Defense Attorney explains drug crimes on the “Dark Web”; Silk Road etc.

Posted By Galluzzo & Arnone || 1-Jun-2015

The New Frontier of Drug Crimes: Silk Road, Agora, and the Dark Web

The traditional business model of drug trafficking, though potentially lucrative, is fraught with peril and obstacles for its participants at all levels. Thanks to fantastic television programs like The Wire and Breaking Bad, many Americans already have a basic understanding of this business model: Transactions are conducted using cash, and regulatory safeguards at banks and other institutions make it difficult for dealers to use their income to make large purchases (thereby necessitating the risky business of money laundering). Transactions are also generally made face-to-face and hand-to-hand, meaning that the dealers and buyers can be fairly easily identified or apprehended by law enforcement.

These sorts of traditional drug dealing operations use levels and levels of intermediaries to protect the chiefs from being directly implicated, but law enforcement officers have routinely been able to force low- and medium-level dealers to "snitch" on their suppliers. Moreover, this business model's need for a human being to personally deliver contraband makes the buyers and sellers potentially subject to violent acts by thieves or competitors.

It should come as no surprise then that many savvy and enterprising criminals took to the nether world of the "Dark Web" (or “Dark Net”) to traffic narcotics (and sometimes even weapons) at online markets like Silk Road (then Silk Road 2.0) and Agora, among others. These online markets provided solid anonymity for buyers and sellers of drugs because they are accessible only through the Tor browser (Tor = The Onion Router), a software program designed to disguise the IP address (and thus the physical presence) of a person browsing online. Buyers and sellers can connect anonymously on these markets using Tor in a way that makes it extremely difficult for law enforcement to track the IP addresses (and thus, the physical locations and true identities) of the participants.Though Silk Road was shut down by law enforcement, and other sites continue to be closed, new ones inevitably crop up to replace them.

Also, the buyers and sellers on these websites aren't using credit cards or cash - they're generally using BitCoin. This online and anonymous digital currency has been highly controversial and is illegal in some countries, though it is currently legal in the U.S. and becoming subject to increasing regulations. (NOTE: The author of this article has significant experience representing a person accused of criminal activity involving the use of now-defunct precursor online currencies called Webmoney and egold.). There is no question that cryptocurrencies like Bitcoin are absolutely critical to the survival of these marketplaces, as these transactions could not possibly be consummated without it.

Moreover, consumers of narcotics and designer drugs frequently find the experience of buying from these sorts of online suppliers to be safer and easier than the traditional alternative. First, the buyer doesn't have to personally meet an unsavory criminal in his home or some other dangerous place where he risks being caught. Second, the market offers easy price comparisons amongst sellers - it's practically an eBay or Travelocity for drugs. (Note: Federal Judge Katherine Forrest, in denying Ross Ulbricht's motion to dismiss the pending indictment against him, described the now defunct Silk Road as being like eBay).

Of course, because of the anonymity involved, a buyer can be easily ripped off on one of these sites - that is why buyer reviews are such an important part of these new markets. Sellers have to develop and maintain a reputation for trustworthiness among users, and that can be hard to do in an environment where buyers cannot possibly hold the seller personally accountable for defrauding them.

The hosts of these marketplaces can also fairly effectively disguise their anonymity. Ross Ulbricht a/k/a Dread Pirate Roberts, is easily the most notorious such alleged host, and was arrested last year after a length federal investigation. The U.S. federal government contended that for years he hosted the Silk Road online market (technically a portal accessible only via Tor browsers), and took commissions on thousands of drug-related sales totaling millions of dollars in Bitcoin. Ultimately, after a trial before Judge Forrest, Ross Ulbricht was convicted of numerous crimes and sentenced to life in prison.

The weaknesses in these modern operations generally arise in the delivery system. Private shipping companies like FedEx and DHL do not need search warrants to open suspicious packages.Accordingly, dealers tend to prefer to use shady offshore delivery services or USPS, whose agents must have federal search warrants to open suspicious packages. In the event that an illicit package is intercepted by a courier, federal agents often attempt to deliver the package to its intended recipient in a "controlled buy": essentially, the federal agent poses as a delivery man and tries to get the recipient to sign for the package. Of course, most buyers in this market use "dummy drop" addresses, like mailboxes opened under pseudonyms, to receive these sorts of packages. Ultimately though these measures don't really prevent law enforcement from waiting at the "dummy drop" location and simply arresting the person when s/he picks up the package.

Most dealers sending narcotics via courier do not use actual return addresses, of course, or pay for the postage with anything other than cash. Federal agents might be able to trace the drop off point of an intercepted package, but unless there is good archived video surveillance footage of the person making the drop at the courier's drop off center, it is typically exceedingly difficult for federal agents to identify the person that mailed the package. Finally, dealers that use couriers have discovered a variety of vacuum-sealing techniques to make it especially difficult for courier companies or USPS to detect any illicit substances in the packages.

These sorts of cases are typically prosecuted in federal court. Notably, local law enforcement makes most of the drug trafficking related arrests in the U.S. - indeed, police officers do most of the heavy lifting in America's War on Drugs. However, whereas cartels engaged in traditional drug dealing are routinely investigated by both state and local law enforcement, these new online Silk Road and Agora operations are generally just too complex for state law enforcement officers to penetrate; state law enforcement simply lacks the resources and the personnel to penetrate these operations, so it is up to the FBI and other federal law enforcement agencies alone to do the work. The author wouldn't be surprised if the federal government soon starts seriously ramping up its own funding of this effort to combat the "Dark Net" or decides to give more money to local law enforcement agencies to develop the capabilities to assist them, but for the moment, in terms of sheer numbers and probabilities, there are probably fewer law enforcement officers chasing these modern dealers than there are officers pursuing traditional drug dealers on the streets.

That being said, the potential penalties for dealing drugs online can be significant. The most readily applicable charges would generally include violations of 18 USC Section 952 or any number of money-laundering and conspiracy charges. Obviously, Ross Ulbricht, the founder of Silk Road, received life in prison for his criminal activities, though his appeal is pending. Also, sellers on Silk Road face a two-level enhancement under 2D1.1(b)(7) for “mass marketing” narcotics on the Internet, which buy itself can elevate a sentence by two years as opposed to traditional drug dealing.

If you or a loved have been arrested or prosecuted for a crime involving the purchase or sale of contraband or narcotics on Silk Road, Agora, or some other Tor-accessed portal, you should strongly consider contacting the experienced criminal defense attorneys at Galluzzo & Arnone LLP. Their team of former prosecutors has defended people accused of committing Internet crimes involving electronic currencies like Bitcoin and its precursors, as well as individuals accused of trafficking narcotics on the internet and Tor-accessed markets. This is a complex subject at the intersection of technology and criminal law that few criminal defense attorneys truly understand, so you should take pains to ensure that your criminal defense attorneys, like those at Galluzzo & Arnone LLP, truly understand the relevant issues.

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