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SC Man Pleads Guilty to Federal Charges of Money Laundering with BitCoin

Man Pleads Guilty to Federal Charges of Money Laundering with BitCoin for Drugs

federal charges of money launderingA Lexington, SC resident has pleaded guilty to federal charges of money laundering with BitCoin in order to purchase drugs through the “Deep Web.”

Joseph Patrick Gelli, 23, was officially charged with conspiracy to commit money laundering, using the popular internet currency BitCoin. He reportedly used the currency to purchase illegal drugs online and have them shipped to his home.

The drugs included marijuana and the psychotropic drug, mushrooms or ‘shrooms. He planned to sell the drugs to local users. BitCoin would, he hoped, prevent his drug transactions from being noticed or traced.

A news release regarding the investigation into Gelli’s money laundering and drug charges reported that police found $38,000 in his home, along with “a variety of illicit drugs.”

“IRS-CI will continue to focus on financial crimes that involve virtual currency by collaborating with FinCEN, its internal business units and other federal law enforcement agencies to identify the movement of illegal monies utilizing virtual currency,” IRS special agent Thomas Holloman said.

A recent investigation conducted by computer giant IBM found that BitCoin is becoming less popular for many cybercrimes because the value has decreased significantly, and it is primarily being used for money laundering purposes.

Etay Maor, senior fraud prevention strategist at IBM Security, said: “They use Bitcoin for the money laundering part and take payment with it, but they’ll move it out almost immediately.

“Most of them [the cyber criminals] won’t keep bitcoins – they don’t like the valuations Bitcoin has – so they just use it as a layer of obfuscation, and move it to a different form of money.”

Money laundering has been a federal crime officially since 1986, when the US passed the Money Laundering Control Act. The Act defines money laundering at the federal level as a financial transaction in which the profits were generated through illegal or illicit means, and the financial transaction is specifically intended to hide the source of the funds. BitCoin and other internet currencies, since they rely on anonymity as part of the “libertarian experiment” that created them, are great practical methods of laundering money. The IRS and other federal agencies have taken a strong interest in BitCoin transactions in particular since the arrest and conviction of Ross Ulbricht, aka the Dread Pirate Roberts, who founded and ran the Silk Road and helped BitCoin become the massively popular decentralized currency that it is today.

However, just because you own and use BitCoin for transactions does not mean that your intention was to commit or conspire to money laundering. At the height of its popularity, BitCoin was accepted at numerous brick and mortar establishments, as well as online establishments, simply because the exchange rate to US dollars was so high. Money laundering is not part of this financial transaction.

The Strom Law Firm Defends You Against Federal Charges Like Money Laundering

If you have been indicted on federal charges of money laundering, mail or wire fraud, or racketeering, the South Carolina federal charges defense attorneys at the Strom Law Firm can help. We offer a free, confidential consultation to discuss the charges you face and to see how we can help, so contact us today. 803.252.4800



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