Bitcoin Start-up Founder Facing Federal Money Laundering Charges (U.S. Code 18 Section 1956)
On Jan. 27, Charlie Shrem, founder of BitInstant, was arrested and charged with federal money laundering charges. He is alleged to have knowingly used his company to facilitate illegal purchases from the now-closed drug marketplace Silk Road.
Silk Road was a website that allowed users to anonymously purchase everything from heroin to fake IDs. To ensure that all transactions did not disclose any personal information, the digital currency Bitcoin was used to pay for products.
Shrem’s BitInstant was the means used by Silk Road users to exchange cash into Bitcoins. Shrem is alleged to have collaborated with another man, Robert Faiella, to sell more than $1 million worth of Bitcoins to Silk Road users. Users did not have to provide any personally identifying information to BitInstant while BitInstant charged a fee for its service.
Pursuant to the Money Laundering Control Act of 1986, payment companies like BitInstant are required to collect information about their customers, monitor their transactions, and report “suspicious” transactions to the government. Federal authorities allege Shrem was in violation of these laws.
What is Money Laundering?
According to U.S. Code 18 Section 1956, you are guilty of money laundering if you knowingly conduct or attempt to conduct a financial transaction involving the proceeds of a “specified unlawful activity.” A specified unlawful activity can be drug trafficking, bribery, fraud and other crimes.
You can face federal money laundering charges if you transport, transmit or transfer funds through the United States, originating or arriving inside or outside the country, under the following conditions:
- With intent to commit a specified unlawful activity; or
- With intent to evade taxes or otherwise defraud the Internal Revenue Service (U.S. Code 26 Section 7201 or Section 7206); and
- Knowing that the transaction is designed to:
- Conceal or disguise the nature, location, source, ownership, or control of the proceeds of a specified unlawful activity; or
- To avoid a transaction reporting requirement under state or federal law.
Under U.S. Code 18 Section 1957, the federal government can prosecute you for money laundering for the criminal activity described above without proving that you knew the funds you were processing came from unlawful activity.
What is the Punishment for a Federal Money Laundering Conviction?
Money laundering is a federal crime. If you face federal money laundering charges, you will be charged by the U.S. Attorney’s Office under federal law and the case will go to the nearest federal court.
If you are convicted of money laundering under U.S. Code Section 1956, you face up to 20 years in prison and a fine of up to $500,000, or double the value of the property involved in the transaction (whichever is greater).
A conviction under U.S. Code Section 1957 can result in imprisonment of up to 10 years and a fine of double the value of the property involved in the transaction.
Call Wallin & Klarich if You are Facing Federal Money Laundering Charges
If you or a loved one is facing federal money laundering charges, it is critical that you speak to an experienced criminal defense attorney. At Wallin & Klarich, our attorneys have over 40 years of experience in handling federal criminal cases in Southern California. Our attorneys will fight to get you the best possible outcome in your case.
With offices in Los Angeles, Sherman Oaks, Torrance, Tustin, San Diego, Riverside, San Bernardino, Ventura, West Covina and Victorville, there is an experienced Wallin & Klarich Southern California criminal defense attorney near you no matter where you are located.
Call us today at (877) 4-NO-JAIL or (877) 466-5245 for a free phone consultation. We will get through this together.
