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Monday, March 30, 2015

Former Federal Agents Charged With Bitcoin Money Laundering and Wire Fraud



Agents Were Part of Baltimore’s Silk Road Task Force

Two former federal agents have been charged with wire fraud, money laundering and related offenses for stealing digital currency during their investigation of the Silk Road, an underground black market that allowed users to conduct illegal transactions over the Internet.  The charges are contained in a federal criminal complaint issued on March 25, 2015, in the Northern District of California and unsealed today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division, Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) San Francisco Division, Special Agent in Charge Michael P. Tompkins of the Justice Department’s Office of the Inspector General Washington Field Office and Special Agent in Charge Lori Hazenstab of the Department of Homeland Security’s Office of the Inspector General in Washington D.C. made the announcement.

Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration (DEA), and Shaun W. Bridges, 32, of Laurel, Maryland, was a Special Agent with the U.S. Secret Service (USSS).  Both were assigned to the Baltimore Silk Road Task Force, which investigated illegal activity in the Silk Road marketplace.  Force served as an undercover agent and was tasked with establishing communications with a target of the investigation, Ross Ulbricht, aka “Dread Pirate Roberts.”  Force is charged with wire fraud, theft of government property, money laundering and conflict of interest.  Bridges is charged with wire fraud and money laundering.

According to the complaint, Force was a DEA agent assigned to investigate the Silk Road marketplace.  During the investigation, Force engaged in certain authorized undercover  operations by, among other things, communicating online with “Dread Pirate Roberts” (Ulbricht), the target of his investigation.  The complaint alleges, however, that Force then, without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain.  In doing so, the complaint alleges, Force used fake online personas, and engaged in complex Bitcoin transactions to steal from the government and the targets of the investigation.  Specifically, Force allegedly solicited and received digital currency as part of the investigation, but failed to report his receipt of the funds, and instead transferred the currency to his personal account.  In one such transaction, Force allegedly sold information about the government’s investigation to the target of the investigation.  The complaint also alleges that Force invested in and worked for a digital currency exchange company while still working for the DEA, and that he directed the company to freeze a customer’s account with no legal basis to do so, then transferred the customer’s funds to his personal account.  Further, Force allegedly sent an unauthorized Justice Department subpoena to an online payment service directing that it unfreeze his personal account.

Bridges allegedly diverted to his personal account over $800,000 in digital currency that he gained control of during the Silk Road investigation.  The complaint alleges that Bridges placed the assets into an account at Mt. Gox, the now-defunct digital currency exchange in Japan.  He then allegedly wired funds into one of his personal investment accounts in the United States mere days before he sought a $2.1 million seizure warrant for Mt. Gox’s accounts.    

Bridges self-surrendered today and will appear before Magistrate Judge Maria-Elena James of the Northern District of California at 9:30 a.m. PST this morning.  Force was arrested on Friday, March 27, 2015, in Baltimore and will appear before Magistrate Judge Timothy J. Sullivan of the District of Maryland at 2:30 p.m. EST today.

The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General and the Department of Homeland Security Office of the Inspector General in Washington D.C.  The Treasury Department’s Financial Crimes Enforcement Network also provided assistance with the investigation of this case.  The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section.

Saturday, March 28, 2015

Former Independence, Missouri, Police Officer Indicted on Federal Civil Rights and Obstruction of Justice Charges



Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division and U.S. Attorney Tammy Dickinson of the Western District of Missouri announced that a federal grand jury has returned a four-count indictment against former Independence, Missouri, police officer Timothy Runnels for violating the constitutional rights of a minor who was in his custody and obstructing the subsequent investigation into the incident.

According to the indictment, Runnels continuously deployed a Taser against the minor while the minor was on the ground and not posing a threat to Runnels or others.  The indictment also charges that Runnels deliberately dropped the minor headfirst onto the ground while the minor was restrained and not posing a threat to Runnels or others.  The indictment alleges that the minor sustained bodily injury as a result of Runnels’ actions and, with respect to the first count, that the offense involved the use of a dangerous weapon.  The indictment also charges Runnels with two counts of obstruction of justice for filing a false police report concerning the incident and for making a false statement to Independence Police Department investigators regarding the amount of force that he used against the minor.

If convicted, Runnels faces a statutory maximum sentence of 10 years in prison and a fine of $250,000 for each of two charged counts of civil rights violations, and a statutory maximum sentence of 20 years in prison and a fine of $250,000 for one count of obstruction of justice by submitting a false police report and one count of providing misleading information to Independence Police Department investigators. 

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the FBI’s Kansas City Division and is being prosecuted by Trial Attorney Shan Patel of the Civil Rights Division and First Assistant U.S. Attorney David Ketchmark of the Western District of Missouri.

Friday, March 27, 2015

New York City Police Officer and Customs and Border Protection Officer sentenced to Three Years in Prison for International Arms Trafficking



Defendants Used Law Enforcement Credentials to Obtain Military-Grade Assault Rifles, Sniper Rifles, and Other High-Powered Weapons for Smuggling to the Philippines

Former New York City Police Officer Rex Maralit and his brother Wilfredo Maralit, a Customs and Border Protection Officer assigned to Los Angeles International Airport, were sentenced earlier today at the federal courthouse in Brooklyn to three years’ imprisonment to be followed by three years of supervised release for their roles in an illegal scheme to smuggle high-powered assault rifles, sniper rifles, pistols, and firearms accessories from the United States to the Philippines. The defendants pleaded guilty on June 12, 2014, before United States District Judge Allyne R. Ross to violating the Arms Export Control Act. A third brother, Ariel Maralit, resides in the Philippines and remains a fugitive.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Assistant Attorney General John P. Carlin; Raymond R. Parmer, Jr., Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), New York; Craig W. Rupert, Special Agent in Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office; Delano A. Read, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), New York Field Division; and William J. Bratton, Commissioner, New York City Police Department (NYPD).

“These defendants violated their sworn duties to uphold the law, abusing their positions of trust to profit from the illegal export of extremely dangerous weapons,” stated Ms. Lynch. “Today’s sentences send a powerful message that criminal conduct by police officers, federal agents, and their confederates will not be tolerated, and that no one, least of all those entrusted to protect the communities and the country they serve, is above the law.” Ms. Lynch expressed her
grateful appreciation to HSI, DCIS, ATF, and the NYPD’s Internal Affairs Bureau, which worked closely together to investigate the case, and to the U.S. Attorney’s Office for the Central District of California and the U.S. Attorney’s Office for the District of New Jersey for their assistance.

Between January 2009 and September 2013, the defendants exported a variety of military-style firearms, along with high-capacity magazines and accessories for those weapons, from the United States to the Philippines where they were sold to overseas customers. Both Rex and Wilfredo Maralit used their official credentials and status to obtain and ship the weapons without first obtaining a license from the U.S. State Department. The firearms included the Barrett .50 caliber long-range semi-automatic rifle, the FN “SCAR” assault rifle, and high-capacity FN 5.7mm semi-automatic carbines and pistols which fire a cartridge that was specifically designed to penetrate body armor.

The Arms Export Control Act requires exporters of firearms to first obtain the approval of the United States State Department before shipping weapons overseas. Similarly, dealing in firearms is regulated by the ATF, which requires gun dealers to first obtain a federal firearms license before engaging in such a business.

The government’s case is being prosecuted by Assistant United States Attorneys Seth DuCharme and Sam Nitze, with assistance from Trial Attorney David Recker of the Justice Department’s National Security Division.

The Defendants:
REX G. MARALIT
Lawrenceville, New Jersey
Age: 46

WILFREDO MARALIT
Garden Grove, California
Age: 49