Government Agents Indicted for Wire Fraud and Money Laundering in Silk Road Investigation

Internet Anonymity Bitcoin

United States v. Carl Mark Force IV, No. 3-15-70370 (N.D. Cal. Mar. 25, 2015)


Former Drug Enforcement Administration Special Agent Carl Mark Force IV and Secret Service Special Agent Shaun W. Bridges have been charged for wire fraud and money laundering in connection with an investigation of Silk Road, a digital black market that allowed people to anonymously buy drugs and other illicit goods using Bitcoin, a digital currency. Criminal Complaint at 2. The two agents were members of the Baltimore Silk Road Task Force and allegedly used their official capacities and investigative resources to steal Bitcoins for their own personal gain. Id. at 2–5.

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From 2012 to 2013, Force served as the lead undercover agent in Baltimore’s Silk Road investigations unit and was in communication with Dread Pirate Roberts (“DPR”), the owner and operator of the Silk Road website. Id. at 3. During this time, Force allegedly transferred government-owned Bitcoins into his personal bank accounts. Id. at 4. According to the complaint, Force also created numerous fake identities outside of his officially-sanctioned undercover personas to sell DPR $100,000 worth of information on the investigation and to extort $250,000 from DPR in exchange for not disclosing DPR’s activities to the government. Id. at 3–4. Further, Force may have used his power to run criminal background checks for CoinMKT, a Bitcoin currency exchange service in which he had invested and served as Chief Compliance Officer, and issued a forged Department of Justice subpoena to Venmo to order the company to unfreeze his account. Id. at 4–5.

Bridges served as the computer forensics expert in the investigation. Id. at 3. The complaint charged him with receiving $820,000 worth of wire transfers from Mt. Gox, a Japanese digital currency exchange where a large amount of stolen Bitcoins had been deposited. Id. at 5. A few days later, Bridges served as the affiant on a multi-million dollar warrant to seize Mt. Gox accounts. Id. Bridges resigned on March 18, 2015, and Force resigned in May 2014.

Earlier this year, a jury in New York convicted Ross Ulbricht of founding and operating Silk Road as DPR. Ulbricht has denied being DPR and may use the facts alleged in the complaint against Force and Bridges to request a mistrial. His attorney has issued a statement in response to the complaint, saying, “It is clear from this Complaint that fundamentally the government’s investigation of Mr. Ulbricht lacked any integrity, and was wholly and fatally compromised from the inside.”

When Silk Road was in operation, it allowed more than 100,000 people to anonymously transact illegal drugs and other illicit goods, generating total revenues of more than $213 million.

Sheri Pan is a second-year student at Harvard Law School interested in the intersection of technology and public interest law.