A 35-year-old Rochester, New York man has been sentenced to 51 months in federal prison for operating a fraud scheme that converted unauthorized credit-card payments into bitcoin. The Department of Justice announced the sentence and restitution order on October 23 for Timothy Wadsworth following his conviction for conspiracy to commit wire fraud and money laundering.
Between March 10 and May 15, 2020, Wadsworth attempted 310 unauthorized payments totaling $1,673,578 through Stripe, a payment processor for businesses. Using account numbers supplied by co-conspirators, 116 of these transactions succeeded, totaling $730,728.22. The account holders did not authorize any of the transactions.
Wadsworth transferred the fraudulent funds from Stripe to accounts he controlled at HSBC and Evolve Federal Credit Union. From there, he moved portions of the money to the cryptocurrency exchange Coinbase, where he purchased bitcoin and sent it to external addresses controlled by co-conspirators.
U.S. District Judge Frank P. Geraci Jr. ordered Wadsworth to pay $810,965.19 in restitution and forfeit $810,956.19 in wire fraud proceeds. His schemes spanning March 2020 through September 2021 involved approximately $2.06 million in combined actual and intended losses.
Beyond the Stripe scheme, Wadsworth's fraud activities included filing false applications for Economic Injury Disaster Loans that generated $161,200, obtaining two Paycheck Protection Program loans totaling $41,249, and fraudulently receiving approximately $65,896 in unemployment benefits. He also directed a $42,000 wire payment from a recently widowed victim into his account through a romance scheme, and received approximately $26,000 from six other victims through various schemes.
Federal prosecutors have previously linked conventional fraud proceeds to cryptocurrency purchases in other cases, demonstrating an ongoing pattern of criminals using digital assets to launder stolen funds.
