$400M Drug Network Run From Prison? FBI & DEA Launch Operation Deep Cut as Encrypted Files Hint at “Phase Two”

At 5:17 a.m., as the first light of dawn broke over East Oakland, federal agents moved with precision. Simultaneous raids took place across warehouses, safe houses, and covert storage locations as part of Operation Deep Cut, the latest strike in the ongoing battle against organized crime. The FBI and DEA, working in tandem, seized critical evidence: server racks, encrypted crypto wallets, and complex financial ledgers that could expose a multi-million-dollar drug operation operating across the U.S.

The most shocking revelation? Investigators allege that the entire $400 million operation was being controlled from inside Pelican Bay State Prison — one of California’s most notorious correctional facilities. The sheer scale of the operation has stunned authorities, as encrypted communications, money laundering schemes, and strategic moves appeared to be masterminded from behind bars.

The Network: Controlled From Within Pelican Bay State Prison

For months, federal agents had been tracking the sophisticated operation that spanned multiple states, using a web of front businesses, coded messages, and encrypted communications. The sheer magnitude of the network’s reach was staggering — it wasn’t just about moving narcotics. It was about the strategic flow of money and resources, operated from the heart of one of the country’s highest-security prisons.

At the center of it all were encrypted files recovered during the raids. These files not only contained details on drug distribution and money laundering but also included strategic planning references to “Phase Two” — a coded term that suggests another layer of the network is already in the process of restructuring.

Money Laundering: Restaurants, Charities, and Front Businesses

What makes this operation especially complex is how the criminal organization used legitimate businesses as part of its laundering scheme. Restaurants, charities, and other front companies were reportedly used to funnel hundreds of thousands of dollars, hiding illicit funds under the guise of normal financial transactions.

These businesses were part of an intricate financial web that allowed the network to move money without raising alarms. This separation between narcotics supply chains and money flow strategies made it harder for authorities to trace and disrupt the operation, adding another level of sophistication to an already complex criminal enterprise.

RICO Indictments: Conspiracy, Money Laundering, and Criminal Enterprise

In the wake of the operation, multiple RICO (Racketeer Influenced and Corrupt Organizations) indictments have been filed against those involved in the conspiracy. The charges focus on money laundering, coordinated criminal enterprise activities, and the far-reaching conspiracy that allowed the network to operate with impunity.

But despite the success of Operation Deep Cut, experts are sounding alarms about the future. While one network has been dismantled, encrypted files hint that “Phase Two” — another, potentially more dangerous network — is already in the process of reforming. Federal authorities are concerned that the operation could quickly regenerate as its leaders adapt to the loss of key players.

The Rising Question: Who is Pulling the Strings From Behind Bars?

One of the most disturbing aspects of the operation is that it may have been run by inmates at Pelican Bay, where gang leaders are allegedly operating without restriction. Prison phones, visitation systems, and coded communications were reportedly exploited to maintain a far-reaching criminal operation that continued to thrive from behind bars.

The question now is whether law enforcement can truly sever the entire criminal infrastructure or whether new power structures are already in place. Will authorities be able to prevent the “Phase Two” network from gaining momentum, or will these criminals evolve even faster than the FBI and DEA can respond?

The Fallout: What’s Already Rising in Its Place?

The success of Operation Deep Cut has undeniably struck a massive blow to the criminal enterprise, but the battle is far from over. The true test will be whether the investigation can uncover the full scope of “Phase Two” before it takes root.

As new leaders emerge from the wreckage of the old system, and as encrypted communications and prison-run networks continue to evade detection, federal agents are now facing the difficult question: if one system has fallen, what’s already rising in its place?