A federal jury in Brooklyn today convicted David Motovich of perpetrating a years-long scheme to establish and conceal a massive illegal check-cashing operation.

Motovich was found guilty on 16 counts of an indictment charging him with operating an illegal money transmitting business, failure to file currency transaction reports, bank fraud, conspiracy to commit bank fraud, money laundering, aggravated identity theft, and conspiracy to defraud the United States.  The verdict followed a three-week trial before United States District Judge William F. Kuntz, II.  When sentenced, Motovich faces up to 30 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Christie M. Curtis, Acting Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI) and Thomas Fattorusso, Special Agent in Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), announced the verdict.

“Taken behind the façade of a seemingly legitimate lumber business in Brooklyn, the jury followed the trail of evidence to find an infestation of crimes,” stated United States Attorney Peace.  “Motovich operated an illegal money transmitting business that funneled millions of dollars to himself to get rich, evade taxes and fund a lavish lifestyle of luxury cars, jewelry and a spectacular penthouse apartment.  With today’s verdict, the defendant finds there is a very high price to pay for his blatant disregard for the law.”

“David Motovich developed an illicit scheme using his family’s business to launder more than $55 million through construction companies to finance lavish purchases.  For seven years, Motovich funneled his proceeds through falsely named bank accounts to conceal the profits and evade authoritative oversight. Despite his efforts to disrupt our investigation into his unlawful activity, today’s verdict highlights the FBI’s tireless dedication to apprehending criminals who employ fraudulent tactics to fund expensive lifestyles,” stated FBI Acting Assistant Director in Charge Curtis.

“Motovich made millions from his back office deals, cashing checks for clients who paid more in fees just to know their transactions were hidden from the government.  But we found out.  And although his shady business allowed him to lease a high-end apartment with expensive renovations and luxury cars, today’s verdict will ensure that his next lease is only for a prison cell, no renovations required,” said Thomas M. Fattorusso, Special Agent in Charge of IRS CI New York.

As proven at trial, Motovich used his family-run business in the Midwood section of Brooklyn as a front for an illegal, unlicensed check-cashing operation. 

From the second floor of Midwood Lumber on Coney Island Avenue, Motovich offered his services primarily to the owners and operators of construction companies, cashing millions of dollars in checks to fund off-the-books payrolls for those businesses.

Motovich’s customers paid a higher fee to Motovich than the fees charged by licensed check cashing businesses because the customers understood that Motovich would not file Suspicious Activity Reports or Currency Transaction Reports for cash transactions in amounts greater than $10,000, as required by federal anti-money laundering statutes.

Motovich supplied his check cashing customers with fraudulent documents that they could use to disguise the transactions as payments by the customers for materials and/or subcontracting work if the customers were audited by the New York State Workers Compensation Board or tax authorities.

In furtherance of his scheme, Motovich created shell companies for the sole purpose of facilitating his illegal check cashing business and instructed his customers to issue checks drawn against their business accounts and make the checks payable to one of the companies.

Motovich then deposited the checks into bank accounts that he created at several financial institutions.  To conceal his control and ownership of the funds in the accounts, and to avoid detection of his scheme, Motovich opened the accounts in the names of other individuals.

In total, between 2012 and 2019, Motovich deposited more than $55 million into the accounts that he had opened in the names of other individuals and used the funds to purchase real estate; pay personal and corporate credit card accounts; purchase luxury items, including millions of dollars of diamonds, watches, jewelry and clothing; make lease and purchase payments for Porsche and Lexus luxury vehicles; pay premiums on multi-million dollar life insurance policies for himself, his wife and others; renovate his penthouse apartment in Manhattan to include a swimming pool; and to fund other business ventures.

Motovich’s co-defendants Marina Kuyan, Kemal Sarkinovic, and Joshua Markovics, all previously pleaded guilty to various charges in connection with the scheme. They are awaiting sentencing.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Robert Polemeni, Erik Paulsen, Andrew Grubin and Matthew Skurnik are in charge of the prosecution, with assistance from Eastern District of New York Special Agent George Dietz and Paralegal Specialist Kavya Kannan.

The Defendant:

DAVID MOTOVICH
Age:  49
New York, NY

E.D.N.Y. Docket No. 21-CR-497 (WFK)

Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of NADER AL-NAJI, the founder and promoter of the “BitClout” token.

 AL-NAJI was charged with defrauding a “BitClout” purchaser by making false and misleading representations disclaiming control over the use of the investment funds.  AL-NAJI was taken into custody on Saturday, July 27, 2024, and was presented JULY 29 before a U.S. Magistrate Judge in California.

U.S. Attorney Damian Williams said:

“BitClout may have been a new token, but Nader Al-Naji’s alleged fraud was nothing new.  He allegedly lied to get access to millions of dollars, then gave the money away to family and friends.  Today’s arrest signifies this Office’s commitment to holding to account people who use deception to enrich themselves.”

FBI Acting Assistant Director in Charge Christie M. Curtis said:

“Nader Al-Naji, founder of the BitClout protocol, allegedly lied to investors and misappropriated investments in the protocol for personal expenses and gifts.  Failing to properly disclose the use of invested funds disrupts the integrity vital to investing and can breed distrust for future opportunities.  The FBI does not tolerate individuals who use false promises and half-truths to exploit well-intended investors of their funds.

According to the allegations contained in the Complaint:[1]

AL-NAJI is the founder of BitClout, a social media and cryptocurrency trading platform that purportedly allowed users to purchase BitClout tokens using Bitcoin, ostensibly through a decentralized protocol without any centralized issuer, for the purpose of trading BitClout tokens in connection with the social media profiles of other BitClout users.

BitClout held itself out as a “cross between a financial app and a social app.”  Specifically, BitClout was touted as “a social network built from the ground up as its own custom blockchain.  It’s not a company, it has no employees—it’s just code and coins . . . . [W]e refer to BitClout as a ‘protocol’—it is ultimately nothing more than an open-source piece of code running on machines all over the world.  No company, just code and coins.”

In or about January 2021, AL-NAJI contacted representatives of a prospective investor (“Investor-1”) to discuss the BitClout project and provided Investor-1 with BitClout’s marketing material.  On or about January 18, 2021, AL-NAJI met with representatives of Investor-1 and stated, in substance and in part, his intent to use the Bitcoin raised from selling BitClout to develop the BitClout protocol.  As part of negotiations with Investor-1, AL-NAJI claimed, in substance, that the role played by his entity was merely to purchase BitClout tokens from the protocol, and that he did not have any control over the funds after the purchase was complete.

In fact, contrary to AL-NAJI’s representations to Investor-1, AL-NAJI did maintain control over the proceeds provided by Investor-1 and used them for, among other things, personal expenses and gifts to AL-NAJI’s family members.  After inducing Investor-1 to invest approximately $3 million, AL-NAJI routed the funds through multiple accounts for the ultimate benefit of himself and family members.

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Al-NAJI, 32, of Los Angeles, California, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the investigative work of the FBI and also thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendant, for its assistance in the investigation.

The case is being overseen by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Sarah Mortazavi and Nicholas Folly are in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.