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2 Bitcoin operators plead guilty in Silk Road case

By WTOP Staff

LARRY NEUMEISTER
Associated Press

NEW YORK (AP) — The top executive of a New York City-based Bitcoin company and a Florida Bitcoin exchanger pleaded guilty Thursday to federal charges, admitting that they enabled the digital currency to be funneled to the black market website Silk Road.

Charlie Shrem, 24, of Manhattan, pleaded guilty in federal court there to aiding and abetting the operation of an unlicensed money transmitting business, while Robert Faiella, 54, of Cape Coral, Florida, pleaded guilty to operating an unlicensed money transfer business.

Sentencing was set for Jan. 20, when each faces as much as five years in prison.

The case grew from the government’s shutdown of Silk Road. Shrem was chief executive officer of BitInstant; Faiella operated an unlicensed money transferring business.

They were accused of letting more than $1 million in Bitcoins reach the website. Both admitted during their pleas that they knew narcotics were bought and sold on the website.

U.S. District Judge Jed S. Rakoff asked Faiella whether he knew from December 2011 through last October that his Bitcoins would be used to buy and sell drugs and that it was illegal.

“Absolutely,” Faiella answered.

Shrem said he knew that much of the business conducted on Silk Road involved the purchase and sale of narcotics.

“I knew what I did here was wrong,” he told Rakoff.

Authorities have said Silk Road’s San Francisco operator generated more than $1 billion in illicit business since 2011 on the website. It used Bitcoin, a tough-to-track digital currency, before being shut down.

Prosecutors said Faiella ran an underground Bitcoin exchange on the Silk Road website, operating under the username “BTCKing.” They said he sold Bitcoins.

The government said Faiella filled his orders through Shrem’s company from August 2011 until July 2013, when the company stopped operating.

Prosecutors said Shrem, who was vice chairman of a foundation dedicated to promoting the Bitcoin currency, failed to file a single suspicious activity report with the U.S. Treasury Department regarding Faiella.

“Robert Faiella and Charlie Shrem opted to travel down a crooked path — running an illegal money transmitting business that catered to criminals bent on trafficking narcotics on the dark web drug site, Silk Road,” U.S. Attorney Preet Bharara said in a statement. “The approximately $1 million in Bitcoins Faiella and Shrem sold to these outlaws cost them a lot more than they bargained for and bought them today’s convictions.”

Marc Agnifilo, Shrem’s attorney, said outside court that his client’s crime was an aberration.

He said Shrem was dedicated to making Bitcoin a more useful form of currency.

Agnifilo said he would ask Rakoff at sentencing for leniency.

“If God smiles on him, hopefully he’ll be back in the Bitcoin world,” he said.

A lawyer for Faiella had no comment.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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