According to William J. Hochul Jr., U.S. Attorney, a federal grand jury returned an indictment charging Richard Petix, of Rochester, NY with operating an unlicensed money transmitting business and making material false statements. A separate indictment charging Zhe Wang and Kevin Szura, both from Queens, with conspiracy to distribute controlled substances, money laundering conspiracy, money laundering, and conducting a monetary transaction in criminally derived property. Petix could serve up to five years of each charge, while Wang and Szura could serve 20 years.
“This case demonstrates the ever growing ways in which the virtual world is intersecting with, and being exploited by, real life crime and criminals. Those involved in such illicit activities should know that law enforcement is prepared to track them into the deep and dark portions of the web in order to bring criminals to justice.” Attorney Hochul was quoted as saying in regards to the case.
“Dismantling the fraudulent financial operations of transnational criminal organizations is critical because these groups can succeed only so long as they can funnel their illicit proceeds freely and without detection,” said Michael Kennedy, Acting Special Agent in Charge of Homeland Security Investigations. “HIS will continue to aggressively target illegally functioning new alternatives to traditional financial institutions that deliberately enable businesses and individuals to further their criminal schemes.”
Handling the case is Assistant U.S. Attorney Wei Xiang, who stated that Petrix lied to federal probation officers and law enforcement agents about his ownership and use of a laptop computer, as well as a smartphone. Petrix was put on supervised release in 2009 for a child pornography conviction and was supposed to tell probation officers and law enforcement when he used a computer or the internet and also to let law enforcement examine the computer if suspicious activity is detected. On October 20th, 2015 Petix told his probation officer that he did not use any computers or the internet.
On December 3rd, 2015, Petix made a bitcoin sale with an undercover federal agent. Using his laptop computer and smartphone Petix transferred 37 bitcoins worth approximately $13,000 to the agent. When probation officers confronted Petix at the scene he denied having the laptop and smartphone.
During the time between August 2015 and December 3rd, 2015 Petix is accused of having been running and unlawfully operating bitcoin exchange with sold approximately $200,000 in bitcoins.
The indictment states that in October of 2015 Wan was one of four people arrested by the Erie County Sheriff’s Office with state controlled substance charges. Wang’s home at 72 Winspear Ave. in Buffalo, NY, was raided and around 2,500 Xanax bars were confiscated. When Wang and Szura were arrested on March 7th, 2016 by agents, they were trying to purchase $8,000 in bitcoins to buy more Xanax bars. Between the two of them they were busted with over $30,000 in their possession. Szura was also busted with Xanax he was bringing for the undercover agent to try.
Petix will be arraigned before U.S. Magistrate Judge Hugh B. Scott tomorrow, March 15th, 2016 at 10:00 a.m. Wang and Szura were arraigned March 10th in front of U.S. Magistrate Judge Michael J. Roemer. The indictments are thanks to an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero, and the United States Postal Inspection Service, under the direction of Inspector in Charge Shelly Binkowski.