Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that TREVON GROSS, the former Chairman and CEO of Helping Other People Excel Federal Credit Union (“HOPE FCU”), located in Lakewood, New Jersey, and YURI LEBEDEV, a former member of HOPE FCU’s Board of Directors and a former employee of Coin.mx, an internet-based Bitcoin exchange, were found guilty today in Manhattan federal court, in connection with a bribery scheme to take over control of HOPE FCU and a fraud scheme in furtherance of the operations of Coin.mx. The jury convicted GROSS and LEBEDEV on all counts with which they were charged in the controlling indictment following a four-week trial before U.S. District Judge Alison J. Nathan.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As a unanimous jury found today, Yuri Lebedev and others at Coin.mx, an unlawful Bitcoin exchange, tricked banks into processing millions of dollars in transactions by hiding the true nature of their business. When the banks caught on to their scheme, Lebedev and others bribed Trevon Gross so they could have a captive credit union to process those transactions, undermining the credit union’s safety and solvency. Despite elaborate efforts to hide their schemes, the defendants’ conduct was exposed at trial and found for what they were, federal crimes.”
According to the Indictment, other filings in Manhattan federal court, and evidence admitted at trial:
The Unlawful Bitcoin Exchange
Between 2013 and July 2015, LEBEDEV helped operate Coin.mx, an unlawful internet-based Bitcoin exchange, along with Anthony Murgio, the founder of Coin.mx. LEBEDEV and his co-conspirators engaged in substantial efforts to evade detection of their unlawful Bitcoin exchange by operating through a phony front company called “Collectables Club.” Coin.mx used the “Collectables Club” to open financial accounts in order to trick financial institutions into believing the unlawful Bitcoin exchange was simply a members-only association of individuals who discussed, bought, and sold collectible items and memorabilia. LEBEDEV and his co-conspirators deceived financial institutions by deliberately misidentifying and miscoding Coin.mx customers’ credit and debit card transactions, in violation of bank and credit card company rules and regulations. Through the illegal Coin.mx scheme, LEBEDEV and his co-conspirators caused more than $10 million in Bitcoin-related transactions to be processed illegally through financial institutions.
The Federal Credit Union Scheme
In 2014, in an effort further to evade scrutiny from financial institutions about the nature of the business engaged in by Coin.mx, LEBEDEV, Murgio, and their co-conspirators gained control of HOPE FCU, a federal credit union in New Jersey with primarily low-income members. After making more than $150,000 in illegal bribes at GROSS’s direction to bank accounts in the name of a church where GROSS served as the pastor, Murgio, LEBEDEV, and their co-conspirators took control of HOPE FCU. With GROSS’s assistance, Murgio installed LEBEDEV and various co-conspirators on HOPE FCU’s Board of Directors and transferred Coin.mx’s banking operations to HOPE FCU. GROSS also ceded operational control of the credit union to the board members installed by Murgio, including LEBEDEV. Thereafter, GROSS, LEBEDEV, and others worked to run tens of millions of dollars of ACH (Automated Clearing House) transactions through the credit union without adequate controls, thus putting its financial condition at risk.
GROSS, LEBEDEV, Murgio, and their co-conspirators also obstructed an examination of HOPE FCU by the National Credit Union Administration (“NCUA”) and made false statements to the NCUA in order to perpetuate LEBEDEV and Murgio’s control of the credit union. These included deliberately failing to disclose the bribe payments; misrepresenting the location of Coin.mx-affiliated businesses, including the “Collectables Club,” so as to claim that they were eligible to be members of the credit union and to serve as Board members; and manipulating the accounting at HOPE FCU so as to hide its true financial condition and the fact that it was processing tens of millions of dollars of transactions without adequate controls. HOPE FCU was operated as a captive bank by MURGIO and his co-conspirators until the end of 2014.
In October 2015, the NCUA placed HOPE FCU into conservatorship, and subsequently liquidation.
* * *
LEBEDEV, 39, of St. John’s, Florida, and GROSS, 52, of Jackson, New Jersey, were found guilty of one count of making corrupt payments to an officer of a financial institution and one count of receipt of corrupt payments by an officer of a financial institution, respectively, each of which carries a maximum sentence of 30 years in prison. LEBEDEV and GROSS also were each found guilty of participation in a conspiracy to make and receive corrupt payments, as well as to obstruct the examination of the NCUA and make false statements to the NCUA, which carries a maximum sentence of five years in prison. LEBEDEV was also found guilty of one count of wire fraud, one count of bank fraud, and one count of conspiracy to commit wire and bank fraud, each of which carries a maximum sentence of 30 years in prison. Their sentencings are set for July 20, 2017, before the Honorable Alison J. Nathan.
All four of LEBEDEV and GROSS’s co-defendants, including Anthony Murgio, have pled guilty and are awaiting sentence.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Kim praised the outstanding investigative work of the FBI and the Secret Service. He also thanked the NCUA for its assistance with the investigation and prosecution.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Eun Young Choi, Daniel S. Noble, and Won S. Shin are in charge of the prosecution.