YORBA LINDA (CBSLA) — A Yorba Linda man accused of operating an illegal Bitcoin and money laundering business has struck a plea deal with federal investigators.
Kais Mohammad, 36, who was also known as “Superman 29,” agreed to plead guilty to one count each of operating an unlicensed money transmitting business, money laundering and failing to maintain an effective anti-money laundering program, according to a plea agreement filed Wednesday.
Federal investigators say HeroCoin, which was owned and operated by Mohammad, was an illegal virtual-currency money services business, exchanging Bitcoin for cash and charging commission of up to 25%. Mohammad allegedly met with clients and public locations and exchanged currency for them. According to the Department of Justice, Mohammad did not inquire as to the source of the funds and often knew the funds were proceeds of criminal activity.
Mohammad later purchased a network of ATM-type kiosks and installed them in malls, gas stations and convenience stores throughout Los Angeles, Orange, Riverside and San Bernardino counties, according to federal officials. At these HeroCoin-branded kiosks, customers were able to use cash to purchase Bitcoin, or sell Bitcoin in exchange for cash that was dispensed onsite.
Prosecutors say Mohammad intentionally failed to register the company with the U.S. Treasury Department’s Financial Crimes Enforcement Network, develop an anti-money laundering program, or alert federal officials to transactions bigger than $10,000 or transactions over $2,000 involving customers suspected to be involved in criminal activity. Mohammad also admitted to neglecting to put a program in place to get identification for customers conducting multiple transactions of up to $3,000 on his kiosks or verify any identification provided by the person conducting the transaction.
According to the plea deal, Mohammad admitted to exchanging between $15 million and $25 million from in-person exchanges and transactions occurring at his kiosks.
A hearing has not yet been scheduled for Mohammad to enter his guilty plea. He faces a statutory maximum sentence of 30 years in federal prison and has agreed to forfeit the cash, cryptocurrency and 17 Bitcoin ATMs that he operated.