Two former federal agents who helped investigate the illegal Silk Road Internet drug emporium were charged with pocketing hundreds of thousands of dollars in digital money.
The agents were part of a Baltimore task force whose investigation led to murder-for-hire and drug charges there against Silk Road founder Ross Ulbricht, who was separately convicted by a jury in New York of running a criminal enterprise that catered to hackers and drug traffickers.
The lead undercover agent in Baltimore, then with the U.S. Drug Enforcement Administration, is accused of creating fictitious identities, including "French Maid," to extort and negotiate with Ulbricht, who used the moniker "Dread Pirate Roberts" while running Silk Road. Carl Force, 46, threatened to provide information about Ulbricht to the government and also offered to sell Ulbricht information about the U.S. investigation, prosecutors said Monday.
A second agent, Shaun Bridges, 32, who worked for the U.S. Secret Service as a computer forensics expert, allegedly stole $820,000 in bitcoins that he got control of during the investigation.
Prosecutors said in court filings for Ulbricht's trial that they had evidence he tried to arrange the murder of five people who threatened the anonymity of buyers and sellers on Silk Road.
"The government's considerable efforts at keeping this monumental scandal from being aired at Ross Ulbricht's trial is itself scandalous," Lindsay Lewis, one of his lawyers, said Monday in an e-mail.
The charges revealed Monday show that the investigation of Ulbricht lacked integrity and was fatally compromised, she said.
"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," Lewis said.
Ulbricht's defense knew about the investigation but couldn't use it because it was under seal, according to the lawyer. His lawyers will use it in their appeal, she said.
Whether the case against the investigators leads to a reversal of Ulbricht's conviction will depend on what evidence can be tied to their misconduct, said Terree Bowers, a former U.S. attorney in Los Angeles who's now with Arent Fox LLP.
"If it's not critical to the conviction, then the conviction may stand," Bowers said in a phone interview.
According to testimony at Ulbricht's trial, the underground website handled $214 million in illegal transactions paid for in bitcoins.
After extorting Ulbricht, Force wired about $235,000 to an account in Panama to hide it, according to the criminal complaint filed in San Francisco federal court. He's also accused of using his position as a DEA agent to run illegal criminal history checks for a digital currency company in which he himself had invested $110,000.
In addition, prosecutors allege Force used his supervisor's signature stamp on a subpoena to unfreeze one of his own accounts that had been blocked for suspicious activity.
Force is being held pending a bail hearing on Thursday, said Peter Carr, a spokesman for the Justice Department spokesman.
His attorney, Ivan Bates of Baltimore, didn't immediately respond to a phone message seeking comment.
Bridges allegedly filed an affidavit for a warrant to seize the Mt. Gox Co. exchange, where Silk Road bitcoins were stored, and its owner's bank accounts two days after he had taken his own money out of it, according to the criminal complaint.
"Mr. Bridges, a former law enforcement officer with an unblemished record, maintains his innocence," his lawyer, Steven Levin, said in an e-mail. "He will fight the charges in the appropriate place at the appropriate time."
Ulbricht, 30, faces as long as life in prison after jurors took just 3 1/2 hours Feb. 4 to find him guilty on all seven federal charges he faced.
Prosecutors claimed he ran Silk Road from 2011 to 2013, armed only with a laptop and a Wi-Fi connection. When he was arrested, his computer was filled with evidence showing he conceived the site and ran it, they said.
The jurors heard evidence that Ulbricht paid $150,000 to someone claiming to be a member of the Hells Angels motorcycle gang to kill a Silk Road user who called himself FriendlyChemist. The government claimed FriendlyChemist sought to extort Ulbricht by threatening to publish a list of names and addresses of Silk Road sellers and buyers unless he was paid $500,000.
Ulbricht didn't face murder solicitation charges in the trial and prosecutors said they don't believe any murders were carried out. The judge in New York said the government could use the evidence to show Ulbricht's connection to Silk Road.
Ulbricht still faces one murder solicitation charge in Baltimore.
The case is U.S. v. Force, 15-mj-70370, U.S. District Court, Northern District of California (San Francisco).