Office nets first statewide forfeiture of cryptocurrency

FREEHOLD – The Monmouth County Prosecutor’s Office became the first New Jersey state agency to make cryptocurrency seizures in two separate cases originating in 2017 and 2018. Now, in 2021, our Office is the first state agency to complete the forfeiture and liquidation of cryptocurrency assets from the 2018 case, announced Monmouth County Prosecutor Christopher J. Gramiccioni.

“The Monmouth County Prosecutor’s Office leads from the front on innovative law enforcement strategies and practices necessary in the emerging new crypto world. No office is better suited to break that ground than our team of talented investigators,” Prosecutor Christopher J. Gramiccioni said.

The 2018 forfeiture is tied to an investigation by detectives from the Office’s Gang and Criminal Enterprise Unit; the Narcotics Strike Force; and the Financial Crimes and Public Corruption Unit. In 2018, investigators executed search warrants at two locations in Long Branch utilized by Giddel Gonzalez-Estrada, 39, of Broadway in Long Branch. Seized at the two locations were three vehicles, about $32,000 in cash, approximately 500 grams of cocaine with a street value of about $50,000, a small amount of marijuana, a .22 cal. handgun, and large amounts of packaging, weighing materials and various paraphernalia used for the sale and distribution of illegal narcotics.

During the execution of the search warrants, financial documents were discovered. Upon further investigation, it was determined Gonzalez-Estrada maintained cryptocurrency in a United States-based exchange. The cryptocurrency was consequently frozen and subsequently seized after it was determined to be the proceeds of narcotic distribution activity stored as cryptocurrency assets. The cryptocurrency value at the time of seizure was approximately $57k. Our team successfully completed the process of asset liquidation for cryptocurrency seized and forfeited with $198,237.31 in net proceeds is being sent from Coinbase to the Monmouth County forfeiture account.

Gonzalez-Estrada pleaded guilty in 2019 to various drug charges and was sentenced to 10 years in a New Jersey state prison. A forfeiture complaint was filed, and a judgment was entered on August 5, 2019, by Monmouth County Superior Court Judge Lourdes Lucas forfeiting the assets seized in the investigation to the Monmouth County Prosecutor’s Office.

“I am proud of the work our investigators did uncovering these modern methods used to conceal assets derived from criminal activity in the cyberworld. This will serve as an effective template for the state law enforcement agencies in the cryptocurrency market – a place where we can expect proceeds from crimes to continue to be concealed,” Prosecutor Gramiccioni said.

The first crypto seizure for this office and for a New Jersey state agency occurred after the arrest of Terry Kou, 28, of Colts Neck, in late 2017, when this Office seized cryptocurrency assets valued at more than $200k. The value of that cryptocurrency is now estimated to be more than $1.25 million. Kou was later charged in 2019 with additional offenses last year following a two-year operation focusing on eradicating fraud and identity theft. The investigation dubbed “Operation Plastic Army” resulted in the arrests of 16 individuals, including Kou, who were involved in defrauding more than a dozen financial institutions. Kou’s case is still pending.

The Gonzalez-Estrada criminal prosecution was assigned to Monmouth County Assistant Prosecutor Merlin K. Thomas. The forfeiture portion of the case was handled by Monmouth County Assistant Prosecutor Michael Costanzo, Director of the Forfeiture Section of the Monmouth County Prosecutor’s Office.