Silk Road Operator Sentenced to Life Imprisonment

San Francisco resident Ross William Ulbricht, the founder of the notorious black market drug site Silk Road, was sentenced to life in prison in Manhattan federal court today.

Silk Road operated from January 2011 to October 2013 and served as a marketplace where users bought and sold hard drugs using the Tor network and the virtual currency bitcoin to maintain their anonymity, according to the U.S. Attorney’s Office of the Southern District of New York.

Ulbricht, 31, who used the online moniker “Dread Pirate Roberts,” or “DPR,” was arrested in a San Francisco public library in October 2013. He was convicted on February 5 of this year following a four-week jury trial on charges related to distributing narcotics, conspiracy, hacking, trafficking false identity documents, and conspiring to commit money laundering.

During the almost three years Silk Road was in operation, more than 100,000 users went to the site to buy and sell more than $200 million worth of illegal drugs and other unlawful goods and services, according to a statement from the U.S. Attorney’s Office of the Southern District of New York.

Ulbricht was not the only person charged in connection with the website.

In March, two Maryland-based federal investigators assigned to the Silk Road investigation were charged in U.S. District Court in San Francisco with fraudulently obtaining hundreds of thousands of dollars in bitcoin during the course of their investigation, according to federal prosecutors.

Carl Force, 46, of Baltimore, a former special agent with the Drug Enforcement Administration, and Shaun Bridges, 32, of Laurel, Maryland, a former special agent with the Secret Service, were each charged with wire fraud and money laundering.

Force was also charged with theft of government property and conflict of interest in a federal criminal complaint.

Force, a DEA agent for 15 years, was the lead undercover agent in communication with Ulbricht. Bridges was a computer forensic expert with the Secret Service.

The investigation into the two agents began in early May 2014. Force resigned shortly after the investigation was opened, while Bridges remained with the agency until March 18 of this year.

He resigned abruptly upon learning he was being suspended, and allegedly attempted to hide and wipe an Apple laptop when investigators instructed him to check it into evidence.

The alleged actions by the two agents appears to have compromised numerous aspects of the federal investigation, including alerting Ulbricht and others that they were being investigated.

Ulbricht’s attorney, Joshua Dratel, said that much of the government’s evidence is inextricable from the corruption.

Dratel said the corruption allegations against the undercover officials, however, could not be used in Ulbricht’s defense and that the government’s failure to disclose the investigation until after Ulbricht was tried and convicted denied him due process and a fair trial.

“The government’s considerable efforts at keeping this monumental scandal from being aired at Ross Ulbricht’s trial is itself scandalous,” Dratel said.

The investigation into Force’s actions revealed that he procured hundreds of thousands of dollars in bitcoin through fraud, blackmail and extortion. Force deposited $757,000 into bank accounts between April 2013 and May 2014, well beyond his annual salary of $150,000, according to the complaint unsealed in March.

Force apparently paid off his mortgage, paid off a government loan and made numerous investments, Internal Revenue Service Special Agent Tigran Gambaryan wrote in an affidavit.

Force and Bridges collaborated on money laundering techniques and closely watched the price of bitcoin to maximize their profits, according to the complaint.

Bridges allegedly orchestrated the theft of more than $820,000 worth of bitcoin from the Silk Road website after obtaining administration credentials from the investigation.

The final transfer Bridges made came a day before the Japanese bitcoin exchange firm, Mt. Gox, was served a federal seizure warrant for $2.1 million. Bridges was the affiant for that warrant, according to the complaint.

Further federal charges are still pending in Maryland against Ulbricht, stemming from a separate investigation, involving an alleged murder-for-hire plot.

The federal investigation also led to Silk Road administrator Curtis Green, 47, of Utah, pleading guilty in 2013 to conspiracy to distribute cocaine and Silk Road vendor, Jacob Theodore George IV, 32, of Edgewood, Maryland, pleading guilty in 2013, to conspiracy to distribute drugs, including heroin.

The narcotics distributed on Silk Road were linked to overdose deaths across the world including the death of a 27-year old Microsoft employee who was found unresponsive in front of his computer. He was logged onto Silk Road at the time, and died as a result of heroin and other prescription drugs that he had ordered from Silk Road, according to prosecutors.

Preet Bharara, U.S. Attorney for the Southern District of New York, said in a statement following Ulbricht’s sentencing that, “Ulbricht was a drug dealer and criminal profiteer who exploited people’s addictions and contributed to the deaths of at least six young people.”

Between 2011 and 2013, law enforcement agents made more than 60 individual undercover purchases of controlled substances from vendors on the website, purchasing illegal drugs in countries including the United States, Germany, the Netherlands, Canada, the United Kingdom, Spain, Ireland, Italy, Austria, and France.

The site also listed computer hacking services as well as offers to forge driver’s licenses, passports, Social Security cards, utility bills, credit card statements, car insurance records, and other false identification documents, according to the U.S. Attorney’s Office of the Southern District of New York.

Ulbricht operated Silk Road on “The Onion Router,” or “Tor” network, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the networks’ users.

Silk Road was also designed to include a Bitcoin-based payment system that served to facilitate the illegal commerce conducted on the site by concealing the identities and locations of the users transmitting and receiving funds through the site.

Ulbricht managed a staff of paid, online administrators and computer programmers who assisted with the day-to-day operation of the site.

The commissions Ulbricht reaped from the illicit sales conducted through the site are estimated to be worth more than $13 million.

In addition to the life sentence prison term, Ulbricht was ordered to forfeit $183,961,921, based on the value of bitcoins transacted on his website, according to the U.S. Attorney’s Office of the Southern District of New York.

Hannah Albarazi, Bay City News

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