February 14, 2019

#136 The Founder

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Episode Notes

The story of a person who wanted to change the world using the internet — by committing crimes on an unprecedented global scale.

Check out Evan's book on Paul Le Roux, The Mastermind, here

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Transcript

[THEME MUSIC]


FROM GIMLET. THIS IS REPLY ALL. I'M PJ VOGT.


PJ VOGT: A couple weeks ago, I talked to this reporter named Evan Ratliff. 


PJ: Okay, so how long, how long have you covered technology?


EVAN RATLIFF: I have covered, I've covered technology since 1998. That’s when I started at Wired magazine, I don't know that you could say I was covering it at that time I was an intern who opened the mail but–


PJ: That's covering–


EVAN: In a theoretical way I was cover–I was party to an institution that was covering technology.


PJ: Evan’s really interested in people who use the internet to invent new kinds of crime and trickery. Cyber-extortionists, bounty hunters, bio-pirates.    


But for the last five years, he’s been working on this one book. It’s called The Mastermind


It’s about a guy who Evan believes may be the most prolific cybercriminal of all time. A man who started out as a broke, nerdy computer programmer ... and in an astonishingly short amount of time built this criminal empire that spanned across the world, sewing devastation pretty much everywhere.   The guy’s name is Paul Le Roux. 


EVAN: He was born in Zimbabwe, which at the time, when he was born in 1972, Christmas Eve 1972, was Rhodesia. He's white. So, he's–was part of the minority that was at the time controlling the country.


Evan says there was nothing about Paul’s early life that gave any indication of what this guy was going to become.  


EVAN: He was not a bad kid. I mean everyone says he was a good kid and he was a sweet kid. And they were even, you know, bad kids in the neighborhood, one of whom I talked to, who said, “No, no Paul was never like that. He was just–”


PJ: You talked to his neighborhood bad kid?


EVAN: I did. I talked to like a neighborhood gang kid who said, “Yeah, we all did that stuff. And, and he was, he was just like a, a kind of pudgy kid who was quiet and friendly and his relatives loved him and he was very smart.


PJ: And then, when he was a teenager, Paul’s family moved to South Africa. After that, he started to struggle.  


EVAN: Paul went to school there and did not like it. He didn't like the people. He didn't like the kids. He was really, really upset for some reason with learning Afrikaans.


PJ: Hm.


EVAN: Um as a kind of dead language and it was really in his teens, like with many teens, he started to sort of change. He started to kind of project an attitude of superiority. And then he got a computer. He–his cousin told me that he got a computer for washing a car and from that moment forward. He became obsessed.


[MUSIC] 


PJ: Paul spent the rest of his teens and his early twenties just teaching himself everything he could about coding. And in 1999 he goes online and releases this computer program. It’s this new kind of encryption software that’s extremely powerful and extremely effective. It’s called E4M, Encryption for the Masses.


EVAN: And it was quite well known in the encryption community because it was a piece of disk encryption software that let you encrypt your whole hard drive, but one of the things it did is that it sort of hid the fact that you had encrypted it. Because, even if you've encrypted your hard drive, if the authorities or whoever's looking knows that it is, they sort of know where to look to try to break that. 


PJ: Right. It's like a–if there's one house on the block that has like 80 locks on the door, they're like, "Oh, maybe a drug dealer lives there."


EVAN: (laughs) Right. Exactly. And they're trying to- then–then they can spend all their effort trying to break in there. So it was, it was trying to solve that problem. And also just be a more advanced, sophisticated piece of encryption software. He, he incorporated a lot of different types of different software and algorithms into it and, when he did so, he released it as open-source software. 


So he released it for free, he released all the source code and the idea being, under the principles of open-source software, that other people could work on it and improve it and it would all get better. 


PJ: That’s exactly what happened. People took Paul’s free software and they improved it, they made it better, and then they charged money for the things that they’d made. Some of those people got to cash in and Paul didn’t. He tried to start a company, that failed. By 2001 he was reduced to this job working for a guy whose product was actually based off Paul’s work, a commercialized version of E4M. And if that wasn’t bad enough, that guy fired Paul. None of this had been the plan. 


EVAN: He kind of thought he was participating in this open source world where everyone helped each other and then he came to feel that he never got any money and everyone was taking advantage of him. So he had really been sort of exploited in putting his code out there. And he, he expressed that on message boards.


PJ:  What would he say?


EVAN: He would say, he, he basically said, “It's been nothing but trouble. I've, I’ve released this thing for free. It's been nothing for trouble. And also I’m broke.”


And meanwhile the guy who's running the commercialized encryption software company is like–has a house in the Riviera and is living very high. And Paul Le Roux, he gets divorced. He kind of bounces around and then he ends up in Rotterdam and, you know, he meets someone new and he gets married, but they're living in this small apartment and they have a kid and they have a beat-up car. And he really, he wants what he's seen these other tech people have, particularly this guy who owns this company. He wants that and he's so far from it despite having created a really valuable, interesting piece of software.


[MUSIC] 


PJ: To make matters worse, all of this was happening right at the end the dotcom bubble. These years where everywhere Paul looked, he would’ve just seen the internet turning people–people nowhere near as smart as him–into millionaires.  


Paul Le Roux was not going let this happen again. This was going to be the last time anybody made a sucker out of him.  


For a couple years, he lays low. And then in 2004, he shows up online with his new venture.  


An online pharmaceutical company called RX Limited. 


EVAN: The sort of pitch for the company is that, in the United States there is a really messed up health care system. And as part of that health care system people get prescriptions for painkillers for their back, for their headaches, migraines, what have you. Then they maybe lose their health insurance. They can't get their pain meds anymore and then they go online looking for a cheaper place to find them. So, the premise of the company was to satisfy that demand.


PJ: RX Limited was going to let Americans buy painkillers–quickly, cheaply, with very few questions asked.


Instead of having to make an appointment with some doctor and then go to a pharmacy and get their drugs, Paul’s website would take care of it. Just, put in your credit card, fill out a questionnaire, then somewhere on the Internet an American doctor will approve your prescription, send it to a pharmacy somewhere else in America, and then the pharmacy will just FedEx the drugs right to your house.  


That was the plan. Of course, for this to work, Paul needed doctors and pharmacists. So RX Limited starts just faxing all these mom-and-pop pharmacies, saying, "Hey, we have a very exciting opportunity for you. Using the Internet, we're going to help connect you with customers, not just in your neighborhood, but all across America." 


Evan said, even though pretty much the only drugs that these pharmacists were going to be asked to sell were addictive painkillers, RX Limited was really good at making it sound like there was nothing shady was going on.


EVAN: FOR INSTANCE, there's one pharmacist named Charles Schultz who's this sort of 70-something pharmacist in Oshkosh, Wisconsin, who has two small pharmacies that are family-run. One of them is called Schultz Pharmacy and the other one is called Medicine Mart. 


And he gets a solicitation from RX Limited. And he actually says, "Well I'm not so sure about this." And he ignores it for a while and then times get a little harder and he sort of pulls it back out and says, "You know what, maybe I will try this." And he contacts them.


PJ: And when he calls RX Limited back, the obvious question he has is just like, is there any way this operation could possibly be legal?


EVAN: And they say, "Absolutely. Because we're not dealing in controlled substances. We're not dealing in substances that are, uh, strictly speaking, illegal under American law. But also–" 


PJ: And that's, that's true?


EVAN: That is true. None of the three painkillers that the network dealt in mass, mass quantities, none of them were controlled substances according to the DEA and the federal government. You still need a prescription for them–


PJ: Right–


EVAN: But they aren't under the same legal controls that something like OxyContin would be or obviously heroin or marijuana or anything else. 


EVAN: And they would even say, "Hey, call his ex-DEA agent down in Florida and he'll reassure you." And they did, they had a guy who the pharmacist could call. 


PJ: An actual ex-DEA agent–? 


EVAN: No.


PJ: (laughs) No?


EVAN: No it was not. 


PJ: (laughs)


EVAN: But very good at playing one. 


PJ: Got it. 


EVAN: Uh, or at least to the satisfaction of a 70-year-old pharmacist. You know? Who would say, "Okay, well, you know what this, it sounded too good to be true. But I guess it's not."


PJ: (whispers) Wow.  What is the–even though these main painkillers aren't controlled substances, are they things that people are abusing? Is it like creating misery?


EVAN: Yes. Something like tramadol, there are plenty of users of tramadol here who, they're using it as an addictive drug. 


Like, many of the stories are, are the same stories that you hear around the opioid epidemic. So when the, when the authorities started tracking this, they would go interview people. They'd try to find out, who is buying all these drugs, this volume of drugs? Who could it possibly be? The people they found were people who got into a car accident, lost their job, lost their health insurance, at one point were prescribed painkillers, got hooked, and then they're just ordering tramadol online.


PJ: The orders kept coming and coming. Paul Le Roux had call centers in Israel and the Philippines, just filled with people who all day were taking orders from Americans, even calling them up asking, do you need more? 


This was years before the opioid crisis would become front page news in America. But the people in these call centers they were seeing it. It was basically their business model. 


And it was profitable. Everybody in the chain was making lots of money–the pharmacists, the doctors, and more than anybody else, Paul. Hundreds of millions of dollars. 


His big advantage over his competition was that he was able to make himself untouchable online. For instance, this thing would happen to other questionable online pharmacies where they would just have their domain names taken away. Like GoDaddy or whoever would just kill their websites for violating the terms of service. That never happened to Paul. 


EVAN: What Paul Le Roux did was, through RX Limited, he created a thing called ABSystems, which was a domain registrar. So it was basically, it was literally the–


PJ: Oh, like he himself was like a GoDaddy or a Hover– 


EVAN: He was a GoDaddy. And he got it officially approved by ICANN to be the–


PJ: (whispers) What?

 

EVAN: One of two domain registrars operating in the Philippines. Not only could they protect them in that way, if something did get taken down, let's say at a different place in the stream, a website got taken down, they could print a thousand more in an hour. They could just–

 

PJ: (whispers) Wow. 

 

EVAN: Mint domains in an unlimited fashion because they were approved by ICANN to make whatever domains they wanted, so they would have, you know, RXBizPayouts dot 345–like they, they could just make, add numbers, add random strings to the end and just keep making them and making them and making them. And it made it essentially impossible to take the network down. They just–there was no way to do it–

 

PJ: That's so devious. 

 

EVAN: Yeah it was brilliant. 


PJ: And what, like, was his, like at the height of Paul’s success, how much of the online pharmacy market was just his? 


EVAN: There was one estimate at the time that half of the domains on the web that were devoted to internet pharmacies, rogue internet pharmacies, were actually RX limited. So it was potentially responsible for half of all of the–


PJ: (whispers) That’s wild.


EVAN: Gray, black market distribution of pharmaceuticals on the internet. Again, impossible to know the exact numbers. If you asked anyone who was looking at like spam or pharmacies at that time, ABSystems was the absolute juggernaut.


PJ: Almost from the beginning, like in 2008, Paul’s new business completely transformed his life. He’s able to move with his wife and kids to the Philippines, great weather, lax regulatory environment. He’s buys a luxury penthouse condo, and then another, and then another. He has more money than he could ever spend.  


After a few years of this, Paul, like anybody who’s outrageously successful in a somewhat shady business faces two options. One, he can take his somewhat shady business and just make it above-board, like, make sure that the doctors are actually reviewing all the prescriptions like they’re supposed to. In that case, he probably makes a little less money. 


Or he could just keep doing what he’s doing and hope that he doesn’t get in trouble.  


Paul chooses a third option. And nothing that happens next makes any sense according to my understanding of how the world works. This is where the life of Paul Le Roux becomes completely absurd. 


Paul Le Roux decides to grow and expand into new businesses. He decides he knows exactly how to put his wealth to use. 


EVAN: People who advised him would say, "Hey, invest it in this. Or branch out into this." 


But he decided, "Well, if I branch out into cocaine trafficking and meth trafficking and moving gold across Africa, those are very high margin businesses (PJ laughs) and I can make five thousand percent return on my money instead of eking out five percent at some, you know, some boring call center business. I can really, really maximize my money." 


PJ: And so what's his first step into sort of that. Like going from being like, “Okay, I'm a businessman who with–who's very good at the internet to like, darker.”


EVAN: The first step was probably he hired this guy named Dave Smith who was a former soldier from the UK. He's actually from Northern Ireland. And he was operating in the Philippines. There's all these security companies that sort of provide protection for projects, physical protection, (PJ: Mhm.) if you’re building a dam or something like that. 


And Dave Smith was a guy who had worked in Iraq. He'd worked in Afghanistan. He had a whole network of sort of mercenary, ex-soldiers who were willing to do pretty much anything as it turned out for a salary of 10,000 dollars a month.


Dave Smith sort of said, "Hey, I can open up this whole world for you. Now, I can give you the ability to project your growing power all over the world." And Le Roux jumped at that opportunity. So, that included starting to do gold purchases in Africa to launder money. So–


PJ: How would that work? 


EVAN: He would send guys–I mean all of this stuff sounds insane because one of, one of the things that's so remarkable about him is he would just send people to do something that had come out of his head. So he had an idea in his head and then he would say, "Hey, go, go try to do this." And if they failed, he would just send another guy and another guy and another guy until either it worked or maybe it was a bad idea to begin with.


PJ: But like he was like, he's doing this remotely, like it's like he's playing a video game. Like it's like–


EVAN: Yeah. Absolutely. I mean he's sitting at his laptop, does not leave his house very often. He works as many hours in a day as you could possibly work and sleeps maybe a few hours a day. He's got a beat up old Windows machine that he has outfitted exactly how he wants it, with exactly the encryption software that he has written to make sure that he can hold everything on there and it's all protected. 


So, for the gold for instance, he would just send a guy to like Accra in Ghana and say, "Okay, we're going to buy some black market gold." Literally ex-US soldier sent to Accra with a big bag of money, walking around saying, "Who's got gold?"


PJ: Really?


EVAN: Yes. And so, then they would–you can find it. You–the crazy thing is, it works. Like you can find someone– 


PJ: How?


EVAN: Well, you start–I mean, it starts with, they just talk to a taxi driver. I mean, there's a known black market for gold. So there's- there's- there's–wherever there's gold mining, there is also an urban center where people are siphoning off gold from the mines– 


PJ: Uh huh. 


EVAN: And it's ending up being sold in sort of back alleys, so to speak. 


PJ: But it's like, you would expect that the way that story ends is like when your friends go to a city for the first time and try to buy weed and they end up with like a bag of oregano or whatever. You know what I mean? Like, you shouldn't just be able to send somebody to go buy gold. 


EVAN: I, I agree. Sometimes it would go that way. And so, all the mercenary guys that I talked to, you know, they would have a story about, "Oh, this one guy, you know, Shy Ruvin, they sent Shai Reuven into the Congo and Shai Reuven had a bag of money and he just got jacked as soon as he arrived at the airport." And they're like, "You can't just show up in the Congo with a bag full of money and expect not to get jacked." 



EVAN: But you can send a couple of guys into the Congo who first figure out weapons and security and safe houses and contacts. And then you send the guy with the bag of money and when he shows up at the airport, there are two guys with automatic weapons (PJ: Hm.) who are there to usher him into a safe house to then provide the money to get the gold and then the gold is driven across borders in a pickup truck or a, an SUV with like five guys who are ex-US military, British military, South African military guys who their entire job is to protect this gold. So that's how they did it. 



PJ: It really is like he thinks he’s playing a video game it’s like you try the level once, it didn’t work and it’s almost like he’s thinking like, “Oh, I just need to upgrade our weapons or send in more guys.”


EVAN: It is a video game and he was operating–his video game it was sort of like some combination of- of- of–of a set video game and then a, like, a–I'm trying to think of a good example, maybe The Sims, where, uh, or what's that one all my nephews played? Where you build–


PJ: Minecraft?


EVAN: Minecraft. Where you can make your own rules too. You can do–you can create worlds. So the craziest example of that is that he tried to start essentially his own militia in Somalia. And he just, from the Philippines he was just like, "You know what's a good place to go? Somalia. Because the government there has no control over the environment and if I were to set up an operation there, I could operate entirely lawlessly. I could do whatever I wanted. So he set about creating what was ostensibly a fishing, a tuna fishing operation. 


PJ: A tuna fishing operation. 


EVAN: In Somalia. 


PJ: Okay. 


EVAN: Which is actually not a terrible idea by the way.


PJ: So, I did not know this, but Evan told me that tuna fishing is actually very lucrative industry. 


And apparently there used to be lots of fishing off the coast of Somalia. But, it was all foreign fishermen, which not everybody in Somalia liked. And so some people started going out and capturing the boats. (That’s apparently how Somali pirates first became a thing.) Anyway, now there’s a lot less big commercial boats fishing. And if you’re Paul Le Roux, all of this is something you somehow just know. 

 

EVAN: And Paul Le Roux, always looking for a, a market, an opening–an opportunity, he said, "You know what? I bet there's–it's just teeming with fish there. (PJ laughs) So if we set up a fishing operation and we just coordinated with the pirates, we can just buy them off. We can use them for protection. We can protect them. We have our own forces. Then we could fish for tuna there. 


PJ: So is his superpower like a combination of he has lots of ideas for illegal things to do and he's very audacious? Like what is- what–why is he the person who has that idea and does it? Where as like another person, even like another criminal, doesn't do it. 


EVAN: I think the combination of he made so much money in this pharmaceutical business that he really had the ability to kind of just splash it around on crazy ideas. So he really was like, you know, his version of like, uh, Richard Branson or actually a better example is his version of Elon Musk who's sort of, you know, "Now I'm going to start this. Now I'm going to start that. I'm going to start Tesla. I'm going to start this." His version of that was, "Hey, why not Somalia? Hey, why not gold mining? Hey, why not arms dealing?" 


He, that's where he wanted to splash his money around. He thought, "I can be the biggest global criminal in history." 


PJ: Evan actually managed to get a picture of what Paul was like as a CEO. Turns out kind of annoying. Like, he had too many ideas. For instance, in Somalia, he never even gets to the tuna fishing. He decided, that was gonna take too long. So instead, he flew in a botanist to try to see if he could grow poppies and cannabis in Somalia.


Stuff like that completely frustrated his militia. Plus, he was just a micromanager.


EVAN: He'd call you up in the middle of the night and have some complaint about the gold deal you were doing and that's just not what the CEO should be spending time on. Like the CEO should delegate that task–


PJ: And how did his like mercenary hitmen feel about getting hassled by like the computer nerd boss who's micromanaging them.  


EVAN: Well, they, they didn't like it, uh, but, a lot of them, the mercenary guys, they were like, this is better than working in Afghanistan or Iraq. Like–


PJ: Right.


EVAN: Some of them thought it was incredible fun. They were getting paid 10,000 dollars a month, flying around the world, doing crazy shit and they couldn't get enough of it. 


PJ: And how would he hire? Like how do you pick which mercenaries are the good mercenaries?


EVAN: They would do it through networks, just networking. Dave Smith just had contacts who had worked with him at diff–like Crucible, like a, like a security contractor that's contracted to work in Iraq. So he's got people that he can email and say, "Hey, I've got a rich guy. This rich guy's paying really good money for grey area work, show up in the Philippines, we'll have a meeting, if he likes you, we'll hire you." That's how they would do it. 


PJ: So it's like inform–it's not like they're on LinkedIn. Like, it's like informal, word of mouth, phone calls. 


EVAN: Well they, they did not hire through LinkedIn, but it is like they were on LinkedIn. 


PJ: Really?


EVAN: Yeah, as a matter of fact, well so they had–they would have front companies. So they had a front company called Echelon. Echelon or Southern Ace–


PJ: (whispers) Southern Ace.


EVAN: Was the name of the company that operated in Somalia. They would take resumes. You submit your resume to Echelon. Your resume says, “I have, you know, close protection combat experience.”


And so, when I started looking for these guys I, at first I was sort of like, I'll never find these mercenaries. How could I possibly find them? They're holed up somewhere. If they haven't been arrested, they're in hiding. I literally went on LinkedIn, typed in Southern Ace and a guy just comes up. He's just got Southern Ace on his resume as a place that he worked–


PJ: (whispers) That's wild.


EVAN: He's described the work in a way that's very, sort of, sounds vaguely like it's any other security company, you know, "provided protection for projects in Papua, New Guinea and, you know, management of equipment." And like what I found out that he did was he burned another operation–they had a timber operation in Papua, New Guinea, he burned the other operation to the ground. 


PJ: (whispers) Oh my god. 


EVAN: The competitive operation. And like, the guy that worked for Southern Ace. He was a hitman. He was hired by Le Roux as his personal hitman under a company called Southern Ace and he just put it on his resume. As something he'd done–


PJ: But it didn't say, it just said Southern Ace, like "human troubleshooting" or whatever–


EVAN: Exactly–


PJ: It didn't say like hitman. 


EVAN: Exactly.


PJ: That's so wild. It's weird also I guess I never thought of it. But just that there is like a–that it's an industry. Do you know what I mean? That there's like a world of people who kind of know each other and used to work together and like, oh, that guy is great, that guy is terrible. It's just strange that a computer nerd finds himself in that industry. 


EVAN: I think that was one of the things that was so remarkable to me was how you could get into so many worlds so easily. 


PJ: Evan found a bunch of early usenet posts Paul wrote -- he doesn’t come across as someone with some special insight into the world beyond coding software. He’s actually super blinkered -- misogynist, racist -- he has an idiotic stereotype for every country. 


So it turns out, here’s what happens when you give a misanthropic internet troll access to unlimited funds and lots of mercenaries. He moving cocaine and meth throughout the world,


[MUSIC] 


He’s selling weapons to Iran. At one point, he even considers an armed coup of the government in the Seychelles. 

And by 2010, he’s already gone a long way to making sure that none of this stuff can get traced back to him. His business is just a web of shell companies. And he’s even started to erase his name from the Internet. 


And in the real world, it was like he had the Phillipines totally under his control. Evan said Paul had bribes so many cops that even the ones who wanted to investigate him were too scared of their bosses. They figured Paul probably paid them off. He had moles in the American embassy. He could buy and sell intelligence reports. He’d converted his money into gold bars, which he then buried under the hot tubs of his estates in the Philippines.  


Paul seemed totally untouchable. 


[MUSIC] 


PJ: What Paul La Roux didn’t know was that in Minnesota, two DEA employees had already begun to pull on a tiny thread.  


BREAK


PJ: So the story of how Paul Le Roux would eventually be caught, it started slowly and it started far away. In 2007, in an office building in Minnesota, there were these two obscure DEA investigators whose whole job is basically just to regulate pharmacies in the US. 


EVAN: They were what you call diversion investigators, which means they're not like DEA agents. They don't carry guns. They don't bust people with cocaine and things like that. They only investigate the diversion of prescription drugs onto the illegal market. That's their job.


PJ: Got it.


EVAN: So, Kimberly Brill and Steven Holdren, they would raid pharmacies. Pharmacies that were selling controlled drugs online. 


PJ: So, one day they’re investigating a suspicious pharmacy in Chicago. This place called Altgeld Garden. Altgeld Garden is part of Paul’s rogue pharmacy empire, but they don’t know that. All they know is Altgeld Garden is shipping way too many painkillers. 


And Kimberly Brill wants to know exactly how many, and to who, and so she subpoenas Alt Geld’s FedEx account. And when she does, she see something that catches her completely by surprise. The FedEx account is being shared with a dozens of other pharmacies, all across the United States. It’s like the shady pharmacy version of 80 people who all use the same Netflix password.


EVAN: So it's like someone got a hold of a FedEx number account and has like shared it with all their friends and everyone's shipping on it. So–


PJ: Oh! Which is really sloppy. Like, they're having multiple pharmacies in their network share a login basically?


EVAN: Basically, yeah. So that's when those investigators realized, "Oh, now we can see that the other entity, RX Limited is the thing behind all of this. 


PJ: Were they surprised at just–to realize that they'd found something like maybe bigger than what they'd been looking for?


EVAN: They were stunned. I mean when Kimberly Brill opened up this spreadsheet she was, basically said, "Oh my god. This is unbelievable." And like, called her partner Steven Holdren and was like, "You have to come look at this right now." Because I think they knew that a network might involve multiple pharmacies, but the volume of shipments that were happening was just staggering. I mean we're talking about tens of thousands of drug orders that are happening all on the same FedEx account. 


PJ: And so this is where the game of cat and mouse really starts. Because she knows that there’s this big network, but she doesn’t know who’s running it.


And by her own admission she and her partner are not internet experts. So in order to understand what RX Limited is up to, they have to teach themselves how the internet works. They have to learn about like, domain registrars and IP addresses, peer locations.


PJ: It's funny because they're learning, they, they like understand drug dealing and they're trying to learn the internet. He understands the Internet and is learning like real life drug dealing.


EVAN: Mhm–


PJ: You know what I mean?


EVAN: And he's operating with hundreds of millions of dollars, whatever equipment he wants, anything he wants to buy.


PJ: No bureaucracy. 


EVAN: And they're operating in cubicles, in a tower in Minneapolis, with literal notebooks, like five-by-seven notebooks, where they're keeping ledgers on everything they found and like an old desktop computer. And they're taking on this man and his network.


PJ: Online, Paul’s network doesn’t look like a network. It looks like an infinite number of unrelated, spammy pharmacy websites. But when Kimberly and her partner map it all out, they realize that even though there’s all these websites, when you actually buy the drugs,  like at checkout, you get redirected to a payment page and that payment page is only hosted at one of two different places. And so they subpoena one of those domains. This place called Systems CA.

 

EVAN: So that was a sort of centralized point where they could say, "Okay, where is that hosted?" They found it hosted at a place in Canada. They could get a subpoena to go in there and try to get the information off who's paying for this. And they came across the name Paul Le Roux.


PJ: He had just put his name as like the, the owner?


EVAN: When he first started, he put his name on everything. He was Paul Le Roux–


PJ: Because he didn't know what it was going to be?


EVAN: He didn't know what it was going to be. He didn’t know what else he was going to be doing. 


PJ: (whispers) Right. 


EVAN: He didn't know the extent to which he was going to be tracked by the US authorities all over the world. He figured it out later. And he started taking his name off of everything. And actually one of the investigators involved basically said to me, "If he had done that a little bit earlier, he would be free today." 


PJ: And they don't understand at this point, I guess, that the thing that they're looking at is the least shady thing that he probably does at this point. 


EVAN: Yeah, at the beginning, I mean, he wasn't doing as many shady things at the time they first started looking, 2007-2008, he was just getting into real serious other types of crime. But then they would start to see these, just these anomalies that they couldn't understand. Like, they couldn't understand why he's making phone calls to Somalia. 


He's not running a fucking pharmacy in Somalia.


And so these pieces like slowly started to cohere. Because it was almost just impossible to believe that he was involved in the scope of things that they eventually discovered. Like you wouldn't sit there and be like, "Oh, you know what? We should look into whether or not he's buying meth out of North Korea."


PJ: "I wonder if he's trying to take over a country." Wait, was he really buying meth out of my North Korea?


EVAN: He was buying meth out of North Korea. 


PJ: How does that work? 


EVAN: That's, that's classic Paul Le Roux. (PJ laughs) He had a, he had a guy who worked for him, he was actually a bartender. He owned a bar in Manila. And then the guy came to him and said, "Hey, look, I know this man. And this man has contacts in the Chinese triads in the- in the–organized crime in Hong Kong. And you should talk to him. 


And so, Le Roux goes and talks to him and this guy had- the–the bartender guy it's like his brother's friend or something, and eventually it comes to light that actually the man does have contacts. He is part of organized crime in Hong Kong and he knows how to get meth out of North Korea. So they start up an operation, figuring out how they're going to get it out of there, where it's going to go. It seems like they bought, you know, 50 kilos initially. And then eventually he bought a ton. And–


PJ: You mean a literal ton. 


EVAN: I mean a literal ton. It's manufactured by–under the direction of the state in North Korea. And so it's like 99.9% pure. It's like the purest meth in the world. And, so, that was one business that he had, was getting some meth out of North Korea. He actually tried to buy a submarine from North Korea as well, because he wanted to use it to ship the stuff.


PJ: (laughs) And because why not.


EVAN: Yeah.


PJ: And do you have a sense of like how he was–was he feeling like, was he enjoying it? Was he like stressed out? Like, what it the experience of this like for this guy who started in a very different place and is now remote micromanaging a burgeoning drug empire?


EVAN: I sort of think like any, you know, CEO of something that becomes massive and sprawling and you're trying to keep it entirely under your control that there were times when he was frankly doing the thing he had always dreamed of. Like he loved deals, he loved making deals, the bigger the deal the better and he would talk with this sort of satisfaction about how many deals he had going on in all of these different industries. It's like he'd diversified his company and he was just, just succeeding in so many areas.


But then I also, I got a hold of a lot of chats that he had with his cousin and in those chats you can also see the stress that comes with that. You know, he owes people money, and people owe him money and there's violence involved and it starts to get very serious and that is wearing on him and he will periodically say, "Hey, I need a, I need a death certificate because I need to disappear and I need people to think that I'm dead." And then he sort of works through whatever problem that was and he doesn't need the death certificate anymore. But–


PJ: He's like "Ah, forget the death certificate."


EVAN: Yeah, then six months later he's like, "I need, uh, surface-to-air missiles, so we gotta get surface-to-air missiles." You know, he's just kind of like, always, always churning. And there's one sense in which that's what he was born to do and there's nothing more satisfying than that. And there's another sense in which it seems like the world was kind of closing in on him by 2011, 2012. 


PJ: Evan says that by this point Paul had just started to lose it. He’d gotten very paranoid, and very bloodthirsty. For years, he’d used Dave Smith, his chief mercenary, to threaten people. Some employee who he thought could talk to the cops or somebody who he thought had stolen his money. But now, he just wanted those people killed. 


And the list of people who should be killed kept expanding. It wasn’t just people who were threats to Paul, it was anybody who crossed him. His cousin owed him 50 grand, Paul had his house firebombed. A real estate agent lost his money in a deal. He had her murdered.


EVAN: So he really kind of like, got so deep into his head on betrayal, that he would just have anyone- he would have any–by the end he would have anyone killed. His hit-list included people who owed him 1,000 dollars. 


PJ: Really?


EVAN: I mean, he made hundreds of millions of dollars. And he had a woman on his hit-list, another real estate agent, who had supposedly bilked him for a 1,000 dollars. It’s insane.


PJ: What's the closest he got to like the things he was doing? Like, what's the part where he was most actually like not directing a video game of violence?


EVAN: The closest he got was he participated in three of the murders that he ordered–


PJ: Oh–


EVAN: So he had this South African hitman and he was kind of his personal hitman. So he had a security team. But then he had his personal hitman who nobody else knew about, so he could use him, carry out murders that he didn't want anyone in the rest of his operation to know about. Those murders involved people in his operation itself. So for instance– 


PJ: You need a hitman to kill your hitman. 


EVAN: You need to hitman to kill your hitman. And it's like, that's exactly what he did. He used the South African hitman to kill Dave Smith, who was his head of hitman operations.


PJ: Why?


EVAN: Well, Dave Smith had gotten very frustrated that he was not making more money. So he was doing all this dirty work for Le Roux and had gotten him into all this drug dealing, all these lucrative ventures and gotten him all these mercenaries, felt that he wasn't getting paid enough, was also using a lot of drugs (PJ: Mm.) and he started stealing from Le Roux. He started stealing gold. 


Le Roux laundered a lot of his money in gold and they hid it all over the Philippines. So Dave Smith was digging it up and selling it, borrowing, so to speak, from Le Roux to feed increasingly expensive appetites. ‘Cause Le Roux had said, "Don't buy fancy cars. Don't buy fancy watches. We're low profile. We don't want any attention." So this guy's driving up and down the main drag of the Red Light District in Manila in a Lamborghini. Like it's not–it wasn't a secret.


PJ: Right. 


EVAN: That he was out there going crazy. He just didn't care. And I think probably because he thought, "I'm Le Roux's hitman. What's he going to do? Order me to kill myself?"


PJ: (whispers) Right. 


EVAN: But Le Roux had another hitman. And so, they lured him to a piece of property in the south of the main island of the Philippines where Manila is–he had a, kind of a beachfront property there–under the guise that they were going to bury some gold. So they brought Dave Smith there and then the South African guy shot him. And then it became a kind of like black comedy in a way. Like the guy's gun jammed. Dave Smith was still alive. And they were trying to get the gun unjammed and then some dogs ran onto the scene. And they were like chasing off the dogs.


PJ: (whispers) God.


EVAN: And then they got the gun unjammed and shot him. And then, Le Roux also had a gun, so then Le Roux shot him too. And that was a moment where it felt like, when I learned about that, that he, he had gone so far that he really wanted to participate in that element of the business. 


But then, you know, I interviewed this hitman and he was like, "And then Le Roux, you know, he could have fucking killed me. Like, he was like shooting this crazy automatic weapon all over the place. He has no idea what he's doing and I'm lucky I wasn't killed because I was standing right across from him. And then he handed me a roll of like plastic wrap and was like, ‘Wrap up the body.’” And the hitman, being an experienced hitman was like, “You're fucking out of your mind. Like, we've got to like wrap up this body in something bigger and then like dump it in the ocean." And that's what they did. Although then it wouldn't sink. So then Le Roux like got in the water and like cut holes in it, so it would sink. 


PJ: Yeah.


EVAN: There's something so bizarre about Le Roux's sort of amateurish approach to killing people and it's all really like someone who's been playing a first person shooter who suddenly is in the real world doing first-person shooting.


PJ: Yeah. 


EVAN: And really has no idea what they're doing. Eventually they were able to dispose of Dave Smith's body, and then they killed two other people in sort of similar ways. 


PJ: At that point, like how many years away is he from having just been a guy who invented some encryption software that was open-source? 


EVAN: From the encryption thing he's, he's a decade away. Like in a decade, he went from a guy who was making open-source software for this community and also going on message boards and saying, "Hey, does anyone have contract programming they need done? I can do it. I'm great. You can see my resume." He went from that to being a guy who is, you know, killing his longtime number two deputy and, you know, dumping his body in the ocean.


PJ: I know this is sort of impossible to answer but do you think that that person was always inside him?


EVAN: That's, I've really puzzled over that. And I've tri–I've in some ways tried to refrain from, from being the person who psycho–psychoanalyzes him. I mean, the, if you interview anyone in his orbit, they will provide that kind of analysis and say either, "Yeah, he was like the nerd kid who everyone beat up and so he was forever taking vengeance on the world. So he was always that." And then other people will say, "He was not. He was the sweetest kid and teenager and even young adult and actually something changed in him." 


But he kind of like went down a path that led him to exercise impulses that he maybe already had some version of, like he always felt sort of superior to other people intellectually. And then that just gets metastasized within this network where he also feels like that's part of business. Killing people is how you work in this business, that's just too bad. If you want to be in this business, you got to kill people. 


PAUL LE ROUX: I can see why you picked this place. 


PJ: This is a video from the day that Paul was arrested.  


C: Trust me, what’s your name again?


PAUL: Paul.


PJ: He’s in a hotel room in Liberia, sunk into a big red vinyl couch. He’s got a shaved head, oversized royal blue polo. He’s almost 40 years old. And he’s there to make a deal with the head of a Colombian cartel. Paul’s going to help him build a meth facility in Liberia. He just sent them the precursor chemicals.  


PAUL: Already shipped. It’s already shipped. 


C: It’s already shipped.


PAUL: We already sent it to you.


C: Okay.


PAUL: Uh, this week I will get the bill of lading and I will give it to my man here to give to your guys. I want to apologize for the delays on that. Actually when we went to ship it out, there’s a whole bunch of new regulations we have to comply with. Which we finally did.


C: Mhm.


PAUL: And we shipped it out. It went out last week.


PJ: The conversation moves on, from meth to coke to drug kingpin small talk. Paul actually starts telling this cartel guy about Dave Smith, about the murder, about why he got so pissed off.  


PAUL: That asshole. Stole, can you believe this, five fucking million dollars. 


C: 500 million?


PAUL: Five million dollars.


C: Five million dollars.


PAUL: This motherfucker stole. Can you believe that dude? This asshole bought for himself a fucking Hummer. 


C: Hm.


PAUL: A Mercedes. His Mercedes is a fucking SL65 AMG. 


C: Yeah.


PAUL: It’s like a 300,000 dollar car. A Lamborghini. What else, what else did he have? You know what really pissed me off? His yacht is bigger than my yacht!”


C: (laughs)


PJ: Paul doesn’t know it, but all the people in the room laughing sycophantically, they’re recording for the DEA. The cartel boss is actually a paid informant. 


What had happened was that, months before this meeting, Paul had relocated some of his criminal operations to Brazil. He wanted to traffic cocaine out of South America. 


The problem for Paul was that the Minnesota DEA investigators, they could get way better cooperation from the Brazilian authorities than they ever could in the Philippines.


EVAN: They got a wiretap on his cell phone. They were following him all over the place. They were reading his emails and his texts. And so, at that point, they were really starting to get information they’d never been able to get. And he was talking about all of his businesses, drugs, huge amounts of drugs moving out of South America. He was talking about the pharmacy business, money laundering, all of it. 


PJ: Evan said now way more people at the DEA were excited about trying to arrest Paul. The 960 Group, which is the DEA’s elite narco-terrorism squad, full of agents with actual guns and badges and real resources, now they jumped onto the case. 


EVAN: After a long time of not being interested, they became interested in trying to catch Le Roux and so they took over the job of actually catching him. 


To do that they set up an elaborate sting operation which required that they find an insider from Le Roux’s organization who could help them lure him into basically a fake drug deal. And they found a guy who had worked for Le Roux, who had actually contacted the US government trying to turn in Le Roux but no one had ever paid attention to his email and–


PJ: How often does that happen? 


EVAN: Well, apparently a lot because there were multiple people who worked for Le Roux who attempted to contact (PJ laughs) the US government and these people didn't hear from anyone for like six months.


PJ: But now, they wanted to arrest him, which meant setting up a sting operation. The tricky part about that was actually just finding a way to get Paul to physically come to the meeting, to go in person to a drug deal. 


That wasn’t Paul’s style. Remember this is the guy who wants to do everything, remotely. But the way they got him there was by playing to his ego. They told him, “This is a boss to boss situation.” This powerful Colombian cartel head wants to meet his equal in person. 


And as paranoid and cautious as Paul was on the Internet, it turned out that in the room, not so much. It was like, immediately he was just talking. So much. He was showing off his whole criminal operation like he was some nerdy kid talking about his prize winning science project to his Mom’s new boyfriend. 


PAUL: We, actually right now, we manufacture in Philippines and we also buy from the Chinese, who are getting it from North Korea.


C: Mhm.


PAUL: Okay? The quality that you saw–


C: Right.


PAUL: Is very high. That one– 


C: That’s not very high. That is awesome. 


PAUL: Yeah.


C: I was going to tell you that, but later on. But now that you talk about it. 


PAUL: Yeah. 


C: That is fucking incredible.


EVAN: It’s clear that he gets off on making these deals and being an international operator. I mean, it's, it's an incredible power trip. 


PJ: That helps me understand because it's almost like the disgusting little like jolt you get in your brain when you name drop, when you like brag that you like saw some celebrity on the street or something. It's like he gets that but for buying like North Korean meth.


EVAN: Right. Right, if you felt like you could, you know, go anywhere in the world and sort of meet with high level people, like I could see how that would be–you would feel like, oh, like, look at the power that I have at my fingertips.



PJ: The sting operation was a success. Paul left the meeting in the hotel room, got back to his own hotel, and was arrested. They threw him on a plane and extradited him to the US. He started cooperating before the plane had even landed.


But what happened next confounded a lot of the people who followed this, especially Evan. 


So, he said, the Minnesota DEA, they actually lost control of the case. That elite squad, the 960 unit, they took over. And for some reason, that team, along with the federal prosecutors in New York, they decided to go after Paul’s organization in this very unusual way.  


Normally, the way the government arrests a drug kingpin is they try to get the lowest level people in the organization. They arrest them. They offer them leniency to turn on their bosses, and they just move their way up. But in Paul’s case, they did the opposite. 


The government offered Paul what Evan says was a generous cooperation deal in order to use him as a witness against his own underlings. 


EVAN: For instance, all the operators of the pharmacy business, where you say, okay, these are people who were- a lot–some of them scared for their lives working for Le Roux. If you had gone to them and said, “Hey, will you come to American testify against Paul Le Roux?” They would have jumped at that opportunity and instead they were using Paul Le Roux in custody to lure these people, for instance, out of Israel to Romania, so they could be arrested and brought here and prosecuted.


PJ: The government’s strategy created a very bizarre spectacle. So picture this, okay? It's fall of 2013, you've got Preet Bharara, who at the time is the US Attorney for the Southern District of New York. Now he's a podcast host. He is doing this press conference where he's announcing these huge arrests that they've made.


PREET BHARARA: The bone chilling allegations in today’s indictment read like they were ripped from the pages of a Tom Clancy novel. The charges tell a tale of an international band of mercenary marksman, who enlisted their elite military training to serve as hired guns for evil ends.


PJ: He talks about these murderous contract killers who they’ve nabbed. But what he doesn’t talk about is who these guys are working for. 


PREET: All five defendants allegedly worked to help import hundreds of kilograms of cocaine into the United States.  


PJ: He doesn’t talk about Paul. Even though they had him custody. And the reason was that they’d ended up in a situation where they couldn’t actually charge him for the worst of what he’d done, for the murders.


EVAN: The evidence that they gathered about those murders a lot of it came from Le Roux. So they would say, “Well, okay, we wouldn't even know about these murders if he hadn't told us. If we hadn't given him the plea deal in the first place.”


PJ: Hm.


EVAN: And then you can't charge him with what he tells you under the cooperation agreement. Now again, there's two sides of the DEA on this and the ones that investigated Le Roux fora very long time say, that's bullshit. They say, “You didn’t have to just flip him. You could have done it the way we do a traditional operation, which is get the lower-level people to talk about the higher level people.” So there's some dispute there.


[MUSIC]  


PJ: It’s hard to even fully measure the scope of all the damage Paul caused. All the countries where his mercenaries ran amok–Somalia, the Philippines, Brazil–all the painkillers he pumped into America. Whatever it was, it feels like it was bigger than what anybody got punished for. 


And as far as anybody knows, it’s not like Paul was able to flip on some big fish above him. No Iranian Arms dealers went to jail, no bigtime meth manufacturers. 


Paul himself has now been in custody for seven years but he hasn’t even been sentenced. Evan says it might happen in the next few months.


PJ: What do you think’ll happen, like, what do you, what do you expect his sentence’ll look like?


EVAN: I- I- I’m–I’m scared to predict it, because I’ve heard everything- even–people involved, like an agent at the 960 Group who spent a lot of time on Le Roux, said, I think he said, you know, he’ll get 10 and he’s already served almost seven. It’ll be seven this year. So he’ll serve three more and he’ll get out, and then he’ll never bother the United States again. He’ll probably go back to his business but he'll never mess with us again. 


And that's the person who worked to catch Le Roux and have him prosecuted and then worked with him in a cooperation scenario to catch all these other people. So whether or not that’s what the judge will think is–I mean that’s not an implausible scenario to me, that that would happen.


PJ: But then it seems like, three years from now, if he's back out in the world, it's really hard to imagine him changing his behavior. Like it feels like he would just pick up where he left off. 


EVAN: It's almost impossible to imagine. I mean certainly when I saw him testify for many, many hours, at one point he said, “I'm trying to turn over a new leaf.” And it was the most unconvincing cliche I have ever heard someone utter. Like


[MUSIC] 


 it was actually dripping with the opposite feeling, like he's not actually trying to turn over a new leaf. Now there's certainly not any evidence that you can see from the outside that it would make any sense that he would do anything other than go back into business.


PJ: In fact, Evan said, Paul doesn't even seem to be waiting until he gets out of prison. He got in trouble recently for trying to open new call centers in the Philippines from his cell.


[MUSIC] 


Evan's book about Paul Le Roux is called The Mastermind. There's so much more absurd detail and craziness in that book than we could cover here. Go check it out! 


Reply All is hosted by me PJ Vogt and Alex Goldman. We’re produced by Sruthi Pinnamaneni, Phia Bennin, Damiano Marchetti, Anna Foley and Jessica Yung. Our show’s edited by Tim Howard. We’re mixed by Rick Kwan. Fact-checking by Michelle Harris. Our intern is Christina Ayele Djossa. Our theme song is by the mysterious Breakmaster Cylinder. Our ad music is by Build Buildings.


Matt Lieber is a Sunday at the farmer’s market.  


You can listen to the show on iTunes, Spotify, or wherever you get your podcasts. Thanks for listening. See you in two weeks.