Springfield man pleads guilty to distributing marijuana on the Dark Web and laundering the proceeds | USAO-OR

PORTLAND, Ore.—On January 18, 2022, a Springfield, Oregon man pleaded guilty to distributing marijuana on the dark web and laundering the proceeds of his cryptocurrency.

Robert Kelly O’Neill, 59, waived the indictment and pleaded guilty to possession with intent to distribute marijuana and money laundering.

According to court documents, beginning around January 2016, Homeland Security Investigations (HSI) and the US Postal Inspection Service (USPIS) began investigating the widespread importation and online distribution of controlled substances in dark web marketplaces. . As part of the investigation, HSI and USPIS revealed widespread laundering of illicit digital currency proceeds across the country, including in Oregon.

The investigation uncovered a money laundering operation involving a dark net seller, GOLD, who traded Bitcoin for cash. GOLD received Bitcoins from customers and, in exchange for a fee, sent or shipped money to a physical mailing address provided by the customer.

As the investigation continued, officers identified an individual using the pseudonym “Resinate” who employed GOLD’s money laundering services. Resinate used various addresses, including several addresses in Oregon, to receive cash shipments. After the packages were delivered in cash, known and unknown accomplices collected and delivered the packages to Resinate.

In October 2016, GOLD was arrested and an HSI agent in New York assumed his identity and continued to make deals with Resinate. Between September 2015 and May 2018, Resinate laundered over $725,000 in illicit proceeds through GOLD and another $167,000 in Bitcoin through a co-conspirator in Springfield. Additionally, records from dark websites Silk Road and Silk Road 2.0 confirmed that in 2013 and 2014, Resinate earned $390,000 in Bitcoin from selling marijuana.

In June 2018, law enforcement executed numerous federal search warrants at the named individuals’ addresses and at O’Neill’s Springfield residence. Investigators discovered a marijuana processing and packaging operation in O’Neill’s garage and seized dozens of computers and electronic storage devices from O’Neill’s residence. Officers also found handwritten notes identifying O’Neill as Resinate. A forensic examination of O’Neill’s electronic devices returned Bitcoin wallet addresses, images and details of O’Neill’s various black market vendor accounts, encrypted emails between O’Neill and undercover HSI agent and cryptocurrency wallet backups.

In addition to electronic and physical evidence, investigators identified and seized over $21,469 in US currency, six Bitcoin and 458 Bitcoin Cash.

On September 3, 2021, O’Neill was charged by criminal information with possession with intent to distribute marijuana and money laundering. He will be sentenced on April 26, 2022 before U.S. District Court Judge Michael J. McShane.

Possession with the intent to distribute marijuana is punishable by up to 20 years in prison, a $1 million fine and five years of supervised release. Money laundering is punishable by up to 20 years in prison; a fine of $500,000 or double the value of the property in question, whichever is greater; and three years of probation.

As part of his plea deal, O’Neill agreed to confiscate US currency, Bitcoin and Bitcoin Cash seized by the officers.

U.S. Attorney Scott Erik Asphaug of the District of Oregon made the announcement.

This case was investigated by HSI, USPIS, IRS Criminal Investigation, in addition to assistance from numerous state and local law enforcement agencies. Assistant U.S. Attorneys Gavin W. Bruce prosecuted the case.

This case is part of Operation Dark Gold, a coordinated national law enforcement operation, announced in June 2018, which used the first nationwide undercover action to target sellers of illicit goods on the dark web. HSI New York Special Agents, in coordination with the U.S. Attorney’s Office for the Southern District of New York, impersonated a money launderer on dark web market sites, exchanging U.S. currency for virtual currency. Through this operation, HSI New York identified numerous sellers of illicit goods, resulting in over 90 criminal cases across the country.

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