Leader Of Miami Crew Sentenced To 63 Months In Prison For Defrauding Banks And Cryptocurrency Exchange Of More Than $4 Million
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HUGH BRIAN HANEY pled guilty in Manhattan federal court today to money laundering charges, based on his attempt to launder the proceeds of a narcotics trafficking operation that HANEY ran on the Dark Web site known as “Silk Road.” U.S. District Judge Jed S. Rakoff presided over the defendant’s guilty plea.
U.S. Attorney Geoffrey S. Berman said: “Hugh Haney used Silk Road as a means to sell drugs to people all over the world. Then he laundered more than $19 million in profits through cryptocurrency. Peddling drugs on the Dark Web does not provide anonymity forever, as Hugh Haney can attest.”
As alleged in the underlying Complaint, Indictment and statements made in open court:
Silk Road was an online criminal marketplace designed to be outside the reach of law enforcement or governmental regulation. All transactions on Silk Road could be completed only through use of the cryptocurrency Bitcoin. During its two-and-a-half years in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over 100,000 buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions. Law enforcement shut down Silk Road in or about October 2013.
One prominent narcotics vendor on Silk Road was called “Pharmville.” The operators of Pharmville supplied a dedicated community of individuals who often traded illicit narcotics. Pursuant to a judicially authorized warrant of HANEY’s house in Ohio in 2018, law enforcement agents found evidence that HANEY was a high-ranking member of Pharmville, involved in large-scale narcotics trafficking on Silk Road. Among the documents found on a computer in HANEY’s house was a document entitled “HBH DAILY TO DO LIST,” which, among other things, referred to Silk Road, Pharmville, and large-scale narcotics trafficking, including of the deadly opioid fentanyl.
In 2017 and 2018, HANEY transferred Bitcoins representing narcotics proceeds that he had earned through his control of Pharmville from Bitcoin addresses connected to Silk Road to an account HANEY controlled at a company involved in the exchange of Bitcoins and other digital currency (“Company-1”). In correspondence with Company-1, HANEY falsely claimed that he had legitimately earned these Bitcoins through cryptographically creating them and from fair transfers with others, while in reality the Bitcoin were derived from transfers from Silk Road. After HANEY transferred the Bitcoins to cash worth more than $19 million through Company-1, law enforcement seized the money pursuant to a judicially authorized seizure warrant from a custodial account at a bank (“Bank-1”).
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HANEY, 61, of Ohio, was arrested July 18, 2019, and has been in federal custody since. HANEY pled guilty to one count of concealment money laundering, which carries a maximum sentence of 20 years in prison, and one count of engaging in a financial transaction in criminally derived property, which carries a maximum sentence of 10 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
HANEY is scheduled to be sentenced by Judge Rakoff on is February 12, 2020.
Mr. Berman praised the outstanding investigative work of the Department of Homeland Security, Homeland Security Investigations.
These cases are being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Tara M. La Morte and Samuel L. Raymond are in charge of the prosecutions.
James Margolin, Nicholas Biase