Part 1 | Part 2 [to be published]
If one googles the name “Ian Freeman” and “bitcoin,” the result will be hundreds of articles describing Freeman as a “fraudster.” That’s because immediately after Freeman’s sentencing in a criminal case in a U.S. District Court in New Hampshire on October 2, 2023, the U.S. Attorney’s office in New Hampshire sent out a press release in which Freeman was labeled a “fraudster.”
There is one big problem, however, with that description: Freeman was never convicted of fraud, and the U.S. Attorney’s office knew that when it sent out that press release on the day of his sentencing.
That’s not to say, however, that there wasn’t any evidence of fraud in Freeman’s trial. There was, but it was fraud committed by the U.S. government official whose testimony the U.S. Attorney used to secure a conviction of Freeman on a bogus charge of “money laundering.” Although the jury found Freeman guilty of money laundering based on the sworn testimony of that agent, the federal judge presiding over the trial, Judge Joseph Laplante, as we see later in this article, threw out that finding of guilt and acquitted Freeman of the money-laundering charge.
Nonetheless, Freeman was convicted on other charges — conspiracy to engage in money laundering, failing to register his bitcoin business with the federal government, conspiring to fail to register his bitcoin business with the federal government, and income-tax evasion, all of which, as we will see later in this article, were as bogus as the money-laundering conviction that the judge rightly threw out.
In short, this article is about the unjust conviction of an innocent man — Ian Freeman — who is now serving an eight-year jail sentence that was meted out to him by the same judge who threw out that bogus money-laundering conviction.
But this is also an article that goes far beyond a detailed analysis of a very complex criminal prosecution in a federal district court, because it also places this criminal case in a much larger context, one that goes a long way toward explaining the dark statist morass into which our nation has plunged. That necessarily will mean a very long, multipart article, one that will not only explain in detail the wrongful conviction of the 43-year-old Ian Freeman but also review the historical, political, legal, and economic context in which an innocent man has been wrongfully convicted and sentenced to serve a very long time in a federal penitentiary.
The Federal Fraudster
In September 2019, a man named Pavel Prilotsky began purchasing bitcoins from Ian Freeman. We will examine later the nature of bitcoins and how and why Freeman got into the business of selling them, but for now, we are simply going to focus on the fraud in which Prilotsky engaged in an effort to entrap Freeman into committing a crime.
Prilotsky told Freeman that he was in the car business. It was a lie. In fact, Prilotsky was an agent of the Internal Revenue Service who had been assigned the task of secretly investigating whether Freeman was committing any crimes in his bitcoin business, specifically income-tax violations, money-laundering offenses, and violations of bank-secrecy regulations.
Over the course of almost a year, Prilotsky made several purchases of bitcoins from Freeman involving several thousands of dollars. In the process, he established a friendly relationship with Freeman. At the end of this year-long relationship, Prilotsky happened to mention that he was a drug dealer. It was another lie, one that Prilotsky hoped would enable him to charge Freeman with the illegal laundering of drug money by knowingly selling bitcoins to a supposed drug dealer.
There is something worth noting about Prilotsky’s misconduct. Given that he was employing fraud in an effort to secure a criminal conviction of Freeman, it is a virtual certainty that during his year-long investigation he had failed to come up with any evidence that Freeman had actually committed any crimes that fell within the three specific areas of Prilotsky’s investigation I just outlined. After all, at the risk of belaboring the obvious, if Prilotsky’s year-long investigation had turned up any evidence of real crimes that Freeman had committed, there would have been no reason to resort to fraud as a way to induce him to commit a crime.
Prilotsky’s hope of entrapping Freeman with a bogus crime, however, was quickly dashed by Freeman. Once he heard Prilotsky’s fake confession that he was a drug dealer, Freeman told him that he would no longer do business with him.
Not willing to let his fraudulent scheme fail so easily, Prilotsky expressed a deep disappointment to Freeman, pointing out that he had lots of friends who were interested in buying bitcoins from Freeman. What he was obviously trying to do was tempt Freeman into changing his mind with the prospect of making much more money than simply by selling bitcoins to Prilotsky. It didn’t work. Freeman stuck by his guns and told Prilotsky that he would no longer sell him bitcoins.
But the indefatigable fraudster Prilotsky still refused to give up. He asked Freeman about the bitcoin kiosks that Freeman had installed in various retail stores in Keene, New Hampshire, where Freeman lived. Those kiosks were not manned, so anyone could purchase bitcoins from them as easily as purchasing soft drinks from a vending machine.
When Prilotsky brought up the bitcoin kiosks, Freeman told him that he did not have Freeman’s permission to purchase bitcoins from his kiosks. That, of course, should have been the end of the Prilotsky’s fraudulent scheme, but Prilotsky was obviously desperate after almost a full year of investigating Freeman and coming up short. What Prilotsky did next is almost impossible to believe.
After Freeman told Prilotsky that he did not have Freeman’s permission to purchase bitcoins from one of Freeman’s bitcoin kiosks, he nonetheless went straight to one of Freeman’s bitcoin kiosks and purchased bitcoins by depositing the sum of $19,000 of U.S. taxpayer money that the IRS had collected from American taxpayers.
Prilotsky then took all of this “evidence” to the U.S. Attorney’s office in New Hampshire, which then — believe it or not — proceeded to prepare a federal criminal indictment charging Freeman with money laundering, based on the notion that Freeman had sold bitcoins to a “drug dealer” who had purchased the bitcoins from one of Freeman’s unmanned bitcoin kiosks, even though he did not have Freeman’s consent, authorization, knowledge, or approval and had been expressly told by Freeman that he would no longer sell him bitcoins.
The feds went to trial against Freeman with their IRS fraudster as their star witness, and the jury then convicted Freeman of money laundering based on Prilotsky’s testimony.
A Judgment of Acquittal
There is a long-established principle in the criminal law with respect to the finality of jury verdicts, which is that the jury is the final determiner of a person’s guilt. No judge, at either the trial or appellate level, has the power to disregard the jury’s verdict in a criminal case. It is final. Thus, in an appeal, even though the appellate judges can decide whether the district judge made any “reversible” errors of law, they lack any authority to second-guess the jury.
But there is also a long-established rule in the criminal law that empowers a convicted defendant to file in the trial court what is called a motion for judgment of acquittal notwithstanding the verdict of the jury. The trial judge has the authority to grant that motion by acquitting the defendant, notwithstanding the guilty verdict of the jury. The standard for granting such a motion, however, is extraordinarily high, given the long-established principle of the finality of jury verdicts. To grant the motion, the judge must find that there is no evidence whatsoever to support the guilty verdict that the jury has returned. If there is some evidence to support the verdict, the judge cannot grant the motion for judgment of acquittal, but if there is no evidence to support the jury’s finding, the judge can — and should — grant the motion.
To his credit, Judge Laplante granted Freeman’s motion for judgment of acquittal on the money-laundering count — the count that was based on the testimony of Prilotsky. Mind you, there is no indication that Laplante was morally outraged over what Prilotsky and the prosecution had done. Instead, he was simply upholding a principle of criminal law with respect to judgments of acquittal.
Laplante’s order of acquittal was the correct one, given that Freeman had made it clear that he had no intention of doing business with Prilotsky ever again once he learned that Prilotsky was supposedly a drug dealer. And clearly the judge saw through what Prilotsky was doing when he purchased bitcoins from Freeman by depositing $19,000 into one of Freeman’s kiosks without Freeman’s knowledge, authorization, or consent. What is surprising, however, is that Laplante permitted the money-laundering charge to go to the jury in the first place. He could have — and should have — granted Freeman’s motion for acquittal after both sides closed their cases and before the case was handed to the jury.
What the U.S. Attorney’s office did next is astounding. It filed a notice of appeal of Laplante’s ruling in the First Circuit Court of Appeals. That is, even though Laplante sentenced Freeman to eight years in the federal penitentiary on the other offenses of which he was convicted, that wasn’t good enough for the federal prosecutors. They obviously wanted more than a pound of flesh. After all, why else would they appeal the judge’s order of acquittal on the money-laundering count? They were obviously hoping to get the judge’s order of acquittal reversed on appeal and sent back for sentencing, at which point they would ask the judge to stack another sentence on top of the eight-year sentence Freeman had already received for the other charges. In fact, at sentencing, the prosecutors wanted the judge to sentence Freeman to almost 20 years in jail. They must have been bitterly disappointed when Laplante gave Freeman “only” eight years. We will examine later in this article the roots of the deep enmity that federal prosecutors and other federal officials have toward people like Ian Freeman.
But what really made their appeal — and, indeed, their prosecution — so phenomenal was their knowledge that Freeman had refused to do business with Prilotsky after he had told him that he was a drug dealer and that Prilotsky had used one of Freeman’s unmanned kiosks to purchase bitcoins after Freeman had told him that he didn’t have his permission to do so. What type of lawyers would pursue a criminal conviction either at the trial level or appellate level based on clear and convincing evidence of innocence, especially when their case is based on the testimony of an IRS undercover agent who, after being told to buzz off by Freeman, refused to give up trying to induce an innocent man to commit a crime?
But then something happened to cause the prosecution to change its mind. Sometime after filing its notice of appeal of Judge Laplante’s order of acquittal, the U.S. Attorney’s office successfully sought a dismissal of its appeal. Maybe it was shame over what they had done, but my hunch is that they simply concluded that it just wasn’t worth the effort. Even if they were successful in getting the judge’s order of acquittal reversed and the jury’s verdict reinstated on the money laundering charge, the chances were that Laplante would most likely make any new jail sentence run concurrently with the eight-year sentence he had already meted out to Freeman based on the other charges of which he was convicted.
The “Lonely Hearts Club”
The charge on which Prilotsky’s testimony was based was money laundering, and that’s the charge on which Judge Laplante issued his order of acquittal.
But another charge that Freeman was convicted of was conspiracy to launder money. While it sounds like those two charges — money laundering and conspiracy to launder money — were the same, they were actually very different.
With the money laundering charge, the government had to prove that Freeman illegally laundered money. That’s what the federal prosecutors were claiming that Freeman did when Prilotsky purchased bitcoins from Freeman’s kiosk.
With the charge of conspiracy to launder money, however, the government didn’t have to prove that the defendant actually laundered money. Instead, it simply had to prove that he entered into an agreement with another person (or other persons) to illegally launder money. The government also had to prove what is called an “overt act” that furthered the conspiracy.
While the laundering charge related to Prilotsky’s acts, the conspiracy to launder money charge revolved around what I would call the Lonely Hearts Club. As the federal prosecutors carefully documented in Ian Freeman’s trial, it turns out that there are lots of lonely people in the world, especially ones in their 60s and 70s, who are looking for love. The problem is that many of them are looking for love in all the wrong places, such as on the Internet.
Of course, as we all know, some people do meet on the Internet, exchange messages, meet each other, fall in love, get married, and live happily ever after. Unfortunately, however, finding love on the Internet doesn’t work for everyone. Some members of the Lonely Hearts Club meet people on the Internet who appear to be handsome, beautiful, and charming and who whisper sweet nothings into their ears via email or similar communications. Some members of the Lonely Hearts Club even end up falling madly in love with people they have never met in person and, even worse, decide to send them extremely large sums of money — sometimes hundreds of thousands of dollars — to help out their new lovers in their time of dire financial need. Only later do these members of the Lonely Hearts Club discover that it wasn’t true love on the part of their lovers but instead a “romance scam” that successfully caused them to part with their money.
There are, of course, different ways for a person to hand over large sums of money to a new lover.
One way is to simply do it in person with cash or a check. But the problem with that is that romance scammers are usually reluctant to use that method, especially given the risk of arrest.
Another method is to have the member of the Lonely Hearts Club wire the funds into the bank account of the new lover. The problem with that method, however, is that the bank can oftentimes identify the scammer and “claw back” the money for the benefit of the victim.
And then another way is to wire money to a bitcoin seller like Ian Freeman with instructions to purchase bitcoins and place them into the bitcoin wallet of the new lover. From the standpoint of a romance scammer, the bitcoin route is the best because it is virtually impossible to trace the identity and contact information of the scammer. Once the bitcoins are purchased and placed into the bitcoin wallet of the scammer, it is virtually impossible for a member of the Lonely Hearts Club to get his or her money back.
During Freeman’s trial and at the sentencing hearing, the federal prosecutors paraded a long line of people who were members of the Lonely Hearts Club before the jury and the judge. They gave heartrending stories about how they had fallen madly in love with the wrong people — people who sometimes they had never met in person — people to whom they had sent extremely large sums of money by purchasing bitcoins from Freeman and having him deposit them in the bitcoin wallets of their new lovers. In fact, while there were other charges against Freeman — two relating to failing to register his bitcoin business with the feds and others relating to income-tax violations, the main thrust of the federal criminal case against Ian Freeman revolved around (1) the money-laundering allegations relating to the testimony of Prilotsky and (2) the money-laundering conspiracy allegations relating to the testimonies of the members of the Lonely Hearts Club whose new lovers had scammed them out of large sums of money.
Notice something important, something that I mentioned at the very beginning of this article: Notwithstanding the U.S. Attorney’s office’s press release on the day of Freeman’s sentencing claiming that he was a “fraudster” — a claim that got repeated all over the Internet and the print media, Freeman was never convicted of fraud. In fact, the feds never even charged Freeman with defrauding or conspiring to defraud any member of the Lonely Hearts Club. Why not? Doesn’t that seem a bit strange given the prosecution’s long parade of witnesses from the Lonely Hearts Club who shared their heartrending stories of misguided love with the jury and the judge?
I should point out something that I haven’t yet mentioned with respect to fraud. After Freeman was first arrested, among the charges for which the U.S. Attorney’s office in New Hampshire had him indicted were wire fraud and bank fraud, two offenses that fell within the investigatory ambit of the federal fraudster Prilotsky. So, given that the U.S. Attorney’s office in New Hampshire initially had Freeman indicted for those two fraud-related offenses, it is clear that the lawyers in that office were very familiar with the legal concept of fraud. Thus, that pesky question naturally arises: Given the many members of the Lonely Hearts Club that the prosecutors paraded before the jury and the judge in Freeman’s trial who shared those heartrending stories about how their lovers had scammed them out of large sums of money, why didn’t those federal prosecutors charge Freeman with either defrauding those members of the Lonely Hearts Club or entering into a conspiracy to defraud them?
We will examine the wire-fraud and bank-fraud charges with which the federal prosecutors initially charged Freeman in part 2 of this article. Suffice it to say for now that just before trial, the federal prosecutors announced that they were abandoning those particular fraud charges against Freeman. But why would they do that? Why would the people who eagerly labeled Freeman a “fraudster” on the day of sentencing suddenly decide to not pursue those wire-fraud and bank-fraud charges at trial? They abandoned those fraud charges for the same reason they never charged Freeman with defrauding or conspiring to defraud any member of the Lonely Hearts Club, and we will examine that reason next.