Two former federal agents in Baltimore who led an undercover hunt for the head of an online drug marketplace called Silk Road have been charged with stealing hundreds of thousands of dollars during the investigation.
The agents, Carl M. Force, 46, a 15-year veteran of the Drug Enforcement Administration who resigned last year, and Shaun W. Bridges, 32, a special agent with the Secret Service who resigned this month, made their first appearances in court Monday after the unsealing of the criminal complaint in California.
Both were members of the Baltimore Silk Road Task Force, which authorities have said was one of two concurrent federal investigations into the world's most popular — and now defunct — online drug bazaar. Their work helped lead to two indictments against alleged Silk Road founder and administrator Ross William Ulbricht.
But authorities now allege that Force used off-the-books aliases to talk with Ulbricht, in one case offering sensitive information for money and in another trying to extort him, while Bridges allegedly wired himself $800,000 in digital currency that he had gained control of during the investigation.
Authorities also believe Bridges was behind a theft from Silk Road that led Ulbricht to allegedly commission a murder-for-hire, a charge Ulbricht still faces in Maryland.
Ulbricht was convicted in February in New York of charges including drug trafficking and money laundering and is awaiting sentencing. His attorney, Joshua L. Dratel, said the charges against Force and Bridges bolster his client's argument for a new trial.
"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," Dratel said.
Attorneys for the former federal agents said they were innocent but declined further comment. Prosecutors in Maryland, meanwhile, said they are reviewing the potential impact of the arrests of the agents on Ulbricht's case here.
"We have not made a decision about how to proceed with that case," said U.S. Attorney Rod Rosenstein.
The investigation of Silk Road involved encrypted servers on the so-called deep web, and complex transactions involving electronic currency called Bitcoins.
Rosenstein said the charges highlight new challenges in policing corruption in the "cyber arena, where it is difficult for supervisors to provide oversight."
Force was paid $150,000 as a veteran DEA agent, but during the two-year period that he was involved in the Silk Road investigation, IRS investigators determined he made $776,000 — which they say he used to pay off his mortgage and a loan, and to make investments in real estate and a new business venture.
Ulbricht's arrest in 2013 made national news, and federal authorities in Maryland touted the role they played in learning his alleged Silk Road identity as "Dread Pirate Roberts." A drug bust in Harford County grew into a nationwide operation, with agents in Maryland developing informants.
Tens of thousands of people were buying drugs and other illicit goods on the Silk Road site, generating more than $200 million in revenue before it was shut down.
An undercover agent using the name "Nob" was able to develop a rapport with Dread Pirate Roberts, convincing him through private messages on Silk Road that he was a drug smuggler with international connections.
Force was "Nob," authorities acknowledge in the criminal complaint. But it was only after Ulbricht was arrested, and his laptop seized, that authorities learned how much of Force's activity on Silk Road had not been documented or reported to his supervisors and prosecutors.
Force had been authorized to tell Dread Pirate Roberts that he had a corrupt government contact who was feeding him information, authorities say, and he orchestrated two payoffs from Dread Pirate Roberts for the information. But authorities now say Force put the payments into his own account and claimed the money never came through.
Authorities say Force also created the online persona "French Maid," which was unknown to task force members and which they say he used to sell sensitive law enforcement information to Dread Pirate Roberts. In the first message sent as "French Maid," he wrote, "I have received important information that you need to know asap."
The message was signed, "Carl." Hours later, he sent another saying, "Whoops! My name is Carla Sophia."
Federal prosecutors say Ulbricht's own notes show that he paid "French Maid" $100,000 worth of digital currency in exchange for information about someone who had given his name to law enforcement.
Force also allegedly used another screen name in an attempt to extort $250,000 from Ulbricht.
In late 2013, Force became an investor with a California-based digital currency exchange company and began using his position with the DEA to run criminal background checks on people who used the exchange, while freezing their accounts without legal basis and transferring those funds to his personal account, according to court records.
When one of his online payment accounts was frozen, authorities say, Force also sent an unauthorized Justice Department subpoena to the company.
Records show Force become aware of an investigation into his alleged dealings in May 2014, and he resigned from the FBI that month. A month before that, he had registered paperwork to establish a company called Engedi LLC, a digital currency speculating and investment company.
Baltimore DEA Special Agent in Charge Gary Tuggle said Monday that the agency had "noticed an anomaly" in Force's investigation, and reported it to the DEA's internal affairs office. Tuggle declined further comment.
The allegations against Bridges, meanwhile, are at the heart of the charges against Ulbricht in Maryland, which include murder for hire.
Bridges and Force were part of a team that in 2013 apprehended Curtis Clark Green, a senior administrator with Silk Road with wide access to its inner workings and who proved crucial to bringing down the operation.
Green agreed to speak with members of the Baltimore Silk Road Task Force, showing them how to log in to Silk Road and various other administrative functions.
Hours after that debriefing, Silk Road "suffered a series of sizable thefts" of currency associated with Green's account, according to court records. Questioned about the theft by law enforcement at the time, Green denied involvement.
But that theft would lead Dread Pirate Roberts to contact "Nob" about commissioning Green's murder, according to court records. Dread Pirate Roberts wired "Nob" $80,000 to kill Green, and task force members faked Green's death, according to the records.
IRS investigators believe Bridges was the user behind the theft, and have linked various accounts and transactions to him.
In the spring of 2013, prosecutors say, Bridges wired more than $820,000 to his personal accounts from Mt. Gox, a now-defunct digital currency exchange, just as he was preparing to serve a search and seizure warrant on the company's accounts.
Force was arrested Friday at his North Baltimore home. Inside his vehicle, prosecutors said he had a handgun, a passport and blank money orders — "everything you might need to flee at a moment's notice." He did not enter a plea at his hearing.
He faces charges of wire fraud, theft of government property, money laundering and conflict of interest. His attorney, Ivan Bates, declined to comment.
Bridges, of Laurel, surrendered in California and is charged with wire fraud and money laundering.
"Mr. Bridges maintains his innocence and will fight these charges in the appropriate venue at the appropriate time," his attorney, Steven H. Levin, said.
In New York, federal prosecutors declined to comment on the potential impact of the charges against the agents. Ulbricht's attorney, Dratel, said information about the agents was withheld from him, then partially revealed just before trial and kept under seal, which he called "scandalous."
"At Mr. Ulbricht's trial, knowing full well the corruption alleged in the complaint made public today, the government still aggressively precluded much of that evidence, and kept it from the jury," Dratel said. "Consequently, the government improperly used the ongoing grand jury process in San Francisco as both a sword and a shield to deny Mr. Ulbricht access to and use of important evidence, and a fair trial."