Internet Payment Processor Liberty Reserve Accused of Laundering $6 Billion

pdclarry writes with a followup to this weekend's story that Liberty Reserve, a huge international payment processor, had been shut down and its founder had been arrested. "Liberty Reserve, apparently the Internet bank of choice for criminals, as reported by the NY Times, Wired and Business Week, has been accused of laundering over $6 billion dollars. Incorporated in Costa Rica in 2006, Liberty Reserve allegedly 'facilitated global criminal conduct' and was created and structured 'as a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes,' Manhattan U.S. Attorney Preet Bharara said in an indictment (PDF) unsealed today. Chatter on criminal web sites show a rising sense of panic as fortunes have disappeared in an instant."

Comments

as opposed to the 300 trillion

[maliqua]

that HSBC may have laundered..

Re:as opposed to the 300 trillion

[thesupraman]

I believe its called 'too big to fail'
Also known as 'the people in power keep their money there'

Re:as opposed to the 300 trillion

[anagama]

Came here to make an HSBC quip.

Although Matt Taibi has it at 10 Billion, his description of the settlement with HSBC is sadly hilarious:

Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you fucking kidding me? That's the punishment? The government's negotiators couldn't hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them "partially" wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department's opening offer -- asking executives to restrict their Caribbean vacation time to nine weeks a year?

http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213

Anyway, one thing is clear. Liberty Reserve didn't donate enough to Obama's campaign to get a slap on the wrist and and a cabinet post.

Re:as opposed to the 300 trillion

[Anonymous Coward]

Or the $420 billion laundered by Wachovia, for which they paid a $160 million fine.

This is almost certainly less than the profit they made - international money transfers are not cheap - and nobody was prosecuted.

It really is one law for the rich...

Re:as opposed to the 300 trillion

[Anonymous Coward]

I'll just leave this right here...

http://www.guardian.co.uk/business/2013/may/23/hsbc-court-threat-money-laundering-charges

Re:as opposed to the 300 trillion

[colinrichardday]

Universal claims over the empty set are true. Now if he had written "Some honest prosecutor in America", you would have a point.

Re:as opposed to the 300 trillion

[dkleinsc]

Anyway, one thing is clear. Liberty Reserve didn't donate enough to Obama's campaign to get a slap on the wrist and and a cabinet post.

I don't think that's the issue here: According to opensecrets.org, in the 2012 cycle, HSBC gave only about $30K to Obama and $23K to Romney. By comparison, Goldman Sachs spent about $8 million on lobbying and "donations" (a.k.a. bribes). So I don't think HSBC bought them off at the highest level, I think they might have simply offered some extremely well-paid and cushy jobs to the bureaucrats investigating their crimes to convince them that they couldn't find specific wrongdoing on the part of specific people.

But put me in the camp that says that both HSBC execs and Liberty Reserve execs should probably be in jail for this. Or even better, you might take George Carlin's advice:

And you know, in this country, now there are alot of people who want to expand the death penalty to include drug dealers. This is really stupid. Drug dealers aren't afraid to die. They're already killing each other every day on the streets by the hundreds. Drive-bys, gang shootings, they're not afraid to die. Death penalty doesn't mean anything unless you use it on people who are afraid to die. Like... the bankers who launder the drug money. The bankers, who launder, the drug money. Forget the dealers, you want to slow down that drug traffic, you got to start executing a few of these bankers. White, middle class Republican bankers.

Re:as opposed to the 300 trillion

[Anonymous Coward]

It's amazing that anyone is surprised by this. HSBC is part of the establishment and therefore exempt from the penalties that the little people have to face.

Imagine this. 0.1% of human beings have managed to strip mine the world's wealth. They understand that the only way to keep the other 99.9% of humans from murdering them and taking all their stuff is to keep them so stressed out that they can't think straight enough to notice.

When you are worried about terror, paying your mortgage, keeping or getting a job, celebrity scandals, what that other political party/religion/lifestyle choice group is thinking/saying/doing which is an obvious personal assault on your freedoms then you are not thinking critically about anything -- you just don't have time.

The reality in which most people live is continually re-defined by that 0.1%. Your politicians, priests, bankers, CEOS, and celebrities -- they manufacture a reality that you buy into and will defend to the death.

Re:as opposed to the 300 trillion

[anagama]

Good on Judge Gleason! I'm glad to hear that he may torpedo that travesty of a deal. Still, Obama's legal team is working hard to protect the banksters:

The deal -- known as a deferred prosecution agreement (DPA) -- meant HSBC was exempt from prosecution and triggered a storm of criticism. Judge John Gleeson is now believed to be considering rejecting the deal, a move that could leave HSBC facing a criminal prosecution and the threat that its charter to do business in the US could be revoked. ... The justice department is believed to be challenging the need for Gleeson's approval after failing to get a quick signature while the judge is upholding his opinion that he must sign off on the DPA.

Re:as opposed to the 300 trillion

[pla]

An American judge order the splitting of the HONG KONG SHANGHAI BANK OF CHINA? Yes, that's what HSBC means.

The last "C" stands for "Corporation", actually, but close enough.

And yes, an American judge (albeit it with the name "Roberts", since the case would unavoidably end up with the USSC) could order them split up for the purpose of acting as a corporate entity in the US. Worldwide, we can't do much about them. If they want to do business in the US, however, we have every right to insist on the terms under which we allow them to do business in out country.

Re:as opposed to the 300 trillion

[mjwx]

An American judge order the splitting of the HONG KONG SHANGHAI BANK OF CHINA? Yes, that's what HSBC means.

The last "C" stands for "Corporation", actually, but close enough.

HSBC was created when Hong Kong and Singapore were territories of England. They moved their headquarters to London before the English handed back Hong Kong to the Chinese (end of the 99 year lease). HSBC, despite being named Hong Kong and Shanghai Banking Corporation are a UK company and realistically, always have been.

Now it feels odd using this argument FOR the United States but...

HSBC do business in the US, so they are subject to US laws and judgements.

karma truck

[magarity]

"a rising sense of panic as fortunes have disappeared in an instant"

So now they know how their victims feel?

Re:karma truck

[Anonymous Coward]

"..., so I listened to Slashdot..."

You're lucky to be alive.

How is this news?

[haruchai]

There's a financial agency that's not a money-laundering operation? We live in interesting times.

Re:Keep your eyes on the real criminals

[dkleinsc]

the federal reserve corporation pumped out trillions of dollars to mask banker fraud

No they didn't. The Federal Reserve pumped out trillions of dollars because that's what the Federal Reserve is supposed to do in a recession. They pumped out a lot of cash after the S&L collapse in the 1980's too, when the bankers weren't protected and many went to jail.

And I'm not saying the Fed shouldn't be questioned or examined, but that's not in the category of things they've done that's actually wrong or fraudulent in some way.

What is 300 trillion ?

[Taco Cowboy]

Liberty Reserve may have laundered 6 Billion, HSBC may have laundered 300 trillion, but all in all, what does that all mean ?

How come governments can "create" new money out of thin air, trillions at a time, and it's all legal, but when Joe-on-the-street did some side jobs and made some money out of it and does not want it to be taxed, they call it "money laundering" ?

It's all about control, it's all about TPTB exerting their control over us

It's a case of the Great Leader can do everything they want to (even to the point of supplying weapons to some groups of seedy people to fight/kill/murder other groups of seedy people) but you, the Joe-on-the-street, don't get to do anything you want because you just ain't nobody

Re: What is 300 trillion ?

[Xeranar]

Idiots who don't understand fiat currency make me sad. Basically we dillute the money supply as a proportion of the GDP. In other words we base our money off of our collective labor rather than some arbitrary metal we deem rare enough to care about.

Re: What is 300 trillion ?

[Arker]

You must make yourself very sad.

"We" dont do any of this. A cabal of the best connected and wealthiest bankers in the country do it, in private, as they see fit, and we get no say. When they inflate the currency, they dont create new value - they just suck some of the value out of the old currency. And then they get to spend the new currency. Great scam. Of course they try to restrain their greed enough to keep the inflation at a level where the increase in GDP can mask it - they dont want to be set on with torches and pitchforks any more than anyone else does.

Re: What is 300 trillion ?

[Anonymous Coward]

So even if you work more and more, the government dilutes your work so you will be as if working the same as usual?

No. It means if you stuff all your money under your mattress and don't do any work at all you're not entitled to a share of a growing economy.

Re: What is 300 trillion ?

[ShanghaiBill]

"We" dont do any of this. A cabal of the best connected and wealthiest bankers in the country do it

Do you understand that banker are creditors, who benefit from a strong currency? So if their unenlightened self interest is the opposite of what they are doing, why are they doing it? Maybe because they (along with 99% of all economists) believe that we all benefit from expansionary monetary policy during recessions?

When they inflate the currency, they dont create new value - they just suck some of the value out of the old currency.

Except that inflation is near record lows, despite trillions in new money. When unemployment is at 10% and factory utilization is below 80%, there is plenty of slack for "new money" to create real value by putting labor and capital to work.

Of course they try to restrain their greed ...

Could you please explain how a creditor diluting the currency can be considered "greedy"? You might want to read some history books. In the past the conspiracy nuts were accusing the bankers of suppressing the "common man" by doing the exact opposite of what they are doing today. The most eloquent expression of this was the Cross of Gold speech by William Jennings Bryan.

Re: What is 300 trillion ?

[Arker]

Do you understand that banker are creditors, who benefit from a strong currency? So if their unenlightened self interest is the opposite of what they are doing, why are they doing it?

Over the past 20 years the currency supply as estimated by the Fed themselves has gone from $400 billion to $3,000 billion dollars - a gain of $2,600 billion. That means 6.5 times more US currency than *existed* 20 years ago has been *added* to the supply since then, and that's *net* so gross numbers would be even bigger. That's a pretty huge slice of 'pie' even for the richest men on the planet. In the meantime the devaluing aspect that pays for this windfall is spread out evenly among everyone holding US dollars, while the enriching portion hits you alone, so you are taking a relatively small hit for a relatively large return. In sum, your thesis that this is against their self interest is simply ill-founded. Particularly considering that what matters to the very rich is not actual value (since they have more than they could need already) but rather proportional value (since this is the aspect of money that brings power, and at that level money really is only a tool for acquiring power.)

Except that inflation is near record lows, despite trillions in new money. When unemployment is at 10% and factory utilization is below 80%, there is plenty of slack for "new money" to create real value by putting labor and capital to work.

Except that your numbers are heavily massaged for propaganda purposes and dont actually resemble reality. Unemployment numbers only count people that lost their jobs recently (the chronically unemployed become invisible this way) and only people that have no work at all (so people that lose good jobs and have them 'replaced' with minimum wage jobs that they cannot live on dont count as unemployed either.) 'Our' factory utilisation is low because 'we' are busy moving those jobs overseas.

Bryant, for all his flaws and mistakes, was advocating a bimetallic monetary standard, not fiat currency, and your citation of him seems a bit gratuitous.

Re: What is 300 trillion ?

[ShanghaiBill]

That's the kind of insanity that's driving the US deeper into the hole. Doubling down on failed policies won't turn the economy around, and such failed policies haven't even worked as advertised for the last several years.

The opposite of what America is doing is called "austerity". That is what Europe is doing. Two years ago we both had near 10% unemployment. Today, America is at 8% and Europe is at 12%. In the face of this reality, I think you look pretty foolish arguing that America's monetary expansion is wrong and we should be more like Europe. It is important to balance budgets and pay down debts, but trying to do it in the middle of a recession is nuts.

Six dollars billion dollars

[honestmonkey]

I like that they laundered "$6 billion dollars". So one guy, Mr. Six Dollars had his billion dollars laundered? Or was it a billion and six dollars? A billion dollars worth of six dollar bills? Or is it that the dollar sign or the word 'dollars' was redundant? Hmmmmm.

Attack on digital currency

[Neo-Rio-101]

We all know that this is the first salvo being fired at digital currencies.

The "powers that be" running the world's major banks in concert, can't have any currency run outside of their control and manipulation, because then they would lose their grip on the world's economies (and in turn, their people) to do their bidding.

If they can't latch control onto Bitcoin or other currencies, they will attempt to stifle it's ascendancy, or drive it far underground.
Remember that they only manage to control the world because we have to use the major currencies under their control, which gives them their license to print credit at the cost of everyone's freedom who actually has to do the work for it's creation.

Re:Attack on digital currency

[rmstar]

The "powers that be" running the world's major banks in concert, can't have any currency run outside of their control and manipulation, because then they would lose their grip on the world's economies (and in turn, their people) to do their bidding.

I'm here to say that I am fine with this.

Governments are needed to bring order and stability, and they do that by enforcing the rule of law, including the legality of business. Money laundring undermines this, so it must be prosecuted. Actually, I am quite happy that they are finally doing somthing about money laundring.

That goverments don't get all what they do 100% right is normal for any human endeavour, and a reason to engage into politics, not to pretend we will be better off without governments.

Anyway, bitcoins & co need to be regulated to avoid it becomming a vehicle for illegal business.