Two Marijuana Dealers Sentenced for Laundering Bitcoin

A father and son were sentenced to five years in prison for marijuana distribution and money laundering.

U.S. District Judge John C. Coughenour sentenced Kenneth Warren Rhule (K. H. Rhule), 28, to five years in prison for conspiracy to manufacture and distribute marijuana and laundering monetary instruments. The judge sentenced Kenneth John Rule (K. J. Rhule), 47, to five years in prison for conspiracy to manufacture and distribute marijuana.

“Not only did this pair produce and distribute marijuana products on the dark web, in violation of the state’s regulatory scheme, they also illegally laundered immense amounts of bitcoin that their enterprise earned,” said U.S. Attorney Nick Brown. “When law enforcement moved in there were more than a dozen firearms – some loaded and ready to be used to protect their drug trade.”

A picture of Altogether, Rhule exchanged $142,000 worth of bitcoin for cash with the undercover agent.

Altogether, Rhule exchanged $142,000 worth of bitcoin for cash with the undercover agent.


In April 2018, federal investigators started meeting with the localbitcoins.com user “Gimacut93” to exchange cash for Bitcoin. “Through their conversations the undercover agent made it seem they were laundering money related to human trafficking activities,” according to the announcement from the U.S. Attorney’s Office for the Western District of Washington.

The criminal complaint detailed the investigation into the money laundering activities.

Investigators contacted Gimacut93 on localbitcoins.com and asked to meet to exchange $12,000 in cash for Bitcoin. Kenneth Warren Rhule met the undercover law enforcement officer at a Starbucks. While waiting for confirmations, K.W. Rhule told the undercover agent that he worked in the CBD industry, filling “5, 10, or 20,000-kilo orders.” He also told the agent that he was not charging a fee because he had a lot of Bitcoin he needed to move, and he usually needed to exchange $100,000 worth every month.

A picture of “CBD industry”

“CBD industry”

“In completing these transactions, the undercover agent represented the cash to be the proceeds of specified unlawful activity, as defined in 18 U.S.C. § 1956(c)(7), and K. W. Rhule acted with the intent to avoid a transaction reporting requirement under state or federal law, including those under the Bank Secrecy Act, 31 U.S.C. §§ 5313–26, and its implementing regulations. K. W. Rhule did not ask the undercover agent for any personally identifying information (such as full name, Social Security number, or taxpayer identification number) prior to, during, or after the transactions.”

At the next meeting, the undercover L.E.O. asked K. W. Rhule about anonymous transactions with cryptocurrency. The defendant then advised the L.E.O. to use Monero, Tails, and the Tor Browser. The L.E.O. told K. W. Rhule that he needed an anonymous way to accept payment from prostitutes in the Ukraine (this is what the press release described as “human trafficking”).

A picture of Investigators linked the company “HerbinArtisans” to the Rhule defendants.

Investigators linked the company “HerbinArtisans” to the Rhule defendants.

After exchanging more than $120,000 in Bitcoin with the feds, Gimacut93 stopped responding to their text messages and ignored them on LocalBitcoins.


The phone number K. W. Rhule had given the undercover fed through LocalBitcoins was the same phone number used by the Instagram account “HerbinArtisans.” Although the account is now private and does not mention cannabis sales, investigators believe that K. W. Rhule used to reach customers through the account. The description for the account previously included “Bitcoin and crypto-friendly. D.M. for inquiries.”

On February 10, 2015, K. W. Rhule registered for an enterprise
account with Google, using the domain name herbinartisans.com. The defendant used a herbinartisans.com email address with the HerbinArtisans Instagram account.

Investigators obtained access to the Google account. They examined emails sent by both Rhule defendants, incriminating pictures stored in Google Drive, and SMS conversations between the father and son.

Google Drive

The HerbinArtisans’ Google Drive also contained an organizational chart, created on January 18, 2016, which listed “Ken” as the “C.E.O.,” while “Kenny”—a name used by K. W. Rhule—was listed as the “C.O.O.” of the organization. Other individuals, also known to be associated with HerbinArtisans, were listed in subordinate roles with the titles “Garden
technician,” “Processing lead,” “Processor,” and “V.P.” on the same chart.

A picture of The organization chart stored in Google Drive identified the defendants.

The organization chart stored in Google Drive identified the defendants.

The defendants purchased a Cessna P210N, which they stored in Snohomish, Washington. The plea agreement indicates that the defendants used the plane to transport marijuana.

On April 24, 2015, K. J. Rhule texted K. W. Rhule, “Also, I have some KILLER deep web locations for selling…” Similarly, on May 16, 2015, K. J. Rhule texted K. W. Rhule, “Also, online deep web… Setup a couple order takers… The proceeds go into a bitcoin account we control… They send in the orders each day, we ship them, and we pay out the commission when the Bitcoin escrow is released…”

According to an Income Statement saved in the HerbinArtisans account, from 2015 until 2019, HerbinArtisans earned a “Total [Gross] Income” of $13,710,069.27 and a “Net Income” of $2,574,850.33.

Search Warrants

On March 10, 2020, law enforcement officers executed a search warrant at properties associated with the defendants, including a warehouse in Monroe, Washington.

A picture of The Monroe, Washington, warehouse used by the Rhule duo.

The Monroe, Washington, warehouse used by the Rhule duo.

“Inside a warehouse located on the property, agents found processing equipment and materials dedicated to the extraction and concentration of marijuana including: various types of industrial-grade machinery, steel tables, industrial amounts of dry ice, dry-ice storage bin coolers, metal cylinders of various sizes, flexible metal hoses, pressure cylinders, various pumps, industrial scales, stainless steel pressure cylinders, pressure covers, vacuum pumps, electric motors, a mini dryer, a terpene trap, tube racks, mixers, chemistry mixers, multiple ovens and drying racks containing marijuana distillate products.”

“agents also found approximately 29 large garbage bags filled with marijuana plant material and multiple glass jars containing refined marijuana distillate products. Agents further found a large rotary evaporator with multiple large glass flasks, a heavy-duty press, and a 50-gallon tank of pressurized butane.”

Law enforcement officers found approximately 1,000 kilograms of bulk marijuana or marijuana extracts, including packaging, when they executed search warrants in connection with this case in March 2020.

The Rhules made over $13 million in sales from marijuana distribution but netted only $2.5 million.

The federal government is very concerned that Washington state could not tax the defendants’ marijuana distribution operation.

“…[T]he state has set up a regulatory framework to serve many important purposes, including ensuring the safety of those who produce and consume marijuana products. The state is also, of course, entitled to tax the marijuana industry. Yet the defendants ignored all this. Perhaps, as is so often true in fraud cases, they were motivated by simple greed. But in running their business in this way, they put a lot of people at risk, and disadvantaged others in the industry who chose to play by the rules.”

Judge Coughenour justified the sentence by noting the size of the enterprise and the presence of firearms.

Father and son sentenced to prison for money laundering and illegal marijuana business | archive.is, archive.org, justice.gov

Complaint: pdf
plea: pdf
indictment: pdf

Do you really want to comment here? not rules
31269020 Wed, Jun 1, 2022

loose lips sink ships is the lesson I learned today

5932e5f0 Wed, Jun 1, 2022

What is the maximum safest amount of bitcoin to cash it (after using bitcoin tumbler)? or monero to cash?

e807cf90 Wed, Jun 1, 2022

Was this daballstars? 2018 and 2020 just now sentanced?

e7d27470 Wed, Jun 1, 2022

weed profit so tiny

f9c8acb0 Wed, Jun 1, 2022

Situational awareness and operational security was obviously weak in this tale. Damn that was an epic setup. Why not go legit quickly after starting up.. and guns. The guns aren’t necessary. Not if you stay low key and chill.

8b192760 Thu, Jun 2, 2022

what the fuck u smoking
u r doing it wrong

31b19bd0 Wed, Jun 1, 2022

Always do Monero to cash. Never meet anyone IRL. Never talk about your business with anyone.

d32d4d60 Thu, Jun 2, 2022

sometimes I’m about to do a lone wolf mass terrorist event, like derailing a nuclear refueling train in a heavily dense populated area with poor securit-a, and someone like u reminds me intelligent folk do actually exist, bravo

99f54e30 Wed, Jun 1, 2022

Q: Why dont we see articles about convictions of mute dealers?
A: Because they dont dont talk lol!!!

71868140 Thu, Jun 2, 2022

why the fuck would you give up so much sensitive ass information to a fucking stranger, in 2018 when its well known fucking feds be buying btc on there for cash and trying to trace it back or use it to investigate your ass for dark net drug activity.. i mean giving any single piece of information, let alone fucking honest accurate truths, to complete fucking strangers selling dirty btc to for large amounts of cash, in fucking person.. COME ON.. I get it tho that they prob felt so safe after operating a year or two no issues, they didnt think they were really even criminals, i mean its fucking pot, in 2018 era, fucking marijauna, on the west coast at that..

but come on if you have enough brain cells to pull that off and profit that much in that short time in the marijauna business you should have the brain cells to know its still fucking illegal especially at a federal level and to clean your shit the fuck up and have some tight ass OPSEC, and keep the fucking blickys far from product

b090a870 Thu, Jun 2, 2022

and 5 years is fucking bullshit for literally just marijauna, i get the guns are really what got them the time, they probably wouldve walked on probation, maybe a year or two max bc so much money, but the guns is what really got them fucking hit. dont fucking have blicks especially that many unless u know in ur heart ur gonna pull that trigger first off, and keep it far away from your fucking stash of product and money so it doesnt completely fuck you guns and drugs.. without the guns they wouldve been coolin

21346990 Thu, Jun 2, 2022

FUCK THESE aSSHOLES really piss me off all that fucking money made so easily so safely so harmessly no fucking victims and to be so sloppy and fucking stupid and involve the guns making it dumber and dumber fuck me i could really use 13 mil, fucking half a key rn and id be set vending a year or two retire and launder smart and clean keep my mouth shut no friends no bitch no family no nothin but flipping packs stacking cash ducking feds cleaning up retiring and getting far away… asswipes.

dc9b9250 Fri, Jun 3, 2022

Its almost like the international drug “war” is an endless game that plays into the hands of the establishment a/k/a global elites. ‘member folks it is preferred you drink yourself to death; you know like the pigs who troll DNL! I mean we can’t ALL beat our loved ones, roll a county vehicle x3 times @ 98 mph, while armed committing a felony DWI, get paid-time off and a promotion on the taxpayers dime! No its those in poverty pulling themselves up by their bootstraps, obviously. ‘member its preferred u wage-slave and or/die. The elite hate competition. By the Cuckhold’s horn, I denounce you!

18049bd0 Sun, Jun 5, 2022

A wise man once said nothing

39d7d700 Sun, Jun 5, 2022

^ Unless u monopolyOfficial then you leave a trail of evidence that was so idiotically easy to trace, that I thought I had impostor syndrome when I collected my bounty

0fad36c0 Tue, Jun 7, 2022

this really pisses me off. i mean its just weed cmon. FUCK THE FEDS

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