Head of B.C. encryption firm pleads guilty to racketeering

VANCOUVER — The founder of a Vancouver encryption company that supplied untraceable BlackBerry devices to organized crime groups around the world has pleaded guilty to racketeering in Southern California.

Phantom Secure CEO Vincent Ramos appeared before U.S. District Court Magistrate Barbara Lynn Majorin a San Diego courtroom Tuesday and admitted to leading a criminal enterprise that facilitated international drug smuggling “through the sale and service of encrypted communications devices.”

In his plea deal, Ramos admitted that he and his associates helped distribute cocaine, heroin and methamphetamine to locations in Canada, the U.S., Australia, Mexico, Thailand and Europe.

Ramos, who lived with his family in Richmond until his arrest this year, maintained Phantom Secure servers in Panama and Hong Kong — hidden behind virtual proxy servers — and remotely wiped devices seized by law enforcement.

Some of his customers included members of the Sinaloa cartel of Mexico, court documents said.

Ramos and his co-conspirators would sell devices only to customers who had a personal reference from an existing client. Ramos used digital currencies, including Bitcoin, to facilitate financial transactions for Phantom Secure to protect users’ anonymity and launder proceeds from Phantom Secure.

He admitted that at least 450 kilograms of cocaine were distributed using Phantom Secure devices.

As part of his guilty plea, Ramos agreed to an $80-million US forfeiture judgment, as well as the forfeiture of tens of millions of dollars in identified assets, ranging from bank accounts worldwide, to houses, to a Lamborghini, to cryptocurrency accounts and gold coins. But the plea deal also said the U.S. would not seize two Lower Mainland properties, vehicles and bank accounts used by his family.

Ramos also agreed to forfeit the server licences and more than 150 domains that were being used to operate the infrastructure of the Phantom Secure network, enabling it to send and receive encrypted messages for criminals.

“The Phantom Secure encrypted communication service was designed with one purpose — to provide drug traffickers and other violent criminals with a secure means by which to communicate openly about criminal activity without fear of detection by law enforcement,” U.S. Attorney Adam Braverman said in a statement.

“As a result of this investigation, Phantom Secure has been dismantled and its CEO Vincent Ramos now faces a significant prison sentence. The United States will investigate and prosecute anyone who provides support, in any form, to criminal organizations, including those who try to help criminal organizations ‘go dark’ on law enforcement.”

FBI Special Agent John Brown, who heads the San Diego field office, said Ramos’s guilty plea “is a significant strike against transnational organized crime.”

“The FBI and our international lawenforcement partners have demonstrated that we will not be deterred by those who exploit encryption to benefit criminal organizations and assist in evading law enforcement,” Brown said.

“With this case, we have successfully shut down the communication network of dangerous criminals who operated across the globe.”

Ramos’s co-defendants — Kim Augustus Rodd, Younes Nasri, Michael Gamboa and Christopher Poquiz — remain international fugitives.

Ramos is scheduled to be sentenced Dec. 17. He faces a maximum sentence of 20 years in jail, but the plea agreement states that U.S. authorities won’t oppose his transfer to a Canadian prison after he has served at least five years south of the border.

Ramos founded Phantom Secure Communications in Vancouver in 2008. The company then branched out to the U.S., Australia, Dubai, Panama, Hong Kong and Thailand.

Born in Winnipeg in 1977, Ramos moved with his family to Richmond at age four. He attended Surrey-based Kwantlen Polytechnic University for two years and studied business before embarking on a career selling Amway products, according to documents filed in court by his lawyer.

He then worked for Rogers Cellular before deciding to go into business for himself.