On January twenty seventh OneCoin defendant Gilbert Armenta’s attorneys filed a Sentencing Memorandum.
The submitting was closely redacted, prompting Internal Metropolis Press’ Matthew Lee to file a movement requesting entry to an unredacted model.
On the request of the court docket, on February tenth Armenta’s attorneys clarified their place on the redactions.
Recognizing that Mr. Armenta’s cooperation has been referenced publicly we now have eliminated redactions to normal references to Mr. Armenta’s cooperation and have left redacted particular private particulars regarding his cooperation efforts and the Authorities’s investigation.
On the eve of Armenta’s sentencing, we check out the principally unredacted Sentencing Memorandum.
Primarily to doc the small print of Armenta’s cooperation, and what led to the DOJ revoking its intent to file a supporting leniency letter with respect to Armenta’s sentencing.
It’s vital to keep in mind that Armenta’s Sentencing Memorandum has been filed with the purpose of convincing a Choose to present him as lenient a sentence as potential.
There’s a lot within the seventy-eight web page submitting I haven’t lined, primarily pertaining to Armenta’s private historical past, his household and the same old “I’m truly an amazing man!” narrative.
There are additionally redactions of private data. A few of this particulars Armenta’s time detention at MCC. A number of the redactions give you respect to Ruja Ignatova.
It has lengthy been suspected Ignatova had connections to organized crime in Jap Europe. I can’t say for positive whether or not these redactions search to maintain this data from being confirmed nevertheless it positive does learn that manner.
A number of the redactions pertain to Sebastian Greenwood and, if unredacted, I imagine would make clear prolonged procedural delays in his case.
With that preamble out of the way in which, I’ve damaged down data from Armenta’s submitting into varied headerable themes.
I’ve tried to cite from Armenta’s submitting as a lot as potential, because it reads fairly effectively by itself.
Armenta’s street to OneCoin cash laundering
In 2001, Gilbert based his personal firm referred to as Mio Group, which had roughly 50 staff. Mio Group developed a multi-island community within the Caribbean that offered wi-fi, video-on-demand, gaming, and hospitality merchandise to almost 8.5 million subscribers.
Nevertheless, the corporate collapsed within the 2009 monetary disaster.
Between 2009 and 2013, Gilbert consulted for out of doors wi-fi ventures and targeted on restructuring his private funds.
He filed for Chapter 7 chapter in March 2013, which was discharged in June 2014 and resulted in monetary destroy for Gilbert.
To stay employable, Gilbert educated himself on the fee processing sector.
In 2013, Gilbert based entities to supply card issuing and fee processing providers. Gilbert’s firms supplied pay as you go playing cards that may very well be used for varied functions, together with enterprise bills, payroll, direct deposit, and loyalty packages.
His firms additionally supplied fee processing providers—for instance, he may assist an internet service provider make the most of the banking relationships, card processors, and fee networks needed to remodel a buyer’s mouse-click right into a corresponding deposit of funds into the service provider’s accounts.
Armenta’s finance dealings would ultimately see him turn into a key participant in OneCoin’s US-based cash laundering operations.
Armenta’s involvement in OneCoin
Gilbert met Ruja Ignatova, one of many founders of OneCoin, in June 2015 whereas he was within the course of of buying a financial institution positioned within the nation of Georgia referred to as JSC Capital Financial institution (“JSC”).
Ruja was a pre-existing buyer of JSC on the time.
Three months after assembly Ruja, Gilbert attended a OneCoin occasion in Macau.
On the time, Gilbert was fully unaware that OneCoin was a fraud, and was impressed by the group that Ruja’s enterprise generated and the seeming professionalism of the operation.
Subsequently, he additionally started an intimate relationship with Ruja.
Gilbert grew to become conscious of Ruja’s connection to OneCoin, though he didn’t perceive it to be problematic on the outset.
In October 2015, Ruja advised Gilbert that she was receiving threats of bodily hurt that required her to make use of a safety element, and that somebody broke into her house in Bulgaria and tried to burn it down.
Early on within the relationship, Ruja satisfied Gilbert that there have been many on-line doubters of her enterprise, even some who unfairly referred to as her a fraud, which precipitated her problem in sustaining financial institution relationships.
She began to hunt Gilbert’s assist in managing round most of the banks’ considerations in doing enterprise along with her.
Gilbert didn’t have any private information of an underlying fraud, and agreed to help Ruja in overcoming her banking difficulties.
In an try to attenuate financial institution scrutiny, Gilbert offered false data and paperwork to banks with a purpose to transfer Ruja’s cash.
Nevertheless, over time, the reasons that Gilbert acquired from Ruja concerning the transfers she made and directed have been usually obscure, illogical, and contradictory.
Ruja additionally requested Gilbert to money multimillion-dollar checks for her as a result of banks wouldn’t do enterprise along with her.
All through this era, a number of banks closed Gilbert’s accounts on account of suspicious exercise, however he continued to maneuver cash for Ruja. In complete, Gilbert moved over $300 million for Ruja in lots of smaller increments between September 2015 and June 2016.
He was given little or no details about the supply, objective, or final vacation spot of these funds.
Gilbert additionally assisted Ruja by issuing OneCoin pay as you go playing cards by JSC. As soon as once more, on the outset, Gilbert believed this was a authentic enterprise with important enterprise potential for his firm.
Between September 2015 and January 2016, he issued roughly 1,200 to 1,400 OneCoin pay as you go playing cards that have been for use to pay refunds and commissions to OneCoin members.
When pay as you go or debit playing cards are supplied by blatant Ponzi schemes, we frequently see the inference that Visa or MasterCard lends legitimacy to an in any other case fraudulent enterprise mannequin.
As you’ve learn above, these playing cards are universally obtained by way of deception and sometimes by unrelated shell firms hooked up to a dodgy service provider.
Within the mixture, OneCoin members used roughly $780,000 by these pay as you go playing cards.
Moreover, Gilbert launched his long-time lawyer, Mark Scott, to Ruja on September 30, 2015, as Ruja acknowledged that she had potential enterprise offers and required attorneys.
In some unspecified time in the future within the Scott-Ruja relationship, Scott started to switch funds for Ruja, and the 2 reduce Gilbert out of their enterprise relationship.
Gilbert labored with different people and entities to maneuver Ruja’s cash as effectively. Specifically, Gilbert labored with a British firm named Viola Asset Administration (“VAM”) and its chairman, Christopher Hamilton.
Round February 2016, Gilbert organized for about $39 million to be transferred right into a VAM overseas trade account in Hong Kong.
Hamilton then stole $32 million of these funds.
Gilbert subsequently retained “debt assortment” specialists in the UK who tracked Hamilton, despatched him threatening messages, and confronted him at his house.
Though Gilbert believed that the debt assortment specialists would possibly threaten Hamilton as a part of their technique to reclaim the stolen funds, he by no means thought that precise violence could be used.
Armenta’s unlawful conduct outdoors of OneCoin
It appears the DOJ have an prolonged curiosity in Armenta past OneCoin.
Armenta’s submitting particulars bribes to officers in Mexico and laundering of “unlawful US playing proceeds”.
Mexican bribes
In early 2014, Gilbert met a Mexico-based businessman who additionally labored in card fee processing and explored a number of card issuing and fee processing packages as collaboration alternatives, however none in the end materialized.
Subsequently, in 2016, Gilbert paid roughly $250,000 to $300,000 to the businessman with the understanding that some or the entire funds is likely to be paid to an official of the Mexican authorities to assist safe a specific authorities contract.
Mr. Armenta’s enterprise by no means acquired a authorities contract.
US playing cash laundering
Between roughly August 2015 and March 2017, Mr. Armenta helped course of funds for on-line playing web sites that solicited bets from United States-based prospects, in violation of United States regulation.
The bank card transactions associated to on-line playing funds have been miscoded with a purpose to conceal the true underlying service provider and the aim of the funds.
Armenta’s arrest
Gilbert Armenta was arrested on September thirteenth, 2017.
Armenta was arrested on the airport upon his return from a enterprise journey to Europe.
Federal brokers knowledgeable him that he was arrested for extortion of a person in the UK.
Armenta’s cooperation with the DOJ
The OneCoin investigation was in its early levels and missing any witnesses. Mr. Armenta proceeded to supply the federal government with that proof by a unprecedented 14 straight days of proffer periods, which included weekends and days throughout which the investigating brokers lived with Mr. Armenta in a resort room.
Amongst different issues, Mr. Armenta instantly offered the investigators with entry to his electronic mail accounts, and permitted the investigating brokers to conduct a consent search of his enterprise workplace at evening to keep away from any leak of the investigation.
On the early levels of these proffer periods, Gilbert offered crucial and well timed data to the Authorities in regards to the Authorities’s essential investigative goal, Ruja Ignatova, the founder and chief of OneCoin.
Gilbert offered this data although he had been in a romantic relationship with Ignatova on the time of his arrest.
[lengthy redactions] the Authorities was unable to apprehend Ignatova, and she or he stays at giant right this moment as one of many FBI’s ten most wished fugitives.
The time that Gilbert spent proffering to the Authorities with counsel is simply the tip of the iceberg.
Gilbert additionally [redacted], (which) tremendously expanded the Authorities’s understanding of OneCoin, the gamers concerned in that scheme, and the [lengthy redactions].
Past proffers and recorded telephone calls and in-person conferences, Gilbert spent tons of of hours assembly, talking, and texting with the brokers assigned to his case, educating them on issues starting from OneCoin [redacted].
Many of those topics concerned Gilbert shedding mild on the unlawful actions of harmful and highly effective people.
Following his arrest, Armenta would go on to plead responsible.
On the time of his responsible plea a number of months later, the supervising prosecutors characterised Mr. Armenta’s ongoing cooperation efforts as “extraordinary.”
These efforts resulted within the indictment of each co-founders of OneCoin (together with the unique CEO), and the next CEO as effectively, amongst others.
As a direct or oblique results of his cooperation, no less than 14 extra defendants have been indicted, together with the architect of the OneCoin fraud and her inheritor obvious, her brother.
Personally I’m conscious of 9 OneCoin associated indictments within the US:
- Ruja Ignatova – OneCoin co-founder and CEO of OneCoin)
- Sebastian Greenwood – OneCoin co-founder and joint Grasp Distributor
- Konstantin Ignatov – Ruja Ignatova’s brother, took over as CEO after she disappeared in 2017
- Frank Schneider – oversaw OneCoin’s cash laundering operations and his intelligence background noticed him positioned as Ruja’s “right-hand man”
- Mark Scott – head of OneCoin’s cash laundering operations within the US
- Gilbert Armenta – labored instantly with Ruja Ignatova to launder OneCoin investor funds
- David Pike – labored carefully with Mark Scott
- Christopher Hamilton – UK division of OneCoin’s cash laundering operations
- Robert MacDonald – UK division of OneCoin’s cash laundering operations
I don’t know who the opposite 5 indicted OneCoin associated people are. This might tie into redactions confirming the involvement of organized crime figures.
Eight defendants have been convicted following Mr. Armenta’s invaluable cooperation and help and leads generated from that help.
I’ve thought-about OneCoin promoters however that appears unlikely given they’re, for probably the most half, dwelling out within the open (and in most cases persevering with to rip-off customers by varied Ponzi schemes).
As well as, Mr. Armenta has forfeited greater than $40 million to the Division of Justice in his effort to make amends for his crimes, and as well as has agreed to forfeit the proceeds from two properties every value hundreds of thousands of {dollars}.
As to the specifics of Armenta’s cooperation;
For greater than two years, he was repeatedly debriefed by prosecutors, engaged in dozens of recorded telephone calls and in-person conferences with a purpose to receive proof the Authorities may use to construct circumstances towards others, a few of whom have been linked with OneCoin, and others who weren’t.
Mr. Armenta’s cooperation instantly led to the indictment of the kingpin of the OneCoin enterprise, Ruja Ignatova. On the Authorities’s request, he carried out roughly 44 tape recorded telephone calls with Ignatova, totaling greater than 30 hours of discussions along with her.
Armenta’s time within the MCC
New York’s Metropolitan Correctional Middle has a little bit of a infamous historical past.
Armenta discovered himself there in 2019 after his cooperation take care of the DOJ fell by.
In 2019, Mr. Armenta was remanded to the MCC for eight months.
Gilbert entered the MCC on July 19, 2019 and spent the primary 7 days in solitary confinement within the Particular Housing Unit (“SHU”).
The SHU is often reserved for inmates thought-about to be a hazard to themselves or others, however in Gilbert’s case, he was held within the SHU as a result of the Bureau of Prisons (the “BOP”) had failed to find out the place he may very well be housed [redacted].
Not like normal inhabitants inmates, Gilbert was not allowed entry to electronic mail, telephones, or non-legal guests.
Additional, as a result of there have been solely two lawyer rooms accessible to SHU inmates, and since Jeffery Epstein’s attorneys have been monopolizing these rooms on the time, Gilbert couldn’t even meet together with his attorneys for the primary week of his incarceration.
Then, as his eventual first go to together with his attorneys concluded, Gilbert stood by the windowed door of the visitation room, awaiting a guard to retrieve him.
[redacted]
As (Konstantin) Ignatov’s personal subsequent plea settlement and testimony reveal, Gilbert’s concern of reprisal was authentic.
Shortly after coming into the final inhabitants, [redacted]. He was suggested to ship an electronic mail requesting medical consideration, which he did that day.
[redacted]
Mr. Armenta confronted inhumane circumstances on the Metropolitan Correctional Middle, together with rat and cockroach infestations, fixed threats of violence, and rampant inmate drug use, which was notably attempting for him, as a 35-year clear former addict.
The ability was badly infested with cockroaches and rodents, which Gilbert’s attorneys heard operating by the partitions of the lawyer assembly rooms throughout each authorized go to all through his incarceration.
Gilbert steadily famous that his commissary meals, toiletries, clothes, and books had been gnawed to bits.
He would get up a number of occasions all through the evening to chase rodents out of his locker and to filter any feces that had been left behind. Requests for rodent and cockroach traps went ignored.
Throughout Gilbert’s incarceration, lockdowns resulted from Jeffrey Epstein’s loss of life, discovery of contraband or weapons, rape, stabbings, and a boiling water assault.
Circumstances on the MCC have been so deplorable that the Authorities shut the ability down in 2021, a outstanding concession by the Authorities that the ability was uninhabitable even for inmates.
Mr. Armenta confronted not solely the terrible day by day circumstances of the MCC, [redacted].
From February 27, 2020 to March 11, 2020, the MCC entered its worst lockdown but whereas regulation enforcement looked for a loaded gun introduced into the ability by a correctional officer.
Throughout this lockdown, MCC personnel have been changed by a Particular Operations Response Staff (“SORT”) despatched from Arizona by the Bureau of Prisons.
Inmates have been topic to a number of raids in the midst of the evening, throughout which they have been ordered to again out of their cells and sit on the ground with their fingers raised above their head for hours at a time.
The SORT members destroyed cells of their seek for the gun, and Gilbert spent days with nothing however the garments on his again.
He had no clear underwear or clothes, no blankets, and no toiletries. Most of his private possessions have been by no means returned to him. He was not allowed to bathe throughout this two-week interval.
Inmates reported to attorneys that mice and water bugs ran by the models as guards unblocked holes in partitions and vents that inmates had filled with clothes to forestall pests.
Bathrooms overflowed, spreading uncooked sewage. No clear ingesting water was offered; inmates have been compelled to drink from their lavatory sinks, from which brown water usually ran.
Elsewhere within the submitting it’s acknowledged Armenta contracted “one other medical situation” whereas at MCC. The title of the situation is redacted.
Making issues even worse throughout his incarceration, inmates have been locked down repeatedly as a result of high-profile loss of life of Jeffrey Epstein inside the ability in addition to the unrelated lack of a guard’s firearm.
Then, COVID-19 unfold within the MCC, and Mr. Armenta contracted the virus.
From COVID, Gilbert misplaced his senses of scent and style, neither of which has returned absolutely since.
The DOJ’s revokes Armenta’s 5K1 Letter
A 5K1 Letter is the place the DOJ basically places in a great phrase for a cooperating defendant, with the purpose of sentence discount.
On the time of Gilbert’s remand in July 2019, the Authorities represented that whereas it had not but made a remaining choice on whether or not he would obtain a Part 5K1.1 letter, it was extremely uncertain.
It was not till December 2, 2019, after the jury returned a responsible verdict within the Scott trial, that the Authorities formally knowledgeable Gilbert that it will not present a 5K1.1 letter.
Armenta self-sabotaged his 5K1 letter, as detailed in his submitting.
First, Gilbert bought a non-public airplane (the “Airplane”) with out consulting the Authorities.
Though the Airplane was not expressly addressed in Gilbert’s cooperation settlement, and was not topic to a written forfeiture settlement or order, Gilbert knew that the Authorities would probably need to be concerned in any sale.
Over the course of his cooperation, by his counsel, Gilbert raised with the Authorities a number of occasions that he may not afford to keep up the Airplane.
With out upkeep and periodic use, the worth of a airplane declines dramatically.
Between the time of his arrest in September 2017 and December 2018, Gilbert spent over $1 million on sustaining the Airplane, although he was restricted from utilizing it.
Gilbert additionally knowledgeable the Authorities that, with out correct upkeep, the Airplane would proceed to say no steeply in worth.
The Authorities responded in every occasion that it was open to Gilbert promoting the Airplane to mitigate his upkeep bills, however that it will search to be concerned in any sale.
On January 18, 2019, the Authorities realized that the Airplane was en path to the Bahamas and contacted Gilbert’s counsel.
It turned out that Gilbert had bought the airplane on December 28, 2018 with out telling his attorneys or the Authorities, because the airplane was inflicting him important monetary hardship.
When questioned by his attorneys, Gilbert, realizing that he had made an enormous mistake that was going to have severe repercussions, falsely reported {that a} potential purchaser was flying the Airplane on a take a look at run.
This rationalization was not a reasoned try at in the end deceiving the Authorities, however fairly a panicked mistake made in a cut up second of weak spot and concern.
He bought the Airplane for $2.1 million on December 28, 2018; $1.2 million of which went to pay again his mortgage towards the Airplane.
Of the remaining funds, a further $80,000 went to repay the curiosity on the mortgage, one other $30,000 went to repay a upkeep lien on the Airplane for hangar hire and fueling, and $5,000 went to providers rendered by the lender in reference to the sale of the Airplane.
Along with promoting his airplane, Armenta additionally cashed a dodgy $5 million test.
On July 15, 2019, Gilbert flew to New York for a routine scheduled proffer session with the Authorities concerning his ongoing cooperation efforts.
At first of the proffer, the Authorities knowledgeable Gilbert’s counsel for the primary time that it had independently realized that Gilbert was concerned in cashing a $5 million U.S. Treasury tax refund test (the “Examine”) in April 2019.
Gilbert offered the Authorities with particulars throughout that and subsequent proffer periods. He additionally supplied the Authorities full and speedy entry to his telephone and emails on the July 15 proffer session when he was unexpectedly confronted in regards to the Examine.
FBI brokers did in reality evaluate his telephone through the course of that assembly.
The Examine was made out to a Japanese nationwide named Yoshiteru Kawase, whom Gilbert had by no means met.
The Examine was dropped at Gilbert for cashing by a enterprise affiliate named Armando Guzman, who knowledgeable Gilbert that Kawase was a consumer of his and promised Gilbert 20% of the Examine proceeds in trade for cashing the Examine.
Gilbert believed that Armando owed him cash from earlier enterprise dealings.
Gilbert thus determined to not give the $5 million to Armando as soon as the test was cashed, and used the cash for his personal private and enterprise causes.
Gilbert absolutely acknowledges that he ignored a collection of crimson flags surrounding the Examine that ought to have prevented him from taking part in from cashing the Examine.
Armenta places his “poor selections” all the way down to “anxiousness and stress”.
Whereas absolutely acknowledging that the sale of the Airplane and the cashing of the Examine and subsequent use of its proceeds have been large, shameful errors in judgment for which Gilbert is absolutely accountable, in each these cases he was feeling large monetary stress and
even needed to take loans from his spouse.At each time limits, Gilbert was struggling to pay his staff, his workplace leases and different enterprise bills, and his authorized charges. His enterprise was not being profitable and his bills have been piling up.
His most beneficial property was both securing his bail or doubtlessly topic to forfeiture, so he had nothing to promote or leverage.
Because of his conduct, Armenta was remanded to the MCC.
Why Armenta didn’t testify at Mark Scott’s trial
Due to Gilbert’s violations of his cooperation settlement and his remand, the Authorities in the end elected to not name him as a witness within the Mark Scott trial shortly earlier than that trial started in November 2019.
Fortunately, partly because of Gilbert’s cooperation, Ruja’s brother Konstantin Ignatov had been arrested again in March 2019 and determined to cooperate.
The price of justice
Mr. Armenta’s cooperation put himself and his household at nice danger, and the attendant security and safety considerations positioned an added crippling pressure on his marriage.
Gilbert married Basia Armenta in 2006 and the 2 had been very shut even by Gilbert’s arrest and remand. Certainly, they spoke every single day whereas he was on the MCC and she or he traveled from Florida to New York each week to go to him, besides through the quite a few lockdowns and when she was in Poland visiting her mom.
Nevertheless, the stress of extended cooperation, ongoing security considerations about retribution from Ms. Ignatova and the 5 years since Gilbert’s arrest lastly took its toll on the connection, as Gilbert and Basia separated inside the previous 12 months.
However the separation, Basia stays supportive of Gilbert.
Oddly sufficient, Gilbert’s spouse appeared high quality together with his documented affair with Ruja Ignatova.
Throughout the course of his cooperation it was found that Ignatova had bugged Mr. Armenta’s condo previous to his arrest, giving her details about his cooperation standing and placing his household in hurt’s manner.
The security menace was confirmed within the Authorities’s subsequent cooperation settlement with Ignatova’s brother (Konstantin), who was arrested based mostly upon Mr. Armenta’s cooperation and in the end cooperated with the Authorities as effectively.
[The paragraph after the above is redacted]
Gilbert had authentic considerations for his security and that of his household have been he to cooperate towards Ignatova and her group.
Gilbert knowledgeable the Authorities within the early months of his cooperation that Ignatova knew disturbing particulars from his telephone conversations with different people who occurred in each his house and his plane.
Ignatova moreover referenced data she may solely have obtained by hacking the emails of Gilbert and his staff.
For instance, Ignatova questioned Gilbert a couple of jewellery buy after his assistant had paid the bill on his behalf by way of her enterprise electronic mail tackle.
Ignatova had beforehand boasted to Gilbert that she had the potential to watch the communications of others.
[lengthy redactions]
Though this data was instantly offered to each the brokers and the prosecutors, it didn’t seem to Gilbert that the matter was investigated any additional.
Gilbert was understandably distraught, absolutely recognizing by that time limit that Ruja Ignatova was a harmful girl with limitless assets, keen to go to excessive and bizzare lengths to acquire non-public particulars about him and his household.
Maybe the Authorities initially chalked Gilbert’s fears of Ruja hiring individuals to befriend his spouse and bug his condo as much as paranoia, however by the point of the Mark Scott trial in November 2019, it offered info legitimizing these fears to the jury.
Ignatov confirmed throughout his testimony in that trial that Ruja had in reality employed somebody to befriend Gilbert’s spouse and surveil him and his household.
Past the context of OneCoin, [lengthy redactions].
Armenta’s sentencing
Armenta’s attorneys have requested the court docket to depend his time in MCC as time served. Which means if the sentencing request is granted, Armenta walks free.
That is based on the circumstances at MCC throughout Armenta’s detention.
As with different defendants who skilled the deplorable MCC circumstances, any sentence imposed right here ought to replicate the incrementally punitive nature of that interval of incarceration.
Armenta’s attorneys additionally downplay his involvement in OneCoin;
Mr. Armenta’s conduct was admittedly severe. Nevertheless, the Courtroom ought to keep in mind that Mr. Armenta was not an worker or government of OneCoin.
He didn’t develop, design, solicit investments into, or in any other case make any representations to the victims of the underlying OneCoin fraud scheme.
In mild of that and the outcomes and circumstances of Mr. Armenta’s speedy and sustained cooperation with regulation enforcement, the numerous interval of incarceration already served beneath deplorable circumstances, the prolonged interval of house confinement since his launch, and the truth that his incarceration instantly precipitated his contracting COVID-19 and one other medical situation Mr. Armenta respectfully requests that the Courtroom sentence him to time served.
As I perceive it the DOJ have requested Armenta be sentenced to life in jail.
Armenta and Konstantin Ignatov are scheduled to be sentenced on February sixteenth.
