Tom Hays and ?Raphael Satter
NEW YORK: Calling it perhaps the biggest money-laundering scheme in U.S. history, federal prosecutors charged seven people Tuesday with running what amounted to an online, underworld bank that handled $6 billion for drug dealers, child pornographers, identity thieves and other criminals around the globe.
The case was aimed at Liberty Reserve, a currency-transfer and payment-processing company based in Costa Rica that authorities say allowed customers to move money anonymously from one account to another via the Internet with almost no questions asked.
U.S. officials said the enterprise was staggering in scope: Over roughly seven years, Liberty Reserve processed 55 million illicit transactions worldwide for 1 million users, including 200,000 in the U.S.
The network “became the bank of choice for the criminal underworld,” U.S. Attorney Preet Bharara said in announcing the unsealing of an indictment against the defendants, including Liberty Revenue founder Arthur Budovsky, an American who renounced his U.S. citizenship after deciding to set up in Costa Rica.
Liberty Reserve allowed users to open accounts using fictitious names, including “Russian Hacker” and “Hacker Account.” One person was registered under the name of “Joe Bogus” and the address “123 Fake Main Street” in “Completely Made Up City, New York.”
“The coin of the realm was anonymity,” Bharara said. “It was the opposite of a know-your-customer policy.”
The network charged a 1 percent fee on transactions through “exchangers” — middlemen who converted actual currency into virtual funds and then back into cash.
In the indictment, prosecutors called the network “one of the principal means by which cyber criminals around the world distribute, store and launder proceeds of their illegal activity ... including credit-card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.”