Former Liberty Reserve chief technology officer sentenced to 5 years in prison

NEW YORK — The former chief technology officer for Liberty Reserve was sentenced to five years in prison Friday at the federal courthouse in Manhattan. This sentencing stems from a joint investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the United States Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Attorney's Office for the Southern District of New York.

Mark Marmilev, 35, of Brooklyn, was principally responsible for designing and maintaining the technological infrastructure for Liberty Reserve, a company that operated one of the world's most widely used digital currency services. He pleaded guilty September

2014 for conspiring to operate an unlicensed money transmitting business that he knew involved the transmission of funds derived from criminal activity.

According to allegations contained in the indictment filed against Liberty Reserve, Marmilev, and six other individual defendants, and statements made in other documents filed in Manhattan federal court and related court proceedings:

Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet's "largest payment processor and money transfer system." Liberty Reserve was created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions.

Before the U.S. government shut down Liberty Reserve in May 2013, it had more than five million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and processed tens of millions of transactions through its system, totaling more than $16 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes.

Marmilev was a longtime associate of Liberty Reserve founder Arthur Budovsky and served as Liberty Reserve's chief technology officer. In that role, Marmilev was principally responsible for designing and maintaining Liberty Reserve's technological infrastructure. Marmilev worked for Liberty Reserve for years despite knowing that the business was used extensively to process criminal transactions. Marmilev even promoted Liberty Reserve to criminals on Internet discussion forums, where, using aliases, he touted Liberty Reserve's lack of anti-money laundering policies and its tolerance for, as he put it, "shady businesses."

In addition to the prison sentence, Marmilev was sentenced to three years of supervised release and a $250,000 fine. In conjunction with the sentencing, a civil forfeiture complaint was filed Friday seeking the forfeiture of Gourmet Boutique, a retail grocery business located in Brooklyn, and the forfeiture of Marmilev's interest in Grimaldi's, a pizzeria located in the Coney Island area of Brooklyn; according to the complaint, Marmilev purchased these business interests using more than $1.6 million in Liberty Reserve proceeds.

The U.S. Attorney for the Southern District of New York, Prett Bharara praised the outstanding work of Homeland Security Investigations, the United States Secret Service, and the Internal Revenue Service-Criminal Investigation, which worked together in this case as part of the Global Illicit Financial Team. Bharara also thanked the United States Secret Service's New York Electronic Crimes Task Force for their extraordinary assistance with the investigation. Additionally, Bharara specially thanked all the international law enforcement agencies that assisted in the investigation, in particular, the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor's Office.

The charges contained in the indictment against certain of Marmilev'ss co-defendants remain pending and are merely accusations. Those defendants are presumed innocent unless and until proven guilty.