U.S. Seizes Virtual Currencies Valued at $24 Million Assisting Brazil in Major Internet Fraud Investigation

The Department of Justice announced today that it has seized virtual currency worth an estimated $24 million on behalf of the Brazilian government. 

The seizure order was obtained pursuant to an official request from the government of Brazil, made under the Treaty between the United States of America and the Federative Republic of Brazil on Mutual Legal Assistance in Criminal Matters, for assistance in connection with a large cryptocurrency fraud scheme in a Brazilian federal police investigation called “Operation Egypto.”  Brazilian authorities estimate that more than $200 million was obtained through this scheme through which more than tens of thousands of Brazilians may have been defrauded.

Brazilian federal prosecutors have charged several individuals in the case.  The U.S. seizures were tied to Brazilian Marcos Antonio Fagundes’ alleged role in the scheme.  As the United States alleged based on information provided by Brazilian authorities, Fagundes is charged with several criminal violations of Brazilian law, including, among other offenses, the operation of a financial institution without legal authorization, fraudulent management of a financial institution, misappropriation, and money laundering, as well as securities law violations.  The Brazilian court issued a seizure order directing the seizure of virtual currency in the United States owned or controlled by Fagundes.   

According to documents filed in the Brazilian criminal proceeding and the Brazilian court’s findings, during August 2017 to May 2019, Fagundes and other defendants solicited funds from prospective investors over the internet, sometimes in combination with telephone and other means, and held the funds received in a manner that subjected it to regulation as a financial institution under Brazilian law, with which Fagundes and the other defendants failed to comply.  Solicitations referred to as innovative investment opportunities were made over the internet and in person, offering investments in cryptocurrencies.  As alleged, the defendants solicited investors to give money to corporations they controlled, in the form of Brazilian currency or cryptocurrency, which the companies would then invest in a variety of virtual currency types.  The Brazilian court found, however, that only a very small amount of funds were invested in cryptocurrencies as promised, and very little was returned to the investors. To carry out the scheme, the conspirators are alleged to have made false and inconsistent promises to investors about the way the funds were invested and exaggerated the rates of return.

In execution of the Brazilian request for assistance, an application to enforce the Brazilian seizure order was filed in the U.S. District Court for the District of Columbia pursuant to 28 U.S.C. § 2467, seeking to seize the virtual currency belonging to or controlled by Fagundes located in the United States.  U.S. District Judge Trevor N. McFadden granted the U.S. government’s application and issued seizure orders directing the seizure of the virtual currency. 

The U.S. Department of Justice’s Money Laundering and Asset Recovery Section (MLARS) International Unit and Office of International Affairs are working in close cooperation with the Brazilian authorities, the FBI Legal Attaché in Brasilia, the FBI in Boston, the FBI’s Virtual Currency Evolving Threat Working Group, and the U.S. Marshals Service to restrain the virtual currency and preserve it for forfeiture proceedings pending in Brazil to compensate the investors victimized in this fraudulent investment scheme.  The forfeiture proceedings in the United States are being handled by MLARS International Unit Trial Attorney Jennifer Wallis.    

The crypto currency firm holding the accounts cooperated with law enforcement authorities in executing this seizure.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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    A federal indictment unsealed today charges three North Korean computer programmers with participating in a wide-ranging criminal conspiracy to conduct a series of destructive cyberattacks, to steal and extort more than $1.3 billion of money and cryptocurrency from financial institutions and companies, to create and deploy multiple malicious cryptocurrency applications, and to develop and fraudulently market a blockchain platform.
    [Read More…]
  • Six Charged in Connection with a $3 Million Paycheck Protection Program Fraud Scheme
    In Crime News
    Six individuals were charged in an indictment with fraudulently obtaining approximately $1.5 million in Paycheck Protection Program (PPP) loans on behalf of five businesses based in Georgia and South Carolina.
    [Read More…]
  • The United States Designates ISIS Financial Facilitators
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • The United States and Kuwait Launch Fourth Strategic Dialogue
    In Crime Control and Security News
    Office of the [Read More…]
  • Two sentenced after law enforcement uncovers illegal aliens in 100 degree trailer
    In Justice News
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  • Remote Interview Pilot for Trusted Traveler Programs
    In Travel
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  • Civil Monetary Penalties: Federal Agencies’ Compliance with the 2020 Annual Inflation Adjustment Requirements
    In U.S GAO News
    What GAO Found In this fifth annual review, GAO found that the majority of federal agencies that could be subject to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended (IAA), have complied with the provisions of the act to publish 2020 civil monetary penalty inflation adjustments in the Federal Register and report related information in their 2020 agency financial reports (AFR), or equivalent. However, two agencies did not publish inflation adjustments in the Federal Register as of December 31, 2020, and did not report the required information in their 2020 AFRs for one or more of their civil monetary penalties. Why GAO Did This Study The IAA includes a provision, added in 2015, requiring GAO to annually submit to Congress a report assessing agencies' compliance with the annual inflation adjustments required by the act. This is the fifth annual report responding to this requirement. For more information, contact Paula M. Rascona at (202) 512-9816 or rasconap@gao.gov.
    [Read More…]