Penissmith, a former moderator of Alphabay Market, pleaded guilty to conspiring to engage in a racketeer influenced corrupt organization. He settled more than 20,000 disputes as a moderator and received four Bitcoins every week in exchange for his services.
Bryan Connor Herrell, 25, pleaded guilty to one count of conspiring to engage in a racketeer influenced corrupt organization in connection with his role as a member of Alphabay’s “Scamwatch” team and later as a dispute moderator. Under the names “Penissmith” and “Botah,” Herrell moderated more than 20,000 transactions between vendors and their customers, making him a party to more than 20,000 transactions on the marketplace in the eyes of a grand jury in December 2017. The United States Attorneys Office for the Eastern District of California unveiled the indictment in June 2019.According to court documents, Herrell acted as a member of Alphabay's "Scamwatch" from between August 2015 through on or about December 2015.
The ALPHABAY ORGANIZATION employed ' ‘scam watchers” responsible for monitoring and quashing phishing attempts and other scams being carried out on the AlphaBay online platform.
From on or about August 2015 through on or about December 2015, defendant HERRELL served as a scam watcher, as described above, for which he was paid in Bitcoin. Defendant HERRELL used the moniker “PENISSMITH” to conduct this activity.
And from May 2016 through July 2017, Herrell acted as one of the primary dispute moderators on the marketplace, settling thousands of disputes. According to the indictment, the majority of the members of Alphabay staff worked as dispute moderators. Of the “6 - 8” individuals involved in Alphabay, five worked as moderators. Herrell, acting as Penissmith, Cooked and Botoh, worked alongside Raspi, Disc0, Russ0, and BigMuscles.
As a Moderator (as discussed above), HERRELL adjudicated disputes between buyers and vendors on AlphaBay. As a Moderator, Penissmith/Botah was paid four bitcoins per week for his assistance in administrating aspects of AlphaBay, had full visibility and awareness of the criminal activities conducted on the website, and in many instances directly facilitated these criminal activities through his moderation of disputes.
Records seized from computers owned by alleged Alphabay administrator Alexandre Cazes provided investigators with information about the disputes settled by Penissmith. The indictment included the categories of the disputes involving Penissmith. The indictment only includes the data for 11,142 disputes instead of the complete 20,000 referenced by U.S. Attorney McGregor W. Scott in the recent announcement.
|Category||No. Of Disputes Moderated|
|Fentanyl and RCs||468|
|Buds & Flowers \[marijuana\]||3,451|
|Edibles \[mariuana based\]||761|
Prosecutors need to prove an enterprise displayed a “pattern of racketeering activity.” The law defines 35 offenses as racketeering activity, including terrorism, drug trafficking, money laundering, wire fraud, and kidnapping. RICO charges require two predicate offenses. According to prosecutors, Alphabay met the predicate requirement under the following indictable offenses:
- fraud in connection with identification documents
- fraud in connection with access devices
- money laundering
- multiple offenses involving narcotics trafficking
- drug trafficking, use of a communication facility, and conspiracy
Although RICO laws cover drug trafficking, large-scale drug trafficking organizations are usually usually prosecuted under the so-called “Kingpin Statute” (Continuing Criminal Enterprise Statute). The Kingpin Statute is effectively the narcotics equivalent to the RICO Act. The RICO Act, however, includes a wider range of crimes traditionally associated with racketeering as well as violations of the Controlled Substances Act. One major difference between the two laws is the sentencing guidelines. The Kingpin State penalty is a mandatory minimum of 20 years imprisonment with a maximum of life imprisonment. RICO comes with a maximum statutory penalty of 20 years in prison. (For reference, Ross Ulbricht is serving two life sentences under the Kingpin Statute for his role as the owner of Silk Road.)
On May 18, a judge will sentence Herrell to a maximum penalty of 20 years imprisonment.
Herrell, as a part of the plea agreement, has agreed to forfeit
- An assortment of counterfeit “Magic: The Gathering” and sports collectible cards;
- Approximately $745.00 in U.S. Currency;
- 139 gold coins, one ounce each;
- 8 silver dollar coins, one ounce each;
- One $1 ,000 bill encased in hard plastic;
- One German August Schwer Cuckoo Clock