Brother of Criminal Bitcoin Mixing CEO Pleads Guilty to Stealing 712 Bitcoins From IRS
An Ohio family now has not one but two felons facing potentially lengthy prison sentences for crypto-related crimes.
Cleveland man Gary Harmon, 31, pleaded guilty to one count each of wire fraud and obstruction of justice on Friday for stealing 712 bitcoins from the Internal Revenue Service (IRS). The bitcoins had been seized by law enforcement from Harmon’s older brother, Larry Harmon – the CEO of darknet crypto mixing service Helix – after his 2020 arrest.
Larry Harmon pleaded guilty to one count of conspiracy to launder monetary instruments in August 2021. He was ordered to pay a $60 million civil penalty by the Financial Crimes Enforcement Network (FinCEN). The elder Harmon has not yet been sentenced – as part of his plea agreement, he was required to forfeit his ill-gotten gains as well as turn government informant. According to his lawyers, his cooperation is “active and ongoing.”
But while Larry was cooperating with the government, his younger brother – who was formerly employed by one of Larry’s companies, Coin Ninja – was stealing from them, pilfering crypto from Larry’s forfeited wallets.
According to a newly-released memorandum filed by prosecutors in August 2021, Gary Harmon used recovery seed words to recreate numerous wallets that belonged to his brother. In April 2020, he made a series of eight transfers from Larry’s forfeited wallets – Trezor wallets being held in an IRS storage locker – to his own wallets. In total, the younger Harmon brother purloined a total of 712 bitcoins from the IRS – at the time, worth $5.4 million.
Prosecutors said that Gary initially vehemently denied draining his brother’s wallets, even when presented with evidence that he had done so.
Rags to riches
Prior to stealing the 712 bitcoin, prosecutors said Gary “was on unemployment and lived a modest lifestyle,” after being laid off from Coin Ninja after his brother’s arrest in 2020.
In Feb. 2020, Gary told CoinDesk in an interview that Larry’s frozen assets had forced the family to create a GoFundMe campaign for its expenses during the trial (the GoFundMe has since been deleted).
After gaining access to his brother’s wallets, the newly flush Gary took out a $1.2 million loan through BlockFi, using bitcoin as collateral, to purchase a luxury condo in Cleveland.
He also “spent bitcoin extravagantly” at strip clubs and on private jet flights. Photos recovered from his cell phone show a lavish evening out at a club: Gary bathing in a tub full of cash, a blissful smile on his face as scantily-clad dancers mingle behind him. A text reveals that Gary paid $122,232 for the privilege of swimming in the pool of 100,000 one-dollar bills surrounded by the dancers. The massive bill included $15,000 for a “dancer fee” and $25,000 for the room.
In July 2021, federal agents arrested Gary Harmon and searched his Ohio residence. They found wallets containing approximately $6,000 in bitcoin.
As part of his plea agreement, Gary Harmon agreed to the forfeiture of more than $12 million in crypto, including 647 bitcoins, 2 ether and 17.4 million dogecoins.
Gary Harmon has not yet been sentenced. He faces a maximum of 40 years in prison.
Via: Coindesk
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