Father and Son Sentenced for Laundering Drug Trafficking Bitcoin Proceeds Intended for Federal Forfeiture
Baltimore, Maryland – A federal grand jury has indicted Ryan Farace, age 34, of Reisterstown, Maryland, and Robert Swain, age 34, of Freeland, Maryland, on charges related to a scheme to manufacture and distribute alprazolam tablets, which are typically sold under the brand name “Xanax.” The indictment alleges that Farace distributed the drugs through sales on the dark web in exchange for Bitcoin, and that Farace and Swain laundered the drug proceeds through financial transactions designed to conceal the source and ownership of the illegal funds. The superseding indictment was returned on February 22, 2018, and unsealed on June 22, 2018.
The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur; Assistant Special Agent in Charge Don Hibbert of the Drug Enforcement Administration-Washington; Acting Special Agent in Charge Cardell T. Morant of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Postal Inspector in Charge Eric Shen of the U.S. Postal Inspection Service – Washington Division; Acting Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service (IRS) – Criminal Investigation; Maryland U.S. Marshal Johnny Hughes; and Chief Terrence B. Sheridan of the Baltimore County Police Department.
According to the six-count indictment, from no later than November 2013 through June 2017, Farace purchased narcotics manufacturing equipment, including pill presses and counterfeit “Xanax” pill molds, which he used to press loose alprazolam powder into tablet or pill form, and which he intended to resemble legitimate Xanax pills. The indictment alleges that Farace solicited orders for the alprazolam pills on dark web marketplaces and sold alprazolam pills directly to buyers in exchange for Bitcoin. Farace allegedly communicated with his customers through encrypted electronic messages and shipped the completed pill orders through the U.S. Postal Service. According to the indictment, postage for these packages was often paid using pre-paid debit cards that Farace obtained in the names of, and with the personal identifying information of, other people. The indictment alleges that between May 10, 2016 and January 31, 2017, Farace distributed and possessed with the intent to distribute more than 6,900 alprazolam pills.
Further, the indictment alleges that Farace and Swain laundered the proceeds of the illegal drug sales by conducting financial transactions designed to conceal and disguise the nature, source, ownership and control of the illegal drug proceeds. To date, law enforcement has seized assets from the defendants and their co-conspirators valued at over $22 million at the time of the seizures, including approximately $17 million in Bitcoin and other cryptocurrencies, $2.5 million in computer equipment, and more than $1.5 million in cash.
As part of the indictment, the government seeks the forfeiture of no less than $5,665,000, plus the value of 4,000 Bitcoin believed to be the proceeds of the illegal drug sales, two residences, and two vehicles used to facilitate the drug distribution.
Farace faces a maximum sentence of five years in prison for conspiracy to manufacture, distribute, and possess with the intent to distribute alprazolam; five years in prison for each of three counts of distributing and possessing with intent to distribute alprazolam; and 20 years in prison for maintaining drug-involved premises. Farace and Swain face a maximum of 20 years in prison for money laundering conspiracy. An arraignment on the superseding indictment has been scheduled for July 13, 2018, in U.S. District Court in Baltimore. Farace is currently detained and Swain is released under the supervision of U.S. Pretrial Services.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
This case was part of a year-long, coordinated national operation involving the collective participation of the Department of Homeland Security, the Money Laundering and Asset Recovery Section of the Department of Justice’s Criminal Division, the United States Secret Service, the United States Postal Inspection Service, the Drug Enforcement Administration, and 51 United States Attorney’s Offices, which used the first nationwide undercover action to target vendors of illicit goods on the darknet. Since its inception more than one year ago, the operation has led to the opening of more than 90 active cases around the country. Numerous individuals have been arrested and charged, and the operation has resulted in the seizure of weapons, drugs, virtual currency proceeds, United States currency, and computer equipment. https://www.justice.gov/opa/pr/first-nationwide-undercover-operation-targeting-darknet-vendors-results-arrests-more-35
United States Attorney Robert K. Hur commended the DEA, HSI, the U.S. Postal Inspection Service, the IRS-Criminal Investigation; the U.S. Marshals Service, and the Baltimore County Police Department for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Dana J. Brusca, Zachary B. Stendig, and Seema Mittal, who are prosecuting the case.