Chicago area suspects charged for illegal cryptocurrency kiosk operation
CHICAGO (CBS) – A business and three individuals facing charges in Ohio for illegally owning and operating cryptocurrency kiosks and bilked victims, including the elderly, out of millions of dollars have ties to suburban Chicago communities.
Prosecutors in Cuyahoga County in Ohio announced charges against S and P Solutions, which was doing business as Bitcoin of America (BOA), Sonny Meraban, 45, Reza Mehraban, 75, and William Suriano, 69, including engaging in a pattern of corrupt activity, conspiracy, and license requirement violation for running the kiosks between August of 2002 and last month.
Cryptocurrency kiosks refers to cryptocurrency ATMs, like Bitcoin ATMs.
It's alleged Bitcoin of America took a 20% cut of every transaction that happened using their machines. Even when the company was told, certain transactions involved people being scammed out of thousands of dollars, they never gave back the 20% fee they collected to victims, totaling more than $3.5 million.
"Obviously this was a very complex operation," said Michael C. O'Malley, the Cuyahoga County Prosecutor. "All of these warrants were executed yesterday. There were over 100 law enforcement officers involved and it was a very complex operation."
As a part of the announcement, prosecutors confirmed that the U.S. Secret Service and Lisle police executed a search warrant at the company's office in Lisle on Wednesday morning with help from the DuPage County State's Attorney's Office. This was the same police activity that Lisle police warned about, but provided few details on.
In addition, Cuyahoga County prosecutors said Reza Meraban was arrested during another search warrant execution at his residence in Naperville. Suriano was also arrested in Riverside, Illinois.
Sonny Meraban, the owner and founder of S and P Solutions, was arrested at his residence in Miami, Florida.
Prosecutors said the individuals charged were operating the kiosks without a money transmission license and that they falsely represented their money transferring capabilities to Ohio regulators to avoid detection.
Bitcoin of America has 2,500 ATMs across 31 states. CBS 2 found several machines in River North. One inside a corner market had a warning sign on it saying "If the person depositing money was instructed to make a payment to the IRS or Social Security Administration, they are most likely the victim of a scam."
"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," O'Malley said.
The U.S. Secret Service Cyber Fraud and Money Laundering Task Force conducted the investigation with help from several other law enforcement agencies including four from the Chicago area.
The investigation remains ongoing.
CBS 2 has been told there are no victims in Chicago. The scams were able to take place because Bitcoin of America had not consumer protections or anti-money laundering practices in place. Prosecutors said now that the case is public, they believe more victims will be coming forward.