Prominent Lawyer Accused of Hiding Millions in Gambling Winnings in Crypto #CriptoNews

A lawyer who has argued before the U.S. Supreme Court more than 40 times used cryptocurrency and a VPN to hide millions of dollars in gambling winnings from tax officials, prosecutors allege.

Newsweek sought email comment from the Justice Department and Goldstein’s attorney on Monday.

Why It Matters

Tom Goldstein, the founder of SCOTUSblog, a website for lawyers, journalists and others researching Supreme Court rulings, allegedly tried to hide millions of dollars in transfers to a cryptocurrency wallet. Prosecutors said Goldstein won and lost millions playing poker and that the money was transferred by cryptocurrency using a “fixer” to hide the transactions from U.S. tax officials.

What To Know

On January 16, a federal grand jury returned a 22-count indictment against Goldstein for alleged violations of federal tax laws and for making false statements on mortgage loan applications to pay poker debts.

Prosecutors on March 7 submitted an extensive list of documents allegedly showing that Goldstein used a Virtual Private Network (VPN) to hide millions in winnings. VPNs are used to hide the country of origin of an internet user. In this case, Goldstein allegedly tried to show that his payments into the cryptocurrency wallet were coming from India, Norway and Italy rather than the United States, prosecutors said.

“Defendant funded a wallet that has had roughly $100 million in transactions,” prosecutors said. “Even if Defendant does not own or control the 935B wallet, these facts show Defendant’s connection to individuals—possibly abroad—who have controlled tens of millions of dollars in cryptocurrency through an unhosted wallet.

“And his use of the fixer to route cryptocurrency through a third-party to the 935B wallet further underscores how Defendant has used, and can continue to use, unhosted cryptocurrency wallets to facilitate transfers of large sums of money with gambling and/or foreign contacts.”

Goldstein is also accused of trying to pay off a manager at his law firm with bitcoin, valued at between $10,000 and $40,000, so that she would not talk to authorities. The manager, a “potential witness,” according to prosecution court documents, told investigators that she felt uncomfortable when Goldstein offered her the bitcoin.

On January 27, Goldstein made his initial appearance before a Maryland federal court and pleaded not guilty to all charges.

In February, prosecutors alerted the judge that Goldstein was allegedly making cryptocurrency transfers without notifying the court. The judge had Goldstein arrested at the courthouse. He was jailed for three days and released under strict conditions, including that federal authorities be allowed to monitor his electronic devices.

On February 27, Goldstein’s lawyer, Jonathan I. Kravis, filed an appeal to his release conditions. He said in the filing that the government no longer had any need to monitor his electronic transfers.

“The Monitoring Condition is particularly unwarranted in light of the additional release conditions concerning Defendant’s finances,” Kravis wrote. “Among other things, Defendant is prohibited from opening new accounts, making financial transfers without the permission of Pretrial Services, and using cryptocurrency at all. Defendant was also required to disclose all of his financial assets to Pretrial Services. Defendant is challenging none of those release conditions.”

What Happens Next

According to a joint status filing submitted to the court on March 7, the Justice Department would like Goldstein’s pretrial motions to be filed by April 11, with prosecutor response briefs by May 9 and Goldstein’s reply briefs to those by May 30. The court has yet to approve the Justice Department’s proposed schedule.