SEATTLE – Kenneth Warren Rhule, 26 of Bothell, Washington was arrested March 10 on an eight-count complaint charging him with operating an illegal money exchange business involving bitcoin, announced Acting Special Agent in Charge (SAC) of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Seattle Eben Roberts and U.S. Attorney Brian T. Moran.
Rhule made his initial appearance on the criminal complaint in U.S. District Court in Seattle today. Rhule is charged with conducting an unlicensed money transmitting business, five counts of laundering of monetary instruments and one count of conspiracy to produce and distribute marijuana.
According to the criminal complaint, Rhule came to the attention of law enforcement in April 2018, as someone operating an unlicensed bitcoin exchange business under the name “Gimacut93.” At various locations – primarily Starbucks coffee shops – in Western Washington, Rhule met repeatedly with undercover agents posing as criminals who needed to launder funds. Through their conversations the undercover agents made it seem they were laundering money related to human trafficking activities. Rhule agreed to exchange bitcoin for cash apparently knowing the cash was the proceeds of criminal activity. In fact, Rhule offered the undercover agents advice on virtual currency and how to hide the source of the funds. Rhule asked the agents no questions as required under the “know your customer” rule.
Even as he was engaged in the operation of the unlicensed financial exchange business, Rhule was operating a marijuana products business that has no license with the State of Washington. The facility, based in Monroe, manufactures hash oil and other marijuana products using the names HerbinArtisans, Heady.Watr, and KlearKrew. Electronic messages reviewed in the case indicate Rhule was exchanging various marijuana products for cryptocurrency. Rhule claimed that he was manufacturing in the Seattle area but selling most of his product in Florida.
Operating an unlicensed money transmitting business is punishable by up to five years in prison. Laundering monetary instruments is punishable by up to 20 years in prison. Conspiracy to manufacture and distribute the amount of marijuana involved in this case is punishable by a mandatory five years in prison and up to 40 years in prison.
The HSI-led Border Enforcement Security Task Force (BEST) investigated the case. The task force also included the ICE Enforcement and Removal Operations (ERO), Drug Enforcement Administration, Customs and Border Protection, Internal Revenue Service-Criminal Investigation Division, FBI, United States Postal Inspection Service, Seattle Police Department, Snohomish County Sheriff’s Office, Oregon State Patrol, Washington Liquor and Cannabis Board, Washington Army National Guard, and the Washington State Department of Ecology.
“The success of this highly involved case is a direct result of the strong partnerships shared by all of those involved,” continued Roberts. HSI is extremely proud to be a part of such a dedicated and professional law enforcement task force.”
The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The case is being prosecuted by Assistant United States Attorney Marie Dalton.
The primary mission of the HSI BEST is to combat emerging and existing Transnational Criminal Organizations (TCO) by employing the full range of federal, state, local, tribal and international law enforcement authorities and resources in the fight to identify, investigate, disrupt and dismantle these organizations at every level of operation.
The BEST investigative model is a comprehensive response to the growing threat to border security, public safety and national security. BESTs eliminate the barriers between federal and local investigations (access to both federal and state prosecutors) and close the gap with international partners in multinational criminal investigations.
To learn more about BEST visit https://www.ice.gov/best.