RICO charges the FBI and the Department of Justice with cracking down on a pyramid scheme involving the creation of fake online currencies that were then sold on the open market to unwitting buyers.
The US Attorney’s office in the District of New Jersey, the agency charged with cracking the scheme, said it had filed racketeering charges against seven people and two businesses.
It was not clear how many customers were affected by the scheme.
US Attorney General Loretta Lynch, who said the scheme was one of the largest she had ever seen, said the case was the largest ever brought under the RICO law.
US prosecutors allege that in April 2018, a man called “John Doe” created the scheme by pretending to be an account holder on a platform called Omegle, a popular Forex exchange.
He then sold a number of the cryptocurrencies on the platform to unsuspecting customers who then bought the virtual goods.
He told the FBI that he sold more than $1.7 million worth of virtual goods on Omegles platform.
The money was then transferred to accounts linked to John Doe, who sold it to a third person who in turn sold it on to customers in the US, UK, Australia and elsewhere.
One of the people charged in the indictment was a California resident named Justin McFarland.
McFarlands account was set up in September 2018.
Prosecutors said McFars account had been used to make about $1,600 in sales and received $1m from them.
They allege that the money was used to pay off debt on the accounts that had been created, pay for McFarlds mortgage, buy a home, pay rent and buy a car.
McElhaney said that McFar’s alleged scheme was designed to avoid detection and money laundering charges because it was designed “to avoid detection, and then to evade prosecution”.
The indictment charged that McElthaney was aware that McSarley and McFarlanders account had also been used in the sale of counterfeit goods.
The indictment says that in December 2018, McSarelds bank account was used as the primary payment for transactions in the scheme and that he knew that some of the transactions had been made using stolen identities.
McSarls account was linked to a different US person named Christopher Jones, who is charged with a different crime and has not yet been identified.
Jones was charged with making false statements to a US federal bank.
On Monday, McElhalaney also announced that federal agents arrested an alleged member of the scheme who is believed to have worked in McFarleys bank.
The FBI says the individual was arrested at his home in California.
John Doe’s attorney, Paul Hirsch, said in a statement that the man has cooperated fully with the investigation and is grateful for the work of the FBI.
“We continue to ask the federal government to provide the assistance it has requested in bringing to justice these criminals who were so brazenly profiting from the fraud of the United States currency system,” he said.
In a statement, the US Attorney for the Districts of California and New York, Peter Carr, called the indictment a “staggerING” investigation.
Carr said that it was the first criminal case the department has brought under RICO, which was created after the collapse of the Soviet Union in 1991.
RICO was expanded after 9/11 to cover all crimes committed against the US.
US Attorney Carr said the federal investigation is ongoing.
If you have information that can assist the FBI, please contact Detective Michael D’Amato at 202-947-8273.
This article has been corrected to reflect the indictment being filed in the Eastern District of Virginia, not the District.