State seizes €530k from firm that sold smartphones to drugs gangs

CAB granted court order after FBI tip-off on company that remotely wiped seized devices

 

More than half a million euro seized from the Irish operation of an international company that created ultra-secure smartphones for some of the world’s most notorious criminals has been handed over to the State.

Canadian-based Phantom Secure made tens of millions of dollars hacking and modifying Blackberry devices, which were then sold on to crime and drugs gangs, including the infamous Sinaloa Cartel, so they could evade the law.

Cameras were removed, GPS and internet tracking was disabled and the phones were locked into encrypted messaging channels, routed to virtual servers in Panama and Hong Kong, keeping suspect communications out of reach of police worldwide.

Phantom Secure would also remotely “wipe” devices that were seized by law enforcement agencies.

The Criminal Assets Agency (CAB) was granted a High Court order on Tuesday allowing for more than €530,000 held in accounts with Allied Irish Bank and linked to Phantom Secure to be transferred to the public purse.

Two accounts were frozen in March after CAB, acting on a tip-off from the FBI, raided the offices of Phantom Secure Technology, on Dublin’s Ormond Quay, which was set up in Ireland in 2011 as a subsidiary of Phantom Secure.

The High Court application was made under Section 3, 4A and 7 of the Proceeds of Crime Act, 1996, before Ms Justice Carmel Stewart and with the agreement of the respondent Vincent Ramos.

Ramos, chief executive of Phantom Secure and a director of its Irish subsidiary, pleaded guilty in October in the US to leading a criminal enterprise that facilitated international drug traffickers through “the sale and service of encrypted communications devices”.

It is the first time US authorities have targeted a company for knowingly making encrypted technology for criminals.

As part of a plea agreement, Ramos admitted that he and others facilitated the distribution of cocaine, heroin and methamphetamine around the globe, including in the US, Australia, Mexico, Canada, Thailand and Europe.

He is to be sentenced on December 17th. US attorney Adam Braverman said Ramos faces a “significant” time in jail.

A number of his co-defendants “remain international fugitives, charged with participating in and aiding and abetting a racketeering enterprise and conspiring to import and distribute controlled substances around the world”, according to the US Department of Justice.

Criminals paid up to $3,000 (€2,600) every six months for a subscription to the Phantom Secure encrypted smartphone service.

To become a customer, an existing client had to provide a “personal reference” vouching for the new person.

US authorities say the system was designed to prevent law enforcement agencies from getting hold of the devices.

It was estimated earlier this year that as many as 20,000 handsets modified by the company were in use around the world.

Ramos also used digital currencies such as bitcoin to hide the identities of customers when making financial transactions, as well as for laundering proceeds from Phantom Secure.

Under his guilty plea, he agreed to an $80 million forfeiture money judgment as well as the forfeiture of tens of millions of dollars in identified assets, including bank accounts around the world, houses, a Lamborghini, cryptocurrency accounts and gold coins.

Ramos also agreed to forfeit the server licences and more than 150 domains which were being used to operate the infrastructure of the Phantom Secure network, enabling it to send and receive encrypted messages for criminals.