Some who put money for safekeeping with Arthur Budovsky say they are concerned about the lack of information about the case.
Jose Pablo González, a Costa Rican prosecutor, said Friday that Budovsky, a naturalized Costa Rican, was arrested in Spain at the behest of unspecified New York law enforcement. But there has been no report from Spain about the arrest nor have prosecutors in New York confirmed their involvement.
Budovsky ran an Internet payment processing system that he equated with Pay Pal. But he was unable to get approval for the operation by the Superintendencia General de Entidades Financieras in 2011. So he basically was running an unapproved financial institution from offices in Heredia and his home in a condo in Santa Ana.
González said Friday that those places had been searched and servers and documents confiscated. The Liberty Reserve Web site had been shut down the day before.
Because Budovsky has Costa Rican nationality, he could not have been extradited from here. So some customers wonder why he ended up in Spain where he would be a sitting duck for international warrants.
The prosecutor said that agents also confiscated three vehicles, including a Rolls Royce and a Jaguar. González appears to be the only source for the information. Meanwhile, the payment processing servers have been dismantled for transport.
Some financial and gambling sources estimated that there might have been $150 million tied up in the company as deposits from clients. The firm used third-party processors to change currencies into types acceptable for deposit with Liberty Reserve.
The firm did not enforce the rigor toward depositors that conventional banks do to avoid money laundering. Although Gonzalez said the investigation was about money laundering, other individuals mentioned the word fraud.
Liberty Reserve allowed clients to open as many accounts as they wanted as long as each was linked to a separate email address.
In the past when U.S Justice Department agents confiscated a Web site, they put up a notice to that effect. In cases of online gambling operations in Costa Rica, the Justice Department also provided information on how money held by the gambling firm would be repaid.
Budovsky and an associate were indicted on a charge of operating an illegal money laundering business in Brooklyn in 2006, according to the New York County District Attorney’s Office in Manhattan. The firm at that time was called GoldAge.
Budovsky got what amounts to a suspended sentence.