A Colorado judge sentenced a cocaine vendor to 66 months imprisonment for selling almost 50 kilograms of cocaine to his customers on a darkweb market. The vendor had also committed aggravated identity theft and money laundering, according to a press release from the Department of Justice.
Between April 2018 and September 2018, Timothy Howell and Cavin Mower distributed almost 50 kilograms of cocaine to buyers throughout the United States. During this time, the duo purchased kilogram-quantities of cocaine from a different cocaine vendor on the darkweb and resold it through their own vendor accounts.
Their customers paid for cocaine using Bitcoin, according to the press release. Howell and Mower then attempted to exchange the Bitcoin for clean fiat. The press release described two methods used by the defendants to launder the proceeds of the drug distribution conspiracy:
Howell and Mower laundered the bitcoin proceeds in primarily two ways. First, they used a website that allowed them to purchase gift cards that could be used to buy goods and services. Second, they exchanged bitcoin for cash using the services of an international money transfer company.
According to the Preliminary Order of Forfeiture:
[The] defendants laundered the bitcoin they received from their drug customers by purchasing gift cards through gyft.com using bitcoin, or exchanging bitcoin for cash using MoneyGram.
The United States did not pursue the cryptocurrency owned by Howell since the seized cryptocurrency was administratively forfeited by the United States Postal Inspection Service.
A US Forfeiture notification from 2018 contained a list of the values of the Bitcoin seized from Howell and Mower:
- 4.667127 BTC valued at $31,255.13;
- 1.20789 BTC valued at $9,010.51;
- 0.0334 BTC valued at $246.58;
- 0.38153 BTC valued at $2,640.19;
- 0.645087 BTC valued at $4,237.60;
- 0.36636 BTC valued at $2,373.99;
- 0.34417 BTC valued at $2,213.98;
- 0.57089 BTC valued at $3,626.33;
- 0.58881 BTC, valued at $3,514.22.
“Narcotics trafficking and money laundering through the dark web are an ever increasing method for criminal organizations,” said IRS Special Agent in Charge Andy Tsui. “Special Agents with IRS-Criminal Investigation are highly adept at disrupting the illegal financial activities individuals try to conceal through the dark web and will continue to work diligently to stop these criminals in their cyber tracks.”
Howell had also committed aggravated identity theft. According to the criminal information sheet, “Howell stole the identity of another person and used it to, among other things, gain access to a TSA-controlled area of an international airport to board a flight to Denver.” Mower, who received a 50 month prison sentence in September, caught only the money laundering charge and the distribution charge. Howell, the most recently sentenced defendant, pleaded guilty to all three charges.
Court documents hinted at the complexity of the case:
The Indictment in this case follows a year-long investigation into a complex drug trafficking and money laundering organization. The defendants are charged with participating in a long-running, wide-ranging conspiracy to sell narcotics on the darknet and launder the proceeds of those drug transactions using cryptocurrency. On the day of the defendants’ arrests, the Government executed four search warrants across two different states, including warrants on digital devices, a vehicle, a residence, and a storage locker. During the course of the investigation, the Government executed numerous other search warrants, collecting digital and physical evidence as a result. In particular, the computers, thumb drives, phones, and other digital devices collected via search warrant contain voluminous data in different formats across different operating systems. The first wave of discovery provided to the defense consists of a thumb drive containing voluminous material. The index for the thumb drive alone is 43 pages long with hundreds of entries contained on it. In addition, due to the nature this case and the Governments belief these defendants were operating in the “dark web”, it is likely the defense will need to retain the services of a computer expert to assist in reviewing and understanding portions of the discovery, which will take additional time.
The majority of the informative documents are under a level 2 or level 3 restriction, meaning access is limited. Details of the investigation are currently inaccessible by the general public.
“Drug dealers believe advances in technology can hide their illicit dealings in the dark web and by using cryptocurrency to further their criminal activity,” said Steven Cagen, Special Agent in Charge, HSI Denver. “Today’s sentencing sends a warning to criminals that no matter how sophisticated they believe they are, we will find them and bring them to justice, and they can’t hide from us online.”
Mower was sentenced on September 5, 2019,to 50 months imprisonment and 3 years of supervised release. Howell was sentenced to 66 months imprisonment and 4 years of supervised release on November 22, 2019.
The Denver Digital Currency and Darknet Working Group led this investigation as well as the investigation that led to the arrest of the leader of the ItalianMafiaBrussels drug trafficking organization.