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.
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 3/25/15
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 1,606 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 from Mr. Ulbricht who had illicitly obtained them from selling dope, weapons, and body parts (additional comment added).
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.
Series continues in part 8.