## Facts

- Michael A. Lord and Randall B. Lord operated a Louisiana business that sold Bitcoin to customers in exchange for cash and other payment methods.
- The business received customer funds, purchased Bitcoin through Coinbase, transferred Bitcoin to customers, and retained a commission.
- In spring 2014, Coinbase notified the Lords that their activity as Bitcoin “exchangers” required registration as a money services business (MSB) with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
- In July 2014, the Lords told Coinbase they had registered with FinCEN, but they did not complete registration until November 2014.
- A federal grand jury indicted the Lords in 2015, including for violating 18 U.S.C. § 1960 (operating an unlicensed money transmitting business).
- The government’s § 1960 theory relied on (1) a missing Louisiana license and (2) noncompliance with federal MSB registration requirements.
- The Lords pleaded guilty to the § 1960 offense; Michael Lord also pleaded guilty to a separate drug conspiracy count involving alprazolam.
- Before sentencing, Louisiana regulators clarified that the Lords’ Bitcoin-exchange activity did not require a state money-transmitter/money-services license.
- The Lords moved to withdraw their guilty pleas before sentencing, arguing the state-law clarification undermined the basis for the pleas.

## Issues

1. Whether the defendants showed a “fair and just reason” under Federal Rule of Criminal Procedure 11(d)(2)(B) to withdraw their pre-sentencing guilty pleas to violating 18 U.S.C. § 1960 after learning Louisiana did not require a state license.
2. Whether § 1960 remained satisfied through an independent federal basis—failure to comply with FinCEN MSB registration requirements—regardless of state licensure.

## Decision

- The court denied the motion to withdraw the guilty pleas.
- The court held that § 1960 is disjunctive and may be violated by failing to comply with federal MSB registration requirements even if state licensing is not required.
- The court found an adequate factual basis for the § 1960 pleas based on the Lords’ continued operation before registering with FinCEN and their admitted delay in registration.
- The court concluded the defendants did not meet their burden to show a “fair and just reason” for withdrawal under Rule 11(d)(2)(B).

## Legal Principles

- A defendant may withdraw a guilty plea before sentencing only by showing a “fair and just reason.” Fed. R. Crim. P. 11(d)(2)(B).
- 18 U.S.C. § 1960 covers an “unlicensed money transmitting business,” including a business that fails to comply with federal money-transmitting registration requirements under 31 U.S.C. § 5330 and implementing regulations.
- Where § 1960 provides alternative bases for liability, the failure of one theory (e.g., no state-license requirement) does not negate a plea supported by another independent statutory basis (e.g., federal registration noncompliance).
- A plea-withdrawal request is not justified by later developments that do not establish legal innocence or otherwise undermine the plea’s factual and legal foundation.

## Conclusion

The court refused to permit withdrawal of the Lords’ pre-sentencing guilty pleas because the Louisiana licensure clarification did not eliminate § 1960 liability supported by the defendants’ failure to timely register their money-transmitting business with FinCEN, leaving no “fair and just reason” to set aside the pleas.


United States v. Lord, No. 15-00240, 2017 WL 1424806 (W.D. La. Apr. 20, 2017)