Federal Bureau of Investigation arrests CEO who allegedly sold modded phones to criminals

On March 13, 2018, reports indicated that the Federal Bureau of Investigation had arrested the founder and chief executive officer of Phantom Secure, a company accused of selling customized, encrypted smartphones to global criminal organizations. According to a heavily redacted complaint filed in the Southern District of California, the executive faced charges of racketeering conspiracy to conduct enterprise affairs, conspiracy to distribute narcotics, and aiding and abetting.

The complaint, filed by FBI Special Agent Nicholas Cheviron, alleged that Phantom Secure took devices like the BlackBerry 9720 and stripped them of their microphones, cameras, GPS, internet capabilities, and standard messaging services. The company instead installed encrypted features routed through servers in Panama and Hong Kong. If law enforcement confiscated one of these devices, Phantom Secure could reportedly wipe it remotely.

Authorities claimed the corporate structure was designed specifically to facilitate criminal activity and evade law enforcement monitoring. The complaint noted that the technology was used by organizations such as the Hells Angels and the Sinaloa cartel in Mexico, with a convicted member of the cartel reportedly confirming that the gang purchased the devices specifically for drug trafficking. The charges were also supported by an undercover operation in February 2017, during which multiple undercover agents posing as drug traffickers met the executive in Las Vegas. When asked if the devices could be used to facilitate drug sales, the executive allegedly agreed, stating that the technology had been made specifically for drug trafficking.