A lawyer for the self-proclaimed ‘Crocodile of Wall Street’, Heather Rhiannon Morgan, 31, and her husband Ilya ‘Dutch’ Lichtenstein, 34, claim neither of them are ‘flight risks’ because Morgan has frozen embryos in the city.
The couple’s lawyer, Samson Enzer, has urged a judge to allow them to be freed on $3million and $4.5million bail respectively, saying the fact neither of them fled when given the chance upon first being alerted to the investigation, proves they would not run from the law if now freed on bail.
Prosecutors are urging caution: It is believed the couple still have vast sums of money at their disposal which is likely hidden from authorities.
Furthermore, Lichtenstein has dual citizenship with Russia giving the couple a possible safe haven from which it would be particularly difficult for U.S. authorities to secure an extradition order should the couple choose to flee.
The pair, dubbed ‘Bitcoin Bonnie and Crypto Clyde’ by financial newsletter Morning Brew, were both arrested on Tuesday on federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States for allegedly laundering $4.5billion in Bitcoin stolen in the 2016 Bitfinex exchange hack.
If convicted, they face up to a maximum of 25 years in prison.
A lawyer for the self-proclaimed ‘Crocodile of Wall Street’, Heather Rhiannon Morgan, 31, and her husband Ilya ‘ Dutch ‘ Lichtenstein, 34, right, has urged a judge to allow them to be freed on $3million and $4.5million bail respectively
Prosecutors argued that the pair, who live on Wall Street in Lower Manhattan, should be denied bail, calling them flight risks who still potentially have access to vast sums of money.
Lichtenstein, is a dual US-Russian national from Illinois, while Morgan hails from California.
The couple’s lawyer claims the couple want to start a family and would not run away from her fertilized eggs.
‘Morgan previously froze several of her embryos at a hospital in New York in anticipation of starting a family together, as she can only conceive through in vitro fertilization because she suffers from endometriosis,’ the couple’s lawyer Samson Enzer wrote in a filing.
In this courtroom sketch, attorney Sam Enzer, center, sits between Heather Morgan, left, and her husband, Ilya ‘Dutch’ Lichtenstein, in federal court on Tuesday
‘The couple would never flee from the country at the risk of losing access to their ability to have children, which they were discussing having this year until their lives were disrupted by their arrests in this case,’ Enzer explained.
Federal law enforcement officials said they have recovered roughly $3.6 billon in cryptocurrency – the Justice Department’s largest ever financial seizure – linked to the hack of Bitfinex, a virtual currency exchange based in Hong Kong, whose systems were breached nearly six years ago.
Enzer also attempted to explain how well behaved his clients had been since they were alerted of the investigation into them.
‘Both stayed put in their residence in lower Manhattan … even after the government’s investigation targeting them in this case’ several months ago.
The couple say they have no intention of fleeing because Morgan has frozen embryos stored in New York because the pair had intentions to start a family
The court filing comes just days before the couple’s next scheduled bail hearing in U.S. District Court in Washington, D.C., on Monday.
Judge Beryl Howell will then make a determination on what is best for the pair while they await trial.
On Thursday, Judge Howell ordered the pair to be brought to Washington for next week’s hearing.
Enzer pleaded with Judge Howell for her to stick with the agreements already made with Manhattan federal court Judge Debra Freeman.
Freeman had set bond at $5 million for Lichtenstein and $3 million for Morgan together with added conditions of home incarceration and location-monitoring devices.
But the bail ruling was ultimately blocked after Judge Freeman took notice of prosecutors believing the pair to be a flight risk, reports CNBC.
Morgan was arrested on Tuesday in Manhattan, together with her husband, on federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States
‘Judge Freeman correctly decided that the government has failed to meet its burden of showing that there are no bail conditions that would reasonably assure that Ms. Morgan and Mr. Lichtenstein will appear as required for further court proceedings in this case.’
‘This court should uphold Judge Freeman’s well-reasoned bail rulings,’ Enzer wrote.
Their lawyer also noted the couple had every chance to flee since they were alerted to the government investigation into their dealings, but chosen to remain where they were.
‘The government had law enforcement agents execute a search warrant at their New York residence,’ Enzer wrote.
‘Although federal agents seized Mr. Morgan’s and Mr. Lichtenstein’s travel documents, numerous electronic devices, and other property from their home on January 5 (and left a copy of the warrant indicating that it was granted as part of an investigation into a money-laundering conspiracy and other alleged offenses), the couple took no steps to flee,’ Enzer explained.
The couple’s lawyer noted that they had every chance to flee since they were alerted to the government investigation into their dealings, but chosen to remain where they were
‘Ms. Morgan and Mr. Lichtenstein have no reason to flee to avoid the government’s allegations, as the government’s complaint reveals significant holes in the government’s case against them, especially as to Ms. Morgan,’ Enzer detailed.
‘The money-laundering accusations in the government’s complaint are predicated on a series of circumstantial inferences and assumptions drawn from a complex web of convoluted blockchain-and cryptocurrency-tracing assertions,’ he added.
Enzer also stressed that the couple needed to be kept out of jail in order to prepare a defense for their trial and noted how Morgan suffers from various medical conditions including surgery to remove a lump in her breast and ‘pre-existing lung damage from a prior bout of Middle East Respiratory Syndrome, or MERS,’ which put her at increase risk for catching covid.
Bail for Ilya ‘Dutch’ Lichtenstein, 34, right, and his wife, Heather Rhiannon Morgan, 31, was set at $5million and $3million respectively after their arrest on Tuesday but they have not been released
Earlier this week, the Justice Department shared more information as to the progress with the investigation.
It revealed on Tuesday that more than $3.6 billion worth of bitcoin linked the 2016 hack has been seized having allegedly been in crypto wallets controlled by the couple.
When the breach occurred, 120,000 bitcoins were allegedly transferred into a crypto wallet that Lichtenstein still had access to last month.
The bitcoin that was worth $71 million when the hack happened is now worth more than $4.5 billion.
Prosecutors also stated how despite having recovered ‘the majority of the stolen funds, there are at least 24 virtual current addresses linked to the hack [and believed to be in the defendants’ control] for which law enforcement does not posses the private keys.
‘The remaining addresses contain about 7,500 bitcoin, which is currently valued at over $328 million,’ prosecutors said.
‘The defendants are sophisticated cyber criminals and money launderers who present a serious risk of flight and should be detained pending trial,’ they added.
Photos of self proclaimed ‘Crocodile of Wall Street’ Heather Morgan who was arrested in New York over an alleged Bitcoin hack. Photos of Morgan were taken in June 2020
When Morgan wasn’t allegedly shifting around billions of dollars in the world of cryptocurrency, she was taking to the mic and shooting rap videos.
The would-be corporate influencer raps about entrepreneurship, designs handbags inspired by ketchup squirts, and signs off from her motivational YouTube videos with the words ‘razzle-dazzle.’
In a series of cringey videos posted to YouTube, the wannabe performer can be seen walking around Wall Street while reciting lyrics such as: ‘I’m many things, a rapper, an economist, a journalist, a writer, a CEO, and a dirty, dirty, dirty dirty h*’.
Morgan’s music videos, including the 2019 single Versace Bedouin, were all on her YouTube page until earlier this week. The page has been made private since her arrest.
One website which decided to wade through all of the footage suggested ‘Laundering billions in Bitcoin may not even be the worst crime of her life.’
‘When she’s not reverse-engineering black markets to think of better ways to combat fraud and cybercrime, she enjoys rapping and designing streetwear fashion,’ her Forbes bio states.
Heather Morgan, 31, who calls herself the ‘Crocodile of Wall Street’ (hence the croc pictured in her hand) also spends time creating low-budget rap videos and posing for quirky photoshoots
Social media users did also not hold back as viewers to Morgan’s rapping footage gave their verdict
Social media did also not hold back as viewers to footage gave their verdict.
‘This ‘rapper’ with an alias of RAZZLEKHAN aka Heather Morgan was charged today in NYC, with being part of money laundering scheme that involved Billions worth of Bitcoin. I believe she should have already been in prison for life for whatever this is,’ wrote one user.
‘It’s like Fyre Festival in human form,’ declared another while another declaringL ‘this is the bigger crime!’
‘I wanna know who the audio engineer was, and what they went through’ asked another Twitter follower.
‘Bass line sounds like a fart that never ends,’ wrote DJ Goldman Sachs attempting to critique the offering.
Morgan says that she experiences synesthesia when music can be heard but shapes or colors can be seen.
Her website explains that ‘Just like her fearless entrepreneurial spirit and hacker mindset, Razz shamelessly explores new frontiers of art.’
During the early stages of the pandemic, Morgan took some time out for a photoshoot
Morgan’s songs, which do not appear to have attracted much notice before her arrest, also include lines like ‘You don’t even know me/Start a company at 23.’ In that track, she threatens, ‘Got no clue what I’m about/Could gut you like a trout!’
In her rap songs, Morgan proclaims herself as a ‘real risk taker’ and a ‘bad ass money maker.’ But the lyrics also take some odd detours, including calling herself a ‘Turkish Martha Stewart,’ the ‘Crocodile of Wall Street,’ or a ‘Versace Bedouin.’ (‘Got the bling that win,’ she adds.)
Morgan said in one video the business-meets-hip-hop shtick was a put-on – ‘a hyperbole of myself’ – but she seemed committed to the act. One rap video featured her in a gold track suit pacing across the New York financial district.
Morgan’s other artistic pursuits include designing ‘berazzled’ handbags based on condiment squirts, and rings created with prosthetic eyeballs.
She has written several articles for Mic and Forbes, including one titled, in part, ‘Tips to Protect Your Business from Cybercriminals.’
Morgan says that she experiences synesthesia which happens when music can be heard but shapes or colors can be seen. She is pictured bathed in red
Reviews of her rapping don’t present her in the most positive light but it is still available online.
‘Her delivery is tuneless, the bars are cringe and the accompanying music video isn’t much better,’ declared Engadget.
In one set of lyrics, Morgan can be heard rapping about the scheme she is alleged to have carried out.
‘Spearfish your password / all your funds transferred,’ she says.
‘Always be a GOAT, not a god damn sheep,’ she states in another.
‘Spirit of a revolutionary, power of a dictator / love to be contrary, but I’m fly like a gator,’ the rap continues in the low-budget looking video.
They don’t get much better in another riff: ‘Yes that was cheesy/at least I’m not sleazy,’ she proclaims as her alter-ego named Razzlekhan.
In one song, ‘Moon ‘n Stars,’ she raps about her husband calling him a a ‘weirder version of Larry David’ sampling him saying, ‘I love you, I support you, but I don’t wanna be involved.’
A picture of Heather Morgan, also known as ‘Razzlekhan,’ on a phone in front of the Bitcoin logo
On her website, Morgan calls herself ‘Razzlekhan’ or the ‘Versace Bedouin’ — ‘the raunchy rapper with more pizzazz that Genghis Khan.’
‘I’m a real risk taker/pirate riding the flood/I’m a badass money maker,’ she raps in one video in which she refers to herself as the ‘Crocodile of Wall Street.’
‘Come real far but don’t know where I’m headed/Blindly following rules is for fools,’ she says, gyrating on Wall Street wearing sunglasses, a leopard print scarf, and shiny gold jacket.
‘Her art often resembles something in between an acid trip and a delightful nightmare,’ Morgan wrote about herself on her website, Razzlekhan.com. ‘Definitely not for the faint of heart or easily offended.
‘Razz likes to push the limits of what people are comfortable with,’ she said. ‘Her style has often been described as ‘sexy horror comedy.”
In total, there are about a dozen songs covering all manner of topics including one where the raps about smoking weed in a cemetery and a timely rap about social distancing in ‘High in the Cemetery.’
In the track ‘Cutthroat Country’ she raps about phishing people’s passwords. ‘All your funds transferred,’ she states.
Other songs discuss the American healthcare system and its flaws and how fake friends suck ‘like a vacuum cleaner’ in the song of the same name.
She adopts a freestyle rapping in another track about investing in GameStop, Ethereum, and Bitcoin.
Reviews of her rapping don’t present her in the most positive light but her library is still available online
Lichtenstein and Morgan are thus far not charged directly with perpetrating the hack, but rather with receiving and laundering the stolen funds
Morgan and her husband are accused of conspiring to launder 119,754 bitcoin that was stolen, after a hacker attacked Bitfinex and initiated more than 2,000 unauthorized transactions
According to Morgan’s videos and Facebook postings, she grew up in California, the daughter of a biologist and a high school librarian.
She graduated from the University of California, Davis, and went to work as an economist after doing graduate work at the American University in Cairo.
Morgan said she eventually became a ‘serial software entrepreneur who started multiple successful companies’ including one called SalesFolk.
More discreet online, Lichtenstein described himself on LinkedIn as a ‘technology entrepreneur, coder and investor’ and the founder of several tech companies.
In a Facebook post, he recalled how he proposed to Morgan — ‘my best friend and the woman of my dreams!’
It involved what Lichtenstein called a ‘weird, creative multi-channel marketing campaign’ that saw posters of ‘Razzlekhan’ plastered across New York City and her face on a Times Square billboard.
In one YouTube video, Morgan said her parents ‘didn’t have a lot of money.’
‘I’ve also been totally broke and homeless multiple times,’ she said. ‘Money comes and goes. Sometimes you have it, sometimes you don’t.
‘It’s really nice when you have it but nothing in this life is certain,’ she said. ‘Right now I’m basically living my ideal life.’
Morgan describes herself as ‘an expert in persuasion, social engineering, and game theory’
Morgan, who raps under the name Razzlekhan, (seen in front of Federal Hall on Wall Street in a music video) declared herself the ‘Crocodile of Wall Street’ in one of her rap songs
Lichtenstein is a citizen of both Russia and the United States and the co-founder of an online marketing firm. Morgan, a rapper and former Forbes contributor, describes herself as ‘an expert in persuasion, social engineering, and game theory’.
The August 2016 Bitfinex hack itself was one of the largest crypto heists ever recorded – so massive that news of the theft knocked 20 percent off Bitcoin’s value at the time.
Lichtenstein and Morgan are thus far not charged directly with perpetrating the hack, but rather with receiving and laundering the stolen funds. The case was filed in a federal court in Washington, D.C.
The couple is accused of conspiring to launder 119,754 bitcoin that was stolen, after a hacker attacked Bitfinex and initiated more than 2,000 unauthorized transactions.
The couple is accused of conspiring to launder 119,754 bitcoin that was stolen, after a hacker attacked Bitfinex and initiated more than 2,000 unauthorized transactions’
The complaint alleges, the FBI and federal prosecutors were able to trace the movement of Bitcoin from this hack,’ said Matthew Graves, the U.S. Attorney for the District of Columbia.
He added that the money moved through a major darknet exchange tied to a host of crimes, as well as cryptocurrency addresses tied to child sexual abuse materials.
Lichtenstein and Morgan are facing charges of conspiring to commit money laundering, as well as to defraud the United States.
Prosecutors said on Tuesday the illegal proceeds were spent on a variety of things, from gold and non-fungible tokens to ‘absolutely mundane things such as purchasing a Walmart gift card for $500.’
The August 2016 Bitfinex hack itself was one of the largest crypto heists ever recorded – so massive that news of the theft knocked 20 percent off Bitcoin’s value
Bitfinex said in a statement that it was to working with the Department of Justice to ‘establish our rights to a return of the stolen bitcoin.’
‘We have been cooperating extensively with the DOJ since its investigation began and will continue to do so,’ the company said.
Bitfinex said it intends to provide further updates on its efforts to obtain a return of the stolen bitcoin as and when those updates are available.
Tuesday’s criminal complaint came more than four months after Monaco announced the department was launching a new National Cryptocurrency Enforcement Team, which is comprised of a mix of anti-money laundering and cybersecurity experts.
Cyber criminals who attack companies, municipalities and individuals with ransomware often demand payment in the form of cryptocurrency.
In one high-profile example last year, hackers caused a widespread gas shortage on the U.S. East Coast when by using encryption software called DarkSide to launch a cyber attack on the Colonial Pipeline.
The Justice Department later recovered some $2.3 million in cryptocurrency ransom that Colonial paid to the hackers.
Cases like these demonstrate that the Justice Department ‘can follow money across the blockchain, just as we have always followed it within the traditional financial system,’ said Kenneth Polite, assistant attorney general of the department’s Criminal Division.
Morgan is seen rapping with the New York Stock Exchange behind her to the right
Justice Department officials say that though the proliferation of cryptocurrency and virtual currency exchanges represent innovation, the trend has also been accompanied by money laundering, ransomware and other crimes
‘Today´s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,’ Deputy Attorney General Lisa Monaco said in a statement.
‘In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter the form it takes.’