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Saturday, July 13, 2024 | Back issues
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Liberty Reserve IT Manager Gets Five Years

(CN) - The chief technology officer of an Internet money-laundering service will spend five years in prison for his role in the operation, the Justice Department said Friday.

Mark Marmilev, 35, pleaded guilty to conspiracy for his role in designing and maintaining Liberty Reserve, a company that operated one of the world's most widely used digital currency services until the U.S. government shut it down in 2013.

Liberty Reserve had billed itself as the Internet's "largest payment processor and money transfer system," but was actually created to help criminals conduct illegal transactions anonymously and launder money, the Justice Department said.

When the government cracked down, Liberty Reserve had over 5 million users worldwide, including 600,000 accounts tied to users in the United States. The operation processed transactions totaling over $16 billion - the proceeds from credit card fraud, identity theft, investment fraud, computer hacking, child pornography, drug trafficking and other crimes, according to the Justice Department.

Marmilev got involved with Liberty Reserve through his association with its founder, Arthur Budovsky. As the company's chief technology officer, Marmilev built and maintained the system for years and even touted the company's tolerance for "shady business" on Internet forums.

Budovsky pleaded not guilty to running Liberty Reserve in October, after losing an 18-month extradition battle.

"Mark Marmilev spent years designing and maintaining the technological architecture that allowed Liberty Reserve to operate a global payment processor and money transfer system that catered to criminals," said Manhattan U.S. Attorney Preet Bharara. "Now, he will pay for that crime with five years in federal prison."

Assistant Attorney General Leslie R. Caldwell added: "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."

In addition to the five-year prison sentence, U.S. District Judge Denise Cote also sentenced Marmilev to three years' probation and ordered him to pay a $250,000 fine.

The Justice Department also filed a civil forfeiture complaint against Marmilev to seize his retail grocery business and an interest in a pizzeria, both in Brooklyn - both purchased with his illegal gains from Liberty Reserve, the government said.

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