U.S. District Courtroom for the District of Columbia
The hipster duo accused of laundering billions of dollars in stolen cryptocurrency have been at one level contemplating beginning a brand new life in Japanese Europe and even had “a short dialog with one another in Russian” after they have been arrested on Feb. 8, federal prosecutors stated Thursday in a court docket submitting arguing towards releasing the pair on bond.
Bolstering their declare, the submitting says FBI brokers found a large number of suspicious gadgets within the couple’s Wall Road residence, together with books with secret compartments made by hollowing out the pages.
However protection legal professionals for self-described “Crocodile of Wall Road” Heather Morgan, 31, and Ilya “Dutch” Lichtenstein, 34, insist they gained’t turn out to be fugitives, submitting their very own transient that claims the 2 are desperate to turn out to be mother and father and wish to preserve entry to “a number of” embryos they “beforehand froze at a hospital in New York in anticipation of beginning a household collectively.”
Morgan, a tech entrepreneur, erstwhile Forbes contributor, and aspiring rapper below the moniker “Razzlekhan,” and Lichtenstein, who additionally has a background in tech, are charged with laundering some $4.5 billion price of Bitcoin pilfered in a 2016 hack. Courtroom paperwork lay out a classy scheme by which Morgan and Lichtenstein allegedly tried to launder the funds by means of numerous numbers of convoluted transactions between numerous pseudonymous accounts. Nonetheless, a years-long investigation by particular brokers with the IRS, FBI, and the Division of Homeland Safety was in a position to hint the cash movement on to the newlyweds, who have been in a position to money out about $2.9 million of the illicit Bitcoin earlier than getting caught, prosecutors say.
Investigators nonetheless haven't been in a position to entry no less than 24 accounts allegedly managed by Morgan and Lichtenstein, containing about 7,500 Bitcoin, price roughly $328 million, in keeping with the federal government.
In a letter to Chief Decide Beryl Howell of Washington, D.C., District Courtroom, protection legal professional Samson Enzer stated Morgan, 31, “can solely conceive by means of in vitro fertilization as a result of she suffers from endometriosis. The couple would by no means flee from the nation on the threat of shedding entry to their capacity to have kids, which they have been discussing having this 12 months till their lives have been disrupted by their arrests on this case.”
Nonetheless, prosecutors contend that “no situation or mixture of circumstances can reliably guarantee the looks of such subtle defendants with the means to flee and ample incentive to take action.”
“The defendants are believed to have important further property, together with the remaining a whole bunch of thousands and thousands of dollars’ price of digital forex stolen within the hack that has not but been recovered,” the federal government’s submitting states. “The defendants even have entry to quite a few fraudulent identities and paperwork bought on the darknet, and the flexibility to simply purchase extra. Lichtenstein is a twin Russian citizen. The defendants have established monetary accounts in Russia and Ukraine, and seem to have been organising a contingency plan for a life in Ukraine and/or Russia previous to the COVID-19 pandemic.”
Below the heading “Suspicious Ukraine Exercise,” the submitting describes a month-long journey Morgan and Lichtenstein took to Ukraine in August 2019.
“The couple’s actions in Ukraine at occasions seem pulled from the pages of a spy novel,” it says.
U.S. District Courtroom for the District of Columbia
Whereas they have been within the nation, Lichtenstein “created and/or modified quite a few information in his cloud storage account that contained notes about cash laundering and/or false identification documentation with Ukrainian connections,” the submitting alleges. One of many folders was labeled “personas,” with subfolders containing Russian and Ukrainian identification paperwork in different individuals’s names, the submitting says.
One doc titled “distributors” allegedly listed “descriptions of a number of darknet distributors and contains notes relating to supply choices to Ukraine,” the submitting goes on. “One vendor is marked as ‘can trade for money in UA Kiev.’” One other included a observe to “Ask about supply to Ukraine, the way it works,” and a 3rd had the identify of a vendor providing high-quality counterfeit Ukrainian passports, in keeping with the federal government.
In a file marked “courier,” investigators say they discovered what gave the impression to be monitoring numbers for packages despatched by the darknet distributors listed within the “distributors” doc. A observe hooked up to at least one allegedly learn, “Financial institution debit playing cards on drops, can assure 12 months. Can also make playing cards for our scans,” together with the notation, “good opsec!” Morgan and Lichtenstein had no less than one cargo delivered to a boutique resort in Kyiv the place they weren’t staying however which was situated not removed from the Hilton, the place they have been.
The feds say they've gathered reams of further proof suggesting Morgan and Lichtenstein supposed to go on the run, corresponding to a doc titled “ukraine_package,” written in Russian, which defined ‘easy methods to anonymously obtain a parcel in Ukraine.’” There have been particulars of the positioning of safety cameras in Ukrainian submit places of work, credentials for a number of e mail accounts, and a photograph of Morgan holding a Kyivstar SIM card.
If the 2 have been to flee to Russia, prosecutors stated Lichtenstein “might escape prosecution in america indefinitely,” as Russia “doesn't extradite its personal residents.” As well as, “Morgan’s marriage to Lichtenstein would enable her to qualify for Russian citizenship as effectively… The information from Lichtenstein’s cloud storage account point out that Lichtenstein has entry to quite a few accounts at Russian monetary establishments and false Russian id paperwork for each female and male personas.”
Morgan and Lichtenstein’s legal professionals have been making an attempt—to this point, unsuccessfully—to point out that a $3 million bond for Morgan and a $5 million bond for Lichtenstein, each secured partially by their mother and father’ respective houses, can be enough incentive to not skip city. Mixed with dwelling detention and GPS ankle screens, their continued presence in court docket is all however assured, the protection maintains.
On the contrary, say prosecutors, though a mixed $8 million is “important by any regular measure,” the federal government argues that the sum “is dwarfed by the worth of the funds obtainable to the defendants in the event that they selected to flee.”
“The provide by the defendants’ mother and father to safe the defendants’ bond with their very own houses is beneficiant, however the (unspecified) worth of such property is presumably trivial compared to the a whole bunch of thousands and thousands of dollars in cryptocurrency property to which the defendants have entry,” the submitting states, including, “They may simply purchase their mother and father new houses after fleeing to Ukraine or Russia, or organising a brand new life for themselves anyplace with their newly bought identities.”
Neither Morgan nor Lichtenstein has been notably cooperative with authorities up so far, prosecutors stated. The month earlier than their arrest, the FBI executed a search warrant of Morgan and Lichtenstein’s residence. However the couple stated they didn’t wish to be dwelling whereas brokers combed by means of their belongings.
“Brokers permitted Morgan to retrieve the [couple’s] cat, which was hiding below the mattress,” the federal government’s submitting says. “Whereas Morgan was crouched subsequent to the mattress calling to the cat, she positioned herself subsequent to the nightstand, which was nonetheless holding one in all her telephones. She then reached up and grabbed her cellular phone from the nightstand and repeatedly hit the lock button. It appeared that Morgan was making an attempt to lock the cellphone in a manner that will make it tougher for legislation enforcement to go looking the cellphone’s contents. Legislation enforcement needed to wrest the cellphone from her arms.”
FBI brokers seized, amongst different issues, greater than 50 digital units, in extra of $40,000 money, and a bag labeled “Burner Cellphone,” in keeping with the submitting. Additionally they might have additional cash stashed away, prosecutors imagine: The 2 used among the stolen Bitcoin to purchase greater than 70 one-ounce gold cash from numerous sellers, in keeping with the submitting. But, brokers “didn't find a single gold coin through the search of Lichtenstein and Morgan’s residence or their storage unit,” it says.
On Thursday afternoon, Howell ordered Morgan and Lichtenstein transported from New York to D.C., for a follow-up bail listening to scheduled for Valentine’s Day. Their legal professionals didn't reply to The Each day Beast’s request for remark.