Sky Global encryption case stalls three years after San Diego indictment

Vancouver's Sky Global CEO Jean-Francois Eap faces U.S. racketeering charges that remain untested in court. Belgium has since jailed thousands linked to the encrypted network.

Sky Global indictment three years on: charges dormant, fallout global

Three years after a San Diego grand jury indicted the two men behind Vancouver's Sky Global encrypted smartphone company, the U.S. court file has gone largely quiet — while the ripple effects of the case continue to be felt from Belgium to Minnesota.

Business in Vancouver reports that as of this writing, no filings have been submitted to the San Diego court to bring the proceeding to a close, and no hearings are scheduled.

The original charges

On March 12, 2021, the U.S. Department of Justice charged Sky Global CEO Jean-Francois Eap and distributor Thomas Herdman with racketeering conspiracy and conspiracy to distribute controlled substances. Prosecutors alleged that over the course of a decade, the company made hundreds of millions of dollars in profits by selling modified smartphones and subscriptions to the encrypted Sky ECC network — knowingly, they claimed, to transnational drug traffickers. At least 70,000 Sky Global devices were said to be in use worldwide at the time.

None of those allegations has been tested in court.

Eap did not respond to repeated attempts to contact him last week. Previously, he vowed to clear his name.

"I do not condone illegal activity in any way, shape or form, and nor does our company," Eap said in a statement three days after the indictment. "We stand for protection of privacy and freedom of speech in an era when these rights are under increasing attack. We do not condone illegal or unethical behaviour by our partners or customers. To brand anyone who values privacy and freedom of speech as a criminal is an outrage."

The last significant movement in the court file came in September 2021, when prosecutors applied for forfeiture of Eap and Sky Global's TD Bank accounts, a California-licensed 2019 McLaren 570S Spider, and a list of domain names. Joshua Mellor, the lead prosecutor, did not respond to a request for comment. Kelly Thornton, director of media relations for the U.S. Attorney's Office in the Southern District of California, said: "We are not in a position to do interviews on this ongoing case."

The European operation that cracked the network

The network itself was dismantled before the U.S. charges were filed. Operation Argus — a joint effort by Belgian, French and Dutch police — shut down Sky Global on March 9, 2021, and intercepted approximately one billion messages. A French court had permitted wiretapping of Sky ECC's servers in Roubaix, France, in mid-2019, with the three-country joint investigation team formed by the end of that year.

Law professors Jan-Jaap Oerlemans and Sofie Royer, writing in a November edition of the New Journal of European Law, noted that Belgian and French police had identified criminals using Sky ECC phones as early as 2015. The two authors argued that prosecuting Eap and Herdman may not have been the primary objective of the European investigation.

"Later, it became clear that probably the actual goal, and most certainly the result, of the operation was not to prosecute the individuals behind Sky ECC itself," Oerlemans and Royer wrote, "but to obtain insight in the criminal activities carried out in Belgium and beyond and to prosecute individuals operating from Belgium and neighbouring countries."

Belgium marks three years: 4,439 suspects, 1,139 years in prison

On Saturday, Belgian authorities marked the third anniversary of searches conducted at 200 locations across the country following the cracking of Sky ECC phones. Prosecutors there report 592 open files against 4,439 suspects. Eighty-seven sentences have been handed down, totalling a combined 1,139 years in prison. Authorities have seized 183 million euros — roughly $270 million — in proceeds of crime.

"These criminals are not rid of us yet," prosecutor Franky De Keyzer told Het Nieuwsblad.

B.C. Hells Angel charged in Minnesota murder-for-hire plot

The Sky ECC platform also features in a more recent Canadian-connected case. Damion Patrick Ryan, 43, a full-patch Hells Angel from British Columbia, allegedly used Sky ECC to help a drug lord linked to Iran's Ministry of Intelligence and Security recruit a hitman. Ryan, along with Adam Richard Pearson, 29, and Iranian national Naji Sharifi Zindashti, 49, was charged in Minnesota in January for conspiracy to use interstate commerce in a murder-for-hire plot spanning December 2020 to March 2021. The three allegedly shared photographs of intended victims, location maps, and negotiated payment — all via Sky ECC. The allegations have not been proven in court, and there was no suggestion of wrongdoing on the part of Eap or Herdman.

Not the first Lower Mainland cryptophone case

Sky Global is not the first Lower Mainland encrypted-phone company to reach international courts. Vincent Ramos of Richmond sold modified BlackBerry devices through his Phantom Secure company to clients including Hells Angels and Mexican drug cartels. Arrested in the United States in 2018, Ramos pleaded guilty to racketeering conspiracy, received a nine-year sentence, and forfeited US$80 million.

The Sky ECC and Phantom Secure cases intersected briefly in the national security leaks trial of former RCMP civilian intelligence officer Cameron Ortis last fall. The prosecutor in that case described Ramos and Eap as associates, and heavily redacted trial transcripts included testimony from Ortis that he had emailed Eap.

Eap's California lawyer, former federal prosecutor Ashwin Ram, pushed back in November, stating that Eap never did business with Ramos and never communicated with Ortis. Those alleged links have not been proven.

Ram also noted in a November 2021 court filing that no government agency had raised concerns with Sky Global about illegal use of its products prior to March 2021, and that the company maintained its own internal compliance measures. The filing further stated that Eap had sought a resolution with U.S. government lawyers in July 2021, without success.

Oerlemans and Royer concluded that the Sky ECC operation is unlikely to be the last of its kind. "We expect similar operations to be carried out in the future, focusing on communication service providers such as VPN services, cryptocurrency-mixing platforms and hosting providers," they wrote.

Source: Business in Vancouver