Matthew Galluzzo is a former sex crimes prosecutor who now represents both plaintiffs and defendants in civil sex abuse cases. He also regularly defends individuals accused of white collar crimes and fraud in federal court.

The link to the interview is available here.

The allegations in these cases suggest that the defendants used the public enthusiasm and fervor around cryptocurrency investing to run what amounted to a Ponzi scheme with a crypto appearance. The defendants allegedly went to crypto conventions and investor events and flashed conspicuous wealth in order to persuade people to invest in their cryptocurrencies. The defendants allegedly used a software platform to allow investors to see their investments growing, but the defendants would not allow the investors to withdraw funds. Meanwhile, these defendants allegedly used the investor funds for their own purposes and spent the money lavishly.

The defendants might argue that there was in fact a real cryptocurrency investment that simply failed, as so many cryptocurrencies have. (Some reputable economists might even argue that the entire cryptocurrency industry is, at base, a Ponzi scheme in and of itself.) Prosecutors will use bank records and other evidence to show that these investor accounts ran dry because they were emptied by the defendants.

The charges here are predominately conspiracies to commit Wire Fraud (18 USC 1343) and Money Laundering (18 USC 1956(h)). A person commits wire fraud, basically, when he or she commits fraud using the internet or a telephone system. Money laundering involves taking stolen money (or proceeds from an illegal activity) and knowingly converting it into another form or depositing it into a bank account, for example.

The defendants face significant potential prison sentences. Generally, the penalties for wire fraud and money laundering depend largely on the amount of money stolen. However, the penalties can increase significantly where there are many victims, or when a person acts as a manager of others in the criminal conspiracy, or when the person has a criminal record. In addition to prison penalties, the defendants, if convicted, can expect to owe their victims significant amounts in restitution.

Matthew Galluzzo is an experienced criminal defense attorney and former Manhattan prosecutor. He has successfully represented many individuals accused of federal wire fraud and money laundering and understands how prosecutors investigate and build their cases. If you or a loved one have been accused of wire fraud in federal court, you should strongly consider contacting him today to discuss his potential representation.

Narcotics (21 U.S.C. 846 and 21 U.S.C. 841)

Wire fraud (18 U.S.C. 1343)

Bank fraud (18 U.S.C. 1344)

The Bribery/Travel Act (18 U.S.C. 1952)

Homicide (18 U.S.C. 1111, 18 U.S.C. 1117, 18 U.S.C. 1118)

RICO/organized crime/conspiracy (18 U.S.C. 1961)

Firearms (18 U.S.C. 922, 18 U.S.C. 924)

Trademark Counterfeiting (18 U.S.C. 2320)

Airplane Offenses (including assault and sexual assault) (e.g. 18 U.S.C. 113, 18 U.S.C. 2241-2244, 49 U.S.C. 46506)

Foreign Corrupt Practices Act (15 U.S.C. 78dd-1)

Tax Fraud (26 U.S.C. 7201)

Medicare/Medicaid/Health Care Fraud (18 U.S.C. 1347)

Human Trafficking (18 U.S.C. 1590, 18 U.S.C. 1591, 18 U.S.C. 1952)

Visa Fraud (18 U.S.C. 1546)

Misdemeanors – federal parks and monuments

Money Laundering (18 U.S.C. 1956)

Child exploitation (e.g. 18 U.S.C. 2251, 18 U.S.C. 2252, 18 U.S.C. 2252(a))

Give Mr. Galluzzo a call for a free case evaluation and a quote for his services. Serving Bridgeport, New Haven, and Hartford.

Money laundering charges typically go hand-in-hand with other related criminal charges brought by law enforcement. Individuals involved in narcotics trafficking, loansharking, racketeering, or Medicare fraud, for example, usually conduct their business in cash for understandable reasons. The problem that these people oftentimes face, however, is that they cannot use their criminal proceeds to purchase things that they want to buy, like real estate for example. This is when money laundering becomes relevant.

Typically, money laundering charges arise when a person with a quantity of illegally-derived cash wants to put the money into a bank account or buy assets with it. A criminal might seek to launder his or her own illegal money by depositing it into a bank account or wiring it to another account. He or she might also enlist the assistance of a professional launderer who takes a percentage of the laundered funds in exchange for depositing them into an account or investing them in some business or asset. The criminal with cash may also manipulate an unwitting novice into laundering it for them, so as to escape responsibility in the event the laundering is discovered.

The main criminal statute that applies to money laundering is 18 U.S.C. 1956. Section 1956(a) defines three types of criminal conduct: domestic money laundering transactions (§ 1956(a)(1)); international money laundering transactions (§ 1956(a)(2)); and undercover “sting” money laundering transactions (§ 1956(a)(3)). These charges can be brought as attempts and there are also charges relating to conspiracies to commit money laundering without actual money laundering ever happening (§1956(h)).

To be criminally culpable under 18 U.S.C. § 1956(a)(1), a defendant must conduct or attempt to conduct a financial transaction, knowing that the property involved in the financial transaction represents the proceeds of some unlawful activity, with one of the four specific intents discussed below, and the property must in fact be derived from a specified unlawful activity.

The actual source of the funds must be one of the specified forms of criminal activity identified by the statute, in 18 U.S.C. § 1956(c)(7), or those incorporated by reference from the RICO statute (18 U.S.C. § 1961(1)). Section 1956(c)(7)(B) includes in the list of specified unlawful activity certain offenses against a foreign nation. Thus, proceeds of certain crimes committed in another country may constitute proceeds of a specified unlawful activity for purposes of the money laundering statutes.

To prove a violation of § 1956(a)(1), the prosecutor must prove, either by direct or circumstantial evidence, that the defendant knew that the property involved was the proceeds of any felony under State, Federal or foreign law. The prosecutor need not show that the defendant knew the specific crime from which the proceeds were derived; the prosecutor must prove only that the defendant knew that the property was illegally derived in some way. See § 1956(c)(1).

The prosecutor must also prove that the defendant initiated or concluded, or participated in initiating or concluding, a financial transaction. A “transaction” is defined in § 1956(c)(3) as a purchase, sale, loan, pledge, gift, transfer, delivery, other disposition, and with respect to a financial institution, a deposit, withdrawal, transfer between accounts, loan, exchange of currency, extension of credit, purchase or sale safe-deposit box, or any other payment, transfer or delivery by, through or to a financial institution.

A “financial transaction” is defined in § 1956(c)(4) as a transaction which affects interstate or foreign commerce and: (1) involves the movement of funds by wire or by other means; (2) involves the use of a monetary instrument; or (3) involves the transfer of title to real property, a vehicle, a vessel or an aircraft; or (4) involves the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce.

In conducting the financial transaction, the defendant must have acted with one of the following four specific intents:

1. § 1956(a)(1)(A)(i): intent to promote the carrying on of specified unlawful activity;§ 1956(a)(1)(A)(ii): intent to engage in tax evasion or tax fraud;§ 1956(a)(1)(B)(i): knowledge that the transaction was designed to conceal or disguise the nature, location, source, ownership or control of proceeds of the specified unlawful activity; or§ 1956(a)(1)(B)(ii): knowledge that the transaction was designed to avoid a transaction reporting requirement under State or Federal law [e.g., in violation of 31 U.S.C. §§ 5313 (Currency Transaction Reports) or 5316 (Currency and Monetary Instruments Reports), or 26 U.S.C. § 6050I (Internal Revenue Service Form 8300)].

Prosecutions pursuant to 18 U.S.C. § 1956(a)(2) arise when monetary instruments or funds are transported, transmitted or transferred internationally, and the defendant acted with one of the requisite criminal intents (i.e., promoting, concealing, or avoiding reporting requirements). The intent to engage in tax violations is not included in § 1956(a)(2).

If the transportation, transmission or transfer was conducted with the intent to conceal the proceeds of specified unlawful activity or to avoid a reporting requirement, the prosecutor must show that the defendant knew the monetary instrument or funds represented the proceeds of some form of unlawful activity. However, if the transportation, transmission or transfer is conducted with the intent to promote the carrying on of specified unlawful activity, the prosecutor need not show that the funds or monetary instruments were actually derived from any criminal activity.

The transportation, transmission or transfer must cross the border — either originating or terminating in the United States. That term includes all means of transporting funds or monetary instruments, including wire or electronic funds transfers, and the transfer of currency, checks, money orders, bearer securities and negotiable instruments.

Section 1956(a)(3) relates to undercover operations where the financial transaction involves property represented to be proceeds of specified unlawful activity. The proceeds in § 1956(a)(3) cases are not actually derived from a real crime; they are undercover funds supplied by the Government.

Violations of § 1956 have a maximum potential twenty year prison sentence and a $500,000 fine or twice the amount involved in the transaction, whichever is greater. As is the case with all federal crimes, the U.S. Sentencing Guidelines significantly influence the ultimate sentence for a person convicted of this crime. Notably, the penalties are generally higher depending on the amount of money laundered, and can be especially high for those individuals who laundered money that they themselves earned through criminal conduct.

If you or a loved one have been accused of money laundering by federal authorities, contact the experienced federal criminal defense attorneys at the Law Office of Matthew Galluzzo.