United States v. Ulbricht

• Decision Date: 31 May 2017
• Docket Number: August Term, 2016,Docket No. 15-1815
• Citation: United States v. Ulbricht, 858 F.3d 71 (2nd Cir. 2017)
• Parties: UNITED STATES of America, Appellee, v. Ross William ULBRICHT, a/k/a Dread Pirate Roberts, a/k/a Silk Road, a/k/a Sealed Defendant 1, a/k/a DPR, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

858 F.3d 71

UNITED STATES of America, Appellee,

v.Ross William ULBRICHT, a/k/a Dread Pirate Roberts, a/k/a Silk Road, a/k/a Sealed Defendant 1, a/k/a DPR, Defendant-Appellant.

Docket No. 15-1815

August Term, 2016

United States Court of Appeals, Second Circuit.

Argued: October 6, 2016

Decided: May 31, 2017

Joshua L. Dratel , Joshua L. Dratel, P.C., New York, NY, for defendant-appellant Ross William Ulbricht.

Eun Young Choi , Assistant United States Attorney (Michael D. Neff, Timothy T. Howard, Adam S. Hickey, Assistant United States Attorneys, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY.

Tamar Todd, Jolene Forman, Drug Policy Alliance, Oakland, CA, for amici curiae Drug Policy Alliance, Law Enforcement Against Prohibition, JustLeadershipUSA, and Nancy Gertner.

Joel B. Rudin, Law Offices of Joel B. Rudin, P.C., New York, NY; Steven R. Morrison, University of North Dakota School of Law, Grand Forks, ND, for amicus curiae National Association of Criminal Defense Lawyers.

Before: Newman, Lynch, and Droney, Circuit Judges.

Gerard E. Lynch, Circuit Judge:

Defendant Ross William Ulbricht appeals from a judgment of conviction and sentence to life imprisonment entered in the United States District Court for the Southern District of New York (Katherine B. Forrest, J. ). A jury convicted Ulbricht of drug trafficking and other crimes associated with his creation and operation of Silk Road, an online marketplace whose users primarily purchased and sold illegal goods and services. He challenges several aspects of his conviction and sentence, arguing that (1) the district court erred in denying his motion to suppress evidence assertedly obtained in violation of the Fourth Amendment; (2) the district court committed numerous errors that deprived him of his right to a fair trial, and incorrectly denied his motion for a new trial; and (3) his life sentence is both procedurally and substantively unreasonable. Because we identify no reversible error, we AFFIRM Ulbricht's conviction and sentence in all respects.

BACKGROUND

In February 2015, a jury convicted Ross William Ulbricht on seven counts arising from his creation and operation of Silk Road under the username Dread Pirate Roberts ("DPR").¹ Silk Road was a massive, anonymous criminal marketplace that operated using the Tor Network, which renders Internet traffic through the Tor browser extremely difficult to trace.² Silk Road users principally bought and sold drugs, false identification documents, and computer hacking software. Transactions on Silk Road exclusively used Bitcoins, an anonymous but traceable digital currency.³ The site also contained a private message system, which allowed users to send messages to each other (similar to communicating via email), a public forum to discuss topics related to Silk Road, and a "wiki," which is like an encyclopedia that users could access to receive advice about using the site. Silk Road customers and vendors could also access a support section of the website to seek help from the marketplace's administrators when an issue arose.

According to the government, between 2011 and 2013, thousands of vendors used Silk Road to sell approximately $183 million worth of illegal drugs, as well as other goods and services. Ulbricht, acting as DPR, earned millions of dollars in profits from the commissions collected by Silk Road on purchases. In October 2013, the government arrested Ulbricht, seized the Silk Road servers, and shut down the site.

I. Silk Road Investigation

After Ulbricht created Silk Road in 2011, the site attracted the interest of at least two separate divisions of the Department of Justice:⁴ the United States Attorney's Offices for the District of Maryland and for the Southern District of New York. Throughout the investigations, law enforcement agents knew that the person using Dread Pirate Roberts as his or her Silk Road username had created and managed the site, but they did not know DPR's actual identity. In 2012 and 2013, agents from both offices investigated several individuals who the government suspected were operating Silk Road as DPR. Those individuals included Ulbricht, Anand Athavale, and Mark Karpeles. Ultimately, the New York office identified Ulbricht as DPR, but the Maryland office had investigated and later abandoned the theory that either Athavale or Karpeles might have been Dread Pirate Roberts.

Two aspects of the pre-arrest investigation into Ulbricht are particularly relevant to this appeal: (1) the pen/trap orders that the government obtained to monitor Internet Protocol ("IP") address traffic to and from various devices associated with Ulbricht; and (2) the corrupt behavior of two Baltimore agents who worked on the Silk Road investigation.

A. The Pen/Trap Orders

In September 2013, after Ulbricht became a primary suspect in the DPR investigation, the government obtained five "pen/trap" orders. See 18 U.S.C. §§ 3121 -27 ("Pen/Trap Act"). The orders authorized law enforcement agents to collect IP address data for Internet traffic to and from Ulbricht's home wireless router and other devices that regularly connected to Ulbricht's home router. According to the government's applications for the pen register and trap and trace device, "[e]very device on the Internet is identified by a unique number" called an IP address. S.A. 73.⁵ "This number is used to route information between devices, for example, between two computers." Id. at 73-74. In other words, an "IP address is analogous to a telephone number" because "it indicates the online identity of the communicating device without revealing the communication's content." Id. at 74. Ulbricht does not dispute that description of how IP addresses function.

The pen/trap orders thus did not permit the government to access the content of Ulbricht's communications, nor did the government "seek to obtain[ ] the contents of any communications." Id. at 75. According to Ulbricht, the government's use of his home Internet routing data violated the Fourth Amendment because it helped the government match Ulbricht's online activity with DPR's use of Silk Road. Ulbricht argues that he has a constitutional privacy interest in IP address traffic to and from his home and that the government obtained the pen/trap orders without a warrant, which would have required probable cause.

B. Corrupt Agents Force and Bridges

One of the many other tactics that the government used to expose DPR's identity was to find low-level Silk Road administrators who helped DPR maintain the site, obtain their cooperation, take over their Silk Road usernames, and chat with DPR under those identities. The true owners of the administrator accounts would assist in the investigation by helping the government chat with DPR and access various aspects of the site. Government agents would also create their own new usernames and pose as drug dealers or buyers to purchase or sell narcotics and occasionally contact DPR directly. One of the government's principal trial witnesses, Special Agent Jared Der-Yeghiayan, used the former technique to chat with DPR under the name Cirrus. Cirrus had been a member of the Silk Road support staff before the government took over his account, and Der-Yeghiayan frequently used Silk Road's messaging system to communicate with DPR and other administrators as Cirrus. Cirrus also gave the government access to the staff chat, a separate program allowing DPR to communicate only with his employees.

Two undercover agents involved in the Silk Road investigation are of particular import to this appeal: Secret Service Special Agent Shaun Bridges and Drug Enforcement Administration ("DEA") Special Agent Carl Force, both of whom were assigned to the Baltimore investigation. Both Force and Bridges used their undercover access to exploit the site for their own benefit in various ways, and they eventually pleaded guilty to criminal charges in connection with their work on the Silk Road investigation.⁶

For example, Force and Bridges took over an administrator account belonging to Curtis Green, who worked for Silk Road under the name Flush. According to the criminal complaint against Force and Bridges, in January 2013, Bridges used the Flush username to change other users' passwords, empty their Bitcoin wallets,⁷ and keep $350,000 in Bitcoins in offshore bank accounts, all while attempting to hide his activity through a series of transactions.⁸ Specifically, the complaint against Force and Bridges alleges that Bridges "act[ed] as an administrator to reset pins and passwords on various Silk Road vendors' accounts," then exchanged the Bitcoins for U.S. dollars using the Mt. Gox exchanger.⁹ Supp. App'x 180. Shortly after he committed the January 2013 thefts, Bridges asked Force to chat with DPR as Nob, Force's authorized undercover username, to get advice about how to liquidate Bitcoins. He also sought Force's help in convincing Curtis Green (formerly Flush) to help him transfer Bitcoins to other accounts, and he ultimately tried to blame Green for the theft.

With the government's approval, Force also posed as a drug dealer and communicated with DPR as Nob. As part of his official undercover work as Nob, Force agreed to sell fraudulent identification documents to DPR for $40,000 in Bitcoins. According to the criminal complaint against the agents, Force kept the Bitcoins received by his Nob account in connection with that transaction for his personal use. On another occasion, again as part of his authorized undercover work, Force advised DPR that he had access to information about Silk Road from an invented corrupt government employee. DPR paid Force $50,000 in Bitcoins for purported inside law enforcement information; Force allegedly purloined that payment as well. Moreover, outside his authorized undercover work, Force operated another account under the name French Maid, through which he again offered to sell DPR information about the government's Silk Road...