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United States v. Ulbricht

United States District Court, S.D. New York

January 7, 2015

UNITED STATES OF AMERICA
v.
ROSS WILLIAM ULBRICHT, a/k/a " Dred Pirate Roberts,", a/k/a " DPR,", a/k/a " Silk Road,", Defendant

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For Ross William Ulbricht, also known as Dread Pirate Roberts, also known as Silk Road, also known as Sealed Defendant 1, also known as DPR, Defendant: Joshua Lewis Dratel, Law Offices of Joshua L. Dratel, P.C., New York, NY.

For USA, Plaintiff: Serrin Andrew Turner, Timothy Turner Howard, U.S. Attorney's Office, SDNY, New York, NY.

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OPINION & ORDER

KATHERINE B. FORREST, United States District Judge.

On February 4, 2014, a federal grand jury returned Indictment 14 Cr. 68 (the " Original Indictment" ) against Ross Ulbricht (" defendant" or " Ulbricht" ). (ECF No. 12.) On August 21, 2014, the Government filed Superseding Indictment S1 14 Cr. 68 (KBF) (the " Superseding Indictment" ), charging Ulbricht with seven crimes: Narcotics Trafficking (Count One), Distribution of Narcotics by Means of the Internet (Count Two), Narcotics Trafficking Conspiracy (Count Three), Continuing Criminal Enterprise (Count Four), Conspiracy to Commit and Aid and Abet Computer Hacking (Count Five), Conspiracy to Traffic in Fraudulent Identification Documents (Count Six), and Money Laundering Conspiracy (Count Seven). (ECF No. 52.)

The charges in the Superseding Indictment stem from the Government's allegation that Ulbricht designed, launched, and supervised the administration of Silk Road--a sprawling online marketplace for illicit goods and services--under the username " Dread Pirate Roberts" (" DPR" ). According to the Government, Ulbricht was Dread Pirate Roberts, and controlled every aspect of Silk Road, including the server infrastructure and programming code, the administrative staff responsible for assisting with the site's day-to-day operation, and the profits generated from sales. The Government further alleges that Ulbricht was willing to resort to violence to protect Silk Road. Trial is scheduled to begin on January 13, 2015.

On December 9 and 10, 2014, the parties filed motions in limine. (ECF Nos. 108, 112.) The Court orally ruled on the motions at the final pretrial conference (" FPTC" ) held on December 17, 2014. The Court stated at the FPTC that it would issue a fuller, written opinion in a separate order. This is that order.

I. THE MOTIONS IN LIMINE[1]

This Opinion & Order addresses the followings motions in limine[2]:

A. Defendant's motion to preclude certain evidence regarding Silk Road product listings and transactions, including evidence of narcotics seizures at Chicago O'Hare Airport and evidence of undercover narcotics buys in Chicago and New York;
B. Defendant's motion to preclude, and the Government's motion to allow, evidence that Ulbricht solicited six

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murders-for-hire, and defendant's renewed motion to strike the murder-for-hire allegations from the Superseding Indictment as surplusage;
C. Defendant's motion to preclude certain Government exhibits as insufficiently authenticated;
D. Defendant's motion to preclude, and the Government's motion to allow, evidence that Ulbricht ordered fraudulent identification documents from Silk Road;
E. Defendant's motion to preclude a variety of government exhibits not covered by his other motions in limine;
F. The Government's motion to allow evidence regarding illicit or otherwise criminally oriented goods and services sold on Silk Road not specifically referenced in the Superseding Indictment; and
G. The Government's motion to preclude argument or evidence regarding (a) any potential consequences of conviction, and (b) defendant's political views or other excuses.

II. BACKGROUND[3]

A. The Murder-for-Hire Evidence

The Government intends to offer evidence that Ulbricht solicited six murders-for-hire as part of his efforts to protect Silk Road and his interests therein. (Government's Motions in Limine (" Gov't Mem." ) at 6, ECF No. 108.) The Government is prepared to stipulate that (1) Ulbricht solicited the first murder-for-hire from an undercover Drug Enforcement Administration (" DEA" ) agent and, accordingly, no actual murder occurred, and (2) the Government is not currently aware of any evidence that the remaining murders-for-hire were carried out. (Id. at 6 n.1.)

1. Murder-for-Hire Solicitation No. 1

The Government intends to offer evidence that, in January 2013, as part of his efforts to protect Silk Road and his interests therein, Ulbricht solicited the murder-for-hire of a former Silk Road employee (the " Employee" ), whom Ulbricht suspected of stealing approximately $350,000 worth of bitcoins from Silk Road. (Id. at 6.) This evidence allegedly consists of records of online conversations between Ulbricht[4] and two alleged coconspirators (" CC-1" and " CC-2" ), as well as testimony from a cooperating witness. (Id. at 7.)

The Government contends that chat records recovered from Ulbricht's laptop will show as follows: In mid-January 2013, Ulbricht discussed with CC-1 that the Employee had gone missing and that approximately $350,000 in bitcoins had been stolen from Silk Road. (Id. at 6.) On January 26, 2013, CC-1 informed Ulbricht that he had determined that the Employee was responsible for the theft of bitcoins from various vendor accounts. (Id.) Later that day, Ulbricht told CC-1 that he knew the identity of the Employee, that the Employee had been arrested on narcotics charges, and that he (Ulbricht) had arranged for " muscle" to " get to [the Employee] quickly." (Id.) CC-1 assured Ulbricht that " you always have me at your disposal if you

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locate him and need someone to go handle it." (Id.) Ulbricht responded, " thanks. I want to kick his ass myself, but let's leave it to the pros." (Id.)

The next day, Ulbricht told another coconspirator, CC-2, about the theft. (Id.) Ulbricht expressed surprise that the Employee had stolen from him given that he had a copy of the Employee's driver's license. (Id. at 6-7.) Later in the conversation, Ulbricht and CC-2 discussed the possibility that the Employee was cooperating with law enforcement, and CC-2 remarked:

[A]s a side note, at what point in time do we decide that we've had enough of someone[']s shit, and terminate them? Like, does impersonating a vendor to rip off a mid-level drug lord, using our rep and system; follows up by stealing from our vendors and clients and breeding fear and mis-trust, does that come close in your opinion.

(Id. at 7.) Ulbricht responded, " terminate? execute?" and later stated, " I would have no problem wasting this guy." (Id.) CC-2 responded that he could take care of it, and stated that he would have been surprised if Ulbricht " balked at taking the step, of bluntly, killing [the Employee] for fucking up just a wee bit too badly." (Id.) Later that day, Ulbricht told CC-2 that he had solicited someone to track down the Employee. (Id.)

On February 5, 2013, Ulbricht reported to CC-2 that the Employee was captured and interrogated about the stolen bitcoins. (Id.) A few hours later, Ulbricht told CC-2 that the Employee had been executed. (See id.) On February 23, 2013, Ulbricht reported to CC-1 that he had successfully arranged the Employee's capture and execution. (Id.)

2. Murder-for-Hire Solicitation No. 2

The Government also intends to offer evidence that, in March and April 2013, Ulbricht, acting as DPR, solicited the murder-for-hire of a Silk Road vendor with the username " FriendlyChemist," who was attempting to extort DPR. (Id. at 8.) This evidence consists of messages recovered from the Silk Road messaging system, files recovered from Ulbricht's laptop, and proof that a Silk Road user was paid 1,670 bitcoins to murder FriendlyChemist. (Id. at 11.)

The alleged extortion began on March 13, 2013. (See id. at 8.) In messages sent over the Silk Road messaging system, FriendlyChemist threatened to publish a list of real names and addresses of Silk Road vendors and customers unless DPR paid him $500,000. (Id.) FriendlyChemist claimed that he had obtained the list from hacking into the computer of another Silk Road vendor. (Id.) He indicated that he needed the $500,000 to pay off his narcotics supplier. (Id.) In one message, FriendlyChemist wrote to DPR:

what do u . . . think will happen if thousands of usernames, ordr amounts, addresses get leaked? all those people will leave sr and be scared to use it again. those vendors will all be busted and all there customers will be exposed too and never go back to sr.

(Id.) Later, FriendlyChemist provided to DPR a sample of the identifying information that he claimed to possess.[5] (Id.)

On March 25, 2013, user " redandwhite" sent a message to DPR revealing that he was the supplier to whom FriendlyChemist owed money. (Id.) On March 27, 2013,

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DPR sent the following message to redandwhite:

In my eyes, FriendlyChemist is a liability and I wouldn't mind if he was executed . . . I'm not sure how much you already know about the guy, but I have the following info and am waiting on getting his address.

(Id.) DPR listed FriendlyChemist's name and indicated that he lived in White Rock, British Columbia, Canada, with " Wife 3 kids." (Id. at 9.)

Meanwhile, FriendlyChemist's threats continued. On March 29, 2013, FriendlyChemist sent a message to DPR, stating:

u leave me no choice I want 500k usd withn 72hrs or i am going to post all the info i have. . . . i hate to do this but i need the money or im going to release it all. over 5000 user details and about 2 dozen vender identities. wats it going to be?"

(Id.) Several hours later, DPR sent a message to redandwhite confirming that he wanted FriendlyChemist to be murdered and asking how much redandwhite wanted to be paid for the job. (Id.) After redandwhite asked what problem FriendlyChemist was causing, DPR responded, in a message dated March 30, 2013:

[H]e is threatening to expose the identities of thousands of my clients that he was able to acquire . . . . [T]his kind of behavior is unforgivable to me. Especially here on Silk Road, anonymity is sacrosanct.

(Id.) DPR also commented that the murder " doesn't have to be clean." (Id.) Later that day, redandwhite responded with a quoted price of $150,000 to $300,000 " depending on how you want it done" --" clean" or " non-clean." (Id.) The next day, DPR objected to the price: " Don't want to be a pain here, but the price seems high. Not long ago, I had a clean hit done for $80k. Are the prices you quoted the best you can do?" (Id.)

Through further messages exchanged on March 31, 2013, DPR and redandwhite agreed upon a price of 1,670 bitcoins (approximately $150,000) for the murder-for-hire. (Id. at 9-10.) DPR provided a transaction record confirming the transfer of the bitcoins, and redandwhite confirmed receipt of payment. (Id. at 10.) Approximately 24 hours later, redandwhite sent an update to DPR, stating, " [Y]our problem has been taken care of. . . . Rest easy though, because he won't be blackmailing anyone again. Ever." (Id.) At DPR's request, redandwhite sent DPR a picture of the victim after the job was done. (Id.) Next to the victim was a piece of paper with random numbers that DPR had supplied. (Id.) On April 5, 2013, DPR wrote to redandwhite, " I've received the picture and deleted it. Thank you again for your swift action." (Id.)

According to the Government, evidence recovered from Ulbricht's personal laptop corresponds to the information in the messages retrieved from the Silk Road messaging system. Specifically, agents recovered from the laptop a file labeled " log," in which Ulbricht allegedly recorded his actions in operating Silk Road between March 20, 2013 and September 30, 2013. (Id.) The Government contends that the log includes numerous references to a murder-for-hire, including:

o March 28, 2013: " being blackmailed with user info. talking with large distributor (hell's angels)" ;
o March 29, 2013: " commissioned hit on blackmailer with angels" ;
o April 1, 2013: " got word that blackmailer was executed" ; and
o April 4, 2013: " received visual confirmation of blackmailers execution."

(Id.)

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This timeline corresponds to that of DPR's solicitation of the murder-for-hire of FriendlyChemist as described above.

3. Murder-for-Hire Solicitations Nos. 3-6

Finally, the Government intends to offer evidence that, in April 2013, Ulbricht, acting as DPR, solicited redandwhite to carry out the murders-for-hire of four other individuals associated with FriendlyChemist. (Id. at 11.) The Government's evidence allegedly consists of messages recovered from the Silk Road messaging system, as well records recovered from Ulbricht's laptop. (Id. at 13.) The Government also ...


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