Online Cryptocurrency Exchanger from Riverside County, California Pleads Guilty to Operating Unlicensed Money Transmitting Business

March 13, 2024 – Earlier today, in federal court in Central Islip, David Scotese pleaded guilty to operating an unlicensed money transmitting business.  As part US DOJof his plea agreement, Scotese agreed to forfeit cryptocurrency, cash, and precious metals worth in excess of $1.3 million at current valuation.  The proceeding was held before United States District Judge Joan M. Azrack.  When sentenced, Scotese faces up to five years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), Erin Keegan, Acting Special Agent-in-Charge, Homeland Security Investigations, New York (HSI New York), Edward A. Caban, Commissioner, New York City Police Department (NYPD), and Daniel B. Brubaker, Inspector-in-Charge, United States Postal Inspection Service (USPIS), announced the guilty plea.

“With his guilty plea today, Scotese is taking responsibility for operating a money exchanging and transmitting business in defiance of the critical legal requirements that are intended to secure our financial system from corruption by drug traffickers and other criminals,” stated United States Attorney Peace.  “This prosecution should serve as a warning to other ask-no-questions, black-market money transmitting businesses that FinCEN registration and regulatory compliance are not mere technicalities, but a necessary part of our collective efforts against crime, and that we will prosecute unlicensed money transmitters who flout these rules.”

“While operating an unlicensed money transmitting business, Scotese moved money for his clients with no questions asked.  Without ‘knowing the customer,’ crypto was bought and sold through his exchange with no regard of whether or not the initial funds were legitimate.  This business practice can set a dangerous precedent, and with today’s guilty plea, Scotese will soon learn the consequences of his actions,” stated IRS-CI Special Agent-in-Charge Fattorusso.

“David Scotese defied vital financial regulations in posing as a legitimate cryptocurrency dealer despite having received no such accreditation. Such legal requirements were established to not only ensure fairness, but also oversight in what is undoubtedly a new and emerging market,” said HSI New York Acting Special Agent in Charge Erin Keegan. “I thank HSI New York’s El Dorado Task Force Darkweb and Cryptocurrency investigators, HSI San Diego, and HSI Riverside, in addition to our remarkable law enforcement partners, for ensuring the public remains protected from those attempting to skirt the rules at their expense.”

“Today’s admission of guilt makes abundantly clear that individuals who facilitate the illegal transfer of money will be held accountable; the security of our banking system depends on it,” stated NYPD Commissioner Caban. “The NYPD will continue to work hand in hand with all of our law enforcement partners to identify and stop these criminals. Our message is clear: Using new technology to put profits over compliance is not a path to riches; it is a path to federal prosecution.”

“At the core of our mission as Postal Inspectors is our duty to ensure a secure mail system for the American public. Scotese allegedly used the U.S. Mail to violate federal banking regulations by running an illegal cash for crypto scheme. His plea today should serve as a clear example to anyone who will attempt to evade the law and use the mail to commit a crime. Postal Inspectors and our law enforcement partners will see to it that you are prosecuted to the fullest extent of the law,” said Daniel B. Brubaker, Postal Inspector in Charge of the New York Division.

As alleged in public filings and statements made in court, since at least 2016, Scotese worked and advertised himself online as a cryptocurrency exchanger and transmitter but never registered with the Department of the Treasury, Financial Crimes Enforcement Network (FinCEN) or obtained a state license, as required by law in order to ensure effective financial reporting and anti-money laundering compliance.  At the time of his arrest in California, Scotese had over $130,000 in cash in his home and vehicle, as well as hundreds of thousands of dollars in coins and precious metals obtained through the operation of his unlicensed money transmitting business. Scotese has agreed to forfeit these assets in addition to hundreds of thousands of dollars of various cryptocurrency assets.

The investigation was conducted in coordination with HSI San Diego’s Costa Pacifico Money Laundering Task Force and HSI Riverside’s Inland Commercial Enforcement and Financial Interdiction Team.

Assistant United States Attorney Robert M. Pollack is in charge of the prosecution, and Assistant United States Attorney Tanisha R. Payne of the Office’s Asset Recovery Section is handling forfeiture matters.

The Defendant:

Age:  54
Murietta, California

E.D.N.Y. Docket No. 23-CR-231 (JMA)
Source: DOJ Release

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