Judge allows Heather Morgan to leave prison, not Ilya Lichtenstein

Ilya Lichtenstein and Heather Morgan, via FBI court records

Ilya Lichtenstein and Heather Morgan, via FBI court records

The New York couple facing conspiracy charges in connection with an elaborate crypto scheme were not allowed to return home together on Valentine’s Day after a federal judge ordered a of them stayed behind bars.

Ilya “Dutch” Lichtenstein34 years old and his wife Heather Morgan, 31, was arrested Tuesday and charged with conspiring to launder billions of dollars in stolen cryptocurrency. Authorities eventually seized more than $3.6 billion from Lichtenstein’s virtual wallet, Justice Department speak is the “biggest financial foreclosure ever[.]”

The alleged money-laundering scheme stems from a hack of Hong Kong-based exchange Bitfinex in 2016, when approximately $72 million worth of Bitcoins were stolen.

That estimated value now? $4.5 billion, according to the Department of Justice.

The government has not commented on whether it believes the couple was behind the hack.

“It is extremely difficult to raise and raise children if you are in prison for 20 to 25 years.”

Although a federal judge in New York initially ordered the couple to be released after their arrest last week— $5 million for Lichtenstein and $3 million for Morgan – Chief United States District Court Beryl Howell partially reversed that decision in DC on Monday.

According to court documents, authorities were particularly concerned about the couple’s ability to flee the country: despite the government’s seizure of Bitcoin, Lichtenstein and Morgan allegedly still had access to more than 320 million Unsecured crypto dollars and seized documents show a clear connection to “darknet” sites involved in the production of fake documents and identities.

After a three-hour hearing on Monday, Howell finally ruled that Morgan could return home to New York under strict conditions, but Lichtenstein must stay behind bars in the District of Columbia.

Lichtenstein and Morgan’s attorney, Samson Enzer, argued that the couple had no incentive to run away. He said that both have strong family ties in the US, and highlighted the fact that the parents of each defendant – who were present at the trial – offered to buy their home as a relationship. constraint.

Enzer also said that Morgan and Lichtenstein were tied to New York because they had frozen embryos at a hospital there.

“They would literally leave their future behind if they left,” Enzer said.

Enzer also gave evidence of the couple’s intention to stay in the US that they didn’t run away after a search warrant was issued in January, about a month before their arrest.

Assistant US Attorney Catherine Pelker said that the pair’s sticking together despite knowing they were under investigation was more likely the result of arrogance than a sincere belief that the charges against them were futile.

Pelker said that when a search warrant was issued in January and they were not arrested, Lichtenstein and Morgan believe they “succeeded in defeating us. Even if we are able to track some transactions to their accounts, [they believed] they’ve washed them well enough that they can be legitimately denied. “

Pelker said that when federal authorities issued the search warrant, it was likely that neither Lichtenstein nor Morgan had a clear understanding of what evidence the government actually had.

“To the extent the defendants said they understood our theory, that’s to the extent our case theory was disclosed to them at the time,” Pelker said.

Pelker noted that during the investigation it was revealed that they may have been planning a flight to Ukraine or Russia, noting that neither is “a great time or place to travel right now.” hour”.

As for the tie that the parents of the parties put forward, Pelker said that their home cannot hold up to what the couple could buy if they had access to their crypto accounts.

“The government does not question the sincerity of the defendants’ parents,” Pelker said, but added that “several hundred million” in cryptocurrency “could buy each of their parents their own island.”

“If the argument is that they’re too worried about the possibility of having a family, then having and raising children is extremely difficult if you’re going to be in prison for 20 to 25 years,” says Pelker.

“Significant exposure creates an incentive to flee”

Howell eventually agreed with prosecutors on Lichtenstein, but allowed Morgan to be released.

“This is a substantial exposure, and such substantial exposure creates an incentive to flee,” Howell said, referring to the fact that each defendant faces 25 years in prison.

Howell offers a dry critique of the defense’s argument that the evidence against Lichtenstein and Morgan is episodic and, therefore, relatively flimsy.

“It is Basic Evidence 101 that circumstantial evidence can be as powerful as direct evidence,” says Howell.

Howell said the couple seemed well-equipped to flee the country: Lichtenstein, although raised in the US, was born in Russia and a citizen there, and Morgan has many relationships abroad. Howell also notes that both of them are experienced and tech-savvy travelers, calling them “skilled and quite resourceful.”

“[Their] Financial resources could easily be used to facilitate flight,” Howell said, citing two dozen accounts, believed to contain hundreds of millions of stolen Bitcoins, that are believed to still be in control of Lichtenstein that the government has not yet been able to seize.

The defendants’ previous conduct indicated that “they had the resources and knowledge of how to obtain fake passports and could have taken steps to devise a contingency plan for living elsewhere,” Including possible preparations for identification cards for both men and women, Howell said.

However, Howell agrees that the evidence at this point against Lichtenstein is stronger than the evidence against Morgan and allows her to return home, despite GPS monitoring and strict conditions, including a ban access to any crypto account. Howell did not accept Enzer’s request to transfer Lichtenstein back to a federal prison in New York.

According to prosecutors, Lichtenstein and Morgan had an elaborate and sophisticated plan to clean up the money following the aforementioned 2016 attack of unknown public origin:

The lawsuit alleges that Lichtenstein and Morgan used a variety of sophisticated money-laundering techniques, including the use of false identities, to set up online accounts; the use of computer programs to automate transactions, a money laundering technique that allows many transactions to take place in a short period of time; deposit the stolen funds into accounts at many cryptocurrency exchanges and darknet markets and then withdraw the funds, which obscures the trace of the transaction history by disrupting the flow of funds; converting bitcoins to other forms of virtual currency, including anonymization-enhanced virtual currency (AEC), is in practice known as a “chain jump”; and use US-based corporate accounts to legitimize their banking.

Since their arrest, Lichtenstein and Morgan have been described as a colorful couple: Morgan clearly has another self that is one backing vocalist who performed under the names “Razzlekhan” or sometimes “the Alligator of Wall Street” and Lichtenstein self-invoicing as a “tech entrepreneur, programmer and investor” who is nicknamed “the Dutchman”.

Read the FBI’s Statement of Facts in support of the criminal complaint against Lichtenstein and Morgan below.

[Images via FBI court filing.]

Is there a trick we should know? tips@lawandcrime.com

https://lawandcrime.com/high-profile/couple-allegedly-behind-4-5-billion-cryptocurrency-laundering-scheme-is-ordered-on-valentines-day-to-stay-apart/ Judge allows Heather Morgan to leave prison, not Ilya Lichtenstein

James Brien

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