Source: Office of United States Attorneys
WASHINGTON – Firoz Patel, 50, of Montreal, Canada, was sentenced to 41 months in federal prison today in connection with his efforts to conceal and launder 450 Bitcoin, currently valued at over $43 million, that he hid from the U.S. District Court handling his 2020 conviction and sentencing for conspiring to operate an unlicensed money transmitting business and to commit money laundering.
The sentence was announced by U.S. Attorney Edward R. Martin, Jr., HSI Acting Special Agent in Charge Kai Wah Chan of Homeland Security Investigation’s Washington, D.C., Field Office.
Patel plead guilty on September 17, 2024, to one count of obstruction of an official proceeding. In addition to the prison term, U.S. District Court Judge Dabney L. Friedrich ordered three years of supervised release, a forfeiture money judgment in the amount of $24,020,699.83, and forfeiture of 450 Bitcoin plus interest currently restrained at a virtual currency exchange in the United Kingdom.
In 2020, Patel was convicted and sentenced to 36 months for operating Payza, an illegal financial payments platform that processed cryptocurrency payments.
According to court documents, in 2004 Patel began operating his payment processing company AlertPay, which evolved into Payza. The Montreal company offered its services to customers across the United States, even though the business lacked a license to operate in any state or the District of Columbia.
Throughout Payza’s existence, the company partnered with various money services businesses, such as OboPay in 2012, another online money services business. At Patel’s direction, merchants were not removed from Payza’s platform for being involved in high-risk activities such as Ponzi schemes, money laundering activities, multilevel-marketing (MLM) scams, money-cycler scams, pyramid schemes, and steroid distributors. Payza did not have a Bank Secrecy Act Officer, it did not conduct legally required Bank Secrecy Act/anti-money-laundering audits, and it operated in the United States at various times without registering with the U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN) or state authorities.
On July 16, 2020, Patel pled guilty to one count of conspiracy to operate an unlicensed money-transmitting business and to launder monetary instruments, based on his operation of Payza. As a condition of his plea, he was required to identify and forfeit any property involved in the offense to which he pleaded guilty. Although Patel had control over more than 450 Bitcoin in Payza’s illicit proceeds—valued at approximately $24,000,000 at the time—he provided false information to the U.S. Probation Office and the Court in an attempt to hide his illicit Bitcoin wealth, including by claiming his only assets were $30,000 in a retirement savings account.
On November 10, 2020, then-District Judge Ketanji Brown Jackson sentenced the defendant to 36 months in prison and two years of supervised release and entered an agreed-upon order requiring Patel to forfeit any property involved in his offense, as well as any property traceable to such property. Rather than comply, shortly after his sentencing but before reporting to prison, Patel began consolidating Payza’s illicit cryptocurrency proceeds and attempted to deposit them with Binance, a virtual currency exchange. On April 22, 2021, Binance informed Patel that his account was being closed for violating Binance’s terms of service and being flagged by a third-party compliance tool. Forced to withdraw 450 Bitcoin, Patel opened an offshore virtual currency account in his father’s name, listed an address in Belize linked to Payza’s operations, and transferred the same 450 Bitcoin in illicit proceeds into the account shortly before he reported to the Bureau of Prisons. This second virtual currency exchange also deemed the deposit suspicious and froze the funds.
Patel contacted the exchange in June 2021 stating “[i]f this is about me, then realize that I am not beholden to any actions by the USA or any other government authorities. I have paid my dues and I owe nothing to anybody.” Patel tasked a Payza business associate to work on providing false Know Your Customer (KYC) information to the virtual currency exchange in an effort to unfreeze the illicit funds. Had the scheme succeeded, Patel would have successfully hid and laundered the funds and been released from prison with 450 BTC in criminal proceeds awaiting him. The Department of Justice restrained Patel’s Bitcoin through a Mutual Legal Assistance Treaty request to the United Kingdom during the course of the investigation.
According to the Government’s sentencing memo, Patel became aware of the investigation while serving his 36-month sentence for the 2020 conviction. As Patel neared his release date, he enlisted the assistance of C.A. to impersonate an attorney and engage in sham negotiations with the U.S. Attorney’s Office. C.A. and Patel planned to string along the assigned Assistant United States Attorney (AUSA) long enough for Patel to be released on his 2020 conviction and flee the United States to Canada to avoid prosecution. The AUSA and investigators discovered the false impersonation in advance of Patel’s release date and returned an Indictment of Patel in May 2023. He has been in Bureau of Prisons custody or detained pre-trial since June 2021.
This case was investigated by the Homeland Security Investigations (HSI) Washington, D.C. Field Office. The case is being prosecuted by Assistant United States Attorney Kevin L. Rosenberg and Special Assistant United States Attorney Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney Jonas Lerman of the Criminal Division’s Computer Crime and Intellectual Property Section, National Cryptocurrency Enforcement Team. Valuable assistance was also provided by Scott Meisler and Josh Handell of the Criminal Division’s Appellate Section, and by Trial Attorney Erin Mikita and former Trial Attorney Roberto Iraola of the Criminal Division’s Office of International Affairs. The case was originally investigated by former Assistant United States Attorney Arvind K. Lal.
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