Drug traffickers need reliable smartphone service, too, and Vancouver entrepreneur Vincent Ramos is accused of providing just that to criminal organizations around the world. These are no ordinary Blackberries. The guts of the phone that control everything from calls to photos to internet access have been replaced with a super encrypted messaging system, with signals routed through encrypted servers in Panama and elsewhere, all ensuring that the big-money business of drug trafficking can be done away from the prying eyes of law enforcement, according to investigators. Ramos, 40, founder and CEO of Phantom Secure, was arrested last week in Bellingham, Wash., on a San Diego warrant, and on Thursday a San Diego federal grand jury indicted him and four of his associates who remain fugitives, the U.S. Attorney’s Office said. The heavily redacted complaint unsealed in the case lays out an effort spanning the U.S., Canada and Australia to cut off drug organizations from their secure communication networks. Authorities in Panama, Hong Kong and Thailand also aided investigation efforts, officials said. The FBI believes there are 20,000 of these highly-encrypted devices in customers’ hands, helping the Canadian-based company generate about $80 million in revenue since 2008, according to the indictment. Half of those devices are said to be used by criminal organizations in Australia. In 2014, law enforcement there complained that biker gang use of the phones had thwarted their investigation into two killings. The powerful Mexican Sinaloa cartel also uses them, according to investigators. Ramos is charged with a racketeering conspiracy and conspiracy to aid and abet the distribution of drugs, and his company is accused of shielding its assets in shell companies and cryptocurrencies such as bitcoin. It is the first prosecution of its kind, the U.S. Attorney’s Office said. “The indictment of Vincent Ramos and his associates is a milestone against transnational crime,” FBI Director Christopher Wray said in a statement Thursday. Timothy O’Connor, executive director of the Criminal Investigations Division New South Wales Crime Commission, called the takedown “one of the most significant blows to organized crime in Australia.” In the past two weeks, about 250 agents around the world searched 25 homes and offices linked to Phantom Secure associates, including in Los Angeles, Miami and Las Vegas, prosecutors said Thursday. The operation led to the seizure of servers, phones, computers, drugs and weapons. Authorities also seized more than 150 domains used in the Phantom network by criminal organizations, as well as bank accounts and property in L.A. and Las Vegas, prosecutors said. In Australia, authorities executed 19 search warrants last week and seized more than 1,000 encrypted phones. The four associates indicted alongside Ramos in San Diego are Kim Augustus Rodd of Phuket, Thailand; Younces Nasri of Dubai, United Arab Emirates; and Michael Gamboa and Christopher Poquiz, both of Los Angeles. Phantom Secure openly advertises its encrypted wares and services, with a website that sells to “businesses and executives,” but investigators say not just anyone can get ahold of a Phantom Secure device. Current customers must vouch for new customers and then pass a background check, according to the complaint. Once a new customer is verified, the company then deals with the person anonymously through self-selected nicknames, according to the complaint. The handles give a glimpse into the niche industry: The.killa, narco, elchapo66, knee_capper, leadslinger. The modified Blackberry phones are put on encrypted networks based in Panama, Hong Kong and other countries viewed as being unfriendly to foreign authorities, and the servers are further cloaked in multiple layers of virtual proxy networks, authorities say. Adding to the security, Phantom phones only communicate with other Phantom phones on the network, although once in a while a user can request permission to communicate with another person on another encrypted network, a process called “white listing,” the complaint says. If a user is arrested, or one of the devices is compromised, then a request can be sent to Phantom Secure to have the phone wiped clean of information, the complaint says. A six-month service plan costs $2,000 to $3,000. Everything about Phantom phones seem designed to keep them out of law enforcement’s hands, but a few investigators have gotten hold of them. In fact, the complaint suggests law enforcement in Canada, Australia and the U.S. have been working to infiltrate Phantom phones in multiple drug investigations. One of those cases was based in San Diego. While the complaint does not name the organization or its leader, the details surrounding the investigation and arrests all point to a familiar figure: Owen Hanson. The former USC football player is serving a 21-year prison sentence for overseeing a gambling empire and drug-trafficking operation that imported, exported and distributed thousands of kilograms of cocaine, heroin, methamphetamine and ecstasy. Some drugs were destined for the U.S. and Canada, but he also had a booming business in Australia. The investigation, headed by the San Diego FBI, was wide-ranging, and Hanson’s downfall seemed to be clinched when an undercover agent infiltrated his inner circle. In the days leading up to his Sept. 9, 2015, arrest, Hanson negotiated a 5-kilogram cocaine deal with the agent and then sent an associate, Rufus Rhone, to make the delivery at a Del Mar hotel. A single kilogram of methamphetamine was also bargained for. The same details are referred to in the Phantom Secure complaint, and the drug negotiations were all made on Phantom phones, investigators say. The undercover agent was only able to get his own Phantom phone when Hanson — still unaware he was infiltrated — vouched for him to Phantom Secure. His organization used the encrypted devices for other transactions, including a 10-kilogram shipment of cocaine from the U.S. to Australia that was seized by Australian border authorities, and a coordinated shipment of 135 kilograms of cocaine from Los Angeles to Canada, investigators said. After Hanson’s arrest, Phantom tried to erase all data from the device but the attempt failed because the wipe command didn’t reach his phone. When Hanson — referred to in the complaint as an unnamed convicted transnational drug trafficker — was arrested, a man named Marc Emerson is alleged to have taken over the operation, according to the complaint. The FBI in LA seized Emerson’s Phantom phone in March 2017 after agents watched him load duffel bags filled with 194 kilograms of cocaine into a large truck, the complaint states. The truck driver warned that the device would be wiped clean if Emerson didn’t check in by a certain time, and within hours, it was, according to the complaint. Emerson died a few months later of a drug overdose, authorities said. Investigators worked to close in on Phantom Secure, with Royal Canadian Mounted Police posing as drug-trafficking customers. In one conversation, an officer asked if it was OK to speak about drug transactions explicitly on the phones, and a company representative assured him it was “totally fine” because the servers are based in Panama and “no one has access,” the complaint says. In another exchange, the undercover agent asked Phantom to delete data from a phone because an associate had been arrested and there’s “evidence” that needs to be gone. The representative agreed to wipe both devices clean, the complaint says. In February 2017, several undercover agents posing as high-level traffickers met with Ramos in Las Vegas, explaining they were expanding into South America and Europe. They spoke bluntly about their criminal enterprise and even indicated they would need GPS tracking in case they had to locate snitches to be murdered, according to the complaint. “Right, right, right, right,” Ramos responded, and later assured the devices cannot be hacked, the complaint says. The undercovers bought 10 devices from him and six-month subscriptions for $20,000, the document says. Last June, agents used a Phantom phone to communicate with a suspected Canadian trafficker nicknamed “The Goat,” leading to the arrest of Saysana Luangkhamdeng. U.S. Customs and Border Protection officers found 24 kilograms of ecstasy in a hidden rear compartment in his SUV as he tried to cross from Canada into Washington state. He has pleaded guilty.
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