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Search Results for: “"silk road"

Additional follow-up on former Secret Service agent’s theft from Silk Road dark web site

Primary mode of transportation to be used by major players in Silk Road drug bazaar for many years to come. Image courtesy of Adobe Stock.

While looking at the sentencing of former Secret Service agent Shaun W. Bridges I learned a few more details of what he was up to while looting hundreds of thousands of dollars worth of bitcoins.  His sentencing is one of the loose ends on my posts about the Silk Road dark web site where you could buy any drugs, body parts, contract hits, weapons, explosives, or fake identification that your heart desired.

Some tidbits from a few articles on his antics:

12/7/15 – SFGate – Ex-Secret Service agent gets prison in S.F.-based Silk Road case – Good summary of first case.  Sentenced 12/5/15 to 71 months, which is one month less than 6 years. Carl Force was sentenced on 10/19/15 to 6 1/2 years.

2/3/16 – Motherboard – Great Moments in Shaun Bridges, a Corrupt Silk Road Investigator – Article was written shortly after his re-arrest.

This guy had quite a career. Seriously. He was a successful hostage negotiator before joining Secret Service. He was on the Obama presidential protection detail and was a cyber currency expert while at the USSS.

Read more…

More sentencing details on Silk Road dark web site – part 1

View of Mr. Bridges neighborhood for seven years. Image courtesy of Adobe Stock.

One more loose end on my reporting of the drug/body parts/contract hit/weapons/fake ID/explosives dark web site Silk Road:  sentencing for Shaun W. Bridges.

Update: After getting ready for followup to this post, I realized those are actually separate discussions. Thus, there will be no ‘part 2’ for this post.

He is the former Secret Service agent who, while assigned to the inter-agency task force investigating Silk Road, stole a large amount of bitcoins. He was sentenced to prison for 71 months.

The day before he was scheduled to report to prison he was trying to get out of the U.S. but was arrested for another theft of Bitcoins. He pled guilty and was sentenced to another 24 months, which the judge ordered to run consecutively.

He was also ordered to surrender 1,500 bitcoins, which were worth approximately $10.4 million at the time of his sentencing.

This post will discuss his sentencing. Next post will give some more background on his escapades which paid him a well-earned seven years in free federal housing.

I’ve previously walked through this exercise for Scott London and Keith Graves.

Release dates and actual time in prison

Read more…

Silk Road perps. The last one has been extradicted and is awaiting trial.

Expected long-term housing arrangements for ‘Variety Jones.’ Image courtesy of Adobe Stock.

There are only a few loose ends on the massive on-line drug bazaar called Silk Road. Actually, you could buy weapons, human organs, explosives, and even a contract killing on the site along with any amount of any dope you have ever heard of.

Most of the players are in federal prison on long-term sentences.

Last time I checked, the remaining on-the-loose player was “Variety Jones.” He is now in custody, awaiting trial.

Read more…

The story on Silk Road, an on-line drug bazaar, shows the power of rationalization and self-deception

Cover of “American Kingpin” from Amazon. Used under fair use.

The sad tale of Ross Ulbricht and his on-line drug bazaar called Silk Road is a good study of the outer limits of how far rationalization can carry a person.

It is also a frightening illustration of Jeremiah 17:9. From the New International Version, ponder:

The heart is deceitful above all thing and beyond cure. Who can understand it?

Considering the tale of Silk Road is useful for accountants wanting to learn about the outer fringe of the internet and he investigative power of the federal government, believers who would like an illustration of the frightening level of deceit that lives in the human heart, and anyone else wanting to learn more about the dark worlds that normal people will never see.

My posts are gathered into two collections:

Read more…

Articles on Silk Road – drug peddling site in the ‘dark web’ – part 1

This page gathers together a series of posts written over a period of several years describing the dark net world of Silk Road, a place where you could by any drugs, weapons, explosives, or body parts you might be interested in. This venture did not end well for the founder/operator of the site. He now has free federal housing for the remainder of his natural life.

Follow along as I explored this world I’ll never enter:

2 worlds explored that I’ll never enter

There are two Forbes articles this year that are quite fascinating because they take me into worlds I’ll never see which are far away in a solar system that I’ll never approach.

An Interview With A Digital Drug Lord: The Silk Road’s Dread Pirate Roberts (Q&A) details a digital world of selling drugs that many (most? all?) governments consider illegal. Even in Mr. Roberts’ world there are ethical boundaries.

Inside Mega: The Second Coming of Kim Dotcom tells of the new massive online storage site developed by Kim Dotcom after the feds shut down his first version. This one, it is asserted, will be legal because all data is encrypted by the user thus the host has no idea what is being stored.

I find these articles fascinating because they are in-depth views inside worlds I’ll never see, let alone get the chance to try to understand.  They are a great stretching exercise.

posted 9/23/13 

 

Followup on one of the worlds I’ll never visit

I previously mentioned 2 worlds explored that I’ll never enter.

One of those worlds has been closed until further notice.

The alleged mastermind behind the website Silk Road is now in federal custody. The person known publicly as Dread Pirate Roberts was arrested last week. His site is alleged to be the vehicle for sales of large amounts of illegal drugs.

The feds seized what is reported to be 600,000 Bitcoins in his personal folder along with 26,000 Bitcoins of customer funds. That’s reportedly around $80M worth of bitcoins.

Business Insider reports FBI Struggles To Seize Alleged Silk Road Founder’s 600,000 Bitcoins Worth $80 Million.  The FBI is having trouble getting to the money since they don’t have the private key to the wallet. Here’s how the article describes the situation:

The Bureau is in a position equivalent to having seized a safe belonging to a suspect with no idea of the combination – and no hope of forcing it open any other way.

The Guardian has more:  Silk Road shutdown: how can the FBI seize Bitcoins?

If you don’t want to get caught, don’t be stupid

The Guardian also reports Five stupid things Dread Pirate Roberts did to get arrested.

Looks like Mr. Pirate Roberts wasn’t so smart.

According to the article, he dropped not-so-subtle hints on his LinkedIn site that he was doing nefarious stuff.  He posted his real name in conjunction with asking for help with coding and used his real picture on 9 fake IDs. Why so many? So he could show ID to rent servers. I doubt you have to appear in person to rent servers from across the country, or in another country (at least that’s my guess, never having had exposure to that world) so a fake picture on your fake idea would really reduce your risk.

Check out the article for all the not-so-smart alleged moves made by the alleged drug peddler.

All of this is interesting to me as a glimpse into another world that is several light years removed from the world I live in. The technology angle is interesting, again as a glimpse into high-end tech that I never deal with.

posted 10/9/13

 

Another glimpse into a world I’ll never visit

Fun thing about reading widely on the ‘net is I get to look into worlds that I’ll never, ever visit on my own. Like the world of buying guns and dope online.

Worlds far away I’ll never visit

11/1 – Economist – The Amazons of the darknet – If you thought the days of buying dope and illegal guns on the ‘net ended when the feds took down Silk Road a year ago, think again.The article describes the world of crypto-markets, another world I’ll never get to see.

There is actually an outfit that tracks the offerings in 18 crypto-markets. This group says the number of listings grew from 41k in 1/14 to 66k in 8/14. The three largest vendors reportedly have more listings than Silk Road.

Biggest offerings apparently are drugs, either otherwise prescription or flat-out illegal. You can also reportedly find weapons, fake IDs, and stolen credit & debit cards.

As with other on-line venues for buying stuff, there is a ratings system to provide feedback on the quality of product and service levels. That way you can have a comfortable level of trust in the illegal vendors selling you illegal products who commit wire fraud by taking your order and commit mail fraud by shipping your stuff via first class mail. As I think about it, leaving a one-star rating is more recourse against your drug peddler than you would have on the street corner. Sorta’ wierd though.

Amazing. An entire other world that I had no idea even existed.

Remember, the ‘net and all the other cool technology is only a tool. As with all tools, the nifty, neato gizmos can be used for good or ill.

11/7 – Wall Street Journal – Arrests Signal Breach in “Darknet” Sites – Good followup to above article – Police in the US and Europe busted a number of ‘darknet’ sites and arrested some operators.

Biggest news is officials have been able to identify Tor users. That is a big deal because that encryption technology is supposed to not only use unbreakable encryption but also completely hide all users by routing messages all around the world before getting to the destination. That means your message is secure and you aren’t even associated with the traffic.

Like I’ve said, these are glimpses of worlds I’ll only learn about by what I read online.

posted 12/2/14

 

We can change alleged to confessed when talking about the corrupt DEA investigator of Silk Road

This post continues the coverage of worlds far away I’ll never visit.

It is also in the you can’t make this stuff up category.

previously discussed a federal DEA agent investigating Silk Road who allegedly got $100K from Dread Pirate Roberts for information about the investigation the agent was conducting and allegedly stole $297K from a customer of a bitcoin dealer. He allegedly invested in and was allegedly working for that company as their compliance officer.

Well, we can now drop the alleged and change it to confessed.

Oh, he had a movie deal too.

I will describe a few tidbits from news reports and then go deeper into the plea agreement.

7/1 –Arstechnica – Corrupt Silk Road investigator pleads guilty, admits to $240K movie deal – The agent appeared in court on July 1 to enter a guilty plea on extortion, money laundering, and obstruction of justice charges. He admitted that he took $370K from a customer’s account and only turned over $37K to the government. (Article has an incorrect amount. Should be $337K stolen from the innocent customer, $37K turned over to the government, with the agent stealing net of $300K.)

Also revealed in court is the agent had a $240K contract with 20th Century Fox for his story which is going into a movie about Silk Road. It is not clear whether he has been paid anything yet or not.

Sentencing will be in October. He has agreed to repay $500K in restitution.

The Secret Service agent who is alleged to have separately stole $820K of bitcoins has reportedly agreed to plead guilty.

Seriously, I’m not making this up.

I’m not that creative.

A Forbes article gives more details: Corrupt DEA Agent Pleads Guilty To Extorting Bitcoins From Silk Road Creator Ross Ulbricht He took about $100,000 from Mr. Ulbricht in each of two separate incidences and netted $300,000 theft from a private account. For no legitimate reason at all he froze a person’s account, seized it, and stole $300K.

That is how the restitution gets to $500,000.

Plea agreement

The Forbes article points to the plea agreement here.

The agent plead guilty to three counts. The agreement, as usual, is rather heavy-handed and includes explicit statements which appear to be the specific elements of sundry felonies.

There are multiple explicit references to contact having been made by phone, video link, or electronic mail from him while he was in Maryland to another person (Dread Pirate Roberts or FBI agents interviewing him at different times) who was physically in another state. Those comments seem weird until you realize those are explicit confessions to the elements of wire fraud.

Maximum sentence for each count is 20 years. Maximum fine for each count is $250K or double the gross gain.

The agent agreed to a $500,000 restitution. Payment will start with $290,544 in five specific bank accounts. He will also turn over 683 Bitcoins in six different wallets plus another 200 bitcoins previously seized.

Something I’ve not seen before (but then I don’t spend a lot of time reading plea agreements even though it seems like that may be the case), is that the signed plea deal shows agreement between the prosecutors and the agent as to the adjusted offense level for each of the counts. For count one it is 24 or 26, depending on how one variable is resolved. For count two it is 18 and for count three the agreed level is 27.

Wikipedia has a great article on United States Federal Sentencing Guidelines. The article has the full sentencing guidelines. To get to a recommended sentence, you determine the criminal history category, calculate an adjusted offense level, and look up the two results in the table.

If I understand the criminal history category correctly, I’m guessing the agent would be in category I.

Combining that history level with those negotiated adjusted offense levels shows the following as sentencing guideline:

  • 46-57 months – assumed 24 – count 1
  • 27-33 months – level 18 – count 2
  • 70-87 months – level 27 – count 3

The high range would be something in the range of six or seven years.

A fine for level 27 offense would be a minimum of $12,500 and a maximum of $125,000.

I don’t know if these sentences would all be concurrent or it would be the largest one plus some fraction of a small one in some variation of consecutive. Or perhaps they will be consecutive. I will watch sentencing for my learning.

An idea for my first novel

Hmm. If I want to write a best-seller novel someday, maybe I could just weave together a bunch of these weird stories I read and post about.

How’s this sound? A dirty space cop extorts dark net operators hosted on asteroid mining spaceships that are selling codes to 3D print human organs and customized synthetic dope that have been banned by all terrestrial governments.

Nah. That’ll never work. Too much like yesterday’s headlines.

posed 7/3/15

 

Second federal agent pleads guilty to stealing bitcoins from Silk Road

image courtesy of DollarPhotoClub.com

image courtesy of DollarPhotoClub.com

Two federal law enforcement officers have now entered guilty pleas to charges they stole bitcoins from the Silk Road site while they were part of the investigation of the site.

Other articles on Silk Road and the we-don’t-have-to-say-allegedly corrupt federal agents can be seen on the tag worlds far away I will never visit.

The Department of Justice announced the second agent’s plea on August 31: Former Secret Service Agent Pleads Guilty To Money Laundering And Obstruction.

DoJ said the agent pled guilty to the two felony charges brought against him:

On June 16, 2015, Bridges was charged by information with money laundering, in violation of 18 U.S.C. § 1956, and obstruction of justice, in violation of 18 U.S.C. § 1512.  In today’s plea agreement, Bridges pleaded guilty to both charges.

The two guilty pleas will have “enhancements”, which I think will increase the severity of the sentence. The announcement continues:

In connection with his guilty plea, Bridges acknowledged his actions compromised a District of Maryland grand jury investigation into Ulbricht and the Silk Road. Bridges also acknowledged he made multiple false and misleading statements to both prosecutors and investigators in connection with an investigation being conducted by a San Francisco grand jury.  In addition, Bridges tried to get other government employees to tell false stories to prosecutors and investigators.  In his agreement with the government, Bridges agreed his sentence for money laundering will include enhancements for abuse of trust and obstruction of justice.

A brief summary of his scheme is provided in the announcement, which I quote freely since it is a public document:

In the plea agreement filed today, Bridges admitted he used an administrator account to reset passwords and pins of various accounts on the Silk Road.  This enabled Bridges to move bitcoin into a “wallet” he controlled and which he used to fraudulently move and steal approximately 20,000 bitcoin from Silk Road accounts.  At the time Bridges stole the bitcoin in January 2013, 20,000 bitcoin would have been worth approximately $350,000.  Shortly after Bridges stole the bitcoin, he moved it into an account at Mt. Gox, an online digital currency exchange based in Japan.  Between March and May of 2013, he liquidated the bitcoin into $820,000 of U.S. currency and had the funds transferred to the United States to a personal investment account at Fidelity.  He owned the Fidelity account under the name of Quantum International Investments, LLC.  Later, in June 2014, Bridges transferred money from the Quantum Fidelity account into a personal bank account that he shared with another person.

Short version: he took over the count of an administrator when the administrator was busted, stole Bitcoins worth $350K from customers which appreciated to $820K by the time he converted them to cash.

The feds claim he is getting ready to run, according to the Ars Technica article, Secret Service agent pleads guilty to stealing money from Silk Road dealers.

In court when the plea was entered, federal prosecutors told they judge they had information indicating the agent was trying to change his first and last name. They assert he is a flight risk and wanted him taken into intermediate custody. The judge declined. Sentencing is scheduled for December 7, 2015, so he will be free for another three months.

Seems to me there is a measurable chance that he took over accounts of other people who have not yet been identified. If that’s the case he could possibly, just maybe, have enough money stashed away to make flight worthwhile. If you had several hundred grand parked somewhere and were facing 10 or 25 years in prison, you would be thinking of getting outta’ Dodge. I would imagine there is a reasonable chance he knows how to create a false identity.

I’ll keep my ears open for the sentencing of both of the now confessed crooks.

posted 9/7/15

 

 

More good stuff on the open frontier – 1/17

A few articles on technology, energy, and publishing that are worth a read and a brief comment. Efforts for soft landing to recover a first stage came amazingly close to success.

Worlds far away I’ll never visit

1/9 – Wired – Why the Silk Road Trial Matters – Some background on the upcoming trial of Ross Ulbricht, the alleged mastermind behind Silk Road, which is allegedly one of the first dark markets to sell all sorts of illegal stuff.

Since that is a world I’ll never get within a few light years of, following the case is only way I’ll get hints of what is that planet is like.

(Remainder of post omitted since it deals with the positive world of space exploration and not the dark world of the dark net.)

Posted 1/17/15

 

Silk Road: Felony conviction in a world far away

I’ve previously discussed Silk Road as one of the worlds far away from me that I’ll never visit. Learning about stuff is why I’m writing this blog.

Last week Ross Ulbricht was convicted of multiple felonies for his role in running Silk Road, a place where you could buy all sorts of illegal stuff.

Some recent articles that help me better understand this bizarre alternate universe.

2/2 – Silk Road – The feds claim that Ross Ulbricht is the so-called Dread Pirate Roberts who ran Silk Road. That was an on-line dark market where you could buy anything you want, especially a huge selection of illegal stuff.  His trial has been underway for a while. I’ve not made many comments.

Today’s developments were a very brief defense concluding with announcement Mr. Ulbricht will not testify.  Closing arguments expected Wednesday, 2/4.

I’ll have more comments when the verdict comes back and especially when the feature articles appear after the trial.

2/4 – Wall Street Journal – Silk Road Creator Found Guilty of Cybercrimes – In just 3.5 hours of deliberation, the jury found Ross Ulbricht guilty on seven felony counts. Unexplained is how the FBI was able to penetrate the Tor software. From the superficial reading I’ve done, I thought that was supposed to be an impenetrable wall of privacy on the ‘net. Another interesting comment in the article is that the FBI was able to link him to specific Bitcoin transactions in Silk Road sales. That is way over my head, but trying to figure out things way beyond me is why I’m reading and writing. Missing from the charges and testimony are the oft-discussed six contract murders he allegedly asked an informant to carry out.

2/4 – Wired – Silk Road Mastermind Ross Ulbricht Convicted of All 7 Charges – A bit deeper coverage of the conviction.

From the article:

More broadly, the case represents the limits of cryptographic anonymity tools like Tor and bitcoin against the surveillance powers of the U.S. government. In spite of his use of those crypto tools and others, Ulbricht couldn’t prevent the combined efforts of the FBI, DHS, and IRS from linking his pseudonym to his real-world identity.

There are a few small lessons for us common, everyday folk going about our (legal) business.

First, there is no absolute privacy on the ‘net, in spite of what the first paragraphs of so many articles may say.

Second, if national level police and security agencies want inside your computer, they will get there.

For people who live in worlds I’ll never visit (places like online dope sales), there are deeper lessons that wouldn’t cross my mind:

If the feds do find the administrators of the next generation of dark web drug sites, as they found Ulbricht, don’t expect those online drug lords to let their unencrypted laptops be snatched in a public library, or to have kept assiduous journals of their criminal conspiracies. The Dread Pirate Roberts’ successors have no doubt been watching his trial unfold and learning from his mistakes. And the next guilty verdict may not be so easy.

posted 2/9/15

 

More on weird worlds far away I’ll never visit. Two federal agents allegedly stole big bucks from Silk Road; one of them allegedly did shake down Dread Pirate Roberts. No, this is not an April 1st story.

Sometimes things go so weird you just gotta’ laugh. Satire site Onion is yet again outdone by reality.  Would you otherwise think this was satire?  Two federal agents allegedly ripped off Silk Road, allegedly ripped off Dread Pirate Roberts, and otherwise allegedly stole a ton  stack  pile  truckload  whole bunch of bitcoins. 

3/30 – Wall Street Journal – Former Federal Agents Charged With Stealing Bitcoin During Probe

Ecclesiastes 1:9 says

What has been will be again, what has been done will be done again;

there is nothing new under the sun.

God’s wisdom has been proved yet again by two former federal law enforcement agents when they ripped off some money they found while conducting a criminal probe of Silk Road.

A former DEA agent allegedly tried to sell info to Dread Pirate Roberts, allegedly didsell him info,  and allegedly moved some bitcoins into his personal account. A former Secret Service officer picked up, um, pocketed, um, walked out with, um, allegedly transferred to his alleged personal account over $800K. Both were charged recently and were scheduled to appear in court Monday.

This isn’t just a case of failing to resist temptation and pocketing a bag of dope or a wad of currency on a street bust. Check out some of the things the DEA agent allegedly did, all of which info is according to the complaint:

  • Offered to trade info to Dread Pirate Roberts for $250K.
  • Separate from the above attempted shakedown, he allegedly received $100K from Silk Road in exchange for information about the investigation.
  • Diverted an unspecified amount of bitcoins from the probe which were in federal custody to his personal account
  • Wired $235K to an account in Panama.
  • Invested $100K in a bitcoin company
  • Served as the compliance officer for the company
  • Told his investee company to freeze a customer’s account and then moved about $297K from the frozen account into his personal account

All of that is alleged by the feds. By my count, that is an allegation of at least $400K, calculated as $235K moved out of the country, $100K invested in a bitcoin dealer, rounded up for paying off some loans and bills as alleged in the complaint.

Here are a few things the former Secret Service agent is alleged to have done, according to the sworn complaint:

  • Created a shell company and opened an account at a brokerage firm in that shell’s name.
  • Moved $820K into his newly opened brokerage account in a series of 9 wires from a Mt Gox account. Affidavit hints but does not say there may be a link between those funds and a theft from Silk Road, which proceeds were moved to Mt. Gox. Later the affidavit says the agent filing the complaint believes the former SS agent was “associated” with the theft from Silk Road.
  • Moved $250K from his brokerage account to another account after the FBI interviewed him.

Again, those are the allegations. By my count that would be an allegation of about $800K. So total for these two players is alleged to be at least $1.4M.

The DEA agent worked there 15 years and was earning $150K a year. The SS agent had 6 years experience.

The two agents were charged with:

  • Theft of Government property
  • Wire fraud
  • Money laundering
  • Conflict of interest

That should be enough to hold them in custody for a while.

Hopefully both of these alleged gentlemen will soon be long-term residents of free federal housing.

For future reference: Case 3-15-70370 MEJ. Northern District of California’

posted 3/30/15

 

More weird stories from worlds far away I’ll never visit

One thread of discussions on this blog are worlds far away that I’ll never approach within distance of a light year. The only way I can get a glimpse of those places is with the super long distance telescope of the Internet.

Oh yeah, in case you were wondering what direction to aim your spaceship so you can see for yourself what is in those worlds, keep in mind that being a player on those distant planets can earn you a life sentence in federal prison. More on that at the end of this post.

5/28 – Wired – Inside a Giant Dark-Web Scheme to Sell Counterfeit Coupons – Yet another world I had no idea even existed: creating counterfeit discount coupons to use at the store.

A guy whom I will not name has been indicted for wire fraud and trademark counterfeiting for selling packages of counterfeit coupons good to get discount on a variety of consumer products. Send him $25, in Bitcoins of course, and you get a bunch of coupons.

He also offers a $200 course teaching you how to counterfeit your own coupons.

I guess it makes sense, but never pondered, there is a structure for the code on a coupon. It consists of several specific fields. First, a certain number of digits for the manufacturer, which you can find in any of their products. Then a field for the product offer, followed by the discount, and the number of items you have to buy to get the discount.

Create that digital code, convert it to a UPC, add a picture into the template, type in the text for the discount and you’re ready to steal any consumer product from any vendor you wish to steal from.

This character is accused of being the person known as ThePurpleLotus or TheGoldenLotus.  He is accused of operating on Silk Road and Silk Road 2.0.

Amazing and scary and sad. I had no idea such a world even existed.

By the way, keep in mind creating or using one of those codes is also called shoplifting. It’s a crime.

5/29 – The Economist – Silk Road successors – Depressing chart tracks the number of drug listings by dark-web sites at a half-dozen different dates from 2013 through April 2015.

Silk Road was the dominant site in October 2013. By April  2014 Silk Road 2.0 had the same number of listings and the market (measured in number of listings for dope) had almost doubled. By August of that year the number of listings had grown to three times when Silk Road was busted. Silk Road 2.0 is shut down and has since been replaced by other players. A third marketplace, Evolution, failed because of an inside scam of some sort (according to the article). The volume there was replaced by other providers.

Basic point of the graph is that the close of Silk Road, Silk Road 2.0, and Evolution hasn’t done anything to reduce the number of listings of illegal drugs. Depressingly the number of listings in April 2015 is 2.4 times as many as when Silk Road was shuttered.

Speaking of Silk Road and prison sentences…

5/29 – Wall Street Journal – Silk Road Founder Ross Ulbricht Sentenced to Life in Prison – The convicted mastermind of Silk Road drew a life sentence for running the dark-net site.

Comments from the judge regarding the length of the sentence indicated she held him responsible for the drugs sold at the site.

Article indicates the FBI, federal prosecutors, and judge hope this will be a deterrent for others to not set up or run dark net sites.

I fear that is not the lesson that will be drawn by people who are otherwise inclined to facilitate sales of dope. More likely will be lessons on how to avoid detection, such as don’t ever log into your drug site in a public place. Mr. Ulbricht also used lousy online security on multiple occasions. Getting out of the business is, alas, not the lesson some people are likely to learn.

Lesson I learned? Stay two light years away from anyone or anything in those worlds.

Update: 5/29 – ArsTechnica – Sunk: How Ross Ulbricht ended up in prison for life /Inside the trial that brought down a darknet pirate. Extremely long article on the trial with lots of background. I only read about half of it.

Article has minute details on how the feds distracted Mr. Ulbricht in the library, pushed his laptop out of reach as he was looking over his shoulder, grabbed it, then kept it awake so the encryption wouldn’t slam the drive closed. Good background on the humongous amount of incriminating evidence he stored on the laptop, which was logged in as DPR at the instant of his arrest.

Lots of background on how lousy his defense case was, or his non-defense as the author characterizes it.

If you ever want one article to give you a full background on the case, this is the one to bookmark.

posted 3/30/15

 

More worlds far away I’ll never visit, including a fraud education tidbit for CPAs.

Image of in-person illegal drug sale courtesy of Adobe Stock. I don’t quite know what image to use for an illegal on-line sale.

There are many dark places on the underside of life that I will never see. One item on the long list of reasons why I blog is to look into those places by explaining what I read on the ‘net. I describe those places as worlds far away that I’ll never visit.

Two topics for today:

  • Deep background on Silk Road, the marketplace for anything
  • Selling positive pregnancy tests online

From 2013 through 2015 I wrote about 10 articles on Silk Road and the Dread Pirate Roberts who ran that dark world where you could buy anything you wanted. You could buy drugs, weapons, forged passports, poison, anything. You can find my old posts here.

Turns out Dread Pirate Roberts (an unfortunate choice of names that sullies the reputation of one of the best slap stick movies ever!) is Ross William Ulbricht. He is currently serving a life sentence at the New York Metropolitan Correctional Center. The Bureau of Prison website lists his release date as “Life.”

Now there is a full length book describing his assent to the peak of the dark world and descent into a life of free federal housing for the rest of his natural life. At a current age of 33, that will be a looooong time.

6/13/17 – Wall Street Journal – The Dark Web’s Dark Prince – Review describes American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road.

Review summarizes the origin of Silk Road, its rapid growth, and challenges of running an organization with a billion dollars of illegal sales.

Reviewer suggests there is not really that much unusual about Mr. Ulbricht: he suggests people who love Ayn Rand, have extreme confidence, and can build a competent website are on both sides of each street at every corner of Silicon Valley.

All of what happened took place on-line, so the drama we usually see in criminal stories isn’t present. (Although the way the feds physically grabbed his opened laptop while he was using it is quite entertaining.) One of the ripple effects is that Mr. Ulbricht left a massive paper trail, albeit in electronic bits and bytes.

The review says the book didn’t go into a lot of technical detail. In contrast, one of the positive reviews at Amazon said the book provided a lot of tech info on the case.

I’ve added the book to my wish list – don’t know if I will ever make the time to read it.

And in another dark corner of the underside of life…

12/19/16 – Huffington Post – Woman Claims She’s Paying College Bills With Positive Pregnancy Tests – I would never think of this scam on my own but having had my brain stretched far enough to grasp the concept, it makes sense.

A pregnant woman looking at her college tuition costs came up with the idea of selling positive pregnancy tests. Or if you prefer, she can sell you some urine, which will obviously be off the chart on key hormones since she is three months along.

The Huffington Post investigated her listing, reporting that she doesn’t care if you are pulling a  prank or blackmailing some executive for whom you are his on-the-sly-mistress. Price is $25 for 1, discount price of $35 for two if you are driving a long way to pick up your fake test results.

Yeah, I can see you might want to buy two in case you need to pretend to do a retest to persuade your mark that you really are pregnant. Also might be a good idea not to get the results in the mail – – couldn’t risk getting discovered.

I’m not sure whether to put this in the positive “there is a market for everything”category or the negative “worlds far far away I’ll never visit” bucket.

One thing I do know – this is a scheme that this little ol’ CPA would never dream up, but having read about it this CPA needs to file it away in my real-life fraud education lessons.

My tweet described the story this way:

File this away in the same category as buying-an-envelope-full-of-blank-restaurant-and-taxi-receipts …

As an auditor, I am constantly amazed at the dark creativity of the human mind.

posted 6/19/17

 

In case it wasn’t already obvious, all of the above material (other than images) is copyright 2013 through 2017 by James L. Ulvog.

 

 

On the lack of moral framework – Silk Road part 2

This series of posts from my blog address the Silk Road drug peddling site. Particular focus is on what happens when someone has no frame of reference for making moral decisions other that what is in one’s own mind.

 

How do you make moral decisions if you have no frame of reference other than your own opinion? The tale of Silk Road, part 1

On what basis do you decide which is the right path?

Image of “decisions” by Impact Hub is licensed under CC BY-SA 2.0

What is the relative moral ranking of people selling the following illegal products:

  • Marijuana
  • Cocaine
  • Heroin
  • Weapons
  • Explosives
  • Lethal poisons
  • Harvested body parts

Early in the growth of the Silk Road, which was a hidden place on the internet where you could buy anything you wanted, and I mean aaaaanything imaginable, a debate emerged about the outer limit of products that would be allowed on the site.

The website was set up and run by Ross Ulbricht. Ultimately the feds busted him, his senior staff, and another couple hundred people who worked for Silk Road or sold stuff there.

I just finished reading a book telling the tale of Silk Road, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Have had that book on my wish list for some time.

This five-part series will be published at both Nonprofit Update and Outrun Change. Posting at the Nonprofit site is because of the spiritual dimension, and at the Outrun Change site since I have a lot of other articles there describing Silk Road. People of faith will quickly figure out the spiritual and theological implications of these posts.

Some vendors didn’t like being around other vendors who obviously were less ethical

Fairly early in the life of the site it evolved that the mellow marijuana sellers and buyers didn’t like having those hyped up coke sellers on the same website, who in turn really didn’t like being around the hard-core heroin peddlers.

In turn, the heroin dealers didn’t like their wonderful stuff showing up in the same shopping cart as the handguns and rifles sold by those wacky, weird, anti-government kooks. In turn, the gun peddlers didn’t want to be on a website with those low-life dope dealers.

What to do? How to resolve this conflict between people who thought they were morally better than the other sellers?

Each of those groups of crooks thought they were morally superior to the others.

So tell me, who is in the morally superior position when ranking sellers of pot, coke, “H” (a new term I learned in the book), semiautomatic handguns, fully automatic rifles, hand grenades, and rocket launchers?

Without any moral framework other than one’s feelings at this moment (which are subject to change at the merest whim), how can any one of those be considered better or worse than the others? Which vendors should be allowed on the site and which banned?

Well, Ross Ulbricht, also known as Dread Pirate Roberts, also known as DPR, had no moral framework other than what he felt like at the moment. As a result, his decision was to allow all of the drug and weapon vendors to sell whatever they wanted on the website. Everyone was welcome. For more details jump in at page 123 of the book.

published 8/28/17.

 

How do you make moral decisions if you have no frame of reference other than your own opinion? The tale of Silk Road, part 2.

Above organs were reportedly available for purchase at Silk Road. Image courtesy of Adobe Stock.

While developing Silk Road, Mr. Ulbricht had a girlfriend, whom I won’t name. She knew he was raising and selling dope on the website and broke up when he would not end his involvement with the site.

(This is part 2 of a discussion of a book on Silk Road, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Part 1 here.)

His girlfriend came to a saving faith in Jesus Christ as her Lord and Savior later in the book, well after they broke up. (Based on a few ways that the description of her conversion and faith are described, I will make a wild guess the author of the book is not a believer).

At one point when they got back together for a while, his girlfriend persuaded him to attend worship at what appears to be a charismatic congregation that operated without a formal pastoral leadership structure.

After the worship she asked him what he thought about the morals that were discussed during the worship service.

They talked about this for a while. In response to her question about how he can tell the difference between right and wrong, he said that he thinks it through by himself.

I will quote the key sentences under fair use so you can see the subtlety of how the discussion developed:

“She looked back at Ross and tried to press the question again. ‘But how do you know what’s good and what’s evil without a reference point? Jesus is my relationship that helps me decide if I’m doing good in my life.’

“ ‘I think a man is his own God and can decide for himself what’s right and wrong,’ Ross said. ‘As a man, I decide for myself.’ “

“I decide for myself.” Wow. Each “man is his own God.” Double wow.

Lacking any framework for morality outside his own mind, he obviously made decisions based his own internal framework, which the book makes clear he made up as decisions presented themselves.

Ultimately there were thousands of different drugs available on the website along with the equipment and supplies needed to cook any kind of dope you wanted to manufacture. Later on (see page 168) Dread Pirate Roberts allow the sale of poison, including cyanide.

According to the book, human body parts, such as livers or kidneys or bone marrow, were allowed for sale with no questions as to the source. Kidneys from China were heavily discounted from prices charged by vendors elsewhere on the planet (page 167). If you want to explore how far this be-your-own-god thing can go, ponder that, and then ponder the mindset that would allow such sales, no questions asked or explanations needed.

This is not even the end of him making up a moral framework for himself. He went even further in playing God.

Ponder the bible verse Jeremiah 17:9 from the New International Version in relation to the idea of deciding for yourself the difference between right and wrong, between good and evil:

The heart is deceitful above all thing and beyond cure. Who can understand it?

posted 8/29/17.

 

How do you make moral decisions if you have no frame of reference other than your own opinion? The tale of Silk Road, part 3.

What Dread Pirate Roberts thought he paid for when he wired out a bunch of bitcoins. Not once, but five separate times. Image courtesy of Adobe Stock.

Let’s see where he ended up with this Be-Your-Own-God routine.

The feds busted one recipient of a pound of cocaine.  He was a moderator on the Silk Road site. The feds kept this guy under wraps.

Dread Pirate Roberts, who also went by DPR, concluded that this person, who worked for Silk Road, had absconded with the dope and dropped out of sight. The feds gained control over the guy’s computer.

(This is part 3 of a discussion of a book on Silk Road, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road,written by Nick Bilton. Read parts and 2. Since writing the initial draft of this series, I’ve added two more posts and another 700 words.)

An undercover fed pretending to be a big time drug dealer was in contact with DPR.  So during their conversations, DPR happened to complain that someone had ripped him off. This undercover cop offered to send some of his goons over to rough up the guy.  DPR agreed to have his correspondent get some of his guys over there to work over the double-crosser.

So Carl Force of the U.S. Drug Enforcement Agency and Shaun Bridges of the United States Secret Service pretended to torture this guy for DPR’s benefit by actually torturing the guy, taking pictures as they repeatedly dunked his involuntarily cooperating head in a bathtub full of water.

Oh, the two feds were yelling and screaming at this poor sap demanding he identify where he hid the money that DPR said he stole. The reality was that during the interrogation, one of the agents knew that he, the USSS agent, not this unlucky guy was the thief.

So while the agents dunked the guy in the bathtub in an effort to get his confession of stealing money he didn’t steal, they took pictures of the actual torture and, pretending to be a big-time drug smuggler, later sent the pix to DPR to show they roughed up the guy.

While Mr. Force and another fed continued the torture, Mr. Bridges left the bathroom for a few minutes.

To make a longer story shorter, Carl Force and Shaun Bridges separately either stole or scammed a lot of money out of Silk Road. DPR logically blamed the immediate theft on this poor sap (who was actually in custody, getting dunked in the bathtub, with his computer under the control of the DEA and USSS agents). While the DEA guy continued the dunking, the USSS guy took the laptop out of the room and stole even more money.

What would you do with a guy who stole $350,000 of *your* money?

Stealing $350,000 made Mr. Ulbricht really mad. That was *his* money.  Any money on the site was DPR’s personal property. He thought about having the supposed thief killed.

Let’s see just how far can you can go when you have essentially unlimited financial power without any frame of reference for morality.

DPR discussed what to do about this offense with his #1 lieutenant, a guy called “Variety Jones”, who was also a mentor and coach. The Department of Justice alleges Variety Jones’ actual name is Roger Thomas Clark, although that has not been proved in court.

After DPR and Variety Jones pondered what to do, DPR made a decision.

The conclusion?

DPR talked to Mr. Force, who was pretending to be this big time drug dealer call “Nob”, asking if Nob had a way to find people who could kill this supposed thief of dope and money. Sure, the undercover fed said.

So, DPR contracted with Nob to kill the thief.

Mr. Force and Mr. Bridges forced the guy to stage a photo of his wet torso looking like he was dead, with some soup spilled next to his mouth to make it look like he vomited when he died.

DPR did not actually have this guy killed, but thought that he did. In fact, Mr. Ulbricht paid Nob in Bitcoins for the supposedly completed services.

The book says that DPR contracted to have several other people killed, but the feds couldn’t find any actual bodies. If I understand the book’s comments correctly, Mr. Ulbricht hired five contract executions.

Five contract killings.

Five.

However, it seems that all of the ‘hits’ were scams.

The point is DPR believed the presumed scammers had pull off the several jobs and he paid them for their services. The book says the trial judge stated at sentencing that Mr. Ulbricht received photos which asserted to document the killings.

Becoming a serial murderer is how far Mr. Ulbricht was willing to go with his be-your-own-god moral framework.

Posted 8/30/17

 

The power of rationalization when you have no frame of reference other than your own opinion. The tale of Silk Road, part 4

fake grenade” by pat00139 is licensed under CC BY 2.0

The frightening power of rationalization is clearly on display in the story of Ross Ulbricht, also known as Dread Pirate Roberts, as he developed the Silk Road website where you could buy anything you wanted. The story is told in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. This is the fourth part of a series. You may enjoy reading parts onetwo, and three.

How did Dread Pirate Roberts get to the point where he allowed the sale of every imaginable drug, various explosives, and a range of body parts on the site he created and ran? How did he get to the place of hiring and paying for five assassinations?

The book provides insight to the shifting rationalizations. Journey with me as we explore in-depth how rationalization played out in this situation.

The starting place is that Mr. Ulbricht perceived himself to be a libertarian. That is what he claimed.

I am not a libertarian, but have along the way a few details of what libertarians generally believe. Some of the economists I read and enjoy are coming from a libertarian perspective on economic issues.

Drugs okay? Yes.

One of the ideas in the libertarian school of thought, as I understand it, is that you ought to be free to do with your body whatever you wish.

If you choose to eat unhealthy foods all the time, the government should not get in your way. If you choose to consume drugs that the government has banned, you have every right to do so.

I can wrap my brain around the concept and I can even understand how that led DPR to allow the sale of absolutely any kind of drug that someone wanted to sell. After all, if buyers wants to put something into their body (so the thinking goes), that ought to be a decision they can make as they wish.

Body organs okay? Yes.

When it gets to the point of selling human organs, the thought process is outlined on page 167 of the book. The idea was that if the provider of the organ consents to the transaction, then it is fine to sell the organ in a free market.

DPR concluded that selling organs was a just transaction and completely moral.

I will quote the description in the book on pages 167 and 168 under fair use, because it provides a careful description of the concept:

Anything goes in a free market, the (non-aggression) principle states, as long as you’re not violent toward anyone else without cause. (If someone tries to harm you, then you have every right to defend yourself and your personal property, Dread explained. An eye for an eye was the way of the libertarian world.)

Maybe it is just my opinion, and maybe it is my lack of understanding of the libertarian world, but that basic concept was subsequently stretched far beyond the breaking point.

That do-what-feels-good-for-you concept carries over to allowing sale of any drugs, including synthetics which are described as being 100 times more powerful than heroin. If you want to use such a drug to get high or wasted or destroy yourself, that would be your choice.

Explosives okay? Yes.

That same concept is used by DPR to allow the sale of fully automatic weapons, grenades, and rocket launchers. From the reading I have done (if you didn’t already know I like to read widely) I’m aware that there are people who enjoy buying an automatic weapon through proper legal channels and blasting off a few hundred rounds of ammo per minute at the range. Actually, that sounds kind of fun to me. Even more so if someone else were to give me a couple of cases of ammo.

I have read that there are even people who enjoy buying cannons and armored tanks. People with such a vast amount of money that they don’t have anything else to do with it also legally buy ammunition so they can pop off a few rounds from said cannons or tanks.

How can explosives be okay?

I rather doubt that anyone buying a fully automatic weapon on Silk Road is intending to burn several hundred dollars of ammo at the range next weekend. I doubt anyone buying a grenade or rocket launcher is going to be popping it off just for kicks at their buddy’s hundred acre farm over summer vacation.

Maybe it is a failure of my imagination but I can’t really see anyone buying explosives at Silk Road would look at that them as fun toys to be used in an innocent way. Those weapons are sort of in the range of things one would buy when one is intending serious harm to another person. Or a large number of persons.

Seems to me that would really run contrary to anything I understand of the libertarian frame of reference.

Posted 8/31/17.

 

The power of rationalization when you have no frame of reference other than your own opinion. The tale of Silk Road, part 5.

According to ‘Dread Pirate Roberts’, his ordering the execution of a renegade employee is morally the same as the U.S. President ordering one of the above wartime launches. Illustration courtesy of Adobe Stock.

This is the second of two posts describing the frightening power of rationalization on display in the story of Ross Ulbricht, also known as Dread Pirate Roberts, as he developed the Silk Road website where you could buy anything you wanted. The story is told in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. This is the fifth post in a series. You may enjoy reading parts onetwo, and three.

You might want to read part four before diving into this wrap-up of the rationalization discussion.

How can body organs be okay?

Shall we extend this discussion into body organs?

I suppose there might be some way for informed consent to be given in a situation where a body organ is extracted and sold on the Dark Web. I can’t get my brain around it, but I suppose there might be some possible way to do so that would be consistent with libertarian concepts.

I have a real problem with thinking that organ providers in China gave informed consent.

Maybe I’m missing the boat or maybe just can’t stretch my brain far enough, but I don’t see how libertarian concepts can be used to justify the sale of either hand grenades, rocket launchers, or livers & kidneys. That seems to be a rationalization to do what you otherwise feel like doing.

There is even more rationalization in play.

How do beatings and torture fit in?

Now let’s jump forward to page 181 and following.

When DPR incorrectly concluded that a site moderator had run off with a pound of cocaine and stole $350,000, DPR had to decide what to do. If word got out that you could steal that much money and get away with it, the site would be vulnerable to every single employee who wanted an early retirement.

He had to do something.

He discussed what to do with several of the staff. He realized there weren’t any laws or rules in play. He had the power to decide what direction to go.

He could have blown it off (not an option since it would encourage others to steal DPR’s personal property), or he could have someone punch the guy a few times and threatened him, or he could have someone torture the guy, or he could even have him killed.

What to do?

What to do?

He had the money to do anything. He had the unilateral and unappealable power to do anything.

He decided to have the turncoat tortured. He called Nob and asked him to send some of his goons over to rough up the guy.

How does that fit with the libertarian perspective described earlier?

How does beating someone up, including maybe giving him some broken fingers (like DPR imagined would be needed), fit with the self-defense concept described earlier? Seems to be seriously out of proportion.

That is retaliation.

Sure seems to me that is punishment after someone took your property, not a defense of your property.

That suggests the libertarian concepts may have easily rolled off the lips of DPR, but did not really form a frame of reference that guided him in any meaningful manner.

How does murder fit into any ethical framework?

Now let’s take a look at the rationalizations for murder as described starting on page 199. Watch as this rationalization departs from any identifiable moral framework.

The book describes the payment made after the killing was another $40,000. (I can’t find a reference for the amount of the first payment, but that makes me think the total price was $80,000.)

The book also says the killing distressed DPR and then described the rationalization in play.

Such extreme behavior as stealing $350,000 of DPR’s money needed a strong response to protect his empire.

People like that were a serious threat to what DPR had accomplished. If not addressed, it could destroy all of his property. It could destroy his legacy of ending the prohibition on drug sales (yes, that was his lofty aspirational goal).

Furthermore, he was merely defending his property.

The movers and shakers of the world just have to make tough decisions

The book describes two specific comparisons. Try these on for size.

Having the supposed thief executed was no different from the President of the United States authorizing a drone strike on a specific house in Afghanistan or Iraq. The people soon to die, which could easily include innocent bystanders, need to be killed to protect the US and its allies.

That is an ugly and a horrible thing but sometimes is necessary. Just like the killing that DPR authorized.

Killing terrorists by drone strike in Afghanistan and killing the thief of $350K by contract assassination are morally equal, right? Right?

The same concept applies in the business world.

The book says (which given the structure of the book I believe reflects a discussion between DPR and one of his staff) there have been dozens of Chinese workers who killed themselves by jumping to their deaths because the working conditions while making iPhones were so horrible. (I have no idea if the starting point of this rationalization is even true. The scary point is that like the fulfillment of the five contract killings, DPR believed it to be true.)

While those deaths are unfortunate, that is a cost that Steve Jobs has to bear, according to the book, in order to change the world by making iPhones available to everyone at a great price. Again, that is a rationalization the book explains was in play inside DPR’s mind.

Those alleged suicides of iPhone workers are merely the price paid to change the world. Just like the price DPR had to pay when he was forcedto order the assassination of one of his workers. DPR just had to do that in order to make the world a better place through massive sales of drugs and weapons and body parts.

(Your homework assignment if you want extra credit: identify the separate rationalizations and specific fallacies in the above two stories.)

Behold the power of rationalization

At this point, DPR had long since departed from anything resembling libertarian principles or any identifiable frame of reference.

Consider his moral journey:

He has authorized the sale of any drug in existence.

He has authorized the sale of explosives and body organs.

He has authorized the beating and likely torture of a thieving employee.

He has authorized, and paid for, what he firmly believed was the execution of that employee.

He can easily move forward from here to authorize and pay for another four murders.

It sure does seem to me that Dread Pirate Roberts was using a heaping helping of rationalizations. He was not working from any identifiable frame of reference outside of himself.

Consider again this bible verse from Jeremiah 17:9 in the NIV translation:

The heart is deceitful above all thing and beyond cure. Who can understand it?

Posted 9/1/17

 

Where did one guy wind up by making moral decisions with no moral frame of reference other than himself? The tale of Silk Road, part 6.

Mr. Ulbrecht’s housing for the rest of his life (plus the next 40 years). Image courtesy of Adobe Stock.

How far did he go?

So as a result of running the drug bazaar called Silk Road, where did Ross Ulbricht wind up with his efforts to forcibly legalize drugs and simultaneously remove God from His throne and take over the throne for himself?

What did he get for his efforts? The feds claim he had tens of millions of dollars in his personal accounts.

(This is part 6 of a discussion of Silk Road, as described in, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Check out parts onetwothreefour and five, if you wish.)

He ran a web site at which he knowingly sold to anyone who could pay:

  • pot,
  • coke,
  • heroin,
  • many varieties of synthetic drugs,
  • equipment & supplies to manufacture drugs,
  • automatic weapons,
  • grenades,
  • rocket launchers,
  • body parts, including but not limited to:
  • livers,
  • kidneys,
  • bone marrow,
  • deadly poisons,
  • counterfeit identification,
  • counterfeit currency,
  • keystroke loggers,
  • spoofing software,
  • sundry hacking tools, and
  • fake passports.

He also contracted for and paid for what he thought was the murder of five people who offended him.

Let that sink in – the book says he contracted for what he believed were multiple murders. He believed sufficiently strongly that the hits had been carried out that he paid for the services. Five times.

Where did he wind up?

So, where is he now?

Federal prison.

On two counts (#2 and #4) he was sentenced to life imprisonment. For the other counts, he was sentenced to an additional 40 years.

At sentencing, the judge reminded Mr. Ulbricht that there is no parole in the federal system. A life sentence runs until you are dead.

He will be eligible for release 40 years after he dies.

A hint of what maximum security prison looks like

He isn’t in the stereotypical ‘club fed’ either.  No, he is in maximum security. Sits in his cell 23 hours a day.

For an hour of exercise, he is shackled hands and feet, then shuffles off to a roof-top area where he can get fresh air and sunshine.

According to the book, the exercise area has steel bars across the top, partially blocking the sun and view. This is to prevent things like his compatriot Vanity Jones from swooping in with a helicopter for a dramatic rescue and pulling him off the room.

He is in a cage even during his exercise. That will be his routine for the rest of his life.

Posted 9/4/17.

 

It didn’t end well for two of the feds investigating Silk Road. The tale of Silk Road, part 7.

The wages of corruption. Image courtesy of Adobe Stock.

Two of the feds working on the Silk Road investigation went rogue. That did not turn out well for them.

This is part 7 of a discussion of Silk Road, as described in, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Check out parts onetwothreefour, five and six, if you wish.

Since the book was written, there have been more developments. I stumbled across the additional info after drafting this series of posts.

Let’s take a look at how things turned out for the two crooked federal agents.

What did the two feds do and what did they get for their trouble?

Carl Force, while employed by DEA, fed information on the investigation to Ross Ulbrickt, aka Dread Pirate Roberts, aka DPR, so DPR had some heads-up to stay ahead of the investigation. The book says he was eventually paid $757,000 by DPR for inside info on the investigation.

He was sentenced to 78 months in prison.

Shaun Bridges, while employed by Secret Service, stole $820,000 from Silk Road, according to the book. At the moment Mr. Force and another fed did the faked real torture of the hapless coke recipient, Mr Bridges picked up the laptop, walked out of the room, and stole a bunch of bitcoins, diverting them to his account.

He was sentenced to 71 months in prison and ordered to pay $500,000 restitution.

After sentencing, he was apprehended trying to leave the country.

What else did the Secret Service agent do?

Here’s where the new info drops in.

Apparently that wasn’t the end of the shenanigans for Mr. Bridges. We also know why he was trying to get out of the country after sentencing and how he planned to fund his run from the law.

According to a report on 8/18/17 in The Hacker News, the Corrupt Federal Agent, Who Stole Bitcoins From Silk Road, Pleads Guilty To Money Laundering.

If I have a chance, I’ll go read some court documents on the PACER system. In the meantime, the article reports that after Mr. Bridges had been charged in the original case, he used the stolen keys to access the Bitcoins held by the Secret Service.

Article says after being charged and after signing the plea deal, he allegedly stole another 1,600 or so Bitcoins, worth about $359,005 at the time. That many coins would be worth about $6.6M now.

I guess we can drop the ‘allegedly’ from the discussion, since the article says he has entered a guilty plea.

Sentencing will be on November 7, 2017.

Be careful if you read this article. It is a bit fuzzy and confusing on the details.

ArsTechnica provided better explanation on 8/15/17:  Secret Service agent, corrupted by Silk Road case, cops to second heist In court, upon request Mr. Bridges silently read two sections of the information complaint, was asked by the judge if those sections were correct, and Mr. Bridges indicated they were.

He could be sentenced to an additional 10 years.

ArsTechnica linked to an on-line copy of the complaint, which can be seen here.

The case number is 3:17-cr-00448-RS, filed in the Northern District of California, San Francisco Division.

Here are some highlights from the complaint.

While still working at Secret Service, he lawfully seized 1606 bitcoins. He placed them in a private account for storage and held the key to access the account. Up to this point that sounds fine. He executed the authorized seizure and moved the bitcoins into an account he controlled. Thus the seized bitcoins were under proper government control, since you can’t carry the bitcoins down to the evidence locker and log them in to storage.

Mr. Bridges resigned on 3/18/15. When he left, he kept a copy of the private key controlling access to those 1,606 bitcoins. On 3/25/16 he was charged. On 6/15/15 he pled guilty to money laundering and obstruction of justice (See paragraph 11.)

The theft was on 7/28/15, which was 43 days after the plea was entered. If I’m reading the information claims correctly, he moved the bitcoins to an on-line brokerage, whose owner/operator was subsequently busted by the feds.  Mr. Bridges then laundered the bitcoins into about 8 different on-line digital wallets and one hardware wallet account. I think the hardware wallet would be a tangible storage device, such as a thumb drive. Spreading the coins out to other accounts was accomplished in 19 known transactions from 8/3/15 through 11/16/15 for the on-line accounts and an unknown number of transactions on unspecified dates into the hardware wallet.

According to the criminal information filed, Mr. Bridges stole 1606 Bitcoins held by the Secret Service, which he personally had seized from Mr. Force’s account, which were the coins Mr. Force had previously scammed out of Mr. Ulbricht.

You almost have to chuckle at the scheme: after pleading guilty to illicit theft of bitcoins he then illicitly obtained the bitcoins that he had lawfully seized which Mr. Force had illicitly obtained.

The 8/16/17 Department of Justice press release:  Former Secret Service Agent Pleads Guilty to Money Laundering.

A few interesting pieces of information from the press release. The value of the bitcoins at the time they were illegally obtained the second time is cited as $359,005 while the value of bitcoins he stole in the first round is “over $800,000.”  Before reporting to jail, he was arrested on these new charges. This new round of a plea deal includes one charge of money laundering while the first round included two counts, money laundering and obstruction of justice.

It is obvious why he was trying to get out of the country: he wanted to avoid spending 6 years in prison.

Now we know how he planned to finance his run: he had about $360,000 of saleable bitcoins under his control. Earlier in the book, you can read that DPR set up an escape route by spending about $75,000 to establish permanent residency on some island in the Caribbean.

Mr. Bridges’ $360K stash just might have been enough, maybe, to spend the rest of his life sipping rum-and-cokes on the beach if he was willing to get his own ice, mix his own drinks, and buy the cheapest cases of rum on the shelf.

Posted 9/5/17.

 

The Silk Road perps. Where are they now? Part 8.

Image courtesy of Adobe Stock.

This is part 8 of a discussion of Silk Road, as described in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. To learn how these three individuals earned an extended stay in federal housing, you may enjoy reading parts onetwothreefour, fivesix, and seven.

Current status:

In good ol’ Dragnet style, where are bad guys now?

Here is the info from the federal Bureau of Prisons website:

  • Ross William Ulbricht – Life Sentence – register number 18870-111 – age 33 – confined at Florence (Colorado) – High security U.S. Penitentiary.
  • Shaun W Bridges – release date 3/17/2021 – register number 20436-111 – age 35 – not in Bureau of Prisons custody, which means he is being held somewhere else.
  • Carl Mark Force – release date 11/26/2020 – register number 58633-037 – age 48 – confined at McCreary U.S. Penitentiary, medium security, located in Pine Knot, Kentucky.

More status updates:

Roger Thomas Clark, whom the DoJ alleges is “Variety Jones”, is in a Thailand jail fighting extradition to the U.S.   The Bureau of Prisons does not have a listing for him.

The best description of his status that I could find after a brief on-line search is in this article from the Washington Times back on 9/8/16:  Silk Road suspect defies extradition efforts from Thailand 10 months after arrest: Report.

According to the article, Mr. Clark was arrested in Thailand back in December 2015. As of September 2016 he was still in Thailand. He has been charged with two counts, including money laundering and narcotics conspiracy. Potential range of sentence, if convicted, is from 10 years to life on the narcotics charge and 20 years for money laundering.

On 9/7/16, ArsTechnica reported an Exclusive: Our Thai prison interview with the alleged top advisor to Silk Road.  In the interview, Mr. Clark said it is likely he will eventually lose the extradition fight. However, there will be minimal evidence against him. Unlike DPR, who was caught with the laptop open, in use, logged on to Silk Road site as administrator, and with his fingers on the keyboard, Mr. Clark says his laptops were closed and contents encrypted when he was arrested.

Shaun W Bridges – Aha. I now know where Mr. Bridges is located. He is in jail in the San Francisco area, probably the Alameda County jail, since he was wearing one of their jumpsuits in court on 8/15/17, according to the ArsTechnica article mentioned in the previous post.

He is expected to be sentenced on the second round of charges on 11/7/17.

Analysis of sentence and time to serve

In watching federal criminal cases, I’ve learned that while there is no parole in the federal system, there is an allowance of early release in the amount of 53 days for each full year of the sentence. This provides the feds lots of leverage to motivate inmates to behave well.

That is also why we sometimes see a peculiar sentence of one year and one day.  That extra day allows the feds to hold over the head of an inmate the possibility of up to 53 days early release.

That 53 day allowance is incorporated into the expected release dates. In addition, at some point before official release inmates are moved to a residential custody facility in order to prepare for reentry into society. I’ve not figured out what the pattern is for transitional housing.

So, here is my analysis of the actual sentence, likely potential time off for good behavior, likely actual time that will be served, and a guess for when they are credited for going into custody:

Bridges Force
release date per BOP 3/17/2021 11/26/2020
sentence in months      71.00        78.00
sentence in years        5.92          6.50
truncated number of years        5.00          6.00
days early release at 53 days for each full year     265.00      318.00
months of early release        8.83        10.60
months likely to be in custody      62.17        67.40
my guess on incarceration 2/7/2016 5/15/2015

Why do I make such calculations? First, it is interesting. Second, it helps me learn more about the federal system. Third, readers may find this methodology helpful when reading about other federal criminal cases.

Posted 9/6/17

 

Final thoughts on the tale of Silk Road. Part 9.

Cover of “American Kingpin” from Amazon. Used under fair use.

This is the 9th and final part of a discussion of Silk Road, as discussed in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. For the longer story, you may enjoy reading parts onetwothreefour,fivesixseven, and eight.

Other thoughts on the book

If you have previously been following the Silk Road story, you will enjoy the book. It reads like a good detective novel, except it is all true.

The book describes the mutual low opinion held of other federal agencies by the staff of most of the federal agencies that had a part in the investigation. This is not the first time I’ve read of those attitudes or heard of poor cooperation across agencies.

Lack of technical discussion

A couple of the reviews at Amazon indicate there is minimal technical detail in the book. That is absolutely the case.

The extent of technical explanations is to say that there is something called Tor to allow secure and anonymous communications on the ‘net, something called Bitcoin to allow anonymous transfer of money, some way to encrypt a hard drive, something called CAPTCHA is important, and a comment that it is possible to partition a hard drive (whatever that may be!).

Seriously, that is the extent of technical discussion.

Vague comments hint at a lot more technical issues at play on the part of law enforcement. TOR users can be traced and their communications read. Bitcoin transactions can be traced and pinned to specific people. Lots of comments point to federal investigators who are quite skilled at finding their way around the ‘net and quite adept at using advanced technology.

One of many heroes in the story

Discussion of the trial takes up only 10 pages. There is almost as much as the 7 pages devoted to pondering by a Homeland Security investigator on his trip home after four days of testifying at trial.

Oh, about Mr. Jared Der-Yeghiayan, that Homeland Security agent. He explained to his young son the reason for long absences from home by saying he was trying to catch a pirate.

Even a 7 year-old knows that pirates are bad people. The slightly longer version is he did a lot of the groundbreaking research that led to the capture of Mr. Ulbricht. He is one of many stars in the story.

When he returned home after the trial, his son asked daddy if he caught the pirate.

Yes, he said.

I sincerely hope as that young man grows up he will know full well that his father did yeoman’s work defending our country. He is, and will remain, a hero.

And about that unwarranted defamation of one of all-time great comedies

Ross Ulbricht adopted the nickname of Dread Pirate Roberts from the classic movie Princess Bride. Why would Mr. Ulbricht defame that wonderful comedy by associating it with a dope-peddling website?

In the movie, there are many people who were Dread Pirate Roberts. The original pirate had a horrible reputation, so bad in fact that ship captains surrendered the moment they saw the pirate’s flag appear. Eventually the original DPR grew weary of life on the sea and retired to enjoy his booty, secretly transferring the title of DPR to a selected successor. In turn, the successor eventually made enough money and passed on the title again.

The key character in Princess Bride was merely one of a long line of DPRs, each of whom retired.

Vanity Jones suggested using the name Dread Pirate Roberts. He hoped that he would become the second DPR after Mr. Ulbricht retired.

In fact, the book says that at one point Mr. Ulbricht claimed he was merely one in a line of operators of Silk Road. He didn’t set it up or operate it earlier, he was merely gifted the site to use for a while and has since passed it on to someone else. Both the previous and successor DPRs were of course not known to him. The flawed concept is that would provide believable deniability to all the crimes committed while operating the site.

So, that is the how and why Mr. Live-for-the-rest-of-his-life-in-free-federal-housing came to slander such a fabulous, delightful movie.

One final thought

Ponder yet again the distance one can travel with the be-your-own-god framework for morality and decision-making. Consider again Jeremiah 17:9 of the NIV:

The heart is deceitful above all thing and beyond cure. Who can understand it?

The story of Ross Ulbricht of website Silk Road infamy illustrates frighteningly well how deceitful and far beyond cure the human heart can go.

Posted 9/7/17.

 

All of the above material (other than images) is copyright 2017 by James L. Ulvog.

 

Final thoughts on the tale of Silk Road. Part 9.

Cover of “American Kingpin” from Amazon. Used under fair use.

This is the 9th and final part of a discussion of Silk Road, as discussed in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. For the longer story, you may enjoy reading parts one, two, three, four, five, sixseven, and eight.

Other thoughts on the book

If you have previously been following the Silk Road story, you will enjoy the book. It reads like a good detective novel, except it is all true.

The book describes the mutual low opinion held of other federal agencies by the staff of most of the federal agencies that had a part in the investigation. This is not the first time I’ve read of those attitudes or heard of poor cooperation across agencies.

Lack of technical discussion

A couple of the reviews at Amazon indicate there is minimal technical detail in the book. That is absolutely the case.

Read more…

The Silk Road perps. Where are they now? Part 8.

Image courtesy of Adobe Stock.

This is part 8 of a discussion of Silk Road, as described in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. To learn how these three individuals earned an extended stay in federal housing, you may enjoy reading parts one, two, three, four, five, six, and seven.

Current status:

In good ol’ Dragnet style, where are bad guys now?

Here is the info from the federal Bureau of Prisons website:

Update 12/10/18:  Roger Thomas Clark, accused of being “Variety Jones”, is in federal custody awaiting trial.

Read more…

It didn’t end well for two of the feds investigating Silk Road. The tale of Silk Road, part 7.

The wages of corruption. Image courtesy of Adobe Stock.

Two of the feds working on the Silk Road investigation went rogue. That did not turn out well for them.

This is part 7 of a discussion of Silk Road, as described in, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Check out parts one, two, three, four, five and six, if you wish. (Cross-post from my other blog, Nonprofit Update.)

Since the book was written, there have been more developments. I stumbled across the additional info after drafting this series of posts.

Let’s take a look at how things turned out for the two crooked federal agents.

What did the two feds do and what did they get for their trouble?

Read more…

Where did one guy wind up by making moral decisions with no moral frame of reference other than himself? The tale of Silk Road, part 6.

Mr. Ulbrecht’s housing for the rest of his life (plus the next 40 years). Image courtesy of Adobe Stock.

How far did he go?

So as a result of running the drug bazaar called Silk Road, where did Ross Ulbricht wind up with his efforts to forcibly legalize drugs and simultaneously remove God from His throne and take over the throne for himself?

What did he get for his efforts? The feds claim he had tens of millions of dollars in his personal accounts.

(This is part 6 of a discussion of Silk Road, as described in, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Check out parts one, two, three, four and five, if you wish.)

He ran a web site at which he knowingly sold to anyone who could pay:

  • pot,
  • coke,
  • heroin,
  • many varieties of synthetic drugs,
  • equipment & supplies to manufacture drugs,
  • automatic weapons,
  • grenades,
  • rocket launchers,
  • body parts, including but not limited to:
  • livers,
  • kidneys,
  • bone marrow,
  • deadly poisons,
  • counterfeit identification,
  • counterfeit currency,
  • keystroke loggers,
  • spoofing software,
  • sundry hacking tools, and
  • fake passports.

He also contracted for and paid for what he thought was the murder of five people who offended him.

Read more…

The power of rationalization when you have no frame of reference other than your own opinion. The tale of Silk Road, part 5.

According to ‘Dread Pirate Roberts’, his ordering the execution of a renegade employee is morally the same as the U.S. President ordering one of the above wartime launches. Illustration courtesy of Adobe Stock.

This is the second of two posts describing the frightening power of rationalization on display in the story of Ross Ulbricht, also known as Dread Pirate Roberts, as he developed the Silk Road website where you could buy anything you wanted. The story is told in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. This is the fifth post in a series. You may enjoy reading parts one, two, and three.

You might want to read part four before diving into this wrap-up of the rationalization discussion.

How can body organs be okay?

Shall we extend this discussion into body organs?

I suppose there might be some way for informed consent to be given in a situation where a body organ is extracted and sold on the Dark Web. I can’t get my brain around it, but I suppose there might be some possible way to do so that would be consistent with libertarian concepts.

I have a real problem with thinking that organ providers in China gave informed consent.

Maybe I’m missing the boat or maybe just can’t stretch my brain far enough, but I don’t see how libertarian concepts can be used to justify the sale of either hand grenades, rocket launchers, or livers & kidneys. That seems to be a rationalization to do what you otherwise feel like doing.

There is even more rationalization in play.

How do beatings and torture fit in?

Read more…

The power of rationalization when you have no frame of reference other than your own opinion. The tale of Silk Road, part 4

fake grenade” by pat00139 is licensed under CC BY 2.0

The frightening power of rationalization is clearly on display in the story of Ross Ulbricht, also known as Dread Pirate Roberts, as he developed the Silk Road website where you could buy anything you wanted. The story is told in American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. This is the fourth part of a series. You may enjoy reading parts one, two, and three.

How did Dread Pirate Roberts get to the point where he allowed the sale of every imaginable drug, various explosives, and a range of body parts on the site he created and ran? How did he get to the place of hiring and paying for five assassinations?

The book provides insight to the shifting rationalizations. Journey with me as we explore in-depth how rationalization played out in this situation.

Read more…

How do you make moral decisions if you have no frame of reference other than your own opinion? The tale of Silk Road, part 3.

What Dread Pirate Roberts thought he paid for when he wired out a bunch of bitcoins. Not once, but five separate times. Image courtesy of Adobe Stock.

Let’s see where he ended up with this Be-Your-Own-God routine.

The feds busted one recipient of a pound of cocaine.  He was a moderator on the Silk Road site. The feds kept this guy under wraps.

Dread Pirate Roberts, who also went by DPR, concluded that this person, who worked for Silk Road, had absconded with the dope and dropped out of sight. The feds gained control over the guy’s computer.

(This is part 3 of a discussion of a book on Silk Road, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Read parts 1 and 2. Since writing the initial draft of this series, I’ve added two more posts and another 700 words.)

An undercover fed pretending to be a big time drug dealer was in contact with DPR.  So during their conversations, DPR happened to complain that someone had ripped him off. This undercover cop offered to send some of his goons over to rough up the guy.  DPR agreed to have his correspondent get some of his guys over there to work over the double-crosser.

So Carl Force of the U.S. Drug Enforcement Agency and Shaun Bridges of the United States Secret Service pretended to torture this guy for DPR’s benefit by actually torturing the guy, taking pictures as they repeatedly dunked his involuntarily cooperating head in a bathtub full of water.

Read more…

How do you make moral decisions if you have no frame of reference other than your own opinion? The tale of Silk Road, part 2.

Above organs were reportedly available for purchase at Silk Road. Image courtesy of Adobe Stock.

While developing Silk Road, Mr. Ulbricht had a girlfriend, whom I won’t name. She knew he was raising and selling dope on the website and broke up when he would not end his involvement with the site.

(This is part 2 of a discussion of a book on Silk Road, American Kingpin: The Epic Hunt for the Criminal Mastermind Behind the Silk Road, written by Nick Bilton. Part 1 here.)

His girlfriend came to a saving faith in Jesus Christ as her Lord and Savior later in the book, well after they broke up. (Based on a few ways that the description of her conversion and faith are described, I will make a wild guess the author of the book is not a believer).

At one point when they got back together for a while, his girlfriend persuaded him to attend worship at what appears to be a charismatic congregation that operated without a formal pastoral leadership structure.

After the worship she asked him what he thought about the morals that were discussed during the worship service.

Read more…

How do you make moral decisions if you have no frame of reference other than your own opinion? The tale of Silk Road, part 1

On what basis do you decide which is the right path?   Image of “decisions” by Impact Hub is licensed under CC BY-SA 2.0

What is the relative moral ranking of people selling the following illegal products:

  • Marijuana
  • Cocaine
  • Heroin
  • Weapons
  • Explosives
  • Lethal poisons
  • Harvested body parts

Early in the growth of the Silk Road, which was a hidden place on the internet where you could buy anything you wanted, and I mean aaaaanything imaginable, a debate emerged about the outer limit of products that would be allowed on the site.

The website was set up and run by Ross Ulbricht. Ultimately the feds busted him, his senior staff, and another couple hundred people who worked for Silk Road or sold stuff there.

Read more…

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