A former bank employee from Yorba Linda agreed to plead guilty to federal criminal charges that he operated an illegal virtual-currency business that exchanged up to $25 million through in-person transactions and a network of Bitcoin ATM-type kiosks, the U.S. Attorney’s Office announced Wednesday.
Kais Mohammad, 36, agreed to plead guilty to one count each of operating an unlicensed money transmitting business, money laundering, and failure to maintain an effective anti-money laundering program.
In total, Mohammad admitted that he exchanged between $15 million and $25 million from in-person exchanges and transactions occurring at his Bitcoin kiosks.
Mohammad is expected to enter his plea at a hearing in the coming weeks. Upon pleading guilty, Mohammad will face up to 30 years in federal prison. As part of the plea agreement, Mohammad has agreed to forfeit cash, cryptocurrency, and 17 Bitcoin ATMs that he operated as part of his business, according to the U.S. Attorney’s Office.
Using the moniker Superman29, Mohammad advertised his business online to buy and sell Bitcoin throughout Southern California, in transactions up to $25,000. In a typical transaction, he met clients at a public location and exchanged currency for them.
Mohammad generally did not inquire as to the source of the clients’ funds and on many occasions he knew the funds were the proceeds of criminal activity. He admitted that he knew at least one Herocoin client was engaged in illegal activity on the so-called dark web, federal prosecutors said.
Mohammad later purchased and advertised on the internet a network of Bitcoin ATM-type kiosks, which were located in malls, gas stations and convenience stores in Los Angeles, Orange, Riverside and San Bernardino counties. These kiosks allowed customers to use cash to buy Bitcoin, an Internet-based cryptocurrency, or sell Bitcoin in exchange for cash that is dispensed onsite, prosecutors said.
From February to August 2019, Mohammad also conducted multiple in-person transactions with undercover agents who represented that they worked at a karaoke bar that employed women from Korea who entertained men in various ways, including engaging in sexual activity, according to the plea agreement.
On August 28, Mohammad met with an agent and exchanged $16,000 in cash, which the agent represented were the proceeds from illegal activity, for 1.58592 Bitcoin. Mohammad never filed a currency transaction report or suspicious activity report for these transactions, according to the U.S. Attorney’s Office.