US court imprisons Bulgarian owner of Bitcoin exchange for money laundering

Bulgarian national Rossen Iossifov, who was convicted by a federal jury in the United States for his role in a transnational and multimillion-dollar scheme to defraud American victims was sentenced on January 12 to 121 months in prison, the US Department of Justice said in a statement.

Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division, US Attorney Robert M. Duncan Jr. of the Eastern District of Kentucky, and Resident Agent in Charge John Oldham of the US Secret Service made the announcement, the statement said.

US District Court Judge Robert E. Weir sentenced Iossifov, 53, formerly of Bulgaria, for conspiracy to commit a Racketeer Influenced and Corrupt Organizations Act (RICO) offence and conspiracy to commit money laundering.

According to trial evidence, Iossifov owned and managed RG Coins, a cryptocurrency exchange headquartered in Sofia, Bulgaria.

According to the evidence at trial, Iossifov knowingly and intentionally engaged in business practices designed to both assist fraudsters in laundering the proceeds of their fraud and to shield himself from criminal liability.

At least five of Iossifov’s principal clients in Bulgaria were Romanian scammers, who belonged to a criminal enterprise known in court records as the Alexandria (Romania) Online Auction Fraud (AOAF) Network.

More specifically, according to court documents and evidence presented at trial, Iossifov and his co-conspirators participated in a criminal conspiracy that engaged in a large-scale scheme of online auction fraud that victimised at least 900 Americans, the Justice Department statement said.

Romania-based members of the conspiracy posted false advertisements to popular online auction and sales websites — such as craigslist and eBay — for high-cost goods (typically vehicles) that did not actually exist.

Once victims were convinced to send payment, the conspiracy engaged in a complicated money laundering scheme wherein domestic associates would accept victim funds, convert these funds to cryptocurrency, and transfer proceeds in the form of cryptocurrency to foreign-based money launderers. Iossifov was one such foreign-based money launderer who facilitated this final step in the scheme.

According to evidence at trial, Iossifov designed his business to cater to criminal enterprises by, for instance, providing more favourable exchange rates to members of the AOAF Network.

Iossifov also allowed his criminal clients to conduct cryptocurrency exchanges for cash without requiring any identification or documentation to show the source of funds, despite his representations to the contrary to the major bitcoin exchanges that supported his business, the statement said.

Evidence submitted during trial and his sentencing hearing revealed that Iossifov laundered nearly $5 million in cryptocurrency for four of these five scammers in a period of less than three years. This represented over $7 million in funds defrauded from American victims. In return, Iossifov made over $184 000 in proceeds from these transactions.

Iossifov was convicted after a two-week trial in front of Judge Weir in Frankfort, Kentucky in September 2020.

Under federal law, Iossifov must serve 85 per cent of his prison sentence.

Thus far, 17 members of the AOAF Network have been convicted for their role in this scheme, including Iossifov.

Seven others have been sentenced, including Livui-Sorin Nedelcu to 82 months in prison, Marius Dorin Cernat to 50 months in prison, Stefan Alexandru Paiusi to 31 months in prison, Eugen Alin Badea to 40 months in prison, Florin Arvat to 30 months in prison, Alin Ionut Dobric to 37 months in prison, and Austin Edward Nedved to 96 months in prison. Three members are fugitives.

The investigation was conducted by the US Secret Service, Kentucky State Police, Lexington Police Department, IRS Criminal Investigation and US Postal Inspection Service, and supported by the Justice Department’s Organized Crime Drug Enforcement Task Force (OCDETF) and the International Organized Crime Intelligence and Operations Center (IOC-2).

The statement said that assistance was provided by the Romanian National Police (Service for Combating Cybercrime), the Romanian Directorate for Investigating Organised Crime and Terrorism (Agency for Prosecuting Organised Crime), and the Supreme Prosecutor’s Office of Cassation of the Republic of Bulgaria.

The Justice Department’s Office of International Affairs and Money Laundering and Asset Recovery Section of the Criminal Division provided significant support, the statement said.

(Photo: Jason Morrison)

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