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Man indicted in vast online black market

| Tuesday, Feb. 4, 2014, 8:06 p.m.

Federal prosecutors in New York unsealed on Tuesday a broad felony indictment of a man whom they say masterminded the biggest, most sophisticated black-market bazaar on the Internet.

Ross William Ulbricht, 29, was charged by a grand jury with drug trafficking, computer hacking, money laundering and engaging in a continuing criminal enterprise — charges that could result in a life sentence if he is convicted.

The indictment was unsealed in federal court in Manhattan and announced by U.S. Attorney Preet Bharara.

Joshua Dratel, a lawyer for Ulbricht, said his client plans to plead not guilty at an arraignment scheduled for Friday. Ulbricht, who attended Penn State, was taken into custody last year at a San Francisco public library.

Ulbricht is accused of operating and owning Silk Road — a hidden website that prosecutors say was designed to enable users to buy and sell drugs and other illegal goods and services anonymously. The website was shut down in October; it began operating in January 2011.

Prosecutors allege that Silk Road was used by several thousand drug dealers and other vendors to distribute large amounts of drugs and other illegal items and services to more than 100,000 buyers. Prosecutors said the site was used to launder hundreds of millions of dollars from illegal transactions.

Prosecutors said Silk Road used a special “Tor” network of computers distributed around the world and designed to conceal the IP addresses of the computers and identities of their operators. The transactions were made using a Bitcoin-based payment system that helped conceal identities, prosecutors said.

Bitcoin, which began in 2009, is a decentralized digital currency traded from person to person rather than through banks.

The Silk Road site was so vast that it contained nearly 13,000 listings for drugs in late September, shortly before it was shut down, according to the indictment.

Law enforcement agents made more than 100 undercover purchases of controlled substances from Silk Road vendors, including heroin, cocaine, ecstasy and LSD, prosecutors alleged.

Vendors were scattered over 10 countries — the United States, Germany, the Netherlands, Canada, the United Kingdom, Spain, Ireland, Italy, Austria and France.

Among the services available on Silk Road were computer hacking and document forgery, including driver's licenses, passports and other forms of identification.

Using the online name “Dread Pirate Roberts” or “DPR,” Ulbricht oversaw the site, managed a small paid staff and reaped commissions worth tens of millions of dollars from illicit sales on the site, prosecutors charged.

Prosecutors allege that Ulbricht “even solicited six murders-for-hire in connection with operating the site,” though there is no evidence the killings were carried out.

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