The US Department Of Justice Seized Liberty Reserve And Arrested A Fair Number Of Executives!
The news of the arrest of LIBERTY RESERVE’s founder had already arrived on Friday, May 24th, when the Spanish police arrested ARTHUR BUDOVSKY. The site was down but no further notice was established, leaving the regular users in blindness. Yesterday, the US Department of Justice and particularly the Southern District of New York filed and published the indictment of this case with all the charges, allegations, persons and facts described. Along with BUDOVSKY other 4 former executives (VLADIMIR KATS, the co-founder of LIBERTY RESERVE, AZZEDDINE EL AMINE, a manager of LIBERTY RESERVE’s financial accounts, and MARK MARMILEV and MAXIM CHUKHAREV, who helped design and maintain LIBERTY RESERVE’s technological infrastructure) were arrested in different locations globally while two other defendants who are included in the indictment are at large in Costa Rica as the announcement of Department of Justice explains.
All the defendants are accused for conspiracy and operation of money laundering scheme as well as conspiracy and operation of unlicensed money transmitting service as LIBERTY RESERVE was considered to be one. The defendants are threatened with 30 years sentence for the 3 counts in total if they are found guilty of the charges filed.
In addition to the arrests, 5 domain names have been seized, one of them is the Liberty Reserve’s site and the 4 others money exchange services connected with Liberty Reserve. In a separate document is mentioned that 35 additional money exchange services throughout the world are subject of civil forfeiture action because they were used to facilitate the service of LIBERTY RESERVE and as a result they constitute property involved in money laundering. Already, some of them are down or have not run their service to any further extent. Here is the full list of them:
Additionally, 45 bank accounts which Liberty Reserve managed to own via shell-companies related to Liberty Reserve, have been seized or restrained. These were active accounts in banks in Costa Rica, Cyprus, USA, Australia etc.
The indictment is very harsh, unfolding a situation where all the parties involved are subject of criminal activity. LIBERTY RESERVE was used as a service for money laundering by hackers, drug traffickers, credit card thefts and so forth, taking advantage of the anonymity that the alleged environment was offering . From the press release:
To further enable the use of LIBERTY RESERVE for criminal activity, its website offered a “shopping cart interface” that “merchant” websites could use to accept LR currency as a form of payment. The “merchants” who accepted LR currency were overwhelmingly criminal in nature. They included traffickers of stolen credit card data and personal identity information, peddlers of various types of online Ponzi and get-rich-quick schemes, computer hackers for hire, unregulated gambling enterprises, and underground drug-dealing websites.
In addition to being used to process payments for illegal goods and services online, LIBERTY RESERVE was also used by cyber criminals to launder criminal proceeds and transfer funds among criminal associates. For example, LIBERTY RESERVE was used by credit-card theft and computer-hacking rings operating in countries around the world, including Vietnam, Nigeria, Hong Kong, China, and the U.S., to distribute proceeds of these conspiracies among the members involved.
The point that causes moderate trembling to those who used the LIBERTY RESERVE is the fact that absolutely and with no exception the General Attorney believes that whoever had opened and used an account with LIBERTY RESERVE is automatically a criminal and with purpose to launder money since it is said that all the transactions (55 million) and the money processed (about 6 billion US dollars since 2006 to 2013) were dirty money seeking laundering. It is also considered as the largest international money laundering prosecution in history, involving Law Enforcement Actions in 17 Countries.
For the end, let us mention some historical incidents that brought us here today speaking about the largest money laundering prosecution worldwide. Liberty Reserve was co-founded in 2006 as it is known. In 2009, it starts having troubles with the local authorities which from their part notified LIBERTY RESERVE that fall within their jurisdiction and hence needs to obtain license for money transmitting business as soon as possible. Note carefully that Vladimir Cats and Ahmed Yassine Abdelghani withdrew themselves from LIBERTY RESERVE, and consequently their positions were replenished by “Allan Garcia” (Hidalgo) and Azzeddine El Amine. The story goes as follows taken straight from the indictment ~ part 23-29 (Link):
EFFORTS TO CONCEAL LIBERTY RESERVE’S OPERATIONS AND ASSETS
23. Throughout its operation, LIBERTY RESERVE and its principals sought to thwart effective regulation by anti-money laundering authorities and to evade the reach of law enforcement.
24. For example, in or about 2009, a Costa Rican agency responsible for regulating financial institutions, known as Superintendencia General de Entidades Financieras (“SUGEF”), determined that LIBERTY RESERVE fell within its jurisdiction and notified the company that it needed to apply for a license to operate as a money transmitting business in Costa Rica. Beginning in or about October 2009, LIBERTY RESERVE sought such a license from SUGEF, but SUGEF refused to grant the application based on concerns that LIBERTY RESERVE did not have even basic anti-money laundering controls in place such as “know your customer” procedures, and otherwise lacked any effective means of tracking suspicious activity within its system.
25. Instead of remedying these deficiencies, LIBERTY RESERVE created a system designed to feign compliance with anti-money laundering procedures. Specifically, ARTHUR BUDOVSKY, a/k/a “Arthur Belanchuk,” a/k/a “Eric Paltz,” ALLAN ESTEBAN HIDALGO JIMENEZ, “Allan Garcia,” IVLARK NIARMILEV, “Marko,” a/k/a “Mark Halls,” and MAXIM CHUKHAREV, the defendants, created a computer portal that appeared to give Costa Rican regulators the ability to access LIBERTY RESERVE transactional information and monitor it for suspicious activity. However, the data that appeared in the portal was, according to internal communications between the defendants, mostly “fake” and could be manipulated to hide data that LIBERTY RESERVE did not want regulators to see.
26. By November 2011, LIBERTY RESERVE had still been unable to obtain a license from SUGEF to operate legally in Costa Rica. Compounding the company’s troubles, on or about November 18, 2011, the U.S- Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a notice to financial institutions within its network of the risks associated with providing financial services to LIBERTY RESERVE. The notice stated, among other things, that: “[i]nformation obtained by the United States Department of the Treasury indicates LIBERTY RESERVE is currently being used by criminals to conduct anonymous transactions to move money globally.”
27. LIBERTY RESERVE obtained a copy of the FinCEN notice. Approximately two weeks after the FinCEN notice was issued, LIBERTY RESERVE falsely informed SUGEF that its business had been sold to a foreign company and would no longer be operating in Costa Rica. LIBERTY RESERVE thus withdrew its application for a money-transmitting license from SUGEF and purported to shut down its office in Costa Rica. In reality, however, LIBERTY RESERVE went underground and continued to operate in Costa Rica using a stripped—down staff working out of office space held in the name of shell companies controlled by ARTHUR BUDOVSKY, a/k/a “Arthur Belanchuk,” a/k/a “Eric Paltz,” the defendant.
28. At or about the same time LIBERTY RESERVE falsely informed SUGEF that it was shutting down its operations in Costa Rica, ARTHUR BUDOVSKY, a/k/a “Arthur Belanchuk,” a/k/a “Eric Paltz,” ALLAN ESTEBAN HIDALGD JIMENEZ, “Allan Garcia,” and AZZEDDINE EL AMINE, the defendants, began emptying LIBERTY RESERVE’s bank accounts in Costa Rica of millions of dollars and transferring the money first to a bank account in Cyprus held in the name of a shell-company controlled by BUDOVSKY and EL AMINE, and then to a bank account in Russia held in the name of another shell company.
29. Shortly after the defendants began emptying LIBERTY RESERVE’s bank accounts in Costa Rica, the Costa Rican government was able to seize approximately $19.5 million in Costa Rican bank accounts maintained by LIBERTY RESERVE pursuant to a request by U.S. law enforcement authorities. Following that seizure, BUDOVSKY, HIDALGO, and EL AMINE sought to evade further seizure action by moving LIBERTY RESERVE funds into more than two dozen shell company accounts held in locations around the world, including Cyprus, Hong Kong, China, Morocco, Australia, and Spain.
Many people along with the criminal money seized, lost their funds. It bounds in their responsibility whatsoever but on the other hand whatever Big Brother can’t control, with mania wants to confiscate it for his own interest suggesting the unlawful as alibi while blinking the eye to apparently more hideous felony violations. This incident has carried a big hit and agitated the online earning community either it is legitimate or not. With the movement of forfeiting the operation of another 35 additional exchangers, the US Department of Justice gives a sonorous message to the next “victims”. Who will be the next one, really?