Preet Bharara, the United States Attorney for the Southern District of New York, and Leslie R. Caldwell, Assistant Attorney General for the Justice Department’s Criminal Division, announced that MAXIM CHUKHAREV was sentenced today to three years in prison for conspiring to operate an unlicensed money transmitting business in connection with his work for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services. CHUKHAREV was primarily responsible for maintaining Liberty Reserve’s technological infrastructure and for implementing systems designed to create the false appearance that Liberty Reserve had an effective anti-money laundering program. CHUKHAREV pled guilty in September 2014 before U.S. District Judge Denise L. Cote, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Maxim Chukharev provided essential assistance to a criminal enterprise that he knew was operating as an unlicensed money transmitting business. By evading U.S. licensing requirements, Liberty Reserve allowed cybercriminals to move money anonymously around the world. Whenever cybercriminals, including those who intentionally encrypt and cloak criminal cyber activity, are found within the reach of justice, they will be held accountable for their actions."
According to allegations contained in the Indictment filed against Liberty Reserve, CHUKHAREV and six other individual defendants, and statements made in other documents filed in Manhattan federal court and related court proceedings:
Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system." Liberty Reserve was created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions.
Before being shut down by the U.S. government in May 2013, Liberty Reserve had more than five million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and processed tens of millions of transactions through its system, totaling more than $16 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes.
CHUKHAREV began doing work for Liberty Reserve in 2009, and was hired as an employee in January 2010. At first, CHUKHAREV reported directly to Mark Marmilev, Liberty Reserve’s chief technology officer. As time went on, CHUKHAREV took on greater responsibility, including the creation and implementation of a system designed to hide information about Liberty Reserve’s users and the sources of its business from the company’s Costa Rican regulatory agency. By design, the system provided mostly “fake" statistics about Liberty Reserve’s business to the agency, in order to give the appearance that Liberty Reserve had an effective anti-money laundering program. Beginning in January 2012, CHUKHAREV took over many of Marmilev’s responsibilities in the day-to-day management of Liberty Reserve’s technical operations, including the maintenance and operation of its website. CHUKHAREV worked for Liberty Reserve for years despite knowing that the business was not licensed as a money transmitting business under United States law. The fact that Liberty Reserve had not registered as a money transmitting business under U.S. law was a vital component of its success as a system used to launder funds derived from or intended to promote criminal activity.
CHUKHAREV, 28, is a citizen of Russia and resident of Costa Rica.
Mr. Bharara praised the outstanding work of the United States Secret Service, the Internal Revenue Service - Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, which worked together in this case as part of the Global Illicit Financial Team. Mr. Bharara also thanked the United States Secret Service’s New York Electronic Crimes Task Force for their extraordinary assistance with the investigation. Additionally, Mr. Bharara specially thanked all the international law enforcement agencies that assisted in the investigation, in particular, the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office.
This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section (“AFMLS"), which is overseen by Assistant Attorney General Leslie R. Caldwell. Mr. Bharara thanked AFMLS for its partnership and also thanked the Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section for their support.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Serrin Turner, Andrew Goldstein, and Christine Magdo of the Southern District of New York and Trial Attorney Kevin Mosley of AFMLS are in charge of the prosecution, and Assistant United States Attorney Christine Magdo is in charge of the forfeiture aspects of the case.
The charges contained in the Indictment against certain of CHUKHAREV’s co-defendants remain pending and, as to those defendants, are merely accusations. Those defendants are presumed innocent unless and until they are proven guilty.
Source: U.S. Department of Justice, Office of the United States Attorneys
