By CCN: Callaway Crain and Mark Sanchez recently pleaded guilty to money laundering in New York. Investigators allege the pair earned close to $3 million selling steroids and controlled substances, mostly in bitcoin. They were first arrested almost exactly a year ago. $2.8 Million Over…
By CCN: Callaway Crain and Mark Sanchez recently pleaded guilty to money laundering in New York. Investigators allege the pair earned close to $3 million selling steroids and controlled substances, mostly in bitcoin. They were first arrested almost exactly a year ago.
Crain and Sanchez operated on the clear and dark webs and left New York in 2015 to continue their enterprise in Texas. The guilty plea gives them guaranteed sentences of no more than seven-and-a-half years but no less than two-and-a-half. Each is convicted of a second-degree money laundering and fifth-degree drug trafficking, both felonies.
According to a note on the Manhattan District Attorney’s page, the men manufactured the steroids themselves in private residences. They reportedly sold to at least one NFL player and a few other prominent people through a string of websites called “NextDayGear.” They even sold to police officers, according to the DA:
“The defendants purchased steroids, precursor chemicals, and other controlled substances wholesale from China and other countries. After obtaining the chemicals and substances, they mixed, pressed, and packaged them, often under brand names they created; advertised and sold them online; and shipped them to customers in all 50 states and sixteen countries. Their customers included a college football player, an NFL football player, a professional volleyball player, fitness trainers, police officers, members of the armed services deployed overseas, body builders, drug dealers, doctors, lawyers, and a high school athletic coach.”
The notice doesn’t name the exchange that the men used to convert from crypto to cash, but it does mention that they tried to tumble the coins in a rather lazy manner: they just hopped them to an intermediary wallet before depositing them on exchanges. There are professional coin-mixing services that might have been useful for a business like this, but they take time and cost money.
If customers chose not to pay in bitcoin, they could use Western Union, which the men would have sent to fake identities.
“Customers also made payments through Western Union. Those payments were laundered through the use of false identities, or through international wire transfers from foreign-based receivers.”
In total, “NextDayGear” moved 10,000 orders to 16 countries, though their business was primarily in the U.S. The DA says this is the first time they’ve had a money laundering conviction related to cryptocurrency in New York State, although the state has some of the most stringent crypto regulations on its books.
The announcement also mentions a pending case involving dark web seizures that may lead to more money laundering charges.
DA Cyrus Vance said:
“These defendants raked in crypto and cash worth millions on their full-service website that sold prescription-free counterfeit steroids and other controlled substances to customers in all 50 states. Online drug sellers who do business in New York should take note: whether you’re operating in plain sight or in hidden corners of the dark web, my Office has the skills and resources to follow the money, shut down your business, and hold you accountable.”
Although this is the first case prosecuted by local authorities, Crain and Sanchez are not the first New Yorkers to go down on money laundering charges related to cryptocurrency. Federal authorities charged Charlie Shrem with money laundering for knowingly handling funds for a Silk Road vendor, and he did some prison time as a result.
Last modified: January 10, 2020 2:44 PM UTC