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February 5, 2015

You be the judge: what federal sentence for Silk Road creator Ross Ulbricht?

Ross-ulbricht-600x450This Wired article provides the basic story on a notable modern federal defendant who, thanks to a jury verdict yesterday, is now a high-profile convicted felon awaiting sentencing:

A jury has spoken, and the mask is off: Ross Ulbricht has been convicted of being the Dread Pirate Roberts, secret mastermind of the Silk Road online narcotics empire.

On Wednesday, less than a month after his trial began in a downtown Manhattan courtroom, 30-year-old Ulbricht was convicted of all seven crimes he was charged with, including narcotics and money laundering conspiracies and a “kingpin” charge usually reserved for mafia dons and drug cartel leaders.  It took the jury only 3.5 hours to return a verdict.  Ulbricht faces a minimum of 30 years in prison; the maximum is life.  But Ulbricht’s legal team has said it will appeal the decision, and cited its frequent calls for a mistrial and protests against the judge’s decisions throughout the case.

As the verdict was read, Ulbricht stared straight ahead. His mother Lyn Ulbricht slowly shook her head, and his father Kirk put a hand to his temple. After the verdict, Ulbricht turned around to give his family a stoic smile.  “This is not the end,” Ulbricht’s mother said loudly as he was led out of the courtroom. “Ross is a hero!” shouted a supporter.

From his first pre-trial hearings in New York, the government’s evidence that Ulbricht ran the Silk Road’s billion-dollar marketplace under the pseudonym the Dread Pirate Roberts was practically overwhelming.  When the FBI arrested Ulbricht in the science fiction section of a San Francisco public library in October of 2013, his fingers were literally on the keyboard of his laptop, logged into the Silk Road’s “mastermind” account.  On his seized laptop’s hard drive, investigators quickly found a journal, daily logbook, and thousands of pages of private chat logs that chronicled his years of planning, creating and day-to-day running of the Silk Road. That red-handed evidence was bolstered by a college friend of Ulbricht’s who testified at trial that the young Texan had confessed creating the Silk Road to him. On top of that, notes found crumpled in his bedroom’s trashcan connected to the Silk Road’s code.  Ulbricht’s guilty verdict was even further locked down by a former FBI agent’s analysis that traced $13.4 million worth of the black market’s bitcoins from the Silk Road’s servers in Iceland and Pennsylvania to the bitcoin wallet on Ulbricht laptop.

Ulbricht’s defense team quickly admitted at trial that Ulbricht had created the Silk Road. But his attorneys argued that it had been merely an “economic experiment,” one that he quickly gave up to other individuals who grew the site into the massive drug empire the Silk Road represented at its peak in late 2013.  Those purported operators of the site, including the “real” Dread Pirate Roberts, they argued, had framed Ulbricht as the “perfect fall guy.”...

But that dramatic alternative theory was never backed up with a credible explanation of the damning evidence found on Ulbricht’s personal computer.  The defense was left to argue that Ulbricht’s laptop had been hacked, and voluminous incriminating files injected into the computer — perhaps via a Bittorrent connection he was using to download an episode of the Colbert Report at the time of his arrest.  In their closing arguments, prosecutors called that story a “wild conspiracy theory” and a “desperate attempt to create a smokescreen.” It seems the jury agreed.

Despite the case’s grim outcome for Ulbricht, his defense team seemed throughout the trial to be laying the grounds for an appeal.  His lead attorney Joshua Dratel called for a mistrial no less than five times, and was rejected by the judge each time. Dratel’s protests began with pre-trial motions to preclude a large portion of the prosecution’s evidence based on what he described as an illegal, warrantless hack of the Silk Road’s Icelandic server by FBI investigators seeking to locate the computer despite its use of the Tor anonymity software. As the trial began, Dratel butted heads with the prosecution and judge again on the issue of cross-examining a Department of Homeland Security witness on the agency’s alternative suspects in the case, including bitcoin mogul and Mt. Gox CEO Mark Karpeles. And in the last days of the trial, Dratel strongly objected again to a decision by the judge to disallow two of the defense’s expert witnesses based on a lack of qualifications....

Ulbricht will nonetheless be remembered not just for his conviction, but also for ushering in a new age of online black markets.  Today’s leading dark web drug sites like Agora and Evolution offer more narcotics listings than the Silk Road ever did, and have outlived law enforcement’s crackdown on their competitors. Tracking down and prosecuting those new sites’ operators, like prosecuting Ulbricht, will likely require the same intense, multi-year investigations by three-letter agencies.

Though I am not familiar with all the likely sentencing particulars, I would expect a guidelines calculation in this case to be life and that prosecutors will urge a guideline-recommended LWOP sentence. The defense surely will seek the minimum sentence, which in this case is the not-so-minimum 30 years in the federal greybar hotel.

In addition to pursuing their appeal, Ulbricht's defense team might reach out to Brian Doherty at Reason, who has this provocative commentary headlined "Silk Road: Ross Ulbricht's Loss is a Loss for Justice, Liberty, Safety, and Peace: The operation Ulbricht was found guilty of managing was one guaranteed to save lives, reduce real crime, and preserve liberty." Here are excerpts:

[T]he government's multi-year, incredibly expensive attempt to take down the site and prosecute Ulbricht were bad for liberty, bad for markets, bad for the safety of those who choose to use substances the government has declared forbidden, and bad for America....

Ulbricht, if he's guilty of what they tried him for, is guilty of nothing but trying, and for a while succeeding, in doing a good thing for his fellow citizens, the world, and the future. His case will be remembered not as one of stalwart cops saving the world from dangerous crime, but of a visionary martyr punished for the good he did.

The combination of cryptography and Bitcoin are out of the bottle, and what it ultimately means is that the war on drugs is even more hopeless than it always was. But the government seems to never run out of candidates to be the last person to be a victim of that war, a victim of that mistake. May Ulbricht be among the last.

February 5, 2015 at 10:21 AM | Permalink

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Before choosing sides, I need more facts. What was this site about? Was it to have drug purchases with anonymity, safety of the computer vs. face to face transactions, and to have a demonstration of coercion free transactions? How would the drugs be delivered? By mail? What? If not delivered would the seller suffer a bad rating as in EBay and lose business?

Could I order a contract killing on his site?

Could terrorist transmit financing this way, and was he getting 1% of all their transactions? If innocent people were killed by terrorists using his site, how many?

Did he evade taxes on his income?

In other words, what were the outcomes, and did he know about them?

Posted by: Supremacy Claus | Feb 5, 2015 2:47:32 PM

Defense theory was goofy in the face of massive evidence. Where was the common carrier defense? The phone company is not liable if two people plan a bank robbery using its lines, extended to the internet in the Communications Act of 1996. .

http://transition.fcc.gov/telecom.html

Posted by: Supremacy Claus | Feb 5, 2015 3:29:45 PM

Does him being a "Princess Bride" fan factor into the analysis at all?

Posted by: Joe | Feb 5, 2015 3:55:27 PM

Sentences in this country are absolutely nuts. 30 years, as a minimum??? This guy is clearly a talented, well-educated young man, who needs to be taught a lessen. But wouldn't, say 5-10 years, be perfectly adequate? Isn't 30 years obscene for someone who, if set, right could make a lot of himself. Is there any other civilized, Western society that would punish this severely, an intelligent young guy? What is the point?

Posted by: Mike | Feb 5, 2015 6:14:12 PM

30 years; there's no way around it (unless he cooperates). And he deserves it just as much, or as little, as my less-privileged clients do.

Posted by: AFPD | Feb 6, 2015 11:54:37 AM

Mike, five to 10 would have been overkill too.

Only in the tyrannical persecution/incarceration system that has evolved here over the last four decades -- replete with sentencing schemes that start at 30 years -- do sentences of five to 10 seem lenient.

Only in such a system do guys end up getting punished like this for things most normal people wouldn't even recognize as crimes -- if it weren't for the incendiary, hyper-dramatized narratives provided by prosecutors and fly-paper, vague, sweeping, prosecutor-friendly laws (conspiracy statutes are among the worst of them) pressed by crime-demagogue pols. Jurors once broke from deliberations in a trial I was covering as a writer to ask the judge if it were "possible" for them to acquit on the conspiracy charge).

Posted by: John K | Feb 7, 2015 12:28:12 PM

Talented young men need not do things of this nature:

"Ulbricht created Silk Road in approximately January 2011 and owned and operated the underground website until it was shut down by law enforcement authorities in October 2013. Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black market bazaar where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site’s users. While in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other unlawful goods and services to well over a hundred thousand buyers and to launder hundreds of millions of dollars deriving from these unlawful transactions."

http://www.fbi.gov/newyork/press-releases/2014/manhattan-u.s.-attorney-announces-the-indictment-of-ross-ulbricht-the-creator-and-owner-of-the-silk-road-website

This is the sort of major player, not some schlub who gets 10 or more years for being a mule or something, that should get long sentences (whatever "long" should mean) if this sort of thing should be illegal. But, seems some don't want "intelligent guys" like this sort to be mistreated so. This sounds like the sort of double standard where "white collar" type criminals -- who do the more harm in many cases -- get off lightly. The "intelligent guy" also:

"demonstrated a willingness to use violence to protect his criminal enterprise and the anonymity of its users. Ulbricht even solicited six murders-for-hire in connection with operating the site, although there is no evidence that these murders were actually carried out."

Right. LWOP doesn't seem rational (though it might be proportional to what other defendants get), but this guy (if guilty of all of this) deserves a long prison sentence. While detained, I'm all for using his talents (at a nice prison rate) for the public good. OTOH, maybe "soliciting murders-for-hire" is just good for the cause of liberty.

Posted by: Joe | Feb 8, 2015 1:14:49 PM

I was once upon a time a federal defendant. I see the trick they used on Ulbricht, as they did the same thing on my trial and probably most others these days.

The did not actually charge him with attempted murder. They charged him with running a drug and money laundering site. But they allow the jury to hear whatever evidence they have about attempted murder. But the burden or proof for the jury was only related to the actual charge, drug and money laundering. Then at sentencing the judge nails him *as if the attempted murder accusations had been proven to a jury*. In fact they were not proved to a jury.

They should not be allowed to bring in evidence of a serious crime in a trial for a non-violent crime. If they want to hang the man for murder, they should have to charge the man with murder, and prove it to a jury.

Posted by: K | Jun 2, 2017 6:48:35 PM

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