FBI arrests CEO who allegedly sold modded phones to criminals

By midian182 · 28 replies
Mar 11, 2018
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  1. Custom encrypted phones have long been used by criminal gangs as a way for members to securely communicate with each other, but law enforcement agencies are cracking down on companies that provide them. One of the most well-established sellers of the these modded Android and BlackBerry devices, Phantom Secure, has just seen its owner arrested by the FBI for allegedly helping criminal organizations that include the Sinaloa drug cartel.

    As reported by Motherboard, founder and CEO of Canada-based firm Phantom, Vincent Ramos, has been charged with racketeering, conspiracy to conduct enterprise affairs, conspiracy to distribute narcotics, and aiding and abetting. The complaint alleges that the company was created specifically to aid criminals and that the “upper echelon members” of infamous groups including the Sinaloa cartel—a drug trafficking, money laundering, and organized crime syndicate—bought the phones.

    The complaint says that Phantom removes the microphone, camera, GPS navigation, internet browsing, and normal messaging services from devices before selling them. It also uses Pretty Good Privacy (PGP) encryption software to keep criminals’ conversations secure. FBI Special Agent Nicholas Cheviron believes there are 20,000 Phantom phones in use around the world, half of which are in Australia, earning tens of millions of dollars for the company.

    Uncover agents reportedly asked Phantom if they could use its phones to securely send messages such as “sending MDMA to Montreal.” The company said it was “totally fine.” Most damning of all, Ramos is said to have told the sting operation’s agents: “We made it—we made it specifically for this [drug trafficking] too.” Furthermore, a convicted member of the Sinaloa cartel said the gang bought Phantom’s phones "specifically" for drug trafficking purposes, which led to the aiding and abetting charge.

    An FBI spokesperson and Ramos’ lawyer declined to comment.

    There are still plenty of companies that sell encrypted phones under the guise of offering extra security for individuals and companies who require it, when in reality their primary customers are gang members. But this latest incident shows that law enforcement is pushing back against those who knowingly enable crimes.

    Permalink to story.

  2. mattsie

    mattsie TS Member Posts: 39   +14

    Exactly what did he do wrong? Encrypted a few phones? Arrest Apple staff, OP staff,.. if a person buys it and uses it for a certain crime, that is not predictable for every person and by that logic you cannot sell to anyone then.
    SirChocula and regiq like this.
  3. i3kingwizardop

    i3kingwizardop TS Rookie Posts: 21   +7

    Uncover agents reportedly asked Phantom if they could use its phones to securely send messages such as “sending MDMA to Montreal.” The company said it was “totally fine.” Most damning of all, Ramos is said to have told the sting operation’s agents: “We made it—we made it specifically for this [drug trafficking] too.” Furthermore, a convicted member of the Sinaloa cartel said the gang bought Phantom’s phones "specifically" for drug trafficking purposes, which led to the aiding and abetting charge.
    Evernessince likes this.
  4. davislane1

    davislane1 TS Grand Inquisitor Posts: 5,163   +4,241

    What did he do wrong? He committed the crime of being dumb. When asked if his products could be used to break the law, he said, “Of course. That’s why we made them!”

    You can’t do that.
  5. Nobina

    Nobina TS Evangelist Posts: 1,506   +972

    Remember this next time a company tries to sell you their **** product as secure.
  6. Forebode

    Forebode TS Booster Posts: 168   +38

    Without seeing/hearing the whole conversation, these snippets aren't enough. Sure it looks bad. I don't think it's enough. Unless they can prove they knew who they were selling to. You can't go by a conversation. I sure hope they have more than a conversation. Even if it's enough to get their records.. are they really going to keep track which gang members (like they'd use their real name.. or get it in person) were customers?

    It's not illegal to build such devices. They need to investigate due to the CEO statements.. but, unless the company is oblivious to security in record form.., which would be ironic, what could they find?
    regiq likes this.
  7. MPA2000

    MPA2000 TS Rookie

    That's scary. Not about the CEO but that the state are mad because they can't catch criminals, so they go after please that sell them stuff. What's next, will they go after car dealers for selling them homes? Landlords for leasing them apartments?
  8. Siwash

    Siwash TS Rookie

    If the car dealer doesn't have a real estate license, he's going down.
    HyPeroxya and senketsu like this.
  9. Uncle Al

    Uncle Al TS Evangelist Posts: 4,119   +2,605

    Maybe next time they need to put a coin slot on it and just track the money instead of the call ...... LOL
  10. BigPapi74

    BigPapi74 TS Rookie

    The government thinks that only they should have the right to use encryption to hide their dirty dealings. Just my opinion but if someone came into your store and said "I'm a drug dealer and I'm dying of thirst" and you sold them a pepsi you could also be charged with aiding and abetting? Just a conversation topic. I think the man should have the right to sell his tech to anyone he wants. As he tech isn't illegal, he shouldn't be dictated by the government who he can and cannot sell to.
    TorturedChaos and regiq like this.
  11. Danny101

    Danny101 TS Maniac Posts: 321   +120

    They're probably applying some obscure provision of the interstate commerce clause. I also noticed that this investigation extends from Canada to Austrailia too, so something international is going on as well. I like the idea of removing parts in the phone that can be used for spying.
  12. regiq

    regiq TS Booster Posts: 179   +57

    I want one! Not that I need it, of course :p

    Now seriously: it's infuriating that governments' agencies see digital technology only as means of invigilation and control.
  13. Rippleman

    Rippleman TS Evangelist Posts: 870   +393

    I see so many people on many sites always worried about their communication security. in reality, no one cares about you if you are 99.9% of the worlds standard everyday joe. Guess what... all of us posting on a tech forum on a sunday, surprise, we are everyday joes and no one gives a **** about us or our conversations.
  14. Neojt

    Neojt TS Addict Posts: 232   +59

    So when companies make suit case gun that are hard to detect,or suppressor ect ,that totally fine since obviously only good guys need those.

    but hey you can buy a machine gun as long as your phone not encrypted
    SirChocula and cliffordcooley like this.
  15. EClyde

    EClyde TS Evangelist Posts: 1,481   +522

    The guy arrested is a bum and I hope he gets 20 years
  16. Ithrowturdz

    Ithrowturdz TS Rookie

    What if MDMA stands for Mount Dora McIntosh Apples?
  17. Wizwill

    Wizwill TS Enthusiast Posts: 80   +28

    If you either removed all the insecure junk from smartphones or used real basic call-only models and supplied them in matched sets with very good encryption preinstalled...... ?
  18. regiq

    regiq TS Booster Posts: 179   +57

    You're so wrong. Our digital footprint is the only asset that runs this whole internet thing. Every bussiness wants to know you better then you know yourself... Your tax office, insurance company, politicians (check out Cambridge Anaityca claims).
  19. Forebode

    Forebode TS Booster Posts: 168   +38

    no that's not a good analogy. What's a legit legal purpose for a suitcase gun? kill them deer quicker? doubtful. a secure phone is a similar argument to a vpn/tor type of communication. it's legal.

    A secure phone should be used by gov and higher level people in a large corporation or bank or security firm.
  20. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 10,298   +4,213

    A secure phone should be available for everyone that wants one. I'm tired of these one sided notions, that only a certain select few are qualified to use secure phones, guns, and ect...
    SirChocula, Boilerhog146 and regiq like this.
  21. Jon Clennon

    Jon Clennon TS Rookie

  22. EClyde

    EClyde TS Evangelist Posts: 1,481   +522

    Because I said so...what else do I need?
  23. cliffordcooley

    cliffordcooley TS Guardian Fighter Posts: 10,298   +4,213

    Because right now it looks as if you are putting someone in prison, simply because they look like a bum to you.
  24. Urgelt

    Urgelt TS Enthusiast Posts: 66   +37

    Conspiring to abet crimes is a crime.

    Selling encrypted phones shouldn't be illegal (though law enforcement would dearly like for it to be). Stripping out mics and cams and adding PGP should be permissible. So the criminal conduct here is collaborating and communicating with criminals to further a criminal purpose. If they just sold the things on the open market to anyone, I'm not sure law enforcement would have much of a chance to convict.

    The danger is that if they do manage to convict, it *might* establish some case law that law enforcement could use to try to go after companies like Apple, Google and Microsoft, in an effort to get them to remove encryption from all of their services, or at least to furnish back doors for law enforcement to use (never mind that back doors make products vulnerable to *anyone,* not just law enforcement).

    This is all symptomatic of a big power struggle over encryption. The law enforcement community doesn't like it. They are going to continue to nibble at the edges, hoping to weaken it and make of it less of a nuisance for their purposes. Ultimately it's a totalitarian impulse - but so is making it illegal to put plant substances in your mouth. The drug war itself is the real problem here.

    Prohibition creates a criminal class. Eliminate prohibition and the criminal class can't exist.
    regiq likes this.
  25. Joe Blow

    Joe Blow TS Addict Posts: 216   +74

    Because you don't get a 4th Amendment, when it come to technology. They always use "crime" as an excuse.

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