Silk Road Appeal Hinges Upon Crooked Feds

     MANHATTAN (CN) — Like the storied Silk Road of old, its namesake in the deep-web narcotics trade had many furtive dangers, including hit men, heroin, and the constant threat of arrest.
     In one of the Second Circuit's most-anticipated appeals this year, lawyers for the website's now-incarcerated leader Ross Ulbricht highlighted a threat kept hidden from a federal jury at his client's trial: corrupt federal agents.
     Ulbricht, a 32-year-old unmasked as the site's mastermind "Dread Pirate Roberts," has been living out the rest of his young life in prison since May 29, 2015, when a federal judge dealt him the maximum-allowable sentence for operating an online drug bazaar on the so-called deep web.
     Then the largest case of its kind, Ulbricht's prosecution generated intense controversy about the government's digital War on Drugs, along with its corruptions and casualties — not only among dealers and addicts, but also the law enforcement officials seeking to discourage a booming online trade.
     To his supporters, Ulbricht is a symbol of a prosecutorial overreach, and at least one judge appeared troubled that a young man has been condemned to spend the rest of his life behind bars for running a website.
     "It is unusual for a young man in his early 30s with no criminal record, who himself was not dealing drugs, except some mushrooms at one point, at least there was some evidence that suggested that, to receive a life sentence," U.S. Circuit Judge Christopher Droney said in one blockbuster remark at Thursday's Second Circuit hearing.
     The now-defunct Silk Road was once a billion-dollar marketplace as the largest online shop for selling a variety of illicit wares, primarily drugs, through highly encrypted transactions of bitcoin, a then-underground online currency.
     Business was so good, Ulbricht's attorney Joshua Dratel noted, that even federal investigators wanted to get in on the action.
     Months after Ulbricht received his life sentence, Secret Service agent Shaun Bridges and Drug Enforcement Agency official Carl Force admitted swiping hundreds of thousands of dollars in bitcoins for themselves.
     Both men had been part of Baltimore's Silk Road Task Force before New York federal investigators took over.
     Force, in particular, tried to extort Dread Pirate Roberts — not knowing he was Ulbricht — by threatening to expose his identity if he did not receive $250,000, according to his criminal complaint.
     "They hijacked accounts," Dratel said, referring to the officers. "They changed passwords. They stole money. They were inside the guts of this website."
     Questioning how far this intrusion went, U.S. Circuit Judge Gerard Lynch asked, "Were they inside the guts of Mr. Ulbricht's laptop?"
     "No, but that's another issue that we were not allowed to explore," Dratel replied.
     The contents of that laptop, snatched during Ulbricht's arrest almost exactly three years ago, were crucial to the case against him.
     An FBI team swiped Ulbricht's Samsung 700Z computer moments before handcuffing him at San Francisco's Glen Park Library on Oct. 2, 2013.
     Its hard drive contained mountains of evidence identifying Ulbricht as Silk Road's leader Dread Pirate Roberts, including Silk Road's business plans, Excel spreadsheets of the website's sales, detailed diary entries, and the site's passcodes.
     Distancing himself from this evidence, Ulbricht claimed at trial that — like the fictional Dread Pirate Roberts from the popular Disney film "The Princess Bride" — the website's leader was actually many different people operating from behind the same mask.
     Ulbricht admitted that he created the website, but he claimed to have passed on his brainchild to other people.
     Prosecutors splashed cold water on this theory with photographs of Ulbricht's open laptop at the library, moments after his arrest, showing the user "dread" chatting on the Silk Road with an undercover agent
     Assistant U.S. Attorney Eun Young Choi noted this in urging the judges to uphold the jury's convictions.
     "Ross William Ulbricht was caught red-handed running Silk Road," she announced at the opening of her arguments Thursday.
     Attacking this evidence, Dratel claims that the corrupt agents' online shenanigans made the government's forensic evidence subject to "manipulation and fabrication."
     The jury did not find the theory credible, but Dratel said that was because U.S. District Judge Katherine Forrest hamstrung his legal team.
     "The government got to present its case, but the defense was not afforded the same opportunity," Dratel claimed. "Thus, of course, all of the government's evidence looks uncontested and very good. But starting before the trial, and throughout the trial, there was preclusion of every effort the defense made to mount a defense."
     Prosecutor Choi said that the New York agents did not use the evidence from their Baltimore counterparts, and Judge Forrest had simply prevented the trial from veering into an irrelevant circus.
     "You can see a realm in which if Mr. Dratel were able to simply insinuate that because these officers were corrupt in stealing bitcoin, they somehow magically planted the evidence against Ulbricht, that would be highly prejudicial," she said.
     At one point, Choi mocked this defense as the theory of a "magical elf" setting up Ulbricht.
     "It would cause confusion, and it would cause a sideshow about the corruption of those agents," she added.
     In excluding this evidence, Forrest said that the officers' misconduct did not exonerate Ulbricht, but corroborated his crimes.
     When the DEA agent attempted his blackmail scheme, the Dread Pirate Roberts wrote in his journal: "Somebody says they have my ID, but hasn't proven it."
     That and other journal entries were found on Ulbricht's seized laptop.
     During the second half of roughly 30-minute arguments, Dratel sought to reduce what he called, in one written brief, Ulbricht's "shockingly high" life penalty.
     During last year's sentencing, Judge Forrest justified her decision on the need to discourage Silk Road's legions of imitators.
     "What you did was unprecedented," Forrest told Ulbricht in May 2015. "And in breaking that ground as the first person, you sit here as the defendant now having to pay the consequences for that."
     Judge Droney, however, was not convinced those consequences had to be quite so heavy.
     "Isn't that quite a leap to have that kind of sentence imposed?" he asked the prosecutor.
     Insisting Ulbricht's crimes were not victimless, the government presented the court with the families of overdose victims who bought heroin on the Silk Road, and prosecutors said Ulbricht paid hit men to try to kill those who threatened his business.
     There was no evidence anybody was killed, and Dratel disputed the authenticity of the murder-for-hire evidence.
     But Dratel passionately disputed that life behind bars would be necessary even if the transactions happened.
     "Murderers don't get life as a matter of course," the lawyer said, his voice rising. "They don't. They get much less. The average for murderers is 20-something years, in this district, in this circuit. So even for people who actually commit murders, not who, there is no evidence of anything ever happening, other than money being paid for, who knows what, from an internet conversation."
     Mother Lyn Ulbricht, a regular fixture at her son's trial, sat through his appeal a day after visiting him at the Metropolitan Detention Center.
     In an interview outside the courtroom, she said her son did not get a fair trial, but he was "hopeful" for a reversal.
     "The way I understand it is appellate courts exist so we all get fair trials," she said, before adding later: "I hope the court will grant another trial that is fair."
     As is its custom, the three-judge panel reserved decision until a later date.

CORRECTION: The original version of this article incorrectly described a photograph of Ross Ulbricht's laptop that prosecutors showed the jury. Federal agents took of the photograph after Ulbricht's arrest, not before, and Ulbricht himself was not in the picture. Courthouse News regrets the error.