A Colorado woman has pleaded guilty to participating in a sophisticated “SIM swap” scam allegedly orchestrated out of a suburban Chicago home that led to the $400 million hack of the failed cryptocurrency exchange FTX.
Emily Hernandez, 23, of Colorado Springs, entered her plea to one count each of wire fraud and aggravated identity theft during a hearing Thursday in U.S. District Court in Washington, D.C., records show.
The wire fraud count carries a maximum of 20 years in prison; however, preliminary sentencing guidelines included in Hernandez’s plea agreement with prosecutors show she’ll likely face a range of 41 to 51 months in prison.
The plea agreement also stated Hernandez is cooperating with the government. Her Maryland-based attorney, Carmen Hernandez, did not immediately return a call seeking comment.
Hernandez was linked to a conspiracy allegedly being run by Robert Powell, a 22-year-old Indiana native who was living in a mansion in Highland Park. Hernandez’s plea agreement with prosecutors stated she joined the conspiracy in October 2022 after meeting one of Powell’s co-conspirators, Carter Rohn, of Indianapolis.
As the Tribune first reported, Powell was arrested at his home on Museum Drive in January on a federal indictment filed in Washington alleging he had helped co-conspirators siphon at least $400 million in virtual currency from a single company and millions more from other individual victims.
While the indictment and subsequent court documents have referred to the company only as “Victim Company 1,” sources have confirmed to the Tribune that Victim Company 1 is FTX.
The alleged hack occurred Nov. 11, 2022, the same day that FTX collapsed into bankruptcy. Its founder, Sam Bankman-Fried, was later convicted of a massive fraud on investors and was sentenced in March to 25 years in prison.
According to the charges, Powell, using the online monikers “R$” and “ElSwapo1,” beginning in March 2021 directed a series of SIM swaps, a technique in which attackers gain control of a telephone number by having it reassigned to a new device, often by posing as the cellphone user at local stores.
According to Hernandez’s plea agreement, she provided her photograph to Powell’s co-conspirators, which was used to make fraudulent IDs for numerous targets.
In November 2022, Hernandez was sent a plane ticket to travel to Utah, where she participated in several SIM swap schemes at Powell’s behest, according to the plea. From there, she traveled to El Paso, Texas, where on Nov. 11 Powell directed them to target “Victim-1,” who was the FTX employee, and passed along the victim’s full name and Social Security number via encrypted message, according to the plea.
“Powell informed the co-conspirators that Victim-1 was a priority because the Powell co-conspirators would be paid double for this particular SIM swap,” the plea stated.
Hernandez traveled to a local cellular service store where she presented a phony ID with her photo and the victim’s information to gain access to the victim’s mobile account. She then went to a nearby Apple retail store to have the number transferred to a new device, according to the plea.
The information was passed back to Powell, and within hours, more than $400 million in bitcoin went missing from FTX accounts, according to the plea.
At the same time, the sensational meltdown of Bankman-Fried’s FTX exchange was making headlines around the world. Customers were pulling funds off FTX en masse, leading to the Bahamas freezing the exchange’s assets on Nov. 10, 2022. The next day, Bankman-Fried had stepped down as CEO and his company filed for Chapter 11 bankruptcy protection.
“FTX has been hacked, all funds seem to be gone,” an FTX administrator reportedly posted on the company’s Telegram channel, according to news reports. “FTX apps are malware. Delete them.”
On the same day as the FTX employee hack, Hernandez, on Powell’s instructions, also targeted another victim using stolen personal information, leading to the theft of nearly $600,000 in virtual currency, according to Hernandez’s plea. She also helped the group pull off similar scams at stores in Colorado and New Mexico, according to her plea.
In all, Hernandez was paid $2,500 for her participation in the scheme, the plea stated.
Powell, 26, and Rohn, 24, are each facing charges of conspiracy to commit wire fraud and aggravated identity theft. They have pleaded not guilty and are on bond in their home districts while the cases are pending, records show.
jmeisner@chicagotribune.com
