consultant to ex-premier Ehud Barak and an advisor to the Austrian chancellor, as well as the CEO of Israeli telecom giant Bezeq, David Granot. Silberstein was let go today by the Austrian chancellor due to the arrest.

The police suspect that the five detainees and central suspect systemically made use of contracts for nonexistent deals, including property deals in a foreign country, to move money around and launder ill-gotten gains. International law enforcement is involved in cracking the case, say Israeli sources.

https://www.google.com/amp/www.haaretz.com/amp/israel-news/1.806776

Photo: Tomer Appelbaum

 

CBA says ‘not every problem’ fixed after money-laundering allegations

Commonwealth Bank chief Ian Narev admits “not every problem” has been fixed following allegations it breached money laundering laws.

Mr Narev was grilled by journalists today over civil action against the bank taken by regulator Austrac, which alleges more than 53,000 breaches of money-laundering laws.

CBA today set out action it had taken to comply with the laws since it was first alerted in 2015 to failures in reporting transactions by its smart ATMs.

But when asked why Austrac would take action against CBA if the problem had been rectified, Mr Narev said: “We’re not saying every problem’s been fixed.

“We need to go through and work……and I’m not going to sit here and say every problem’s been fixed.

“It is important to bear in mind that we have a regulator here that is a very diligent regulator with an extremely important job to do. Austrac needs to exercise its powers, and be seen to exercise its powers very forcefully.”

CBA retreated 0.7 per cent after Mr Narev’s press conference began to a new session low of $80.87.

Mr Narev also defended CBA’s decision not to report alleged breaches to the market before Austrac last week launched civil action in the Federal Court.

“We report around four million transaction reports to Austrac each year. We exercise judgment as to what requires disclosure … our view is that these things didn’t come anywhere near (that requirement) in the form they came at the time.”

Austrac alleges CBA’s repeated failures to deal with suspiciously large and repeated cash deposits into its smart ATMs delayed and hindered enforcement ­efforts, costing agencies intelligence­ and evidence while ­allowing money laundering to continue.

Questioned today, Mr Narev said: “We’re going to look very carefully at the claims and why warnings that claimed to have been given were not heeded.”

He added: “It’s going to be important to make people understand that a lot of work has been done since these claims were brought to our attention. A lot of work still needs to get done and we’ll continue working closely with Austrac.

“The reality is, when dealing with criminal elements, people find ways to circumvent the limits that you put on (the machines).”

Mr Narev also denied CBA had profited from transactions at the centre of the civil action.

“There is no economic reason that would underpin the alleged activity and that’s not part of the equation,” Mr Narev told journalists. Nor was there any evidence the bank had assisted with any terrorist funding.

Mr Narev was speaking after the CBA said earlier it had no reason to believe alleged breaches of money-laundering laws arose from deliberate or unethical behaviour, or any commercial motive.

The statement came as CBA’s board moved to create a dedicated subcommittee to deal with the allegations by Austrac, with $40 million worth of new anti-money laundering technology to be delivered over the next 12 months.

CBA released its update after today unveiling a bumper $9.9 billion full-year profit, and after it yesterday slashed bonuses for CEO Ian Narev and senior executives, and cut directors’ pay, in the wake of over 53,000 alleged breaches of money-laundering laws.

In a statement earlier today, CBA said it had become aware in the second half of 2015 of “alleged issues” relating to threshold transaction reporting (TTRs) on CBA’s network of intelligent deposit machines (IDMs).

CBA said it had already made some progress in strengthening its policies and processes relating to its obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act.

The board has already moved to cut the short-term variable remuneration outcomes for Mr Narev and group executives for the financial year ended June 30, 2017. Fees for non-executive directors have also been slashed 20 per cent during the current 2018 financial year.

“This reflects our view that the board, CEO and group executives take ultimate collective responsibility for the reputation of the bank,” the CBA board said.

With management accountability now under a microscope, CBA’s board maintains that the bank had not been deliberately complicit in any laundering activity carried out over its network of smart ATMs.

“The board notes that it has no reason to believe that the allegations arose from deliberate or unethical behaviour, or any commercial motive,” it said.

CBA said this week its automated reporting system was knocked offline by a coding error introduced during a software update in 2012.

The bank added that the error was rectified as soon as it was notified and it had taken significant additional steps, including the addition of manpower to its criminal compliance team, the development of a specialist hub to strengthen its Know Your Customer (KYC) processes; and an upgrade of its financial crime technology capabilities.

Mr Narev added this afternoon: “We are not saying it’s all about a software error … we’re saying a significant proportion was due to a coding error. We are going into this with an open mind and we’re going to look at every single claim under the supervision of the committee. It’s going to take a while.”

Mr Narev today repeated the bank made “made mistakes”.

“It’s been a tough time at the Commonwealth Bank since the Austrac proceedings were filed and we’re taking them very seriously,” Mr Narev said. “We know that we’ve made mistakes; we have fixed a lot of those mistakes and we will continue to look to make our business better and better.”

While each of the more than 53,000 alleged contraventions carries a maximum penalty of $18m, the bank has downplayed the prospect of a massive penalty, arguing the breaches overwhelmingly relate to a single software error.

In a separate development, ANZ responded to media reports by declaring it has

systems in place to ensure it complies with anti-money laundering obligations.

“We are also subject to continuous supervision from Austrac and have no outstanding requirements,” ANZ said.

ANZ said Austrac had reviewed its smart ATMs in late 2015 and found no evidence of noncompliance with anti-money laundering regulation.

http://www.theaustralian.com.au/business/financial-services/cba-says-no-unethical-behaviour-behind-moneylaundering-scandal/news-story/f5fed05fa40066ce18af27042878620f

Photo: James Croucher

CBA blames money laundering allegations on ‘coding error’

Commonwealth Bank of Australia has blamed a software “coding error” for most of the 50,000 breaches of money laundering and counterterrorism laws alleged by Australia’s financial crime-fighting agency.

The country’s biggest lender said on Monday it was reviewing a legal action initiated last week by the Australian Transaction Reports and Analysis Centre (Austrac) but played down reports it could face fines worth almost A$1tn (US$793bn).

“That big number is very inflated due to the nature of the claims,” Ian Narev, CBA chief executive, told Australian media on Monday.

“One very important piece of context is the vast majority related to one software coding error in 2012, which we picked up in 2015, fixed in a month and rectified.”

CBA was shaken by Austrac’s revelations that it was suing the bank for alleged breaches of money-laundering laws, which the agency claimed enabled drug dealers and criminals to launder tens of millions of dollars of cash.

The alleged breaches related to CBA’s rollout in May 2012 of intelligent deposit machines that facilitate anonymous cash and cheque deposits of up to A$20,000 per transaction.

Austrac alleged the machines could be used for illegal dealings, with criminals able to accept cash from anonymous parties to transfer the proceeds of crime overseas.

Austrac has accused CBA of more than 50,000 breaches of the law by failing to adequately monitor A$624.7m of transactions on its network of IDMs over a three-year period. The agency also alleged that CBA failed to adequately report unusual transactions equalling more than A$77m or monitor suspicious customers after it became aware of possible money laundering.

CBA said the issue began after a coding error during a software update to the machines in late 2012. This error meant the machines did not create the necessary suspicious-transaction reports, which by law should be sent to the authorities.

“This error became apparent in 2015 and within a month of discovering it, we notified Austrac, delivered the missing transaction reports and fixed the coding issue,” said CBA.

CBA could face a maximum penalty of A$18m for each breach of the law, which has caused some media to speculate about it facing a fine of almost A$1tn.

On Monday the bank played down these claims, stating that most alleged breaches arose from “a single course of conduct” as they emanated from the same systems error.

CLSA warned in a note that many of the transactions identified by Austrac involved funds remitted outside Australia, which could leave the bank vulnerable to fines in those jurisdictions, including the US where penalties for misbehaviour are higher than in Australia.

The broker also warned of damage to CBA’s reputation, saying the bank “seems to make more mis-steps than its peers”.

Austrac’s legal action marks the latest development in a series of financial scandals that have put a spotlight on alleged rule breaking by Australian banks.

Mr Narev dismissed questions about his future leading the bank, telling Australian radio that all his attention was focused on the legal claim and the bank’s results on Wednesday.

“Whenever we get matters that impact the reputation of the bank we make sure we get to the bottom of it,” he said.

https://www.google.com/amp/s/amp.ft.com/content/67e306e6-7b2c-11e7-9108-edda0bcbc928

Photo: EPA

CBA money laundering allegations: How three men got away with itYou

In mid-2015, 11 Commonwealth Bank accounts were opened in 11 different names. Eleven different New South Wales drivers’ licences were used to open the accounts.

If anyone at the Commonwealth Bank had checked, they would have noticed the pictures on most of the licences featured the same overweight man.

That man was Kha Weng Foong. He was sentenced late last year as part of a money-laundering syndicate that funnelled about $4.5 million through the Commonwealth Bank to Hong Kong in five weeks in mid-2015.

The syndicate’s actions became part of a much bigger story today, with Australia’s financial watchdog, Austrac, launching a court case against the Commonwealth Bank for a vast failure to prevent money laundering through its cash deposit machines around Australia since 2012.

Austrac alleges the bank has contravened Australia’s money laundering legislation about 53,700 times since introducing its “intelligent deposit machines” in May 2012.

Austrac also accuses the Commonwealth Bank of failing to report suspicious transactions and ignoring repeated warnings from law enforcement it may be facilitating money laundering.

Austrac identified four syndicates that deposited a total of about $90 million with the bank between late 2014 and mid-2016.

The syndicate involving Foong, a Malaysian citizen, is one of those examples and highlights the massive money laundering alleged to have slipped past the Commonwealth Bank’s gaze.

A document tendered in Foong’s case described how he and two other men — Hong Kong man Yuen Hong Fung and another unidentified man — deposited millions of dollars in cash in Commonwealth Bank accounts between July 14 and August 24, 2015.

The three men deposited about $3.6 million across 427 separate transactions. They made dozens of deposited amounts under $10,000 at Commonwealth branches scattered across Sydney to avoid scrutiny.

The bank accounts were held in fake names such as Ronald Brown, Luke Shaw and Richard Whippy.

Once the money was deposited into the Commonwealth Bank accounts, Fung transferred $4.5 million to two Hong Kong accounts across 99 separate online transactions.

What the men didn’t know was the Australian Federal Police were watching. On the morning of August 24, 2015, after a month of surveillance, Foong and Fung were arrested.

Police found $40,000 on Foong and almost $200,000 in his car. They found 16 fake NSW drivers’ licence cards and a wealth of banking material.

At Fung’s home they found a black bag with $520,000 inside. When questioned, Fung told federal police a man named “Johnny” had given it to him two days before and asked him to hold onto it.

Both Foong and Fung have been sentenced for the money laundering.

The three men funnelled $4.5 million out of Australia, partly because of lax standards at the Commonwealth Bank.

And if Austrac’s allegations are to be believed, it was only the tip of the iceberg.

Comment has been sought from the Commonwealth Bank.

http://mobile.abc.net.au/news/2017-08-03/cba-money-laundering-law-breach-claim-how-men-got-away-with-it/8771652?pfmredir=sm

Photo: ABC News 

Gangs force thousands of teens to become ‘money mules’

The number of young people targeted by criminals to be “money mules” – people who let their bank accounts be used to launder money – has doubled, according to a fraud prevention service.

Cifas, which aims at reducing financial crime in the UK, said that the number of “misuse of facility” frauds involving those under 21 years of age, has risen sharply.

There were 4,222 cases in the first half of 2017, compared with 2,143 in the first part of 2916, the fraud prevention service said.

It also reported that 65 per cent of the 17,040 incidents in the UK in the first six months of 2017 were committed by those under 30.

This type of fraud normally sees an individual allowing their bank account to be used in transferring money, according to Cifas, making it more difficult for authorities to monitor.

The organisation has also called for children to receive fraud education in the national curriculum.

“We are trying to prevent young people from getting involved in something that could end up being quite damaging,” said Sandra Peaston, Cifas, assistant director. “Not just the repercussions of laundering money but getting involved in organised crime can get very nasty.”

Ms Peaston added that criminals were advertising on social media, offering cash if youngsters allow them to use their bank accounts.

The Metropolitan Police has sent out warnings to parents through London schools after worries that school children are being approached outside school gates. There have been several cases recorded outside of London according to The Times.

Youngsters have been approached with violent threats if they did not consent, say police.

Parents were warned to talk to their children so they are on alert concerning these money laundering schemes, as they may not be aware that this is a criminal offence and could damage their credit status in the future.

Operation Falcon, the Met police’s fraud department sent out a letter explaining how youngsters are lured in. “This is either done by force or for a financial incentive. We need your support to help educate young people around this issue.

Bank accounts are private and must only be used by the account holder. Any misuse could not only be criminal but could cause serious credit issues for the account holder.”

Children as young as 13 now have bank accounts, said Detective Chief Inspector Gay Miles, and they now have “access to money that they didn’t have before.”

https://www.google.com/amp/www.independent.co.uk/news/uk/teenagers-money-laundering-money-mules-criminal-gangs-gangsters-criminals-fraud-a7866151.html%3famp

Photo: Getty 

 

FinCEN Fines BTC-e Virtual Currency Exchange $110 Million for Facilitating Ransomware, Dark Net Drug Sales

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN), working in coordination with the U.S. Attorney’s Office for the Northern District of California, assessed a $110,003,314 civil money penalty today against BTC-e a/k/a Canton Business Corporation (BTC-e) for willfully violating U.S. anti-money laundering (AML) laws. Russian national Alexander Vinnik, one of the operators of BTC-e, was arrested in Greece this week, and FinCEN assessed a $12 million penalty against him for his role in the violations.

BTC-e is an internet-based, foreign-located money transmitter that exchanges fiat currency as well as the convertible virtual currencies Bitcoin, Litecoin, Namecoin, Novacoin, Peercoin, Ethereum, and Dash. It is one of the largest virtual currency exchanges by volume in the world. BTC-e facilitated transactions involving ransomware, computer hacking, identity theft, tax refund fraud schemes, public corruption, and drug trafficking.

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. anti-money laundering laws,” said Jamal El-Hindi, Acting Director for FinCEN. “This action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency. Treasury’s FinCEN team and our law enforcement partners will work with foreign counterparts across the globe to appropriately oversee virtual currency exchangers and administrators who attempt to subvert U.S. law and avoid complying with U.S. AML safeguards.”

FinCEN acted in coordination with law enforcement’s seizure of BTC-e and Vinnik’s arrest. The Internal Revenue Service-Criminal Investigation Division, Federal Bureau of Investigation, United States Secret Service, and Homeland Security Investigations conducted the criminal investigation.

Among other violations, BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address. Instead of acting to prevent money laundering, BTC-e and its operators embraced the pervasive criminal activity conducted at the exchange. Users openly and explicitly discussed criminal activity on BTC-e’s user chat. BTC-e’s customer service representatives offered advice on how to process and access money obtained from illegal drug sales on dark net markets like Silk Road, Hansa Market, and AlphaBay.

BTC-e also processed transactions involving funds stolen between 2011 and 2014 from one of the world’s largest bitcoin exchanges, Mt. Gox. BTC-e processed over 300,000 bitcoin in transactions traceable to the theft. FinCEN has also identified at least $3 million of facilitated transactions tied to ransomware attacks such as “Cryptolocker” and “Locky.” Further, BTC-e shared customers and conducted transactions with the now-defunct money laundering website Liberty Reserve. FinCEN previously issued a finding under Section 311 of the USA PATRIOT Act that identified Liberty Reserve as a financial institution of primary money laundering concern.

BTC-e has conducted over $296 million in transactions of bitcoin alone and tens of thousands of transactions in other convertible virtual currencies. The transactions included funds sent from customers located within the United States to recipients who were also located within the United States. BTC-e also concealed its geographic location and its ownership. Regardless of its ownership or location, the company was required to comply with U.S. AML laws and regulations as a foreign-located MSB including AML program, MSB registration, suspicious activity reporting, and recordkeeping requirements. This is the second supervisory enforcement action FinCEN has taken against a business that operates as an exchanger of virtual currency, and the first it has taken against a foreign-located MSB doing business in the United States.

https://www.fincen.gov/news/news-releases/fincen-fines-btc-e-virtual-currency-exchange-110-million-facilitating-ransomware

 

 

Criminal mastermind’ of $4bn bitcoin laundering scheme arrested

The Russian “internationally sought ‘mastermind’ of a crime organisation” accused of laundering more than $4bn in bitcoin, including funds obtained from the hack of failed bitcoin exchange Mt Gox, has been arrested in Greece.

A US jury indicted Alexander Vinnik on Wednesday after his arrest in a small beachside village in northern Greece on Tuesday, following an investigation led by the US justice department along with several other federal agencies and task forces.

Vinnik was described by the justice department as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011, which was allegedly used to launder more than $4bn for people involved in crimes ranging from computer hacking to drug trafficking.

US authorities also linked him to the failure of Mt Gox, the Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik “obtained” funds from the hack of Mt Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.

“Just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes,” said Brian Stretch, US attorney for the Northern District of California.

Vinnik’s arrest is the latest in a series of US operations against Russian cybercriminals in Europe, including the taking down of two of the biggest dark web marketplaces for drugs, guns and other illicit items, AlphaBay and Hansa, last week.

The prosecutions also coincide with intensified scrutiny of Russian hackers after US intelligence officials determined that Russia interfered in the 2016 US presidential election using cyber-warfare methods to help Donald Trump, something Moscow denies.

During his time in the digital currency market, US authorities allege Vinnik facilitated crimes including hacking, fraud, identity theft, tax refund fraud, public corruption and drug trafficking. Greek police described Vinnik as a “an internationally sought ‘mastermind’ of a crime organisation”.

BTC-e, which has been out of service for more than a day, attributed this to “unplanned maintenance”. In a tweet on Wednesday after the arrest of Vinnik, BTC-e said it would restore service in the next five to 10 days.

The exchange is one of the oldest virtual currency platforms. It allows users to trade bitcoin pseudonymously against a variety of fiat and virtual currencies, and is known in cryptocurrency markets as having relaxed standards for checking users’ identity, and for not collaborating with law enforcement.

https://www.google.com/amp/s/amp.theguardian.com/technology/2017/jul/27/russian-criminal-mastermind-4bn-bitcoin-laundering-scheme-arrested-mt-gox-exchange-alexander-vinnik

Businessman accused of stealing millions in Ponzi scheme

A businessman is accused of running a Ponzi scheme that took more than $3.6 million from people in Central Florida, according to the Orange County Sheriff’s Office.

Deputies arrested Justin Troy Spearman, 29, on numerous fraud-related charges Saturday.

Spearman, formerly of Winter Park, persuaded people in Orange, Seminole and Volusia counties to let him invest their money in 2013 and 2014, according to the probable-cause affidavit.

He told them the money was going into gas and oil businesses in Texas, and provided fake documents to persuade them.

The investors, many of whom knew one another, gave Spearman more than $3.6 million, according to the affidavit. He would pay old investors with money taken from the new investors.

Spearman was a big spender, using the money on luxury cars, private airplanes and extravagant gifts, according to court records.

Public records show he also had a Palm Beach condo worth nearly $800,000 in 2015.

Some of the investors confronted Spearman in 2014 when they weren’t getting the returns they were promised. He confessed on-camera to the scheme and admitted himself for psychiatric evaluation at a hospital, according to court documents.

Orange County Circuit Court records show that Gloria Cockman, one of the investors, sued Spearman in 2014.

He pleaded the Fifth Amendment during the case, and she was awarded a settlement.

Spearman was sentenced to 27 months in prison in July 2016 for another Ponzi scheme in Texas.

The investigation of Spearman was conducted jointly by the Winter Park Police Department and the Florida Office of Financial Regulation, according to the affidavit.

Spearman’s charges include grand theft, securities fraud and sale of unregistered securities, according to the arrest affidavit.

He was booked into the Orange County Jail with bond set at $2.1 million, the affidavit shows.

http://www.orlandosentinel.com/news/breaking-news/os-justin-spearman-arrested-ponzi-scheme-20170719-story.html