No landlord has ever been prosecuted under federal drug laws for renting property to a known drug dealer. That’s the argument alleged Silk Road owner Ross Ulbricht’s defense lawyer has pitched to a federal judge.
Attorney Joshua Dratel filed a motion in a Manhattan federal court this week, seeking the dismissal of the four-count indictment against Ulbricht, who allegedly ran what became the world's largest online black market from January 2011 to October 2013 under the alias “Dread Pirate Roberts.”
The motion does not necessarily deny or confirm that Ulbricht founded and operated Silk Road. Rather, it challenges the validity of the charges in the indictment by casting Ulbricht as a potential “digital landlord” renting space to Silk Road users, who may or may not have been conducting criminal acts.
Ulbricht has been charged with narcotics and computer hacking conspiracy charges, money laundering, and being the kingpin of a continuing criminal enterprise. In a 50-page memorandum supporting the motion, Dratel essentially argues that the laws used to charge Ulbricht have never been applied to someone in Ulbricht’s position, and should not apply in the case against Ulbricht.
The indictment “advances an unprecedented and extraordinarily expansive theory of vicarious liability ... that would impose criminal responsibility upon Mr. Ulbricht based on the conduct, knowledge, and intent of others,” Dratel wrote.
“Bitcoins, the exclusive means of payment on Silk Road, do not qualify as ‘monetary instruments,’ and therefore cannot serve as the basis for a money laundering violation,” Dratel wrote.
In response to the computer hacking conspiracy charges, Dratel again employed the digital landlord defense.
Even though Silk Road users may have bought and sold malicious software through the site, Ulbricht would not have known if the buyer “was intending to use the software for proprietary research, academic study (by students or professors), security purposes, or merely to satisfy the particular abstract interest of a particular consumer,” Dratel wrote. “Indeed, even the FBI solicits malware.”
Dratel further extends the digital landlord argument in response to the “kingpin” charge, which, with a 20-year minimum sentence, is the most serious one Ulbricht faces in the indictment.
The law is aimed at those who organize a criminal enterprise consisting of at least five other people. Ulbricht is said to have supervised a team of paid administrators to help him run Silk Road.
Ulbricht is not, however, charged with managing “any of the many ‘users’ who were buying and selling drugs and other illicit goods and services on the site,” Dratel wrote. Basically, Ulbricht’s staff are analogous to building superintendents in this argument.
Dratel has not yet responded to our request for comment on his defense of Ulbricht.
Silk Road is said to have facilitated more than $1 billion in mostly-illicit transactions from January 2011 until the FBI shut down the site in October 2013. Ulbricht allegedly reaped tens of millions of dollars worth of bitcoins in transaction fees through the site.
The prosecution built its case against Ulbricht not only from a lengthy FBI investigation that led to his arrest, but also from a laptop agents seized from him during his arrest at the Glen Park branch of the San Francisco Public Library on Oct. 1.
Ulbricht faces a minimum of 30 years and a maximum of life in prison if convicted on all four charges. Even if Ulbricht eludes the charges in the New York indictment, he faces perhaps more serious allegations in Maryland, where federal prosecutors say Ulbricht facilitated a bulk cocaine deal and ordered the torture and murder of one of his Silk Road employees.
Ulbricht allegedly asked an undercover FBI agent to carry out the murder-for-hire on the man later revealed to be Curtis Clark Green, and court documents state that the undercover agent sent Ulbricht staged pictures, appearing to show the murdered man.
New York federal prosecutors floated five additional murder-for-hire allegations in initial filings in Ulbricht’s case, but those allegations didn’t make it into the indictment. The prosecution will likely have until the end of May to file a superseding indictment. March 31 was the initial deadline for a superseding indictment, but the prosecution and defense agreed to extend it, pending Judge Katherine Forrest’s approval.
Ulbricht’s trial is scheduled to begin on Nov. 3. The prosecution will have a chance to counter this motion before Forrest makes a ruling. Dratel’s argument is laid out in full in the memorandum below.
Illustration by Jason Reed