Queens Man Sentenced In Manhattan Federal Court To Two Years In Prison For Conspiring To Hide Over $390,000 From The IRS
FOR IMMEDIATE RELEASE
Tuesday, September 4, 2012
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ILYA BORUCH was sentenced today to two years in prison for conspiring to defraud the Internal Revenue Service (“IRS”) by failing to file Currency Transaction Reports (“CTRs”), in connection with his operation of an Internet currency exchange business. Under federal law, CTRs must be filed with the IRS for cash transactions in excess of $10,000. BORUCH was convicted in May 2011 following a seven-day jury trial. He was sentenced today in Manhattan federal court by U.S. District Judge George B. Daniels.
Manhattan U.S. Attorney Preet Bharara said: “Ilya Boruch, the owner of an Internet financial services company, not only broke the law when he concealed over $390,000 in cash transactions from the IRS, but he helped others do the same. Today’s sentence makes clear that compliance with federal tax laws is not optional.”
According to documents filed in Manhattan federal court and to the evidence presented at trial and at sentencing:
BORUCH was the chief executive and owner of Bidding Expert, Inc. (“Bidding Expert”), a company with offices in Rego Park, New York. BORUCH offered various financial services to customers, including exchanging cash into “WebMoney,” and WebMoney into cash, through Bidding Expert. WebMoney was an Internet-based system headquartered in Russia that allowed people who maintained accounts to send or receive cash securely and anonymously over the Internet in the form of “units” that served as a form of digital currency. WebMoney transfers did not use formal banking channels and were otherwise untraceable. For a fee, WebMoney “exchangers” offered the service of converting traditional currency into WebMoney units, and vice versa. Because BORUCH engaged in the business of transmitting hard currency, he was required to file a CTR with the IRS for each cash transaction in excess of $10,000.
From late 2006 through February 2008, BORUCH served as a WebMoney exchanger for Yuriy Rakushchynets and Ivan Biltse, who had obtained stolen bank account numbers and PINs for hundreds of bank accounts from their overseas coconspirators. Rakushchynets and Biltse then used that information to withdraw millions of dollars from ATMs in New York City. In order to receive additional stolen accounts and repeat the process of fraudulently withdrawing more cash, Rakushchynets and Biltse sent the majority of the cash to their overseas sources of stolen account data in a way that did not attract law enforcement attention.
BORUCH repeatedly met with Rakushchynets and Biltse on street corners in New York City, picking up vast quantities of cash that was typically secreted in shopping bags. BORUCH then converted the cash into WebMoney, which he either sent to Rakushchynets’ WebMoney account, or to other WebMoney accounts at Rakushchynets’ direction. BORUCH sent over $390,000 in WebMoney directly from his own account to Rakushchynets’ account. At no time did he ever file CTRs, as required by federal law.
BORUCH, who was arrested in June 2008, was convicted of one count of conspiring to defraud the United States. He was acquitted of one count of money laundering conspiracy.
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In addition to the prison term, Judge Daniels sentenced BORUCH, 34, of Forest Hills, NY, to three years of supervised release. Rakushchynets and Biltse pled guilty in September and October 2008, respectively. Biltse was sentenced by Judge Daniels in September 2011 to 48 months in prison. Rakushchynets has not yet been sentenced.
Mr. Bharara praised the investigative efforts of the Federal Bureau of Investigation.
This case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Thomas G.A. Brown and Lee Renzin are in charge of this prosecution.