(Bloomberg) -- An Ohio man who posed in a tub full of cash is scheduled to plead guilty after he was charged with remotely stealing Bitcoin stored on a computer device the government seized in a case against his older brother.
Gary Harmon, 31, is to appear for a “plea agreement hearing” in federal court in Washington, DC, on Dec. 22, court records show. Harmon was charged after 713 digital tokens, then worth almost $5 million, disappeared from a hardware wallet in an Internal Revenue Service evidence locker as authorities watched helplessly.
An attorney for Harmon and a spokesman for the US Attorney’s Office in Washington declined to comment.
Prosecutors had seized the wallet from Harmon’s brother, Larry, after his February 2020 arrest on charges he laundered $311 million in crypto transactions on Darknet sites where illegal drugs were sold. Larry Harmon was the first person charged with US crimes related to “mixing” — the practice of jumbling together tokens from different owners to make them harder to trace.
Gary Harmon attended two bail hearings for his brother, one in their hometown of Akron, Ohio, and one in Washington. He learned prosecutors didn’t have the seed recovery phrases needed to access more than 4,800 Bitcoin seized from his brother, who had stored the tokens on a Trezor device, court filings show.
That device allows someone to generate a “seed phrase,” or combination of as many as 24 words that can re-create private keys to allow someone to go online and use a Bitcoin address for transactions. Anyone with that phrase and an additional PIN could take control of the Bitcoin from another device.
Read more: Millions in Cryptocurrency Vanished as Agents Watched Helplessly
Prosecutors initially suspected Larry Harmon did just that over several days in April 2020, after he’d been freed on bail. Larry told prosecutors that the culprit was Gary, who had worked for him. After Larry’s arrest, Gary lived on Covid stimulus funds and Ohio unemployment checks, court records show.
But when the 713 Bitcoin disappeared, Gary Harmon’s lifestyle took a dramatic upswing. A photo on his cellphone showed him grinning as he lounged in a bathtub full of dollar bills surrounded by scantily clad women. Agents traced 519 of the stolen Bitcoin through two mixers, filings show. Prosecutors say he used 68 Bitcoin as collateral for a $1.2 million loan, and spent some of that to buy a luxury condo in Cleveland.
Gary was arrested in July 2021, accused of money laundering and other crimes. A few weeks later, his brother pleaded guilty. Gary sought bail, but prosecutors said he should have to hand over seed phrases to the stolen Bitcoin. His lawyer said that would force him to admit crimes in violation of his Fifth Amendment right against self-incrimination. After that, Gary turned down two plea offers. His trial was scheduled for February.
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