Father Pleads Guilty in Bitcoin Case Tied to Hack

     MANHATTAN (CN) — A Florida father pleaded guilty Thursday to leading investigators off the scent of his son’s alleged front company for an illegal bitcoin exchange, owned by an Israeli linked to a hack on JPMorgan.
     Michael Murgio, a 66-year-old from Florida, is the father of Anthony Murgio, who was arrested for operating Coin.mx in July 2015.
     The younger Murgio was charged months later in a scheme that Manhattan U.S. Attorney Preet Bharara called a “brave new world of hacking for profit” that could bode the “next frontier of securities fraud.”
     The Wall Street Journal reported at the time that its parent company Dow Jones was a victim, along with JPMorgan, E-Trade Financial and Scottrade, and prosecutors said that the perpetrators used the stolen information to make tens of millions of dollars in stock fraud proceeds.
     Prosecutors say that Coin.mx laundered some of these funds and exchanged at least $1.8 million in bitcoins for tens of thousands of customers.
     Israeli nationals Gery Shalon and Ziv Orenstein were charged in that scheme along with U.S. citizen Joshua Aaron.
     Prosecutors say that the younger Murgio helped operate Coin.mx with fellow Florida resident Yuri Lebedev, and his father pleaded guilty today to a more tangential role in the scheme.
     In order to land accounts at two major banks, Murgio and Lebedev created a front company called the “Collectables Club,” which supposedly traded cars, coins, stamps, sports memorabilia, music instruments and other items, according to their criminal complaints.
     They later installed themselves on the board of directors of a small New Jersey credit union that catered to low-income residents as a “captive bank for their unlawful business,” prosecutors say.
     Trevon Gross, a New Jersey pastor and former chairman of Helping Other People Excel Federal Credit Union, is also charged with the Murgios and Lebedev.
     Neither of the Murgios is accused of participating in the hacking crimes.
     At a roughly 30-minute hearing on Thursday afternoon, Michael Murgio acknowledged that he sent a letter to the National Credit Union Administration falsely claiming that this club was based in New Jersey.
     He admitted that the entity was actually based in Florida.
     “When I did this, I knew what I was doing was wrong,” he told U.S. District Judge Alison Nathan.
     Michael Murgio, whose plea opens him up to a maximum of 16 months imprisonment, is slated for sentencing on Jan. 27, 2017.
     Anthony Murgio, Lebedov, Gross, Shalon and Orenstein have pleaded not guilty.
     The first three of these men are scheduled to face trial on Feb. 6.
     The U.S. Attorney’s office declined to comment.

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