CHICAGO — A Dutch man, who allegedly used the shuttered "Silk Road" underground website to sell illegal drugs for bitcoins worth millions of dollars, has agreed to plead guilty to a federal drug conspiracy charge filed against him Thursday.
The criminal charge resulted from an undercover investigation led by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).
Through his attorney, Cornelis Jan Slomp, aka "SuperTrips," 22, of Woerden, the Netherlands, authorized the government to disclose that he will plead guilty to conspiring to import and distribute various controlled substances. He will plead guilty when he is arraigned on the charge that was brought in a criminal Information filed April 24 in U.S. District Court.
Slomp was charged with distributing worldwide about 104 kilograms (229 pounds) of an illegal drug known as MDMA; 566,000 Ecstasy pills containing MDMA; four kilograms (nine pounds) of cocaine; three kilograms (seven pounds) of Benzodiazepine; and substantial quantities of amphetamine, lysergic acid diethylamide (LSD), and marijuana. He was also charged with allowing substantial quantities of methamphetamine, ketamine, and Xanax to be distributed through his SuperTrips vendor account from March 2012 through August 2013.
Slomp was arrested Aug. 27, 2013 at the Miami International Airport after arriving on a flight from Europe. Court documents allege that Slomp was intending to meet with alleged co-conspirators in Florida and spin off his entire U.S. Silk Road operations and customers to one of his co-conspirators. Slomp also allegedly intended to retrieve his share of the illegal drug proceeds that co-conspirator generated as Slomp's largest wholesale re-distributor in the United States of fronted illegal drugs.
Slomp was arrested based on a warrant and criminal complaint filed in federal court in Chicago. After he was transferred to Chicago to face prosecution he did not contest detention and was ordered to remain in federal custody.
Upon conviction, Slomp faces a mandatory minimum of five years and a maximum of 40 years in prison, and a $5 million fine. The government is also seeking forfeiture of about $3,030,000 in alleged proceeds from Slomp's drug trafficking. The government seized the equivalent of that amount in bitcoins, a digital currency, and exchanged it for cash.
"Illegal drug trafficking is not new, but drug trafficking using a sophisticated underground computer network designed to protect anonymity of buyers and sellers presents new challenges to law enforcement that we are prepared to meet," said Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois.
"In the global black market for all things illegal, Slomp allegedly was a prolific vendor on Silk Road," said Gary Hartwig, special agent-in-charge of HSI Chicago. "HSI will remain vigilant against criminals who traffic contraband and illicit goods across our nation's borders. Those who mistakenly believe the anonymity of the Internet – even on the Deep Web – shields them from scrutiny are finding out they can't evade detection in cyberspace."
Fardon and Hartwig commended U.S. Customs and Border Protection and U.S. Postal Inspection Service agents in Chicago for their assistance in the investigation. HSI Miami, HSI Attaché, The Hague, and the Justice Department's Office of International Affairs also provided assistance.
According to court documents, Slomp used Silk Road to sell illegal drugs and received about 385,000 in bitcoins from more than 10,000 transactions as payment. From January 2011 until it was shut down by law enforcement in October 2013, Silk Road allowed vendors and buyers to exchange goods and services online. It was dedicated to selling illegal drugs and other illicit, black-market goods using bitcoins; and it was designed to facilitate illegal commerce by ensuring anonymity among its users. The underground website operated on a special worldwide network of computers that concealed the true Internet Protocol addresses of the users. Each communication, wrapped in a layer of encryption, bounced through numerous relays within the network so the end recipient had no way of tracing the communication back to its true originating IP address.
During the undercover investigation, HSI agents surreptitiously entered the website and observed a vendor who had offered various controlled substances for sale for about 18 months. In April 2012, CBP officers at Chicago's O'Hare International Airport seized an envelope mailed from the Netherlands that tested positive for MDMA concealed inside an empty DVD case. During the investigation, HSI agents collected more than 100 similar envelopes in Chicago, each mailed from the Netherlands or Germany, containing various controlled substances. The investigation identified Slomp as the alleged Silk Road vendor responsible for mailing the envelopes seized in Chicago.
The charge describes 11 unnamed co-conspirators in Europe and the United States who allegedly assisted Slomp in supplying, manufacturing, selling, packaging, shipping, and distributing various illegal drugs. Two of these individuals in the Netherlands allegedly manufactured hundreds of thousands of Ecstasy pills of different colors, most bearing a question mark, which was Slomp's unique identifying logo.
In August 2012, Slomp and Individual J in Florida allegedly agreed that Slomp would front wholesale quantities of illegal drugs on credit. They further agreed to divide the proceeds in half after Individual J resold the drugs to Silk Road customers under the vendor names "UnderGroundSyndicate" and "BTCMaster." Slomp allegedly imported a half-kilogram (one pound) of fronted MDMA every week for a year to Individual J, as well as substantial quantities of other illegal drugs.
Assistant U.S. Attorney Andrew S. Boutros, Northern District of Illinois, is prosecuting this case.
These charges were announced by the following agency heads: Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois; Gary Hartwig, special agent in charge of U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) in Chicago; John Redmond, special agent in charge of the Food and Drug Administration's (FDA) Office of Criminal Investigations in Chicago; Jack Riley, special agent in charge of the Chicago office of the Drug Enforcement Administration (DEA); James C. Lee, special agent in charge of the Internal Revenue Service's (IRS) Criminal Investigation; and Tony Gómez, inspector in charge of the U.S. Postal Inspection Service in Chicago.
The Illinois State Police also assisted in this investigation, which was conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF).
Following an undercover investigation, James M. Bolin and his son, James P. Bolin, were charged with multiple offenses relating to misbranding and trafficking drugs. James M. Bolin was also charged with money laundering. Both defendants allegedly defrauded and misled the FDA and the DEA regarding the drug status of their purported "herbal" products to avoid regulation of the drugs they sold.
On June 4, 2013, federal agents executed a search warrant at James M. Bolin's former residence in Manhattan, Ill., where he operated a business known as "Herbal City," "H City," "Shop HC," and "Show Off City." While executing the search warrant, federal agents seized hundreds of packages of allegedly illegal synthetic cannabinoids, or a version of the psychoactive component of marijuana, as well as $165,247 in cash. The defendants allegedly advertised the sale of misbranded drugs online and created videos to promote human consumption of their products.
James M. Bolin, aka "James Matthew," 49, and his son, James P. Bolin, aka "Jimmy," 31, both of New Lenox, Ill., were each charged with the following crimes:
- one count of conspiring to commit misbranding of drugs,
- four counts of placing misbranded drugs into commerce, five counts of receiving and delivering misbranded drugs,
- two counts of conspiring to possess and distribute synthetic marijuana products,
- six counts of distributing controlled substances or analogues, and
- one count of attempting to distribute controlled substances or analogues.
James M. Bolin was also charged with seven counts of money laundering.
The 26-count indictment, which also seeks the forfeiture of about $2 million in illegal proceeds, was returned by a federal grand jury Jan. 30. The Bolins will be arraigned on a date yet to be determined in U.S. District Court.
According to the indictment, between January 2010 and June 2013, the defendants conspired to introduce, receive and deliver misbranded drugs into interstate commerce. The Bolins bought and sold products that they and their suppliers – located in California, Florida and New York – falsely referred to as "incense," "herbal incense," "herbal potpourri," and other misleading names. In fact, the drugs were falsely labeled, indicating they were not intended for human consumption when they actually were. The packages also failed to bear labels identifying the name and quantity of active ingredients, as well as the name and location of the manufacturer, packer or distributor, the indictment alleges.
The indictment identifies the following products that the Bolins allegedly bought, marketed and sold as misbranded drugs: G-20 Herbal Potpourri, Joker Herbal Potpourri, Caution Blitzen Herbal Potpourri, Kronik Kryponite Herbal Potpourri, AK-47 24 Karat Gold Potpourri, ZenBio Sonic Zero Cherry, ZenBio Sonic Zero Blueberry, Hip Hop, Darkness Prince, Out World, Cherry Bomb, Caution Platinum Super Strong Incense, Caution Silver Super Strong Incense, Diablo Botanical Incense, Bizarro, Smoking Santa, Mr. Happy and OMG Next Generation.
The indictment alleges that the defendants used the U.S. Postal Service and commercial carriers to ship and receive their illegal products and leased mailboxes in commercial stores in Frankfort and New Lenox, Ill. They allegedly paid at least $1 million to out-of-state suppliers for the misbranded drugs they obtained, while collecting about $3 million in revenue from customers between 2010 and June 2013.
Each count in the indictment contains various maximum penalties, ranging from three years in prison on the misbranded drug counts, to 20 years in prison on the controlled substance counts and some of the money laundering counts against James M. Bolin. Each count also carries a maximum fine ranging between $250,000 and $1 million.
Assistant U.S. Attorney Matthew Schneider, Northern District of Illinois, is prosecuting this case.