Dec. 7—CONCORD — A 76-year-old widow will testify about a romance scam that took her life savings, prosecutors said Tuesday at the start of a three-week trial of Free Keene activist Ian Freeman on money-laundering charges.

Danella Varel of Punta Gorda, Florida, lost $755,000 in the scam over a six-day period in June 2020, federal prosecutor Georgianna MacDonald told a jury in U.S. District Court. Varel never met Freeman, but she sent a photo of herself holding a sign authorizing the transfer through Freeman to the scammer.

Freeman, a prominent Free State Project activist, earned a 10% fee to convert Varel's cash to her scammer's untraceable bitcoin, MacDonald said.

"Ian Freeman had one golden rule for the criminals he served. What you do with your bitcoin is your business. Don't tell me what your plans are," MacDonald said. Victims of scams, mostly middle-aged and elderly people from around the country, are queued up to testify, she said.

Freeman faces eight charges involving money laundering, operation of an unauthorized money transfer operation and tax evasion. Freeman has blogged that he faces a maximum term of 70 years if convicted on all the charges.

His lawyer, veteran Concord defense attorney Mark Sisti, said the prosecution's case is "absolute nonsense."

Although the prosecution claims that Freeman laundered money from ill-gotten scams, no scammer will testify about laundering his proceeds through Freeman, Sisti said.

Sisti said he will push back on the victim testimony. For example, if Varel withdrew money from a bank, the bank should have reported the large transaction under one of the laws Freeman is accused of violating, Sisti said.

"That little old lady, what bank did she go to that was highly regulated? What bank did not see these red flags?" said Sisti, who hinted that the bank should be facing charges. "Shame on that bank president because that guy should be sitting next to me."

Trial only for Freeman

The trial comes more than 1 1/2 years after the FBI arrested Freeman and five other New Hampshire residents and charged them with financial crimes. Labeled the Crypto Six, they have launched a social media campaign.

Prosecutors have dropped all charges against one, and four others have pleaded guilty.

Freeman is the only one to go to trial. Several supporters appeared outside the federal courthouse on Tuesday, one dressed as a bitcoin symbol.

Inside the courthouse, many chose to sit in an overflow courtroom, where masks were not required. District Court Judge Joseph Laplante said masks will be worn for the trial unless all jurors agree they are not necessary.

The only people who will be unmasked are witnesses while giving testimony, lawyers who question them and Freeman, who has a medical waiver.

The trial is expected to last as long as three weeks, which means it could wrap up between the Christmas and New Year's holidays.

Several FBI, IRS and U.S. Postal Inspection Service agents are expected to testify for the prosecution, as well as Renee Spinella, one of the original Crypto Six.

Freeman's witness list includes about a dozen Keene-area residents, including state Rep. Matthew Santonastaso, R-Rindge, and Keith Murphy, the owner of Murphy's Taproom, which for years hosted Freeman's bitcoin kiosk machine.

Most of Tuesday was taken up with jury selection. An original pool was narrowed to about 40, who listened to questions by lawyers for both sides during the "voir dire" portion of the jury screening process.

Questioned about crypto

The trial comes as the national mood about cryptocurrency has soured with the implosion of the FTX crypto exchange.

Of the 40 potential jurors who made it to the voir dire stage of jury selection, only one had invested or purchased bitcoin, and she did not survive the final cut.

Others were excused because of answers to a lengthy questionnaire, which asked their thoughts about Free Keene, the Free State Project, cryptocurrency, the FBI and IRS.

A man who gave the first name of John said he lives in Swanzey and was familiar with the Free Keene movement and some basics about the case. Laplante excused him.

"Sometimes I think (Free Keene) is on the mark, other times I think they're three steps away from the loony bin," said John, who said he works as a sales associate for Home Depot.

During voir dire, when lawyers asked the pool of 40 jurors their thoughts about issues regarding the case, most signaled that they were familiar with cryptocurrency, but about a dozen said they wouldn't invest in cryptocurrency.

"I work too hard for my money to give it away," one man said. Others said they didn't understand it or didn't like the anonymous nature of the currency.

But Sisti stressed that people involved in crypto are not criminals.

"We're gonna be talking about this stuff every day," he said. "We're all going to learn a lot."

mhayward@unionleader.com