Federal Agents Arrested for Bitcoin Money Laundering and Fraud

288
EPA administrator Scott Pruitt has a clear double standard when it comes to conflicts of interest.

Two former federal agents have been charged with money laundering, wire fraud, and related offenses during their investigation of the online black market, Silk Road. Former DEA special agent Carl Force allegedly abused his authority by stealing from the government and selling sensitive information to the target of their investigation, while former Secret Service special agent Shaun Bridges reportedly diverted over $800,000 Silk Road bitcoins into his personal account instead of confiscating the funds as government property. By taking advantage of encrypted communications, multiple aliases, and hacked administrator accounts, these federal agents operated in the shadows and above the law.

According to court documents, Ross Ulbricht created Silk Road in January 2011 and operated the underground website until law enforcement agencies shut it down in October 2013. By concealing the IP addresses of the computers, the Silk Road became an open market facilitating both legal and illegal commerce. Although the majority of items sold on the website were illicit narcotics, Silk Road also offered computer hacking services, fake IDs, and other forged documents. After Sen. Chuck Schumer learned about the site, he asked law enforcement authorities to shut down Silk Road.

Between 2012 and 2013, agents Force and Bridges served on the Baltimore Silk Road Task Force. As the lead undercover agent, Force established communication with Ulbricht, while Bridges worked as the computer forensics expert on the team. Force initially fed Ulbricht fraudulent information, but the DEA agent also created multiple pseudonyms and began encrypting his surreptitious communications with Ulbricht.

Under the moniker “Nob,” Force posed as a criminal offering to kill Silk Road employee Curtis Green before he could become a potential witness against Ulbricht. Designed to ensnare Ulbricht into a murder-for-hire plot, the sting merely allowed Force to initiate contact with Ulbricht who went by the pseudonym “DPR” or “Dread Pirate Roberts.” After a few months of communication with Ulbricht, Force began encrypting his conversations and utilizing multiple online personas without informing his superiors.

Under the alias “French Maid,” Force allegedly sold sensitive information regarding the Silk Road investigation to Ulbricht. Instead of reporting the conversations or bitcoins to law enforcement, Force kept the transactions secret and deposited over $100,000 into his personal account. In the criminal complaint against Force and Bridges, IRS agent Tigran Gambaryan accused Force of being so stupid that he wrote his own name “Carl” at the end of a message written by French Maid.

Under the pseudonym “Death From Above,” Force allegedly contacted the Dread Pirate Roberts and threatened to reveal his real name if Ulbricht refused to pay him $250,000. According to Gambaryan, a screen-recording program on Force’s computer captured video of the DEA agent writing as Death From Above. Force has also been accused of secretly working for the bitcoin exchange firm CoinMKT, illegally seizing $297,000 from a CoinMKT customer, and transferring the funds into his personal account. After the payment firm Venmo froze his funds due to suspicious activity, Force allegedly used his supervisor’s signature stamp without authorization to issue a DOJ subpoena directing Venmo to unfreeze his personal account.

After arresting Silk Road employee Curtis Green, the Baltimore Silk Road Task Force including agents Force and Bridges gained access to Green’s administrator account in late January 2013. On January 25, 2013, a sizeable amount of bitcoins were stolen from Silk Road and transferred to a digital currency exchange based in Japan called Mt. Gox. Over the next few months, Bridges diverted roughly $820,000 to his personal account before seeking a $2.1 million seizure warrant for Mt. Gox’s accounts.

Charged with money laundering and wire fraud, Bridges self-surrendered on Monday. Force was arrested on Friday and charged with wire fraud, theft of government property, money laundering, and conflict of interest.

On February 4, Ulbricht was convicted of distributing narcotics, engaging in a continuing criminal enterprise, conspiring to commit computer hacking, conspiring to traffic in false identity documents, and conspiring to commit money laundering. Ulbricht’s sentencing is scheduled for May 15. He faces up to life in prison.

FALL FUNDRAISER

If you liked this article, please donate $5 to keep NationofChange online through November.

[give_form id="735829"]

COMMENTS