US: Seven Charged in $6 Billion Laundering Scheme

Published: 31 May 2013


The US Attorney’s Office froze the assets of Liberty Reserve, a currency transfer and online payment company, in connection with a $6 billion transnational money laundering scheme connected to organized crime, fraud, computer hacking, child pornography and narcotics trafficking, a US Attorney’s Office press release said on Tuesday. Prosecutors alleged that over the course of its operation, the site processed over 55 million transactions, “virtually all of which were illegal.”

Seven Liberty Reserve employees, including the company’s founder, Arthur Budovsky, have been charged in the case. Budovsky and a company manager were arrested in Spain on Friday, while three others were arrested in the US. Two other suspects remain at large in Costa Rica, the press release said.

Liberty Reserve’s primary purpose was to allow users to anonymously conduct illegal transfers of money and to launder money made from criminal enterprises, the press release alleged. The site also featured a virtual currency which could be used to make transactions in place of a credit card or bank account information. Liberty Reserve required users to register before using the virtual currency, but unlike normal banking institutions, did not require any validation of identification. This allowed defendants to launder their money anonymously under names such as “Joe Bogus” and “Russia Hacker.”

The defendants were completely aware of that their operation was illegal, the press release said. An online chat between two of the defendants described the company activities as “illegal” and indicated knowledge of money laundering. When the defendants realized the company was under investigation by US authorities, they pretended to shut down Liberty Reserve, but continued to operate the company through a series of shell companies across six different countries.

Five domain names and 45 bank accounts were also seized in connection with the case. The US Treasury Department also listed Liberty Reserve as a primary money laundering concern, which prohibits other financial institutions from conducting or maintaining business with the company.