A Secret Service agent and a DEA agent with lead roles in the investigation to take down the Internet drug bazaar Silk Road allegedly stole proceeds from the underground site and hid their booty in offshore accounts.
Former DEA agent Carl Force, 46, of Baltimore, the task force agent charged with going undercover to communicate online with Silk Road operator Ross Ulbricht, known as Dread Pirate Roberts, allegedly used several online aliases to extort hundreds of thousands of dollars worth of bitcoin from Ulbricht, according to a criminal complaint unsealed Monday. Force is charged with money laundering, wire fraud, theft and conflict of interest.
Prosecutors also charged Shaun Bridges, 32, of Laurel, Md., a former special agent with the U.S. Secret Service, who allegedly accessed Silk Road accounts using password information from a Silk Road customer service representative arrested in a drug sting. Bridges, who joined the Secret Service in 2009, is charged with wire fraud and money laundering.
The FBI shut down Silk Road and arrested Ulbricht on Oct. 2, 2013. Silk Road, a dark Web black market that traded in illegal drugs, counterfeit IDs and computer hacking software, required its buyers and sellers to do business in bitcoin, an anonymous digital currency that is difficult to trace.
A federal jury in New York convicted Ulbricht last month on drug conspiracy charges. Ulbricht, who will be sentenced in May, was also the target of an investigation in Maryland. Force and Bridges worked on the Maryland investigation.
Prosecutors say Force, in addition to his official undercover identity as “Nob,” created several unauthorized online aliases, so he could conduct complex bitcoin transactions to steal from the government and Ulbricht.
In one transaction, Force, using his second alias, allegedly demanded Ulbricht pay him $250,000 in bitcoin not to disclose information to the government. Posing as a woman named Carla under the alias “French Maid,” Force allegedly offered to sell Ulbricht information about the government’s investigation in exchange for $100,000 worth of bitcoin.
Ulbricht paid the money, and Force deposited it into a personal account, IRS Special Agent Tigran Gambaryan wrote in an affidavit. Force allegedly converted some bitcoin to dollars and wired the money to his personal overseas bank account in Panama, the affidavit said.
Force also worked for and invested $110,000 in the California-based digital currency exchange company CoinMKT while still working for the DEA. The company featured Force in its pitches to venture capital investors as CoinMKT’s anti-money laundering and compliance officer.
E-mails between Force and CoinMKT’s CEO indicated that Force planned to stay at the DEA until the bitcoin exchange “hits it ‘big time.’ ”
“I have a lot of down time at DEA so I am confident that I can handle all that needs to be done regarding Legal and Compliance on a daily basis,” Force wrote.
Prosecutors say Force used his position at the DEA to steal money from accounts at CoinMKT. In one instance, Force allegedly directed CoinMKT to freeze a customer account. He then seized 223 bitcoins worth about $297,000 and transferred them to his personal Bitstamp digital currency account. He then exchanged the bitcoins for dollars and put the money in his personal checking account, court papers say.
Force, who earned about $150,000 a year as a DEA agent, made $757,000 in deposits to his personal bank account from April 2013 to May 2014, court papers show. During that time, Force paid off his mortgage and a government thrift savings loan while investing in real estate and bitcoin businesses, court papers say.
Authorities arrested Force on Friday. Force, a 15-year veteran, resigned from the DEA in May. He is in jail and will appear in court Thursday for a detention hearing.
Bridges, the computer forensics expert on the Baltimore investigation, allegedly stole more than $800,000 worth of bitcoin that he controlled during the Silk Road investigation and placed it into an account with Mt. Gox, a digital currency exchange in Japan. Silk Road reported a massive bitcoin theft Jan. 25, 2013, the same day Bridges attended an interview with the Silk Road administrator caught in the sting.
Bridges allegedly wired the funds to a personal U.S. investment account through nine transfers from March 6, 2013, to May 7, 2013. The final transfer on May 7, 2013, came two days before he personally sought a $2.1 million seizure warrant for Mt. Gox’s accounts, court papers say.
Bridges, who joined the Secret Service in 2009, resigned from the Secret Service on March 18. He surrendered to authorities Monday and was released under pretrial supervision.
Bridges intends to fight the charges, his attorney Steven H. Levin said. Bridges “had an unblemished career in law enforcement for several years. He maintains his innocence,” Levin said.