How the USAO New Hampshire Returned $3.5 Million to Scam Victims

Instrumental in maintaining the rule of law and ensuring justice is served, U.S. Attorney Jane E. Young and the U.S Attorney’s Office for the District of New Hampshire aggressively investigate and prosecute fraud cases due to the devastating impact they have on victims.

The office is home to several prosecuting Assistant U.S. Attorneys (AUSA), including John Kennedy and Georgiana L. MacDonald, who led the prosecution of Ian Freeman—convicted money launderer.

Fraudsters targeted the elderly and vulnerable, then laundered proceeds through religious institutions

A group of fraudsters scammed primarily elderly victims out of millions of dollars. In interviews preparing for the subsequent prosecution, AUSA Kennedy explained, “Nearly everybody I spoke to was the victim of some kind of fraud, whether it be a romance scam, an investment fraud or frauds involving the government reaching out and telling [the victims] they owe a tax or something like that.”

Once they fell for the deception, the victims were directed by the fraudsters to send their money to Freeman who, according to court filings, knowingly solicited and accepted millions of dollars worth of bitcoin using his unlicensed money service business. He then remitted the US dollars, less a handsome fee, to the fraudsters conducting the frauds.

Freeman shrewdly used various religious institutions to conceal his laundering activities and shield himself from oversight. Freeman and his supporters aggressively denied culpability and refused to cooperate or offer contrition.

Unraveling a laundering network: The role of blockchain in criminal investigations

Professional money launderers create sophisticated infrastructure in order to obfuscate their conducts from law enforcement. “Luckily in this case, the District of New Hampshire and its investigative partners were willing to methodically peel back the onion and identify the underlying conduct and victims of these fraud schemes,” said Senior Blockchain Investigator and former Homeland Security Investigations investigator Chris Hoffmeister.

The District of New Hampshire, working with a cross section of law enforcement including FBI, IRS-CI, HSI and USPS, was persistent in its efforts to dismantle the laundering scheme and take steps on behalf of victims to obtain restitution. 

“There is nothing wrong with cryptocurrency. It is legal. But what we see is that fraudsters hide behind it given the anonymity that it provides,” stated US Attorney Young. 

Using blockchain tracing techniques, investigators were able to follow some of the cryptocurrency transfers and found what appeared to be common consolidation wallets. To find the identity of the individual or entity behind the wallet, investigators subpoenaed exchanges to request account information. Data held by the exchanges led them to Freeman as the owner of the wallets.

“One of the issues that we were trying to establish was that Mr. Freeman was the one who was controlling this business. The blockchain tracing in this case helped establish that. We were able to show that all of the bitcoin transactions were coming from Mr. Freeman through legal process. That was an important piece for us in being able to show that he was at the center of this operation,” said AUSA Kennedy.

Court orders restitution, holds Freeman accountable for money laundering crimes

Freeman was sentenced to eight years in prison and was ordered to pay restitution. “Freeman’s actions caused just as much harm as the fraudsters’ actions and the court held him accountable for that,” added AUSA Kennedy. 

“This is somebody who knew exactly what he was doing; was trying to be cute or sophisticated about it, but the jury saw through it as did the court,” commented US Attorney Young.

“As a society we continue to grow, every day there is new technology out there. You have to have people out there that want to embrace that and understand that and support that and leverage the tools that are out there,” said US Attorney Young.