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Friday, April 03, 2015

Undercover federal agents in Silk Road case accused of fraud

DEA agent Carl Force accused of extorting thousands’ worth of bitcoin from convicted money-launderer Ross Ulbricht, while second agent also charged



Ross Ulbricht in court in January. Ulbricht was found guilty of fraud charges.
Ross Ulbricht in court in January. Ulbricht was found guilty of fraud charges. Photograph: Elizabeth Williams/AP

“French Maid” wasn’t Carl Force’s officially sanctioned darknet alias.
In his capacity as an undercover Drug Enforcement Agency agent, and a senior member of the team investigating the deep-web drug market Silk Road and its owner, Force used the alias “Nob”.
Ross Ulbricht, the founder of Silk Road known then as “Dread Pirate Roberts”, believed Nob to be a drug smuggler operating in the US with criminal underworld connections.
But Force also created “French Maid” and “Death from Above” – separate aliases not sanctioned by his bosses which he used to extort from Ulbricht hundreds of thousands of dollars’ worth of bitcoin, according to a complaint filed in a US district court in California.
In 2013, after a two-year investigation, the FBI arrested Ulbricht. In February 2015 he was found guilty on charges of money laundering, conspiracy to traffic drugs and attempted purchase of a murder-for-hire.
The complaint against Force, which was filed on 25 March, describes how he was assigned to the Baltimore, Maryland side of the FBI investigation into Ulbricht. While involved in that investigation, the complaint alleges, Force stole and converted for personal use “a sizable amount” of bitcoin that had been sent to him in his official capacity.
“Rather than turning those bitcoin over to the government,” the complaint continues, “Force deposited them into his own personal accounts.”
Force and Shaun Bridges, a secret service agent who has also been charged in relation to fraud linked to the Dread Pirate Roberts investigation, were senior agents within the taskforce. Force was the lead agent in communication with the Dread Pirate Roberts account, and Bridges was a computer forensics expert.
Force and Bridges had significant exposure to and developed expertise in the digital currency known as bitcoin, according to the complaint, which also says that Force used his position as a federal agent to illegally run background checks for the benefit of a bitcoin exchange company called CoinMKT, in which he had invested more than $100,000.
At one point, believing that Silk Road had been the victim of a theft, Dread Pirate Roberts contacted Nob – Force – and asked him to commission the assassination of a former Silk Road vendor (whose account had been compromised to law enforcement), known in the complaint as CG.
Force appears to have made little attempt to hide his activities. His personal checking account, reviewed by the FBI during its investigation into the two agents, showed incoming deposits of “at least approximately $757,000” between April 2013 and May 2014.
Force and Bridges also set up bitcoin investment properties named Quantum Investments and Engedi LLC, apparently to hold and re-invest the funds they had stolen.
In communication with Dread Pirate Roberts, Force also created a fictional insider source in the government agency, known as Kevin, whom he said was feeding him insider information. For this information, Force demanded payment from Ulbricht.
Force and Bridges have been charged with wire fraud and money laundering. Force has additionally been charged with theft of government property and conflict of interest
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