CLEVELAND — Three people and one business are being charged after allegedly owning and operating cryptocurrency kiosks illegally across Northeast Ohio.
Cuyahoga County Prosecutor Michael O'Malley announced details of the operation during a Thursday press conference, saying two arrests happened in Chicago and one in Miami.
Those arrested include the owner and founder of S&P Solutions, 45-year-old Sonny Meraban, 75-year-old Reza Meraban and 69-year-old William Suriano, an attorney for S&P Solutions.
Authorities say the company being charged -- S&P Solutions -- was doing business as Bitcoin of America.
The full press conference can be viewed below:
THE OPERATION
On Wednesday, March 1, numerous law enforcement agencies executed 54 search warrants across Cuyahoga and Lorain counties during an operation, which included 28 law enforcement agencies.
In total, 52 bitcoin machines operating under Bitcoin of America were confiscated across the two counties. 41 of the machines were found in Cuyahoga County and 11 in Lorain County.
"These ATMs were seized, 52 of them, yesterday from neighborhood gas stations mainly," said Andrew Rogalski, Economic Crime Supervisor and Assistant Prosecuting Attorney. "These ATMs look like any other ATM. Essentially you put cash in and you tell the machine where you want to send cash that’s converted into cryptocurrency that can go anywhere in the world usually by the means of a QR code or bar code that you can scan from your phone. These ATMs are ready-made for scammers. The scammers here, whether it’s romance scams or law enforcement impersonators, will direct the victims, which are often times elderly or otherwise vulnerable, to specifically go to Bitcoin of American ATMs, take money that they’ve withdrawn from their savings accounts or 401Ks, insert it into the Bitcoin machine and send it to a wallet that they’ve been sent over the phone -- which they may think is their own wallet, but it really belongs to some third party that could be anywhere in the world."
CHARGES
All three individuals as well as S and P Solutions are being charged with the exact same crimes, which are listed below:
Engaging in a pattern of corrupt activity
Conspiracy
Money laundering (8 counts)
Receiving stolen property (8 counts)
CTS license requirement violation (33 counts)
Tampering with records (5 counts)
Possessing criminal tools
Taxation
“We’re dealing with a new industry with cryptocurrency, but we’re not dealing with new laws," Rogalski said. "The same laws and the same legal theories apply to this business as any other businesses. Cryptocurrency is money. If you’re a money transmitter in the state of Ohio, you need to have a license.”
THE INVESTIGATION
Officials noted that one of the biggest problems was that Bitcoin of America was taking approximately 20 percent of the money deposited in each transaction at the bitcoin ATMs.
“One of the main issues was certainly the machines not being licensed in the state of Ohio, and these individuals taking 20 percent of every transaction that occurred in the machine," said O'Malley. "But these machines were also used to scam elderly people in Northeast Ohio, including eight victims who were led to these machines through fraudulent means to transfer funds.”
Rogalski gave an example of an elderly gentleman being scammed in Northeast Ohio.
“There’s one instance where an elderly gentleman, within one hour, did three transactions at the same Bitcoin of America machine all in excess of $2,500 all to the same third-party wallet. That $11,250 was gone to him in a matter of seconds. So Bitcoin of America does little to prevent these transactions and then even less to help once the victim realizes that they are a victim of crime.”
According to Blaine Forschen, the United States Secret Service Special Agent in Charge, authorities began receiving reports from a number of elderly fraud victims being scammed by ATMs operated and owned by Bitcoin of America in September 2021, prompting an investigation. In October 2022, the task force and investigative unit presented the case to the Cuyahoga County Prosecutor's Office.
Officials believe that since 2018, Bitcoin of America has been evading numerous regulatory safeguards and financial compliance requirements in Ohio by "misrepresenting the company’s role in transferring funds through cryptocurrency.”
EDITOR'S NOTE: The video above previously aired on 3News on March 1, 2023, in an unrelated story.