"PurpleLotus" sold around $1 million worth of fraudulent vouchers.
On Wednesday, a man was sentenced to 41 months in prison for manufacturing and selling illegal goods on the dark web. But he wasn't trading drugs; this man was in the less usual but highly profitable dark web trade of counterfeit coupons.
Beau Wattigney, 30, from New Orelans, pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit trademarked counterfeiting in July 2015, according to court documents. The case involved discount or credit vouchers for more than 50 US businesses, representing a potential loss to the businesses of over $1 million.
Under the aliases of "GoldenLotus," "PurpleLotus," "MoxDiamond," and "NickMode," Wattigney sold products such as $50 Visa Gift Cards at a massive discount, for around $0.01 each. Wattigney steadily made tens of thousands of dollars between May 2012 and November 2014.
In a message sent by Wattigney to another Silk Road user, describing how one of his products worked, he wrote "Yes bud, you take it to the Walmart and use the Self Checkout. That's the reason I created that coupon. Can't vouche [sic] for other stores selfcheckouts [sic] but can tell you with certainty it works at Walmart."
Some of Wattigney's vouchers were also sold in packs, such as "The Original S.R. Exclusive Coupon Collection!" for around $54.44, and "The Hardcore Coupon Collection."
In one court document related to Wattigney's guilty plea, his defense counsel writes that Wattigney "created and manufactured these fraudulent coupons himself, and with the assistance of several co-conspirators, including one individual using the online moniker 'wraith.'"
Wattigney sold his wares on both the original Silk Road and its successor, Silk Road 2.0, and sent them all over the country. On Silk Road 2.0, Wattigney peddled the items with help from another, larger pool of co-conspirators, and created another identity, "CouponKing," in "an effort to control the counterfeit coupon market," court documents read.
The Coupon Information Corporation (CIC), a group that combats this type of fraud, conducted its own investigation into Wattigney, purchasing 408 counterfeit items from him on Silk Road 2.0 back in April 2014. The FBI, meanwhile, obtained transaction histories as well as messages on the original Silk Road server as part of their investigation into Wattigney.
In May 2015, the same month Wattigney was charged, a group of vendors calling themselves "TeamLotus" announced on The Hub—a sort of neutral meeting ground for dark web market users—that they were taking on the role after PurpleLotus had "retired." At the time of writing, TeamLotus' dedicated dark web shop is offline, and the vendor is listed as on "Vacation Mode" on AlphaBay, a market popular for fraud and stolen items.
Their last post on The Hub was made in November; it's unclear whether the group included the co-conspirators mentioned in court documents.