Geoffrey S. Berman, the United States Attorney for the
Southern District of New York, William F. Sweeney Jr., the Assistant
Director-in-Charge of the New York Field Office of the Federal Bureau of
Investigation (“FBI”), and Jonathan D. Larsen, Acting Special Agent in Charge
of the New York Office of the Internal Revenue Service, Criminal Investigation
Division (“IRS-CI”), announced the arrest today of REGINALD FOWLER on charges
of bank fraud and operating an unlicensed money transmitting business. Bank fraud charges were also unsealed against
co-conspirator RAVID YOSEF, who remains at large. FOWLER and YOSEF, who worked for several
related companies that provided fiat-currency banking services to various
cryptocurrency exchanges (the “Crypto Companies”), allegedly participated in a
conspiracy in which FOWLER made numerous false and misleading statements to
banks to open bank accounts that were used to receive deposits from individuals
purchasing cryptocurrency, and in which FOWLER and YOSEF falsified electronic
wire payment instructions to conceal the true nature of a voluminous
cryptocurrency exchange business.
Hundreds of millions of dollars flowed through the Crypto Companies’
accounts from banks located across the globe. FOWLER will be presented today in
federal court in Phoenix, Arizona. The
case is assigned to U.S. District Judge Andrew L. Carter Jr.
U.S. Attorney Geoffrey S. Berman said: “Reginald Fowler and Ravid Yosef allegedly
ran a shadow bank that processed hundreds of millions of dollars of unregulated
transactions on behalf of numerous cryptocurrency exchanges. Their organization allegedly skirted the
anti-money laundering safeguards required of licensed institutions that ensure
the U.S. financial system is not used for criminal purposes, and did so through
lies and deceit. Thanks to the
investigative work of the FBI and the IRS-CI, they will be prosecuted for their
actions.”
FBI Assistant Director William F. Sweeney Jr. said: “Lying to banks and skirting the regulations
put in place by the banking industry is a violation of federal law, a crime
both Fowler and Yosef are charged with today.
Taking it one step further, as alleged, Fowler himself directed the ebb
and flow of significant amounts of money to and from these various bank
accounts, despite the fact that he was not licensed to do so. May this be a reminder to all that there are
consequences to engaging in fraudulent behavior and risky business practices.”
IRS-CI Acting Special Agent in Charge Jonathan D. Larsen
said: “As this indictment shows, IRS-CI
will continue to follow the money, no matter if it's virtual currency, to bring
criminals to justice. This should serve as a warning to cyber-criminals who
think they can hide behind virtual currency that IRS-CI is fully committed to
unraveling these schemes.”
According to the allegations in the Indictment unsealed
today[1]:
In or about 2018, REGINALD FOWLER, RAVID YOSEF, and others
operated the Crypto Companies, and FOWLER opened and maintained bank accounts
at various banks around the world on behalf of the Crypto Companies. One of the Crypto Companies markets itself as
a company that allows clients to deposit and withdraw government-backed, or
“fiat,” currency to numerous crypto
exchanges, which are platforms where people can buy and sell cryptocurrency or
“virtual currency.” Users of one
particular crypto exchange (“Exchange-1”) deposited government-backed currency
into a bank account of the Crypto Companies (“Account-1”) that was opened and
maintained by FOWLER at a specific international bank (“Bank-1”). Although
Exchange-1 advertised itself as providing required “know your customer” and
anti-money laundering verification services in connection with Exchange-1’s
platform, this was false with respect to the shadow banking services provided
by FOWLER and YOSEF.
As described in the Indictment, FOWLER and YOSEF conspired
to, and did, misrepresent the nature of the Crypto Companies’ business and
falsely stated to Bank-1 that Account-1 would be used to process real estate
investments. These misrepresentations
also appeared on wire transfer instructions sent out from bank accounts opened
and maintained by FOWLER and YOSEF, among others, on behalf of the Crypto
Companies. Records from Bank-1 reveal
that dozens of individuals from various countries wired millions of dollars
into Account-1, and, at the same time, Account-1 also wired millions of dollars
to other individuals and companies. Even
though FOWLER was receiving and directing these monetary transactions, neither
he nor any of the Crypto Companies were ever licensed as a money transmitting
business, as required by federal law.
*
* *
FOWLER, 60, of Chandler, Arizona, and YOSEF, 36, of Tel
Aviv, Israel, are each charged with one count of bank fraud and one count of
conspiracy to commit bank fraud, each of which carries a maximum sentence of 30
years in prison. FOWLER is also charged
with one count of operating an unlicensed money transmitting business and one
count of conspiracy to do the same, each of which carries a maximum sentence of
five 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.
Mr. Berman praised the outstanding investigative work of
Special Agents from the FBI New York Money Laundering Investigations Squad and
Special Agents from the IRS-CI.
The prosecution of this case is being handled by the
Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Sheb Swett,
David Zhou, and Jessica Fender 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.
[1] As the introductory phrase signifies, the entirety of
the text of the Indictment and the description of the Indictment set forth
below constitute only allegations, and every fact described should be treated
as an allegation.
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