Detroit Man Sentenced to Over Ten Years For Drug Trafficking and Crypto-Related Money Laundering

Last week, the United States Attorney’s Office for the Eastern District of Michigan announced that Victor Hernandez, the leader of a conspiracy to sell cocaine and counterfeit pills over the dark web and launder the proceeds through cryptocurrency, was sentenced to over 10 years in federal prison. Hernandez’s sister, Carolyn Hernandez-Taylor, also pled guilty and was sentenced related to her role as a co-conspirator. 

The case was investigated by the Detroit offices of Homeland Security Investigations (HSI) the Drug Enforcement Administration, and IRS Criminal Investigations.

According to the indictment, Hernandez, 31, of Detroit, ran a dark web vendor site under the moniker “opiateconnect,” selling illicit scheduled drugs, including cocaine, and various counterfeit drugs. These counterfeit pills were made to look like Xanax —the most commonly prescribed psychotropic medication in the United States used to manage panic and anxiety disorders—but were in fact uncontrolled research chemicals not scheduled for human consumption.

Hernandez, according to the indictment, laundered the drug proceeds through non-monetary transactions and intermediary addresses eventually landing at a US-based exchange to cash out the proceeds into fiat currency as shown in the TRM graph below.

Federal investigators worked for months to determine the identity of “opiateconnect” and the location he was using. That investigation led to the execution of a search warrant at Hernandez’s house in Detroit, where agents discovered a clandestine drug lab capable of producing upwards of 20,000 pills per hour. They also found around three firearms, a “tub” containing approximately 600 grams of cocaine, thousands of pressed counterfeit alprazolam pills, $340,000 in cash, and more than $1 million in cryptocurrency.

The prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

The investigation was conducted by the Detroit Dark Web Task Force, which consists of HSI, Postal Inspection Service Office of the Inspector General (USPIS-OIG), Secret Service (USSS), IRS-CI, Michigan State Police (MSP), and CBP. The purpose of the task force is to investigate criminal organizations, to include drug vendors, that operate within dark web marketplaces.  The task force has disrupted and dismantled numerous drug trafficking organizations through criminal arrests, and the seizure of the proceeds from criminal activity.

TRM Labs is proud support law enforcement worldwide in the fight against the use of cryptocurrencies to launder illicit drug proceeds.

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