Montreal businessman sentenced to 3 and a half years in U.S. prison for laundering bitcoin

A Montreal business owner, Firoz Patel, will spend another three and a half years in U.S. federal prison after being sentenced for laundering $43 million US worth of Bitcoin following an earlier conviction for operating an unlicensed money-transmitting business. 

Patel, 50, pleaded guilty to obstruction of an official proceeding for attempting to hide the Bitcoin from U.S. prosecutors. 

He was initially convicted to conspiracy charges and sentenced to 36 months in U.S. prison in 2020. Patel had been running an illegal payment processing company called Payza (originally AlertPay). According to U.S. court records, Payza was involved in high-risk activities, such as Ponzi schemes, multilevel-marketing scams and pyramid schemes, among others. 

Patel was the subject of CBC investigations, which were made possible by leaked documents obtained by the International Consortium of Investigative Journalists (ICIJ) as part of the worldwide Pandora Papers investigation and shared exclusively with its Canadian partners, CBC and The Toronto Star.

When Patel was sentenced by then-District Judge Ketanji Brown Jackson, who is now a U.S. Supreme Court justice, he was ordered to forfeit 450 Bitcoin (valued at $24 million US then and now $43 million US). 

But Patel told a probation officer and the court that his only assets were $30,000 US in a retirement savings account. 

“Rather than comply, shortly after his sentencing but before reporting to prison, Patel began consolidating Payza’s illicit cryptocurrency proceeds and attempted to deposit them with Binance, a virtual currency exchange,” according to the U.S. Attorney’s Office for the District of Columbia. 

Binance ended up freezing the funds and Patel attempted to deposit them in an offshore account. Those funds were flagged and American law enforcement opened an investigation. 

Patel somehow became aware of the investigation into his bitcoins, though, and enlisted an accomplice to impersonate an attorney and negotiate with the U.S. Attorney’s Office until his 36-month sentence was up. He planned to flee to Canada at that point. 

Investigators discovered the impersonation in time and indicted Patel in May 2023.