World leader in organized crime communications was launched in Canada
A Vancouver company, called Phantom Secure, a little over a year ago, was the world leader in providing illegal encrypted communication services for the top international drug traffickers in the world.
But perhaps no more. On March 8, 2018, the CEO of Phantom Secure, a Vancouver resident named Vincent Ramos, was arrested in San Diego and charged by the US government with orchestrating and planning racketeering activities including money laundering, illegal gambling and drug trafficking during a ten year period from his office in Vancouver.
Phantom Secure provided Blackberry devices and an encrypted service to the top echelons of transnational organized crime and terrorist organizations to allow them to conduct drug trafficking activities undetected around the world. It did so by using multiple VPNs with servers in Panama and by custom managing the entire communication chain for gangsters. For example, it could remotely wipe data from Blackberry devices on behalf of gangsters if they were arrested or compromised. Technology wise, Phantom Secure re-configured Blackberry devices to limit their functionality so that they could only be used for limited functions and therefore, they could control the communications and ensure access to law enforcement was restricted by encryption.
According to Ramos, Panama was selected because “it does not help other countries with investigations and does not recognize tax evasion as a crime.”
A person could join the Vancouver-based Phantom network only if a cartel member or high-level member of organized crime referred them to Ramos. It would appear that most of the communications and network services were provided to the Mexican cartel, or their affiliates, to allow the movement of illegal drugs globally.
El Chapo, The Killer, The Narco
The Blackberry devices provided to organized crime were connected to domains owned by Phantom and consistent with the type of clientele the Vancouver-based enterprise catered to, its customers were given handles to communicate reflective of their organized criminal activities, such as:
- ElChapo@lockedpgp.com – El Chapo
- TheCartel@freedomsecure.me – The Cartel
- Narco@lockedpgp.com – Narco
- KneeCapper@lockedpgp.com – Knee Capper
- LeadSlinger@freedomsecure.me – Lead Slinger
- TheKilla@freedomsecure.me – The Killer
There were 20,000 devices connected to the Vancouver based Phantom Secure network, and according to the FBI, not one device was ever used for non-criminal purposes.
Bitcoin as the preferred payment method
In order to receive payments from organized crime anonymously, among other payment methods, Ramos received Bitcoin and operated through a series of shell companies.
In 2015, the RCMP managed to successfully infiltrate Phantom Secure, acquire several devices and subscribe to the service, posing as drug traffickers.
Ramos, at one point, informed a user that he built the Phantom technology system specifically for international drug trafficking.
And right in Vancouver.
Using the Phantom service, over the course of ten years, drug traffickers were able to move drugs from Mexico into the US, Canada and to Australia. Ramos was investigated, arrested and indicted with the assistance of the FBI, RCMP, Australian police and several others. But not in Canada – he was indicted and prosecuted in the US.
$80 million in proceeds of crime forfeited
In October 2018, Ramos pleaded guilty to conspiracy in California to conducting a criminal enterprise and admitted he assisted drug traffickers to traffic and distribute drugs around the world. On his own encrypted device he texted: “We are fucking rich man…Sinaloa cartel, that’s what’s up.”
He agreed to forfeit US$80 million in proceeds of crime to the US government as part of his plea agreement. He has assets that include Bitcoin, Dash, Eth and XRP at nine different digital currency exchanges including Bittrex, Binance and Poloniex, a mansion at 83 Crescent Road in Vancouver, had a house at 9688 Seagrave Road, Richmond, BC and a condo in Las Vegas.
He has bank accounts at TD Bank and investments with TD Investments held in BC numbered companies, bank accounts at Coast Capital Savings ($142,000), BMO ($78,536), Bank of America ($95,000) and ScotiaBank. There are also bank accounts in Hong Kong, China, Ireland, Singapore and the United Arab Emirates. And cash at vaults in Beverly Hills and at JP Morgan Chase equal to over $300,000 and shares with Canaccord and other investment brokers.
A mere cellular service provider acquires unexplained wealth of US$101 million
That a mere cellular service provider acquired such vast wealth in Vancouver in a few years to the tune of US$101 million, so many bank accounts with so much cash and real estate properties with no actual legal job and no AML process that was activated, is surprising particularly since the service was featured on a national television newscast months before the take-down of Ramos.
This week, the US government filed an application in San Diego to seize all of the assets worldwide including in Vancouver, Canada where many of the assets are chilling – some of it parked in real estate in Vancouver, bought with proceeds of crime.
Thus far, no law enforcement action has been taken against the US and foreign digital currency exchanges that provided services to Phantom Secure in Canada, whether negligently or wittingly. Vancouver based cellular service providers do not make a profit of US$101 million and nothing about Phantom Secure’s services would have passed even the most basic AML due diligence at a financial institution or digital currency exchange.
Phantom Secure 2.0
It is possible that Ramos was not the key operative running Phantom Secure.
On Twitter and Instagram, Phantom Secure came back to life after the incarceration of Ramos. But who would have had access to their systems? The new Phantom Secure came back with a Bitcoin-only payment option. The company wrote on its Instagram account that because some users were associated with law enforcement and broke the “circle of trust”, the service was being re-booted. The hashtags #WeBack #BitcoinOnly #PhantomsBack #BackOnline were used. According to their Instagram account, you can enter the new circle of trust through the doorway of Bitcoin.
One post on Instagram reads: “The arc of technology is in the direction of unbreakable encryption, and no laws are going to get in the way of that reality.”
It appears that the law actually did get in the way, at least for Ramos.