Lyell Champagne Jr. was sentenced to three years in prison for bank fraud and tax evasion related to cryptocurrencies, and ordered to repay more than $3.4 million in illegal tax refunds.

Lyell Champagne Jr., a Missouri resident, was sentenced to three years in prison for conspiracy to commit bank fraud and tax evasion related to cryptocurrencies, the U.S. Attorney’s Office for the District of Connecticut announced on September 10. The case, which was investigated by the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS), highlights the potential risks in the rapidly growing digital asset sector.

According to the US Department of Justice, between March 2021 and April 2022, Champagne and co-defendant Kristian Gupta carried out a sophisticated scheme to steal money from the bank accounts of multiple victims. They collected victims’ online login credentials and illegally transferred funds to cryptocurrency wallets under their control. The scheme also involved bank employees, but was stopped in time by an undercover investigation.

Court documents show that Gupta provided Champagne with personal information about his victims, which Champagne then used to open fake email accounts and cryptocurrency trading accounts. This behavior shows the sophistication of the subjects' modus operandi, taking advantage of the anonymity of cryptocurrencies to conceal their crimes.

Champagne also committed tax evasion by filing false tax returns for a shell company called “Shireberk International” from 2018 to 2021. This resulted in Champagne receiving an illegal tax refund of $3,449,935. The US Department of Justice confirmed that the money was recovered by law enforcement.

Champagne pleaded guilty on June 11 and was sentenced to three years in prison. Co-defendant Gupta also pleaded guilty in April and will be sentenced on September 19.