NEW YORK — Indictments are still pending in the case of an alleged Bitcoin money laundering scheme involving a tiny low-income credit union in New Jersey.
One of the men charged in the scheme, Florida resident Anthony Murgio, appeared in a federal court in New York earlier this week. However, according to a spokesman for the U.S. Attorney's Office for the Southern District of New York, Murgio did not have to enter a plea, since he has not been officially indicted yet.
Murgio's attorney, Tampa-based Gregory Kehoe, said that was because his client was only making an "initial appearance" at the court.
The spokesman at the US Attorney's Office also said Murgio's next hearing is scheduled for Sept. 9, but the defendant is not required to appear.
Murgio reportedly remains free on $100,000 bail.
As previously reported in Credit Union Journal, Murgio and another defendant Yuri Lebedev ran a Bitcoin exchange through a phony front-company and a small New Jersey credit union that Murgio took control of for the scheme. That credit union was identified as Helping Other People Excel (HOPE) Federal Credit Union, a $291,000 institution based in Jackson, N.J.
A spokesman for HOPE FCU would not comment on the ongoing case.
Murgio and Lebedev, who are represented by different attorneys, are charged in separate complaints, but it hasn't been determined if they'll be tried separately or not, added the spokesman for the US Attorney's Office.
As previously reported by CU Journal, the FBI alleges that since at least late 2013, Murgio and Lebedev operated Coin.mx, a Bitcoin exchange service that enabled co-conspirators and customers to pay a fee to exchange cash for Bitcoins.
"In doing so," the FBI stated in a release, "they knowingly exchanged cash for people whom they believed may be engaging in criminal activity." The duo are also said to have exchanged cash for Bitcoins for victims of cyber-attacks involving ransom money.
Murgio and Lebedev "knowingly enabled the criminals responsible for those attacks to receive the proceeds of their crimes, yet, in violation of federal anti-money laundering laws, Murgio never filed any suspicious activity reports regarding any of the transactions."
Both men are charged with conspiracy to operate an unlicensed money transmitting business and operating an unlicensed money transmitting business, each of which carries a maximum five-year prison sentence. Murgio has also been charged with money laundering — a maximum 20-year sentence — and willful failure to file a suspicious activity report, which carries a maximum five-year sentence.
Coin.mx exchanged at least $1.8 million for customers between October 2013 and January 2015, along with transferring hundreds of thousands of dollars to accounts in Cyprus, Eastern Europe and Hong Kong, along with receiving hundreds of thousands of dollars from bank accounts in Cyprus and the British Virgin Islands.
In order to evade potential scrutiny, the FBI said Murgio obtained beneficial control of HOPE FCU, a credit union with about 100 members, serving primarily low-income residents. Murgio is alleged to have installed Lebedev and others on the CU's board and transferred Coin.mx's banking operations to the CU, which served as a captive for their business until early this year.
Also, according to the FBI, the NCUA discovered in early 2015 that substantial payment processing activity was being run through the credit union and HOPE was forced to stop that activity. Murgio then found other overseas payment channels.
Lebedev's LinkedIn account states that he is currently employed as a "principal software architect" for a company called BigTree Solutions based in the Tampa/St. Petersburg, Fla., area. Prior to that, he is listed as "lead java architect" at HOPE FCU from October 2014 to January 2015.
Murgio's LinkedIn account noted that he is a former owner of a restaurant in Tallahassee, Fla., as well as a "property management system" called InstaManager.com.
According to the Florida Department of Revenue, in January 2013, Murgio was arrested for failing to pay more than $110,000 in sales taxes.
