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The Jack of All Trades: Abramoff, Andrade, AML Bitcoin.

Author: 
Nigel Morris-Cotterill

You'd have thought that you'd heard the last of US lobbyist Jack Abramoff, the self-styled lobbyist, film producer, writer and businessman when he was awarded the coveted additional position, without which no American businessman's career is, seemingly, complete: that of convicted felon. After all, when you've been jailed for fraud, conspiracy to commit bribery and tax evasion you'd keep your head down, wouldn't you.

But then again, when your entire career has been working with dodgy businesses and doing dodgy political deals, perhaps there's nothing left to do but be dodgy over cryptoassets. A crypto-coin especially designed to be resistant to money laundering: AML Bitcoin was tailor-made for Abramoff. Now he's awaiting sentence and the company behind it is in disarray - and spending investors' money on litigation.

But what lies behind it is even more fascinating and takes us on a global trek from Las Vegas via Texas to London, Singapore and Melbourne - then across the Pacific to Northern California.

In or about July 2017, Andrade (it's so difficult not to type "android" out of habit) and NAC Foundation began to raise money saying it was for the development of AML Bitcoin. Two things didn't exactly ring true: first, cryptocurrencies are really, really cheap to create. Seriously: they cost less than a wedding ring from Ratner's Jewellers as we all know cost less than a Marks and Spencer's sandwich. And if you don't know that you really should look it up. Secondly, while some might see that the sale of tokens that will later be exchanged for assets as a form of crowdfunding, on analysis, it's really, really difficult to see it as anything less than speculative fund-raising which means it is regulated; not being regulated turns it into an unregulated investment and they hover on the border between totally illegal and legal only if certain stringent conditions are met. Those stringent conditions are, mainly, in relation to qualified, sophisticated investors which means it's not a public offering. That was not Andrade's plan.

In the charges in the Abramoff case, it was said "Abramoff was retained by Andrade and NAC Foundation in or about June 2017 to perform consulting and to work on a public relations and marketing campaign for AML Bitcoin." It took Abramoff three months to get things under way: he "recruited and paid writers to publish and disseminate, under those writers' names, witten articles touting AML Bitcoin specifically, as well as to tout the idea of a cryptocurrency that would be fully compliant with "AML" and "KYC" laws and regulations. These articles were published as opinion editorials or "op-eds" on well-known news and financial websites."

No one told the media that the articles were PR puff pieces written by Abramoff's team and laundered through freelance contributors.

But then, in October, it was re-launched as an Initial Coin Offering or ICO. See here: https://www.prnewswire.com/new... . In that press release, shown as being issued in Las Vegas (does anyone else see the irony?)

It said "The Foundation created AML BitCoin with anti-money laundering, anti-terrorism and anti-theft properties built into the coin's code. The coin will use a biometric identification system to verify owners of wallets that hold the AML BitCoin."

That, anyone with an ounce of sense can see, is far removed from how cryptocurrencies work. Well, technically, it's possible and it's simple but, and only but, if the particular cryptocurrency works in a closed system with dedicated and closed terminals. And unless AML Bitcoin were to become the sole, or very dominant, currency worldwide, it's not going to work.

"Up until now banks and governments have not been able to adopt cryptocurrencies because they are not AML-compliant – meaning they do not comply with the standards used by the American banking industry, mandates laid out in The PATRIOT Act, and other regulatory frameworks," NAC Foundation CEO Marcus Andrade said. "With AML BitCoin, that has now changed. The first U.S. bank is poised to run a trial with AML BitCoin for interbank transfers, an advancement that will save millions of dollars in exchange fees." Ignoring the fact that the name of the USA PATRIOT Act is wrong, there's another problem. Claims that there was already a degree of acceptance were false.

Also false was the fake advertisement claiming that AML Bitcoin was "impervious" to hacking by North Koreans, an advertisemen that it was claimed was rejected by TV companies from being broadcast in the break during "The Superbowl," a popular American sporting event for which fees are very high, a figure which increses if, during the previous year's festivities, a female singer manages to fall out of her clothes. It was, prosecutors say, never intended that the ad would be shown and not true that it was rejected "as being too political." The so-called "rejection campaign" worked reasonably well. Given the amount of false advertising in the world, that doesn't seem particularly bad, it has to be admitted.

Amazingly, Abramoff was not a back-room strategist. He actually spoke to people including the prospect who, asking where the development stood, was told that its compliance aspects were all "funcioning and complete." The funniest thing about it all? Just like the pump and dump fraudsters of old, Abramoff was "compensated" in the very thing he was pumping. And it wasn't even that much: AML Bitcoin Tokens with a face value of USD220,000 for 15 months work. And his biggest mistake was talking, on the phone, to someone across the border in northern California. That made the fraud inter-state and that made it federal.

But Jack the Lad wasn't only playing with AML Bitcoin. He was also playing with dope, representing a company in California. He lobbied various federal politicians for changes in the law and the policing of medical and personal use marijuana.

Talk about being hoist by your own petard: after his final release in 2010, Abramoff had immediately gone back to lobbying. An unusually united government quickly passed the Lobbying Disclosure Act under which all lobbyists must register with the Secretary of the Senate and the Clerk of the House of Representatives their prior convictions, if any. Even though he was the reason that the Act was passed, Abromoff made no effort to register.

Abramoff received tokens which he sold for USD50,000. He is awaiting sentencing but his deal includes the surrender of the proceeds of that sale plus prejudgment interest of USD5,500.

It is said that the amount raised from the two money raising schemes (the initial launch plus the subsequent ICO) for AML Bitcoin brought in about USD5.6 million from about two and a half thousand investors.

The Securities and Exchange Commission began its own action alleging NAC Foundation's schemes were unregistered and illegal and also alleging theft. Andrade claimed that the SEC had misled the Court when it alleged that he had offered a technology that he had not at that time developed. He held, and the SEC knew he held, patents for so-called AML Techology that related to AML Bitcoin. Also, he said, at all points made it clear that the tokens were not an investment and/ or in the alternative that NAC Foundation's sales terms expressly stated that investors should not expect a return on investment.

Is the story over? Now there's "AMLWALLET.com" and a claim on the AML Bitcoin website that, since April 2020, holders of AML Bitcoin tokens can convert them to AML Bitcoins. Both websites are, as of today, active including account opening at AMLWALLET.com.

You decide if it's over.....

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SEC complaint: https://www.sec.gov/litigation...
USA v Abramoff (DOJ) https://www.justice.gov/usao-n...
USA v Andrade: https://www.justice.gov/usao-n...
DOJ press release: https://www.justice.gov/usao-n...

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