European police and justice authorities allege EncroChat’s customer base was overwhelmingly criminal.DADO RUVIC/Reuters
Canadian Paul Krusky, the alleged leader of EncroChat, and his associates deliberately promoted and sold the encrypted phone service to known criminals, laundering profits through a complex web of companies and banks around the world, French authorities claim in a legal document.
The people running EncroChat, which was infiltrated by French police in 2020, were in direct contact with a major Spanish drug trafficker and Dutch biker gangs, according to allegations contained in a previously unreported judicial record from the Dominican Republic dated December, 2023.
The document contains new details about the accusations against Mr. Krusky and the operations of EncroChat, which was an encrypted phone company that grew to more than 60,000 users before it was shuttered in 2020. European police and justice authorities allege EncroChat’s customer base was overwhelmingly criminal, and that the service was designed to allow organized crime groups to communicate without fear of monitoring by police.
Mr. Krusky had “no qualms” about selling EncroChat phones to well-known gang members and drug dealers, an attorney representing France, Josefina González de León, told the court in the Dominican Republic.
A low-profile tech entrepreneur who grew up in Guelph, Ont., Mr. Krusky is currently in custody in France facing numerous criminal charges owing to his involvement with EncroChat, including participating in drug trafficking, aggravated money laundering, and supplying authorized cryptographic devices.
The alleged criminal activity spans 2017 to 2021, according to the document, and occurred in Canada, the Dominican Republic, Spain, the Netherlands, the United Kingdom, Germany, Hong Kong and Panama.
Antoine Vey, Mr. Krusky’s lawyer in France, declined to comment on the Dominican court filing, pointing to an earlier statement to The Globe and Mail in which he said that Mr. Krusky “fully denies the allegations which are made against him.” None of the charges have been proven in court.
The case against Mr. Krusky has largely been shrouded in secrecy. But some details relating to the allegations against him were presented to a judge in the Dominican Republic, where Mr. Krusky and his wife had been living for years.
Mr. Krusky was arrested in the Dominican Republic in May, 2022, as France sought to have him extradited to face criminal charges. The court in Santo Domingo ruled in favour of the extradition request late last year, and on Feb. 5, a French public prosecutor issued a news release announcing the country had one of EncroChat’s key leaders in its custody.
The court document from the Dominican Republic outlines the reasons for extraditing Mr. Krusky, and names two other alleged EncroChat leaders. According to French authorities, a Canadian named Seiji Godo served as EncroChat’s technical director while Ian Howard Retvedt, who appears to have family ties to Saskatchewan, is identified as a financial investor.
EncroChat, an operating system loaded onto modified Android phones, promised ultrasecure communication. The devices, which were distributed through a network of resellers across Canada and Europe, sold for roughly €1,000, with a six-month subscription plan fetching another €1,500.
The phones were made to look like regular devices running Google’s Android operating system, but users could switch to the EncroChat operating system by entering a password. Messages to other EncroChat users were encrypted end-to-end and could be set to self destruct after a certain period of time. The phones had been stripped of their GPS functionality and came with a “panic wipe” feature that allowed a user to erase their contents by punching in a code.
The French Gendarmerie Nationale began investigating EncroChat in 2017, and by 2020, it had infiltrated the company’s servers, which were housed in Roubaix, a city in northern France. The information retrieved through that investigation has so far resulted in more than 6,500 arrests and the seizure of large quantities of cash and drugs.
EncroChat users deployed aliases on the platform instead of their real names. Mr. Krusky went by the alias “dystopian,” according to French authorities, who describe him as EncroChat’s general director and key decision maker. He personally oversaw the adding and removal of users on EncroChat’s network, authorities allege.
EncroChat was not a legal entity with an address and a bank account, according to the judicial document. Instead, its owners funnelled their profits through a series of companies and bank accounts in various jurisdictions, in particular Dubai and Hong Kong, French authorities claim.
EncroChat’s profits were shared between Mr. Krusky, Mr. Godo and Mr. Retvedt, according to the court document. It also names a creator of the EncroChat system, Benjamin Haigh, and an individual named Juan Amoretti who was allegedly responsible for logistics.
“Mr. Godo vehemently denies the allegations and looks forward to being vindicated in due time,” Thierry Marembert, an attorney for Mr. Godo based in France, said in a statement. “As the allegations relate to an ongoing matter, we will have no further comment at this time.”
Mr. Haigh told The Globe in an e-mail that he “was contracted for web development work on a component of the system for a limited period of time.”
He added, “At no point did I work on the entire system or have sightlines into the entire system.”
Attempts to reach Mr. Retvedt were unsuccessful. The Globe was unable to locate Mr. Amoretti for comment. There is no indication that any of the individuals named in the court file other than Mr. Krusky have been criminally charged.
In addition to working for EncroChat, Mr. Amoretti was listed as a reseller of another encrypted phone product called Sky ECC, which was founded by Vancouver-based Sky Global. Like EncroChat, Sky ECC was run off of servers in Roubaix owned by a French company called OVH. Many EncroChat users moved to the Sky ECC platform after EncroChat learned in 2020 that it had been infiltrated by law enforcement, according to Europol.
However, Sky ECC was also breached by European authorities, Europol announced in March of 2021, resulting in hundreds of arrests and the seizure of thousands of kilograms of drugs, hundreds of firearms and millions of euros.
As for Mr. Krusky, his lawyer in France previously told The Globe that there is no evidence to support criminal charges. “The only goal of Mr. Krusky was to provide a technology which would fully respect the privacy of its users and he has never intended to participate or facilitate, actively or even remotely, any criminal activities,” said Mr. Vey, who is best known as one of the lawyers who represented WikiLeaks founder Julian Assange in his extradition battle against the U.S.
Authorities allege that money from the sale of EncroChat phones and subscriptions was laundered through companies and banks around the world by people based in Spain and Dubai who did not work solely for EncroChat.
One of the individuals working out of Dubai was a woman named Olena Shabatina, who created companies, opened accounts and was in contact with EncroChat’s leadership, including Mr. Krusky, authorities allege. Attempts made by The Globe to contact Ms. Shabatina were unsuccessful.
EncroChat’s operations were convoluted. The phones were manufactured in China and prepared in Spain, according to French authorities. (The court document does not specify what preparing the phones entailed.) A Spanish company called Mundo Reader then delivered them to Suro Ltd., a Hong Kong-based entity which listed Mr. Godo as a director.
Suro Ltd. then sold the phones to Zicov, a Dubai-based entity controlled by Ms. Shabatina. (The Globe was unable to locate corporate records for Zicov.) Zicov paid licensing and connection fees to Carbon Darle Ltd., which was based in the Cayman Islands, and to Nimbus Communications Ltd. in Hong Kong. Nimbus was used to purchase the SIM cards from a British company called Ritesim, with Mr. Krusky’s name on the orders.
Companies were set up in Hong Kong solely for the purpose of receiving funds from EncroChat users, and these companies changed frequently, authorities allege. Money was moved between these corporations and invoices were created to justify those movements with the intention of disguising the origin of those funds.
In the summer of 2020, after discovering that authorities may have infiltrated the network, Mr. Krusky and his team of developers alerted EncroChat’s users that the system was no longer secure and advised them to power off and dispose of their devices. This made them accomplices to the crimes being committed by gangs who used EncroChat, Ms. León argued in court.
Mr. Godo appears to be still involved in the encrypted communications industry, serving as the founder and CEO of a Swiss company called SDM Technologies. According to its website, the company offers a secure mobile operating system and encrypted messaging apps, among other products.
Mr. Haigh, who has a B.C. address and lists his occupation as web developer on property records, was recently a director at a company called StormFree Cloud Corp. Earlier this year, it changed its name to SDM Technologies Canada. Shortly before that, Mr. Haigh was replaced as a director by Mr. Godo’s brother, Kiyokazu Godo, corporate records show. Kiyokazu Godo did not respond to a request for comment.
StormFree appeared to be developing secure services for companies to manage mobile devices, according to its website. A 2021 blog post on the site highlights the importance of privacy and encrypted communications, and warns that some governments are trying to “undermine” the public’s access to these tools. “While these efforts often adopt the ‘national security’ rhetoric that has been used to justify mass surveillance for years,” the post reads, “there is no evidence that banning access to this technology will lead to a safer society.”
With reports from Stephanie Chambers