A Santa Monica man allowed his virtual currency cash exchange company to help scammers and drug traffickers launder millions of dollars in criminal proceeds through his businesses, including a Santa Clarita Bitcoin kiosk. The Justice Department recently announced that he has agreed to plead guilty to violating federal law. .
Charles James Randle, 33, agreed to plead guilty to a single information charging him with failing to maintain an effective anti-money laundering (AML) program. This crime carries a statutory maximum penalty of five years in federal prison.
The information and plea agreement were filed today in U.S. District Court in downtown Los Angeles. Randle is expected to formally plead guilty in the coming weeks.
According to the plea agreement, Randle owned and operated a virtual currency money services business ultimately known as Digital Coin Strategies LLC from October 2017 to July 2021. The company offered virtual currency to cash exchange services for a fee.
Randle meets anonymous customers in person to complete transactions, controls and operates a network of automated kiosks in Los Angeles, Orange, and Riverside counties that exchange cash and Bitcoin for each other, and executes Bitcoin. We provided cryptocurrency exchange services in a variety of ways, including: -Cash transactions to an unknown individual who mailed large sums of U.S. currency to him, including to a post office box he controlled.
Randall advertises his business on various websites and falsely claims that his business is a “fully compliant money services business” registered with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. I managed the company’s website. In fact, as Mr. Rundle admitted in his plea agreement, he is not legally required to comply with federal law by facilitating suspicious currency transactions and taking steps to conceal them from law enforcement, including failing to file required currency transaction reports or suspicious activity. and repeatedly violated the company’s AML policies. I will report it.
For example, Randall had relationships with anonymous or near-anonymous individuals, including people whom Randall knew only as “Puppet Sharif,” “White Jetta,” “Arvvuv,” “Aaaah,” and “Yogurt Monster.” and frequently conducted face-to-face cash transactions in excess of $10,000. ” and “Hood.” As part of his plea agreement, Randle said that from October 2020 to January 2021, he transferred a total of $273,940 in cash in exchange for Bitcoin without requesting his name, ID, Social Security number or any other information. He admitted engaging in three specific transactions of exchanging. Buyer or source of funds being exchanged. Such transactions violate the Bank Secrecy Act and his company’s AML policies, which require, among other things, the customer’s name, address, and social security number to verify the identity of customers engaging in transactions over $9,999. , a verified phone number, and a copy of the customer’s official government identification.
Exchanging Bitcoin for cash sent by a stranger in the mail
In addition to running a cryptocurrency exchange business, Randle also conducted hundreds of Bitcoin-to-cash transactions after receiving large sums of cash in the mail from anonymous individuals. In a typical transaction, an anonymous individual uses an encrypted platform to send a text message to Randle, informing him that a package containing cash has been sent to a location in or around Los Angeles controlled by Randle. When Randall received the parcel, he counted the money and transferred the same amount of Bitcoin, minus fees, to a digital wallet controlled by the customer. As with any face-to-face transaction, Randle did not perform any due diligence regarding the person sending the large amount of cash, the source of the funds being exchanged, or the purpose of the transaction.
When Randall received the package, the cash was hidden inside children’s books, hidden inside fake birthday and Christmas presents, buried inside puzzle pieces, and wrapped in multiple magazines. In many cases, the items were packaged in a suspicious manner, such as being damaged or damaged.
On June 5, 2019, FBI agents questioned Rundle about fraudulent proceeds that were mailed to a post office box controlled by Rundle. Two days later, Rundle sent a text message to his customers saying that due to an issue, they were ‘pausing’ the exchange of cash parcels for cryptocurrencies. [law enforcement]” But less than a week later, Randle resumed his cash parcel operations after that same anonymous customer asked Randle if he could exchange $10,000 in cash for Bitcoin.
Mr. Randle’s failure to comply with Bank Secrecy Act requirements, including maintaining an effective AML program, resulted in criminals using his business to launder millions of dollars in criminal proceeds. he admitted. For example, from June 2018 to early 2020, Randle received cash and bits sent to him by a New Jersey resident who was led to believe that her grandson was facing criminal charges for killing an elderly woman in a traffic accident. exchanged coins. The money sent by the victim was to be used to resolve the legal issues of the victim’s grandson. Based on these lies, the victims depleted their savings and retirement accounts. Although Mr. Rundle was not involved in the fraud, his business converted victims’ cash into cryptocurrency without conducting customer due diligence or investigating the source of the funds received. and transferred it to various digital wallets.
illegal bitcoin kiosk transactions
Because Randle’s poor AML practices also allowed criminals to structure and launder funds through his Bitcoin kiosk. Specifically, Rundle operated numerous Bitcoin kiosks located in malls, gas stations, and convenience stores in cities such as Santa Clarita, Los Angeles, Glendale, Huntington Beach, Santa Ana, and Riverside.
However, Randall’s kiosk setup allowed customers to structure their funds to avoid currency reporting requirements by creating numerous accounts and making consecutive transactions of up to $3,000. He also set up one or more of his “test” accounts containing no customer information, which customers could use to complete kiosk transactions.
In September 2020, Randle hired a head of compliance for its digital coin strategy. Randle ignored the individual’s advice to stop using the “test” account for customer transactions at the Bitcoin kiosk. Mr. Randle also continued to conduct face-to-face transactions despite warnings from compliance officers that there was an increased risk that the cash and Bitcoin he received were obtained from illicit sources.
The FBI and the Department of Homeland Security Investigations investigated this matter with assistance from the Federal Deposit Insurance Corporation Office of Inspector General and the U.S. Postal Inspection Service.
Assistant U.S. Attorney Ian V. Ianniello of the General Crimes Division and Assistant U.S. Attorney James E. Doctorman of the Asset Forfeiture and Recovery Division are prosecuting the case.
