DEA Scandal Will Help Ross Ulbricht's Silk Road Appeal, Lawyer Says
Two federal agents have been arrested for various crimes committed while investigating the digital black market.
Two federal agents have been arrested on charges stemming from their undercover investigation into Silk Road, the online black market that was taken down in 2013. Lawyers for Ross Ulbricht, who was convicted for operating the site in February, said they knew about the scandal for months but were not permitted to use it in the trial.
According to a criminal complaint issued by the Department of Justice on March 25 that was unsealed on Monday, the agents face a variety of charges in connection to the investigation that helped bring down Silk Road, including stealing thousands of dollars in Bitcoin from the site.
"The government's considerable efforts at keeping this monumental scandal from being aired at Ross Ulbricht's trial is itself scandalous," Joshua Dratel, Ulbricht's defense attorney said in a statement. "It is clear from this Complaint that fundamentally the government's investigation of Mr. Ulbricht lacked any integrity, and was wholly and fatally compromised from the inside."
Carl Mark Force IV, a former Special Agent with the Drug Enforcement Administration (DEA) who was tasked with establishing a relationship with pseudonymous site administrator Dread Pirate Roberts, has been accused of wire fraud, theft of government property, money laundering, and conflict of interest. The complaint says he "without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain."
Force was allegedly acting as a mole, illegally selling information about the federal investigation to Dread Pirate Roberts.
He also "stole and converted to his own personal use a sizeable amount of bitcoins," according to the complaint.
Former Secret Service agent Shaun Bridges was also arrested on charges of wire fraud and money laundering for allegedly diverting more than $800,000 in Bitcoin seized from Silk Road into his personal account rather than turning it over to the government.
The new developments will play into the appeal process for Ulbricht, who launched a motion for a new trial on March 8.
"There was considerable litigation, including a portion of our post-trial motions, that was related to this but has remained sealed," Joshua Dratel, Ulbricht's attorney told Motherboard by email. "This is an important component of our motion, and will be amplified in our reply now that the charges have been instituted formally."
Force and Bridges were part of the Baltimore Silk Road Task Force, one of several agencies investigating the site before it was taken down in 2013.
The new evidence can be used as grounds for an appeal even though the Baltimore investigation was separate from the one that went to trial, said Braden Perry, partner in the Kansas City-based law firm of Kennyhertz Perry, LLC and former federal enforcement attorney.
"Even though it's a parallel investigation, those facts would likely be material to a jury," he said. "The standard to grant such an appeal of the trial court's denial of a new trial is reversible error, a very burdensome standard."
The new twist could also affect the murder-for-hire charges against Ulbricht, which were filed in a federal court in Maryland. Ulbricht is accused of paying for the murders of at least five people for threatening his online empire. None of the alleged hits were successful.
"It's likely too early to tell on the dismissal of murder for hire charges," Perry said. "It depends on the intricacies of the facts and the evidence the authorities have. It could very well mean a review of the case from the Baltimore prosecutor."
Ulbricht's mother Lyn said the defense's inability to discuss the alleged corruption of government officials constitutes denial of Ross' right to a fair trial.
"Ross' attorneys were not permitted to use this important information at trial, which severely hampered his defense," his mother, Lyn Ulbricht told Motherboard by email. "We believe this critical fact of government corruption casts doubt on the integrity of the investigation and case, including the accusations of murder-for-hire, which we have always been certain are false."
Ulbricht faces life in prison after being found guilty on all seven counts stemming from the creation and operation of Silk Road. He is scheduled to be sentenced on May 15. The full statement from Ulbricht's attorney is below.
The government's considerable efforts at keeping this monumental scandal from being aired at Ross Ulbricht's trial is itself scandalous. In addition to keeping any information about the investigation from the defense for nearly nine months, then revealing it only five weeks prior to trial, and then moving to keep sealed and secret the general underlying information so that Mr. Ulbricht could not use it in his defense at trial, and then stymying the defense at every turn during trial when the defense tried to introduce favorable evidence, the government had also refused to agree to the defense's request to adjourn the trial until after the indictment was returned and made public – a modest adjournment of a couple of months, since it was apparent that the investigation was nearing a conclusion. Throughout Mr. Ulbricht's trial the government repeatedly used the secret nature of the grand jury investigation as an excuse to preclude valuable defense evidence that was not only produced in discovery, independent of the investigation of Mr. Force, but also which was only at best tenuously related to that investigation. In that manner the government deprived the jury of essential facts, and Mr. Ulbricht of due process. In addition, the government failed to disclose previously much of what is in the Complaint, including that two federal law enforcement agents involved in the Silk Road investigation were corrupt. It is clear from this Complaint that fundamentally the government's investigation of Mr. Ulbricht lacked any integrity, and was wholly and fatally compromised from the inside. Also, it is clear that Mr. Force and others within the government obtained access to the administrative platforms of the Silk Road site, where they were able to commandeer accounts and had the capacity to change PIN numbers and other aspects of the site – all without the government's knowledge of what precisely they did with that access. In light of the information provided in the Complaint, it is now apparent to all just how relevant some of the issues raised by the defense at trial were, including the payment by Dread Pirate Roberts to a law enforcement agent for information about the investigation, the ramping up of the investigation of Mr. Ulbricht in mid-2013, soon after that paid information began flowing, and the creation of certain evidence at trial, such as the 2013 journal that conveniently begins – again – in Spring 2013, after the corruption alleged in this Complaint ripened. As the evidence at trial – particularly from the government's law enforcement witnesses – demonstrated, the Baltimore investigation and agents were inextricably involved in the evolution of the case and the evidence, as well as with alerting Mark Karpeles that he was under investigation, and meeting with his lawyers and exchanging information. At Mr. Ulbricht's trial, knowing full well the corruption alleged in the Complaint made public today, the government still aggressively precluded much of that evidence, and kept it from the jury (and had other similar evidence stricken from the record). Consequently, the government improperly used the ongoing grand jury process in San Francisco as both a sword and a shield to deny Mr. Ulbricht access to and use of important evidence, and a fair trial.