A Federal Agents’ Guide To Laundering Silk Road Bitcoin

By Lauren Smiley

When I sat across from Ross Ulbricht — you may know him better as the Silk Road’s Dread Pirate Roberts — in county jail after his arrest in 2013, he was intensely cautious. He dodged almost all of my questions, and seemed somewhere between calm and shell-shocked. Amid some small talk, he revealed a dose of hope about his fate, saying he was “not excessively” worried about the future.

But things have only gotten worse for Ulbricht since then. Last month, the accused 30-year-old online drug market don was convicted of offenses related to running Silk Road, and faces up to life in prison with a sentencing scheduled for May. But now a wackadoo twist to the investigation has unfolded: two federal agents in Baltimore were indicted for laundering Bitcoins from the criminal web they were supposed to be investigating. Ulbricht might just be having his moment of schadenfreude.

The unsealed indictment offers a step-by-step guide to how allegedly crooked agents can go about laundering hundreds of thousands in digital currency. It could also work as a Coen brothers script.

Step One:

Get a plum job.

Fifteen-year DEA special agent Carl Mark Force, earning a roughly $150,000-a-year salary, nabbed one of the most enviable gigs in the Baltimore-based Silk Road Task Force investigation — the lead undercover agent assigned to interacting with Dread Pirate Roberts (DPR).

Six-year Secret Service agent Shaun Bridges, a bitcoin expert, became the computer forensics expert on the Baltimore-based task force. The investigators closed in on the DPR.

Step Two:

Go off script.

According to the indictment, Force created a string of online personas. The only one his bosses sanctioned was “Nob,” who private messaged DPR on Silk Road’s website, pretending to be a well-connected drug smuggler. Other aliases were not green-lighted by his bosses, and Force went about extorting DPR with them. One snarky persona called “Death From Above” asked for a bribe: $250,000 to not rat him out to law enforcement. (As far as investigators can tell, DPR didn’t bite on that one.)

Step Three:

Play both sides — with a sexy lady moniker.

Under the name “French Maid,” Force dangled out info about the feds’ Silk Road investigation to DPR — in exchange for about $100,000 of bitcoin. Force allegedly one time slipped and signed a message from “French Maid” as “Carl” — then hours later wrote back “Whoops!” and signed “Carla Sophia.” The indictment claims Force whisked the money into a personal account.

Step Four:

Send the dinero overseas.

Force allegedly did a lot of wily account transfers of Bitcoin from digital and just plain old-fashioned bank accounts, including transferring $235,000 to an account in Panama.

Step Five:

Hit the private sector.

Investigators say Force invested in and became an officer for the digital money exchange, CoinMKT. He urged the exchange to freeze one account of $297,000, then moved that, too, to his personal account while claiming to CoinMKT that the seized money was going into a DEA account.

Step Six:

Steal the boss’s rubber stamp.

Venmo, the online payments company, froze Force’s personal account because it saw suspicious activity. According to documents, Force then sent them an official Department of Justice subpoena telling them to back off, and, without permission, stamped it with his boss’s signature. Investigators say that during the time of the investigation, Force paid off his mortgage and a federal loan, and invested in real estate and businesses.

Step Seven:

Set up a shell company.

And make sure the name is so fantastically boring it won’t garner attention. During the same time window that Force was going about his business, Agent Bridges created a limited liability company called Quantum International Investments, and opened a bank account in its name in February 2013.

Step Eight:

Transfer the money there pronto.

Investigators believe that, in January 2013, bitcoins stolen from Silk Road were moved into Mt. Gox, an exchange in Japan. Between March and May that year, Mt. Gox sent Quantum’s account nine wire transfers totaling about $820,000.

Step Nine:

Then go back to the money pot as legit law enforcement.

Two days after moving money out of Mt. Gox, prosecutors claim, Bridges wrote the affidavit for a warrant to seize $2.1 million from the service and its owner’s bank accounts, under the law prohibiting running an unregistered money service business.

Step Ten:

Cover your tracks. Clumsily.

The government caught wind of alleged shenanigans in the Baltimore’s Silk Road, and launched an investigation, and a FBI public corruption squad agent interviewed Bridges. Days later, as his colleagues closed in, Bridges wired $225,000 from the Quantum cache to another of his bank accounts — one in his own name.

Allegedly.