By Lookout Staff
October 5, 2023 -- A Santa Monica man accused of allowing scammers and drug traffickers to launder millions of dollars through his cryptocurrency-cash exchange company pleaded guilty to a federal charge Wednesday.
Under a plea bargain, Charles James Randol, 33, was convicted of "failing to maintain an effective anti-money laundering (AML) program" and faces a maximum sentence of five years in federal prison, the U.S. Attorney’s Office said.
According to his plea agreement, from October 2017 to July 2021
Randol owned and operated what was eventually known as Digital Coin Strategies LLC, which offered exchange services for a commission in ads posted on various websites, including his own.
Randol completed the transactions via anonymous in-person meetings with customers, by controlling and operating a network of automated kiosks and through the mail, prosecutors said.
In his plea agreement, Randol admitted he "repeatedly violated federal law and his company’s own AML (anti-money laundering) policies" by taking steps to conceal the suspicious exchanges from law enforcement.
This included "failing to file required currency transaction reports and suspicious activity reports," according to the U.S. Attorney's office.
"Randol frequently conducted in-person cash transactions that exceeded $10,000 with anonymous or pseudo-anonymous individuals, including people who Randol knew only as “Puppet Shariff,” “White Jetta,” “Aaavvv,” “Aaaa,” “Yogurt Monster,” and “Hood,” prosecutors said.
In his plea agreement, Randol "admitted to engaging in three specific transactions from October 2020 to January 2021 in which he exchanged a total of $273,940 in cash for Bitcoin."
He completed the transactions "without requesting a name, proof of identity, Social Security number, or any other information about the buyer or the source of the funds being exchanged," prosecutors said.
Under the Bank Secrecy Act and his company’s AML policy, Randol was required to "verify the identity of customers engaging in transactions over $9,999."
This included obtaining the customer’s full name, address, Social Security number, a verified phone number and a photocopy of the customer’s official government identification.
In addition to in-person transactions, Randol also conducted hundreds of transactions after receiving large cash shipments in the mail from anonymous individuals to locations he controlled in or around Los Angeles.
The sender would then text Randol "using an encrypted platform to notify him that a parcel containing cash had been sent," prosecutors said.
"The cash was often packaged in a suspicious manner, including cash hidden inside children’s books, concealed inside fake birthday or holiday presents, buried within puzzle pieces, or wrapped within multiple magazines."
"Once Randol received the parcel, he would count the money and send an equivalent amount of Bitcoin -- minus a commission -– to a digital wallet controlled by his customers."
Randol also operated numerous Bitcoin kiosks in malls, gas stations and convenience stores in cities in Los Angeles, Orange and Riverside counties, according to prosecutors.
"The setting on Randol’s kiosks allowed customers to structure funds to avoid currency reporting requirements by creating numerous accounts and by engaging in successive transactions involving up to $3,000."
"He also set up one or more 'test' accounts that contained no customer information, which he allowed customers to use to complete kiosk transactions."
Randol is scheduled to be sentenced January 17.
The FBI and Homeland Security Investigations investigated the case with assistance from Federal Deposit Insurance Corporation Office of Inspector General and the United States Postal Inspection Service.