The Silk Road founder's life sentence appeal may rely on an alleged $800,000 theft by federal agents
Lawyers for the mastermind behind the world's largest online drug emporium - who was sentenced to life in prison without parole last week - say their appeal will rely at least in part on alleged government corruption deemed immaterial during the trial.
Former DEA agent Carl Force and US Secret Service agent Shaun Bridges were part of the Baltimore Silk Road task force - known as SA Force - before the site, founded and operated by 31-year-old Ross Ulbricht, was shut down in late 2013.
Both were indicted in March on charges of money laundering, wire fraud, and theft of government property for allegedly stealing hundreds of thousands of dollars worth of bitcoins during their undercover investigation. While Force "stole and converted to his own personal use a sizeable amount of bitcoins," Bridges "without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain," according to the criminal complaint filed against them.
Ulbricht's defense team was only informed of the pending corruption case about a month before his trial began, according to Forbes, and by then the prosecution had already moved to seal the information so that it could not be used against them.
"The fact that we were precluded at trial from using any evidence related to the former SA Force - we did not even learn about Bridges until after the trial was over - will of course be one of the key issues we will raise on appeal," Lindsey Lewis, one of Ulbricht's defense attorneys, told Business Insider.
The defense's initial request for a retrial in light of the corruption charges was denied by Judge Katherine B. Forrest, who argued that a jury would have found Ulbricht guilty regardless of Force's or Bridges' alleged crimes.
"This motion for a new trial … does not address how any additional evidence, investigation, or time would have raised even a remote (let alone reasonable) probability that the outcome of the trial would be any different," she wrote in an April 27 ruling.
But it is the trial's process, and not its outcome, that the defense will likely challenge in its appeal. Ulbricht's defense team made a statement in late March arguing that their client was deprived of due process and a fair trial, when the government made a "scandalous" effort to keep the corruption charges a secret from jurors.
Braden Perry, partner in the Kansas City-based law firm of Kennyher?tz Perry, LLC, agreed that not informing the jury of an ongoing corruption case against two government investigators was likely a big enough error to provide grounds for an appeal.
"Even though it's a parallel investigation, those facts would likely be material to a jury," he told Vice. "The standard to grant such an appeal of the trial court's denial of a new trial is reversible error, a very burdensome standard."
While undercover on Silk Road as "Nob," "French Maid," and later "Death from Above," Force allegedly sold information to Ulbricht, illegally, about the government's investigation and siphoned the payments into his personal account.
"At one point, Ulbricht ... paid French Maid $100,000 for the tip that Mt. Gox CEO Mark Karpeles gave Ulbricht's name to the Department of Homeland Security," writes Wired's Andy Greenberg.
Force allegedly extorted enough money to pay off his mortgage, repay a $22,000 government loan, wire $235,000 to an offshore account in Panama, and invest tens of thousands of dollars in real estate and stocks, according to Forbes' Sarah Jeong.
In January 2013, $820,000 worth of bitcoins were stolen from Silk Road - a theft that Ulbricht, who ran the website under the pseudonym Dread Pirate Roberts ("DPR"), traced back to the account of Silk Road employee Curtis Green, according to Forbes. DPR allegedly hired Nob, thinking he was a hitman, to kill Green for stealing Silk Road funds.
Force and Bridges let DPR believe it was Green who had stolen the bitcoins, according to Forbes. Meanwhile, unbeknownst to DPR, Green had actually forfeited his administrative account to Bridges hours before the theft occurred, according to Forbes.
Nevertheless, Bridges allegedly staged Green's "murder" with Force's help, sending "proof-of-death" photos to DPR which were later used against Ulbricht.
By late January, Bridges had transferred all of the stolen bitcoins into the now-defunct bitcoin exchange Mt. Gox, according to the Justice Department. By the end of May, the criminal complaint alleges, $820,000 had been wired from Bridges' Mt. Gox account to the bank account of Quantum International Investments, LLC, a dummy corporation he had set up in February to hide the stolen money.
The criminal case against Carl Force and Shaun Bridges will continue to proceed in the Northern District of California.
We have reached out to Force's and Bridges' attorneys for comment and will update this post if we hear back.