David Walbank KC considers a US extradition request relating to the alleged laundering of a £4 billion crypto-currency fraud

Amongst three new videos uploaded to CrimeCast this week is David Walbank KC’s case review of Hamilton v Government of the United States of America [2023] EWHC 2893 (Admin).

The judgment of the King’s Bench Divisional Court relates to the so-called forum bar and the public interest considerations enumerated by s.83A(3) Extradition Act 2003, when considering a request by US prosecutors for the extradition of a suspect from the United Kingdom. Christopher Hamilton was a UK national who was alleged to have assisted in laundering the proceeds of a £4 billion Ponzi scheme marketed as a crypto-currency (‘OneCoin’).

Having historically had conduct of many of the most complex cases for all the major fraud prosecution agencies (including as Standing Counsel to the Revenue and Customs Prosecutions Office and Standing Counsel to the Department for Business, Innovation and Skills), David’s work is now almost exclusively for front-rank firms instructing him to defend charges of white-collar fraud. As well as being the crime correspondent for the premier legal periodical, New Law Journal, commenting on the hottest topics in the criminal justice system in his fortnightly Crime Brief column, David is also the creator and presenter of www.crimecast.law (‘Straight Talking About Crime’), which now hosts more than 250 video case reviews in which he talks directly to camera about recent caselaw and legislation.

For free and instant access to this video case review, you can visit https://CrimeCast.Law/. David said as follows:

“The facts were that a cryptocurrency called ‘OneCoin’ was marketed worldwide as an investment by two individuals called Ruja Ignatova and Karl Greenwood. They claimed that it was mined using computer servers (so that there was limited supply) with transactions maintained on a secure blockchain. The purported value of OneCoin was artificially set each day in a way that steadily increased from €0.5 to almost €30 per coin. Its purported value never decreased. It became popular and was marketed at events around the world. One such event attracting thousands of people was held at the Wembley Arena in London. Members of the scheme were paid commissions for recruiting others to purchase OneCoin. But in reality, OneCoin was a fraudulent Ponzi scheme. It was not mined and its supply was unlimited. It had no intrinsic economic value. There was no true blockchain. The total fraud was valued at £4 billion and there were said to be 3.5 million victims, with about half of the revenue being generated from people residing in China.

Ignatova and Greenwood used other individuals to launder the proceeds of the fraud. One such was Gilbert Armanta, who laundered $150 million of the proceeds of the fraud through numerous bank accounts in the USA. Two other individuals alleged to have been involved in the laundering process were British nationals living in the UK called Christopher Hamilton and Robert MacDonald, using Hamiliton’s company, Viola Asset Management. US prosecutors relied upon emails passing between Hamilton and MacDonald, which were said to demonstrate their knowledge of the underlying fraud, including one from MacDonald which read as follows:

‘OneCoin is selling (it appears) cryptocurrency … but it’s clearly a Ponzi scheme … OK I’ve been doing this for best part of an hour now and from everything I’ve seen and read … (dozens and dozens and dozens of pages video blogs etc) I can’t catagorocally [sic] prove anything (which is bad in itself) … but I think they’re running a giant Ponzi based in Bulgaria and covering Eastern Europe and Far East … my question is are we banking or being asked to assist in the banking of a large Ponzi? Clearly we can help I don’t have a financial ethic against this …’

The City of London Police launched and later discontinued a criminal investigation, but they continued to assist the US authorities. Of the key individuals, Ruja Ignatova was charged but went on the run and became one of the FBI’s ‘Ten Most Wanted’; Karl Greenwood was arrested in Thailand and extradited to the USA, where he pleaded guilty and was sentenced to 20 years imprisonment; and Gilbert Armenta was also sentenced, with more than $40 million being forfeited to the US government. As for Christopher Hamilton and Robert MacDonald, in March 2019, a New York grand jury returned an indictment containing two counts, one of laundering and the other of wire fraud – the latter charging a fraud on the OneCoin fraudsters, alleging that Hamilton and MacDonald had stolen $32 million worth of the proceeds they were meant to be laundering. The US applied for their extradition. The District Judge discharged McDonald on Article 8 ECHR grounds but ordered that Hamilton’s case be sent to the Home Secretary to decide whether the extradition should proceed. Hamilton then appealed against that order.

In handing down judgment, Dame Victoria Sharp, President of the King’s Bench Division, summarised the legal framework, noting that extradition requests from the US are dealt with under the Extradition Act 2003 and that section 83A prescribes the circumstances in which extradition will not be in the interests of justice. There is a threshold condition that activity material to the commission of the extradition offence is alleged to have been performed by the requested person in the UK. If and only if that threshold condition is satisfied, the court must then consider the seven specified matters set out in s83A(a)-(g) in order to determine whether extradition should take place, those factors being:

(a) the place where most of the loss or harm resulting from the extradition offence occurred or was intended to occur;
(b) the interests of any victims of the extradition offence;
(c) any belief of a prosecutor that the United Kingdom … is not the most appropriate jurisdiction in which to prosecute D in respect of the conduct constituting the extradition offence;
(d) whether evidence necessary to prove the offence could be made available in the United Kingdom;
(e) any delay that might result from proceeding in one jurisdiction rather than another;
(f) the desirability and practicability of all prosecutions relating to the extradition offence taking place in one jurisdiction …
(g) D’s connections with the United Kingdom.

Her Ladyship also referred to, amongst other cases: Shaw v USA [2014] EWHC 4654 (Admin), Atraskevic v Lithuanian Prosecutor General’s Office [2015] EWHC 131 (Admin), Love v USA [2018] 1 WLR 2889, USA v McDaid [2020] EWHC 1527 (Admin) and to Patman & Safi v Slovakian Specialist Criminal Court [2020] EWHC 3512 (Admin). She then held as follows:

1. The appellant was a British national who had lived in the UK for his entire life. He was dependent on medical treatment here for a potentially life-threatening condition.

2. The alleged offences took place when he was in the UK and the greatest share of the harm directly occasioned by his conduct occurred here rather than in the US.

3. Victims in the US had already secured a measure of vindication by the prosecutions brought there. There were also UK victims but there had been no UK prosecution.

4. All evidence necessary for a prosecution could be made available in the UK. The putative co-defendant could be tried here but, following his discharge, not in the US and it was practicable and highly desirable that they be tried in the same jurisdiction.

5. Proceedings in the US would probably conclude more quickly than in the UK but it was not possible to quantify how much more quickly and that factor was not sufficiently weighty to alter the overall assessment of the interests of justice.

6. There were several problems with the analysis put forward by the CPS prosecutor and, in the circumstances, her expression of belief as to the most appropriate location for prosecution carried no weight.

And so, for all those reasons, the District Judge ought to have ruled that extradition should not take place and would then have been required to discharge the appellant. The Divisional Court therefore allowed the appeal, ordered the appellant’s discharge and quashed the extradition request.

The court emphasised, however, that: ‘The consequence of the appellant’s success on this appeal is not that he secures impunity; it is that he should be answerable to the law in the UK rather than the US”.