89. The Crocodile (Heather Morgan & Ilya Lichtenstein)
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Hey, I have an announcement to make. Deformer, aka Trevor Howard, the brilliant artist responsible for making all of the haunting music you hear in these episodes, has finally put together a collection of songs from the show for your enjoyment. It's called Deformer Swindled, and you can stream it on Spotify, Apple Music, YouTube, Bandcamp, or you can purchase a digital copy from the Swindled shop or from Deformer's website at deformer.black.com.

Please go check it out and share with a friend whose life may be in need of a darker soundtrack. Again, you can stream Deformer Swindled on every major music platform, or buy a copy at deformer.black or the freshly redesigned swindledpodcast.com. I'll post links in the show notes. Enjoy the show. This episode of Swindled may contain graphic descriptions or audio recordings of disturbing events which may not be suitable for all audiences. Listener discretion is advised.

Something has happened in the past 50 years where women are no longer trained to submit to a man, to serve a man. The very idea of beauty and aesthetics is being demolished to where now women are being applauded and encouraged to look like fat outer space cyborgs.

That's a man named Dariush Valazeda, infamously known online as Roosh V.

In 2001, Rush V started blogging anonymously about dating in Washington, D.C., where he lived and worked as an industrial microbiologist. He shared anecdotes and advice on how to pick up women, and eventually self-published numerous books detailing his seduction strategy under the Rush V name. He dubbed his philosophy, Neomasculinity.

Bruch advocated for traditional heteronormative roles for men and women and railed against feminism which he accused of ushering in an era of "Western degeneracy", all the while offering advice to his disciples on how to convince these lesser beings to sleep with them. The tragic paradox of the lonely male.

In 2012, Rushfi launched a new website called Return of Kings, where he continued to publish what many considered misogynistic, antisemitic, and homophobic views. His articles included titles such as "Five Reasons to Date a Girl with an Eating Disorder," "Street Harassment is a Myth," "Invented by Socially Retarded White Women," "Don't Work for a Female Boss," and "Biology Says People on Welfare Should Die."

That same year, the Southern Poverty Law Center included Ruch in its quarterly extremism report, usually reserved for terrorists and neo-Nazis. But Ruch v. sparked the most controversy a few years later in 2015 when he wrote an article suggesting that rape could be eliminated if it were legalized. The idea, which he later backtracked and called a satirical thought experiment, is that women would do more to protect themselves if the constant threat of legal rape lingered around every corner.

That particular article earned Rouchevie a cocktail in the face when he was recognized at a bar in Montreal. This is fucking Rouchevie! This is a guy that says rape should be legal!

But not everyone was hostile towards Rushfi. His ideas are embraced by a large, dedicated audience of at least 30,000 men around the world. They communicate, organize, and share ideas on Rushfi's online forum, which features more than 1 million posts to date. Several of those posts came from a seemingly wealthy longtime user named Romeo, including a 7,500-word essay about his experience hunting for a wife in his adopted country of Thailand.

"I left a broken society to live in a traditional one," Roméo wrote, describing his homeland of Quebec as a place with too many people on welfare. "Muslim refugees get in easily and start breeding like bedbugs." Roméo told the Forum that he left Progressive Canada behind and settled in Bangkok in 2012. There he opened a bank account, started learning the language and purchased multiple properties and a Porsche Panamera.

"Tai girls love supercars," he wrote.

That was Romeo's primary goal. Find a wife, preferably a virgin from a good family. Marriage material, he called it. Not one of those devalued women that hang around the tourist areas. Romeo wrote that he had dealt with their type before. He had dated a Vietnamese woman who lived in the U.S. and found her to be too ambitious. She wanted to do more than just cook and clean, he lamented. Quote, Such a beautiful girl who got poisoned by feminism.

Romeo, the hopeless romantic, kept searching until his 1940s dreams came true. He proudly told the Rush V Forum that he found a worthy wife in Thailand and he was able to secure a solid prenup too. They were expecting a child together soon, Romeo announced. It's unclear if the pregnancy granted Romeo's wife a temporary reprieve from the weight limit to which, according to Romeo, she was forced to adhere.

Romeo was living his version of an ideal life, to say the least. But still, there was something missing. "I am what we call a professional cheater," he told the Rochefee forum. "Despite having a live-in wife, I have a secondary residence that no one knows about, and that's where I bring girls." Romeo said he used prepaid credit cards and a separate SIM card for his phone to avoid detection. He was the true envy of all his Rochefee community peers.

Although, some users called bullshit on Romeo's stories. One even calculated that Romeo couldn't have become wealthy by investing in Bitcoin, as he had claimed. Romeo replied that he never disclosed all the sources of his income, and then privately messaged a video of himself driving his Porsche to another user who doubted the purchase. He also posted photographs of stacks of cash. Okay, maybe Romeo was the real deal.

his fellow community members were eager to learn more. But after July 4th, 2017, Romeo never logged back on to the Rush V forums. He never even said goodbye. Many presumed he was probably just too busy with all of his women and money and sports cars. The connection wasn't made immediately, but the day after Romeo disappeared, July 5th, 2017, Alpha Bay, the world's largest dark web black market, also disappeared.

AlphaBay launched in December 2014 to fill the vacuum left by the sudden closure of Silk Road after its administrator was apprehended red-handed by federal authorities in a San Francisco library. In its three-count complaint, the government says a man known as the Dread Pirate Roberts was able to rake in $80 million in two years through an illegal site he created, a secretive online marketplace for drugs.

Alphabay's goal was to become the quote, "largest eBay-style underworld marketplace." With a special kind of web browser that preserves anonymity, you could purchase every type of drug imaginable, including fentanyl and heroin, credit card information, fake IDs, weapons, stolen goods, and more with cryptocurrency, and have those items shipped directly to your house or to a friend's house.

Within two years, Alphabay became the largest cryptocurrency black market of all time, ten times the size of the Silk Road. At its peak, there were more than 369,000 product listings and more than 400,000 users. Alphabay reportedly processed between $600,000 and $800,000 in sales per day, totaling over $1 billion in sales over its lifetime.

The anonymous owners of AlphaBay kept up to 4% of every transaction for themselves, which amounted to millions of dollars every year. The beneficiaries, whoever they may be, were probably living like royalty. But was it worth the risk? Ross Obrecht, aka Dread Pirate Roberts, the 29-year-old man behind Silk Road, had been handed an exceptionally harsh punishment: double life in prison without parole. But there was no fear.

AlphaBay's head administrator understood the potential life-ending consequences and readily accepted them. In 2015, AlphaO2, as he was known, told Motherboard over encrypted chat, quote, We have to carry on with business. We all need money to eat. Adding, Courts can stop a man, but they can't stop an ideology. Darknet markets will always be around until the war on drugs stops.

Besides, Ross Ulbricht had made mistakes. He'd used his personal email address and kept a meticulous journal on Silk Road's maintenance. So sloppy. In comparison, AlphaBay's operational security was airtight. That was true. Since AlphaBay's launch, law enforcement agencies worldwide have been sniffing around for leads with no luck. That's why when the site disappeared in July 2017, many assumed it was an exit scam. It happened to other marketplaces so many times before.

The owners of AlphaBay probably skipped town with all the digital reserves and turned off the lie behind them, probably the Russians. That would explain AlphaBay's ban on trading in Russian information and the quote "Be Safe Brothers" written in Cyrillic that was included in AlphaO2's post signature. Or maybe not. Perhaps there was another explanation.

In November 2016, cops in Fresno, California, who had made several undercover busts ordering from AlphaBay, received a welcome tip. It came from one of AlphaBay's first registered users, and they had the welcome email to prove it. And on that early welcome email was proof of an amateurish server error. The metadata revealed where AlphaBay's servers were based and listed the AlphaBay administrator's email address, pimpalex91 at hotmail.com.

The Fresno cops searched the internet for that email address and found a match. According to Andy Greenberg's multi-part series about AlphaBay and Wired Magazine, someone had used the email in 2008 to register a profile on a French-language social media site. The young man in the profile photo looked like a rapper. A white rapper. His name was Alex, from Quebec, born in 1991.

The investigators also found accounts and postings on French language technology forums where PimpAlex91 signed his full name, Alexander Casas. With that discovery, the cops found a LinkedIn profile that revealed Mr. Casas' profession. He owned and operated EBX Technologies, a computer repair and web design business that he started when he was 17.

according to the publicly available information. Alex Kauzis' business was based in Quebec, but other evidence suggests that he was no longer living there. The investigators in Fresno told Wired that they found the profile for his fiancée in Thailand. Alex was in some of the photos, standing next to a gray Lamborghini. It was hard to believe this nerdy, balding 25-year-old was the brains behind Alphabay.

But all doubt was erased when the investigators uncovered an old account on a programming forum that belonged to Alex Casas. He had been posting using the username Alpha02. Operation Bayonet was a multinational law enforcement operation that resulted from the tip sent to the Fresno police. On July 5th, 2017, two undercover female officers from the Royal Thai police rammed a car into the front gate of Alex Casas' house.

Alex Kauzis came outside to investigate the commotion. When he reached the end of his driveway, police surrounded him and took him into custody. The plan worked like a charm. Law enforcement hoped the car wreck would surprise Kauzis enough for him to leave his computers unlocked and unencrypted. And sure enough, when they entered the home, the laptop in Alex Kauzis' bedroom was logged into the administrative account of AlphaBay. They had found AlphaO2.

The authorities shut down the site but delayed the announcement. They wanted Alphabase users to migrate to another dark web marketplace called Hanzo. It was a honeypot. Authorities had quietly seized control of Hanzo a few weeks earlier.

Today the Department of Justice announces the takedown of the dark web market Alpha Bay. This is the largest dark market web place takedown in world history. Make no mistake, the forces of law and justice face a challenge from criminals and transnational criminal organizations who think they can commit their crimes with impunity by going dark.

This case, pursued by dedicated agents and prosecutors, says you are not safe. You cannot hide. We will find you. Dismantle your organization and network, and we will prosecute you. Alex Causes would be prosecuted. He faced 16 felony counts, including racketeering, narcotics conspiracy, and money laundering, which carried a potential life sentence. The case against him was solid.

Federal authorities found all of the passwords for the AlphaBay website, the locations of its servers, and other online identities associated with the marketplace. They'd also seized and traced Alex's crypto accounts, which revealed that his computer business, EBX Technologies, was nothing more than a front for his criminal activity.

Investigators also found a well-organized spreadsheet listing all of Alex Kauzis' financial holdings. His total net worth was $23 million. Almost $10 million was held in crypto. In addition, he had cash distributed across 11 different bank accounts in other countries. Some of them were registered in his wife's name. She was also arrested on a money laundering charge.

According to his document, Kauzis owned real estate in Bangkok, Phuket, Cyprus, and Antigua. He listed four Lamborghinis, a BMW motorcycle, a Mini Cooper, and a Porsche Panamera. Alex Kauzis was very proud, as evidenced by his post as "Romeo" on Rochefee's forum. Monthly payments to Roche from Alex's PayPal account proved that he was a premium member.

After the arrest, Rushfi, who had since transitioned grifts from pickup artistry to born-again alt-right political commentator, confirmed that Mr. Khaosus was part of the community, but denied knowing anything about his personal life or illegal activity. When the prison was closed, Mr. Alexander was in the prison alone.

On July 12th, 2017, at around 7:00 a.m., just hours before his extradition hearing, Royal Thai Police opened Alexandra Kauzis' jail cell and found him lying face down on the floor. According to the Bangkok Post, Alex had hanged himself with a towel from his bathroom door. He was pronounced dead at the scene. And with that, the war on drugs had finally come to an end. Not really. In August 2021, the Alpha Bay was resurrected, new and improved.

Turns out authorities had never identified the original Alpha Bay's number two in command, an administrator and security expert named DeSnake. And DeSnake spent the next four years rebuilding the marketplace from scratch. He told Wired Magazine, quote, The biggest reason I am returning is to make the Alpha Bay name be remembered as more than the marketplace, which got busted and the founder made out to have committed suicide. So after all that fine police work, back to square one.

However, the closure of the original AlphaBay wasn't totally pointless. The website's seized data did eventually help authorities solve a different mystery. A mystery involving billions of dollars worth of Bitcoin that was stolen from a hacked crypto exchange in 2016. A married couple of technology entrepreneurs, one of whom can best be described as the most obnoxious person on the planet, failed to hide their digital tracks on this episode of Swindled.

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The Hong Kong-based Bitfinex exchange has revealed it was victim to a hacking attack in which nearly 120,000 bitcoins of customer funds were stolen. On August 2nd, 2016, at 10:26 a.m., 119,754 bitcoin were stolen from Bitfinex, one of the world's largest and most reputable virtual currency exchanges.

At the time, one Bitcoin was worth about 600 US dollars. The total value stolen in the heist? Almost 72 million dollars. When Bitfinex announced the unfortunate news, the price of Bitcoin fell about 20% over concerns about newly discovered vulnerabilities in the blockchain. But those fears were unfounded.

In this case, through an inside job or social engineering. Hackers had infiltrated the exchange using remote access malware that allowed them to gain complete control of a Bitfinex admin's computer as if they were sitting at the keyboard. The hackers reportedly had access to Bitfinex servers weeks before they emptied the vault. They watched and learned how funds moved in and out of the exchange, and they found the private keys required to transfer the cryptocurrency to external wallets.

Minutes before the heist, the hackers raised Bitfinex's daily withdrawal limit from 2500 Bitcoin to 1 million Bitcoin. Four hours and 2,000 transactions later, almost 120,000 Bitcoin were stolen. The only reason the hackers didn't take it all was because a Bitfinex employee logged on and witnessed what was happening in real time. But by then it was too late. There was no saving what had already been lost.

And since the stolen cryptocurrency belonged to Bitfinex's users, Bitfinex the company chose to allocate the losses. "After much thought, analysis and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets," Bitfinex said in a statement on its website. "This is the closest approximation to what would happen in a liquidation context."

Bitfinex reduced the account balances of every one of its users by 36%. It basically issued IOUs in the form of what it called BFX tokens. Those BFX tokens could be exchanged for shares in Bitfinex's parent company, or cash eventually, whenever the company became solvent again.

Other users opted for something called an RRT, a token that entitled the holder to a share of stolen Bitcoins if they were ever recovered, which seemed unlikely. The hackers left behind no evidence. Even after Bitfinex offered a multi-million dollar reward for information, there were no leads. The only information authorities had to work with was the publicly visible crypto wallet to which the stolen funds had been transferred.

And even that offered nothing. There was no movement. The stolen Bitcoin just sat there. Until one day, tiny fractions started peeling off in an endless series of transactions. Those tiny fractions were mixed with small amounts of non-stolen Bitcoin and laundered through Alphabay to become almost untraceable. Then that freshly mixed Bitcoin could be used to purchase other cryptocurrencies such as Ethereum, which allows the thief to chain hop and lose the trail.

But the majority, about 80% of the 120,000 stolen Bitcoin, sat untouched for years with no way to get them back. That's almost certainly due to the difficulty of laundering or spending stolen cryptocurrency. The blockchain addresses of these stolen Bitcoin had been blacklisted. Reputable crypto exchanges would not accept them, and most would require proof of identity. Any respectable thief would hesitate to comply.

and the difficulty in moving the stolen digital loot only increased as the price of Bitcoin ballooned. The $72 million worth of Bitcoin stolen in 2016 was worth $8 billion six years later, making the Bitfinex hack one of the largest financial heists in world history. How does one off-ramp $8 billion with the whole world watching?

and the whole world was watching. By 2021, federal authorities were hot on the trail. After AlphaBay was seized in 2017, investigators could better trace the flow of transactions. The investigation was making progress, but the legwork took years. But eventually it would pay off, and the question would finally be answered. Who were the masterminds behind this ambitious and sophisticated heist? Support for Swindled comes from SimpliSafe.

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Meet Heather Rhiannon Morgan, the founder and CEO of Salesfolk, an email marketing consulting company that specialized in cold email copywriting. You know, the unsolicited sales emails you get from some random asshole linking to their calendar asking you to set up a meeting? Yeah, those kind of emails were Heather R. Morgan's specialty.

She started the company when she was 23 years old. On her personal website, Heather described herself as quote, "an analytics ninja, an economist, and a published author with seven years of copywriting experience." Heather always seemed to be hustling and expanding her repertoire. What is life if not for continually adding bullet points to your resume?

That's right. Heather Morgan wasn't all business. She had hobbies. Heather was a rapper. She performed as an incredibly flamboyant and crude alter ego named Razzlecon.

I'm no music critic, but her rapping is just brutal. Take my word for it, please.

Alright, fine. But don't say I didn't warn you. I'm a motherfucking beast, living on the coast that's east. Crocodile waiting for a feast. Don't got bad yeast. I'm a badass to say the least. Keep your bullshit, please. What? Razzle dazzle, living in a glass castle. Don't fuck with no hassle.

I gotta stay vocal. Bitcoin, Ethereum, HODL. AMC, GameStop, YOLO. The Hedgie store, squeeze with ease, but they say no pump and dumps, please? What? Shem and the motherfucking crocodile? Wall Street! Wall Street! Wall Street!

Oh you want more? You got it. Turkish Martha's dirt! Keep gone up in her skirt! Been trappin' with dessert! Scorned Poppy from the dirt! Yeah, I know I'm hot, and I make your boner tot, but guess what? You don't have a motherfuckin' shot! You can't afford these goods. They can't be bought.

Razzle dazzle bitches. Razzle fucking dazzle. Stuck a cock for a rock. In my pants I got a big sock. Razzle dazzle bitches. Razzle dazzle bitches. Razzle dazzle bitches. Shazam motherfuckers, time to razzle dazzle.

Heather Morgan shared the origin of her rap career in a 2019 column for Forbes. She had secured the writing gig by networking at a conference she had talked her way into. That was another one of Heather Morgan's self-professed specialties. She was an expert in social engineering.

Anyway, in that Forbes column, Heather claims Razzlecon was born out of burnout when she was 28 years old. A quarter-life crisis, perhaps. A common occurrence where young people adopt a dog or buy a really expensive blender or, in the worst cases, start doing improv comedy. Heather Morgan was no different. "I had this crazy idea for a song that I just had to make. The song came to me at 9 a.m. on a Tuesday, completely sober, and I wrote the whole thing in about 30 minutes.

On the surface, it's an absurdist stoner story, similar to the likes of Harold and Kumar go to White Castle, but underneath is an allegory of Silicon Valley, chock full of symbolism. The experience of creating that masterpiece proved a welcome distraction from Heather's incredibly demanding lifestyle as a tech entrepreneur. In the article, she recommended other stressed out CEOs try for themselves, as if that's what the world needs.

"I'm definitely not trying to win a Grammy for my voice," Heather wrote, "but I am addicted to rap. I know I still have lots of room to improve, but that's what I like about it, and I intend to keep rapping into my 80s in between building new software."

First of all, I just want to say thank you for all the dope feedback and love since my Forbes article came out. But I've had a few kind of weird messages since it came out too. And one of them was actually from someone that I know. It was an email and they basically said it's super random that I'm a rapper now. And I asked them why they said that and they were like, well, you don't have all the usual stuff that a rapper has like swag, a posse, and tats.

Obviously, that's what makes a rapper. But no, I just have to say, I don't think you know me very well, if that's what you think, because last I checked, I have a fuckload of dope-ass swag. And I have this tattoo here. Being yourself is what RazzleCon was all about. Embracing the weirdness. Expressing yourself freely. That's all Heather Morgan was trying to do.

She hadn't always been in the right environment to do so. Heather grew up in a one-stop light town in rural California where she stood out like a sore thumb. Not just because of her personality, but also because of her lisp and her braces and for being the only person at school to use a rolling backpack. Heather was bullied mercilessly. The whole experience was a nightmare, she said in a YouTube video.

Heather Morgan could not wait to leave her hometown, but she would have to do so with her own devices. Heather's parents were not wealthy. Her father was a government biologist, and her mother was a librarian. Heather would have to find a different way to finance her dreams, but that was no problem. Heather Morgan never really cared about money anyway.

Money, in my mind, money comes and goes. Sometimes you have it, sometimes you don't. It's really nice when you have it, but life is also not just about money. Success, in my mind, isn't also just about money. It's about your quality of life and your happiness.

Thanks to her brain, Heather Morgan was able to get as far away from her hometown as possible. According to Forbes, after graduating from the University of California, Davis with a degree in economics in 2011, Heather took a job at Hong Kong University running seminars for students about American culture.

From there, Heather Morgan moved to Cairo, Egypt to pursue a postgraduate degree at American University. She only lasted one semester. A friend she had met there told Forbes that one day in 2013, Heather announced she was moving back to the States because she wasn't making enough money. So Heather Morgan moved to the place where everybody was making a fortune, Silicon Valley.

She started getting involved in tech startups, sleeping on couches, scrounging for food. It almost seemed like poverty by design, as if she knew her struggle would make for an inspirational anecdote in all the biographies that would be written about her someday.

So I right now am basically living my ideal life and I got all of this from my mind. In the summer of 2013, Heather Morgan started working for an Arabic language mobile gaming company. But one day she stopped answering the phone. The app's founder eventually learned that Heather had married a colleague from the startup accelerator and spontaneously moved to Brazil. So quirky.

By October 2013, Heather Morgan was back in the Bay Area. She told a friend that her marriage had become abusive, so she fled.

Newly refocused, Heather launched her own business, Salesfolk, her email marketing consulting company. I started my company when I was 23 and grew it into a multi-million dollar business with zero outside funding. I had no connections, I didn't go to an Ivy League school, and I wasn't trust fund. By her own account, Salesfolk was a success. Heather Morgan would not be denied. She

She was constantly posting marketing tips and interviews with other sales professionals on YouTube and TikTok. Heather had a series of tutorials about cold emails. Also, did you know that she invented the popular email closing, Cheers? So many people have stolen this email template from me, the quick question subject line, and notice they sign it with Cheers. Guess what? That's because I lived in Hong Kong and I used to speak British English.

Probably this guy did not, and probably most people who are doing that did not. Rather, they are blindly copying my cold email templates that I made five to seven years ago. This is a perfect example. Heather Morgan is insufferable, but apparently she did have some admirers. There was a new man in the picture before New Year's Day 2015. His name was Ilya Lichtenstein, but everyone called him Dutch.

Like Heather, Ilya "Dutch" Lichtenstein was heavily involved in startup culture. He founded a company called MixRank, which was a giant database of ads that measures what works and what doesn't work in terms of marketing to help advertisers build a successful campaign. So MixRank is a giant database of ads. We analyze hundreds of thousands of sites every day, pick up... Yeah, that's great.

Ilya Lichtenstein is the son of Russian immigrants who reportedly fled the motherland for the suburbs of Chicago to escape religious persecution. He has been a self-described geek for his entire life. Ilya was captain of the math team in Quiz Bowl. "Very much the stereotype of a computer guy," acquaintances told Business Insider. "A computer guy who liked to learn and perform magic tricks for his friends."

In the past, Ilya Lichtenstein has described himself as a techno-libertarian that opposes over-regulation. Naturally, this led to fervent support of Senator Ron Paul in the 2008 United States presidential race. As a college freshman, Ilya Lichtenstein created a website called RonPaulFan.com. The quote, "Number one source for all Ron Paul news." By 2009, Ilya had to find something else to do. That's when he discovered affiliate marketing.

Ilya Lichtenstein began selling weight loss supplements on a website he created called MyNaturalWeightLossDiet.com. He also started marketing and selling some kind of brain booster pill called Instant Focus. Although Lichtenstein bragged in forum posts that he was making $100,000 a year as a student from his affiliate marketing business, the truth was it never really got off the ground.

Ilya's next big idea was to create dating websites, adultfriendgrinder.com and findgeekgirls.com, perhaps he was projecting. After graduating from the University of Wisconsin-Madison in 2010 with a degree in psychology,

Ilya Lichtenstein moved to Silicon Valley, where he co-founded his most successful business to date, the aforementioned venture-backed advertising technology company MixRank. And he immersed himself in the startup culture, where he met many like-minded entrepreneurs, including one nerdy girl who had founded her own email marketing company.

Hi, I'm Heather Morgan and I'm here today with Salesfolk and Sales for Startups talking to Ilya Lichtenstein, the co-founder and CEO of Mixrank, a Y Combinator-backed startup that does automated sales prospecting for B2B companies and other companies as well. Hi, Ilya.

Hi. Hey Heather, thanks for having me. You're welcome. Thanks for talking with us today. Ilya and Heather started dating. They seemed to balance each other out. Heather was outgoing and loud and eccentric. Dutch was more reserved. Why don't you just keep filming me expecting something to happen? What do you want me to do? You want me to just like shove something up my ass and do a little dance?

The relationship worked. The couple supported each other's companies, invested in other startups, and launched new ones together, such as EndPass, a quote, delightful and secure cryptocurrency wallet that's easy enough for grandma to use.

Ilya Lichtenstein and Heather Morgan seemed absolutely devoted to making a name for themselves as serial software entrepreneurs. But suddenly and inexplicably, that all changed the summer of 2016. Ilya abruptly left MixRank, the company he co-founded, to focus on investing and consulting, according to his LinkedIn.

At the same time, Heather Morgan downsized sales folk to a shell of itself. The couple then packed up and moved to New York City, settling down in a $1 million two-bedroom condo at 75 Wall Street with their adopted Bengal cat named Clarissa. Okay, so Dutch, can you tell me a little bit what you thought having a pet? Having a pet is completely different from what I would expect it to be. I thought it would be more Clarissa-ish.

I thought it would be more like having like a little AIBO robot dog or maybe like a Tickle Me Elmo. She'd be like Tickle Me Elmo. Yeah, where I thought they're just like a passive thing and you just grab them, you put them on your lap.

Not this one. But they have so much personality and you can have such a nuanced and complex relationship with them. Yeah. And really learn from them and grow as a person in the way you relate to them. And it's really special. And that's why everyone should have a pet. Yeah.

In 2019, Ilya Lichtenstein and Heather Morgan got engaged. Ilya described his proposal in a Facebook post. He had commissioned a guerrilla-style advertising campaign for RazzleCon in New York, including a billboard in Times Square.

I knew I had to do something memorable that would really show how much I love and value the real Heather. Not just the badass entrepreneur, but also the ultra weird creative genius. At the same time, knowing Heather, she would want any proposal to be pragmatic and also add business value.

Heather Morgan had gotten more serious about her rap career after the move. With her newly found free time, she had written almost an entire album's worth of songs. She hired a producer to make the beats, started making her own clothes, and she shot and released multiple music videos, each one more ridiculous than the last.

Razzle Dazzle, RazzleCon here and I'm super excited about my new song Vacuum Cleaner which is, you guessed it, it's about vacuum cleaners, what what? Bitch you suck like a vacuum cleaner, va va va va va vacuum cleaner.

Heather Morgan claims to have synesthesia, a neurological phenomenon in which people see sounds and hear colors. Because of this, her website reads, Razzlecon's art often resembles, quote, something in between an acid trip and a delightful nightmare. Definitely not for the faint of heart or easily offended.

Raz, it says, likes to push the limits of what people are comfortable with. Her style has often been described as sexy horror comedy because of her fondness for combining dark and disturbing concepts with dirty jokes and gestures. Whether that leads to something wonderful or terrible is unclear. The only thing that's certain is it won't be boring or mediocre. She's right. It's much worse. Razzlecon, the Versace better win real fast.

I feel like it can't be that bad on purpose, a longtime friend told Business Insider.

But the quality isn't the point. Like Heather Morgan said in her Forbes article, Razzlecon was a great stress reliever, and she desperately needed one. By the time the couple was married in November 2021, Heather Morgan and Ilya Dutch Lichtenstein knew that they were being investigated. Question. What are your 2021 goals? I have a bunch of them I plan to...

triple my company's revenue. I want to release an independent rap album. I am working on a book that is inspirational yet cynical, and I want to grow my YouTube audience and a bunch of other stuff. How about you? What do you want to learn or accomplish in 2021?

Okay, this next story is one that's caught the world's attention. A Canadian man who died while in custody in a Thai prison is now accused of being an online kingpin. One who built a fortune as the mastermind of the world's largest illegal online marketplace called Alphabay. Years of tedious and complicated police work led to this moment. Tracking the stolen Bitcoin and requesting information from internet service providers and cryptocurrency exchanges. It all took forever.

But here's what investigators learned. Whoever controlled the crypto wallet containing the $8 billion in Bitcoin stolen from Bitfinex was using several classic money laundering techniques to access and use the funds. For example, the suspects created a store on Alphabay and then made purchases from that store with the stolen loot. They also used some kind of bot that was programmed to bulk automate transactions to look like store sales. But the process wasn't complete until a crypto exchange accepted the stolen Bitcoin.

To appear legit, the suspects set up several different business accounts on the exchanges with names such as "Salesfolk" and "In The Past" to make the transactions appear as sales. When approved, the stolen Bitcoin was converted to different cryptocurrencies or cashed out at a Bitcoin ATM, where it was used to purchase gift cards from Walmart, Uber, Hotels.com, and the PlayStation Network.

Some of the stolen Bitcoin was used to buy NFTs and gold, and that gold was shipped through the mail to a residence owned by someone named Ilya Lichtenstein.

It was a name that had come up time and time again. In fact, both Ilya Lichtenstein and Heather Morgan had used their real names on several of the exchange accounts that were laundering the Bitcoin stolen in the Bitfinex hack. Sometimes they were registered to fake identities, but in at least one of those cases, Ilya uploaded a photo of himself for verification using a false name.

Investigators determined that Ilya Lichtenstein and Heather Morgan had cashed out millions of dollars. Plus, one of the couple's businesses had also applied for and accepted an $11,000 PPP loan during the COVID-19 crisis. But even with all of this evidence, it took another year to secure a search warrant.

In the meantime, at Ilya Lichtenstein and Heather Morgan's wedding in Culver City, California on November 13th, 2021, the bride was carried down the aisle on a throne by eight of her closest friends as the band Europe's hit song Final Countdown played in the background, unaware of the irony. At the reception, Razzlecon rapped one of her songs in front of 75 horrified guests.

Later, Ilya performed a magic trick in the fancy venue. Attendees assumed the couple could afford it all with their early crypto investments.

Three months later, on January 5th, 2022, there was a knock on the door at Mr. and Mr. Lichtenstein's Wall Street apartment. A group of federal agents entered and greeted Heather Morgan's parents who were in town visiting. Heather and Ilya were given the option to stay for the search or leave. After a brief conversation in Russian that no one else in the room understood, the couple opted to give the feds some space, but Heather asked if she could retrieve their cat and was approved.

Heather entered the couple's bedroom and crouched next to the bed while calling Clarissa's name. She then quickly reached for her phone on the nightstand and repeatedly pressed the lock button, a move that authorities believe was an attempt to wipe the device.

An agent saw what was happening and wrestled the phone from Heather's hands. It was added to the pile of electronics that the investigators had found. Four hardware wallets, dozens of thumb drives, tablets, and cell phones, including one in a Ziploc bag labeled "Burner Phone." There was a pocketbook stuffed with $40,000 cash and a quote "substantial amount of foreign currency."

Also of interest were two books in Ilya's office: the Water Goats, a novel, and a collection of Japanese maps that had been hollowed out to create secret compartments. There were also personas and passport folders on Ilya's computer that included links that counterfeit identification cards, passports, and overseas bank accounts. Investigators had found everything except what they were looking for.

and those were the private keys that belonged to the 120,000 bitcoins stolen from Bitfinex. That was the smoking gun, and without it, there was not enough hard evidence to make an arrest. But there were still weeks worth of digital evidence to sort through. Five days after the search, Razzlecon released a new song dedicated to her lover, with whom she plans to be with, quote, until the goddamn end. Right or left? Stars, two bars, don't drive, no...

On January 31, 2022, the federal authorities hit the jackpot. In Ilya Lichtenstein's cloud storage account, they found and decrypted the private keys for the nearly 2,000 Bitcoin addresses tied to the Bitfinex hack. Those monitoring the transactions related to the hack noticed that 95,000 Bitcoin had been consolidated into a single wallet. Were the hackers making a move?

Nope, that was the government seizing $3.6 billion worth. 25,000 Bitcoin were untraceable and never recovered. Also, the price of Bitcoin had plunged by now. A week later, Heather Morgan posted a TikTok video complaining about her experience at a nail salon. Can I be real with you about something? You know what? I really, really, really hate nail stuff for the longest time. I only hated one nail, my razzle nail, right?

The next day, February 8th, 2022, Heather Morgan and Ilya Lichtenstein were arrested. They were charged with conspiracy to commit money laundering and conspiracy to defraud the United States. The couple has not been charged with performing the actual hack of Bitfinex. Today, the Department of Justice has dealt a major blow to cyber criminals looking to exploit cryptocurrency.

The department has charged Ilya Lichtenstein and Heather Morgan for their alleged roles in a conspiracy to launder stolen cryptocurrency taken during the 2016 hack of a virtual currency exchange

That hack resulted in the theft of almost 120,000 Bitcoin, which at the time was worth approximately $71 million. Today, the value of that Bitcoin has grown to over $4.5 billion.

My initial reaction was, it was one of those fake news articles that paste in names of your friends. One friend of the couple told Business Insider, I was that level of shocked.

A former employee of Heather Morgan said that based on her perception of the couple, it is almost comical that this happened. Another friend wasn't surprised at all. Quote, I 110% think they would be capable of doing it. Ilya Lichtenstein and Heather Morgan, 34 and 31 years old respectively, both pleaded not guilty. Ilya posted a $5 million bond secured by his parents' home. His passports were seized and he was given house arrest.

Heather's bond was $3 million with the same conditions. However, the Justice Department in Washington, D.C. reversed the New York judge's decision to allow the couple to post bail, citing evidence that they were a potential flight risk. In addition to their access to numerous fraudulent identities and established foreign bank accounts, Ilya had citizenship in Russia, and as his wife, so did Heather. Russia does not extradite. In theory, they could avoid prosecution indefinitely.

The prosecutors allege that the couple already had plans in place to leave, porting to a 2019 month-long trip to Ukraine where they received a suspicious package from Russia at a hotel they weren't staying in. Not to mention the couple might still have access to the 25,000 stolen Bitcoin that was never recovered, which are now worth approximately $70 million.

Morgan and Lichtenstein's lawyers argued that the couple would not leave because their parents would lose their homes. Also, Heather could only conceive through in vitro fertilization, and she was storing frozen embryos in New York. If Heather fled, she would also have to leave behind her future family. Ilya Lichtenstein was held without bail. Heather Morgan was released until her trial.

According to Bloomberg, Heather returned to the couple's apartment on Wall Street and immediately started having a moving sale, which included everything from three electronic deadbolts to a fake Banksy print. Heather was also granted permission to find legitimate employment until her case is resolved. Razzlecon never stopped grinding. Razzle dazzle, bitches.

Six months later, Heather Morgan broke her social media silence, first by denying any association with all the crypto and NFTs that had popped up using her likeness and name.

A week later, she tweeted out a job search, quote, Looking for remote B2B growth marketing sales copywriting demand gen work. Can be contract or potentially full-time. Have 10 years experience, including remotely managing distributed teams. DM me to discuss. Serious opportunities with B2B tech companies only. Thanks.

Since their bond hearing, Heather Morgan and Ilya Lichtenstein have hired separate lawyers. Heather is reportedly working on a plea deal. The couple's next hearing is scheduled for 2023.

Swindled is written, researched, produced, and hosted by me, a concerned citizen, with original music by Trevor Howard, a.k.a. The Former, a.k.a. Dutch. For more information about Swindled, you can visit swindledpodcast.com and follow us on Instagram, Facebook, Twitter, and TikTok, at Swindled Podcast. Or you can send us a postcard at PO Box 6044, Austin, Texas 78762. But please, no packages. We do not trust you.

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