Damian Williams, the United States Attorney for the Southern District of New York, announced today that REGINALD FOWLER was sentenced to 75 months in prison for arranging to process more than $700 million of unregulated transactions on behalf of cryptocurrency exchanges, in violation of federal anti-money laundering laws, lying to U.S. banks to do so, and defrauding the Alliance of American Football (“AAF”), a short-lived professional football league, in connection with his acquisition of a significant ownership stake in the league.
According to court filings and statements made in court proceedings:[1]
In or about February 2018, REGINALD FOWLER established Global Trading Solutions LLC (“GTS”) and began working with Crypto Capital and other related companies (the “Crypto Companies”), which were operated by Israeli nationals. The Crypto Companies marketed themselves as providing a seamless way for individuals to exchange standard currency for cryptocurrency. A number of cryptocurrency exchanges began using the Crypto Companies to process their fiat-to-cryptocurrency transactions.
Because banks were reluctant to handle cryptocurrency transactions, in reality, the Crypto Companies could not access legitimate financial institutions. Instead, the Crypto Companies lied to banks in order to open accounts that were used to process cryptocurrency transactions without the banks’ knowledge. FOWLER opened dozens of such accounts in the United States and around the world. He did not disclose GTS’s involvement with the Crypto Companies and the fact that it was operating as a payment processor for hundreds of millions of dollars in cryptocurrency transactions. FOWLER also directed other individuals to include false information on wire transfer instructions to further deceive banks about the nature of GTS’s business. In less than 10 months, FOWLER processed approximately $750 million in cryptocurrency transactions in various currencies. At no point were FOWLER, GTS, nor any of the Crypto Companies ever licensed as a money transmitting business in the United States, as required by federal law.
Additionally, in 2018, FOWLER defrauded the AAF in connection with his acquisition of a significant ownership stake in the league. In the course of negotiating his investment in the AAF, FOWLER falsely claimed personal ownership of GTS funds that, in fact, belonged to clients of FOWLER’s illegal money transmission service established in support of the Crypto Companies. As he did when opening bank accounts, FOWLER lied to AAF executives, telling them that the funds in the GTS bank accounts derived from real estate investments as well as government contracts and that the tens of millions of dollars in the GTS accounts were liquid assets he could use to invest in the AAF. FOWLER did not disclose his involvement with the Crypto Companies. Moreover, although FOWLER experienced account closures and government seizure of GTS funds in the month leading up to his investment in the AAF, FOWLER did not disclose those facts to the AAF. FOWLER acquired a significant investment stake in the AAF in November 2018 yet was unable to fund that investment. Based, in part, on FOWLER’s lies, the AAF declared bankruptcy in about April 2019, ending the season and dashing the hopes of FOWLER’s victims.
In addition to the prison sentence, FOWLER, 64, of Chandler, Arizona, was ordered to pay forfeiture of $740,249,140.52 and restitution in the amount of $53,189,261.80 to the AAF.
Mr. Williams praised the outstanding investigative work of Special Agents from the Federal Bureau of Investigation’s New York Money Laundering Investigation Squad and Special Agents from the Internal Revenue Service-Criminal Investigations.
[1] As to FOWLER’s co-defendants, the entirety of the text of the Indictments and the descriptions in the Indictments set forth below constitute only allegations, and every fact described should be treated as an allegation.
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