Liberty Reserve information technology manager pleads guilty in Manhattan federal court

NEW YORK — A former information technology manager for Liberty Reserve plead guilty Tuesday in Manhattan federal court to conspiring to operate an unlicensed money transmitting business. This event stems from an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the U.S. Secret Service, the Internal Revenue Service-Criminal Investigation, Department of Justice's Criminal Division (IRS-CI), and the U.S. Attorney for the Southern District of New York.

Maxim Chukharev, 28, of San Jose, Costa Rica, helped maintain the technological infrastructure for Liberty Reserve, a company that operated one of the world's most widely used digital currency services. Chukharev was arrested in San Jose, Costa Rica, in May 2013.

According to allegations contained in the indictment filed against Liberty Reserve, Chukharev, and six other individual defendants, and statements made in related court proceedings:

Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet's "largest payment processor and money transfer system." Liberty Reserve was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions.

Before being shut down by the U.S. government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system totaling more than $6 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes.

Chukharev was an associate of Liberty Reserve founder Arthur Budovsky and served as Liberty Reserve's information technology manager in Costa Rica. In that role, Chukharev was responsible, along with co-defendant Mark Marmilev, formerly Liberty Reserve's Chief Technology Officer, for maintaining Liberty Reserve's technological infrastructure.

Chukharev pleaded guilty to one count of conspiring to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison.

Chukharev is among seven individuals charged in the indictment, which was unsealed on May 28, 2013. Three co-defendants – Vladimir Kats, Azzeddine el Amine, and Mark Marmilev – have pled guilty and are awaiting sentencing. The indictment also charged Liberty Reserve with conspiracy to commit money laundering and operation of an unlicensed money transmitting business. Those charges are still pending.

Preet Bharara, U.S. attorney for the Southern District of New York praised the outstanding work of HSI, the United States Secret Service, the Internal Revenue Service-Criminal Investigation, which worked together in this case as part of the Global Illicit Financial Team. Mr. Bharara also thanked the United States Secret Service's New York Electronic Crimes Task Force for its extraordinary assistance with the investigation. Additionally, Mr. Bharara specially thanked all the international law enforcement agencies that assisted in the investigation, in particular, the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor's Office.

This case is being prosecuted jointly with the Department of Justice's Asset Forfeiture and Money Laundering Section (AFMLS), which is overseen by Assistant Attorney General Leslie R. Caldwell. Mr. Bharara thanked AFMLS for its partnership and also thanked the Department of Justice's Office of International Affairs and Computer Crime and Intellectual Property Section for their support.