Overview:
A Santa Monica man is facing up to five years in federal prison for helping criminals launder money through his cryptocurrency-cash exchange company.
A Santa Monica man is facing up to five years in federal prison for helping criminals launder money through his cryptocurrency-cash exchange company.
Charles James Randol, 33, agreed to plead guilty to failure to maintain an effective anti-money laundering (AML) program at his business this week and the U.S. Attorney’s office said the deal will be finalized in the coming weeks.
Randol’s company, Digital Coin Strategies LLC. offered to exchange cryptocurrency like Bitcoin for cash or vice versa for a commission. The business allowed anonymous customers to complete in-person transactions, controlled a network of automated kiosks and conducted Bitcoin-for-cash transactions for unknown individuals who mailed large amounts of U.S. currency to him, including to post office boxes that he controlled.
According to the Justice Department, Randol falsely claimed the business was fully compliant with money service rules.
“In fact, as Randol admitted in his plea agreement, he repeatedly violated federal law and his company’s own AML policies by facilitating suspicious currency exchange transactions and taking steps to conceal them from law enforcement, including by failing to file required currency transaction reports and suspicious activity reports,” said a statement by the Justice Department.
Randol is accused of conducting in-person transactions with individuals he knew only by internet handles such as “Puppet Shariff,” “White Jetta,” “Aaavvv,” “Aaaa,” “Yogurt Monster,” and “Hood.” Those transactions were frequently in excess of $10,000. Three specific transactions, totaling $273,940 in cash for Bitcoin were conducted without gathering any of the required identification information.
Prosecutors said that while operating his crypto-exchange business, Randol also conducted hundreds of Bitcoin-for-cash transactions after receiving large cash shipments in the mail from anonymous individuals.
In those cases, Randol received the packages of suspicious cash that was packaged inside children’s books, concealed inside fake birthday or holiday presents, buried within puzzle pieces, or wrapped within multiple magazines.
In 2019, the FBI contacted Randol over receipt of fraud proceeds. While Randol subsequently told customers he would be taking a hiatus from the business, he continued with his illegal practices.
Prosecutors said Randol’s service was used to help scammers steal from victims.
“For example, between June 2018 and early 2020, Randol exchanged Bitcoin for cash that was mailed to him by a New Jersey resident who had been tricked into believing his grandson was facing criminal prosecution after purportedly killing an elderly woman in a traffic accident and that the money the victim was sending would be used to help the victim’s grandson with his legal problems,” said the release. “Based on these lies, the victim drained his savings and retirement accounts. While Randol did not participate in the fraud, his business converted the victim’s cash to cryptocurrency and sent it to various digital wallets without conducting any customer due diligence or investigating the source of the money he was receiving.”
The kiosk business was also used inappropriately with Randol allowing customers to make transactions without creating accounts or providing identification.
Randol continued the behavior even after hiring a compliance officer for Digital Coin Strategies who warned him about the company’s risk of receiving illegal funds.