
'Black Market Bank' Co-Founder Budovsky Sentenced to 20 Years - Tomte
http://www.bloomberg.com/news/articles/2016-05-06/-black-market-bank-co-founder-budovsky-sentenced-to-20-years
======
alva
>Prosecutors in New York said the company operated as “the financial hub for
cyber criminals around the world.”

Well fortunately for the cyber criminals, I have some great suggestions for
alternative banking solutions. Plus! Your co-conspirators will almost
definitely never face a day in jail. Think you will have to pay for expensive
flights to Switzerland to open your account? Save some of that hard earned
cash and just take a walk to your nearest high street.

HSBC 2012 - $1.9b fine for laundering Mexican drug money.

JPMorgan - $13b aggressive, irresponsible mortgage lending

Bank of America - $16b ditto

Libor rate fixing - $3b, multiple banks

Forex rigging - $2b, multiple banks

BNP Paribas - $9b, violating international sanctions

PPI - £23b, multiple banks

Around $240b worth of fines between 2009-2013. Some of which can be put down
to incompetence. Most of which can be put down to outright criminal fraud.

Play it fair with sentencing please.

~~~
rtpg
There's this trope about us choosing to not throw people in jail but its just
a consequence of needing real evidence against a person.

Holder made some ckmment to the line of " if we had the evidence , people at
the DOJ would be rushing to charge. Throwing a Wall St exec in jail is a
career-making case" (edit: actual quote
[https://mobile.twitter.com/lauraolin/status/7279880874149847...](https://mobile.twitter.com/lauraolin/status/727988087414984705)
)

The interests are totally aligned for the DOJ to crush any execs found of
willful wrongdoing

~~~
chishaku
> The interests are totally aligned for the DOJ

Are they?

Eric Holder in 1999:

"Prosecutors may consider the collateral consequences of a corporate criminal
conviction in determining whether to charge the corporation with a criminal
offense. Virtually every conviction of a corporation, like virtually every
conviction of an individual, will have an impact on innocent third parties."
[0]

Eric Holder in 2013:

"I am concerned that the size of some of these institutions becomes so large
that it does become difficult to prosecute them." [0]

> if we had the evidence

In reference to Goldman/SEC settlement over Abacus:

"Nor had they questioned top bankers in Goldman’s mortgage businesses or any
of the bank’s senior executives. Even more surprising to Kidney, the agency
had not taken testimony from John Paulson, the key figure at his eponymous
hedge fund." [1]

An investigator that doesn't ask questions will have a hard time finding
evidence.

[0]: [http://www.bloomberg.com/news/articles/2014-09-25/wall-
stree...](http://www.bloomberg.com/news/articles/2014-09-25/wall-street-banks-
and-their-critics-were-disappointed-in-eric-holder)

[1]: [http://www.newyorker.com/business/currency/why-the-s-e-c-
did...](http://www.newyorker.com/business/currency/why-the-s-e-c-didnt-hit-
goldman-sachs-harder)

~~~
imglorp
> every conviction of a corporation [...] will have an impact on innocent
> third parties"

Well there's your problem right there! Leave the corporations alone, along
with most of the innocent shareholders and employees. Charge only the
criminals as individuals, on up to the CEO. Jail, big fines, asset seizures.

That would clear things up very quickly.

------
chollida1
This is probably a much better source:

[https://www.justice.gov/opa/pr/founder-liberty-reserve-
plead...](https://www.justice.gov/opa/pr/founder-liberty-reserve-pleads-
guilty-laundering-more-250-million-through-his-digital)

Thought Bloomberg is well known to quickly publish 2 sentence articles to get
an entry in google for breaking news and then back fill the story as it gets
more details.

If you haven't heard of the bank in question, Liberty Reserve was bank that
was heavily used to launder black market money. You could open an account with
an email address, and no other documentation, deposit bitcoins, and then pull
out your holdings in the form of cash or gold.

I'm surprised it ran as long as it did, from 2006 to 2013. There was one of
the bulge bracket banks, I think Goldman, who put out a note about the bank
where they speculated that it was an CIA front for trying to track the flow of
black market cash. I'll try and see if I still have the research note around.

~~~
celticninja
It was active way before bitcoin existed and their primary currency was
Liberty Reserve Dollars. You could deposit via western union or other cash
deposit methods and transfer funds internationally with no questions. Bitcoin
was added as another method fairly late on.

~~~
pakled_engineer
LR just provided the ledger, you bought in and cashed out through 3rd party
exchangers who were supposed to do all the KYC checking. LR also would freeze
any account that moved more than some arbitrary amount that I can't remember
but you could open pretty much unlimited accounts with slightly different info
to keep under the limits. They weren't as bad as the DoJ claims unless there
was private side dealing they discovered.

When the exchangers started allowing Visa/MC ATM card loads is when all the
org crime flocked to LR to cash out their stolen db sales and attention from
DoJ started.

------
megous
Seems like nonsense witchhunt based on three numbers:

"The estimated amount of money laundered globally in one year is 2 - 5% of
global GDP[1]"

"...government charges, Liberty Reserve processed 55 million separate
financial transactions and laundered $6 billion in criminal proceeds. [2]" (I
assume they just summed up total amount of transactions here, just because
they can...)

"Budovsky admitted in his plea agreement to laundering more than $250 million
in criminal proceeds. [3]"

So, $250 mil. is 4% of $6 bn. Which is within normal range of money laundering
rates.

He's getting it probably because he wasn't licensed and wasn't giving up data,
or something like that.

[1] [https://www.unodc.org/unodc/en/money-
laundering/globalizatio...](https://www.unodc.org/unodc/en/money-
laundering/globalization.html) [2] [http://abcnews.go.com/US/black-market-
bank-accused-launderin...](http://abcnews.go.com/US/black-market-bank-accused-
laundering-6b-criminal-proceeds/story?id=19275887) [3]
[https://www.justice.gov/opa/pr/founder-liberty-reserve-
plead...](https://www.justice.gov/opa/pr/founder-liberty-reserve-pleads-
guilty-laundering-more-250-million-through-his-digital)

------
Overtonwindow
Not only was this a nonsense witch hunt by prosecutors, but it was also a
continuation of the war on cash. The government and the police do not like
cash, they desperately want an all plastic transaction society, and have been
using laws like civil procedure to attack the the cash-based system for many
years. If you know nothing of civil forfeiture you owe it to yourself to read
up on it. Simply put: If the police find a large amount of cash on you, they
can take it, without a warrant, without conviction, and you will have to sue
to get it back.

------
mindslight
The title should really be changed to "Liberty Reserve" rather than the
shameless government propaganda from Bloombag.

Bitcoin, lacking untracability, will eventually just decay into the same non-
fungible identity-dependent status quo. But the lack of direct persecution
like LR/egold/etc really highlight its one technological achievement.

------
asddddd
Wondering how I can get my money back from this, lost a few grand (legal
money) that I deposited just before they got shut down. Saw a vague allusion
to contact SDNY about it (only found a mailing address) and haven't seen
anything else since.

Was a decent bit of collateral damage since they were fairly popular for
offshore forex and bitcoin.

------
luso_brazilian
That heavy jail sentence while HSBC got a "slap on the wrist", paying their
way out of a criminal indictment [1].

 _> The settlement, announced December 11, 2012, included a $1.256 billion
forfeiture and $665 million in civil fines._

 _> It resolved charges accusing HSBC of having degenerated into a "preferred
financial institution" for Mexican and Colombian drug cartels, money
launderers and other wrongdoers through what the U.S. Department of Justice
called "stunning failures of oversight."_

 _(...)_

 _> The deferred prosecution agreement, known as a DPA, lasts for five years,
and prosecutors may indict the bank if it violates the terms._

 _> Gleeson said "much of what might have been accomplished by a criminal
conviction has been agreed to in the DPA," whose administration he will
supervise._

 _> He noted having received requests from the public to reject the agreement
because it did not hold HSBC criminally liable. He also read numerous
editorials and columns suggesting, as one put it, that HSBC was "too big to
indict."_

[1] [http://www.reuters.com/article/us-hsbc-settlement-
laundering...](http://www.reuters.com/article/us-hsbc-settlement-laundering-
idUSBRE9611B220130702)

~~~
rayiner
I haven't read the indictment in this case, but HSBC didn't merit jail time
for anyone in the U.S. The DOJ had no evidence that anyone in the U.S. at HSBC
actually knew about specific money laundering transactions. The charge was
based on inadequate controls. That's the classic case for a fine as opposed to
jail time.

It's not illegal for your bank to be used for money laundering. Every bank is
used by money launderers. And every U.S. bank knows, in the abstract, its
branches are used to launder money. Read the money laundering statue:
[https://www.law.cornell.edu/uscode/text/18/1956](https://www.law.cornell.edu/uscode/text/18/1956).
It requires transferring money with either: a) intent to promote illegal
activity; or 2) knowing that the transaction is designed to conceal unlawful
activity.

------
atemerev
This is one of the cases where HN urgently needs the "dislike" button (karma
neutral, of course).

------
awt
AML/KYC is inevitable in a collectivist system. Centralization requires the
state to attempt to know everything about everyone, which is impossible, and
leads to collapse.

------
mmkx
Perfect Money is the name of the service that took LR's place.

~~~
hackerboos
e-gold, Pecunix and the ones that just shutdown and ran off with the user's
money like ECU-Money and GDP.

There were a bunch of them.

