2 Federal Agents in Silk Road Case Face Fraud Charges

The following article was published by the New York Times. It is behind a partial paywall and is also restricted to some countries, so we are republishing it here in full for everyone to read.

By BENJAMIN WEISER and MATT APUZZO

Two former federal agents are expected to be arrested on Monday on charges of stealing money while working undercover on an investigation into Silk Road, the once-thriving black market website for drug dealing, a document shows.

The former agents are Carl Mark Force IV, who worked for the Drug Enforcement Administration, and Shaun Bridges, who worked for the Secret Service.

Mr. Force is being charged with wire fraud, theft of government property and money laundering; and Mr. Bridges is being charged with wire fraud and money laundering, according to an affidavit filed in the United States District Court in San Francisco.

The charges stem from the agents’ role in one of the federal investigations into Silk Road; a separate Manhattan-based investigation ultimately led to the filing of charges against the website’s founder, Ross W. Ulbricht, who was convicted last month on numerous counts. The website was also shut down by the authorities.
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Mr. Force, while investigating Silk Road, “stole and converted to his own personal use a sizable amount of Bitcoins,” the digital currency that was used by buyers and sellers on the website and which he obtained in his undercover capacity, the government said.

Document: Charges Against Ex-Federal Agents in Silk Road Investigation

“Rather than turning those Bitcoin over to the government, Force deposited them into his own personal accounts,” the government said.

The charges against the two men are detailed in a 50-page criminal complaint that was unsealed on Monday. The complaint is signed by Tigran Gambaryan, a special agent with the Internal Revenue Service, and says that the investigation of the agents was handled by the United States attorney’s office in San Francisco and the Public Integrity Section of the Justice Department in Washington.

The document describes both former agents as members of a Baltimore-based task force that investigated Silk Road. The website had been the subject of investigations in several cities, including Chicago and New York.

The Baltimore investigation resulted in an indictment of Mr. Ulbricht on a charge of murder for hire, but that case has remained pending and the evidence in support of it was kept out of the New York trial, apparently because of the investigation into the agents.

Mr. Force had been employed as a D.E.A. special agent for about 15 years; he resigned in May 2014, shortly after the investigation into his activities began, the document says. Mr. Bridges had been a special agent of the Secret Service for about six years until he abruptly resigned on March 18, after learning he was a subject of the investigation, the document says.

At the time charges were announced against Mr. Ulbricht in October 2013 and the website was shut down, the authorities called Silk Road “the most sophisticated and extensive criminal marketplace on the Internet.”

Several thousand drug dealers and other vendors used the site from January 2011 through October 2013 to sell hundreds of kilograms of illegal drugs and other illicit goods to more than 100,000 buyers, according to a criminal complaint filed in United States District Court in Manhattan.
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The website generated more than $213 million in revenue during that period, and Mr. Ulbricht, operating under the pseudonym Dread Pirate Roberts, took millions of dollars in commissions, the authorities charged.

Much of Silk Road’s allure to buyers and sellers was anonymity: The website operated on a hidden part of the Internet, out of the glare of law enforcement, and deals were transacted in Bitcoins, a digital currency that can be as hard to trace as cash.

Mr. Ulbricht’s defense lawyer, Joshua L. Dratel, argued during the trial that his client was not Dread Pirate Roberts, a character drawn from the book and movie “The Princess Bride.” Mr. Dratel conceded that Silk Road had been his client’s idea, but that Mr. Ulbricht had turned the website over to others before being lured back as a “fall guy” to be arrested.

Mr. Ulbricht was convicted on Feb. 4 of multiple counts; four of the charges, including distributing narcotics on the Internet and engaging in a continuing criminal enterprise, carry potential life sentences. The judge, Katherine B. Forrest, is scheduled to sentence Mr. Ulbricht on May 15.

At the trial, the government also accused Mr. Ulbricht of commissioning the murders of five people whom he saw as threats to his enterprise. Although the prosecutors said they found no evidence that anyone was harmed, they cited the murders-for-hire as evidence that Mr. Ulbricht was willing to use violence to protect his lucrative operation.



Source: NY TIMES
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