9 ms·

looks like he was concealing his tracks pretty well. Other than spending extravagantly, I wonder where he screwed up?

tyingq 7y ago
"Kvashuk’s grand scheme was thwarted by the hard-work of IRS-CI’s Cyber Crimes Unit" Something that caught the IRS's attention, apparently. Probably lots of deposits of real money to real banks, from a crypto exchange.
- irjustin 7y ago
  I'd agree, 2.8m showing up in accounts will always trigger flags; there's just no way to avoid someone asking questions at that level. Saying Crypto isn't enough which is why he tried to say it was a 'family member gift' which he couldn't prove. Probably all he could show was that his currency came in from a mixer which is going to raise questions. I'm surprised he didn't simply hold tether (if he wanted stable) and then drip it into his accounts.
  - troebr 7y ago
    I think it's a common theme of how fraudsters get caught, they get greedy.
  - tomnipotent 7y ago
    Banks in the U.S. are required to notify the IRS of any deposits/withdrawals in excess of $10,000.
- tempuser24 7y ago
  My guess would be that Microsoft tipped them off. I couldn't find in the compliant where the IRS or Secret Service got involved, but it does say that Microsoft Fraud Investigators discovered the fraud and fired him.
avgDev 7y ago
He did not conceal his tracks. He would pop up on IRS radar just for moving a lot of bitcoin. I owned some bitcoin and was a bit worried because many exchanges were forced by the government to release information of people, coinbase for example. Even, if he did not use one of those exchanges, depositing large amounts of cash and buying 1 mil lakefront property will raise some eyebrows. On his tax returns he said bitcoins were a gift from a relative....unless his relative is ultra rich, no uncle is just going to gift you 3 million bucks. Plus, I am pretty sure you need to present documentation, the IRS will not just take your word for it. Honestly, any deposit over I think 10k is reported to the IRS by the banks, and IRS knows how much this guy is making, what he owns, etc. Crypto currencies are not really as anonymous as supporters would like you to believe, and IRS will crush this guy.
- flatiron 7y ago
  i wonder if he never switched it to fiat if he would have gotten caught on the IRS/Fed side. If he kept it Bitcoin or if he had some Bitcoin to Cash side hustle that he could keep under wraps from the IRS he might have gotten away with it.
  - avgDev 7y ago
    He should have opened a "cash" type of business and inflated number of customers and basically laundered money. He would still probably get caught by Microsoft though eventually.
    - flatiron 7y ago
      still gotta have someone buy that bitcoin from you. dude shoulda done whatever the dark net drug dealers do (and i have no clue what they do but the obviously need to eat so some of that bitcoin turns into cash)
- andrewla 7y ago
  The IRS really doesn't care where the money came from if it is reported. The money that he received was reported on his tax returns, so the IRS would not look further at this, as long as the numbers matched up. In this case it appears that the IRS was brought in to it to correlate the individual's finances with the expected windfall, rather than instigating the investigation. That is, the investigators (in MS and law enforcement) knew who did it, and they were gathering further evidence.
deleted 7y ago
[deleted]
andrewla 7y ago
The complaint, linked above, shows how the investigation went forward. He was not careful; the test accounts were associated with his identity directly.
logfromblammo 7y ago
At the point where the Bitcoin was converted into bank account funds. There's a reason why money laundering is a criminal specialty. He needed to stop stealing and fencing the goods before getting caught, wait a few months or years without doing anything shady at all, then start dripping the ill-gotten gains into his account alongside an entirely legitimate cashflow, a little bit at a time. Buying a mansion and a roadster out of the blue is an "stupid criminals get caught; all criminals are stupid" type of move. Even if all you know of crime comes from the movie theater and television set, you'd know that after the airport job in Goodfellas, some of the guys got whacked for violating the "don't buy anything!" edict. In Breaking Bad, the car wash and the Pollos Hermanos chicken restaurants were necessary for laundering the methamphetamine revenue. I think the mention of Bitcoin mixers was just chaff. The guy was caught because his bank tattled on him, and the IRS didn't buy his flimsy sourcing story. If he had just kept the proceeds as some variety of cryptocurrency, he might not have gotten away with it entirely, but the investigation would probably still be ongoing--the questions remaining to be answered being, of course, "how much did he steal, exactly?" and "how do we seize and forfeit those funds?" Someone might know that he was stealing something, but they wouldn't necessarily know how much.

"Kvashuk’s grand scheme was thwarted by the hard-work of IRS-CI’s Cyber Crimes Unit" Something that caught the IRS's attention, apparently. Probably lots of deposits of real money to real banks, from a crypto exchange.

irjustin 7y ago
I'd agree, 2.8m showing up in accounts will always trigger flags; there's just no way to avoid someone asking questions at that level. Saying Crypto isn't enough which is why he tried to say it was a 'family member gift' which he couldn't prove. Probably all he could show was that his currency came in from a mixer which is going to raise questions. I'm surprised he didn't simply hold tether (if he wanted stable) and then drip it into his accounts.
- troebr 7y ago
  I think it's a common theme of how fraudsters get caught, they get greedy.
- tomnipotent 7y ago
  Banks in the U.S. are required to notify the IRS of any deposits/withdrawals in excess of $10,000.
tempuser24 7y ago
My guess would be that Microsoft tipped them off. I couldn't find in the compliant where the IRS or Secret Service got involved, but it does say that Microsoft Fraud Investigators discovered the fraud and fired him.

avgDev 7y ago

He did not conceal his tracks. He would pop up on IRS radar just for moving a lot of bitcoin. I owned some bitcoin and was a bit worried because many exchanges were forced by the government to release information of people, coinbase for example. Even, if he did not use one of those exchanges, depositing large amounts of cash and buying 1 mil lakefront property will raise some eyebrows. On his tax returns he said bitcoins were a gift from a relative....unless his relative is ultra rich, no uncle is just going to gift you 3 million bucks. Plus, I am pretty sure you need to present documentation, the IRS will not just take your word for it. Honestly, any deposit over I think 10k is reported to the IRS by the banks, and IRS knows how much this guy is making, what he owns, etc. Crypto currencies are not really as anonymous as supporters would like you to believe, and IRS will crush this guy.

flatiron 7y ago
i wonder if he never switched it to fiat if he would have gotten caught on the IRS/Fed side. If he kept it Bitcoin or if he had some Bitcoin to Cash side hustle that he could keep under wraps from the IRS he might have gotten away with it.
- avgDev 7y ago
  He should have opened a "cash" type of business and inflated number of customers and basically laundered money. He would still probably get caught by Microsoft though eventually.
  - flatiron 7y ago
    still gotta have someone buy that bitcoin from you. dude shoulda done whatever the dark net drug dealers do (and i have no clue what they do but the obviously need to eat so some of that bitcoin turns into cash)
andrewla 7y ago
The IRS really doesn't care where the money came from if it is reported. The money that he received was reported on his tax returns, so the IRS would not look further at this, as long as the numbers matched up. In this case it appears that the IRS was brought in to it to correlate the individual's finances with the expected windfall, rather than instigating the investigation. That is, the investigators (in MS and law enforcement) knew who did it, and they were gathering further evidence.

deleted 7y ago

[deleted]

andrewla 7y ago

The complaint, linked above, shows how the investigation went forward. He was not careful; the test accounts were associated with his identity directly.

logfromblammo 7y ago

At the point where the Bitcoin was converted into bank account funds. There's a reason why money laundering is a criminal specialty. He needed to stop stealing and fencing the goods before getting caught, wait a few months or years without doing anything shady at all, then start dripping the ill-gotten gains into his account alongside an entirely legitimate cashflow, a little bit at a time. Buying a mansion and a roadster out of the blue is an "stupid criminals get caught; all criminals are stupid" type of move. Even if all you know of crime comes from the movie theater and television set, you'd know that after the airport job in Goodfellas, some of the guys got whacked for violating the "don't buy anything!" edict. In Breaking Bad, the car wash and the Pollos Hermanos chicken restaurants were necessary for laundering the methamphetamine revenue. I think the mention of Bitcoin mixers was just chaff. The guy was caught because his bank tattled on him, and the IRS didn't buy his flimsy sourcing story. If he had just kept the proceeds as some variety of cryptocurrency, he might not have gotten away with it entirely, but the investigation would probably still be ongoing--the questions remaining to be answered being, of course, "how much did he steal, exactly?" and "how do we seize and forfeit those funds?" Someone might know that he was stealing something, but they wouldn't necessarily know how much.