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OneCoin Trial Mark Scott Found Guilty on
Both Counts After 4 Hours Now US Statement
By Matthew
Russell Lee, Patreon Thread, Plea
BBC
The
Times (UK)
Daily
Mail
SDNY COURTHOUSE,
Nov 21 – Charged with
laundering $400 million for
OneCoin and Ruja Ignatova,
Mark Scott on November 21 was
found guilty on both counts,
wire fraud and bank fraud, by
a jury after four hours of
deliberations on November 21.
The three week trial ended
quickly, after e-mails showed
Ruja Ignatova asking Scott to
"park" money for her for a
fee, and him promising her
anonymity.
Scott, who
has been waiting in the
courthouse cafeteria just
before the verdict with his
wife, stood in the court amid
wailing and will face jail and
disbarment as a lawyer.
Now, hours
later, this from the US
Attorney's Office which for
days, weeks, withheld the
exhibits in the case:
"Geoffrey S. Berman, the
United States Attorney for the
Southern District of New York,
and Cyrus R. Vance Jr., the
District Attorney for New York
County, announced the
conviction today of MARK S.
SCOTT, following a three-week
trial before the Honorable
Edgardo Ramos. SCOTT, a
former equity partner at the
law firm Locke Lord LLP,
laundered approximately $400
million in proceeds of a
massive international fraud
scheme known as “OneCoin”
through fraudulent investment
funds that SCOTT set up and
operated for that
purpose. SCOTT was paid
more than $50 million for his
money laundering services,
which he used to buy luxury
cars, a yacht, and several
seaside
homes.
Manhattan U.S. Attorney
Geoffrey S. Berman said:
“Mark S. Scott, an equity
partner at a prominent
international law firm, used
his specialized knowledge as
an experienced corporate
lawyer to set up fake
investment funds, which he
used to launder hundreds of
millions of dollars of fraud
proceeds. He lined his
pockets with over $50 million
of the money stolen from
victims of the OneCoin
scheme. Scott, who
boasted of earning ‘50 by 50’
now faces 50 years in prison
for his
crimes.”
As reflected in the
Indictment, documents
previously filed in the case,
and evidence introduced at
trial:
“OneCoin” is a massive pyramid
fraud scheme. OneCoin
Ltd. was co-founded in or
about 2014 by Ruja Ignatova,
and is based in Sofia,
Bulgaria. SCOTT was
introduced to Ignatova in late
2015, and began laundering
OneCoin fraud proceeds in
2016. Ignatova served as
OneCoin’s top leader until her
disappearance from public
view, in or about October
2017.
OneCoin Ltd. operates as a
multi-level marketing network
through which members receive
commissions for recruiting
others to purchase
cryptocurrency packages.
OneCoin Ltd. has claimed to
have over three million
members worldwide, including
victims living in the Southern
District of New York.
Records obtained in the course
of the investigation show
that, between the fourth
quarter of 2014 and the third
quarter of 2016 alone, OneCoin
Ltd. generated €3.353 billion
in sales revenue and earned
“profits” of €2.232
billion. OneCoin
continues to operate to this
day.
Among a number of other
representations, OneCoin Ltd.
has claimed that the OneCoin
cryptocurrency is “mined”
using mining servers
maintained and operated by the
company, and that the value of
OneCoin is based on market
supply and demand. The
purported value of a OneCoin
steadily grew from €0.50 to
approximately €29.95 per coin,
as of in or about January
2019. In fact, the value
of OneCoin is determined
internally and not based on
market supply and demand, and
OneCoins are not mined using
computer resources.
Moreover, the investigation
has revealed that Ignatova and
her co-founder conceived of
and built the OneCoin business
fully intending to use it to
defraud
investors.
SCOTT – who was employed
between June 2015 and
September 2016 as an equity
partner at Locke Lord LLP, a
prominent international law
firm – was first introduced to
Ignatova in September
2015. Beginning in 2016,
SCOTT formed a series of fake
private equity investment
funds in the British Virgin
Islands known as the “Fenero
Funds.” SCOTT then
disguised incoming transfers
of approximately $400 million
into the Fenero Funds as
investments from “wealthy
European families,” when in
fact the money represented
proceeds of the OneCoin fraud
scheme. SCOTT layered
the money through various
Fenero Fund bank accounts in
the Cayman Islands and the
Republic of Ireland.
SCOTT subsequently transferred
the funds back to Ignatova and
other OneCoin associated
entities, this time disguising
the transfers as outbound
investments from the Fenero
Funds. As part of the
scheme, SCOTT and his
co-conspirators lied to banks
and other financial
institutions all over the
world, including to banks in
the United States, to cause
those institutions to make
transfers of OneCoin proceeds
and evade anti-money
laundering
procedures.
SCOTT, who boasted about
earning “50 by 50,” was paid
more than $50 million for his
money laundering
services. He used that
money to purchase, among other
things, a collection of luxury
watches worth hundreds of
thousands of dollars, a
Ferrari and several Porsches,
a 57-foot Sunseeker yacht, and
three multimillion-dollar
seaside homes in Cape Cod,
Massachusetts.
SCOTT was arrested near one of
his seaside homes in
Barnstable, Massachusetts, on
September 5,
2018.
*
*
*
SCOTT, 51, of Coral Gables,
Florida, was convicted of one
count of conspiracy to commit
money laundering, which
carries a maximum potential
sentence of 20 years in
prison, and one count of
conspiracy to commit bank
fraud, which carries a maximum
potential sentence of 30 years
in prison. The maximum
potential sentences are
prescribed by Congress and are
provided here for
informational purposes only,
as the sentencing of the
defendant will be determined
by the judge. Sentencing
before Judge Ramos is
scheduled for February 21,
2020."
After
OneCoin's Konstantin Ignatov
got a stay of the civil case
against him, his criminal case
was said to have been kicked
down the road for at least
another two months.
It was a
productive two months, at
least for the U.S. Attorney's
Office for the Southern
District of New York. They got
Konstantin Ignatov to sign a
plea agreement and become a
cooperating witness.
On
November 19 the government
rested its case. Thread
here.
Late
on November 20 - at 11:15 pm
-- Scott's lawyer David Garvin
asked Judge Ramos to, before
the jury start deliberating on
November 21, read yet another
instruction: "Dear Judge
Ramos: Please accept this
letter as the request of the
defense for a supplemental
jury instruction before the
jury begins its deliberations.
Upon reviewing the jury
instructions relating to wire
fraud as the specified
unlawful activity to the
charge of money laundering, it
occurred to the defense that
the instructions may
inadvertently leave the jury
with the impression that the
crime of wire fraud may be
applied solely on
extraterritorial acts. The
crime of wire fraud set forth
in 18 U.S.C. Section 1343
applies to conduct that takes
place within the United
States. A fraud that occurs
outside of the United States
does not fall within the
definition of wire fraud. We
believe that the attached
proposed instruction would
effectively address this
potential problem... As I
previously stated, with regard
to Count 1, the alleged
specified unlawful activity is
wire fraud. The wire fraud
statute does not apply to a
scheme that is carried out
outside of the United States.1
Therefore, in order for
proceeds to be the proceeds of
a specified unlawful activity,
the funds have to be proceeds
of a fraudulent scheme that
occurred in the United States.
A fraud scheme occurs within
the United States only “when
(1) a defendant or
coconspirator commits a
substantial amount of conduct
in the United States, (2) the
conduct is integral to the
commission of the scheme to
defraud; and (3) at least some
of the conduct involves the
use of U.S. wires in
furtherance of the scheme to
defraud.”
Earlier on
November 20 in his summation
AUSA Nicholas Folly asserted
that OneCoin is a fraud scheme
and Ruja is the leader of that
OneCoin. And Scott knows that.
Then he directed the jury to
emails in which Ruja asked
Scott how much he would charge
to park or launder 50 million
Euro for her. These exhibit
have yet to be made available.
Scott's lawyer Arlo
Devlin-Brown because by saying
that lies to Bank of Ireland
could not be bank fraud,
because Bank of Ireland is not
FDIC insured, an element of
the crime. But Sabadell, now
IBERIABANK, is FDIC insured.
More
generally, Devlin-Brown argued
that if Deutsche Bank and HSBC
didn't know that OneCoin was a
scam, how could Mark Scott
know? The jury, of course, is
charged with deciding. Thread
here;
more on Patreon here.
The US
concluded its evidence with
photographs of a house that
Mark Scott bought in
Barnstable on Cape Cod, with
money through City National
Bank of Florida, and his
post-arrest statement in which
he said he met Ruja Ignatova
approximately eight times
including in Frankfurt,
Germany where he said he
thought she lived. Still?
Scott's
lawyers put on two character
witnesses, both lawyers:
Warren Zaffuto of Florida and
Robert Skorupa who met Mark
Scott in Boston in the 1990s.
The summations will be on
November 20, an hour and
twenty minutes each as urged
by Judge Ramos. More on
Patreon here.
At the charging
conference on November 18,
with only four people in the
gallery of cavernous Courtroom
318 of 40 Foley Square - once
the main intake courtroom of
the Mother Court - Arlo
Devlin-Brown said that his
defense summation will be much
shorter if these exhibits are
accepted in. Whether this
logistical decision, directed
at Judge Ramos' stated goal of
getting a jury decision one
way or the other by Friday so
as not to take the jury into
the Thanksgiving holiday week,
is also not known, for now.
Soon it will be known. Watch
this site.
Late on the
afternoon of November 18 the
charging conference was held,
with Inner City Press the only
media in the courtroom. The US
opposed Mark Scott's lawyer's
request for a "good faith"
jury instruction, and at 10 pm
followed it up with a letter:
"Dear Judge Ramos: The
Government submits this brief
letter in opposition to the
defendant’s proposed inclusion
of a standalone good faith
jury instruction. Such an
instruction is unnecessary in
light of the current jury
instructions. The Second
Circuit “has long adhered to
the view held by a majority of
the circuits that a district
court is not required to give
a separate ‘good faith
defense’ instruction provided
it properly instructs the jury
on the government’s burden to
prove the elements of
knowledge and intent, because,
in so doing, it necessarily
captures the essence of a good
faith defense.” United States
v. Al Morshed, 69 F. App'x 13,
16 (2d Cir. 2003). As the
Second Circuit has noted,
standard instructions on
knowledge and intent “capture
the essence of the good faith
defense, for someone cannot
believe in good faith that he
was acting properly and within
the law if he knowingly” and
intentionally committed the
charged offense. Id. The
current charge adequately
charges the jury on the issues
of knowledge and
intent—including a reference
in the conscious avoidance
charge to the fact that if the
jury “find[s] that [Scott]
actually believed the fact was
not so, then you may not find
that he acted knowingly with
respect to that fact.” The
current jury charge is more
than sufficient and nothing
further is warranted in this
case."
Earlier on
November 18 after Manhattan
District Attorney's Office
witness Rosalind October
described OneCoin linked
accounts at Commerzbank,
Morgan Stanley and IBERIABANK,
Scott's lawyers put on the
stand their first witness, out
of order: Florida lawyer
Miguel Diaz de al Portilla as
a character witness.
After he
testified about a real estate
deal on which Mark Scott held
with a refinance mortgage
loan, Assistant US Attorney
Christopher Dimase asked him
about multiple campaign
contributions from Scott when
he unsuccessfully ran to
re-election to the Florida
state legislature.
On Sunday
November 17 the prosecutors
had written to SDNY Judge
Ramos to "request that the
Court: (1) preclude the
defendant from eliciting
testimony from defense
character witnesses regarding
specific instances of the
defendant’s conduct; and (2)
instruct the jury that (a) the
duty of client confidentiality
cannot serve as a defense to
criminal conduct; and (b) none
of the email communications
admitted by the Government at
trial—including communications
between the defendant and Ruja
Ignatova—are privileged."
At the
tail end of the trial day on
Friday, November 15, Scott's
lawyers begrudgingly disclosed
one such character witness,
apparently Renier David de La
Portilla. (Judge Ramos asked
it was "del;" the answer was
"de la.")
If it is,
or even Miguel de La Portilla,
both have been described for
their roles in Cuban-American
/ Republican politics in
Florida, casting addition
light on the role in the case
of George W. Bush's brother
Neil Bush, first reported by
Inner City Press, including at
least $300,000 from Ruja
Ignatova. We will have more on
this during the November 18
trial day. Watch this site, this platform (Patreon)
- and @InnerCityPress
on Twitter.
Inner City
Press also first reported that
Mark Scott associate David R.
Pike was arrested on OneCoin
charges and quietly presented
in and bailed by the SDNY
Magistrate Court on September
12, 2019 by Magistrate Judge
James L. Cott, based on a
complaint signed sealed back
on August 29 by this week's
Magistrate Judge Katharine H.
Parker.
Since then
Special AUSA Julieta V. Lozano
has asked for continuances,
during the Scott trial, to
figure out what to do with
Pike afterward. Inner City
Pres, cover this closely, will
have more. More on Patreon here.
On
November 15, on which the
government had said it might
rest its case, AUSA
Christopher Dimase
questioned a witness
from BNY Mellon about
irregularities it found in
Mark Scott's Fenero Funds'
business with DMS Bank in
Cayman Islands.
The
questioning established the
FDIC insurance, an element in
bank fraud charges, applies
not only to BNY Mellon but
also other involved banks
including TD Bank, JPMorgan
Chase, HSBC and Northern
Trust. The implications of the
evidence in the case for these
banks is not yet clear. More
on Patreon here.
On November
13 the prosecution and the
defense both questioned the
deputy Chief Operating Officer
of Locke Lord, the law firm
Mark Scott worked at from June
2015 through September 2016.
Thread here.
E-mails
were shown in which OneCoin's
Ruja Ignatova told
Scott, "I have some cash with
me. About 220K GBP. Can you
store it for me in London?"
Other exhibits concerned a
bank in Zimbabwe, a penthouse
in London, and funds put into
and quickly taken out of the
law firm's escrow account.
There is
also in evidence
an e-mail from the defendant
Mark Scott to now-cooperating
witness Konstantin Ignatov, as
his sister Ruja's personal
assistant, stating that "I
would prefer not meeting in
Sophia as I don't want too
many travels there on my
flight list." More on Patreon
here.
On November 12
Inner City Press obtained and
put online here,
on Scribd, Konstantin
Ignatov's plea agreement,
including "On the
understandings specified
below, the Office of the
United States Attorney for the
Southern District of New York
(“this Office”) will accept a
guilty plea from Konstantin
Ignatov (the “defendant”) to
the above-referenced
four-count Superseding
Information (the
“Information")...
If the defendant
fully complies with the
understandings specified in
this Agreement, he will not be
further prosecuted criminally
by this Office for any crimes,
except for criminal tax
violations, related to his
participation in: (1) an
international cryptocurrency
fraud scheme known as
“OneCoin” (the “OneCoin
Scheme"), from in or about
2016, up to and including in
or about 2019, as charged in
Counts One and Two of the
Information; (2) a conspiracy
to defraud banks and other
financial institutions
worldwide by causing them to
transfer proceeds of the
OneCoin Scheme by
misrepresenting and omitting
material facts to those banks
and financial institutions,
from in or about 2016, up to
and including in or about
2019, as charged in Count Four
of the Information; and (3) a
conspiracy to launder criminal
proceeds derived from the
OneCoin Scheme, and to
transfer funds internationally
to promote the OneCoin Scheme,
from in or about 2016, up to
and including in or about
2019, as charged in Count
Three of the Information; to
the extent that he has
disclosed such participation
to this Office as of the date
of this Agreement.
It is
understood that Ignatov's
truthful cooperation with this
Office is likely to reveal
activities of individuals who
might use violence, force, and
intimidation against Ignatov,
his family, and loved ones.
Should Ignatov's cooperation
present a significant risk of
physical harm, this Office,
upon the written request of
Ignatov, will take steps that
it determines to be reasonable
and necessary to attempt to
ensure his safety and that of
his family and loved ones.
These steps may
include application to the
Witness Security Program of
the United States Marshals
Service, whereby Ignatov, his
family, and loved ones, if
approved, could be relocated
under a new identity...
This Office will,
however, bring the cooperation
of the defendant to the
attention of other prosecuting
offices, if requested by
him. It is understood
that the sentence to be
imposed upon the defendant is
within the sole discretion of
the Court.
This Office
cannot, and does not, make any
promise or representation as
to what sentence the defendant
will receive, and will not
recommend any specific
sentence to the Court.
However, this Office will
inform the Probation Office
and the Court of (a) this
Agreement; (b) the nature and
extent of the defendant's
activities with respect to
this case and all other
activities of the defendant
which this Office deems
relevant to sentencing; and
(c) the nature and extent of
the defendant's cooperation
with this Office. In so doing,
this Office may use any
information it deems relevant,
including information provided
by the defendant both prior to
and subsequent to the signing
of this Agreement.
In addition, if
this Office determines that
the defendant has provided
substantial assistance in an
investigation or prosecution,
and if he has fully complied
with the understandings
specified in this Agreement,
this Office will file a
motion, pursuant to Section
5K1.1 of the Sentencing
Guidelines, requesting the
Court to sentence the
defendant in light of the
factors set forth in Section
5K1.1(a)(1)-(5).
It is understood
that, even if such a motion is
filed, the sentence to be
imposed on the defendant
remains within the sole
discretion of the Court.
Moreover, nothing in this
Agreement limits this Office's
right to present any facts and
make any arguments relevant to
sentencing to the Probation
Office and the Court, or to
take any position on
post-sentencing motions. The
defendant hereby consents to
such adjournments of his
sentence as may be requested
by this Office.
It is
understood that, should this
Office determine either that
the defendant has not provided
substantial assistance in an
investigation or prosecution,
or that the defendant has
violated any provision of this
Agreement, such a
determination will release
this Office from any
obligation to file a motion
pursuant to Section 5K1.1 of
the Sentencing Guidelines, but
will not entitle the defendant
to withdraw his guilty plea
once it has been entered.
It is
understood that, should this
Office determine, subsequent
to the filing of a motion
pursuant to Section 5K1.1 of
the Sentencing Guidelines
and/or 18 U.S.C. Sec. 3553(e),
that the defendant has
violated any provision of this
Agreement, this Office shall
have the right to withdraw
such motion."
A sample TD
Bank letter to Gilbert Armenta
is here.
We'll have more on this.
On
November 6 Konstantin Ignatov
testified that the bodyguards
to took Ruja on her final
public trip told him she was
met by "Russian guys," and
that Ruja had told him that in
Russia she knew a rich and
powerful person. More on
Patreon, here.
The case
is US v.
Scott / Ignatov,
17-cr-630
(Ramos).
More
on Patreon, here.
***
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