Silk Road Vendor Indicted on Narcotics Charges

The US has charged two men for allegedly making millions of dollars by selling hundreds of thousands of opioid pills on the darknet. 

Costa Rican pharmacist Jose Luis Fung Hou and dual Costa Rican and American citizen David Brian Pate were indicted by a federal grand jury on Tuesday. The pair are accused of trafficking drugs including Oxycontin and morphine and laundering payments in the form of Bitcoin and international wire transfers. 

The indictment alleges that 44-year-old Pate illegally purchased pills from 38-year-old Fung, then sold the narcotics on multiple underground websites, including AlphaBay and the notorious marketplace Silk Road

Using various online monikers including “buyersclub” on darknet markets, online forums, and Bitcoin exchanges, Pate allegedly advertised that he was selling the “old formula” of Oxycontin. This version of the drug does not contain tamper-resistant features such as a crush-proof outside that prevents a user from inhaling or injecting the pills after pulverizing them. 

Pate is accused of hiding the pills in tourist souvenirs such as maracas that were sent in bulk from Costa Rica to co-conspirator re-shippers in the United States. Re-shippers were then sent a list of customer orders to fill along with the customers' names, shipping addresses, and how many pills they wanted. 

Once the shipments were received by the customers, the darknet market would release funds in Bitcoin, which were held in escrow until the transaction was completed, into Pate’s account on the darknet market. Customers reputedly paid Pate over 23,903 Bitcoin for these darknet market sales. 

The seven-count indictment charges Pate and Fung with counts of conspiring with persons to distribute controlled substances, distribution of controlled substances, conspiring with persons to import controlled substances, conspiring to launder money, and laundering of monetary instruments.

“Today’s case is a great example of how the DEA has infiltrated the darknet and, together with our law enforcement partners, proven that every criminal attempting to sell these deadly drugs is within the reach of the law,” said Special Agent in Charge Jesse R. Fong of the US Drug Enforcement Administration’s (DEA) Washington Field Division.

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