What led to the raid by feds on the crypto couple
Prosecutors say the bitcoin money laundering saga of New York couple Heather Morgan and Ilya Lichtenstein “seems like something out of the pages of a spy novel.”
As federal investigators raided the home of New York couple Ilya Lichtenstein and Heather Morgan last month, Morgan insisted she could retrieve her cat from the bedroom. But as Morgan performed the motions to coax the animal from under the bed, officers saw that she was frantically trying to lock her phone, prompting them to tackle her to the ground, prosecutors say.
The last-ditch effort by Morgan, 31, and her husband Ilya Lichtenstein, 34, to cover up their alleged role in laundering billions of dollars in bitcoin, is among additional details to emerge from prosecutors squabbling in a filing in court Thursday that the two suspects should remain in custody. Federal authorities to say it is the “largest financial seizure ever”.
The married couple, who lived in an apartment at posh 75 Wall Street, were arrested on Tuesday for laundering a stash of bitcoins now worth $4.5 billion. On Thursday, Chief Justice Beryl Howell ordered that Lichtenstein and Morgan continue to be detained and be formally transferred from a federal facility in Brooklyn to Washington, DC, where their case will resume in federal court.
Disclosure follows Forbes reporting on the couple, who have built an image of successful tech entrepreneurs, while allegedly laundering stolen bitcoin. Lichtenstein once launched a business and raised funds from Mark Cuban, before investing in startups alongside tech leaders like Marc Benioff. Morgan, meanwhile, has billed herself as a prolific thought leader, writing online articles as a Forbes.com contributor on women leaders, and even had an alter ego as a goofy YouTube rapper called Razzlekhan, who talked about success and money.
In the 34-page document released Thursday, new details paint a clearer picture of the defendants’ activities in the years leading up to their arrest this week. Prosecutors point to Morgan “playing a vital role in the money laundering and fraud scheme” and wrote that the couple’s 2019 activities in Ukraine “seem at times to be taken from the pages of a spy novel.”
The court document, written in preparation for a detention hearing scheduled for Friday, also chronicles what happened when their New York City apartment was raided on January 5. Officers found $40,000 in cash, dozens of electronic devicesand even two hollowed-out books, among other things.
Authorities allege that on January 31, when law enforcement was able to decrypt several files held on Lichtenstein’s cloud storage account, they not only found a spreadsheet of his various crypto accounts, but also Apparent wallet files for additional cryptocurrency that the government has yet to seize.Several of these files “include variations of the word ‘dirty’ in their names, such as ‘dirty_wallet.dat’.”
In August 2019, the couple traveled to Ukraine for a month. Prosecutors say it was during this time that Lichtenstein ‘created and/or modified numerous files’ in this account ‘that contained money laundering notes and/or false identity documents with Ukrainian connections “. It seems that during this period they received packages from Russia to Ukraine, apparently from darknet sellers selling fake passports.
The “notes” file also lists “delivery information” as the 11 Mirrors Design Hotel in Kyiv, which prosecutors note is the same hotel that Morgan posted photos of on his social media platforms, indicating that she was staying nearby. Additionally, the government claims to have “an Uber receipt” showing that Morgan picked up a car at the Design Hotel on September 11, 2019.
Another document contained in Lichtenstein’s cloud storage account, according to prosecutors, includes a Russian-language document that describes “how to receive a package anonymously in Ukraine.” This document provides details on where to place video cameras in Ukrainian post offices and how to avoid being seen.
Finally, the government has provided new details for the first time about the day their New York apartment was raided.
When officers arrived and secured the apartment, Morgan and Lichtenstein said they didn’t want to stay and asked to take their cat with them. The officers present allowed Morgan to retrieve her cat which was hiding under the bed.
But, according to the court document, “as Morgan crouched beside the bed calling for the cat, she positioned herself next to the bedside table, which was still holding one of her phones. She then raised her hand and grabbed her cell phone from the bedside table and repeatedly pressed the lock button It appeared that Morgan was trying to lock the phone in a way that would make it harder for law enforcement to search the contents of the phone.Law enforcement had to snatch the phone from his hands.
Overall, the government says Morgan in particular was “extremely involved” in the scheme and noted that her “business accounts were used to clean up and legitimize stolen funds.”
In a separate space deposit Submitted to court on Thursday, attorneys for Lichtenstein and Morgan say they have not been able to “see, speak to or visit Mr. Lichtenstein” since his arrival at a federal facility in Brooklyn.
“Because the [Bureau of Prisons] apparently misspelled his name in his admissions systems, it was only yesterday that we learned that Mr. Lichtenstein was being held at MDC Brooklyn,” they wrote, describing a series of bureaucratic hurdles that further hampered Their efforts.
The lawyers asked the judge to have a “legal visit (or at least a legal appeal)” with him on Thursday and another on Friday before the next bail review hearing.