CLEVELAND, Ohio — A Cleveland man was sentenced Thursday to more than four years in prison for stealing about $5 million in bitcoin that federal agents had seized from his brother.
Gary Harmon, 31, used the stolen bitcoin to spend lavishly, including converting some of it into $100,000 in dollar bills that he used to fill a bathtub and sit in at a Miami club.
Harmon took the bitcoin after federal agents seized more than $300 million from his brother, who operated a bitcoin laundering network called Helix.
U.S. District Judge Beryl Howell in Washington, D.C., sentenced Harmon to four years and three months in prison for wire fraud and obstruction of justice.
Harmon’s brother, Larry, in August 2021 pleaded guilty to conspiring to launder bitcoin valued at $311 million through the cryptocurrency money service, known as a “mixer” or “tumbler.” The funds came mostly from dark net drug dealers, according to prosecutors.
He has not yet been sentenced because he continues cooperating with federal investigators, according to court records.
After authorities moved to seize Larry Harmon’s assets in 2020, his brother removed as much cryptocurrency from his brother’s account as he could manage, federal prosecutors said.
Gary Harmon knew investigators struggled with cracking one cryptocurrency device because he attended court hearings where IRS agents testified that they worried someone could transfer bitcoin from a device that agents had seized.
That’s exactly what Gary Harmon did, according to prosecutors. He used his brother’s credentials to recreate his brother’s bitcoin wallets from the device, then transferred to his own wallets 712 bitcoin, valued at $4.8 million at the time, prosecutors said.
Gary Harmon laundered the bitcoin through two online mixer services before using it to make expensive purchases, including a 2018 Audi S5, a Swiss watch, custom work on his Lamborghini and a luxury condominium at the Nikolai Building on West 37th Street and Clinton Avenue in Cleveland’s Ohio City neighborhood,
In June 2021, he spent “extravagantly” on a night at a Miami club that accepts bitcoin, according to prosecutors. He spent $25,000 to rent a so-called “whale room” from midnight to 8 a.m., $15,000 on a “dancer’s fee” and $100,000 in one-dollar bills. He later sat in a bathtub full of cash in the club.
Prosecutors said the bill was likely much higher, based on text messages seized from his phone where he ordered 10 girls to remain in his room at the club for the night.
FBI agents arrested him shortly after, on June 28, 2021, and seized the bitcoin, about $284,000 from his bank and the condo.
The bitcoin he stole and laundered increased in market price and grew to $20 million, according to prosecutors.
Defense attorney Ned Smock of the federal public defender’s office in Washington, D.C., wrote in court records that his client cooperated with investigators and helped them find the stolen bitcoin he had hidden.
He wrote that Gary Harmon grew up in Northeast Ohio, went to Baldwin Wallace and Kent State universities and worked as a stone countertop installer. He later worked in marketing in Cleveland and Phoenix before returning home to work at his brother’s company, Coin Ninja, that promoted the wider use of cryptocurrency.
During the time he stole the bitcoin from under federal agents, he was using copious amounts of alcohol, cocaine, ecstasy and hallucinogens, Smock wrote.
“Mr. Harmon recognizes that his conduct was immature, unlawful and inexcusable, and he has done everything in his power to accept responsibility and make the government whole,” Smock wrote in court filings.
Adam Ferrise covers federal courts at cleveland.com and The Plain Dealer. You can find his work here.
