Canadian tech moguls made millions by selling encrypted-messaging software that criminal groups relied on for years to distribute massive amounts of cocaine through Europe before law enforcement agencies began intercepting and decoding their messages.
The founders of the Vancouver, Canada-based company, Sky Global, are now facing racketeering and drug-trafficking charges in the U.S. related to the crimes committed by the criminals using their technology. It has denied any wrongdoing and countersued last week.
The Department of Justice indicted CEO Jean-Francois Eap and Thomas Herdman, one of the company’s most prominent distributors, in March and the Federal Bureau of Investigations (FBI) seized the company’s 100 internet domains.
Prosecutors argue in the federal indictment that Eap and Herdman ‘knowingly and intentionally participated in a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications devices.’
Sky Global sold an encrypted-messaging software to criminals that used it to operate a huge cocaine trafficking ring in Europe, according to an indictment from the U.S. Department of Justice
Criminal groups relied on the messaging system for years before law enforcement agencies began intercepting and decoding their messages. The founders of the company are now facing racketeering and drug-trafficking charges in the U.S.
The indictment also alleged that Eap and Herdman were in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), a law originally designed to prosecute mob bosses.
Sky Global’s new motion demands that the FBI return its website domains, arguing that the seizure violates its First and Fifth amendment rights.
‘Providing encrypted messaging solutions and protecting consumers’ privacy rights is not illegal,’ Sky Global wrote in its motion, filed in a federal court in San Diego.
‘What has happened here is the equivalent of the government seizing Apple.com because drug dealers use iPhone encryption features to communicate with each other.’
The company also said that it has taken measures to prevent Sky Global’s technology from being taken advantage of by criminals. It claims it should be given the opportunity to continue focusing on such efforts.
The company relied on third-party resellers, in many cases tied to organized crime, and was working on trying to prevent them from supplying the technology to criminals.
It’s not clear when the technology first fell into the hands of criminals and at what capacity, but in 2018 law enforcement agencies in Belgium first started intercepting messages to counter cocaine trafficking throughout Europe
Sky Global alleges its target consumer base included people and groups concerned with data privacy and confidentiality, including doctors, government contractors and celebrities.
But, according to the Wall Street Journal, a company locator map appeared to reveal that phones installed with their technology, which have contractual costs of as much as $2,500 for six months, were being used almost exclusively by criminals.
Sky Global’s encrypted technology allows users to wipe their messaging history by making a request to the Sky Global support team.
‘The company’s devices are specifically designed to prevent law enforcement from actively monitoring messages between users,’ according to the indictment.
The indictment also alleges that Sky Global employees used cryptocurrency like Bitcoin to facilitate illegal transactions from its customers and uphold their anonymity.
The indictment says the company followed an ‘ask nothing/do nothing’ approach toward working with clients so it could claim plausible deniability in the case that anyone with their technology used it to commit crimes.
Their internet domains also were seized by the FBI amid the indictment in March
CEO Jean-Francois Eap (left) and Thomas Herdman, one of the company’s most prominent distributors, have denied any wrongdoing and filed a motion last week demanding the FBI return its website domains
‘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 U.S. Attorney Randy Grossman said in a statement.
‘Companies who do this are perpetuating the deadliest drug epidemic in our nation’s history. This groundbreaking investigation should send a serious message to companies who think they can aid criminals in their unlawful activities,’ he added.
However, Sky Global argued in its court filing that the company refuses to erase messages of phones that are in law enforcement custody.
Sky Global urged the FBI to provide the company with copies of the warrants and any other documentation regarding the legal basis for ‘its seizure and retention of Sky Global’s property, thus depriving it of any meaningful opportunity for judicial review.’
The federal case against Sky Global hasn’t made progress since the indictment of March and Eap hasn’t been extradited to the U.S. Sky Global wrote in the motion that Eap and his lawyers contacted the U.S. government in July to discuss the pending charges and cooperate with its investigation, but Eap’s offers were ultimately denied.
The company also handed over internal documents and allegedly attempted to resolve the FBI seizure of its domains, without court intervention.
Some of Sky Global’s internal documents show how it provided Canadian law-enforcement officials with its devices in the hopes of winning a contract with their agency.
Officials found about one billion messages from tens of thousands of Sky Global-enabled devices across the globe
Specifically, Belgium has detained more than 500 suspects and seized 88 metric tons of cocaine, already exceeding last year’s record haul, the new outlet reported
‘The government, however, has declined to engage in substantive discussions regarding the forfeiture issues raised here,’ the motion reads. ‘Accordingly, Sky Global has been left with no option other than the filing of the instant motion for the return of its property.’
Sky Global reported 120,000 active users before it was taken down in March. Now essentially a dead company, Sky Global has had to let go of 27 staff and 14 contractors.
‘Anyone concerned about privacy should be deeply troubled by how the government almost shut down a legitimate, law-abiding company that was attempting to address critical issues around data protection and privacy,’ said Ashwin Ram, an attorney for the company, told Vice News.
Ram added that Sky Global had no control over its third-party sellers, ‘beyond contractual obligations prohibiting the unlawful use and marketing of its technology.’
Eap, an entrepreneur with a background in computer science and telecommunications, started Sky in 2010 in Vancouver, Canada, and neither he nor the company have been in any known legal trouble before the indictment last March.
It’s not clear when the technology first fell into the hands of criminals and at what capacity, but in 2018 law enforcement agencies in Belgium first started intercepting messages to counter cocaine trafficking throughout Europe.
‘It’s their Achilles’ heel,’ Kevin Daniels, the DEA’s deputy chief for Europe, told the Wall Street Journal. ‘Oftentimes we’re two or three steps behind. They are looking for the latest technological advantage over us. But we’re finding a way to catch up.’
Officials found about one billion messages from tens of thousands of Sky Global-enabled devices across the globe. Specifically, Belgium has detained more than 500 suspects and seized 88 metric tons of cocaine, already exceeding last year’s record haul, the new outlet reported.
Officials intercepted a number of messages with gruesome photos of victims of gang violence and detailed plans to execute grisly murders, though Eap and Herdman are not being charged in connection to any of those.
In one case, a Serbian gang planned to assassinate a judge and discussed everything from planning a getaway to how the wind would affect a sniper’s bullet. What they didn’t know was that their messages were seen by police in Belgium, who warned Serbian officials and saved the judge.
In another case, a Sky Global costumer sent directions to an associate on how to torture a given target. The user on the other end of the message couldn’t track down his victim, so another message came in with a photo of a woman and the text, ‘Here are pictures of the wife. You can break her legs.’
Belgian Justice Minister Vincent Van Quickenborne told the Wall Street Journal that the treasure trove of messages was a ‘Holy Grail’ because the criminals suing Sky Global were so brazen and confident that the service was impenetrable.