Shrem & Faiella Agree to Forfeit $950K As Part of Plea Deals

By September 7, 2014Bitcoin Business
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Shrem & Faiella Agree to Forfeit $950K As Part of Plea Deals
Shrem & Faiella Agree to Forfeit $950K As Part of Plea Deals

Last week, reports began crossing the wires indicating that Charlie Shrem was slated to plead guilty to charges of unlicensed money transmitting. His co-conspirator, Mr. Robert Faiella, planned a similar move.

We’re now learning from wire service Reuters that both men have pleaded guilty as planned at a hearing on Thursday, which came a little over two weeks before a trial was scheduled to take place on the 22nd of September.

Shrem acknowledges that he facilitated the conversion of U.S. dollars into bitcoin in order to assist individuals obtain narcotics from the Silk Road marketplace.

According to court documents, Faiella was sending large volumes of money to Shrem’s company, BitInstant, which had raised concern among Shrem’s partner in the business.

These documents indicate that Shrem initially warned Faiella that they understood what he was doing was illegal, formally declaring Faiella as banned from using the BitInstant service.

In later correspondence with Faiella, however, Shrem hinted that Faiella should use alternate e-mail accounts to bypass bans and continue working with BitInstant.

Shrem’s partner at one point advised, “The guy [Faiella] strikes me as pretty deceptive in using [alternate] e-mail addresses etc – we need to keep a very tight watch on this one.”

“You got it boss,” Shrem responded.

Despite recommendations from his business partner, Shrem was focused on “resolving” the issues as opposed to banning Faiella outright, telling Faiella in an email that “I just want to let you know, I take care of you bro.”

Despite Faiella’s illegal actions, Shrem recognized the profitability of the partnership — which of course led up to his arrest (and Faiella’s) earlier this year.

Plea agreement

As part of the plea deals, both men have agreed to forfeit $950,000 to the United States Federal government.

Preet Bharara, attorney for the United States in Manhattan said in a statement, “Robert Faiella and Charlie Shrem opted to travel down a crooked path – running an illegal money transmitting business that catered to criminals bent on trafficking narcotics on the dark web drug site, Silk Road.”

Both Shrem and Faiella will have to appear in court in January of next year. They face up to five years of imprisonment.

We’re now learning from wire service  Reuters that both men have pleaded guilty as planned at a hearing on Thursday, which came a little over two weeks before a trial was scheduled to […]

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