According to the IRS, Bitcoin Fog was the darknet’s longest-running crypto mixer, a money laundering service that worked closely with criminal enterprises. Roman Sterlingov, a dual Russian-Swedish national, operated Bitcoin Fog from 2011 through 2021.
Overall, Sterlingov processed a value of more than $400 million in his decade of operation. Bitcoin Fog was a darknet marketplace, a covert black market network, that handled proceeds primarily associated with drugs, cybercrime, child pornography , and identity theft.
Following an IRS investigation, Sterlingov was convicted after a four-week trial in March of 2024 of money laundering and money laundering conspiracy, operating an unlicensed money transmitting business, and money transmission without a license. He was sentenced to 12 years and six months in prison. On the money side, Sterlingov forfeits his Bitcoin Fog wallet, valued at approximately $103 million, along with $1.76 million in additional funds and a judgment of $395,563,025.39.
The Deputy Attorney General noted, "Roman Sterlingov ran the longest-running bitcoin money laundering service on the darknet, and today he paid the price. In the deepest corners of the internet, he provided a home for criminals of all stripes, from drug traffickers to identity thieves, to store hundreds of millions of dollars in illicit proceeds. Today's sentence reflects the Department's determination to dismantle the criminal networks that enable criminal actors to flourish and ensure consequences for the criminals operating them.”
Number three on the IRS-CI list of top tax crimes of 2024 involves a Certified Public Accountant (CPA) who engineered an abusive tax shelter and an attorney who worked with him to expand the amount of fraudulent deductions sold using those tax shelters.
The CPA, Jack Fisher, reportedly started his abusive tax scheme around 2008. Conservation easements caught the eye of Fisher. These easements allow a landowner to give up their development rights to desirable land in exchange for a tax deduction. In the version marketed for years by Fisher, he bought vacant land, boosted the appraisal value using shady appraisers, and then sold shares in the entity that held the land to those seeking a tax deduction. The attorney, James Sinnott, signed on in 2013 to help expand the network of tax shelters.
An IRS-CI criminal investigation revealed the two, along with additional co-conspirators, sold approximately $1.3 billion in fraudulent tax deductions, causing a tax loss to the IRS of $450 million. Five other defendants (including the appraisers) pleaded guilty. Fisher and Sinnott were convicted in 2023 of conspiracy to defraud, to commit wire fraud, assisting in the filing of false tax returns, and more. Fisher was also convicted of money laundering.
Before the axe fell, Fisher used his proceeds to purchase a private jet, luxury cars, and real estate in the U.S. and the Caribbean. Fisher was sentenced to 25 years in prison and will pay $457,855,755 in restitution. Sinnott drew 23 years in prison with restitution of around $443,760,035. Tax crime paid—but just for a while.
If you are concerned you might end up on the IRS-CI top crimes list, think about speaking with one of our criminal tax lawyers. At Robert J. Fedor, Esq., L.L.C., we provide strong legal representation with the experience to advise you on options for developing an exit strategy to help you avoid—or handle—criminal charges. Contact our legal team today at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.
Interested in a deeper dive into tax fraud? Download our free eBook, Understanding Tax Fraud, to better understand what tax fraud is, what it looks like, and how the IRS determines if an action is fraudulent.