Bitcoin Dealer Sentenced to Two Years in Prison and Ordered to Forfeit Ill-Gotten Gains
Assistant U. S. Attorney Robert Ciaffa (619) 546-7748
NEWS RELEASE SUMMARY – April 8, 2019
SAN DIEGO – Jacob Burrell Campos of Rosarito, Mexico, was sentenced today by U.S. District Judge Marilyn L. Huff to serve two years in prison and forfeit $823,357 in illicit profits for operating an unlicensed money transmitting business in connection with his sale of hundreds of thousands of dollars in Bitcoin to over 1,000 customers throughout the United States.
Burrell, a U.S. citizen, has been in custody without bail since his arrest on August 13, 2018. He pleaded guilty on October 29, 2018, admitting that he operated a Bitcoin exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury, and without implementing the required anti-money laundering safeguards.
According to the plea agreement, Burrell advertised his business on Localbitcoins.com, and communicated with his customers through email and text messages, often using encrypted applications. He negotiated a commission of 5 percent above the prevailing exchange rate, and accepted cash in person, through nationwide ATMs, and through MoneyGram. Burrell admitted that he had no anti-money laundering or “know your customer” program, and performed no due diligence on the source of his customers’ money.
Burrell admitted that, at first, he purchased his supply of Bitcoin through a U.S.-based, regulated exchange, but his account was soon closed because of the large number of suspicious transactions. He then resorted to a cryptocurrency exchange in Hong Kong, where he purchased a total of $3.29 million in Bitcoin, in hundreds of separate transactions, between March 2015 and April 2017.
Finally, Burrell admitted that he exchanged his U.S. cash, which he kept in Mexico, with Joseph Castillo, a San Diego-based precious metals dealer, and that between late 2016 and early 2018, he and others imported into the United States, on an almost daily basis, a total of over $1 million in U.S. currency, in amounts slightly below the $10,000 reporting requirement.
In a sentencing memorandum, prosecutors argued that unlicensed money transmitters pose a serious threat to the integrity of the U.S. financial system by creating a hole in the anti-money laundering regulatory scheme and allowing criminals to launder their cash proceeds without scrutiny. In this case, Burrell provided his clients with anonymity and privacy, and exchanged over $1 million in unregulated cash.
U.S. Attorney Robert Brewer said, “The federal government will continue to investigate and prosecute all white collar criminals who refuse to comply with the anti-money laundering laws of the United States, and who assist others in avoiding scrutiny of their ill-gotten gains. I applaud the excellent work of prosecutor Robert Ciaffa and federal agents who investigated these crimes.”
“Today’s sentencing of Burrell is a reminder to those illegal and unlicensed money transmitters that the laws and rules apply to crypto currency dealings just as they do to other types of financial transactions,” said David Shaw, Special Agent in Charge for Homeland Security Investigations in San Diego. “HSI Special Agents are proud to work with our law enforcement partners to ensure the integrity of the U.S. financial system, and we will continue to adapt to enforce laws across all borders, including cyberspace and the Darknet.”
DEFENDANT Case Number 18CR3554-H
Jacob Burrell-Campos Age: 22 Rosarito, Baja California, Mexico
Count 1: Conducting an unlicensed money transmitting business, 18 USC 1960.
Statutory maximum: 5 years prison, $250,000 fine.
Homeland Security Investigations
Internal Revenue Service
Postal Inspection Service