Originally published at: Crypt6 Day 4: Today We Learned ‘Large’ Amounts Of Cash Is Criminal | Free Keene
Apparently the government thinks having large amounts of cash makes you a criminal! If so come and arrest me! Note: Lawyers will say that having or moving large amounts of cash isn’t a crime despite what the government wants you to believe and it’s not evidence of ill gotten gain either. In this case it’s business cash of my company in my possession as I write this.
Crypto6 Day 4
When passing through security and United States Marshals asked a question or two I said “I don’t speak to liars and thieves”, to which a Marshal humorously responded “You just did”, in those EXACT words. If I had been quick thinking I would have liked to have responded with “I rest my case”.
Today there were about ~16 freedom loving crypto6 supporters in attendance in spite of little advance notice about the fact the trial was now to be held on Fridays too. Previously we had been told or it had been implied based on the estimate end date and calendar days that the trial would not be conducted on Fridays. Apparently the court can’t do basic math.
Here is my Day 4 summary:
New witness
Name: Hope Cherry
Silverspring MD
Worked for agriculture federal credit union
Worked as the VP of security
Federal credit [something or other, possibly regulated by or some similar word] USDA
The credit union has 3 branches
Q What is a credit union?
A non-profit member owned financial institution
Q Smaller?
A Mine is
Q What is shared branching?
A As one does not have a lot of locations shared branch banking enables members to make deposits at associated credit unions
Q How do you use shared branch banking?
A Most use it for deposit and withdraws
Q What do you do?
A I’m a compliance officer
Q Bank secrecy officer?
A Make sure in compliance with law
Q Are you required to register with FinCEN?
A Yes
Q Do you have to have anti money laundering program?
A Yes
Q Do you have to have an anti money laundering program?
A Yes
Q Does it have a reporting requirement?
A Yes, anything in excess of $10,000
[what is interesting about this is that they’re not claiming he was required to register as a bank and money transmitters are regulated differently than banks of which they are saying is he required to register as, though the defense is claiming or will be claiming he was legally advised by state and a lawyer that the church was NOT required to register given the way the church operated its vending or crypto sales operations… it’s also important to note that if you are doing a check or credit card or something similar via a bank these things are not required of businesses selling stuff]
Q Anything else?
A Yes, also SAR
Q Like?
A If we suspect exploitation or elder abuse
Q What did you collect to comply with these laws?
A Name, Address, TAX ID, day to day transaction of the person
Q Do FinCEN give guidance on filing a suspicious activity report and what it is?
A Yes
Q How does someone open an account?
A Come in or online
ID, Name, address, tax ID, employment, use
Q Do you know Ian Freeman?
A Yes
Q How did he open an account?
A Online
Q Type of account opened?
A Personal
[something to note is that someone operating a business from a personal account is ok, one can also do business without registering a corporation, trade name, doing business as, etc, with some restriction possibly, but basically if you aren’t incorporated you’re generally a sole proprietor, but it may also be unclear what you should register as if you are another type of entity like a non-profit or a church]
Q Purpose listed?
A Household
[It is also the case that one might open an account for one purpose and end up using it for another, there is nothing indicating to the opener what a personal or business account are or which one to choose either or why in most instances but it also usually will come down to marketing of features even if, so one for example might open a business account if they do a lot of wire transfers because then they don’t have to go into the bank to conduct the wire transfer, but that will usually cost more, so you might prefer a personal account for a business if not much business is going to go through it, or only certain types of transactions will be passing through it]
Q Source of funds?
A $500k in transactions / month, location NH, it was unusual, and only application we’ve had from NH
Q Type of activity expected?
A Regular stuff, paychecks, bills, etc
[that is curiously maliciously answered response considering I know for a fact many small business are sole proprietors and will also use personal accounts for business, not just bills and paychecks, I both have had sole proprietor businesses and did work for MANY MANY other small businesses operated in the same LEGAL way]
Q Anything stuck out about this account opening?
A We checked into it and there were multiple inquires from other institutions
Q Example?
A Check tax ID correct, etc
Q If it was suspicious why did you open it anyways?
A This does not mean he is up to no good
[they are showing a bank statement on the screen]
Q What month was this?
A 2nd
Q What does ver. Mean?
A Verify account # is correct
statement shows deposits from all over the country
Q Anything suspicious? Did you file a report?
A Yes
[this is humorous because I also operated a computer repair business at one time with deposits coming in from all over the country… in and of itself this is NOT or should not be suspicious.. in my case contractors would deposit checks and cash into the business account once conducting repair work for customers and I’d then pay them per agreed terms for said work, and this is actually very common and there were far far far larger players in this field than me, in fact Dell did something similar for years, and other smaller players focus exclusively on contracting out repair work to third parties and then pay their contractors this way to such a degree they have custom developer websites and portals for it all]
Q Was there information from any other credit union(s) available?
A I asked others and got told they were seeing deposits and names of people making deposits
[Share branch deposit tick shown on screen with a $6,700 ticket]
Q What is this photo?
A I asked for a photo of the person making the deposit
[they bring up a page on screen from a currency transaction report]
Q What does this show?
A Someone other than the person owning the account made a deposit
[again none of that should be suspicious in and of itself, this is common with businesses for a variety of reasons, one is to avoid fees, wire fees have a $15-40 cost for instance whereas cash or check deposit is free and faster than mailing it and you avoid credit card fees, for years I paid a couple other small businesses that supplied my company with certain products or components used in products with a check from my bank, but I’d stop at their bank to make the deposit directly into their checking accounts as it was far far easier than mailing the check and cheaper than using a credit card and for that we would get a 1-3% additional discount on top of another discount we already got, my company sells computers and accessories for clarity on what we did/do aka ThinkPenguin.com ]
Q Did they get ID?
A Yes
[this is or was uncommon, I don’t think I’ve ever been asked for ID to deposit money into someone elses account and this is not or was not a standard procedure at most banks, though it’s possible in recent years it has become more common, but based on what I’ve heard at trial it sounds like this is still rare, but done at least at one financial institution]
Back to statement on screen
Q Stop after 12/6?
A Right, and serious concern about source of money so we restricted account
This activity cause us to talk to Mr Freeman
I called Mr Freeman and he said he was dealing in rare coins
Turned out to be virtual currency
Drilled down and found virtual currency
[she’s admitting that Mr Freeman was not dishonest about his use of the account and told them what it was being used for when asked for further details here which is the exact opposite of the governments claims that he lied to banks, they may not have understood that rare coins is an accurate description for what he was involved in, but as will or was demonstrated through anothers testimony who better although still poorly understood bitcoin that bitcoin has the word coin in it and what makes bitcoin valuable is its rarity, there are only 21 million coins that will ever be ‘minted’, and bitcoin when explaining it to people is commonly explained by comparison to gold and silver in that it’s valuable because of its rarity]
[it’s funny how I had a similar banking situation for years and years and no one ever restricted my account or asked questions about it, now there was one difference and that was that I believe I was using an actual bank rather than a credit union for business at the time, but there was a time where I used a credit union too, and it is possible that they would have seen this as suspicious as running a business from a credit union account while possible is less common, so to them it might have been seen as odd by comparison to other customers, the reason it’s hard to do business with a credit union as a business is usually due to wire transfers having to go through a bank and thus you end up with multiple intermediaries where mistakes can occur in the wire process… I actually closed a credit union account after a few years because it was just too much of a pain in the neck because of this, though not all small businesses do a lot of wire transfers, so I suspect at least some small businesses still do use a credit union over a bank like I did for my business for a while]
Q How did you feel about this?
A It was a red flag, but unsure about it
Q Type of business when asked?
A Shire Free Church
Q Did you search for it?
A Yes, I found the church with a search
Q Make any conclusion?
A It was a little different type of church
We felt we were dealing with and he was not registered
[ while I can’t speak with certainty it is my belief that it was probably the case that the Shire Free Church was not registered with any government at that time, and at some point something did get registered because of this incorrect assumption by financial institutions about the law, or at least they felt obligated to see that a church was registered even if not because of their own legal requirements, and it’s my understanding that churches can’t be required to register with the government because of other supreme court precedent, but that doesn’t mean you can’t register either, and many churches are registered in one way or another with government(s) in the united states at I believe the state level]
Q Did you close his account?
A We suggested he close it or we would
Defense cross examines the witness
Q You are employed as fraud officer?
A Yes
29 years
Q He applied in his name?
A Yes
Q Not a fake name?
A Yes, it was his real name
Q Address?
A Yes, it was a real address
Q He opened for minimum amount of money like most people do?
A Yes
Q $55,000?
A It went to buy bitcoin
Q Made deposit and purchased bitcoin?
A Yes
Q When opened account some red flags?
A No clear cut reason to say no
[this was a simple yes or no question she answered with a sentence… she was trying to avoid giving the defense evidence of innocents here because what this shows is that you don’t have to refuse business with people just because there are red flags and not even financial institutions who actually have to register need refuse service, so that begs the question why should a church who sells bitcoin and isn’t required to register as a money transmitter let alone a bank have to… remember she is also competing with bitcoin and as a competitor she doesn’t want this bitcoin thing to take off because it puts them out of business]
Q When asked for drivers license he provided it right?
A Yes
Q he didn’t stop doing business right?
A No
Q He was compliant right?
A Yes
Q No negative balance right?
A No
Q All positive searches?
A Yes
Q When did you find out cash coming in?
A We have a report, but didn’t immediate stop it
Q Shared branch did business with victim?
A Yes
Q Was there a problem?
A Concern, yes
Q Shared branch bank allowed it despite concerns right?
A Yes
Q She still has money in her account right?
A I can’t tell you
Q This one isn’t in her late 80s or even 70s right?
A Yes, that’s right, she is in her 50’s
Q She was a school teacher right?
A Yes
Q Because over $12,000 a report was filed right?
A Yes
Q They didn’t refuse it right?
A Right
Q Did teller have any problem with 2nd transaction shown?
A No, not that I’m aware of
Q He gave account info on how to contact him right?
A Correct
[ at this point the judge criticizes prosecutor for wanting to censor his own evidence]
[Exhibit on email communications between ian and bank compliance officer shown on screen]
[It’s admitted for what they call a limited purpose]
Judge says ~“can’t be considered true statements, only to understand his point of view, and to round up and understand conversation”
Overview of letter:
Letter explains Ian is a minister of church and law does not apply according to his lawyers. He explains why he thinks the compliance officer is wrong to close account.
There is no difference between vending person to person and selling online.
New Hampshire says “we don’t regulate that”
[this is a reference to what the banking department of New Hampshire stated prior to the state removing their authority to regulate cryptocurrency businesses, meaning the state already wasn’t regulating even if the banking department had the authority to do so before the bill removing their authority passed: https://freekeene.com/2016/09/29/full-video-of-nh-state-house-commission-to-study-cryptocurrency-first-meeting/ ]
The letter says the church conducts know your customer and gets IDs of buyers to stop fraud that is rampant in the online world.
We confirm buyer knows they are buying coins.
[He uses coins in regular conversation and not just “rare coin” when convenient. I believe later on there is evidence Ian even goes out of the way to call customers that he thinks may be getting scammed to ensure they know what they are doing. So much for the claim he didn’t stop transactions that were red flags. Notice though that the credit union lady already said they weren’t stopping transactions because of red flags because that isn’t what the law actually requires.]
Q Is that an accurate letter?
A Yes it is
Q Can you recall attached letter?
A Yes
[the attached letter is separate to the email discussed above]
It was NH banking commission
[while I’ve seen this letter I haven’t been able to locate it online anywhere unfortunately, not on FreeKeene.com nor in the docket, but the letter exists and was displayed in court]
Q You did send his remaining balance to him?
A Correct, there was no suspicion of wrongdoing
[aww wait wait wait what??? didn’t you just close his account for some sort of wrongdoing? Now you are agreeing with the defense that no wrongdoing on his part occurred? What this is suggesting is that the reason they closed the account was of liability on their part, not wrongdoing on the Shire Free Church’s part nor Ian Freeman]
Prosecutor cross examines
Q Did you speak to victim?
A Yes
Q How did you feel after talking to victim?
A I felt she could be victim of scam
[notice we don’t have any evidence that she is a victim of a scam and I’m not even sure they presented evidence she was a victim of a scam here, though this case is so unclear it’s hard to say one way or another, lots of “evidence”, but much of it is to make you feel bad, not that there is evidence of a crime, or at least not of Ian Freeman or the Shire Free Church, and remember the bank let this transaction through too, not just Ian Freeman]
Judy admits in writing to Ian Freeman/Church that the letter is “compelling” evidence of his argument.
Q Do you believe he was honest after using personal account for business?
A No
[this is such a load of crap, people use “personal” accounts for business all the time and she’d know that as the compliance officer, a sole proprietor is a non-registered entity effectively that is representing themselves unless they have a doing business as, but even in that case they are still a sole proprietor and would normally likely open a personal account for business because of the way taxes are conducted even if they have a separate personal account for their business activities separate from their bills/personal stuff]
Defense cross examines
Q Ian wasn’t taking deposits right?
A Correct
Q It would be up to each branch to stop transactions right?
A Not as clear cut as that
[she’s admitting that you only have to stop a transaction if you believe it suspect, and even then not necessarily which backs up the fact that simply doing some amount of due diligence even if you can’t confirm someone isn’t being scammed is sufficient under the law, thus Ian calling people who he thinks might be victims and getting additional verification from them about the transaction is exactly the same level of compliance that the banks do, but unlike the banks he has no legal obligation to do it on behalf of the church because he is neither a financial institution nor a money transmitter under the law, and while this COULD be different for another business if operated differently that wasn’t the case here, selling your own bitcoin from your own wallet does not make one a money transmitter, but an actual bitcoin exchange would make one a money transmitter under the law because you are acting as middlemen in the transaction and moving money or value from one location to another or one place to another, this is exactly what the law says, and the church didn’t do that]
Q They don’t try and stop it?
A [Silence]
Q Ian couldn’t stop it right?
A Correct
[wow, just wow, remember that this is the prosecutor’s own witness and has come in with an agenda of making Ian Freeman look bad]
Q They [the teller] took the deposit right?
A Correct
Q They [the teller] had control over that transaction right?
A Correct
Q Mr Freeman wasn’t there?
A Correct
Q He didn’t see any tell tail signs of a scam, right?
A Correct
Q If red flags existed Mr Freeman wouldn’t have known, right?
A Correct
Q The only person who could have stopped it was the branch employees, right?
A Correct
Q Is it policy to return funds to illegal transactions?
A What were we supposed to do?
[she doesn’t want to answer this one!!! I wonder why]
Q Did you ever sit down with FinCEN?
A No
Prosecutor asks some more questions
Q Do you know what Ian said that led to these people to deposit money?
A No
[how about what the fraudster said if this was a case someone was scammed because Ian wouldn’t have known what they told the victim and the bank wouldn’t have known either, this is a man in the middle scam, it’s neither the bank nor Ian/the Shire Free Church whom are to blame]
New witness
Name: Bruce Sweet
US Postal inspector
Federal agent related to crimes involving US mail
He works with drugs, money laundering, etc
Q Was Ian investigated?
A Yes
We investigated a package going to the church at shipping shack mail box
It was addressed to the shire free church
We open’d it and found a galaxy s phone box with cash inside it
It had $4,000 inside it
Box was from same victim as prior bank victim
Defense cross examines
Q Was complaint from victim?
A No
Q Do you know what cash was for?
A Yes, bitcoin
Q Wasn’t for drugs, right?
A Yes, it wasn’t for drugs
Q Legal product right?
A Yes
New witness
Name Paul Priosey
US Treasury IRS criminal investigation special agent
14 years
Investigated potential violations of the law like money laundering
Based out of charlot Virginia
Previously based out of NY
Q Was Ian investigated?
A Yes
Undercover doing transaction with Ian Freeman
Q What did Ian use? [forms of payment presumably]
A It depends
Q What was your role?
A Conduct bitcoin transactions with freeman
Q How long was your part in the investigation?
A One year
Q Much of it in writing?
A Yes
Q How did you connect with freeman?
A localbitcoin.com
Q Who told you where to start?
A Yea, others
[transactions shown on screen from 2019]
confirms he did these transactions with ian on localbitcoin.com
Q Why did you ask Ian to do a transaction off localbitcoin.com?
A It was easier
[curious – so they aren’t suggesting doing it off localbitcoin.com is to hide some sort of crime]
Q Transaction size?
A $502
“video” pulled up of conversation on telegram
[the prosecutor doesn’t understand what the word means, but none the less telegram is pulled up on the screen]
Q Can you ID defendant?
A Yes blue shirt
[in the room he identifies defendant]
Q Why did you tell freeman wire to bank account wasn’t working if that wasn’t true?
A To get another bank account
[agent openly admits he lied to mr freeman, a red flag you’re dealing with an undercover agent and I have to wonder if Ian wasn’t thinking this too at the time because it’s rare for stuff to not work like this for no apparent reason, but stupid could also explain it]
[chat logs on the screen show agent tried to get ian to do an in person sale after making a series of cash transactions into bank accounts]
Q Did he ask about source of funds?
A No
Q He told you what to tell the bank?
A Yes
[The undercover talks about church events like social sunday, night cap, crypto meetup, new vending machine at thirsty own, does $1000 transaction at vending machine, etc]
Q Asks no questions about why you have so much cash?
A No
[does $1500 constitute a lot of cash these days? If so I must be guilty of being a criminal… there is I believe $8k in cash in my hand right here or thereabout I believe and cash isn’t a crime, and do you know where I got this cash? the bank, and do you know the upstream source of this cash? a legitimate business where I sell computers and accessories called ThinkPenguin.com, and do you know what a lawyer would tell you? Possessing large amounts of cash isn’t a crime! :
]
[Day 4 to be continued… ]