THE WASHINGTON POST: ‘Crocodile of Wall Street’ Heather Morgan gets prison time for role in huge bitcoin theft

To the internet, she’s a rapper named Razzlekhan who styled herself as the “Crocodile of Wall Street” and claimed to have more pizzazz than Genghis Khan.

But to prosecutors, she’s one half of the “bitcoin Bonnie and Clyde” duo behind a crypto heist involving buried gold coins, Ukrainian and Russian money mules and the single-largest asset seizure in Justice Department history.

Heather Rhiannon Morgan, who moonlighted as Razzlekhan, was sentenced in federal court Monday to 18 months in prison for helping her husband launder some of the 120,000 bitcoins - now worth billions of dollars - that he admitted to stealing from global exchange Bitfinex in 2016. Her husband, Ilya “Dutch” Lichtenstein, was sentenced Thursday to five years in prison after pleading guilty to conspiring to launder money, a charge that carries a prison sentence of up to 20 years.

Morgan had pleaded guilty to charges of money laundering and conspiring to defraud the United States, which each carry up to five-year prison terms.

Although Lichtenstein said he was solely responsible for the theft, the case received unusual attention because of Morgan’s dichotomous online presence as a businesswoman with an email marketing company and a rapper who described her work as “horror-comedy with a splash of weird allure.” Netflix commissioned a documentary series about the duo soon after their arrest.

Morgan’s lawyer has said she developed her entertainer alter-ego to cope during a difficult time in her life. Her portrayal in the media, her attorney said in court Monday, ruined her reputation, subjected her to an “avalanche” of hateful messages and made her seem like the central player of the scheme, even though she learned about the theft after the fact and became an accomplice only to protect her husband.

“She’s going to pay the price for the rest of her life,” Morgan’s attorney, Eugene Gorokhov, said.

The value of the stolen bitcoin increased from $71 million in 2016 to an estimated $4.5 billion when Lichtenstein and Morgan were arrested in 2022. Some of the funds were converted into gold coins that Morgan buried or laundered using thousands of small-sum transactions and accounts with fake names, among other methods, prosecutors have said.

Law enforcement seized much of the stolen bitcoin at the time of the arrest. About 96 percent of the funds have been recovered, one of Lichtenstein’s attorneys said at his sentencing.

In a partially redacted court filing, Morgan’s attorney described her as someone who grew up isolated and socially awkward and participated in the scheme out of loyalty to her husband, whom she started dating in 2014.

Lichtenstein, an entrepreneur who founded multiple businesses, experimented with smaller-scale hacking and financial fraud before stealing from Bitfinex, prosecutors said.

Lichtenstein and Morgan married in 2019. Lichtenstein told her about the theft the next year and asked for help concealing the proceeds, according to court filings.

The pair embarked on a massive and meticulous scheme to liquidate the money, using some of the most complicated money laundering techniques IRS agents said they’d seen to date, prosecutors said. In one example described by prosecutors, Lichtenstein used trips to Kazakhstan and Ukraine to receive debit cards and other documents tied to foreign bank accounts that were registered to money mules and sold on cybercriminal forums or in dark-net markets - e-commerce platforms that traffic in illegal goods.

Morgan and Lichtenstein disposed of evidence, throwing a computing device down a garbage chute, and kept a bin of electronic devices and a bag labeled “burner phone” in their apartment, according to court filings.

Still, prosecutors said they sought a reduced prison sentence for Lichtenstein - whom they described as “one of the greatest money launderers that the government has encountered in the cryptocurrency space” - because he quickly cooperated with law enforcement and lent assistance on other cases, including testifying at a trial while in jail. Prosecutors also sought a reduced sentence for Morgan, while her attorney said she had convinced Lichtenstein to cooperate with authorities.

At his sentencing hearing, Lichtenstein apologized for his actions, asking that any prison time given to Morgan be reassigned to him and offering his skills to help other businesses prevent cybercrime.

“My goal is to stop more crime than I have perpetrated,” Lichtenstein told Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia.

Morgan also apologized in an emotional address to the court Monday, saying that her actions were inexcusable and that she would be haunted by the harm she had caused.

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