Two men from Cleveland, Ohio have been charged with possession, conspiracy, and intent to distribute illegal drugs through darknet markets. Nicholas Powell, 32, and Michael Gonzalez, 27, were both arrested in June and presented in court, charged by the Office of the Attorney for Northern District of Ohio.
The pair carried out their operations in Parma City; later, Powell moved out and made a new residence at Spring Hill in Florida, while Gonzalez remained in Parma. The drugs they dealt in included Xanax powder, marijuana, and other illegal drugs.
According to the court documents, Powell would market the drugs on darknet markets such as Silk Road 2, AlphaBay and Hansa under the titles TheSource, BCPHARMA, BnC, BonnienClyde and Money TS. Following the reception of orders, Powell would pass them on to Gonzalez who would supervise the weighing, packaging, and shipping of the drugs to their desired destination.
After that customers would send payments which would be converted into digital currencies such as Bitcoin and Ethereum. This money would be laundered by specialized money launderers to eliminate suspicions towards the activities of the duo.
The court documents also state that encrypted apps were used for communication between the duo. Their conspiracy yielded thousands of dollars between the year 2016 and the time of their arrest.
Investigations leading to the arrest of the two began after an operation under the U.S. Justice Department was launched in June in New York targeting illegal drug vendors who carry out their businesses on dark web platforms, especially those dealing in drugs, guns, and other illegal items. A total of 65 targets were followed through by 100 enforcement agencies nationwide.
During the operation, agents from the Homeland Security Department went undercover as money launderers. This attracted dark web vendors into their trap as they sought to clean their money by exchanging the United States currency for cryptocurrencies.
The operation that went on for a year led to the arrest of more than 35 people in Parma including Powell and Gonzalez. A news report also states that more than 90 cases were opened countrywide against dark web vendors.
The investigations involved 70 search warrants during which a number of illegal items were seized. These included 333 containers of synthetic opioids in liquid form, fentanyl, a little over 24g of Xanax powder, ecstasy, oxycodone, LSD, MDMA, cocaine, more than 100,000 pills of tramadol and a mushroom plant grown for psychedelic reasons in the culprits’ residence as stated by prosecutors.
Officials also stated that the search also led to the recovery of about $3.6 million in cash, gold bars, about 2,000 digital currencies valued greater than $20 million, firearms which included guns, grenades, and rifles, computers, Bitcoin mining devices, 5 vehicles purchased with illegal proceeds and used for criminal activity, vacuum sealers, and pill presses.
Criminal complaints reveal that Gonzalez would receive money via mail on behalf of his accomplice. The operation led to the confiscation of $438,000 in the form of virtual currencies from Powell which he declined to use claiming it was dirty money and that it would criminalize him if spent.
During an interview by Homeland agents, Powell admitted to having dealt Chinese steroids and marijuana which he arranged to have delivered to his customers directly from China. He also disclosed that at a given point in time he would send between $10,000 and $40,000 to a money launderer to mask the true source of his money.
Gonzalez was also interviewed in March, during which time he revealed that he did work with Powell. However, their work relationship was terminated because Gonzalez ran out of 500g of Xanax powder. He also admitted to having made some thousands of dollars during the business period.
Powell was charged with two counts for the conspiracy to distribute drugs, the actual distribution of drugs, advertising drugs on the darknet, and conspiracy to launder money. Gonzalez, on the other hand, is accused of a single count of drug conspiracy.
Their case is assigned to U.S. District Judge Christopher Boyko. Powell appeared in a federal court in Tampa and was afterward taken into custody of U.S. Marshals Service in Cleveland while Gonzalez was set free on bond.