Two former federal agents have been charged with the theft of more than $800,000 in Bitcoins while acting as undercover agents during the investigation into the infamous illicit online marketplace.
The US Department of Justice has charged former Drug Enforcement Administration (DEA) agent Carl Force, 46, with wire fraud, theft of government property, money laundering and conflict of interest. His colleague Shaun Bridges, 32, a Special Agent with the U.S. Secret Service, has been charged with wire fraud and money laundering.
It is alleged that while working undercover as part of Baltimore's Silk Road Task Force, Carl Force "without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain." And that during the course of the investigation he "solicited and received digital currency as part of the investigation", which he failed to report and transferred to his personal account.
Force's authorised undercover activities included communicating with the target of the operation who operated the site under the pseudonym "Dread Pirate Roberts" and was later identified as Ross Ulbricht. But after Ulbricht was arrested and his laptop seized, the authorities discovered that much of Force's activity on Silk Road during the investigation had not been documented or reported to his superiors.
He is accused of selling information about the investigation to Ulbricht. The Department of Justice say that "In one such transaction, Force allegedly sold information about the government's investigation to the target of the investigation."
Force is also accused of "invested in and worked for a digital currency exchange company while still working for the DEA" and that he "directed the company to freeze a customer’s account with no legal basis to do so, then transferred the customer’s funds to his personal account." Also that he "sent an unauthorized Justice Department subpoena to an online payment service directing that it unfreeze his personal account."
Shaun Bridges is charged with transferring over $800,000 in Bitcoins from Silk Road vendors' accounts, which he gained control of during the investigation, to his personal account at the Mt. Gox digital currency exchange. He is than alleged to have transferred funds from Mt. Gox to a personal investment account in the United States shortly before he sought a seizure warrant for Mt. Gox's accounts.
Carl Force resigned from the DEA in 2014 after 15 years service. Shaun Bridges resigned from the Secret Service last month.
Ross Ulbricht was convicted in February of all charges related to the operation of Silk Road. His lawyer, Joshua Dratel has said that they had known of the allegations against the federal agents, but had been prevented from using them in Ulbricht's defence at the trial. Dratel said, "The government's considerable efforts at keeping this monumental scandal from being aired at Ross Ulbricht's trial is itself scandalous."
Ulbricht also faces six further charges of soliciting murder. It is claimed that using the username 'Nob', Carl Force discussed with Ulbricht arranging the murder of Curtis Clark Green, a Silk Road employee who threatened to publish the real names of Silk Road's users. And under another username, 'French Maid', Force received payment of $100,000 for a tip-off that Mark Karpeles, CEO of Mt. Gox, had given Ulbricht's name to the US Department of Homeland Security. And that the money was to be sent to a personal account separate from those holding funds confiscated by the DEA. In one case French Maid ended a message with "Carl", presumably by accident.
