A former National Crime Agency (NCA) officer has been ordered to pay more than £1million in compensation to a man he helped put behind bars, but the criminal will ultimately not see a penny of this money.
Paul Chowles stole Bitcoin worth more than £4million from Thomas White, who ran a dark web black market for drugs. This illegal network, Silk Road, had allowed him to live a life of luxury on the back of the free trading class A and B illicit substances via the website before police raided his waterfront flat in Liverpool city centre.
Bitcoin theft and its aftermath
Chowles, who was part of the NCA team which brought the dropout Liverpool John Moores University student down, seized on the opportunity to steal 50 Bitcoin from the man who he had been tasked with investigating. This stolen cryptocurrency was worth around £60,000 at the time of the theft, but its value thereafter ballooned to more than £4million.
The ex-intelligence analyst and unit manager was said to have believed that he had "gotten away with" his crimes for years, quietly spending his ill-gotten gains on day-to-day expenses rather than expensive cars or exotic holidays. His brazen scheme was ultimately only revealed when White was released from prison and pointed out the missing coins to police.
Court hearing under Proceeds of Crime Act
With Chowles now serving years behind bars himself, his case was brought back before Liverpool Crown Court today, Wednesday, for a hearing under the Proceeds of Crime Act. Having been found to have benefited to the tune of £1,970,759.27 as a result of his criminality, Judge Dennis Watson KC told him to repay a sum of £1,810,678.93 within the next three months or face an additional month in jail, although this is expected to be a formality due to the funds currently being held in restraint.
Chowles, who followed proceedings via video link from prison, was meanwhile told to pay £1,066,956.83 in compensation to White as part of this order. However, this sum will be paid directly to HM Courts and Tribunals Service and seized as part of the latter's own Proceeds of Crime Act matters.
Detective Sergeant David Hale, lead financial investigator with the North West Regional Organised Crime Unit's asset recovery team, said following the hearing: "Paul Chowles abused a position of trust and responsibility for personal financial gain. Today's order ensures that he does not benefit from his criminality and demonstrates our determination to pursue offenders' assets, regardless of their background or former position."
"Despite considerable efforts to disguise the movement of the stolen Bitcoin, specialist investigators were able to follow the financial trail and identify the assets linked to his offending. This outcome is particularly significant, because it not only recovers criminal profits from Chowles but also resolves the outstanding balance of Thomas White's confiscation order."
Spending and detection
The same court previously heard in July last year that Chowles, of Southleigh, near Exeter, Devon, was one of nine members of a digital forensics team which conducted investigations into White, who took over Silk Road under a new guise, Silk Road 2.0, after the original website was shut down by the FBI in 2013. This led to the NCA seizing a USB stick containing 97 Bitcoin from his luxury apartment on Mann Island as part of their operation.
But Craig Hassall KC, prosecuting, described how this digital wallet, which White had named his "retirement wallet", remained in the NCA's charge for more than two years until May 2017, when Chowles surreptitiously transferred 50 of the cryptocurrency into his own control. The now 44-year-old was able to do so using a dark web "mixing service" called Bitcoin Fog, which allowed him to disguise the source of these funds, before he moved the currency into private accounts.
One, which had the moniker "Friendly P", had used a newly registered email address under the name "P Charles" and was apparently based in the Netherlands. Chowles, the "very technically minded and knowledgeable" arresting officer and lead officer in the initial case, went on to spend around £140,000 of the proceeds of this theft in supermarkets, at "various eating and drinking establishments" and on building work and nursery fees.
But suspicion began to fall upon him in 2022 following White's release from prison. Having been jailed for five years and four months in 2019, he noticed during linked investigations relating to the Proceeds of Crime Act that a quantity of Bitcoin had been withdrawn from his account.
A portion of this missing cryptocurrency was later recovered from Chowles' home computer, with further quantities having been cashed in. While the value of 50 Bitcoin at the time of the theft was said to have amounted to £59,409.90, Mr Hassall said that, as of last summer's sentencing hearing, the value stood at "over £4.3million".
Sentencing and impact
Chowles was subsequently arrested at his workplace in May 2022, with several notebooks which were seized from his office drawers having contained usernames and passwords associated with White's cryptocurrency accounts. He began working for the NCA as an intelligence officer in 2009 and was subsequently promoted to the role of intelligence analyst and then, in 2020, to a manager within its Bristol-based technical operations unit.
The dad-of-three, who had no previous convictions, was dismissed without notice from the force following his conviction. Will Parkhill, defending, told the court on his behalf: "He is someone who, it seems, was suffering from anxiety and depression at the relevant time. He was dealing with undiagnosed autism. There was a moderate degree of debt.
"It is not a case where there is an obvious explanation. It is something that he struggles with. It is not something that I can elaborate on to provide a significant explanation for his behaviour.
"Most of that Bitcoin has sat where it went and, over the course of a number of years, has been filtered into familial expenses. It is not a case of high living. It has simply been used to pay for things that they would ordinarily pay for.
"It is not an offence where we can point to any significant life event, but he is someone who has strayed away from the way he lived his life up until that point. Now, he will deal with the consequences. It is a day he has known has been coming for some considerable period of time.
"The marriage has broken up. There is not really any other reason that the marriage has broken up. It is as a result of this. She remains close to him and remains supportive of him. That is perhaps an indication that there is very much another side to Mr Chowles. This is behaviour which was not to have been expected, either by himself or those who knew him best.
"The punitive effect of time spent in prison, for him, is going to be more significant then it may well be for others, not least because of his former profession and the personal characteristics he seems to show, the autism, anxiety and depression. There are physical health complainants that will have some impact as well.
"We know that this is an asset which has appreciated massively over the years. This is not something that would have been known to Mr Chowles at the point that he committed that theft and began processing with the laundering of that money.
"Mr Chowles is not a stupid man. It is likely that appreciation would not have been known to him at the time. It is incidental and unintended. While we have eyewatering figures at the upper end of the scale, we have further figures in relation to his usage of these funds.
"He knew more than most. He did dishonest things with that. He did not do the right thing. He stuck with that for some time, but the figures that we are talking about were not of intentional design.
"Mr Chowles has destroyed his life and had a serious impact on many other people's lives. We ask your honour to pass as low a sentence as you can in all of the circumstances."
Chowles admitted theft, transferring criminal property and concealing criminal property. He showed no reaction in the dock as he was handed five-and-a-half years behind bars.
Sentencing, Judge David Aubrey KC told him: "You were not only involved in that investigation, but you were the lead officer. You were involved in his arrest, and it was you who interviewed him.
"You commenced employment with the National Crime Agency, an organisation which investigates those who are suspected of committing serious organised crime. You occupied a managerial position. It is trite to say that such a role requires, demands and expects trust, integrity and honesty.
"You had much knowledge as to how to navigate through investigations concerned with digital data such as cryptocurrency. That was of great assistance to the agency in the fight against organised crime, provided that you did so with honesty and integrity and had the values of the agency in your DNA in the pursuit of justice.
"Regrettably, you did not. Honesty should have been in your DNA, but it was not. Your knowledge was of great assistance to you as you set about stealing from your suspect. You weaved a sophisticated, intricate, dishonest web. The evidence shows that it was a dishonest web of deceit and guile.
"The court accepts that, in the main, you were spending money on day-to-day familial expenses, and there is no suggestion of high living. But your dishonest and devious concealment had a profound impact on proceedings concerning Thomas White. Inevitably, others would have been subject to suspicion.
"It was you who earlier played a significant role in the investigation of Mr White. It was you who was responsible. It was you who had stolen 50 Bitcoin and thereafter set up the elaborate concealment and transfer exercise for your own ends.
"Whilst you are divorced as a result of the commission of these offences, you remain living in the familial home together with your three children, aged seven, five and two. I have read the impact that your ex-wife believes that it will have upon the children.
"Sadly, you are responsible for the separation from your children that will now occur, a separation that you would have been well aware of since the date of your arrest. I also take into account the fact that the theft occurred, now, a number of years ago, and the fact that a man of your position, having spent a number of years investigating serious crime, will find the custody setting particularly oppressive.
"There was a high degree of trust and responsibility placed upon you. You abused your position of trust and responsibility. The offences were committed over a sustained period of time, and they were sophisticated in nature and implementation.
"I am satisfied you knew it was extremely likely, and you anticipated, that the Bitcoin would have increased in value. Had you not been arrested, you would have continued to reap the rewards of your wrongdoing.
"The gravamen of these offences is your betrayal of trust to the National Crime Agency that you were serving and the betrayal of trust to your colleagues and the public at large, who rightly expect that those in positions such as yours will work with integrity, honesty and in accordance with the law. You were in a position of privilege and power. You abused that privilege and power which had been placed in you.
"You were there to serve the public. You did not. You were serving yourself for your own ends, as is illustrated by that which you dishonestly did after you initially stole the 50 Bitcoin. The court accepts that it is most unlikely that you will see a court of law again."
