Friday, October 23, 2020

Ex-NFL owner to change plea in cryptocurrency fraud scheme

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An Arizona businessman who once held a minority stake in the National Football League’s Minnesota Vikings is likely to admit next month that he took part in running an illegal shadow bank for cryptocurrency traders, according to a court filing.

A federal judge in New York agreed to hold a hearing Jan. 10 to let Reginald Fowler change his plea — an indication that he probably intends to plead guilty to at least some of the charges he faces. Fowler pleaded not guilty in May to charges he and an Israeli woman, Ravid Yosef, ran an unlicensed money-transmitting operation tied to virtual currency trading. Yosef remains at large.

According to prosecutors, Fowler and Yosef lied to banks to open accounts and processed hundreds of millions of dollars through the U.S. financial system on behalf of cryptocurrency exchanges. That way they skirted money-laundering safeguards that licensed institutions have to follow, prosecutors said.

They’re both charged with bank fraud and conspiracy to commit bank fraud. Each charge carries a maximum sentence of 30 years in prison. Fowler is also charged with operating an unlicensed money-transmitting business and conspiracy.

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Fowler’s lawyer, James G. McGovern, didn’t immediately return a telephone call seeking comment on the scheduling request and James Margolin, a spokesman for Manhattan U.S. Attorney Geoffrey Berman, declined to comment.

Fowler and a firm identified in the indictment, Global Trading Solutions LLC, have direct ties to a Panamanian company, Crypto Capital Corp., people familiar with the matter said in May.

Crypto Capital’s name surfaced in April when New York Attorney General Letitia James accused the companies behind the cryptocurrency Tether and digital exchange Bitfinex of covering up the loss of about $850 million in client and corporate funds.

The companies behind Bitfinex and Tether said Crypto Capital acted as their bank, but wouldn’t give the money back. Bitfinex claims the money was deposited with Crypto Capital but through no fault of its own, it was seized by government authorities in the U.S., Poland and Portugal.

Polish Probe

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Another Crypto Capital principal, Oz Yosef, also known as Oz Joseph, was indicted in October on similar charges. He also remains at large. And in October, another Crypto Capital official was arrested as part of a Polish probe into the laundering of the proceeds from drug sales. Polish officials don’t release suspects’ full names and only identified the man as Ivan M.L. Polish media, including Radio RMF, said the suspect is Ivan Manuel Molina Lee, Crypto Capital’s president. Poland deported him to Greece.

Fowler, of Chandler, Arizona, is better known for his ties to professional football than his involvement with cryptocurrencies. In 2005, he tried to buy the Vikings for $600 million but had to settle for a minority stake when he couldn’t come up with the cash, according to the Star Tribune in Minneapolis. His involvement with the team ended in 2014.

Fowler was also an investor in the Alliance of American Football, an upstart professional football league that filed for bankruptcy earlier this year after struggling to make payroll. He had committed to be the league’s primary investor but failed to provide the needed capital at the end of last year, according to Sports Illustrated.

Source: Bloomberg

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