A new form of money laundering is upon us. A small drug operation was busted where all of the payments for the drugs were via credit card and PayPal.
The operation was small scale – but very slick.
The new buyers were introduced by and vetted by other buyers. The introducing buyers received a referral fee from the new buyers – much like any MLM scheme. No face-to-face meeting ever occurred. The items were left in a series of dead drops around a community. One was under a dumpster at the back of a liquor store; another was on top of an old phone box at a convenience store and another under a rock at a public park.
Payment was based upon membership status. Each buyer was instructed to go to a web site and sign up as a member with a referral code – the code of the introducer. If a prospective member did not enter a referral code they would not be allowed to sign up. Each new member could sign up as a basic member or as a bronze member. Based upon the category chosen was how much and what type of street drug was left for the member at a dead drop. A basic member was an 8th of an ounce (8 ball) of cocaine once a week; a bronze member was a quarter ounce of cocaine and a half-pound of marijuana. There were other membership levels up to a full kilo of cocaine and up to 5 lbs of marijuana and yes, you could buy either as well as other street or prescription drugs. How did you know what was what, it came as a print out included with your third order – excuse me- membership reward.
The memberships from the perspective of the processors of the credit cards were very straightforward. The memberships were for executive training and counseling. Several of the bankers were offered free memberships and indeed received, by all accounts, excellent career advice. While these fellows were drug dealers – they were not stupid, nor were they users of their goods. They hired professional coaches to handle the few “real” clients they had to keep up the false front.
When the operation unwound, they had 10 “front” members and over 120 dealing members grossing about 1.5 million per month.
They did eventually blow up, but only after running for over 7 years. They ran into a concentration of risk issue. The operators of the scheme were four women. Three had bachelor’s degrees and one had a master’s degree in CIS. One wished to retire and the other three understood and did buy her out. This left three people to do the work of four. Mind you this is 120 dead drops per week for three people. That is 5 to 8 drops done per day as well as looking for new dead drop locations. Then, one of the women became violently ill. She came down with chicken pox at age 35. She was down for three weeks leaving 2 to work orders and do up to 12 drops per day. Wisely, they scaled back – but in doing so ticked off a few buyers. A ticked off buyer was later picked up for an unrelated felony – something about operating a stolen car parts ring and offered to show the police how and where to buy the drugs. The police did not bother, they took the fellows credit card records and ran the transactions backwards to find the master account, and then ran the deposits out bound to find all of the other “members”. Over a period of time, they did find most of the members and most of the members were a combination of users and small dealers and rolled them up in two days of arrests.