A Montreal entrepreneur is set to spend an additional three and a half years in a U.S. prison for hiding tens of millions of dollars worth of bitcoin in an undeclared account following an earlier cryptocurrency-related criminal conviction.
The businessman, Firoz Patel, was sentenced Thursday in a Washington, D.C., federal court on one count of obstructing an official proceeding, ending the latest chapter of a circuitous criminal case.
In 2012, Patel launched the firm that would become known as Payza, which prosecutors said had scant due-diligence protocols and became a magnet for criminal proceeds from Ponzi schemes, illicit steroid sales and multilevel marketing scams across the globe.
“Payza, through its robust network of shell companies and criminal associates, became the preferred method for criminals to launder illicit proceeds and transfer funds to other criminal associates,” according to prosecutors.
Patel was initially sentenced in 2020 on a conspiracy charge relating to money laundering through Payza. Patel declared that his only assets amounted to $30,000 in a retirement savings account. Authorities say they remained in the dark about Patel’s stash of 450 bitcoin, now worth more than $40 million.
In the months before he reported to prison in 2021, Patel covertly amassed bitcoin in a Binance virtual currency wallet, but the company moved to close the account after it raised red flags. Patel then moved the funds to a U.K.-domiciled account at Blockchain.com, according to court records. Prosecutors said he opened the account in his father’s name.
After being blocked from accessing those funds, in June 2021, Patel filed a legal claim against Blockchain.com in U.K. court using his real name, thus “abandoning the pretense that the funds belonged to anyone else,” according to prosecutors.
That October, as a part of the International Consortium of Investigative Journalists’ Pandora Papers investigation, the Canadian Broadcasting Corporation and the Toronto Star revealed that Patel, who was then in prison, had set up an offshore company while under criminal investigation years prior.
Three months later, U.S. federal investigators worked with British authorities to seize Patel’s bitcoin.
Responding to questions from reporters at the Toronto Star in 2021, Patel suggested that the U.S. charges to which he pleaded guilty would not be considered a crime in Canada.
“There needs to be intent to launder funds, and there was no intent to run a [money transfer] company without the requisite licences, therefore the foundation of the money laundering allegation is false,” Patel said at the time in an emailed statement.
He also told the reporters that his firm that was revealed in the Pandora Papers was intended for legitimate purposes and never conducted any business.
Last Friday, Patel filed a motion to appeal his latest sentence. A lawyer representing Patel declined a request for comment.
