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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Wednesday, February 12, 2020

Dark Web Narcotics Trafficker Sentenced To 3½ Years In Prison In Connection With Laundering More Than $19 Million

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that HUGH BRIAN HANEY was sentenced to 42 months in prison for 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.”  HANEY previously pled guilty to the money laundering charges before United States District Judge Jed S. Rakoff, who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Hugh Haney used the Dark Web site Silk Road to sell drugs illegally and avoid detection.  He then laundered more than $19 million in profits through cryptocurrency.  Now Haney is headed to prison for his crimes.”

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 derived 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.”  HANEY was one of the operators of Pharmville, which supplied a dedicated community of individuals who often traded illicit narcotics.  HANEY had previously been convicted on federal charges for distributing narcotics via the Internet.  In 2018, pursuant to a judicially authorized search of Haney’s house in Ohio, law enforcement agents found on a computer in Haney’s house 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, as well as a ledger of customers whom HANEY had supplied with fentanyl and pharmaceutical drugs.

In 2017 and 2018, HANEY transferred Bitcoins representing narcotics proceeds 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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In addition to his prison term, HANEY, 61, of Westerville, Ohio, was sentenced to three years of supervised release, and ordered to forfeit approximately $19 million and pay a fine of $10,000.

Mr. Berman praised the outstanding investigative work of Homeland Security Investigations. 

This case is 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 prosecution.

Topic(s): 
Drug Trafficking
Financial Fraud
Contact: 
Jim Margolin, Nicholas Biase (212) 637-2600
Press Release Number: 
20-058
Updated February 12, 2020