Canadian CEO arrested in US on charges of supplying encrypted phones to Mexican cartels

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Leroy N. Soetoro

Mar 18, 2018, 2:48:53 PM3/18/18

U.S. authorities last week arrested the head of a Canadian company that
allegedly sold encrypted cellphones to Mexican drug cartels – shedding
light on the growing use of private communications networks among
organized crime groups looking to avoid the prying ears of the law.

Federal law enforcement cuffed Vincent Ramos, the 40-year-old founder of
Phantom Security Communications, last week in Seattle on charges that his
company maintained a secure telephone communications network that supplied
encrypted cellphones to Mexico’s Sinaloa Cartel and Australian biker gangs
among other organized crime groups.

In a heavily-redacted complaint filed in a federal court, the FBI alleges
that “Phantom Secure’s networks were specifically designed to prevent law
enforcement from intercepting and monitoring communications on the
network,” and that there are around 20,000 encrypted Blackberry cellphones
from the company in customers’ hands. Phantom purportedly made tens of
millions of dollars off the scheme, according to the complaint.

“Phantom Secure’s devices and service were specifically designed to
prevent law enforcement from intercepting and monitoring communication on
the network,” FBI Agent Nicholas Cheviron wrote in the complaint. “[E]very
facet of Phantom Secure’s corporate structure was set up specifically to
facilitate criminal activity and obstruct, impede, and evade law

Phantom CEO Ramos faces charges of racketeering and conspiracy to
distribute drugs, while his company is accused of shielding its assets
inside shell companies and in cryptocurrencies like bitcoin.

According to the company’s own marketing materials, Phantom’s technicians
would strip a Blackberry of hardware and software – including those
responsible for voice calls, GPS, the Internet, photos and messenger
services – and then install “Pretty Good Privacy encryption software and
‘Advanced Encryption Standard’ on top of an email program.” These programs
route through encrypted servers in places like Panama and Hong Kong, which
are believed to not cooperate with law enforcement.

A Phantom phone can also only be used when contacting another phone the
company has manipulated.

Not everyone can get on a Phantom plan – which costs between $2,000 and
$3,000 for a six-month service plan – as new customers must be recommended
by a current Phantom user and pass a background check. While the company
says it markets to “businesses and executives,” Phantom only deals with
customers anonymously and the nicknames used give a hint of who their
customers tend to be: narco, elchapo66, knee_capper, leadslinger.

The investigation found that Mexico’s Sinaloa cartel – once headed by
notorious drug lord Joaquín "El Chapo" Guzmán – uses these phones along
with a number of criminal groups in Australia.

Guzmán’s capture back in January 2016 could possibly be the reason for the
Sinaloa cartel’s interest in encrypted phones. The Mexican military was
able to track down El Chapo to a condo in the beachside city of Mazatlán
thanks in large part to a cellphone from one of Guzmán’s henchmen that was
found during a previous raid.

Having an encrypted email platform is not technically illegal and there
are a number of legitimate reasons why someone would want one, but the
affidavit makes clear that Phantom’s entire business model is based on
plying their wares to organized crime.

In the past, many criminals used so-called “burners” – or cheap, pre-paid
cell phones that were difficult to track and thrown out after a period of
time – but wealthy crime groups, like many of Mexico’s drug cartels, are
finding it easier to dish out the money for encrypted phones.

Phantom also isn’t the only company in the game as a search on social
media brings up a number of companies offering encrypted phones, alongside
images of guns, piles of cash and even Mexican flag emojis.

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