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In OneCoin Trial Mark Scott Found Guilty on Both Counts After 4 Hours Now US Statement

By Matthew Russell Lee, Patreon Thread, Plea
BBC The Times (UK) Daily Mail

SDNY COURTHOUSE, Nov 21 – Charged with laundering $400 million for OneCoin and Ruja Ignatova, Mark Scott on November 21 was found guilty on both counts, wire fraud and bank fraud, by a jury after four hours of deliberations on November 21. The three week trial ended quickly, after e-mails showed Ruja Ignatova asking Scott to "park" money for her for a fee, and him promising her anonymity.

  Scott, who has been waiting in the courthouse cafeteria just before the verdict with his wife, stood in the court amid wailing and will face jail and disbarment as a lawyer.

  Now, hours later, this from the US Attorney's Office which for days, weeks, withheld the exhibits in the case: "Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Cyrus R. Vance Jr., the District Attorney for New York County, announced the conviction today of MARK S. SCOTT, following a three-week trial before the Honorable Edgardo Ramos.  SCOTT, a former equity partner at the law firm Locke Lord LLP, laundered approximately $400 million in proceeds of a massive international fraud scheme known as “OneCoin” through fraudulent investment funds that SCOTT set up and operated for that purpose.  SCOTT was paid more than $50 million for his money laundering services, which he used to buy luxury cars, a yacht, and several seaside homes.     Manhattan U.S. Attorney Geoffrey S. Berman said:  “Mark S. Scott, an equity partner at a prominent international law firm, used his specialized knowledge as an experienced corporate lawyer to set up fake investment funds, which he used to launder hundreds of millions of dollars of fraud proceeds.  He lined his pockets with over $50 million of the money stolen from victims of the OneCoin scheme.  Scott, who boasted of earning ‘50 by 50’ now faces 50 years in prison for his crimes.”                  As reflected in the Indictment, documents previously filed in the case, and evidence introduced at trial:     “OneCoin” is a massive pyramid fraud scheme.  OneCoin Ltd. was co-founded in or about 2014 by Ruja Ignatova, and is based in Sofia, Bulgaria.  SCOTT was introduced to Ignatova in late 2015, and began laundering OneCoin fraud proceeds in 2016.  Ignatova served as OneCoin’s top leader until her disappearance from public view, in or about October 2017.     OneCoin Ltd. operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages.  OneCoin Ltd. has claimed to have over three million members worldwide, including victims living in the Southern District of New York.  Records obtained in the course of the investigation show that, between the fourth quarter of 2014 and the third quarter of 2016 alone, OneCoin Ltd. generated €3.353 billion in sales revenue and earned “profits” of €2.232 billion.  OneCoin continues to operate to this day.     Among a number of other representations, OneCoin Ltd. has claimed that the OneCoin cryptocurrency is “mined” using mining servers maintained and operated by the company, and that the value of OneCoin is based on market supply and demand.  The purported value of a OneCoin steadily grew from €0.50 to approximately €29.95 per coin, as of in or about January 2019.  In fact, the value of OneCoin is determined internally and not based on market supply and demand, and OneCoins are not mined using computer resources.  Moreover, the investigation has revealed that Ignatova and her co-founder conceived of and built the OneCoin business fully intending to use it to defraud investors.                 SCOTT – who was employed between June 2015 and September 2016 as an equity partner at Locke Lord LLP, a prominent international law firm – was first introduced to Ignatova in September 2015.  Beginning in 2016, SCOTT formed a series of fake private equity investment funds in the British Virgin Islands known as the “Fenero Funds.”  SCOTT then disguised incoming transfers of approximately $400 million into the Fenero Funds as investments from “wealthy European families,” when in fact the money represented proceeds of the OneCoin fraud scheme.  SCOTT layered the money through various Fenero Fund bank accounts in the Cayman Islands and the Republic of Ireland.  SCOTT subsequently transferred the funds back to Ignatova and other OneCoin associated entities, this time disguising the transfers as outbound investments from the Fenero Funds.  As part of the scheme, SCOTT and his co-conspirators lied to banks and other financial institutions all over the world, including to banks in the United States, to cause those institutions to make transfers of OneCoin proceeds and evade anti-money laundering procedures.                 SCOTT, who boasted about earning “50 by 50,” was paid more than $50 million for his money laundering services.  He used that money to purchase, among other things, a collection of luxury watches worth hundreds of thousands of dollars, a Ferrari and several Porsches, a 57-foot Sunseeker yacht, and three multimillion-dollar seaside homes in Cape Cod, Massachusetts.                 SCOTT was arrested near one of his seaside homes in Barnstable, Massachusetts, on September 5, 2018.     *                *                *                 SCOTT, 51, of Coral Gables, Florida, was convicted of one count of conspiracy to commit money laundering, which carries a maximum potential sentence of 20 years in prison, and one count of conspiracy to commit bank fraud, which carries a maximum potential sentence of 30 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendant will be determined by the judge.  Sentencing before Judge Ramos is scheduled for February 21, 2020."

  After OneCoin's Konstantin Ignatov got a stay of the civil case against him, his criminal case was said to have been kicked down the road for at least another two months.

It was a productive two months, at least for the U.S. Attorney's Office for the Southern District of New York. They got Konstantin Ignatov to sign a plea agreement and become a cooperating witness.

  On November 19 the government rested its case. Thread here. Late on November 20 - at 11:15 pm -- Scott's lawyer David Garvin asked Judge Ramos to, before the jury start deliberating on November 21, read yet another instruction: "Dear Judge Ramos: Please accept this letter as the request of the defense for a supplemental jury instruction before the jury begins its deliberations. Upon reviewing the jury instructions relating to wire fraud as the specified unlawful activity to the charge of money laundering, it occurred to the defense that the instructions may inadvertently leave the jury with the impression that the crime of wire fraud may be applied solely on extraterritorial acts. The crime of wire fraud set forth in 18 U.S.C. Section 1343 applies to conduct that takes place within the United States. A fraud that occurs outside of the United States does not fall within the definition of wire fraud. We believe that the attached proposed instruction would effectively address this potential problem... As I previously stated, with regard to Count 1, the alleged specified unlawful activity is wire fraud. The wire fraud statute does not apply to a scheme that is carried out outside of the United States.1 Therefore, in order for proceeds to be the proceeds of a specified unlawful activity, the funds have to be proceeds of a fraudulent scheme that occurred in the United States. A fraud scheme occurs within the United States only “when (1) a defendant or coconspirator commits a substantial amount of conduct in the United States, (2) the conduct is integral to the commission of the scheme to defraud; and (3) at least some of the conduct involves the use of U.S. wires in furtherance of the scheme to defraud.”

Earlier on November 20 in his summation AUSA Nicholas Folly asserted that OneCoin is a fraud scheme and Ruja is the leader of that OneCoin. And Scott knows that. Then he directed the jury to emails in which Ruja asked Scott how much he would charge to park or launder 50 million Euro for her. These exhibit have yet to be made available.

   Scott's lawyer Arlo Devlin-Brown because by saying that lies to Bank of Ireland could not be bank fraud, because Bank of Ireland is not FDIC insured, an element of the crime. But Sabadell, now IBERIABANK, is FDIC insured.

  More generally, Devlin-Brown argued that if Deutsche Bank and HSBC didn't know that OneCoin was a scam, how could Mark Scott know? The jury, of course, is charged with deciding. Thread here; more on Patreon here.

  The US concluded its evidence with photographs of a house that Mark Scott bought in Barnstable on Cape Cod, with money through City National Bank of Florida, and his post-arrest statement in which he said he met Ruja Ignatova approximately eight times including in Frankfurt, Germany where he said he thought she lived. Still?

  Scott's lawyers put on two character witnesses, both lawyers: Warren Zaffuto of Florida and Robert Skorupa who met Mark Scott in Boston in the 1990s. The summations will be on November 20, an hour and twenty minutes each as urged by Judge Ramos. More on Patreon here.

At the charging conference on November 18, with only four people in the gallery of cavernous Courtroom 318 of 40 Foley Square - once the main intake courtroom of the Mother Court - Arlo Devlin-Brown said that his defense summation will be much shorter if these exhibits are accepted in. Whether this logistical decision, directed at Judge Ramos' stated goal of getting a jury decision one way or the other by Friday so as not to take the jury into the Thanksgiving holiday week, is also not known, for now. Soon it will be known. Watch this site.

 Late on the afternoon of November 18 the charging conference was held, with Inner City Press the only media in the courtroom. The US opposed Mark Scott's lawyer's request for a "good faith" jury instruction, and at 10 pm followed it up with a letter: "Dear Judge Ramos: The Government submits this brief letter in opposition to the defendant’s proposed inclusion of a standalone good faith jury instruction. Such an instruction is unnecessary in light of the current jury instructions. The Second Circuit “has long adhered to the view held by a majority of the circuits that a district court is not required to give a separate ‘good faith defense’ instruction provided it properly instructs the jury on the government’s burden to prove the elements of knowledge and intent, because, in so doing, it necessarily captures the essence of a good faith defense.” United States v. Al Morshed, 69 F. App'x 13, 16 (2d Cir. 2003). As the Second Circuit has noted, standard instructions on knowledge and intent “capture the essence of the good faith defense, for someone cannot believe in good faith that he was acting properly and within the law if he knowingly” and intentionally committed the charged offense. Id. The current charge adequately charges the jury on the issues of knowledge and intent—including a reference in the conscious avoidance charge to the fact that if the jury “find[s] that [Scott] actually believed the fact was not so, then you may not find that he acted knowingly with respect to that fact.” The current jury charge is more than sufficient and nothing further is warranted in this case."

  Earlier on November 18 after Manhattan District Attorney's Office witness Rosalind October described OneCoin linked accounts at Commerzbank, Morgan Stanley and IBERIABANK, Scott's lawyers put on the stand their first witness, out of order: Florida lawyer Miguel Diaz de al Portilla as a character witness.

  After he testified about a real estate deal on which Mark Scott held with a refinance mortgage loan, Assistant US Attorney Christopher Dimase asked him about multiple campaign contributions from Scott when he unsuccessfully ran to re-election to the Florida state legislature.

  On Sunday November 17 the prosecutors had written to SDNY Judge Ramos to "request that the Court: (1) preclude the defendant from eliciting testimony from defense character witnesses regarding specific instances of the defendant’s conduct; and (2) instruct the jury that (a) the duty of client confidentiality cannot serve as a defense to criminal conduct; and (b) none of the email communications admitted by the Government at trial—including communications between the defendant and Ruja Ignatova—are privileged."

  At the tail end of the trial day on Friday, November 15, Scott's lawyers begrudgingly disclosed one such character witness, apparently Renier David de La Portilla. (Judge Ramos asked it was "del;" the answer was "de la.") 

 If it is, or even Miguel de La Portilla, both have been described for their roles in Cuban-American / Republican politics in Florida, casting addition light on the role in the case of George W. Bush's brother Neil Bush, first reported by Inner City Press, including at least $300,000 from Ruja Ignatova. We will have more on this during the November 18 trial day. Watch this site, this platform (Patreon) - and @InnerCityPress on Twitter.

 Inner City Press also first reported that Mark Scott associate David R. Pike was arrested on OneCoin charges and quietly presented in and bailed by the SDNY Magistrate Court on September 12, 2019 by Magistrate Judge James L. Cott, based on a complaint signed sealed back on August 29 by this week's Magistrate Judge Katharine H. Parker.

  Since then Special AUSA Julieta V. Lozano has asked for continuances, during the Scott trial, to figure out what to do with Pike afterward. Inner City Pres, cover this closely, will have more. More on Patreon here.

  On November 15, on which the government had said it might rest its case, AUSA Christopher Dimase questioned  a witness from BNY Mellon about irregularities it found in Mark Scott's Fenero Funds' business with DMS Bank in Cayman Islands.

  The questioning established the FDIC insurance, an element in bank fraud charges, applies not only to BNY Mellon but also other involved banks including TD Bank, JPMorgan Chase, HSBC and Northern Trust. The implications of the evidence in the case for these banks is not yet clear. More on Patreon here.

 On November 13 the prosecution and the defense both questioned the deputy Chief Operating Officer of Locke Lord, the law firm Mark Scott worked at from June 2015 through September 2016. Thread here.

  E-mails were shown in which OneCoin's Ruja Ignatova told Scott, "I have some cash with me. About 220K GBP. Can you store it for me in London?" Other exhibits concerned a bank in Zimbabwe, a penthouse in London, and funds put into and quickly taken out of the law firm's escrow account.

  There is also in evidence an e-mail from the defendant Mark Scott to now-cooperating witness Konstantin Ignatov, as his sister Ruja's personal assistant, stating that "I would prefer not meeting in Sophia as I don't want too many travels there on my flight list." More on Patreon here.

On November 12 Inner City Press obtained and put online here, on Scribd, Konstantin Ignatov's plea agreement, including "On the understandings specified below, the Office of the United States Attorney for the Southern District of New York (“this Office”) will accept a guilty plea from Konstantin Ignatov (the “defendant”) to the above-referenced four-count Superseding Information (the “Information")...

If the defendant fully complies with the understandings specified in this Agreement, he will not be further prosecuted criminally by this Office for any crimes, except for criminal tax violations, related to his participation in: (1) an international cryptocurrency fraud scheme known as “OneCoin” (the “OneCoin Scheme"), from in or about 2016, up to and including in or about 2019, as charged in Counts One and Two of the Information; (2) a conspiracy to defraud banks and other financial institutions worldwide by causing them to transfer proceeds of the OneCoin Scheme by misrepresenting and omitting material facts to those banks and financial institutions, from in or about 2016, up to and including in or about 2019, as charged in Count Four of the Information; and (3) a conspiracy to launder criminal proceeds derived from the OneCoin Scheme, and to transfer funds internationally to promote the OneCoin Scheme, from in or about 2016, up to and including in or about 2019, as charged in Count Three of the Information; to the extent that he has disclosed such participation to this Office as of the date of this Agreement.

  It is understood that Ignatov's truthful cooperation with this Office is likely to reveal activities of individuals who might use violence, force, and intimidation against Ignatov, his family, and loved ones. Should Ignatov's cooperation present a significant risk of physical harm, this Office, upon the written request of Ignatov, will take steps that it determines to be reasonable and necessary to attempt to ensure his safety and that of his family and loved ones.

These steps may include application to the Witness Security Program of the United States Marshals Service, whereby Ignatov, his family, and loved ones, if approved, could be relocated under a new identity...

This Office will, however, bring the cooperation of the defendant to the attention of other prosecuting offices, if requested by him.  It is understood that the sentence to be imposed upon the defendant is within the sole discretion of the Court.

This Office cannot, and does not, make any promise or representation as to what sentence the defendant will receive, and will not recommend any specific sentence to the Court. However, this Office will inform the Probation Office and the Court of (a) this Agreement; (b) the nature and extent of the defendant's activities with respect to this case and all other activities of the defendant which this Office deems relevant to sentencing; and (c) the nature and extent of the defendant's cooperation with this Office. In so doing, this Office may use any information it deems relevant, including information provided by the defendant both prior to and subsequent to the signing of this Agreement.

In addition, if this Office determines that the defendant has provided substantial assistance in an investigation or prosecution, and if he has fully complied with the understandings specified in this Agreement, this Office will file a motion, pursuant to Section 5K1.1 of the Sentencing Guidelines, requesting the Court to sentence the defendant in light of the factors set forth in Section 5K1.1(a)(1)-(5).

It is understood that, even if such a motion is filed, the sentence to be imposed on the defendant remains within the sole discretion of the Court. Moreover, nothing in this Agreement limits this Office's right to present any facts and make any arguments relevant to sentencing to the Probation Office and the Court, or to take any position on post-sentencing motions. The defendant hereby consents to such adjournments of his sentence as may be requested by this Office.

 It is understood that, should this Office determine either that the defendant has not provided substantial assistance in an investigation or prosecution, or that the defendant has violated any provision of this Agreement, such a determination will release this Office from any obligation to file a motion pursuant to Section 5K1.1 of the Sentencing Guidelines, but will not entitle the defendant to withdraw his guilty plea once it has been entered.

 It is understood that, should this Office determine, subsequent to the filing of a motion pursuant to Section 5K1.1 of the Sentencing Guidelines and/or 18 U.S.C. Sec. 3553(e), that the defendant has violated any provision of this Agreement, this Office shall have the right to withdraw such motion."

 A sample TD Bank letter to Gilbert Armenta is here. We'll have more on this.

  On November 6 Konstantin Ignatov testified that the bodyguards to took Ruja on her final public trip told him she was met by "Russian guys," and that Ruja had told him that in Russia she knew a rich and powerful person. More on Patreon, here.

The case is US v. Scott / Ignatov, 17-cr-630 (Ramos).

 More on Patreon, here.


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