Monday, March 30, 2015

Justice Department Charges Ex-Federal Agents with Bitcoin Money Laundering

Well, ain't this  a hoot.

The Justice Department charged two former federal agents with wire fraud and money laundering related to stealing digital currency during their investigation of the Silk Road.

The department said Monday that former agents Carl Force and Shaun Bridges were assigned to the Baltimore Silk Road Task Force, and that Force was arrested March 27. Bridges surrendered Monday. The Justice Department said Force used fake online personas and engaged in bitcoin transactions to steal from the government. Bridges allegedly diverted to his personal account more than $800,000 in digital currency, DOJ said.

UPDATE:

Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration (DEA), and Shaun W. Bridges, 32, of Laurel, Maryland, was a Special Agent with the U.S. Secret Service (USSS).  Both were assigned to the Baltimore Silk Road Task Force, which investigated activity in the Silk Road marketplace.  Force served as an undercover agent and was tasked with establishing communications with a target of the investigation, Ross Ulbricht. Force is charged with wire fraud, theft of government property, money laundering and conflict of interest.  Bridges is charged with wire fraud and money laundering.

According to the complaint, Force was a DEA agent assigned to investigate the Silk Road marketplace.  During the investigation, Force engaged in certain authorized undercover  operations by, among other things, communicating online with "Dread Pirate Roberts” , the target of his investigation.  The complaint alleges, however, that Force then, without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain.

In doing so, the complaint alleges, Force used fake online personas, and engaged in complex Bitcoin transactions to steal from the government and the targets of the investigation.  Specifically, Force allegedly solicited and received digital currency as part of the investigation, but failed to report his receipt of the funds, and instead transferred the currency to his personal account.  In one such transaction, Force allegedly sold information about the government’s investigation to the target of the investigation.  The complaint also alleges that Force invested in and worked for a digital currency exchange company while still working for the DEA, and that he directed the company to freeze a customer’s account with no legal basis to do so, then transferred the customer’s funds to his personal account.  Further, Force allegedly sent an unauthorized Justice Department subpoena to an online payment service directing that it unfreeze his personal account. 

Bridges allegedly diverted to his personal account over $800,000 in digital currency that he gained control of during the Silk Road investigation.  The complaint alleges that Bridges placed the assets into an account at Mt. Gox, the now-defunct digital currency exchange in Japan.  He then allegedly wired funds into one of his personal investment accounts in the United States mere days before he sought a $2.1 million seizure warrant for Mt. Gox’s accounts.    

Bridges self-surrendered today and will appear before Magistrate Judge Maria-Elena James of the Northern District of California at 9:30 a.m. PST this morning.  Force was arrested on Friday, March 27, 2015, in Baltimore and will appear before Magistrate Judge Timothy J. Sullivan of the District of Maryland at 2:30 p.m. EST today.

3 comments:

  1. If they'd have done it the old fashioned way cops/agents do it, by confiscating a drug dealers hard cash during an arrest, they'd probably have gotten away with it.

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  2. I wonder how this will play into a possible appeal for Ross?

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  3. Will they be facing life sentences?

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