LOS ANGELES – A man has agreed to plead guilty to breaking federal law by allowing his cryptocurrency-cash exchange company to help scammers and drug traffickers launder millions of dollars in criminal proceeds through his business, the U.S. Department of Justice announced.
Charles James Randol, 33, of Santa Monica, agreed to plead guilty to a single-count information charging him with failure to maintain an effective anti-money laundering (AML) program, a crime that carries a statutory maximum sentence of five years in federal prison, the DoJ stated.
Both the information and plea agreement were filed in United States District Court in downtown Los Angeles. Randol is expected to formally plead guilty to the charge in the coming weeks, the DoJ said.
According to his plea agreement, from October 2017 to July 2021, Randol owned and operated a virtual-currency money services business that eventually was known as Digital Coin Strategies, LLC. The company offered cryptocurrency-cash exchange services for a commission.
How Business Was Conducted
According to the DoJ, Randol offered his cryptocurrency exchange services in various ways, including meeting anonymous customers in-person to complete transactions, controlling and operating a network of automated kiosks in Los Angeles, Orange, and Riverside counties that converted cash to Bitcoin and vice versa, and conducting 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, DoJ explained.
“Randol advertised his business on various websites, and he maintained a company website that falsely claimed his business was “a fully compliant…money services business” that was registered with the Financial Crimes Enforcement Network, a bureau of the United States Treasury Department,” the DoJ said. “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.”
The ‘Puppet Shariff’ & The ‘Yogurt Monster’
Randol frequently conducted in-person cash transactions that exceeded $10,000 with anonymous or pseudo-anonymous individuals, including people who Randol knew only as “Puppet Shariff,” “White Jetta,” “Aaavvv,” “Aaaa,” “Yogurt Monster,” and “Hood.”
In his plea agreement, the DoJ said Randol admitted to engaging in three specific transactions from October 2020 to January 2021 in which he exchanged a total of $273,940 in cash for Bitcoin without requesting a name, proof of identity, Social Security number, or any other information about the buyer or the source of the funds being exchanged.
The DoJ noted the transactions violated the Bank Secrecy Act and Randol’s company’s AML policy, which required, among other things, that he verify the identity of customers engaging in transactions over $9,999 by obtaining the customer’s full name, address, Social Security number, a verified phone number, and a photocopy of the customer’s official government identification.
Shipments of Cash
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, the DoJ said.
“In a typical transaction, an anonymous individual would text Randol using an encrypted platform to notify him that a parcel containing cash had been sent to a location that Randol controlled in or around Los Angeles. Once Randol received the parcel, he would count the money and send an equivalent amount of Bitcoin – minus a commission – to a digital wallet controlled by his customers. As with in-person transactions, Randol did not conduct any due diligence on the people mailing him large sums of cash, the source of funds being exchanged, or the purpose of the transaction,” DoJ said.
‘Suspicious Manner’
When Randol received the packages, the cash was often packaged in a suspicious manner, including cash hidden inside children’s books, concealed inside fake birthday or holiday presents, buried within puzzle pieces, or wrapped within multiple magazines, DoJ said.
On June 5, 2019, FBI agents interviewed Randol about fraud proceeds that had been mailed to post office boxes he controlled. Two days later, Randol texted a customer stating that he would be taking a “hiatus” from converting cash parcels into cryptocurrency because he “ran into an issue with [law enforcement].” But less than a week later, Randol resumed his cash parcels activity after that same anonymous customer asked Randol if he could exchange $10,000 in cash for Bitcoin, DoJ explained.
Additional Admissions
Randol admitted that his failure to comply with Bank Secrecy Act requirements, including maintaining an effective AML program resulted in criminals using Randol’s business to launder millions of dollars of criminal proceeds, DoJ said.
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