Criminal ring used 'dark web' marketplaces to sell drugs, turn bitcoins into cash
The Phoenix-based drug ring that sold heroin, cocaine and methamphetamine on the “dark web” prided itself on customer satisfaction, speedy shipping and good online reviews.
In fact, the organization, which federal agents busted after monitoring online sales, making buys and intercepting packages shipped through the U.S. Postal Service from a Mesa business, was “attempting to be the ‘Amazon Marketplace’ for thousands of drug addicts and drug dealers across the country,” prosecutors said in federal court documents.
“The actions of this Arizona-based drug trafficking organization fueled the opioid epidemic in communities all over the United States,” prosecutors wrote.
A Tucson man and three others were recently sentenced in federal court to significant prison time for their roles in the organization, which used the secretive dark web, or “darknet,” to advertise and sell potent forms of the illegal drugs from about mid-2015 to March 2017. Prosecutors noted that some of the drugs confiscated tested at 99% pure.
Kevin Dean McCoy, who maintained he was just a computer nerd for the drug ring, was described by prosecutors as one of its co-leaders who provided “technical expertise” in the sophisticated enterprise along with Silvester Ruelas, a Peoria father of six and former Firestone Tire mechanic.
Together, court documents show, they created a high-tech drug operation using dark-web “marketplaces” to advertise their drugs, encrypted their communications, used the Postal Service to deliver the drugs and received payment in the form of digital currency called bitcoin, which allowed for anonymous purchases. The ring then sold the bitcoin online for cash deposits into their banks, using fake business accounts set up specifically for the drug proceeds.
“Our goal was to be efficient, make more money and grow the ... drug-trafficking organization, McCoy said in documents filed as part of his plea agreement.
McCoy, 28, was sentenced last month to 15 years in prison — prosecutors argued for a life sentence — after pleading guilty to conspiracy to distribute controlled substances and laundering proceeds from drug distributions, according to the U.S. District Attorney’s Office in Arizona, which prosecuted the case.
McCoy, who attended Arizona State University while also working as a mechanic to support his family, admits “he was the one who maintained the darknet vendor page, and he was the one responsible for liquidating the cryptocurrency drug proceeds. He provided the technical expertise that allowed this organization to frustrate law enforcement efforts and gave them the technology to market and distribute drugs all across the United States,” prosecutors said in court documents.
Prosecutors said that once a purchase order was made, the ring would package the drugs for shipment primarily at a business in Mesa, VIP Motorsports, which bought auctioned vehicles and resold them. The drugs were placed in Postal Service packages and sent through the mail. The business was used by Ruelas, who worked fixing vehicles, but became a central hub for the drug operation, authorities said.
How much money the ring made was not clear, but documents show it was profitable. Agents seized gold, platinum and silver bars, at least $15,000 in a bank account, high-end watches and jewelry, including a Seattle Seahawks Super Bowl ring, numerous firearms, computers and a Lincoln Navigator. When federal agents raided Ruelas’ home in Peoria in March 2017, they seized nearly 1½ pounds of heroin from his daughter’s bedroom. Nearby were a .50-caliber sniper rifle, Uzi submachine gun, an AK-47 rifle, a Mossberg shotgun, and numerous other firearms and ammunition.
Ruelas was given a 20-year prison sentence, with prosecutors seeking a life term. Amber Worrell, described in court documents as McCoy’s girlfriend, received 10 years in prison, and Peggy Gomez, who was described as the person who opened fake bank accounts for the ring, received a five-year sentence.
“Hiding behind computer keyboards and using our mail system to move their drugs will not shield them from lengthy prison sentences,” said U.S. Attorney Michael Bailey in a new release.
Ruelas and McCoy met at a Firestone repair shop where they worked as mechanics. McCoy’s attorney said in a court document that Ruelas learned McCoy was buying illegal drugs online and asked him to sell some drugs for him. Eventually, Ruelas had McCoy set up an online account to allow Ruelas to sell meth online, according to documents filed by McCoy’s attorney.
Both men, in letters to the judge seeking sentencing leniency, said work-related injuries led them to the drug trafficking business. McCoy claimed he was injured and couldn’t work for a while, got hooked on his medications and hung around “the wrong crowd.” Ruelas said he was brought up in a religious family and worked hard to support his children. He said he suffered a severe head injury on the job and couldn’t work. He said he began selling drugs to supplement his income from fixing up old cars.
Ledgers seized from the group showed shipments of drugs to Arkansas, Illinois, Massachusetts, Missouri, Montana, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Texas, Washington and West Virginia. Parcels containing drugs were also seized on their way to Florida, Georgia, Kansas, Minnesota, Missouri, Nevada, New York, Oregon, and Pennsylvania.
“I would follow-up on the Darknet marketplaces to ensure customers were satisfied, had positive feedback and actually received the ordered drugs,” McCoy said in his plea agreement. “If parcels were not successfully delivered to the recipients/purchasers, we would refill the order.”
Web pages displaying the group’s product look like any other legitimate online marketplace site with product listings, photographs of the products, prices and shipping details. Customers were invited to leave good feedback. One photograph showed meth crystals and powder arranged in the shape of a smiley face with McCoy’s account name written on a piece of paper.
“Fast shipping. Good quality,” one person wrote. “Always perfect,” another customer wrote. “Great! Quality product, excellent stealth, FANTASTIC SHIPPING! My steady Vendor from now on!” chimed another purchaser. Some reviewers, however, complained they didn’t receive as much of the drugs as they ordered: “Product was great quality, but 0.2g short,” one wrote.
Prosecutors called the customer feedback “sickening.”
The anonymity of the dark web, which requires specialized software to access, allowed the buyers to purchase the drugs in secret.
What the drug suppliers didn’t know is that federal agents made several undercover purchases of drugs from the organization’s dark-web marketplace, as well as intercepting 32 parcels sent by the drug ring that contained heroin, meth or cocaine. Agents seized a total of 11 grams of cocaine, 120 grams of heroin and 23 grams of meth from the interdicted parcels, documents state.
The amount of drugs sold by the ring was also not clear. Court documents state the ring sold over a two-year period at least 11 pounds of heroin, 7 pounds of meth and 3 pounds of cocaine.
“Drug traffickers using the dark web feel a sense of security with the anonymity to sell their poisons throughout the world,” said Doug Coleman, special agent in charge of the Drug Enforcement Administration in Arizona. “This investigation clearly demonstrates they aren’t safe, they aren’t anonymous, and they can’t evade justice.”
The investigation was conducted by the DEA, Homeland Security Investigations, Internal Revenue Service and the U.S. Postal Inspection Service, with assistance from the Scottsdale, Mesa and Peoria police departments.
Attorneys for McCoy and Ruelas either could not be reached for comment or would not comment.
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