Month: June 2023

Source: United States Department of Justice News

The Justice Department announced today that it has joined with Erie County, New York, to request that the U.S. District Court for the Western District of New York terminate the consent decree regarding the Erie County Holding Center and the Erie County Correctional Facility. The county successfully achieved substantial compliance with the decree and maintained compliance for more than 18 months, as required by the decree. If the U.S. District Court grants the parties’ joint motion, it will end federal compliance monitoring and return oversight of the facilities back to the county.

“Under the consent decree, Erie County made fundamental improvements to conditions in the Erie County Holding Center and the Erie County Correctional Facility,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Although the Erie County facilities continue to face the same challenges as other jails in caring and treating for people with serious medical and mental health issues, more than a decade of hard work has significantly improved how care and treatment is provided inside these facilities. The Civil Rights Division will continue to prioritize addressing and improving conditions inside jails and prisons across the country.”

The department brought this case under the Civil Rights of Institutionalized Persons Act (CRIPA), which prohibits a pattern or practice of deprivation of constitutional rights of individuals confined to state or local government-run correctional facilities. Specifically, the department found systemic deficiencies related to suicide prevention, medical care and mental health care which resulted in preventable death of incarcerated individuals. The facilities also had fundamentally inadequate policies and practices related to the use of force and the protection of incarcerated individuals from violence and sexual misconduct. These problems were exacerbated by a flawed housing classification system.

Since the District Court entered the consent decree in August 2011, the county has made substantial progress in the facilities’ medical and mental health programs, protection of incarcerated individuals from harm, and environmental health and safety. For example:

• The county has established a Medical Review Committee that oversees the implementation of medical policies and procedures, performs quarterly quality management reviews of the sick call process and analyzes medical data to ensure access to quality care.
• The county has developed a Stabilization Treatment Unit designed for the therapeutic benefit of individuals with serious mental illness. In addition, the county has implemented provisions of the consent decree requiring constant observation and frequent assessments by mental health professionals for individuals requiring a crisis level of care, who may be at risk of suicide. This program is overseen by a constant observation treatment team, which reviews the cases of all individuals in the program as well as those recently discharged.
• The county implemented a detox program administered by a nurse practitioner with specialized training on the management of this high-risk population. The detox program recently added a Medication-Assisted Treatment program, which addresses potentially life-threatening risks for individuals experiencing opiate withdrawal.
• The county appointed a senior-level staff person to serve as the sexual abuse prevention coordinator and supervise improvements in policies, staff training and education of incarcerated individuals.
• The county improved its staff training on use of force, and all uses of force are now reported to the New York State Commission of Correction. These reports are then reviewed by an independent auditor to ensure they are consistent with accepted correctional practices.

Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt/special-litigation-section. Individuals who believe their civil rights may have been violated may file a complaint at www.civilrights.justice.gov.

Source: United States Department of Justice News

            WASHINGTON — A Missouri man pleaded guilty to a felony charge for his actions during the breach of the U.S. Capitol on Jan. 6, 2021. His actions and the actions of others disrupted a joint session of the U.S. Congress convened to ascertain and count the electoral votes related to the 2020 presidential election.

            Jerod Thomas Bargar, 37, of Centralia, Missouri, pleaded guilty yesterday, in the District of Columbia, to entering and remaining in a restricted building or grounds with a deadly or dangerous weapon, a felony. U.S. District Court Judge Reggie Walton scheduled a sentencing hearing for Nov. 3, 2023.  

            According to court documents, Bargar illegally brought a 9-millimeter semi-automatic pistol across state lines and into the District of Columbia. Bargar took the firearm to a rally near the Ellipse and then onto restricted grounds of the U.S. Capitol. Bargar was not licensed to carry a firearm in the District of Columbia. Law enforcement officers recovered the weapon at approximately 2:30 p.m. on Jan. 6, 2021, on the west side of the Capitol Building. The firearm was on the ground, in a distinctive holster that displayed an image of the American flag and the words: “We The People” written on it. The firearm contained one 9-millimeter cartridge in the chamber and approximately 15 additional cartridges in the magazine. Bargar was later linked to the gun in a law enforcement investigation.

            The charge of entering and remaining in a restricted building or grounds with a deadly or dangerous weapon carries a statutory maximum sentence of 10 years in prison, as well as financial penalties.  A federal district court judge will determine an appropriate sentence after considering the U.S. Sentencing Guidelines and other factors.

            This case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Department of Justice National Security Division’s Counterterrorism Section. Valuable assistance was provided by the U.S. Attorney’s Office for the Western District of Missouri.

            This case is being investigated by the FBI’s Washington Field Office, with valuable assistance provided by the FBI’s Kansas City Field Office, the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, the U.S. Capitol Police, and the Metropolitan Police Department.

            In the 29 months since Jan. 6, 2021, more than 1,000 individuals have been charged in nearly all 50 states for crimes related to the breach of the U.S. Capitol, including nearly 350 individuals charged with assaulting or impeding law enforcement. The investigation remains ongoing. 

            Anyone with tips can call 1-800-CALL-FBI (800-225-5324) or visit tips.fbi.gov.

Source: United States Department of Justice News

The Justice Department unsealed charges related to the 2011 hack of the cryptocurrency exchange Mt. Gox and the operation of the illicit cryptocurrency exchange BTC-e.

According to court documents, Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, both Russian nationals, are charged with conspiring to launder approximately 647,000 bitcoins from their hack of Mt. Gox. Bilyuchenko is also charged with conspiring with Alexander Vinnik to operate BTC-e from 2011 to 2017.

“This announcement marks an important milestone in two major cryptocurrency investigations. As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency. Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These indictments highlight the department’s unwavering commitment to bring to justice bad actors in the cryptocurrency ecosystem and prevent the abuse of the financial system.”

“As cyber criminals have become more sophisticated in their methods of thievery, our career prosecutors and law enforcement partners, too, have become experts in the latest technologies being abused for malicious purposes,” said U.S. Attorney Damian Williams for the Southern District of New York. “As alleged, Alexey Bilyuchenko and Aleksandr Verner thought they could outsmart the law by using sophisticated hacks to steal and launder massive amounts of cryptocurrency, a novel technology at the time, but the charges unsealed demonstrate our ability to tenaciously pursue these alleged criminals, no matter how complex their schemes, until they are brought to justice.”

“For years, Bilyuchenko and his co-conspirators allegedly operated a digital currency exchange that enabled criminals around the world – including computer hackers, ransomware actors, narcotics rings, and corrupt public officials – to launder billions of dollars,” said U.S. Attorney Ismail J. Ramsey for the Northern District of California. “The Department of Justice will work tirelessly to identify cyber criminals, no matter where they are. And Bilyuchenko and his co-conspirators will learn that the Department of Justice has long arms and an even longer memory for crimes that harm our communities.”

Southern District of New York indictment

According to court documents unsealed in the Southern District of New York (SDNY), in or about September 2011, Bilyuchenko, Verner, and their co-conspirators allegedly gained unauthorized access to the server holding the cryptocurrency wallets for Mt. Gox. At the time, Mt. Gox was the largest Bitcoin exchange in existence, servicing thousands of users worldwide. Mt. Gox stored the cryptocurrency wallets containing its customers’ bitcoin, and the corresponding private keys used to authorize bitcoin transfers from those wallets, on a computer server in Japan.

“The FBI will continue to work with our U.S. government and international partners to relentlessly pursue and disrupt malicious cyber actors wherever they may reside,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “When cyber criminals engage in fraudulent activity, such as hacking and illicitly operating cryptocurrency exchanges, it is critical that we impose cost on the bad actors and ensure they face justice.”

Bilyuchenko, Verner, and their co-conspirators allegedly used their unauthorized access to Mt. Gox’s server to fraudulently cause bitcoin to be transferred from Mt. Gox’s wallets to bitcoin addresses controlled by Bilyuchenko, Verner, and their co-conspirators. From September 2011 through at least May 2014, Bilyuchenko, Verner, and their co-conspirators allegedly caused the theft of at least approximately 647,000 bitcoins from Mt. Gox, representing the vast majority of the bitcoins belonging to Mt. Gox’s customers. Bilyuchenko, Verner, and their co-conspirators allegedly laundered the bulk of the bitcoins stolen through Mt. Gox principally through bitcoin addresses associated with accounts Bilyuchenko, Verner, and their co-conspirators controlled at two other online bitcoin exchanges.

“Cryptocurrency offers a new way for criminals to steal and launder money, but greed and deceit are nothing new,” said Chief Jim Lee of IRS Criminal Investigation (IRS-CI). “IRS-CI is specially equipped to follow the complex financial trail left by criminals, and we are dedicated to holding those accountable for crimes committed. IRS-CI is proud to stand with our law enforcement partners to announce this indictment.”

In furtherance of the money laundering scheme, in or about April 2012, Bilyuchenko, Verner, and their co-conspirators allegedly negotiated and entered into a fraudulent contract (the “Advertising Contract”) to provide purported advertising services to a Bitcoin brokerage service based in the Southern District of New York (the “New York Bitcoin Broker”). Under the guise of the Advertising Contract, in order to conceal and liquidate the bitcoins stolen from Mt. Gox, Bilyuchenko and Verner allegedly made regular requests to the owner and operator of the New York Bitcoin Broker to make large wire transfers into various offshore bank accounts, including in the names of shell corporations, controlled by Bilyuchenko, Verner, and their co-conspirators. In accordance with these requests, between in or about March 2012 and in or about April 2013, the New York Bitcoin Broker allegedly transferred more than approximately $6.6 million to overseas bank accounts controlled by Bilyuchenko, Verner, and their co-conspirators. In exchange for the wire transfers, the New York Bitcoin Broker allegedly received “credit” on Exchange-1, through which Bilyuchenko, Verner, and their co-conspirators allegedly laundered more than 300,000 of the bitcoins stolen from Mt. Gox.  The fraudulent Advertising Contract with the New York Bitcoin Broker allegedly enabled Bilyuchenko, Verner, and their co-conspirators to conceal and liquidate bitcoins stolen through the Mt. Gox Hack. 

Mt. Gox ceased operations in 2014 after the theft was revealed. 

Northern District of California indictment

According to court documents unsealed in the Northern District of California (NDCA), Bilyuchenko allegedly worked with Vinnik and others to operate the BTC-e exchange from 2011 until it was shut down by law enforcement in July 2017. During that time period, BTC-e was one of the world’s largest cryptocurrency exchanges and was one of the primary ways by which cyber criminals around the world transferred, laundered, and stored the criminal proceeds of their illegal activities.

BTC-e served over one million users worldwide, moving millions of bitcoin worth of deposits and withdrawals, and processing billions of dollars’ worth of transactions. BTC-e received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware events, identity theft schemes, corrupt public officials, and narcotics distribution rings.

“The Secret Service has a long tradition of pursuing and bringing to justice those who aim to exploit our financial systems and target innocent victims,” said Special Agent in Charge William Mancino of the U.S. Secret Service’s Criminal Investigative Division. “Working together with our local, state, and federal law enforcement partners, we will continue to investigate criminal organizations that operate in the ever-evolving cyber domain.”

“Homeland Security Investigations (HSI) continues to investigate cyber criminals illicitly operating in virtual spaces, and we are proud to have worked collaboratively with our law enforcement partners to bring these two individuals to justice,” said Acting Executive Associate Director Katrina W. Berger of HSI. “Our special agents continue to investigate transnational criminal organizations operating in emerging technologies, leveraging our broad authorities to identify, and dismantle those behind sophisticated crypto-scams.”

The SDNY indictment charges Bilyuchenko and Verner with conspiracy to commit money laundering. The NDCA indictment charges Bilyuchenko with money laundering conspiracy and operating an unlicensed money services business.

The U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit is handling the SDNY case. The FBI and IRS-CI are investigating the case and SDNY Assistant U.S. Attorney Olga I. Zverovich is prosecuting the case.

The Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California and the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are handling the NDCA case. The FBI; IRS-CI Oakland Field Office and Cyber Crime Unit in Washington, D.C.; U.S. Secret Service Criminal Investigative Division; and HSI are investigating the case. CCIPS Trial Attorney C. Alden Pelker and NDCA Assistant U.S. Attorney Claudia Quiroz, both members of the National Cryptocurrency Enforcement Team, and NDCA Assistant U.S. Attorney Katherine Lloyd-Lovett are prosecuting the case. The Justice Department’s Office of International Affairs provided invaluable assistance.

A criminal indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice News

The Departments of Justice, Commerce, State and Treasury today issued an advisory to alert the international community, private sector, and public to the threat posed by Iran’s procurement, development and proliferation of unmanned aerial vehicles (UAVs).

The advisory informs private industry of key components Iran seeks to develop its UAV program and entities involved in the procurement, production, and proliferation of Iranian UAVs. The advisory also provides recommendations to exporters, manufacturers, distributors, and financial institutions on implementing effective due diligence and internal controls – specifically, relevant to Iran’s UAV-related activities – to ensure compliance with legal requirements across the entire supply chain and to avoid unintentionally contributing to Iran’s UAV programs.

Today’s announcement complements ongoing work by the Justice Department, including its Task Force KleptoCapture and the Disruptive Technology Strike Force. Launched in March 2022, Task Force KleptoCapture enforces the sweeping sanctions, export controls, and other economic countermeasures imposed on Russia for its unprovoked military invasion of Ukraine, in order to disrupt the Russian war machine and hold its enablers accountable – including the transfer of UAVs from Iran being used against the Ukrainian people. Additionally, in February, the Justice Department and Commerce Department’s Bureau of Industry and Security (BIS) created the Disruptive Technology Strike Force, an interagency effort focused on investigating and prosecuting the illicit transfer of sensitive technologies to foreign state adversaries, including Iran.

To encourage corporate disclosures of potential criminal violations of national security laws, including sanctions and export laws, the National Security Division updated its voluntary self-disclosure policy this past March. The Justice Department has also announced the hiring of 25 new prosecutors in the National Security Division to investigate and prosecute sanctions evasion, export control violations, and similar economic crimes.

It is critical the private sector be vigilant in meeting its compliance obligations due to the threat posed by the extensive overseas network of procurement agents, front companies, suppliers, and intermediaries Iran uses to obtain UAV components – all of which employ a variety of methods to evade export controls and sanctions.

The advisory is available here.

Source: United States Department of Justice News

            WASHINGTON — A Virginia man was sentenced today for assaulting law enforcement during the breach of the U.S. Capitol on Jan. 6, 2021. His actions and the actions of others disrupted a joint session of the U.S. Congress that was in the process of ascertaining and counting the electoral votes related to the 2020 presidential election.

            Markus Maly, 49, of Fincastle, Virginia, was sentenced to 72 months in prison, 36 months of supervised release. Maly was found guilty of interfering with police during a civil disorder; two counts of assaulting, resisting or impeding certain officers using a dangerous weapon; entering and remaining in a restricted building with a dangerous weapon; disorderly or disruptive conduct in a restricted building or grounds with a dangerous weapon; engaging in physical violence in a restricted building or grounds with a dangerous weapon, all felonies; disorderly conduct in a Capitol building, and act of physical violence in a Capitol building or grounds. Maly was found guilty on Dec. 6, 2022, following a jury trial before U.S. District Court Judge Amit P. Mehta.

            According to court documents and evidence presented by the government at trial, on the afternoon of Jan. 6, Maly pointed and sprayed a chemical irritant at a line of police officers attempting to secure the area of the Lower West Terrace of the Capitol Building. He additionally assisted co-defendants Jeffrey Scott Brown and Peter Schwartz with spraying law enforcement by taking a can of spray from Schwartz and handing the can to Brown. Later in the afternoon, Maly exited the tunnel area with a riot shield and testified that he intended to take the shield home as a trophy.

            On Jan. 6, Maly messaged his girlfriend in response to her concern about violence at the Capitol, and wrote, “I know …I’ve got stories though,” and “I[t] was so fun …” The following day, he stated in one conversation on social media that, “I stood my ground and went back for seconds and thirds even.”  He also told another individual through social media, and later admitted on the stand at trial, that his participation in the events of January 6 was “fun.”

            This case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Department of Justice National Security Division’s Counterterrorism Section. Valuable assistance was provided by the U.S. Attorney’s Office for the Western District of Virginia.

            The case is being investigated by the FBI’s Richmond Field Office’s Roanoke Resident Agency, and the FBI’s Washington Field Office, which identified Maly as #324 in its seeking information photos. Valuable assistance was provided by the Metropolitan Police Department and the U.S. Capitol Police.

            In the 29 months since Jan. 6, more than 1,000 individuals have been charged in nearly all 50 states for crimes related to the breach of the U.S. Capitol, including nearly 350 individuals charged with assaulting or impeding law enforcement. The investigation remains ongoing.

            Anyone with tips can call 1-800-CALL-FBI (800-225-5324) or visit tips.fbi.gov.