4.Opening Statement — Prosecution

MR. HOWARD: Thank you, your Honor.

This is a case about a dark and secret part of the Internet that was home to an enormous marketplace for the sale of illegal drugs. It was a website called Silk Road where anybody anywhere in the world could buy and sell dangerous and addictive drugs with the click of a mouse.

During this trial we will take you inside this dark and secret world and show you the man who controlled it all. That man, the defendant, Ross William Ulbricht, he was the kingpin of this digital criminal empire.

The defendant taught himself computer programming and in 2009 began what he described as, quote, a secret project. Using his laptop computer, he created the Silk Road website. His idea was to make illegal drug deals as quick and easy as ordinary online shopping. And that is exactly what he did. Drugs like heroin, cocaine, LSD, crystal meth, all of these were available on Silk Road.

All someone had to do was go to the Silk Road website, pick their drug of choice, and have it delivered right to their doorstep. The defendant's plan worked. Thousands of drug dealers flocked to Silk Road, and more than 1 million drug deals took place on the site before the government shut it down.

As the creator and the operator of Silk Road, the defendant was in the center of each and every one of these drug deals. Like a traditional drug boss, he made them all possible. He decided what drugs could be sold on Silk Road. He set the rules the dealers have to follow. And he also tried to protect those dealers from getting caught. And like any other drug boss, Ulbricht profited from the drug deals that took place on his territory. He took a cut of every single deal that took place on Silk Road, and with that he amassed a fortune -- $18 million.

Also like a traditional drug boss, the defendant was vigilant to protect his criminal empire. When he thought that certain people posed a threat to Silk Road, he was willing to use threats and violence to protect his turf. But unlike a traditional drug boss, the defendant's territory wasn't a city block or even a neighborhood, it was the entire world.

And the defendant controlled his digital drug empire from behind his laptop computer. The defendant controlled everything about Silk Road, from top to bottom. As the defendant himself put it, quote, I am Silk Road, the market, the person, the enterprise, everything.

Through Silk Road, the defendant built a global online network of drug dealers, and every one of them paid for the privilege of doing business on his site. And what did the defendant give the drug dealers in return? First, he gave them a way to protect them from getting caught by giving a way to hide the real identities and sell drugs anonymously, and, second, he gave drug dealers a whole new way to find and hook new customers. Instead of going to the local street block or street corner, a drug dealer on Silk Road could sell to anybody with a computer anywhere in the world.

And, ladies and gentlemen, that is why we are here today. We are here to pull the curtain back on this dark and secret world of online drug trafficking that occurred on Silk Road. We are here to show you that behind that curtain was one man, Ross Ulbricht, and his laptop.

So now let me just give you a preview of what I expect the evidence to show at trial. First, how did Silk Road work? In some ways it worked like any ordinary online shopping website. The Silk Road Web page displayed pictures of the products that were for sale, and you could click on those pictures to see more details. Once the users found what they wanted, they would add it to their online shopping cart and provide a shipping address and provide for payment. The shipper then shipped the purchased items in the mail. And in this way it was no different than Amazon.com or eBay and other popular online shopping sites, but there were critical differences. Let me just take a moment to show you what the Silk Road website looked like. Now I will draw your attention to the upper left-hand corner here. You can see listings of all kinds of illegal drugs that were on Silk Road, divided by category. And in the middle of the homepage, you see colorful advertisements for particular drugs that were offered on Silk Road. For example, here we have some French pure flake cocaine. Down in the left-hand corner we have MDMA, which is commonly known as "ecstasy." These were just a few of the products, a few of the kinds of illegal drugs, just a few examples of the thousands of listings that were available on Silk Road.

Ladies and gentlemen, around 95 percent of the items that were sold on Silk Road were illegal drugs, but drugs were not the only illegal items that were sold on Silk Road. Silk Road offered other products, like fake passports and fake identification documents, for sale. Silk Road offered tools to hack into other people's computers or their email accounts. It even offered the services of other people to do the hacking for you to hack into other people's computers.

But first and foremost, the site was designed to be an online shopping paradise for the sale of illegal drugs. The defendant tried to attract drug dealers and other criminals to the website by creating a safe haven for them, a place where they could make money selling their drugs without getting caught. The defendant did this by making it virtually impossible for anybody to trace the users on Silk Road. And there are two main ways he did this. First, he made sure that Silk Road could only be accessed in a special way. The defendant designed Silk Road to operate on a hidden part of the Internet known as the TOR network. Anyone can access the TOR network simply by downloading some free software from the Internet.

But when someone uses TOR, no one can tell who that person is or where the computer is located. TOR hides the locations and TOR hides their identity. Thus, by making Silk Road only available through the TOR network, the defendant enabled buyers and sellers to conduct illegal transactions without leaving a digital trail that could be led back to them.

Now, the second way the defendant made Silk Road untraceable was controlling the method of payment on Silk Road. Ulbricht refused to allow Silk Road users to pay for their drugs with a credit card or a check or a bank account. Those traditional forms of payment risk exposing the identities of the people that use Silk Road. Instead, the defendant required that drug deals be paid for with bitcoins. Now, bitcoins are a digital currency. You can't hold on to them like you can hold on to a dollar bill. You will learn more about bitcoins during this trial. But the reason that he chose them for the deals on Silk Road was because they are anonymous. When someone buys something with bitcoins, they don't have to give their name. They don't have to give any account information that can be linked back to them like someone has to do when you buy something online with a credit card or a check. So unlike these traditional forms of payment, bitcoins are designed to leave no evidence of the identity of the people using them.

In addition to designing Silk Road to protect the drug dealers that were operating on the site, the defendant designed the website to ensure huge profits for himself. You see, every time a drug deal -- every time an illegal transaction occurred on Silk Road -- Ulbricht charged a commission in bitcoins. The commission was a percentage of the overall sale, from 10 to 12 percent. And he collected millions of dollars worth of commissions from the sales that occurred on Silk Road.

He took his cut of every deal. In about three years, he amassed nearly $18 million worth of bitcoins.

So that is the general overview of Silk Road.

Now, what was the defendant's role on Silk Road? First of all, he came up with the idea. He designed the website. The evidence will show that he began planning Silk Road as early as 2009. By 2011, he was ready to launch his startup drug site but he didn't have any drugs to sell. So what did he do? He got some drugs. The defendant rented a cabin outside of Austin, Texas, a short drive from where he lived at the time, and set up a lab in a cabin and grew his own hallucinogenic mushrooms, illegal drugs, so that he would have something to sell on the site when it opened. And once he had the drugs to sell, he needed to draw users to the site. So what did he do? He went on various drug-related discussion forums on the Internet and posted advertisements for the site, explaining how you could buy any kind of drugs you wanted on Silk Road.

Now, once Silk Road was up and running, the defendant controlled every aspect of its operation. Because he knew what he was doing was illegal, he was careful to conceal his identity while he was doing this. He didn't run Silk Road using his own name. Instead, he used an online alias, a user name, the Dread Pirate Roberts, or "DPR" for short.

Now, if you could put the screen back up, you can see a reference to the Dread Pirate Roberts right here in the top right-hand corner of the homepage, welcoming users to the site. "A few words from the Dread Pirate Roberts."

The Dread Pirate Roberts was known across the Silk Road community as the man in charge, the man who ran it all, set all the rules, and controlled all the profits. So what are some of the things he did?

First, as I mentioned, he set all the rules for the site. And one of the most important rules for Ulbricht was that users had to pay for their drugs or their other illegal goods using the payment system on the website. He didn't want drug dealers to advertise drugs on the site, meet a willing buyer, and then negotiate a way to pay for the drugs off of the site. And why did he do this, ladies and gentlemen? Because he wanted to protect his ability to get his cut, to get his piece of every single sale.

As an example of another rule, the defendant prohibited any users from revealing any information that could expose the true identities of the drug dealers and the other users of the site. The purpose of this rule was to prevent Ulbricht and the drug dealers on the site from getting caught.

You will hear that this rule was so important to the defendant that he was willing to use violence to enforce it. When he believed that people were threatening to expose information about Silk Road, he even tried to have them murdered. Now, although those murders were not successful, the defendant paid hundreds of thousands of dollars to get them done. He was willing to stop at nothing to protect his criminal empire.

Now, what were some of the other ways in which the defendant controlled Silk Road? He decided what illegal drugs could be sold on Silk Road. He was the one who decided that all kinds of drugs, no matter how dangerous, no matter how addictive, could be sold on the website. He was the one who decided that fake passports could be sold on the site no matter who was buying them or what they were using them for. He was the one who decided that computer hacking tools and services were available on the site without any regard to the innocent people whose computers would be intruded on as a result.

And what else did he do as the operator of Silk Road? He managed the day-to-day operations of the site. For example, he gave advice to members of the site to help them avoid getting caught. He advised drug dealers how to package their shipments to make it look just like ordinary business mail. And when disputes arose between drug dealers and users on the site, he stepped in and helped resolve them.

Just as the defendant designed it to be, Silk Road quickly became a place where thousands of drug dealers flocked to sell drugs day in and day out. In fact, the site attracted so many drug dealers that it became too big for him to handle by himself. So he hired a staff of about ten people to help with the day-to-day operation of the site. Some handled questions from drug buyers about how to use the site. Others did computer programming to help maintain the site. The defendant never met any of these employees in person. He knew them purely online, but he supervised them just like any other boss, and paid them salaries amounting to hundreds of thousands of dollars over time.

Finally, the defendant controlled the flow of money through the site. He designed the Silk Road payment system and permitted payment through bitcoins only. He charged a hefty commission in bitcoins on each sale. And as criminals racked up sales on Silk Road, as drug dealers made over $200 million in drug sales on Silk Road, the defendant made a fortune for himself on his commissions. The defendant took many steps to conceal his role running this criminal enterprise. As I mentioned, he was known on Silk Road only by his alias, the Dread Pirate Roberts. But he was also careful not to let many people who were close to him know what he was doing. He kept most of his friends and his family in the dark about his secret life. But because of how much time he was spending running this criminal empire, sometimes he thought it was difficult to keep the secret.

His friends didn't understand why he didn't have any free time. The defendant confided to one of his Silk Road employees that he wished he could just explain to his friends why he didn't have free time, that he could scream at them that he was busy because, quote, I'm running a multimillion dollar criminal enterprise.

Now, while Ulbricht was making millions off his criminal enterprise, he was careful not to lead a lavish lifestyle that would draw suspicion. He deliberately kept a low profile to protect his secret. He saved his money, planning for a day in the future where he might move to another country in the Caribbean where he could begin spending it.

Although the defendant tried to protect his identity as the operator of Silk Road, he made some critical mistakes along the way and ultimately his secret was exposed. Law enforcement agents figured out that Ulbricht was the person using the alias Dread Pirate Roberts, that Ulbricht was the founder, the owner, and the operator of Silk Road. In October 2013, the defendant's luck finally ran out and he was arrested.

Now, the day of his arrest probably started as a typical day for the defendant. He was living in San Francisco at the time. He spent the morning in his apartment, and in the afternoon he left his house to do his daily work, running Silk Road. Since he ran the website from behind a laptop computer, all he needed was an Internet connection. So on this day he decided to go to a public library with his laptop. It was about a five-minute walk from his apartment. And as he walked to the library, he had no idea that he was being followed by FBI agents.

The defendant arrives at the library, finds a table, sits down and opens his laptop, and starts working on Silk Road. He struck up an online conversation with someone he knew as one of the Silk Road employees, a member of his customer support staff. But what the defendant didn't know was this person was not really a Silk Road employee but an undercover federal agent. And as the defendant typed away at his laptop, he had no idea that federal agents in plainclothes were right there in the library watching his every move.

So when the agents were in place and the undercover federal agent confirmed that he was chatting online with the Dread Pirate Roberts, the agents in the library made their move. They arrested the defendant. They grabbed his laptop before he had a chance to close it. And what was the first thing they saw on his computer screen, ladies and gentlemen? Silk Road. They saw the defendant was right in the middle of a conversation, the conversation with the undercover agent. The Dread Pirate Roberts had been unmasked as Ulbricht, the defendant.

Now, that's an overview of what I expect the evidence at trial to show. So how will we prove that to you? How will you know by the end of this trial that this defendant was the Dread Pirate Roberts who ran Silk Road?

First of all, the defendant was caught redhanded. The defendant was arrested at that library in San Francisco while using his laptop in the middle of the online chat with the undercover agent. You will hear testimony from that undercover agent. He will tell you about how he investigated Silk Road for nearly two years and was able to successfully infiltrate the site as a trusted member of the Dread Pirate Roberts' customer support staff.

He will explain how he monitored the activity of the Dread Pirate Roberts online on that day of the defendant's arrest and watched the defendant as he went into the library. He'll explain how he started chatting with the defendant online after he saw the defendant enter the library.

You will also hear from a member of the FBI who was at the library watching the defendant. And you will see photographs taken of the screen of the laptop moments after the defendant's arrest. Those photographs show exactly what the defendant was doing at the time that he was arrested. They show the defendant was chatting with the undercover agent as the Dread Pirate Roberts. The photographs of the laptop will also show the defendant was logged into the Silk Road website under the user name Dread Pirate Roberts when he was arrested. And he wasn't just in any part of the website. He was logged into a special restricted part of the site that he called his mastermind page, a special control panel that he could use as the site administrator to monitor and control the entire site. The defendant was literally caught with his fingers at the keyboard running the Silk Road website.

But that's just the beginning. After he was arrested, agents found a mountain of additional evidence on the laptop that he had been using at the time that he was arrested. The laptop contains all sorts of files showing the defendant's operation of Silk Road. And what were some of those files? The defendant kept a personal journal on his laptop, a digital diary, ladies and gentlemen, and that journal contains devastating confessions by the defendant.

In this journal the defendant described in his own words how he launched and how he operated Silk Road, including the story I told you about how he had to grow his own illegal hallucinogenic mushrooms in a cabin, how he set up his own drug lab in order to set up the site.

The journal also describes about how excited he got as the site, as Silk Road, got bigger from year to year. There are also chat logs on the laptop, transcripts of online communications that he had with other Silk Road employees. These chats will show the defendant was involved in running every aspect of Silk Road on a daily basis. And there is a lot more on the defendant's laptop, including a to do list with tasks related to running Silk Road, spreadsheets that track expenses related to Silk Road, and lists of the computers that he had around the world to run the website. The laptop also contained the defendant's enormous profits. It contained bitcoins worth approximately $18 million at the time of his arrest.

Beyond this extremely damning evidence, You'll hear still more evidence the defendant controlled Silk Road. You'll hear how the defendant confessed to a long time friend of his from college. When the defendant was first developing the site, he sometimes turned to a friend for programming advice. Well, you will hear from that friend at this trial. The friend will tell you that in 2010, in 2011, when he was working as a computer programmer, the defendant started calling on him to ask him help on computer programming questions. The friend will tell you that he repeatedly asked the defendant hey, what are you working on? What kind of website are you building? And the defendant would refuse to answer, telling him that it was top secret.

Eventually the friend told the defendant that he wouldn't provide any help any more unless the defendant told him what this secret website was. So the defendant eventually gave in. He told his friend that he was running a website that sold illegal drugs. You will hear how the defendant showed his friend the Silk Road website and bragged that he was the mastermind behind the entire thing.

You will also hear from a federal agent who first identified the defendant as the Dread Pirate Roberts based on telltale clues he left behind on the Internet. In 2011, when he started the website, he publicized, he advertised the site on various drug-related forums on the Internet. Then he will show you those Web pages and explain to you how he was able to trace them to the defendant, which is what led law enforcement to him.

You will hear from some other witnesses. You will hear from a drug dealer who sold heroin on Silk Road. Now, that witness has pled guilty to serious drug offenses, but he's here to give you an insider's view of how Silk Road operated from one of its many -- from one of its thousands of drug dealers. He'll tell you his story about how he himself owned a legitimate business but he was overwhelmed with his own expensive addiction to heroin. He'll tell you about how he discovered Silk Road and almost overnight was able to become a bigtime drug dealer on Silk Road. Within days he was able to easily set up an account in Silk Road and start distributing heroin that he had purchased in New York all over the United States. The defendant made it possible for this man, who had never sold drugs before in his life, to distribute heroin to literally thousands of people across the country.

You will also hear from a computer scientist who had examined the computers which ran the Silk Road website. He will tell you about the data that was recovered from the servers and the huge volume of drug transactions that are reflected in the data.

You will also hear about drug buys that undercover agents made on the Silk Road website, how they went on the Silk Road website and ordered drugs, and how those drugs then arrived in the mail.

These are just some highlights of the proof you will see and you will hear. We submit to you that by the end of this trial you will find that the evidence provides a detailed and interlocking account of how Ross Ulbricht was the Dread Pirate Roberts, the owner and the operator of the vast criminal enterprise that was Silk Road.

Now, before I conclude, I just want to take a brief moment to talk about the legal charges in this case. First, the defendant is charged with drug trafficking crimes based on the drug deals that he brokered and that he profited from in operating Silk Road.

The defendant is also charged with committing crimes relating to other types of criminal activity that he brokered and profited from through Silk Road. He is charged with trafficking in fraudulent identification documents based on the fake passports and the fake ID's that were sold on Silk Road.

He is also charged with a computer hacking crime based on the computer hacking tools and the services that were sold on Silk Road, every one of which the defendant profited from.

And, finally, the defendant is charged with money laundering based on the bitcoin-based payment system used on Silk Road, which the defendant designed to conceal the money moving through the site from law enforcement.

This is just an overview of the charges in this case. Judge Forrest will give you detailed legal instructions on all of these charges at the end of the case before you deliberate.

At the end of this trial, after all the evidence has been presented to you, we will have a chance to speak to you again about how the evidence proves the defendant's guilt beyond a reasonable doubt. Between now and then, I would just ask you to do three things: First, listen carefully to the evidence; second, follow Judge Forrest's instructions on the law; and, third, use your common sense, the same common sense that you use every day. If you do these three things -- pay careful attention to the evidence, follow the Judge's instructions on the law, and use your common sense -- you will reach the only conclusion that is supported by the evidence in this case -- that Ross Ulbricht, the defendant, is guilty as charged.