In the Silk Road case, the gov't turned out to be as dirty as the defendant. New trial coming?
After a jury in February found Ross Ulbricht guilty of narcotics and money laundering conspiracies among other charges, in conjunction with his role as the mastermind behind the Silk Road online drug marketplace, even most long-time Ulbricht supporters looked at the preponderance of evidence against him and assumed the case was resoundingly closed. Yesterday, the door to that conviction may have cracked open a tiny bit.
The US Department of Justice has charged US Secret Service (USSS) special agent Shaun Bridges and Drug Enforcement Administration (DEA) agent Carl Mark Force IV with money laundering and wire fraud in conjunction with their roles leading the Silk Road investigation. (Force was also charged with theft of government property). The pair of federal officers stand accused of diverting $800,000 in bitcoin from Silk Road to their own personal wallet accounts.
[Aside: Is it just me or aren’t Bridges and Force the two most perfect Hollywood cop names you could ever think of?]
Even crazier, the two are accused of posing as hitmen on the darknet website and subsequently ensnaring Ulbricht in a murder-for-hire plot against one of his Silk Road employees, whose death they later faked while collecting $80,000 for their services. Later Bridges and Force allegedly extorted 770 bitcoins – then worth approximately $100,000 – and had sought even more, by threatening to reveal his role in the employee’s disappearance.
Many of the details of these alleged crimes were uncovered by the Internal Revenue Service's (IRS) Cyber Crimes Unit Liaison Tigran Gambaryan, who uncovered the ill-gotten funds following tips from bitcoin exchange platform, Bitstamp, after Force allegedly asked that company and PayPal owned Venmo to help him cover his tracks.
While this apparent rampant corruption could surely end the careers of these veteran federal agents, the bigger question is what impact they could have on Ulbricht’s now suspect conviction. Surely, these men who had allegedly already made a profit of nearly $1 million based on these frauds had the motive and the means to frame Ulbricht to cover their tracks. To be clear, there has been no evidence to that effect disclosed publicly to date, but you can be sure this raises questions that Ulbricht’s lawyers and his public supporters will want answered.
Judging by a tweet from Ublricht counsel Joshua Dratel yesterday, this is not the first time the defense had heard of these accusations:
Major Silk Road govt corruption scandal revelation today that we've had to sit on for four months and were not permitted to use at trial.
— Joshua Dratel (@JDratel) March 30, 2015 The question is, why was this information inadmissible at trial and what, if any impact, did that have on Ulbricht’s conviction? If the defense can prove to an appellate judge that the defense was wrongly handicapped by this decision – a fact that may be more likely given the new information brought to light by the DOJ indictment – then it could be enough to merit a new trial. In such an event, it’s certainly conceivable that some of the evidence collected by Bridges and Force could be thrown out as a result. A report by Wired suggests that the most crucial evidence related to Ulbricht's conviction was collected by the New York division of the FBI and the Chicago Department of Homeland Security, meaning it still may be enough to put him away.
It’s unclear just how much Dratel knew about the misconduct by these federal agents and when he found out. But, as some Reddit users have posited in the wake of this news, it’s possible that the defense strategically waited until after the trial to raise the issue with the hopes of negating what, based on the evidence, appeared all along to be a likely guilty verdict. Then again, judging by the apparent ineptitude of the defense in this case, that may be giving Dratel too much credit.
Either way, the government that emerged from this case looking victorious now looks just as guilty and corrupt as did Ulbricht. Perhaps the two sides deserve each other. Even after the fall of Silk Road, shutting down dark web drug marketplaces more generally has become like a game of whack-a-mole that the government can’t seem to win. Following yesterday’s shocking revelations of alleged government corruption, it seems that Ulbricht could still get the last laugh.
In another twist, it was Bridges who signed the warrant to seize the US bank accounts of the now-bankrupt Japanese bitcoin exchange Mt. Gox in May 2013. Whether there was any corruption on the part of the Federal agents investigating that case and whether that information could impact the still ongoing investigation into the exchange's collapse in Japan remains to be seen.
Regardless of how this plays out, it's sad and ironic that after several multi-year-long efforts by the US government to "protect" the world from the dangers of bitcoin and online drug sales the so-called good guys end up being as dirty as the bad guys. Just as sad, it's hardly surprising.