A dark web vendor and his supplier have faced formal charges in a U.S. court after prosecution learnt that the pair used darknet sites to trade in illicit substances and launder money.
According to a press release by the U.S. State Department of Justice, 44-year-old David Brian Pate, who holds dual citizenship for the U.S. and Costa Rica, was indicted along with the 38-year-old Costa Rican national Jose Luis Fung Hou by a federal grand jury in the District of Columbia.
The pair, who happen to be resident to Costa Rica, are alleged to have used darknet platforms to sell opioids until the police caught up with their activities through and investigations.
The two defendants have been subjected to a seven-count indictment with charges ranging from the conspiracy to distribute controlled drugs, illicit distribution of drugs, a conspiracy to import controlled drugs through affiliates, a money laundering conspiracy and laundering financial instruments.
Darknet Drug Sales and Crypto Money Laundering
According to court records, Pate ran an operation that involved the illicit purchase of narcotic drugs such as OxyContin and morphine from pharmacist Fung – his co-accused supplier based in Costa Rica.
Pate used a money laundering approach to submit payments to Fung in exchange for the drugs that would then be sold across numerous dark web sites. The suspect’s darknet customers, who browsed Silk Road and AlphaBay, would reportedly buy the drugs using Bitcoin.
Investigators discovered that the darknet vendor used various monikers such as “buyersclub” to operate on dark web marketplaces, online forums and crypto exchanges. Advertisements posted by Pate would indicate that he was selling the “old formula” of OxyContin that lacked tamoer-resistant elements.
Further, the indictment pointed out that the defendant’s dark web operation involved the shipment of bulk consignments of drugs in pill form from the Costa Rica-based supplier. The pills would be hidden in tourist items like maracas and sent to re-shippers on U.S. soil.
The suspect would then issue the co-conspirators with lists of customer orders, including names of interested buyers, their addresses and the quantities of drugs bought. It is reported that the re-shipper’s task was to repackage the drug shipments conveniently before sending to intended customers.
In the end, once the customers would confirm receipt of the goods, the dark web platform would release the money in cryptocurrency to hide the commercial trail that may be detected by law enforcement agencies.
Ideally, the funds were held in escrow before any transaction was complete, and the release of funds into Pate’s account in the darknet ecommerce site would take place to signal a successful drug sale.
The court indictment estimated that the total amount of funds received by the defendant in Bitcoin stood at 23,903 coins.
Uncle Sam’s Commitment to Fight Drugs
Commenting on the latest developments, Acting U.S. Attorney Michael Sherwin reflected on importance of the case in deterring the proliferation of criminal activities surrounding the illicit drug industry.
The official stated that the charges served as a warning to globally-placed drug traffickers who have long stayed clear of the law enforcement radar by U.S. authorities – thanks to the anonymity accorded to criminals by the dark web and cryptocurrencies.
Attorney Sherwin went on to voice the government’s commitment in the fight against the raging opioid crisis that has been fueled by organized criminal networks, including the federal ambition to dismantle the currently-existing cyber-enabled frameworks used by criminals to obscure their activities.
In addition, Jesse Fong, Special Agent in Charge of the U.S. Drug Enforcement Administration’s Washington Field Division shared his thoughts about the latest indictment. The agent cited the great demonstration provided by the case in proving the DEA’s anti-darknet successes against organized criminal activity.