In Journal, Man Wrote of Creating Silk Road, an Online Black Market, Prosecutors Say

Long before the website Silk Road became an online black market for drugs and other illicit goods, it began its life of underground commerce with the sale of homegrown hallucinogenic mushrooms, prosecutors have said.

The website’s origins were highlighted on Wednesday in Federal District Court in Manhattan, as prosecutors disclosed entries from a personal journal that they say were written by Ross W. Ulbricht, the man charged with creating Silk Road.

When Mr. Ulbricht, a 30-year-old California man, was arrested in October 2013, federal agents say they discovered the journal on his laptop computer.

“I began working on a project that had been in my mind for over a year,” Mr. Ulbricht wrote in one entry, prosecutors said. “I was calling it Underground Brokers, but eventually settled on Silk Road. The idea was to create a website where people could buy anything anonymously, with no trail whatsoever that could lead back to them.”

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It was on that website, on a hidden part of the Internet, prosecutors have charged, where thousands of vendors sold drugs and other illegal goods, using Bitcoins, a digital currency as anonymous as cash.

The government has said Mr. Ulbricht ran the site under the pseudonym Dread Pirate Roberts, a charge that Mr. Ulbricht’s lawyer, Joshua L. Dratel, has denied. Mr. Ulbricht has pleaded not guilty to narcotics trafficking conspiracy and other counts.

The journal was cited by the government in late 2013 when it argued against bail for Mr. Ulbricht after he was arrested in a San Francisco library and brought to Manhattan to face charges. Last week, in an opening statement, a prosecutor said the journal had been found on Mr. Ulbricht’s laptop, to which he was logged on as Dread Pirate Roberts at the time of his arrest.

“That journal contains devastating confessions by the defendant,” the prosecutor, Timothy T. Howard, told the jury.

Thomas Kiernan, a computer scientist with the Federal Bureau of Investigation, testified on Wednesday that Mr. Ulbricht’s arrest had been carried out while he was using the laptop so agents could bypass encryption software to gain access to it.

The introduction of Mr. Ulbricht’s writings seemed to be intended to link him to Silk Road’s operations throughout its existence from 2011 to 2013.

“I imagine that someday I may have a story written about my life and it would be good to have a detailed account of it,” he wrote, according to an entry a prosecutor read aloud to the jury.

In other writings the government ascribes to Mr. Ulbricht, he said he hated working for others “and trading my time for money with no investment in myself.”

As for the website idea: “I had been studying the technology for a while, but needed a business model and strategy.”

He said he had decided to grow “shrooms” that he could sell cheaply on the site “to get people interested.”

He described his optimism about his idea. “In 2011, I am creating a year of prosperity and power beyond what I have ever experienced before,” he wrote. “Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator.”

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At one point, Mr. Ulbricht described how he began the site: announcing it in Bitcoin discussion forums, taking his first order for mushrooms, and selling about 10 pounds in a couple of months.

As traffic grew, he wrote, “I worked all day every day, still processing transactions by hand, dealing with scammers, answering messages, meeting new strange people through my site and getting to know them.”

When the website Gawker published an article about Silk Road, Mr. Ulbricht noted, there had been “a huge spike in sign-ups.” He also cited criticism by two United States senators, which put him “into a bad state of mind,” and made him feel “extremely vulnerable and scared.”

Silk Road thrived, though, and as he made as much as $25,000 monthly, he decided to take the site “to the next level,” he wrote.

He described the hiring of employees — prosecutors have said he never met them but knew and supervised them “purely online” — one of whom had “helped me see a larger vision,” he wrote.


http://www.nytimes.com/2015/01/22/nyregion/man-wrote-of-creating-illicit-site-jury-is-told.html?_r=0