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Fed Math: The FBI Can't Count To 100 In Case Against Roman Storm

Fed Math: The FBI Can't Count To 100 In Case Against Roman Storm

The Government's forensic accounting reports do not add up. “You testified that you were trained by the FBI?”

David Z. Morris profile image
by David Z. Morris

The second full day of proceedings in the criminal prosecution of Tornado Cash cofounder Roman Storm kicked off with embarrassment for Federal investigators, as Storm’s defense team successfully poked holes in a forensic accounting report and the provenance of cell-phone data. Measured against the defense’s goal of establishing “reasonable doubt” of the charges against Storm, their efforts seemed extremely effective.

The government began the day by calling Jessica Reyes, an FBI forensic accountant. Reyes detailed her analysis of the bank accounts of Peppersec, the Deleware-registered U.S. corporation under which Roman Storm, Alexey Pertsev, and Roman Semenov developed the Tornado Cash software. The broad goal of the questioning appeared to be to demonstrate that Storm and his partners were making a lot of money from Tornado Cash. 

This included a pie chart breaking down withdrawals from the accounts, with a service called Rho. The chart showed 80% of expenditures went to payroll, totaling a bit over $290,273; 9% went to recurring expenses, at $32,676; and 10%, or $37,873, to “Other” expenses.

These numbers are notable first for seeming extremely modest for an operation with as many as a half-dozen employees. You may note another issue with the breakdown – the defense team certainly did. 

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From 99 to 100+4

“This chart only adds up to 99%,” asked defense attorney Keri Axel in her cross-examination of Reyes. “Why?”

“I would need to examine my spreadsheet,” replied Reyes, referring to source data used to generate the charts. She would give the same response, in some variation, more than a dozen times as cross-examination continued.

Axel then brought up another pie chart Reyes had prepared for the prosecution. It showed Peppersec account withdrawals from January to April of 2022, broken down into $85,066 for payroll, or 80% of total withdrawals; 10% for recurring expenses, or $6,370; and 14% for Other Expenses, totaling $14,609.

“That adds up to 104%,” Axel pointed out to Reyes. “Why?”

“I would have to refer to the spreadsheet,” the witness replied.

Axel went on to highlight and confront Reyes regarding other charts that quite literally didn’t add up. Axel also asked Reyes about previous drafts of the charts which, using different periodizations, showed that payroll overall amounted to closer to 45% of Peppersec expenses over time, rather than 80%. This undermined the prosecution’s framing of the Tornado Cash team as ruthlessly self-enriching. 

Axel also took the opportunity to highlight tax payments made by Peppersec to Washington State, and corporate registration fees paid to Delaware, buttressing the impression of a normal, law-abiding firm. Throughout, the FBI’s forensic accountant failed to recall details of her analysis, repeatedly citing the need to refer back to unavailable source documents.

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Where's The Money?

Axel walked Reyes through inflows to the Peppersec account – and found very few. Aside from a few chargebacks, the only source of inflows to the account was a large initial payment from Dragonfly Capital, a well-known technology investing firm that invested in Peppersec and Tornado Cash.

Axel further highlighted a type of transaction notably missing from Peppersec’s bank ledger. “You testified that you were trained by the FBI [to detect money laundering]?” Axel asked, the incredulity implicit. 

“You testified that you often looked for large cash transactions [as a sign of illicit activity] … Do you see large cash withdrawals from this account?”

“No,” Reyes replied.

“Did you see a lot of cash payments into the account?”

“No,” Reyes replied.

Pertsev's Messages and Some Lousy T-Shirts

The remainder of the morning was also devoted primarily to forensic witnesses, who detailed the process of seizing electronic devices from Roman Storm’s home in Washington, and extracting data from various devices. 

Prosecutors took another apparent hit in the matter of a device seized from Alexey Pertsev by Dutch authorities. FBI forensic analyst Peter Dickerman testified to processing data taken from Pertsev’s seized device, and prosecutors took the opportunity to display photos of Pertsev wearing Tornado Cash shirts.

But on cross examination, Dickerman admitted that he had worked with the data, but not the device itself.

“You never actually saw the phone, did you?” asked Storm’s defense. “I didn’t,” Dickerman answered.

Dickerman's extraction from Pertsev's phone had been subject to discussion between the parties since pretrial proceedings. The defense wanted them thrown out, as Dickerman did not perform the extraction himself – rather, he performed an extraction of data extracted by Dutch authorities.

Days before trial, the defense found that a Telegram message attributed to Pertsev by the Government was actually written by a CoinDesk reporter.

SDNY Misrepresented CoinDesk Reporter As Tornado Cash Developer In $600M Cash Out Message
“Perhaps the indictment could have been clearer about the origin of the language,” the Government states.

Independent journalism does not finance itself. If you enjoyed this article, please consider making a donation. If you would like to note a correction to this article, please email corrections@therage.co

David Z. Morris profile image
by David Z. Morris

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