Narcotics & Money Laundering: Dark Web Vendor & Pharmacist Duo Indicted

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A duo from Costa Rica of U.S. had been indicted by a grand jury (feds) in the District of Columbia owing to narcotics sales or illicit sales of the opioids on the dark web. The defendants have been identified as David Brian Pate aged 44 years and Jose Luis Fung Hou aged 38 years. Both of them are Costa Rican citizen and indicted with the counts of conspiring with the persons for import and distribution of controlled substances (narcotics sales), money laundering conspiracy along with the laundering of monetary instruments.

Some Insights On The Case From Law Enforcement Authorities

“As alleged in the indictment, the defendants helped fuel our deadly opioid drug epidemic by hiding behind the darknet and cryptocurrency to profit from the sale of illicit opioids into the United States,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Fortunately, by working with our law enforcement partners across the United States and overseas, we were able to uncover this darknet opioid market and bring to justice those responsible.”

“These charges are a warning to drug traffickers worldwide that neither the shroud of the darknet or of virtual currency can hide their illegal activities from the vigilance of U.S. law enforcement,” said Acting U.S. Attorney Michael Sherwin for the District of Columbia.  “We are firmly committed to combatting the problem of opioid abuse and breaking through sophisticated cyber-enabled barriers employed by criminals to hide their activities.”

“The opioid epidemic is a crisis crippling many families in this country,” said Special Agent in Charge Kelly R. Jackson of the IRS Criminal Investigation (CI) Washington D.C. Field Office.  “This international group profited off of people’s addictions, revictimizing them when they were already vulnerable. This group purposely distributed opioids that did not contain a safety additive and prevented inhalation of the drug.  Years ago when drug dealers and traffickers moved to the darknet and started using virtual currency to conceal and expand their network, CI also moved our playing field to the darknet to bring groups like this to justice.”

“Today’s case is a great example of how the DEA has infiltrated the darknet and, together with our law enforcement partners, proven that every criminal attempting to sell these deadly drugs is within the reach of the law,” said Special Agent in Charge Jesse R. Fong of the U.S. Drug Enforcement Administration’s (DEA) Washington Field Division.

How Did They Carry On The Narcotics Sales?

The indictment has alleged that one of the defenders, David Brian Pate has illicitly involved in the purchase of narcotics that includes OxyContin and morphine pills from Jose Luis Fung Hou, a pharmacist residing in Costa Rica and also participated in narcotics sales along with money laundering. The indictment states that Pate had laundered the payments to Fung in the bid to purchase narcotics. Then Pate sold all of these acquired narcotics on various dark markets that even included some prominent dark web marketplaces such as AlphaBay and Silk Road. The narcotics sales have been conducted in exchange for Bitcoin cryptocurrency. Pate has also utilized several online monikers such as online forums, “buyersclub” on the darknet markets and Bitcoin exchanges. The accused has also advertised of him selling the “old formula” of the OxyContin drug that did not contain tamper-resistant features like “crush-proof” feature preventing the users from inhaling or injecting the OxyContin pills after pulverizing them.

narcotics-sale
Image: The Verge

The indictment has further alleged that the darknet sale that Pate frequently carried out involved him in the sending of bulk narcotics shipment in the form of pills from Costa Rica owing to narcotics sales. The deliveries are often concealed in the tourist souvenirs like maracas, conspirator re-shippers in the U.S. Following this, Pate would send the re-shippers a list of the customer orders that are inclusive of the customers’ details – name, shipping address and quantity of pills purchased. After receiving this, the re-shippers created smaller pills packages that they mailed to the customers. As soon as the customers received the shipments, the dark web market would release the funds in Bitcoin to Pate’s account on the dark markets that was until then held in the escrow till the completion of the transaction. Pate has received over 23,903 Bitcoins till date for all of these darknet market sales. The co-conspirators have also laundered payments in the form of international wire transfers and Bitcoin transactions.

MarketBitcoin Received
Agora62.251352
Silk Road191.675684
AlphaBay1,077.18
Nucleus26.692179
Abraxas173.020268
Dream3,787,112
Middle Earth191.675684
Total23.903.281872

The Charges & Other Information

The charges of money laundering and purchase and narcotics sales mentioned in the pleadings are solely allegations. At the same time, the defendant is presumed to be innocent until the guilty beyond the reasonable doubt is proven in the court of law.

The case has been investigated by the U.S. Postal Inspection Service (USPIS) and the IRS-CI Cyber Crimes Unit, DEA. The assistance has been provided by The Justice Department’s Office of International Affairs and Costa Rican authorities. Currently, Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section, Assistant U.S. Attorneys Zia M. Faruqui and Laura Crane of the U.S. Attorney’s Office for the District of Columbia, Paralegal Specialist Brian Rickers and Teesha Tobias, and Legal Assistant Jessica McCormick are handling the case. Former Assistant U.S. Attorneys Youli Lee and Kara Traster, and Paralegal Specialist Toni Anne Donato have been providing the additional assistance.

Source: DOJ


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