Bitcoins, the “dark web” and drug-contaminated rental houses at S.C. beach resorts — including Hilton Head and Kiawah islands — played roles in a multi-million-dollar drug ring based in the Lowcountry.
Court records detailing the drug ring’s operation are sealed. However, testimony this week by Richland County Sheriff’s deputy William Cobia during a pretrial bond hearing in U.S. District Court in Columbia offered a glimpse into the once-thriving drug ring, which had tentacles that ran from China to South Carolina.
Since 2012, the drug ring, whose alleged leader was 36-year-old Eric Hughes of Bluffton, sold “millions” of counterfeit Xanax and Oxycodone prescription drugs on the dark web — the internet’s secretive, dark underbelly — to users across the nation, testified Cobia, who works undercover with a task force led by the federal Drug Enforcement Agency.
Both drugs normally require a prescription. Xanax is a powerful relaxation drug; Oxydocone is a highly addictive pain killer.
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On the dark web, Hughes was known by his cyber nickname, “Genius Bar,” and was famous among illegal U.S. drug users who bought his counterfeit prescription drugs on a dark web shopping site, Cobia testified.
“People actually sought out his site from across the country,” Cobia testified. “He made hundreds of thousands of pills, if not millions.”
The dark web is difficult to access. It is a place where child pornographers, drug dealers, killers for hire and other criminals often hang out. Those buying and selling illegal goods on the dark web often use bitcoin, a non-government-backed digital currency that is difficult to trace.
Last year, a covert FBI cyber-operation that prowls the dark web looking for criminals came into contact with Hughes.
Hughes had ordered a “pill press” — a machine that cranks out pills that look like real prescription drugs from powdery ingredients, Cobia testified. The FBI notified S.C. authorities, and a drug task force — made up of federal, state and local law enforcement officers — started investigating.
Hughes ordered synthetic narcotic ingredients from China — nine pounds or more at a time — to make his phony pills, Cobia testified.
There was no way that Hughes could guarantee that his homemade pills didn’t contain “hot spots” — dangerous concentrations of narcotics, Cobia testified. “They can potentially kill you,” he testified. “There’s no way to know what’s in those pills.”
To manufacture the pills, Hughes and two confederates rented vacation homes at Hilton Head, Kiawah and Fripp islands in South Carolina, and at Tybee Island in Georgia, just over the S.C. border.
“They set up their pill press in those homes,” converting them into “clandestine drug laboratories,” Cobia said. “When they were done processing, the house would be totally contaminated.”
Cleaning up the contamination at one Tybee Island house cost the owners $213,000, Cobia testified.
The Drug Enforcement Agency has sent letters to owners of six other beach rental homes warning them their houses have been contaminated, Cobia testified.
The DEA-led task force arrested Hughes in August after he was in a car crash and thousands of pills spilled onto the road way, Cobia said. Hughes was carrying a gun and false identification, including a fake driver’s license from Alabama.
Investigators also found internet accounts holding roughly 150 bitcoins worth $1 million, Cobia testified. The bitcoins have been seized and sold by the U.S. Marshal’s office, he testified.
Hughes stashed his bitcoins in various places, including Internet gambling sites. He also gave family members more than $200,000 in bitcoins, Cobia testified. Investigators think that Hughes, who has cooperated to some extent with agents, has more bitcoins stashed away, Cobia testified.
Hughes is being held in the Lexington County jail on federal charges of drug dealing that endangered lives. If convicted, he could face from 15 years to life in prison. Federal officials also have charged two other men — Taylor Place, 24, and Willie Rice, 36, both also of Bluffton — with the same crimes.
At Wednesday’s hearing, Hughes was denied bond.
Hughes’ court-appointed lawyer, Jimmy Rogers, argued to U.S. Magistrate Judge Paige Gossett that Hughes had family and psychological issues that would keep him from fleeing.
But Gossett agreed with assistant U.S. Attorney Jim May, who argued Hughes posed a danger to the community and a threat to flee before his trial, citing his stash of bitcoins and use of a phony driver’s license.
“God only knows what was in those drugs he was producing,” May told Gossett. “His drugs went out to unsuspecting populations, and he put peoples’ lives at risk.”