A Canadian businessman accused of enabling organized crime through his association with an encrypted messaging service has been arrested by French police, despite claims he was “fully cooperating” with U.S. law enforcement, a French court revealed.
On September 3, 2024, it was disclosed that Thomas Herdman, 63, had assisted U.S. authorities in their investigation of the Canadian encrypted phone provider Sky Global under a “proffer agreement” prior to his arrest and subsequent extradition to France. He has been held without trial for 38 months at the Fleury-Mérogis prison, located south of Paris. Herdman was apprehended in Spain in June 2021 during a trip to meet with U.S. officials involved in the Sky Global investigation, according to the Court of Appeal of Paris.
Appearing before the court clad in a black T-shirt and jeans, and speaking through an interpreter, Herdman stated, “I was in Spain at the request of the U.S. government. I followed all their instructions.” His attorney, Philippe Ohayon, argued during a public bail hearing that Herdman had actively collaborated with American investigators. The defense maintained that due to his cooperation and proffer agreement with U.S. prosecutors, the French should not have issued an arrest warrant for him.
Sky ECC has been under investigation since 2018 for its alleged use by organized crime groups involved in drug trafficking, arms smuggling, and money laundering. The court was informed that criminal enterprises utilized the service for their operations and that Herdman, along with Sky ECC management and distributors, was aware of these activities.
In France, Herdman faces 22 charges, including laundering proceeds from drug imports linked to organized crime, caused by his distribution of Sky ECC encrypted phones and failure to properly declare cryptographic equipment. Initially indicted by a grand jury in the Southern District of California in March 2021, he was accused of racketeering and knowingly facilitating the import and distribution of illegal drugs via the sale of encrypted communication devices alongside Sky Global CEO and founder Jean-François Eap.
Herdman has denied any wrongdoing, asserting on September 3 that U.S. investigators misrepresented key details about his involvement with the now-defunct encrypted service. He refuted claims that he was the right-hand man of former CEO Eap, emphasizing, “I wasn’t involved in the development of Sky ECC or its management.”
Herdman was recruited by business associate Grant Persall as the account director for Levup Technologies Inc., a Canadian firm that won a contract to distribute Sky ECC phones in 2017. Levup has described itself as one of the smaller distributors of Sky ECC, with a customer base of fewer than 6,000, representing just 6% to 8% of the global Sky ECC user base. “I was merely an employee,” Herdman explained during his court appearance, contending there was no evidence of complicity in drug trafficking, labeling such allegations as “egregious lies.” He added that Levup did not distribute Sky ECC phones in France and had no resellers operating within the country.
Herdman further claimed his case was part of an “American entrapment” operation known as Trojan Shield. This operation involved providing criminals with encrypted phones that were secretly monitored by U.S. law enforcement. Between 2018 and 2021, an FBI-run encrypted device company named “Anom” sold over 12,000 encrypted phones to criminal organizations, who were unaware their communications were being intercepted.
He asserted that the Trojan Shield operation effectively forced users from other encrypted phone networks, including Sky ECC, onto the Anom “spy platform.”
Defense attorneys have raised concerns regarding prosecutors’ assertions that Sky ECC was predominantly used for illicit activities. Legal information from Europe indicates that only about 10,000 users appear to be associated with criminality, which constitutes roughly 10% of the overall user base. In Herdman’s situation, searches through Europol’s secure information exchange revealed that out of 130 of his Sky ECC clients, only two were of interest to authorities, none of whom have been identified or convicted.
Moreover, U.S. undercover agents secretly recorded phone conversations with Herdman and arranged a meeting, resulting in the purchase of three Sky ECC phones. These agents were reportedly part of Operation Trojan Shield, aimed at persuading criminals to transition to Anom’s encrypted devices under FBI control. They allegedly conveyed to Herdman that they were affiliated with a drug trafficking organization and sought his assistance in converting profits into cryptocurrency. Nevertheless, defense lawyers argue there were no direct references to criminal activities in the transcripts or recordings of communications between Herdman and the undercover agents.
Ohayon stated during the hearing that European and French prosecutors had not formally approached Sky Global for assistance in their investigation while simultaneously accusing the company of failing to cooperate.
A bail application was denied by the court, which heard propositions from Herdman’s legal team to place him under house arrest with electronic monitoring, alongside a bail deposit of €250,000 from his family and a monthly payment of €5,000. Earlier in August, the prosecutor overseeing the case applied for Herdman’s release with a proposed bail of €5 million, which was subsequently rejected by investigative judges.
Herdman argued that he posed no flight risk: “The only way I wouldn’t appear at court is if I die. It’s a crime to take this long to get to court.” He expressed a desire to have his day in court, noting that cases in other countries typically take six months to be resolved. He asserted his readiness for trial, claiming the courts were not prepared for it.
Before his arrest, Herdman stated he had spent 17 years teaching at a university in Japan and had been involved in soccer coaching for around 25 years, insisting he had no previous run-ins with the law or incarceration.
After the hearing, attorney Philippe Ohayon remarked that Herdman’s prolonged detention contradicted the French legal principles: “We are not the United States; freedom cannot be bought.”
A general prosecutor at the Court of Appeal pointed out that Herdman is the only individual set to face trial under indictments issued by French authorities against 30 people linked to Sky ECC and emphasized the necessity to ensure his attendance in court. She expressed concerns about a significant risk of flight, citing Herdman’s belief that he had been misled by U.S. authorities. Although Herdman maintained he would not flee due to a fear of harsher consequences, the prosecutor argued this was easy to claim.
She highlighted that Herdman’s previous lifestyle, which included extensive travel, paired with his alleged financial resources and connections, rendered him a high flight risk.
Belgian police had previously conducted a raid on 200 homes in March 2021, as part of an investigation into the encrypted phone network Sky ECC.
Sky Global, founded by Canadian entrepreneur Jean-François Eap and registered in British Columbia in 2010, launched its Sky ECC encrypted phone network in 2013, selling devices through third-party distributors bound by contracts prohibiting illegal use of the phones. The judge ultimately denied Herdman’s bail request. Attorney Paul Sin-Chan later informed Computer Weekly that Levup, employing Herdman, represented one of the smallest distributions of Sky ECC phones globally, sustaining only 6% of total users. He added that Levup had not supplied Sky ECC phones to French resellers, and there was no indication that their clients had connections to criminal users.