Indian-American in Calif. to plead guilty to Bitcoin money laundering charges

An Indian-American in Westwood, Calif. was last week slapped with federal criminal charges for allegedly owning and operating an unlicensed money transmitting business where he exchanged up to $25 million in cash and virtual currency for Darknet drug dealers and other criminals, some of whom used his bitcoin ATM kiosk.

According to the U.S. Attorney’s Office in Los Angeles, Kunal Kalra, 25 — also known as “Kumar,” “shecklemayne” and “coinman” — ran a money-remitting business in suburban Los Angeles used by drug dealers operating on the dark web. His services even provided a standing kiosk, or ATM, for cryptocurrency.

Kalra, who was charged August 23 in a four-count criminal information filed in U.S. District Court and is expected to make his initial court appearance in September, agreed to plead guilty, pursuant to a plea agreement, to four felonies: distribution of methamphetamine, operating an unlicensed money transmitting business, laundering of monetary instruments, and failure to maintain an effective anti-money laundering program.

This is believed to be the first federal criminal case charging an unlicensed money remitting business that used a bitcoin kiosk, prosecutors said.

According to the court documents, from May 2015 through October 2017, Kalra knowingly operated a virtual currency exchange business where he exchanged U.S. dollars for bitcoin and vice versa.

Kalra charged commissions for exchanging dollars for bitcoin, and he only dealt with high-volume customers willing to exchange at least $5,000 per transaction. Kalra admitted in his plea agreement that he exchanged bitcoin for cash from criminals, including those who received bitcoin from selling narcotics on the Darknet.

Kalra allegedly established bank accounts in the names of others, including fake businesses, which allowed him to conceal his illicit business activities, court papers state. Kalra also admitted to operating a kiosk – essentially an ATM – where his customers could exchange bitcoin for cash and vice versa.

Kalra profited from every transaction conducted on the ATM. Customers, who sought to do an exchange using this ATM, were not required to provide their identities and Kalra did not install a camera or implement any features requiring customers to identify themselves, the plea agreement states.

The U.S. Attorney’s office said in a press statement that Kalra also admitted that in 2017 he exchanged approximately $400,000 in cash for bitcoin for an undercover agent who contacted him online and later met him in person on multiple occasions at a coffee shop in Los Angeles.

The undercover agent told Kalra that his virtual currency were proceeds of drug trafficking, and Kalra continued with various transactions, according to the plea agreement.

In June 2017, Kalra sold nearly two pounds of methamphetamine to an undercover law enforcement official in exchange for $6,000. Kalra and the undercover agent later met at a coffee shop in Signal Hill to exchange $50,000 in bitcoin for cash, which the undercover agent represented to Kalra was the proceeds of the sales of the methamphetamine that Kalra had sold to the agent, the plea agreement states.

Authorities seized nearly $889,000 in cash from Kalra’s bank accounts and vehicle, as well as approximately 54.3 bitcoin (523,311.36 U.S. Dollar) and other cryptocurrencies.

The maximum possible sentence Kalra could receive for these charges is life in federal prison.

The prosecutors said Kalra also faces federal criminal charges in San Antonio, Texas, that were filed earlier in August. That case alleges Kalra conspired to commit money laundering for a drug trafficking network that sold fraudulent prescription tablets, including some laced with methamphetamine and fentanyl.

According to MySanAntonio.com, Kalra provided illegal services for various drug dealers operating on the dark web, including laundering more than $548,000 for Alaa Mohammed Allawi, an Iraqi-born interpreter for U.S. military forces who had homes in San Antonio, Los Angeles and Houston.

Allawi, 30, led a San Antonio ring that trafficked thousands of black market prescription pills laced with fentanyl or methamphetamine. The ring made the pills using a commercial pill press at a home near the University of Texas at San Antonio and initially targeted college students, but grew its market on the dark web.

In the plea agreement filed last week, Kalra agreed to plead guilty to those charges in Los Angeles federal court.

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