209 F. Supp. 3d 698
S.D.N.Y.2016Background
- Defendants Anthony Murgio, Yuri Lebedev, Trevon Gross, and Michael Murgio are charged in a nine‑count superseding indictment alleging (1) operation/conspiracy to operate Coin.mx as an unlicensed money transmitting business (18 U.S.C. § 1960), (2) wire fraud, (3) money laundering, and (4) a bribery scheme to obtain control of HOPE FCU.
- The Government alleges Coin.mx transmitted bitcoins for the public, used front companies (e.g., “Collectables Club”) to deceive banks, charged fees, and moved funds through traditional banking channels.
- The bribery counts allege Gross (HOPE FCU chairman) received over $150,000 to assist in installing conspirators on the credit‑union board and to transfer Coin.mx banking to HOPE FCU; Murgio, Lebedev, and Michael Murgio are accused of paying or arranging the payments.
- Pretrial motions: Murgio moved to dismiss Counts 1–2 (§ 1960) and filed omnibus motions; Gross moved to dismiss Count 5 (18 U.S.C. § 215) and sought a bill of particulars; Lebedev filed omnibus motions and sought particulars and severance; Michael Murgio joined several co‑defendant motions.
- The Court denied dismissal motions (Counts 1–2 and Count 5), holding the indictment pleads the statutory elements adequately, concluded bitcoins qualify as “funds” under § 1960, and found the indictment sufficiently alleges Coin.mx was an unlicensed money‑transmitting business.
- The Court granted in part and denied in part bills of particulars: ordered the Government to identify laws/duties Gross allegedly violated and to provide dates/amounts/locations of any bribes specifically attributed to Lebedev and Michael Murgio; denied requests to identify all unindicted co‑conspirators and denied other disclosure/severance demands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether bitcoins qualify as “funds” under 18 U.S.C. § 1960 | Gov: ordinary meaning of "funds" is broad; virtual currency functioning as medium of exchange fits § 1960 | Murgio: “funds” should be limited to currency; dictionaries/agency guidance support narrower reading; lenity/avoidance apply | Bitcoins are “funds” under § 1960; plain meaning, legislative purpose, and precedent support inclusion |
| Whether the indictment adequately alleges Coin.mx was a “money transmitting business” | Gov: indictment tracks § 1960 and alleges transmitting activities beyond two‑party sales; discovery supports transmission theory | Murgio: allegations only show selling bitcoins, not transmitting on behalf of the public or operating as a transmitter for others | Indictment sufficiently alleges Coin.mx was a money transmitting business; implied facts and discovery make the pleading adequate |
| Whether indictment adequately alleges Coin.mx was “unlicensed” under § 1960 (state/federal requirements) | Gov: alleges failure to comply with Florida licensing (Ch. 560) and federal registration (31 U.S.C. § 5330/31 C.F.R.) | Murgio: Florida/ federal regimes do not cover bitcoins or Coin.mx; cites Florida Espinoza decision and agency guidance | Indictment adequately alleges failure to comply with Florida licensing and federal registration; Espinoza not controlling and factual differences exist |
| Sufficiency of Count 5 (Gross) under 18 U.S.C. § 215 for accepting corrupt payments | Gov: indictment tracks statute, alleges quid pro quo (payments in exchange for installing board members and transferring banking), and supplies contextual facts | Gross: term “corruptly” is ambiguous; indictment must specify law/duty intended to be violated and venue particulars | Count 5 is sufficient; “corruptly” adequately pleads mens rea given circuit authority and accompanying factual allegations; ordered particulars on which laws/duties were implicated but denied venue particular request |
Key Cases Cited
- United States v. Aleynikov, 676 F.3d 71 (2d Cir.) (statutory‑scope challenge to indictment)
- United States v. Stringer, 730 F.3d 120 (2d Cir.) (an indictment need only track statutory language and state approximate time/place)
- United States v. Faiella, 39 F. Supp. 3d 544 (S.D.N.Y.) (virtual currency qualifies as “funds” for § 1960 purposes)
- United States v. Ulbricht, 31 F. Supp. 3d 540 (S.D.N.Y.) (bitcoin held to be “funds” in money‑laundering context)
- United States v. E‑Gold, Ltd., 550 F. Supp. 2d 82 (D.D.C.) (broad reading of § 1960 to include funds beyond physical currency)
- Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560 (U.S.) (undefined statutory terms given ordinary meaning)
- Moskal v. United States, 498 U.S. 103 (U.S.) (rule of lenity applies only if ambiguity remains after traditional tools)
- United States v. McElroy, 910 F.2d 1016 (2d Cir.) (definition and vagueness analysis of “corruptly” under § 215)
- Bruton v. United States, 391 U.S. 123 (U.S.) (limitations on admitting non‑testifying co‑defendant confessions at joint trial)
- Roviaro v. United States, 353 U.S. 53 (U.S.) (informant‑identity privilege and disclosure standards)
- Stavroulakis v. United States, 952 F.2d 686 (2d Cir.) (indictment read to include necessarily implied facts)