This frame grab from the Silk Road website shows thumbnails for products allegedly available through the site. On Tuesday, Oct. 1, 2013, FBI agents arrested Ross William Ulbricht, who is accused of operating the secret website, which is believed to have brokered more than $1 billion in transactions for illegal drugs and services.The Associated Press
It was like the Craigslist or eBay of illegal goods, where vendors offered heroin, cocaine or LSD and where you could also shop for computer hacking software, stolen credit-card information or forged documents.
And the website administrator was a 29-year-old libertarian physics grad from Texas who bought his fake identification papers from Canada and once ordered the murder of a purported drug dealer in British Columbia.
The wild, lurid story of Ross William Ulbricht, who is alleged to have earned millions from a computer startup that sold narcotics using the virtual currency Bitcoin, ended with his arrest by the FBI this week.
The case against Mr. Ulbricht, detailed in court documents filed in New York, San Francisco and Baltimore, involved cyber-sleuthing, a Canadian blackmailer and a think tank inspired by the Austrian school of economics.
The allegations illustrate how one man can build a massive online criminal entreprise in less than three years. But the court filings also show that even when a suspect goes to great lengths to hide his trail, his social media footprint and past online posts can leave incriminating clues for police.
According to the court documents, Mr. Ulbricht called himself Dread Pirate Roberts, or DPR, and was the mastermind behind Silk Road, a website that had nearly a million registered users who purchased the equivalent in Bitcoin of $1.2-billion in illegal goods, generating $80-million in commissions.
By July of this year, Mr. Ulbricht had earned at least $3.4-million, according to a criminal complaint filed in New York by FBI Special Agent Christopher Tarbell.
In a parallel investigation in Maryland, Mr. Ulbricht was charged with attempted witness murder. He is alleged to have plotted the torture and murder of an employee because he feared the man would co-operate with the authorities.
Mr. Ulbricht is also alleged in the New York investigation to have been involved in a murder-for-hire scheme against a Silk Road vendor from Canada.
According to Special Agent Tarbell's criminal complaint, in March 2013, a vendor known as "FriendlyChemist" sent Mr. Ulbricht a private message.
The message said FriendlyChemist had hacked the Silk Road site and obtained a list of real names of vendors and users.
FriendlyChemist threatened to release the names unless he was paid half a million dollars, which "he needed to pay off his narcotics suppliers," the complaint said.
Mr. Ulbricht pretended to comply and agreed to contact one of FriendlyChemist's creditors, who went by the name "redandwhite," but then suggested to the creditor that he could be paid to kill FriendlyChemist, the complaint said.
"In my eyes, FriendlyChemist is a liability and I wouldn't mind if he was executed," Mr. Ulbricht is alleged to have messaged to redandwhite.
The messages show the two haggling over the price, with Mr. Ulbricht telling redandwhite: "Are the prices you quoted the best you can do? I would like this done asap."
Eventually they settled on $150,000, the complaint said, and Mr. Ulbricht is alleged to have told redandwhite that the target, FriendlyChemist, lived in White Rock, B.C., with a wife and three kids.
While Mr. Ulbricht was told the killing was carried out, he may have been duped as Special Agent Tarbell wrote that the FBI consulted with their Canadian counterparts and were told no killing had taken place at that time in White Rock.
Just months before the B.C. murder plot, it is alleged that Mr. Ulbricht was also conspiring the torture and killing of another man, an employee whom had been recently arrested.
"Considering his arrest, I have to assume he will sing," Mr. Ulbricht said in an online communication with a man he thought was a drug vendor, but who was in fact an undercover federal agent in Maryland, according to a criminal indictment filed in Baltimore.
The indictment said Mr. Ulbricht offered to pay $80,000 and wanted "proof of death" of the employee, who was married and had a daughter. He was then shown staged photos of the employee's torture and death. "I'm pissed I had to kill him ... but what's done is done," Mr. Ulbricht told the undercover agent before wiring money from Australia to an account in Washington, D.C., the indictment said.
The court documents allege that Silk Road was only accessible through the Tor network -- free software that redirects Internet traffic to make users anonymous.
Silk Road began operating in early 2011 and by that fall had been spotted by law-enforcement agents who began making undercover purchases. They also started an extensive search of the Internet to discover when Silk Road was first publicized.
According to the New York court complaint, an investigator, identified only as "Agent 1," found that the earliest references emerged at the end of January 2011, when someone calling himself "Altoid" made posts on two online forums, one for fans of magic mushrooms and another for Bitcoin users.
In both cases, altoid asked if other users had heard of the Silk Road website. "The two postings created by altoid ... appear to be attempts to generate interest in the site ... a common online tactic," Special Agent Tarbell said.
Agent 1 found what appeared to be the smoking gun in another posting, made in October 2011, where altoid went on the Bitcoin forum and announced that he was looking to hire an IT professional who could help his Bitcoin startup company. The post asked applicants to contact him at a Gmail address, rossulbricht@gmail.com.
Investigators obtained from Google the subscriber records associated with that e-mail address, which led them to Mr. Ulbricht's profiles on Google+, YouTube and LinkedIn.
They learned that he was in his late 20s, had a degree in physics from the University of Texas and stated in his LinkedIn profile that he was "creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force."
In the criminal complaint, Special Agent Tarbell said "I believe that this 'economic situation' referred to by Ulbricht is Silk Road."
The complaint said that investigators noted that Mr. Ulbricht made references in his social-media accounts to the Ludwig von Mises Institute, a libertarian think tank. On Silk Road, the administrator, DPR, had similarly mentioned the Mises institute, citing its economic theories as "providing the philosophical underpinning for Silk Road," Special Agent Tarbell said.
He said that investigators cross-referenced dates on Mr. Ulbricht's YouTube and Gmail account and established that he was in San Francisco and had logged on from a location near a friend's house, on Hickory Street. The FBI then determined that DPR had logged onto Silk Road as an administrator from an Internet café "less than 500 feet" from the Hickory Street address.
Another clue came in July of this year when U.S. Customs and Border Protection agents intercepted a package sent to Mr. Ulbricht from Canada. Inside were nine forged identification documents, which carried different names but all had photos of Mr. Ulbricht.
Special Agent Tarbell said his review of DPR's messages on the Silk Road forum showed that he had expressed interest in obtaining fake papers so he could rent more computer servers under a false identity.
The last clues came from a website called Stack Overflow, where computer programmers swap questions and answers about coding problems. The FBI found that Mr. Ulbricht made a post under his name in March 2012, then less than a minute later erased it and reposted using the pseudonym "frosty."
Special Tarbell said that the query posted by frosty on the Stack Overflow forum asked about a coding problem involving the use of Tor. He said investigators later found that some of the "code on the Silk Road Server is a revised version of the code described in Ulbricht's posting."
The frosty handle was also used by a Silk Road administrator, the criminal complaint said.
According to court records in San Francisco, Mr. Ulbricht was arrested earlier this week, on a New York warrant for drug conspiracy, computer hacking conspiracy and money laundering conspiracy.
He is also wanted in Maryland for conspiracy to distribute a controlled substance and attempted witness murder.
Mr. Ulbricht appeared before a judge Wednesday and was remanded into custody until his bail hearing, scheduled for Friday.
Tu Thanh Ha