Ex-tech officer at indicted money exchange pleads guilty to U.S. charge

Reuters News
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Posted: Sep 11, 2014 6:13 PM

By Bernard Vaughan and Joseph Ax

NEW YORK (Reuters) - A former technology officer at indicted former digital currency exchange Liberty Reserve pleaded guilty on Thursday in New York to a federal charge of conspiring to operate an unlicensed money transmitting business.

Mark Marmilev, 35, became the third employee of Liberty to strike a deal with prosecutors.

At a hearing in Manhattan federal court, Marmilev, who was responsible for designing and maintaining Liberty's technological infrastructure, said he was trying to protect the company from "hackers and identity thieves."

Marmilev said he suspected a substantial amount of the funds Liberty Reserve processed were obtained fraudulently but that he "consciously avoided" confirming it.

Liberty Reserve was indicted in May 2013. Marmilev's plea came almost a year after Liberty co-founder Vladimir Kats pleaded guilty to money laundering and operating an unlicensed money transmitting business.

Former manager Azzedine El Amine pleaded guilty last month to charges of conspiracy and operating an unlicensed money transmitting business.

Manhattan U.S. Attorney Preet Bharara has called the prosecution of Liberty Reserve perhaps "the largest international money laundering case ever brought by the United States," accusing the exchange of helping criminals process more than $6 billion in money transfers.

"With his guilty plea today, we are one step closer to holding to account everyone integrally involved in this sprawling Internet enterprise that served as a central financial institution for cyber criminals and illegal transactions of numerous kinds," Bharara said in a statement on Thursday.

Prosecutors have said Liberty Reserve had more than a million worldwide users, including at least 200,000 in the United States, at the time it was shut down in May 2013. Authorities said that virtually its entire business was related to criminal activity, including child pornography, drug trafficking and computer hacking.

Cote set Marmilev's sentencing for Dec. 12. Under his plea agreement, he faces a maximum of five years in prison.

Charges are pending against four other Liberty employees, including co-founder Arthur Budovsky, who is fighting extradition from Spain.

Seth Ginsberg, Marmilev's lawyer, said after the hearing that Marmilev was not cooperating in any current investigation.

(Reporting by Bernard Vaughan; Editing by Peter Cooney)