Last updated: February 4, 2015 11:19 pm
Ulbricht found guilty over Silk Road drugs site
Kara Scannell in New YorkAuthor alerts
Ross Ulbricht was accused of being the mastermind behind illegal marketplace Silk Road. His lawyer called him ‘the perfect fall guy’Ross Ulbricht was accused of being the mastermind behind illegal marketplace Silk Road. His lawyer called him ‘the perfect fall guy’The San Francisco Public Library: Mr Ulbricht was arrested by FBI agents at one of its branchesThe San Francisco Public Library: Mr Ulbricht was arrested by FBI agents at one of its branchesDefence attorney Joshua Dratel gives an opening statement to the jury at the start of the trial©APSilk Road was one of the largest anonymous online marketplaces for heroin and other illegal drugsSeized goods: prosecutors claim more than $200m of illegal products were sold through the siteEvidence storeroom: the volume of seized envelopes containing hard drugs, pictured here in boxes, escalated rapidlyRoss Ulbricht ordered nine counterfeit drivers’ licences under multiple aliases months before he was arrested, all with his actual birth dateThe prosecution pointed the jury to personal emails on the Ok Cupid dating site to establish a link between his Gmail email account and activity on Silk RoadSilk Road transactions tallied the equivalent of more than $13m over nearly three years, according to government evidenceLyn Ulbricht, with husband Kirk behind left, said her son’s defence was “shackled” by the judge’s ruling precluding expert witness testimonyLyn Ulbricht, speaking to reporters after the verdict. As her son was led away from the court, she yelled “it’s not the end”
Ross Ulbricht was convicted on Wednesday of being Dread Pirate Roberts, the mastermind of a $200m marketplace for illegal drugs and hacking services, handing the US government a victory in a case that has tested new boundaries for authorities prosecuting the “dark net”.
After only three and a half hours of deliberation, the jury found Mr Ulbricht guilty on all seven counts (see below).
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As the verdict was read out in a packed courtroom, Mr Ulbricht sat motionless, staring straight ahead. His mother, seated on a bench two rows behind, shook her head.
After the judge adjourned the case, one supporter shouted “Ross is a hero”. When Mr Ulbricht was led away, his mother yelled “it’s not the end”, while another supporter yelled “we love you Ross”.
Preet Bharara, the US Attorney for Manhattan, said Silk Road was a black market bazaar built by Mr Ulbricht to exploit the anonymity of the dark web and the digital currency bitcoin.
“Ulbricht’s arrest and conviction — and our seizure of millions of dollars of Silk Road bitcoins — should send a clear message to anyone else attempting to operate an online criminal enterprise,” Mr Bharara said in a statement. “The supposed anonymity of the dark web is not a protective shield from arrest and prosecution.”
The case has attracted the attention of bitcoin enthusiasts, libertarian groups, who have been staunch supporters of Silk Road, and others who say the government is trying to turn web hosting into a criminal activity. It has also highlighted the potential difficulties in proving who is on the other end of a screen name — an issue embraced by Mr Ulbricht’s attorneys.
Mr Ulbricht, 30, will be sentenced on May 15. One of the charges carries a range of 20 years to life in prison. Mr Ulbricht has been in government custody since his October 2013 arrest.
The case rested largely on digital documents recovered from Mr Ulbricht’s laptop and Silk Road’s servers, and turned on how lawyers for both sides sought to interpret them. Prosecutors said Mr Ulbricht was an egomaniac who operated Silk Road from beginning to end and grew it into a $200m marketplace that he would do anything — including resort to murders-for-hire — to protect.
Mr Ulbricht’s lawyer conceded his client created Silk Road but said he sold it and was later set up — by Mark Karpelès, the founder of Mt Gox, the largest bitcoin exchange until its collapse, or someone else who was acting as DPR. Mr Karpelès has denied any involvement and has not been accused of any wrongdoing.
“Documents can be created, edited, moved,” Mr Ulbricht’s lawyer, Joshua Dratel, told the jury. All the organised files found on Mr Ulbricht’s laptop were “a little too convenient”.
Where all roads lead
Documentary evidence used against Mr Ulbricht
“They think I sold it” chat
“I’m running a . . . criminal enterprise” chat
“A website where people could buy anything” journal
Exhibit 240 A
“Everyone knows too much” message
Exhibit 240 C
“Too much time away from Silk Road” journal
Exhibit 240 D
“Covered in poison oak” log
“I have poison oak” email
Messages from Dread Pirate Roberts
The lawyers sparred over the evidence and Mr Ulbricht’s legal team made some tactical decisions that resulted in the judge refusing to allow them to call experts on computer security and bitcoin. Mr Dratel flagged in his opening statement his theories that Mr Ulbricht had been hacked and that he traded bitcoins, but did not tell the court of his intention to call witnesses until the eve of his defence case.
“A defence preference for trial by ambush is legally unsupportable,” Judge Katherine Forrest wrote in an opinion excluding the experts.
Most of the government’s witnesses were federal agents, some acting undercover as they hunted for DPR’s true identity, while others described how they arrived later for Mr Ulbricht’s dramatic arrest at a public library in San Francisco. They described how they ultimately traced DPR to Mr Ulbricht and pieced together bitcoin transfers from Silk Road accounts to wallets held on Mr Ulbricht’s laptop, and other corroborating evidence from his laptop, personal emails from a Google account, and information stored on the Silk Road servers.
The government called Richard Bates, a classmate of Mr Ulbricht, who recalled that his friend revealed the Silk Road website to him in 2011.
He described how Mr Ulbricht arrived early to a party in November 2011 in a state of stress because a friend of his girlfriend had posted on his Facebook page that authorities would be interested in his drug operation. Mr Bates recalled telling his friend to shut down the website. Mr Ulbricht, he said, told him he had already sold it.
Prosecutors then showed the jury a private chat message between DPR and Variety Jones, a mentor to DPR, from the following month. When asked whether anyone knew about Silk Road, DPR wrote, “unfortunately yes. There are two, but they think I sold the site and got out. and they are quite convinced of it.”
Mr Dratel said the verdict was “very disappointing” and they would obviously appeal. He said the short deliberation was indicative of the one-sided nature of the case because he was precluded from putting on the evidence he wanted.
Lyn Ulbricht, Ross Ulbricht’s mother, said the defence was “shackled” by the judge’s ruling precluding testimony from expert witnesses.
Richard Weber, head of IRS-Criminal Investigation, said: “Criminals who operate on the dark web dealing with virtual currency will now know that even the dark web has rules.
“IRS-CI special agents are the best financial investigators in the world, and they have sent a message to criminals who perpetrate this type of crime that they are on notice. We will follow the money trail to wherever it leads, around the world, or to the dark places on the internet that they call home.”
COUNTS — PRISON TERMS
1. Narcotics trafficking — max: life in prison; min: 10 years
2. Distribution of narcotics by means of the internet — max: life in prison; min 10 years
3. Narcotics trafficking conspiracy — max: life in prison; min 10 years
4. Continuing criminal enterprise — max: life in prison; min 20 years
5. Conspiracy to commit and aid and abet computer hacking — max 5 years
6. Conspiracy to traffick in fraudulent identification documents — max 15 years
7. Money laundering conspiracy — max 20 years
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