Feds in NY: Costa Rica Money Biz A Hub for Crooks

When an undercover agent posing as a new client sought to register at the currency transfer firm Liberty Reserve as “Joe Bogus” from “123 Fake Main Street” in “Completely Made-Up City,” no one at the company based in Costa Rica objected.

The same client recorded digital currency transactions as “ATM skimming work.” Still no problem. In fact, federal prosecutors in Manhattan say anonymity and criminality were what Liberty Reserve was all about.

“The only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes as it became a popular hub for fraudsters, hackers, and traffickers,” U.S. Attorney Preet Bharara said Tuesday in announcing charges against seven people in a $6-billion scheme that he billed as possibly the largest money-laundering scheme ever seen in the United States.

U.S. officials said the enterprise was staggering in scope. Over roughly seven years, Liberty Reserve processed 55 million illicit transactions worldwide for one million users, including 200,000 in the U.S. The network charged a 1-percent fee on transactions through “exchangers” — middlemen who converted actual currency into virtual funds and then back into cash.

In the indictment, prosecutors called Liberty Reserve “one of the principal means by which cyber criminals around the world distribute, store and launder proceeds of their illegal activity.”

Alleged founder Arthur Budovsky — an American who renounced his U.S. citizenship after deciding to set up in Costa Rica — and another defendant, identified as Azzeddine el Amine, were arrested Friday at a Madrid airport while trying to return to Costa Rica. They were ordered jailed while they await a hearing on extradition to the U.S.

Costa Rica’s director of judicial investigations, Francisco Segura, acknowledged that Costa Rica is an attractive country for U.S. criminals because they can obtain Costa Rican citizenship easily and inexpensively and are protected from being extradited to the United States.

Public Security Minister Mario Zamora said after a Wednesday meeting with U.S. Ambassador Anne Andrew that the two countries will start working on consolidating an extradition treaty for suspects in organized crime cases.

This article appeared in print on page 5 of the May 31st, 2013 edition of Hamodia.