At Least One Federal Agent Stole Hundreds of Thousands in Silk Road Investigation

May 30th 2015

Alex Mierjeski

Editor's Update 7/2/2015: Carl M. Force, a former D.E.A. agent who played a lead role in the agency's Silk Road investigation, pleaded guilty to charges of extortion, money laundering, and obstruction of justice in federal court on Thursday. According to prosecutors, the undercover investigator stole over $200,000 in digital currency and attempted to sell secret information about the law enforcement agency to Ross Ulbricht, the founder of Silk Road. The Los Angeles Times' James Queally reports that "Force was one of two former federal law enforcement agents accused of trying to use his role in the Silk Road investigation for personal gain. Shaun W. Bridges, a 32-year-old former Secret Service agent, also has been accused of stealing hundreds of thousands of dollars worth of bitcoins while investigating the website in 2013.​"

Ross Ulbricht, the convicted 31-year-old mastermind behind one of the Internet's most notorious online marketplaces, Silk Road, was sentenced Friday to life in prison in a Manhattan federal district court.

What did Ulbricht do?

Ulbricht's alleged crime was ostensibly a non-violent one––he simply ran a website. But facing charges including drug trafficking, computer hacking, money laundering, and hiring assassins to kill other Silk Road members, Ulbricht's hopes of a lenient sentence were eviscerated when Judge Katherine Forrest, who has presided over the case since January, dealt the maximum of life in prison.

"[W]hat you did in connection with Silk Road was terribly destructive to our social fabric," Judge Forrest told Ulbricht in a packed courtroom. "Silk Road's birth and presence asserted that its...creator was better than the laws of this country," she said. "This is deeply troubling, terribly misguided, and very dangerous."

"In the world you created over time, democracy didn't exist...You were captain of the ship – the Dread Pirate Roberts," she told Ulbricht, referring to the pseudonym prosecutors accused him of using to operate the site. Ulbricht and his lawyers have denied this claim, saying that although their client created the site, it was operated by someone else as it became the snarling, expansive marketplace it was when federal agents shut it down and arrested Ulbricht in October 2013.

Life in prison without parole...isn't that harsh?

Many observers think so:

What exactly was Silk Road?

The Silk Road, which acted as an online black market bazaar for myriad goods and services, was accessed via the shadowy and intractable "dark web" and was most famous as a place to buy and sell drugs of all stripes, as well as weapons and murder-for-hire. Users made transactions using the crypto-currency known as Bitcoin, which is allegedly untraceable. The site operated for about three years, during which time over 1.5 million transactions were counted between thousands of sellers and over 100,000 buyers. It was reportedly a $1.2 billion operation.

According to Ulbricht , Silk Road was born out of a libertarian ideal that sought to give users a chance to buy and sell in an uninhibited manner. "Silk Road was supposed to be about giving people the freedom to make their own choices, to pursue their own happiness, however they individually saw fit," he wrote in a letter to the court this week. "What it turned into, was, in part, a convenient way for people to satisfy their drug addictions...I learned from Silk Road that when you give people freedom, you don't know what they'll do with it." In the same letter, he asked Forrest to issue him a 20-year sentence––the minimum for his case––calling the Silk Road a "very naïve and costly idea that I deeply regret."

But prosecutors––and apparently Judge Forrest––saw an opportunity to set a harsh precedent for future cases involving similar activity, calling on the court to "send a clear message...[with] a lengthy sentence, one substantially above the mandatory minimum," in a letter this week.

Why was the case controversial?

Friday's decision comes after a long and convoluted procedural process since federal agents from different outfits arrested Ulbricht two years ago. In addition to the inherent complexities and esoteric nature of the shadowy dark web and the dubious cast of characters that operate there, the case was complicated when agents' investigative methods––including illegal searches and seizures and the acquisition by DEA agents of hundreds of thousands of Bitcoin dollars over the investigation––came under scrutiny. But the bulk of evidence damning Ulbricht apparently overshadowed agents' questionable tactics in the case brought by the government, which deemed the Silk Road to have "dramatically lowered the barriers to obtaining illegal drugs," while "provid[ing] a one-stop online shopping mall where the supply of drugs was virtually limitless," the New York Times reports.

With the absence of the Silk Road, however, other dark web black markets are likely to pop up––if they haven't already––to meet the demand needs of former Silk Road users.

VICE News is reporting that Lynn Ulbricht, the mother of the convicted, said that her son plans to appeal the decision, for which his lawyers say there is a "very strong" case. Ulbricht will remain in Brooklyn jail where he has already spent more than a year since being arrested. According to VICE News, he will continue teaching fellow inmates there math, physics, and yoga.