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Tuesday, March 31, 2015

Wetting the federal beak

Two ex federal agents have been indicted on the grounds of stealing virtual currency during the Silk Road investigation. Both were members of the Baltimore Task Force that conducted the investigation that led to the seizure of the Silk Road servers and kingpin Ross Ulbricht’s arrest in October of 2013. 

Drug Enforcement Administration special agent Carl Mark Force IV, 46, was charged with wire fraud, theft of government property and money laundering. Maryland Secret Service agent Shaun Bridges, 32, was charged with wire fraud and money laundering. You can read a more detailed story of the indictment here.

Forbes breaks the whole thing down in this article. Pretty amazing story. And even more here. And it even gets better, read the Wired story, DEA agent charged with acting as paid mole for Silk Road. Who are the bad guys again? Here is the long version, feel free to skip to the end.
The Department of Justice’s 50-page complaint unsealed Monday details a wide range of alleged corrupt acts from Force and Bridges during the Silk Road investigation—from creating unauthorized undercover personas, to extorting Bitcoins from Ulbricht in exchange for information, and forging a subpoena for Venmo.
“Force and Bridges abused their positions as federal agents and engaged in a scheme to defraud a variety of third-parties, the public, and the government, all for their own financial enrichment,” the complaint reads.
Force’s charges are tied to his actions while undercover on the Silk Road towards the end of his 15-year career as a special agent. As part of the Silk Road investigation, Force went undercover as “Nob,” an imaginary drug smuggler in the United States with global criminal connections, in order to communicate with the Dread Pirate Roberts (Ulbricht’s moniker on the Silk Road).  Force interacted with DPR as instructed, but allegedly took his communications with DPR much further than he reported back to the DEA, according to the criminal complaint.  After the Silk Road servers were seized in October 2013, the feds discovered that “Nob” had had many encrypted conversations with DPR that were never officially recorded.
One of Nob’s cover stories on the Silk Road was, ironically, that he had access to “Kevin,” a corrupt government employee who worked for the Department of Justice but gave Nob information about the Silk Road investigation.  Most of Nob’s conversations with DPR about Kevin were encrypted, except one revealing message. In August 2013, DPR allegedly wrote Nob, “I could not decrypt your second message, got an error. I could decrypt the first, and have sent the 525 btc as requested.” Nob responded, telling DPR to use PGP and the two continued to chat. In his DEA file about Kevin and the conversation with DPR, Force included an agent’s note that said: “DPR made no such payment.” According to the complaint, however, DPR allegedly paid Force twice in Bitcoin—400 Bitcoins for fraudulent identification documents in June 2013, and 525 Bitcoins for Kevin’s inside information in August 2013.
Force’s alleged communication with DPR didn’t end with “Nob,” and Force allegedly used two other unauthorized personas –“French Maid” and “Death From Above.” Ulbricht allegedly paid French Maid approximately $100,000 in bitcoins in exchange for a name that French Maid claimed Mark Karpeles had given to law enforcement.  Karpeles was then CEO of Mt. Gox digital currency exchange, and the Baltimore Silk Road Task Force was trying to interview him about the Silk Road. (In Ulbricht’s trial, a special agent revealed on the stand that the FBI considered Karpeles as a possible suspect before pursuing Ulbricht as the Silk Road mastermind). The complaint lists several reasons that “French Maid” and “Nob” were believed to be the same person (aka Force): the investigation into Karpeles was privileged information, both Nob and French Maid used the same outdated PGP software, and the 770 bitcoins paid to French Maid ended up in Force’s personal account. Force used his third persona, “Death From Above,” to allegedly attempt to solicit $250,000 from DPR in exchange for personal identifying details about one of the Homeland Security’s possible Silk Road suspects. The complaint details other alleged misconduct by Force, including subpoenaing Venmo to unfreeze his personal account.
In addition to his work undercover work, Force worked extensively with former Secret Service agent Bridges, who was also on the Baltimore Silk Road Task Force. The complaint details how Force worked with Bridges to allegedly steal Bitcoins from the Silk Road, transfer them to an account with Mt. Gox, and then remove the money just before Bridges served a seizure warrant on the Bitcoin exchange. Because Bridges was the Baltimore Silk Road Task Force’s Bitcoin and Tor expert, he was the affiant on many seizure warrants related to digital currency, including the $2.1 million seizure of Mt. Gox.
A few months before the Mt. Gox accounts were seized,  one of DPR’s employees–referenced as C.G. in the complaint—showed Bridges and Force how to log into Silk Road vendor accounts, reset passwords, and do other administrative tasks on January 25, 2013. C.G. had been caught with a kilogram of cocaine by the Baltimore Task Force earlier in January 2013. The same day C.G. gave Bridges and Force the inside scoop, the Silk Road was hit with series of large thefts, tied to C.G.’s account. Believing that C.G. was responsible for the thefts, DPR commissioned hits on C.G. from Nob and another individual. DPR allegedly paid Nob $80,000 for the hit through a wire transfer, and Force and others on the Baltimore Task Force faked C.G.’s death to look like the hit actually took place. Bridges was allegedly responsible for creating “proof-of-death” photos of C.G. for Nob to send to DPR.
According to the criminal complaint, the feds believe that Bridges–under the monikers “Hush” and “Number13”– was responsible for the original thefts from the Silk Road, in coordination with Force.  A total of 20,000 Bitcoins were stolen from the Silk Road, which would have been worth $350,000 at that time and more than $20 million at Bitcoin’s height. After the theft, Bridges allegedly began bugging Force to ask DPR for advice on how to exchange Bitcoins for dollars. DPR didn’t have an answer, and Bridges answered: “Roger. Just curious.”
Coincidentally I have just finished Cory Doctorow's book For the win, which while far from exceptional, is a fictionalized story of virtual gold data miners, as told through the lens of an amateur economist anyway, somebody romantically inclined to wax poetically about the workers rising up en masse and smiting the evil overlords.

If you are a gamer or a precocious adolescent I highly recommend the book and it is indeed germane to this case and honestly starts out pretty well.

Doctorow isn't necessarily terrible, think of a subpar William Gibson clone morphing into John Kenneth Galbraith. Not necessarily my cup of meat but it takes all kinds.

He actually has a pretty serious cv, worked for both Boing Boing and the EFF, check it out here. Not real impressed with how he spins a yarn but then again I can be highly critical. I had to skim the end chapters to make the pain stop.

In any case virtual gold farming is real and it is huge in our world. People are willing to pay big bucks for virtual currency, something that is merely an abstract conception. And willing to commit all kinds of criminal acts for it as well.

Lazy gamers who want to feel like big shots can get virtual money and weapons from other poor schmucks who may be slaves in some fourth world country.

It turns out that some of the virtual gold mining is forced upon workers at Chinese prison camps as I have written about before, see Working on the virtual chain gang. This thing is so big that apparently even the cops are now wetting their beak. Meanwhile Ulbricht's family seems to think he was railroaded. Stay tuned.

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