Two former federal agents were charged with stealing
hundreds of thousands of dollars of virtual currency during an undercover
investigation into an online drug market, bringing an age-old law-enforcement
problem into the Internet era. Prosecutors in San Francisco unsealed charges
Monday against former Drug Enforcement Administration agent Carl Force, 46
years old, and former Secret Service agent Shaun Bridges, 32,
accusing them of pocketing bitcoins amid their probe of Silk Road, a now-defunct
website that linked buyers and sellers of illicit goods.
The site’s founder, Ross Ulbricht—known online as Dread Pirate
Roberts—was convicted by a jury in February on an array of charges
related to his role in its operation, which authorities say generated $1.2
billion in revenue over 2½ years. Mr. Ulbricht’s lawyer argued his client
wasn’t Dread Pirate Roberts and has said he plans to appeal.
The Manhattan U.S. attorney’s office told a judge Monday
that the two agents charged had nothing to do with its separate investigation
into Silk Road, which was conducted by agents in New York. Both agents were
members of a Silk Road Task Force operating out of Baltimore but don’t appear
to have been working together to steal bitcoin, according to the criminal
complaint detailing the charges. Mr. Force allegedly created a fake,
unauthorized online persona called French Maid and offered to sell Dread Pirate
Roberts information about the federal investigation in exchange for about
$100,000 of bitcoin. Mr. Force, who also was doing authorized undercover work
for the DEA and posing as a supposed drug dealer named Nob, also offered to
sell Dread Pirate Roberts information he claimed to be purchasing from a
corrupt Justice Department employee. In both cases, Mr. Force allegedly
pocketed the money that he was paid for the information.
Mr. Bridges, meanwhile, allegedly used credentials taken
from a Silk Road administrator who had been arrested to steal bitcoins from the
site. He allegedly transferred $820,000 to his personal account, according to
the complaint. Mr. Bridges appeared in federal court in San Francisco on Monday
and was released on a $500,000 bond.
The charges are the latest in a string of embarrassing
disclosures for both the Secret Service and the DEA. The Secret Service has
been under pressure over lapses in White House security, while the Justice
Department’s inspector general last week said the DEA sometimes mishandles
internal probes of sexual misconduct, including agents attending sex parties
with prostitutes in Colombia.
Both agents allegedly tried to take steps to cover their
tracks once they learned authorities in San Francisco were probing the
Baltimore Silk Road Task Force. They each resigned after they learned they were
under investigation. Part of the evidence against them appears to have been
derived from a computer belonging to Mr. Ulbricht that was seized during his
arrest. On it, he kept records of some of his conversations with French Maid,
which authorities say was Mr. Force. A Silk Road server copied by agents and
prosecutors in New York also appears to have provided some evidence against Mr.
The criminal complaint unsealed Monday is rife with alleged
wrongdoing by agents accused of treating the online world of hidden markets and
anonymous personas like the Wild West over a two-year period.
Mr. Force allegedly used his DEA credentials to trick a firm
into diverting digital currency to an account he controlled. Despite learning
that a technical glitch had caused the suspicious transactions, Mr. Force told
CoinMKT to seize the account, which contained more than $300,000 in cash and virtual
currencies. Using his DEA email, Mr. Force allegedly told the firm to transfer
the money to what it thought was a DEA account. But authorities say the money
went instead to a personal account controlled by Mr. Force. Not long after the
seizure, he started a firm aimed at investing in virtual currency.
Among the most brazen episodes contained in the complaint
was an alleged theft by Mr. Bridges, then a Secret Service agent, who
purportedly used an arrested Silk Road administrator’s login information to
siphon bitcoin from the online marketplace during a period when the
administrator was still debriefing investigators on the workings of the site.
It wasn’t clear to most of the investigators where the money
was going, but the theft prompted Dread Pirate Roberts, the site’s creator, to
offer Mr. Force—who was posing as the drug dealer Nob for the DEA—$80,000 to
kill Mr. Green, according to authorities. The DEA agents on the task force
faked Mr. Green’s death, sending pictures of his supposed corpse to Dread
Pirate Roberts, who authorities say paid the $80,000.
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