Any backdoor connection that the Silk Road online market might have had with Mark Karpeles, the founder of the failed Mt. Gox Bitcoin exchange, will have to be disregarded unless defense attorneys present stronger evidence, the judge in the U.S. federal trial against Russ Ulbricht said Tuesday.
Ulbricht's defense attorney Joshua Dratel surprised the courtroom last week when he asserted that prosecutors had originally suspected Karpeles as the leader behind Silk Road, a site that allegedly facilitated over $1 billion in sales of illegal and unlawful goods. He made the assertion while cross-examining the Department of Homeland Security agent Jared DerYeghiayan, who was in charge of investigating Ulbricht.
Karpeles has subsequently denied any involvement.
DerYeghiayan had recounted how his team had caught Ulbricht managing Silk Road from his laptop computer in a public library in San Francisco. The capture had linked the "Dread Pirate Roberts" anonymous account -- under which much of the Silk Road work was done -- with Ulbricht, who was signed in as "Dread Pirate Roberts" at the time of the arrest.
Dratel has maintained that while Ulbricht started Silk Road, he left the site a few months later, and that he rejoined the operation immediately prior to the bust, having been lured back in by the real operators to serve as a fall guy.
But U.S. District Judge Katherine Forrest of the Southern District of New York told Dratel on Tuesday that to support this line of defense, he would need to introduce into evidence details such as documents showing that Ulbricht had handed over the "Dread Pirate Roberts" account to someone else.
If Dratel were to introduce a new perpetrator, such as Karpeles, he would need to offer direct or strong circumstantial evidence. Much of Dratel's questioning, which was not objected to by prosecutors last week, centered on whether DerYeghiayan had believed, or suspected, that Karpeles was running the site.
On Tuesday, Forrest told Dratel that it's not allowed to ask someone if they "believed" or "suspected" something.
Dratel maintained that he could show other people operated "Dread Pirate Roberts" simply through cross examination of the prosecution's witnesses. He also asserted to the judge that he felt Karpeles "could be the real Dread Pirate Roberts."
DerYeghiayan explained that Karpeles initially came to his attention when he noticed that a marketing Web site for Silk Road, silkroadmarket.org, was run on a Web hosting operation owned by Karpeles, called KalyHost. At the time, Karpeles's Bitcoin exchange, Mt. Gox, was being investigated by the Department of Homeland Security for illegal money transfers.
DerYeghiayan had obtained the information about silkroadmarket.org through an Internet WhoIs lookup, a service that provides information about who owns and runs websites based on domain-name information.
Silkroadmarket.org was not Silk Road itself, but only provided a link to the service, which ran on the anonymous Tor network. In questioning, DerYeghiayan admitted that KalyHost was also running hundreds of other Web sites, and he had no additional evidence suggesting silkroadmarket.org was anything other than a standard customer account for hosting company.
DerYeghiayan then subpoenaed some of Karpeles' e-mail accounts and found no further connection to Silk Road. As a result, the investigation team moved their attention to other possible suspects, he said. Silkroadmarket.org was registered under a false name, Richard Page, a name that was later found on Ulbricht's computer in what the prosecution described as a file of aliases Ulbricht used.
Forrest also reprimanded the prosecutors for not objecting more strenuously to Dratel's line of questioning last week, which might have swayed the jury's opinion of the case, prompting jury members speculate about actions that were not supported by fact. On Tuesday, prosecutors also started objecting more frequently to cross-examination questions posed to their witnesses by Dratel.
Forrest also pointed out that even though other people could have been operating "Dread Pirate Roberts," the law clearly states that someone joining in on a conspiracy to commit crime can be held responsible for that conspiracy even before that person had joined the activity.
Texas resident Ulbricht was indicted last February, after being arrested in October 2013 in California. At the time of his arrest, Ulbricht was charged with narcotics conspiracy, engaging in a continuing criminal enterprise, conspiracy to commit computer hacking, and money laundering. Both the charges of narcotics and engaging in a criminal enterprise have maximum penalties of lifetime imprisonment.