US Charges CEO of Company Selling Encrypted Devices to Drug Traffickers The custom handsets included iPhones that were allegedly used to evade police surveillance.

By S. Shah

This story originally appeared on Engadget

The US Department of Justice (DoJ) has announced an indictment against the head and associate of a Canada-based company that allegedly supplied custom encrypted phones to international drug traffickers. In just the second case of its kind, CEO Jean-Francois Eap and former distributor Thomas Herdman of Sky Global were charged with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO). Warrants have been issued for their arrests.

The RICO law is typically used to combat organized crime and was previously used against another encrypted phone company called Phantom Secure.Motherboard reports that the DoJ's announcement follows a crackdown in Europe that saw local law enforcement obtain and decrypt almost a billion messages sent between Sky Global's customers.

The indictment, returned by a federal grand jury on Friday, alleges that Sky Global installed sophisticated encryption software on devices designed to help drug traffickers to evade police surveillance. The custom phones — which included iPhone, Google Pixel, Blackberry, and Nokia handsets — allowed their users to communicate with each other in a closed network, with Sky Global routing their activity through encrypted servers located in Canada and France.

Related: Bitcoin Exchange Founder Sentenced to Prison for Money Laundering

Sky Global's alleged purpose was to facilitate an international drug trafficking operation that included the import and export of heroin, cocaine and methamphetamine. The narcotics were distributed in the US and Canada, Australia, Asia and Europe. While the encrypted communications system was also allegedly used to mask money laundering activities that included Bitcoin transactions on Sky Global's website.

In order to hide their illicit enterprise, Sky Global's employees apparently set up shell companies to cloak the proceeds from sales of their encrypted software. In total, some 70,000 of the custom devices are in use worldwide, according to the DoJ.

"The indictment alleges that Sky Global generated hundreds of millions of dollars providing a service that allowed criminal networks around the world to hide their international drug trafficking activity from law enforcement," Acting US Attorney Randy Grossman said in a statement. "This groundbreaking investigation should send a serious message to companies who think they can aid criminals in their unlawful activities."

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

Dog-Lovers' Side Hustle 'Took Off Right Away' and Made More Than $30,000 a Month — Now It's About to Hit $2.3 Million

Childhood friends Teddy Tawil and Irving Fallas turned their passion for pets into a successful business.

Business News

'Affluent People Love a Deal': These Luxury Items Are Flying Off the Shelves at Costco, According to the Company's Longtime Chairman

Some Costco customers are washing down their $1.50 hot dog combo with fancy Champagne, apparently.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Science & Technology

What Is 'AI Tasking'? Entrepreneurs Are Using This Viral Strategy to Save 3 Days a Week

Want to 10x revenue without hiring? AI automates marketing, saving you 3+ days/week. Learn 4 AI tools for content, chatbots, leads & sales. Get the free 'AI Success Kit' + a chapter from Ben's new book!

Business News

No Meetings, Up to $30 Per Hour, Fully Remote: A College Student Training AI Says the Work Is 'Perfect' for Introverts

He works 30 hours a week without a direct boss, daily meetings, or contact with coworkers.

Leadership

'The Most Important Traits Are Confidence and Humility': Leadership Lessons From an Army Ranger Turned CEO

Dan Streetman, the CEO of Tanium, a leading cybersecurity company located in the San Francisco Bay Area, on how being an Army Ranger has prepared him to be a CEO, what leadership means to him and how his company works to deliver the power of certainty for the organizations it serves.