BurtW arrested (update: charges dropped!)

[Gleb Gamow]

"Your husband is a horrible horrible man and you probably are too" -- S.A. Arran McWhirter, the day he seized a little girl's life savings.

Failed logic. It's worrying that they would make an baseless accusation like that. I would expect better from someone with the power to seize assets. Also if that quote is correct it's a language failure as well, unless S.A. Arran McWhirter honestly believes you're male.


So (watch the strawman coming) if we're in fallacy land I'll go ad ridiculum.

I'm on the same forum as Jean and Burt - one already determined to be horrible, the other probably horrible - so I am probably horrible too. Hey, I'm on twitter and facebook too. Guess who else is on Twitter and facebook!? The president of the USA! He must be horrible too (do some searching, there are countless sources actually confirming this ;-) ). S.A. Arran McWhirter willingly and knowingly works under them! They must be horrible too!

S.A. Arran McWhirter, you are an horrible man and your husband probably is too.

Now you did it!

https://www.linkedin.com/pub/arran-mcwhirter/65/620/481

Education

James Madison University
Bachelor's degree, Psychology

John Jay College of Criminal Justice
Master of Arts (M.A.), Forensic Psychology

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[Quickseller]

I was looking to donate, but... Why they're using a Coinbase wallet to receive the bitcoins? It sounds a very bad idea for me...

Why is that a bad idea? They obviously need fiat so they are going to convert any bitcoin they receive into fiat ASAP in order to pay their legal bills

Yeah, I know they need fiat, but Coinbase doesn't allow a direct control of your bitcoins and also is known for frequently blocking the access because of supposedly AML regulations.

Imagine if they start to ask from where the money from these donations comes from...

They are not going to have any of the donated bitcoin for any length of time. They are going to need to either use coinbase or some other exchange in order to sell the bitcoin they receive as donations (I am in no position to give legal advice to them, but I don't think it is a good idea to be selling any donated bitcoin on a P2P basis). They might as well receive their bitcoin directly on an exchange that can automatically sell any bitcoin received and deposit it into their account.

If their account gets blocked then they can just switch to another exchange that is not blocked.

[sinner]

so it's illegal to sell BTC on LocalBitcoins without a money transmitter license?

[redsn0w]

so it's illegal to sell BTC on LocalBitcoins without a money transmitter license?

It depends from : what country do you live and how much you "trade", but basically it is not illegal to sell/buy bitcoin (at least here in my country m).

[gwern]

BurtW's indictment was filed on 2014 oct 07 in the US District Court for Colorado. On the same day, at least three other cryptocurrency related cases were filed in that same court, with the same special agent Arran McWhirter, with the same prosecuting attorney of Michele Korver, all offenses listed as occurring in Boulder County:

14-cr-00398 USA v Burton Wagner
18 USC 1960
Count 1: Operation of Unlicensed Money Transmitting Business

14-cr-00399 USA v Sean Swanson
18 USC 1960
Count 1: Operation of Unlicensed Money Transmitting Business

14-cr-00400 USA v Michael Seiler
18 USC 1956 (a)(3)(B) and (C)
18 USC 1960
Count 1: Money Laundering
Count 2: Operation of Unlicensed Money Transmitting Business

14-cr-00401 USA v Katherine Noland and Thomas Noland
18 USC 1956 (a)(3)(B) and (C)
18 USC 1960
18 USC 2
Count 1: Money Laundering (Katherine)
Count 2: Operation of Unlicensed Money Transmitting Business (Katherine and Thomas)

Very frustrating. I just went through all 4 cases' docket reports in PACER, and for all of them, the complaints are still sealed and even the plea agreements are sealed. So I have no idea what's going on other than it was obviously a connected series of busts and sounds like it may have been black-market related.

[odolvlobo]

BurtW's indictment was filed on 2014 oct 07 in the US District Court for Colorado. On the same day, at least three other cryptocurrency related cases were filed in that same court, with the same special agent Arran McWhirter, with the same prosecuting attorney of Michele Korver, all offenses listed as occurring in Boulder County:

14-cr-00398 USA v Burton Wagner
18 USC 1960
Count 1: Operation of Unlicensed Money Transmitting Business

14-cr-00399 USA v Sean Swanson
18 USC 1960
Count 1: Operation of Unlicensed Money Transmitting Business

14-cr-00400 USA v Michael Seiler
18 USC 1956 (a)(3)(B) and (C)
18 USC 1960
Count 1: Money Laundering
Count 2: Operation of Unlicensed Money Transmitting Business

14-cr-00401 USA v Katherine Noland and Thomas Noland
18 USC 1956 (a)(3)(B) and (C)
18 USC 1960
18 USC 2
Count 1: Money Laundering (Katherine)
Count 2: Operation of Unlicensed Money Transmitting Business (Katherine and Thomas)

Very frustrating. I just went through all 4 cases' docket reports in PACER, and for all of them, the complaints are still sealed and even the plea agreements are sealed. So I have no idea what's going on other than it was obviously a connected series of busts and sounds like it may have been black-market related.

Is that normal? What are they protecting/hiding?

[QuestionAuthority]

BurtW's indictment was filed on 2014 oct 07 in the US District Court for Colorado. On the same day, at least three other cryptocurrency related cases were filed in that same court, with the same special agent Arran McWhirter, with the same prosecuting attorney of Michele Korver, all offenses listed as occurring in Boulder County:

14-cr-00398 USA v Burton Wagner
18 USC 1960
Count 1: Operation of Unlicensed Money Transmitting Business

14-cr-00399 USA v Sean Swanson
18 USC 1960
Count 1: Operation of Unlicensed Money Transmitting Business

14-cr-00400 USA v Michael Seiler
18 USC 1956 (a)(3)(B) and (C)
18 USC 1960
Count 1: Money Laundering
Count 2: Operation of Unlicensed Money Transmitting Business

14-cr-00401 USA v Katherine Noland and Thomas Noland
18 USC 1956 (a)(3)(B) and (C)
18 USC 1960
18 USC 2
Count 1: Money Laundering (Katherine)
Count 2: Operation of Unlicensed Money Transmitting Business (Katherine and Thomas)

Very frustrating. I just went through all 4 cases' docket reports in PACER, and for all of them, the complaints are still sealed and even the plea agreements are sealed. So I have no idea what's going on other than it was obviously a connected series of busts and sounds like it may have been black-market related.

Is that normal? What are they protecting/hiding?

That struck me as odd too. When they took down Liberty Reserve they used the patriot act. Does that mean what Burt was doing was as bad as Liberty Reserve? The government is throwing around the patriot act and walking on civil liberties so much since 9/11 that I don't even recognize this country anymore. Civil liberties are meaningless when you have laws that allow them to be trampled. The founding fathers of America are weeping in their graves.

[BurtW]

That struck me as odd too. When they took down Liberty Reserve they used the patriot act. Does that mean what Burt was doing was as bad as Liberty Reserve? The government is throwing around the patriot act and walking on civil liberties so much since 9/11 that I don't even recognize this country anymore. Civil liberties are meaningless when you have laws that allow them to be trampled. The founding fathers of America are weeping in their graves.

"up vote"

[MegaFall]

Welp.... time to move to New Zealand. They don't give a crap about BTC transmissions there. Not surprising there's a country free than the USA at this point.

The website of the Reserve Bank of New Zealand states the following:

The Reserve Bank of New Zealand Act prohibits the issuance of bank notes and coins by any party other than the Reserve Bank.  However, the Reserve Bank has no direct power over any form of alternative payments medium.

Non-banks do not need our approval for schemes that involve the storage and/or transfer of value (such as ‘bitcoin’) – so long as they do not involve the issuance of physical circulating currency (notes and coins).[95]

On December 11, 2013, The Wall Street Journal reported that the assistant governor of the Reserve Bank had urged the country’s banks and businesses to exercise caution with regard to the bitcoin, saying “[y]ou have to worry about where’s the supply, how it’s controlled, how it’s monitored.  Who knows at this point?  There is still a lot for the world to learn on this issue.”[96]  New Zealand’s Commerce Commission says the bitcoin is covered by the Fair Trading Act and the Commerce Act.

[yakuza699]

Not sure if this was posted or not(if so point it and I'll delete this post).New Mexico passes a sweeping bill to protect innocent people's property from civil asset forfeiture.
http://www.freedomworks.org/content/new-mexico-passes-sweeping-bill-protect-innocent-peoples-property-civil-asset-forfeiture
1 down 49 to go.
What do you think about New Mexico BurtW?

[siameze]

Don't forget about that lovely new executive order signed just days ago, with such broad language it could make anyone that donates to BurtW's cause a criminal by association. Despite the fact that he has not been convicted of a crime ... yet.

[MegaFall]

Not sure if this was posted or not(if so point it and I'll delete this post).New Mexico passes a sweeping bill to protect innocent people's property from civil asset forfeiture.
http://www.freedomworks.org/content/new-mexico-passes-sweeping-bill-protect-innocent-peoples-property-civil-asset-forfeiture
1 down 49 to go.
What do you think about New Mexico BurtW?

Here's a federal equivalent:

S.255 - http://hdl.loc.gov/loc.uscongress/legislation.114s255
H.R.540 - http://hdl.loc.gov/loc.uscongress/legislation.114hr540


Pick up the phones and email the crap out of your senators, and reps.

[BurtW]

Not sure if this was posted or not(if so point it and I'll delete this post).New Mexico passes a sweeping bill to protect innocent people's property from civil asset forfeiture.
http://www.freedomworks.org/content/new-mexico-passes-sweeping-bill-protect-innocent-peoples-property-civil-asset-forfeiture
1 down 49 to go.
What do you think about New Mexico BurtW?

Here's a federal equivalent:

S.255 - http://hdl.loc.gov/loc.uscongress/legislation.114s255
H.R.540 - http://hdl.loc.gov/loc.uscongress/legislation.114hr540


Pick up the phones and email the crap out of your senators, and reps.

If you are inclined to pick up the phone, Jean has a phone tree started here (enter jean@jmwagner.com to get to her phone tree):

http://www.signupgenius.com/findasignup

As you may or may not know Jean and Zoë both testified at the judiciary committee hearing on the equivalent Colorado state bill.  It is already against Colorado law and the Colorado state constitution to take someone's property unless that person has been convicted of a crime.  The Colorado state and local law enforcement get around the small inconvenience of it being unconstitutional by having their buddies at the Federal level do the dirty "wet work" for them.  They then split the take, usually 20% to the Feds for their trouble and 80% to the state and local guys.  The bill that day in committee would put an end to this "equitable [profit] sharing" practice.  At the hearing there were about 20 local law enforcement officers, in uniforms, with holstered guns, all ready to testify against the bill, presumably on our dime.

Ever since the raid on our house and the destruction of her room Zoë is afraid of all law enforcement.  She had a lot she planned to say to the committee and bravely got up to the microphone but due to the fact that there was an entire row of uniformed officers with guns sitting right behind her while she testified she got somewhat frightened and forgot a lot of what she wanted to say.  Can you say witness intimidation?  I thought you could.

You can hear Jean and Zoë's testimony here (third movie link, all three movies, especially the first one which is hilarious and infuriating at the same time are worth a watch):

http://www.jmwagner.com/links.html 

After Jean, Zoë's, and two other supporters of the bill testified then came the endless drone of one local law enforcement officer after another, all proud of the fact that they were "self funding" their operations, "saving the taxpayers money", and whining that without the money they get from these unconstitutional practices they just would not be able to do their jobs, which as I understand from their rhetoric has something to do with "getting bad guys".  You can listen to all four hours of testimony here (download the Feb 15, 2015, 4 hour, 34 minute audio of the Senate Judiciary committee meeting):

http://www.leg.state.co.us/clics/cslFrontPages.nsf/Audio?OpenPage

So what happened?  Local law enforcement was able to convince 3 of 5 members of the committee and the bill died in committee.  The author of the bill hopes to be back next year to try again.  Meanwhile the local law enforcement will be allowed to unconstitutionally shake down Colorado citizens for another 4 to 5 million dollars over the next year.

SILVER LINING:  the vote was not along party lines!!!  One democrat and one republican actually voted for the bill.  The other three votes against the bill were 2 republicans and one democrat.  The deciding vote just happened to be a former LE officer.

[Quickseller]

IMO civil forfeiture need to be addressed at a federal level, not a local one. I would not doubt that there will eventually be a supreme court case ruling civil forfeiture unconstitutional in the future, however the fact that, in the 81% of cases when no crime is charged, the government will usually return the property when the forfeiture is disputed, along with the fact that challenging such laws are very expensive and suits would need to be brought by people who, by definition have a lot to lose by not settling (the government often makes settlement offers when suits are filed) and do not have a lot left means that few people are going to have standing to petition the supreme court to hear their case.

The Washington Post published an in depth article late last year about civil forfeiture (I believe the linked article is the one, but they have written about it several times) which has since caused a lot of public debate about the issue. The Wall Street Journal has also published a number of articles critical of civil forfeiture. This is interesting because the Post is traditionally a very liberal publication while the WSJ is a very conservative publication.

I would not be surprised if the issue of civil forfeiture is a major issue in the 2016 (US) election.
I am also somewhat curious as to what exactly happened that law enforcement was able to seize your bitcoin. I would think an experienced trader would have security measures in place that would prevent an attacker from gaining access to your private keys.

[kevinlarr]

so it's illegal to sell BTC on LocalBitcoins without a money transmitter license?

Short answer is, NO.   If you are a business you need a license regardless of where you operate in the USA.

Long answer is, read the thread.

Here's the problem that I have with people who are answering this whole f**ked-up situation with the "just get a license" reply:  In certain STATES that's totally not feasible.

Case in point, check the Michigan Dept of Insurance and Financial Services info where it says that licensees for Money Transmission Services Act need to have net worth of $100,000 minimum and provide surety bond up to $1,500,000 to qualify.

This is clearly not intended to be something applied to ordinary individuals running any kind of "Small Business".

Furthermore, a search on their website, here...

http://www.dleg.state.mi.us/fis/ind_srch/ConsumerFinance/Search.asp

...to see exactly WHO and what KIND of actual business currently *IS* licensed for this, turns up exactly ONE actual business located in MICHIGAN, and SEVENTY-FIVE other businesses, ALL located in OTHER STATES and ALL of which appear to be multi-million or billion dollar LARGE corporations operating *Nationally* and even *Internationally*, such as PayPal, Western Union, GreenDot, etc etc etc.

Is there really a point to getting the FinCEN license for Federal "Approval" IF at the STATE level they're going to end up trying to apply this onerous impossible "license" to a lone-individual or even "small business", sub-$1000 per day, local bitcoin hobbyist type amateur trader anyway??

Other states may be better, but I'm sure others may be worse too.

Smart choice is to not do anything with LocalBitcoins if you live in the USA.

Well, just *voluntarily* giving up on doing any kind of person to person trading out of FEAR is probably exactly what they want to achieve with this attack on Burt and his family (and, sadly, from Armis' reply above it seems that strategy may actually be working).      

KEV

[chopstick]

Burt, I'm sorry for what you're going through.

If you are selling bitcoins on LBC, even only part-time, you absolutely *must* get registered as an MSB and implement AML / KYC policies.

Otherwise, you run the risk of the Feds charging you with money laundering, or running an unlicensed MSB, or both.

And then they will take all your assets and probably spend it on a vacation to Panama. And have a good laugh about how they ruined your life. Simply for selling a few bitcoins.

Amazing what this country has devolved into.

These boneheads who are prosecuting Burt and who raided his house acting like he's a freaking Kingpin and terrified a little child should be ashamed of themselves.

[BurtW]

In this corner:  A guy who has had to hire five different law firms, still has the better ones on retainer - including a law firm that specializes in and has handled actual civil asset forfeiture cases for many years - and has paid almost $200,000 in legal fees.  A guy who is living this.

And in the other corner:  Quickseller, a guy with a humble opinion.

IMO civil forfeiture need to be addressed at a federal level, not a local one.

Let's see where would you start?  The executive branch that makes billions of extra dollars from this?  The do nothing but what their corporate masters want them to do Congressional branch?  Or your best idea yet: the "fox guarding the hen house" Judicial branch who also directly profits from this practice?

I would not doubt that there will eventually be a supreme court case ruling civil forfeiture unconstitutional in the future,

"Take it to the supreme court by God!".  Just two of the many, many, times this has already been done that I found in quick search:
http://www.slate.com/articles/news_and_politics/jurisprudence/2014/02/kaley_v_united_states_terrible_supreme_court_decision_lets_the_government.html
http://www.businessinsider.com/supreme-court-ruling-on-civil-forfeiture-2014-11

Fifth Amendment's stipulation that you can't "be deprived of life, liberty, or property, without due process of law."

The Supreme Court has ruled otherwise. That court has issued a number of rulings upholding civil forfeiture, including one in 1996 that said seizure of an innocent person's property didn't violate due process. In that case, a Michigan woman named Tina Bennis fought the seizure of her car after her husband was caught having sex with a prostitute in it.

however the fact that, in the 81% of cases when no crime is charged, the government will usually return the property when the forfeiture is disputed,

Even if true (where is your source) this would mean that in 20%, oops sorry 19%, of the cases where the seizure is disputed the government keeps the property anyway, right?  Let me tell you what actual attorneys that deals with this shit all the time actually told me:

If I am totally acquitted of all criminal charges the government will probably drop the civil asset forfeiture suit (which is a totally separate case from the criminal case).  However, due to the supreme court you put your trust in rulings, they can pursue the civil asset forfeiture case even in light of a total acquittal of all criminal charges.  How can this be?  Because in the criminal case I am I trial but in the civil case I am not on trial, the seized property is on trial.  Also, while you are getting a source for your 81% figure please also find out how many of those people that "won" got all of their seized property back or were not irreparably harmed by the whole ordeal.

A quick search found one of your "81%" so called "winners" (http://www.forbes.com/sites/georgeleef/2014/09/12/time-for-civil-asset-forfeiture-laws-to-meet-the-same-fate-as-jim-crow/):

a 35-year old African American owner of a small barbecue restaurant in Staunton, VA was stunned when police took $17,550 from him during a stop in 2012 for a minor traffic infraction on I-66 in Fairfax. He rejected a settlement with the government for half of his money and demanded a jury trial. He eventually got his money back, but lost his business because he didn’t have the cash to pay his overhead.

along with the fact that challenging such laws are very expensive

No shit Sherlock.  Now what you might not know, not having this happen to you, is that the prosecutors in these cases will drag them out as long as they possibly can in the hopes of totally bankrupting the victim through their attorney's fees.

and suits would need to be brought by people who, by definition have a lot to lose by not settling (the government often makes settlement offers when suits are filed) and do not have a lot left means that few people are going to have standing to petition the supreme court to hear their case.

and who know they will lose anyway, just like all of those before them.
 

The Washington Post published an in depth article late last year about civil forfeiture (I believe the linked article is the one, but they have written about it several times) which has since caused a lot of public debate about the issue. The Wall Street Journal has also published a number of articles critical of civil forfeiture. This is interesting because the Post is traditionally a very liberal publication while the WSJ is a very conservative publication.

cool

I would not be surprised if the issue of civil forfeiture is a major issue in the 2016 (US) election.

That would be nice, not holding my breath.

[MegaFall]

If you are selling bitcoins on LBC, even only part-time, you absolutely *must* get registered as an MSB and implement AML / KYC policies.

Yeah and the problem with that is we all have money like this laying around right?:

Here's the problem that I have with people who are answering this whole f**ked-up situation with the "just get a license" reply:  In certain STATES that's totally not feasible.

Case in point, check the Michigan Dept of Insurance and Financial Services info where it says that licensees for Money Transmission Services Act need to have net worth of $100,000 minimum and provide surety bond up to $1,500,000 to qualify.

Didn't we fight a war against Britain because of an oppressive government? How is our current government no different? We fought the revolutionary war just to end up right back where we were within 240 years.

[bryant.coleman]

This is why I have always advised people to use BTC-e or other exchanges which guarantee anonymity. LBC is not reliable. Remember the incident in which 2 Florida guys were jailed for using it.

[chopstick]

If you are selling bitcoins on LBC, even only part-time, you absolutely *must* get registered as an MSB and implement AML / KYC policies.

Yeah and the problem with that is we all have money like this laying around right?:

It doesn't cost any money to get registered with FINCEN.

Depending on your state you may not need a state licensure. Getting registered with FINCEN and implementing an effective AML / KYC policy is not particularly expensive, if you do it yourself, but it may be time consuming.

If you pay a compliance company to do your AML / KYC policy for you, it may cost a grand or so. But, you can also do it yourself, if you want to invest some time into research, effectively accomplishing it for free.

I am just giving advice to keep any future would-be BTC sellers from having all their assets seized by the feds incase they decide to go after you like they did Burt.

FINCEN does give a 6 month grace period before you are required to register, it says so on their website. But if you are selling BTC long term and doing any somewhat significant volume of local transactions you should probably register as an MSB and follow AML / KYC policies. Unless you want to take the risk. It's up to you.

I'm just saying, if you are doing really low volume, it probably won't matter. But if one day they decide to prosecute BTC sellers in your state like they have in FL and CO, this could very well happen to anyone. But you can prevent it by being registered as an MSB with FINCEN (which is free) and implementing an AML / KYC policy. For your AML policy, you probably won't be able to do transactions over 3k unless they provide ID and proof of residence. It would probably be a good idea not to do any transactions over 3k, period.

If they mention using the BTC for anything illegal, it's a good idea to assume the customer is an undercover federal agent and you must terminate the transaction immediately.