Faketoshi, The Early Years — Part 2
MyLegacyKit (Link to original medium.com post)
Gregor Sailer: Carson City VI/Vågårda, Sweden, from the series “The Potemkin Village”, 2016
Written by Arthur van Pelt, with assistance from CryptoDevil
ABOUT EDITS to this article: as more material might become available
after publication of this article, it will have edits and updates every now
and then. In that sense, this article can be considered a work in progress,
to become a reference piece for years to come.
Intro
We hope you truly enjoyed “Faketoshi, The Early Years — Part 1”. Let’s
recap Part 1 for a bit before we continue with Part 2.
2003–2006
Craig Wright abandons his own consulting company when a new
shareholder he’d persuaded to invest in it discovers that the financials don’t
add up. Then sets about poaching his old clients from under the new
investor and winds up in court on breach of contract.
Court orders him to stop approaching clients — ignored, Court finds him
guilty of contempt, the judges sentence him to 28 days imprisonment,
suspended on condition that he performs 250 hours of community services,
and Craig is ordered to pay the costs of the proceedings.
Thus begins a decade-long pursuit of Craig by the lawyers for his old
company for recovery of hundreds of thousands of dollars in debt he owes.
2009
Craig incorporates two business entities and sets about filing specious
claims for tax rebates on ten-years worth of ‘Intellectual Property’ derived
from his university studies which he insists were purchased for millions by
these two companies, directly from him.
2010
The Australian Taxation Office (ATO) find Craig Wright’s claims suspect and
conduct an audit and interviews, looking deeper into his tax returns and
business activities — none of these returns or business activities, records
and transcripts from the time show, cite Bitcoin in any capacity whatsoever.
2011
Craig Wright and Dave Kleiman attempt to land four US Department of
Homeland Security (DHS) contracts and set up a US business entity (W&K
Info Defense Research LLC) in order to handle the application process
through — all four are rejected outright by DHS. The US company that Dave
had incorporated has no further purpose and is left to be automatically
struck off the active register by administrative dissolution.
2012
Having recently learned of the existence of Bitcoin, Craig floats the idea of
setting up some sort of Bitcoin bank. Long on ambition, but short on
viability, it doesn’t progress anywhere as an actual project.
2013
In April of this year, Dave Kleiman dies and Craig almost immediately seizes
on the opportunity to re-write the nature of their past dealings, by filing two
massive claims in NSW Supreme Court of almost $30 million each against
their, dormant and defunct, US company ‘W&K Info Defense Research LLC’
which they’d solely used to file their rejected applications for US DHS
contracts. The court relies on Craig’s own declaration and valuation of the
company’s supposed assets and debts owed to him and, as the legal action
is uncontested (as Craig was basically suing himself, with backdated ‘help’
of at that point in time ex-CFO Jamie Wilson), it rules in his favour,
whereupon he promptly adds the ‘value’ to his rebate scam.
To load up the value of his intra-business transactions even more, he
introduces the notion that purchases across his companies are being made
through Bitcoin instead of bank deposits and transfers. For this he
apparently finds public addresses on the Bitcoin blockchain and starts
declaring to the tax authorities that he has been mining and buying Bitcoin
since 2009 and that he owns and controls the multiple Bitcoin addresses
he’d submitted in his bookkeeping records to the ATO. A notable moment
arrives by the end of 2013 when the ATO’s Refund Integrity department
launches their next audit of Craig’s tax rebate claims which, unlike
previously, now contain supposed Bitcoin-related transactions.
February 2014
The ATO is becoming more and more sceptical of these multi-million-dollar
transactions he is claiming took place for which he has filed for massive
amounts in GST and R&D rebates. Their audit of Craig finds that 94% of his
income or that of his business entities over the prior two years is derived
from these tax rebates. ATO wants proof the Bitcoin transactions took place
but he, instead, insists that no Bitcoin was actually ‘paid’ in a regular on-
chain transaction, that these business dealings were conducted by drawing
up a document of a ‘transfer of value’ where the purchaser of the product or
service could ‘call on’ the value of the Bitcoin held in trust.
The one regular Bitcoin payment Craig claims to have made the previous
year is to a fugitive conman, Mark Ferrier, for banking software, gold and
industrial mining automation software. A conman Craig can provide no
evidence of ever having met, spoken to or transacted with. The ATO clearly
suspect Craig is lying about the Bitcoin addresses he professes to own. He
needs to come up with something to convince them that he could be
somebody who would, indeed, own a lot of Bitcoin. 10 months after Dave
Kleiman’s death, Craig emails Dave’s family and claims:
“Your son Dave and I are two of the three key people behind Bitcoin”
…and so we continue.
Disclaimer: You will see many times the $ symbol being used. Since Craig
Wright lived in Australia in the period of these articles, the $ symbol used in
numbers related to Craig will always refer to the Australian dollar (AUD),
except where indicated otherwise.
2014, The year of the ATO hearings
February 12, 2014: Hotwire article in Business Insider Australia.
Remember, at this point Craig has only tested out his “I am Satoshi” claim or,
rather, his “We were Satoshi” claim, in his email to the Kleiman family so far.
He has an impending interview with a sceptical ATO due in the coming days
and he is desperate to make them believe he has substantial connections to
Bitcoin, namely, his supposed ‘Bitcoin Bank’ project.
He contacts Liz Tay, a reporter for ‘Business Insider Australia’ and goes into
overdrive, wildly claiming that Hotwire PE was merely months away from
opening ‘Denariuz Bank’, which would be the world’s first Bitcoin-based
bank, slated to offer Bitcoin-based equivalents of conventional savings
accounts, term deposits, credit and debit cards, and loans. Which, if true,
was certainly newsworthy.
She writes that, “CEO Craig Steven Wright” had stated that the Denariuz
Bank had been in talks with regulators in the UK, US, Australia and Singapore
over the previous year and was due to begin taking deposits during the
second half of 2014 and that he “expected a stock market listing to be in the
pipeline but declined to discuss details”.
Liz also wrote that Wright had said Denariuz would launch with a global pool
of more than 100,000 Bitcoin ($73.6 million at the time) from its backers.
At this point in time Hotwire PE was, in fact, on the brink of bankruptcy.
The interview blends a mix of claims being made at this time, some of which
were true and others which have been entirely fabricated years later by
Craig Wright to his tax lawyer Andrew Sommer, being repeated as though
they are facts. This is a process which Craig will likely have been hoping
would act as some kind of third-party validation of his ever-evolving
narrative to the story he has been weaving for the ATO during their
investigations into his increasingly audacious rebate filings.
Opening paragraph sets the scene, the ATO have closed the taps on the
revenue stream Craig has been milking with millions of dollars of claimed
business transaction tax rebates. The objective, Andrew Sommer asserts, is
to simply try and “free up the cash flow” — the aforementioned tax rebate
cash flow back into Craig’s company bank accounts.
He begins by leading with a chronological walk-through of “how we got to
here”, launching straight in with a wholly unproven-to-this-day claim that in
2009 “the mining of Bitcoin commences” implied basis for Craig possibly
holding hundreds of thousands, maybe even millions of Bitcoins as an
explanation for some of the underlying ‘value’ he has been ascribing to
these questionable inter-company transactions his tax rebate amounts have
been based on.
While this leading sentence in the chronology lacks any evidence
whatsoever, other than, for sure ‘the mining of Bitcoin commences’ in 2009
by other people — some of whom will eventually go on to cryptographically
prove Craig’s claimed ownership of their early wallet addresses as fraud and
lies, the follow-on sentence is true, namely, “There’s audit and ensuing
disputes with the Tax Office regarding information defence (the original
Australian company he ‘sold’ his academic IP to)… and Dr Wright personally
back in 2009” which did drag on for a couple of years, but is absolutely
unrelated to anything Bitcoin-related as has been proven in the actual
evidence from the time.
This process of blending supposed Bitcoin-connected history with actual
business and tax-related activity Craig was verifiably connected to is
repeated all through this transcript, but there is, and remains, a complete
and utter lack of evidence to support any of the Bitcoin-related assertions.
Pick a sentence from the above ATO interview extract and it will be either:
A true statement describing an event which did take place, but is
nothing to do with Bitcoin;
A never-proven statement trying to connect Craig to large-scale Bitcoin
involvement;
A statement which has since been debunked by the ATO and in courts
of law, involving backdated contracts, correspondence and forgeries,
which attempt to connect Craig to large-scale Bitcoin involvement.
Andrew Sommer, as you can see in the above transcript, is driven to make a
great many assertions of supposed fact during this interview process but
will, following receipt of evidence exposing his client’s fraud and lies, later in
2015 terminate his law firm’s relationship with Craig and his companies,
citing serious issues with the integrity of documents received to both their
office and the ATO, from Craig Wright, himself.
In the meantime, however, Craig is getting his very own version of reality laid
out to suit his particular needs for his ongoing spat with the ATO, except, as
we said, it is all a façade of lies and half-truths.
For example:
There has never been any evidence of Craig being involved with Bitcoin
mining at any time, let alone as an early miner.
The supposed ‘Trusts’ were found to be nothing but back-dated ‘off-
the-shelf’ companies or even just entirely fabricated and non-existent
in any capacity.
There was no ‘defence research’ R&D being conducted by Craig and
Dave’s US company — records show only that it was created for the
purpose of filing applications for US government contracts and, when
these were rejected, simply left to become inactive on the register.
The ‘MJF’ transaction which, as stated by Mr Sommer, was “germane to
the returns that are being looked at currently” is later debunked as a
convoluted lie involving pirated banking software and Craig setting up
fake support-desk domains and correspondence in his desperate
attempt to convince the ATO otherwise.
The ‘July discussions’ with the ATO about the nature of Bitcoin were
not, as Craig likes to pretend, the core reason for these disputes at all,
the topic formed only a small and rather irrelevant part of their
investigations into his ongoing rebate fraud and the ATO, as he will later
find, were not quite so easy to fool as Craig would have hoped.
What is interesting to note in the above, however, is Andrew’s reference to
the NSW Supreme Court case, which supposedly involved massive loans
denominated in Bitcoin, developed Software and SDKs and supposed
valuable IP Craig had sought to ‘recover’ from W&K Info Defense Research,
where he states that, “Those orders in the New South Wales Supreme Court
substantiated value of the claims being made for that intellectual
property[…]roughly 28 million a piece” — this is exactly what Craig would
have wanted to achieve in the sham litigation he had conducted in late 2013
where he got to self-declare the value of everything he was supposedly
recovering from the US company, uncontested and with no third-party
verification whatsoever. His very own tax lawyer then citing the Supreme
Court decision to grant his ‘recovery’ action as being sufficient
substantiation of the value when he faced the ATO’s questions on Craig’s
behalf.
Perjury is a serious enough offence at the High Court level, the Supreme
Court will not take kindly to being used as a conduit for tax fraud.
Later in the interview Craig, employing a colloquialism Satoshi once used,
appears to be tentatively looking to see if anyone in attendance might be a
suitable candidate for prompting the one question he wants to be asked, one
which would absolutely serve to help in his efforts to persuade the ATO to
accept why he might genuinely own a vast trove of Bitcoin:
“I did my best to try and hide the fact that I’ve been running Bitcoin since
2009 but I think it’s getting — most — most — by the end of this I think half
the world is going to bloody know.”
But no-one bites. The only response it elicits is a, “Yeah, well.” from Andrew.