E-Processor tech exec sent to jail

Online gambling industry observers interested in the sudden disappearance of e-processor Liberty Reserve last year now know what happened to the company following a media statement from the US Justice Department.

The Department advised Friday that Mark Marmilev (35), the chief technical officer at Liberty Reserve, had been jailed for five years for conspiring to operate an unlicensed money transmitting business that he knew involved the transmission of funds derived from criminal activity.

The Costa Rica-registered company was shut down by the feds in May 2013, and other defendants in the case are still being investigated.

DoJ officials claim that Marmilev was principally responsible for designing and maintaining the technological infrastructure for Liberty Reserve, which operated one of the world’s most widely used digital currency services.

Marmilev pled guilty in September 2014 before U.S. District Judge Denise L. Cote, who also imposed sentence Friday.

Assistant Attorney General Leslie R. Caldwell said: “Marmilev used his tech savvy to create a virtual currency business that was used extensively by criminals throughout the world. He and Liberty Reserve’s founders boasted they were outside the reach of U.S. law enforcement, and he couldn’t have been more wrong.

“His prison sentence shows that those who hide their illegal activities from the scrutiny of the Justice Department will be caught and will go to prison.”

Allegations contained in the Indictment filed against Liberty Reserve indicate that Marmilev and six other individual defendants were investigated.

Justice officials claim that the company was “…created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes.”

Before being shut down Liberty Reserve 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.

Marmilev was reportedly a longtime associate of Liberty Reserve founder Arthur Budovsky and served as the company’s chief technology officer, often promoting the company’s lack of anti-money laundering measures on Internet discussion forums.

In addition to his prison sentence, Brooklyn, New York-based Marmilev was sentenced to three years of supervised release and a $250,000 fine. The government is also seeking a civil forfeiture order on restaurant and fast food businesses in which Marmilev is alleged to have invested $1.6 million.

The DoJ statement indicates that the Liberty Reserve shut down was achieved by different US government departments working together, and included the United States Secret Service, the Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, all collaborating as part of the Global Illicit Financial Team.

Other entities, several on an international basis, involved in the investigation included the New York Electronic Crimes Task Force, the Judicial Investigation Organisation 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 further prosecution of the case is being handled by the DoJ’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit.