WPCNR FBI WIRE. From the Federal Bureau of Investigation. September 24, 2020:
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Joleen Simpson, Acting Special Agent in Charge of the Boston Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced that MICHAEL R. WEIGAND, pled guilty to making false statements to federal agents about his involvement in, and his work for, the “Silk Road” online illicit black market, which was responsible for distributing hundreds of millions of dollars of narcotics and other contraband.
WEIGAND’s false statements concealed his role in the operation of the Silk Road website. WEIGAND surrendered today and pled guilty before United States District Judge William H. Pauley III.
Acting U.S. Attorney Audrey Strauss said: “Silk Road was a secret online marketplace for illegal drugs, hacking services, and a number of other criminal activities.
Michael Weigand helped Silk Road by, among other things, identifying technological vulnerabilities in the site, supplying technological advice directly to Silk Road’s leadership, and travelling overseas to remove Silk Road evidence from a co-conspirator’s residence. When Weigand was questioned by law enforcement in 2019, he falsely claimed not to have done anything at all for Silk Road. For his various false statements, Weigand now faces potential prison time.”
IRS-CI Acting Special Agent in Charge Joleen Simpson said: “During its years of operation the Silk Road website allowed thousands of individuals to anonymously conduct narcotics transactions, launder money, and facilitate other illegal transactions. This investigation took law enforcement above and beyond its traditional role in financial crimes. In effect, it put us squarely in the middle of the high-tech world of cyber-crime and the dark web. When given the opportunity to provide truthful statements to the agents, Weigand knowingly and willfully attempted to deceive the agents of the role he played in providing technical expertise to the Silk Road operators. I hope that this guilty plea will discourage others from providing false information to law enforcement officers in the future.”
FBI Assistant Director William F. Sweeney Jr. said:
“Weigand and others used their skills and savvy to create a secret online enclave for criminals to trade in illegal drugs and illicit goods and services. They thought they were smart enough to evade law enforcement, but they were wrong. When Weigand was confronted, he lied about his involvement – once again thinking we weren’t smart enough to catch him. With today’s plea, he’ll have time to contemplate the truth as he awaits his sentence.”
HSI Special Agent-in-Charge Peter C. Fitzhugh said:
“Criminal activity on the dark web continues to be more prevalent, allowing easy accessibility to narcotics and illicit goods with the click of a button. With online criminal enterprises growing, law enforcement technologies are advancing, and HSI with its partners are infiltrating the dark web, intercepting online dealings and locating the perpetrators. Today’s guilty plea should stand as reminder to those criminals who have a false sense of security behind their computer screen, that they too will one day face the consequences of their actions.”
According to the allegations in the Information, court filings, statements made in court, and evidence presented during the 2015 trial of Ross Ulbricht, Silk Road’s founder and chief administrator:
Ulbricht created Silk Road in approximately January 2011, and owned and operated the underground website until it was shut down by law enforcement in October 2013.
Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet at the time. During its more than two-and-a-half years in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over one hundred thousand buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.
Silk Road was specifically designed to allow its users to buy and sell drugs and other illegal goods and services anonymously and outside the reach of law enforcement through the use of the Tor network and a Bitcoin-based payment system.
WEIGAND – who is a computer programmer and electrical engineer – worked with Roger Thomas Clark, the senior adviser to Ulbricht, on certain aspects of Silk Road.
For instance, WEIGAND and Clark worked to identify technological vulnerabilities in the Silk Road website. WEIGAND also supplied technological advice directly to Clark and Ulbricht.
In January 2019, WEIGAND was questioned by an IRS Special Agent and an FBI Special Agent. After being specifically warned that it is a federal crime to make a false statement to a federal law enforcement officer, WEIGAND attempted to cover up his involvement in Silk Road by falsely stating, among other things, that (1) he never opened an account on Silk Road; (2) he never used the online pseudonyms “Shabang” or “~Shabang~”; (3) he never transferred Bitcoin to Silk Road; (4) he never exposed computer security vulnerabilities in the Silk Road website; (5) he never communicated with anyone who used the online pseudonym “Dread Pirate Roberts,” “DPR,” or “Silk Road”; (6) he never performed any services for the Silk Road website; and (7) he did not know the true identity of “Variety Jones” (one of Clark’s pseudonyms) on Silk Road. WEIGAND also falsely stated that the purpose of his trip to London in late 2013, following the takedown of the Silk Road website and arrest of Ulbricht, was to meet with Clark’s associate regarding a marijuana seed business. In fact, WEIGAND traveled to Clark’s London residence and removed Silk Road evidence.
WEIGAND, 56, of Kirtland, Ohio, pled guilty to one count of making false statements, which carries a maximum sentence of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. WEIGAND is scheduled to be sentenced by Judge Pauley on December 18, 2020, at 2:00 p.m.
The founder and operator of Silk Road, Ross Ulbricht, was previously convicted of seven offenses after a jury trial: distributing narcotics, distributing narcotics by means of the Internet, conspiring to distribute narcotics, engaging in a continuing criminal enterprise, conspiring to commit computer hacking, conspiring to traffic in false identity documents, and conspiring to commit money laundering. Ulbricht was sentenced principally to life imprisonment and $183 million in forfeiture.
The senior adviser to Ulbricht, Roger Thomas Clark, pled guilty to conspiring to distribute narcotics and his sentencing is currently pending; Clark faces a maximum potential sentence of 20 years in prison.
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Ms. Strauss praised the outstanding joint efforts of the IRS-CI, the FBI, and HSI. Ms. Strauss also thanked the FBI’s Cleveland Office for its assistance.
This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Michael D. Neff is in charge of the prosecution.