LawFuel.com – The Law News Daily Site – Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and David E. Beach, Special Agent-in-Charge of the New York Field Office of the United States Secret Service, announced today the unsealing of a superseding indictment charging TREVON GROSS with accepting over $150,000 in bribes as the Chairman of the Board of a federal credit union that served primarily low-income local residents in New Jersey. GROSS was bribed by the operators of Coin.mx, an unlawful Bitcoin exchange operated by co-defendant Anthony Murgio. GROSS surrendered to the FBI earlier today and is expected to be presented this afternoon in Manhattan federal court.
According to the allegations contained in the superseding indictment unsealed today and the criminal complaints previously filed in this case As the introductory phrase signifies, the entirety of the text of the superseding indictment and the complaints, and the description of the indictment and complaints set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
The Unlawful Bitcoin Exchange
Anthony Murgio, GROSS’s co-defendant, knowingly operated Coin.mx, an unlawful internet-based Bitcoin exchange, in violation of federal anti-money laundering laws and regulations, including those requiring money services businesses like Coin.mx to meet registration and reporting requirements set forth by the United States Treasury Department. Murgio and his co-conspirators engaged in substantial efforts to evade detection of their unlawful Bitcoin exchange scheme by operating through a phony front company called “Collectables Club,” and by maintaining a corresponding phony “Collectables Club” website. In doing so, they sought to deceive the major financial institutions through which they operated into believing their unlawful Bitcoin exchange business was simply a members-only association of individuals who discussed, bought, and sold collectable items, such as stamps and sports memorabilia.
In addition to lying to financial institutions, Murgio and his co-conspirators deceived U.S. banks and credit card issuers into authorizing credit and debit card payment and ACH (Automated Clearing House) transactions to purchase Bitcoins through Coin.mx. In particular, Murgio and his co-conspirators deliberately misidentified and miscoded customers’ credit and debit card transactions, in violation of bank and credit card company rules and regulations, and limited the dollar amount of individual transactions engaged in by their customers, in order to deceive banks into allowing the transactions to be completed, and avoid arousing suspicion from the banks. Murgio and his co-conspirators also knowingly instructed their Coin.mx customers to lie to banks about the Bitcoin exchange transactions the customers were executing through Coin.mx, and to state falsely that they were for the exchange of collectables items, and not for Bitcoins.
GROSS Secretly Sells Control of the Federal Credit Union to Murgio
In approximately 2014, in an effort to evade potential scrutiny from financial institutions and others about the nature of Coin.mx, Murgio, Yuri Lebedev, and their co-conspirators acquired control of HOPE FCU, a federal credit union in New Jersey with primarily low-income members. GROSS, who was the Chairman of the Board of HOPE FCU, allowed Murgio, Lebedev, and their co-conspirators to take control of HOPE FCU and assisted their efforts in exchange for bribes, which GROSS directed Murgio to pay to bank accounts under GROSS’s control. In total, at GROSS’s direction, Murgio and his co-conspirators paid over $150,000 to accounts under GROSS’s control. GROSS, in turn, spent proceeds from the bribes on personal expenses, including payments on his personal credit cards. With GROSS’s assistance, Murgio installed his co-conspirators, including Lebedev, on HOPE FCU’s Board of Directors and transferred Coin.mx’s banking operations to HOPE FCU.
Murgio, Lebedev, and their co-conspirators operated HOPE FCU as a captive bank for their unlawful Bitcoin exchange until at least early 2015. At that time, after discovering that substantial payment processing activity was being conducted through HOPE FCU, the National Credit Union Administration (“NCUA”) forced HOPE FCU to cease engaging in such activity, and Murgio thereafter found new, overseas payment processing channels for his unlawful business. In October 2015, in connection with the charged conduct, the NCUA placed HOPE FCU into conservatorship, and thereafter liquidated it.
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GROSS, 46, of Jackson, New Jersey, is charged with one count of corruptly accepting payments as an officer of a financial institution, which carries a maximum sentence of 30 years in prison.
Murgio and Lebedev were arrested on July 21, 2015, and are each charged with one count of conspiracy to corruptly make payments to an officer of a financial institution, which carries a maximum sentence of five years in prison. Murgio is also charged with corruptly making payments to an officer of a financial institution, which carries a maximum sentence of 30 years in prison. In addition, Murgio is charged with one count of conspiracy to operate an unlicensed money transmitting business and one count of operating an unlicensed money transmitting business, each of which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison; and one count of money laundering, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Trial is presently scheduled in this case for October 31, 2016, before the Honorable Alison J. Nathan.
Mr. Bharara praised the investigative work of the FBI and the Secret Service. He also thanked the National Credit Union Administration for their assistance with the investigation.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Eun Young Choi and Daniel S. Noble are in charge of the prosecution.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
As the introductory phrase signifies, the entirety of the text of the superseding indictment and the complaints, and the description of the indictment and complaints set forth herein, constitute only allegations, and every fact described should be treated as an allegation.