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Arrest gives insight into online drug trade

Customers could shop for cannabis, oxycodene, stimulants, testosterone, and psychedelics on the Silk Road website.

Customers could shop for cannabis, oxycodene, stimulants, testosterone, and psychedelics on the Silk Road website.

SAN FRANCISCO — FBI agents found him in the science fiction section of a small branch of the San Francisco public library, chatting online.

The man known as Dread Pirate Roberts — Ross William Ulbricht — was on his personal laptop Tuesday afternoon, authorities said, talking about the vast black market bazaar that is believed to have brokered more than $1 billion in transactions for illegal drugs and services.

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When a half-dozen FBI agents burst into the library in a quiet, blue-collar neighborhood, they ended Ulbricht’s conversation with a cooperating witness, pinned the Austin, Texas, native to a window, and took him to jail.

Ulbricht, 29, was charged in criminal complaints in federal courts in New York and Maryland. He is accused of making millions of dollars operating the secret Silk Road website and of a failed murder-for-hire scheme, while living with two roommates whom he paid $1,000 to rent a room in a modest neighborhood.

Federal authorities shut down the website.

Ulbricht has not entered pleas. His public defender in San Francisco declined to comment Wednesday. Ulbricht was due back in federal court Friday to discuss bail and his transfer to New York, where the bulk of the charges have been filed.

He is charged with being the mastermind of Silk Road, where users browsed through nearly 13,000 listings under categories like cannabis, psychedelics, and stimulants.

Ulbricht is charged in Maryland with ordering the torture and murder of an employee from an undercover agent. He feared the employee would expose his alias. Court records say he wired the agent $80,000 after he was shown staged photos of the employee’s faked torture.

His arrest culminated a two-year-investigation that painstakingly followed a small trail of computer crumbs Ulbricht carelessly left for the FBI, according to court documents.

Ulbricht came to the attention of US agents in 2011 when they figured out he was “altoid,” someone who they say was marketing Silk Road on other drug-related websites the FBI was watching. In October 2011, “altoid” posted an ad for a computer expert with experience in Bitcoin, an electronic currency, and gave an e-mail address.

From there, investigators began to monitor Ulbricht’s online behavior closely, according to the court records. Investigators said Ulbricht was living within 500 feet of a San Francisco Internet cafe on June 3, 2013, when someone “logged into a server used to administer the Silk Road website.”

Court documents show investigators connected Ulbricht to Silk Road by monitoring his e-mail and picking up on some slipups, including using his real name to ask a programmers’ website a highly technical question about connecting to secret sites like Silk Road.

His final mistake, according to the court papers, was ordering fake identification documents from a Silk Road vendor from Canada. One of the nine documents was a California driver’s license with Ulbricht’s photograph and birthdate, but a different name. The package was intercepted during a routine Customs search.

On July 26, Homeland Security investigators visited Ulbricht at his San Francisco residence. He generally refused to answer questions, the agents said.

The investigators left that day without arresting Ulbricht, who has a bachelor’s of science degree in physics from the University of Texas at Dallas and a master’s degree from Penn State University.

They returned Tuesday and arrested him at the library. He faces life in prison if convicted of all the charges.

The Silk Road website protected users with an encryption technique called “onion routing,” designed to make it “practically impossible to physically locate the computers hosting or accessing websites on the network,” court papers said. One listing for heroin promised “all rock, no powder, vacuum sealed and stealth shipping.”

The defendant announced in a website forum in 2012 that to avoid confusion he needed to change his username, according to court papers. He wrote, “My new name is: Dread Pirate Roberts,” an apparent reference to a swashbuckling character in “The Princess Bride,” a 1987 comedy film.

As of July, there were nearly 1 million registered users of the site from the United States, Germany, Russia, Australia, and around the globe, the court papers said. The site generated an estimated $1.2 billion since it started in 2011 and collected $80 million by charging 8 to 15 percent commission on each sale, they said.

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