The use of technology in criminal enterprises has become commonplace. It has been linked to white collar crimes, tax evasion, and most recently (in Manhattan), drug trafficking and money laundering. Forty-four year old Chester Anderson, along with his two co-conspirators, were indicted for operating storefronts on the ‘dark web’ which sold counterfeit drugs and other substances to individuals in 43 states.
They laundered the proceeds – nearly $2.3 million in cryptocurrency – by using debit cards and withdrawing cash from ATM’s throughout the metropolitan area. According to the press release, the Manhattan DA’s investigators made multiple undercover transactions in cryptocurrency. They were able to execute search warrants on the properties owned by defendants in New Jersey.
As a result, they seized nearly half a million pills – the biggest seizure of pills in the history of the state of New Jersey, with a street value of around $4 million. They also seized thousands of dollars’ worth of cryptocurrency. The investigation was triggered by a low-level staffer noticing unusually high levels of activity with ATMs in both New York and New Jersey in 2017. The D.A’s office was able to utilize a new Cyber Lab to trace the money, and also counts as the first time New York state prosecutors have been able to remove a storefront on the dark web.
Anderson used a screen name ‘sinmed’ to sell various kinds of drugs to buyers across the country on the dark web. His co-conspirators were used primarily to manufacture the pills and find equipment. They purchased industrial power mixers, pill presses and dies which would imprint pills with brand names (like Xanax).
Their equipment could produce 16,000 pills per hour. At least 1,000 packages had been shipped by the defendant from New Jersey, and over 8,000 pills had been seized through interception of some of these packages. The packages used incorrect return addresses that referred to Manhattan-based businesses, such as a real estate agency and multiple law firms. All activity was run out of a cell phone store owned by one of the defendants in Asbury Park, New Jersey.
To hide the operation, the defendants used a shell company to buy the primary ingredient used to manufacture pharmaceutical pills from China. Using the $2.3 million in proceeds, they were able to withdraw over $1 million in cash from ATMs. The lead defendant has been charged with Money Laundering in the First Degree, Identity Theft in the First Degree, and Criminal Sale of a Controlled Substance in the Fourth and Fifth degrees, as well as two counts of conspiracy. If convicted of the class B felony (money laundering), a non-violent offense, the defendant faces anywhere from one to twenty-five years in prison. Bail has been set for Mr. Anderson at $1 million, and $500,000.00 for the other two defendants.
The dark web is a portion of the internet which can be accessed only by using cyber tools like the Tor Browser, which provides anonymity. Purchases can be made online for various items – drugs, guns, sex – using cryptocurrency. The DA’s office in Manhattan has invested significant money and resources into its own cybercrime investigatory arm. This is just the latest in what will likely be continued prosecutions for activities on the dark web.