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  • Writer's pictureAnna Stylianou

AML News: Lawyer Sentenced To 10 Years In Prison For Laundering $400 Million Of OneCoin Fraud Proceeds - Lessons learned

Lawyers play a crucial role in the financial world. They are gatekeepers of the financial system, ensuring that financial transactions are compliant with the law. However, when this power is misused, the consequences can be severe.


The case of Mark Scott, a former law firm partner sentenced to a decade behind bars for laundering about $400 million from the OneCoin fraud scheme, is a stark reminder of this reality.


What is OneCoin?


OneCoin, was a fraudulent cryptocurrency scheme based in Sofia, Bulgaria. The scheme began in 2014 and quickly grew into one of the largest fraud schemes in history. By the end of 2016, it had amassed over $4 billion from 3.5 million victims. Its value though, was artificially set, with no real market value.


How the Lawyer Laundered Funds: A Step-by-Step Analysis


As an equity partner at Locke Lord LLP, Mark Scott was first introduced to OneCoin's co-founder, Ruja Ignatova, in September 2015. He played an important role in disguising the fraudulent nature of OneCoin and facilitating its operations in the following ways:


·      In early 2016, Scott established a series of fake private equity funds, known as the Fenero Funds, in the British Virgin Islands. These were seemingly private equity funds, but in reality, a cover for laundering OneCoin's proceeds.


·      Scott disguised incoming transfers of about $400 million to the Fenero Funds as investments from “wealthy European families.” In reality, this money were proceeds of the OneCoin fraud scheme.


·      The laundered money was shuffled through various accounts in the Cayman Islands and the Republic of Ireland.


·      The funds were then transferred back to Ignatova and other OneCoin entities, disguised as outbound investments.

·      Throughout this process, Scott and his co-conspirators deceived banks and financial institutions worldwide. They misrepresented the nature of these transactions to evade anti-money laundering procedures.


·      For his services, Scott received over $50 million. His lavish lifestyle, including luxury cars, a yacht, and multiple homes, was funded by these illegal proceeds. However, this wealth became his undoing, leading to his arrest and conviction.


Consequences and Reflection


In addition to his 10-year in prison sentence, Scott faces three years of supervised release and has been ordered to forfeit a substantial sum of money, several bank accounts, luxury vehicles, and real estate properties.


This case, prosecuted diligently by the U.S. Attorney's Office, serves as a clear warning about the dangersof professional misconduct and the severe consequences of engaging in money laundering.


It also underscores the importance of vigilance in the financial sector against such sophisticated fraud schemes. The collaboration of the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation was instrumental in bringing Scott to justice.


As professionals, especially those in influential positions, it is imperative to uphold ethical standards and legal compliance.


The story of Mark Scott is not just a tale of crime and punishment but a cautionary reminder of the responsibilities that come with power and influence.


A Note on Reputation and Ethics


This case highlights a critical point: the reputation of a lawyer, or any professional, is not a foolproof indicator of their ethical conduct. Despite his esteemed position and apparent respectability, Scott chose a path of criminal activity. It reminds us that vigilance and due diligence are essential, regardless of the reputation or standing of the individuals involved. Trust must be earned and continually validated, especially in professions entrusted with significant financial and ethical responsibilities.


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