UNITED STATES OF AMERICA v. ROSS WILLIAM ULBRICHT Trial Transcript

Page 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 13, 2015 9:20 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Linda Moreno, Defense jury consultant Page 2 THE CLERK: In the matter now on trial, the United States of America versus Ross William Ulbricht, 14 Cr. 68. Counsel, please state your names for the record. MR. TURNER: Good morning, your Honor. Serrin Turner for the government. With me at counsel's table is A.U.S.A. Timothy Howard, FBI Agent Vincent D'Agostino and two paralegals from our office, Nicholas Evert and Molly Rosen. MR. HOWARD: Good morning, your Honor. THE COURT: Good morning. All right. I am just getting Mr. D'Agostino. I see he is over here. OK. Terrific. MR. DRATEL: Good morning, your Honor. Joshua Dratel for Mr. Ulbricht, who is standing beside me. With me at counsel table is Lindsay Lewis, of my office, Joshua Horowitz, and also Linda Moreno, who is an attorney who is assisting us with jury selection. THE COURT: All right. Good morning to all of you. COUNSSEL: Good morning, your Honor. THE COURT: We've got a couple of housekeeping matters to raise right now and then we'll take whatever issues you folks may have in addition. We're going to get the jury, I think, the panel, about 10 o'clock. That is my guess. The reason for the delay is while we've got our own set of folks, there is another very significant case that is picking a jury today as well, and so there is a lot of folks coming in downstairs. And when we do that, the plan is if all 91 or 92 show up, we'll take about 60, who will fit in a this room, or so, and they will come in and we'll then start from there. So we'll have actually a group of some number, if we get full attendance, who will stay in the other room for a period of time. Page 3 All right. Now, one thing that I want to make sure you folks all realize is that while a lot of letters come into the Court's email, copied to both sides, unless they are under seal, we've got to make sure, for purposes of the overall record, that everything is on the docket. We've done our best to try to ensure that whatever we've received, if it is under seal, that it has been placed in the sealed vault. If it is ex parte it is also placed in the sealed vault with a notation of that, and if it belongs on the docket because it does not require being under seal, which should be everything possible, then that belongs on the docket. So I want to have you folks take individual responsibility for ensuring that whatever you have sent to the Court is appropriately captured in that universe. In other words, there should be nothing which you think I have in a file in my office. All right? Because if one day somebody has to reconstruct the file, I want them to be able to reconstruct it in its entirety. So we've done what we can. Going forward, it will be easier but let's just get all ourselves reconciled in that process. Page 4 Now, there is one open item from Mr. Dratel's letter of January 9th. I did not receive a response from the government, that I'm aware of, relating to the oral presentation of the Internet evidence. Mr. Turner. MR. TURNER: Your Honor, our position would be these are records just like any other records. They can be read to the jury. You have wire transcripts that are often read to the jury. This is not an unusual situation. And I don't even know how mechanically we would work it so that you would type these chats out and have them shown to the jury that way. THE COURT: Let's back up a little bit. It is typically the case that wires are in their -- you've got your line transcriptions and they will be highlighted, and the government typically has the agent recite what is on the screen, or whichever witness is -- sometimes it is a cooperating witness who was a party to that, just to literally read out the words on the page. That is a different process from what I understood you folks were proposing here, which was to have two folks basically be the voices, if you will, of the Internet communications. So let's separate out the two because, as I understand it, the thrust of the letter is towards this back and forth between these voices, the two voices, as opposed to the first, more typical way, which is on the screen. So as to the two voices, are you folks willing to forgo that and let's see if we can narrow this, and then we will get Mr. Dratel's position on doing it the traditional way? Page 5 MR. TURNER: Well, your Honor, I certainly -- I mean, I myself have had cases with wires, for example, where the transcripts were read in exactly that way, with two parties, one reading one voice, the other reading the other. I think it makes it easier for the jury to understand rather than have the whole thing in one person's voice. I think your Honor already addressed this issue of, you know, inflection and that sort of thing in terms of reading it in an unfair way. I really don't think that will happen, but that is something the Court can address at that time, if it does happen. We are simply -- I should just clarify, I think we're only planning on doing that where we have lengthy chats that we may not have -- we may not introduce in the course of a particular witness' testimony but read them after a witness testifies. So I think there will be a number of chats where we read the whole thing in, because it is, you know, only half a page and we don't do the two-person reading of the document. But for lengthy interchanges I think it will make it easier for the jury to understand. I really don't think it would be prejudicial to the defendant in any way. If that circumstance does arise, the Court can at that time decide maybe to do it differently. I don't think it will be a problem. THE COURT: I hear that position. The defendant has presented, I think, an issue that's different from that, which is that wires are a type of intended oral communication and that the written chats, while they are called "chat," which has an oral connotation, the written chats were not necessarily intended to be orally communicated and so that there is a difference between the two. And there might be a way in which the jury then is brought to believe a particular -- or have a particular view of the chat when it is rendered into oral comment. Page 6 MR. TURNER: So it seems to me there are two issues. If that is the issue, that it is a written communication, I really don't think that is an issue because all the time you have letters, you have contracts, you have all sorts of documents that are constantly used as evidence at trial, and it is absolutely routine to read from those documents, you know, even in their entirety sometimes. Just because it was originally written doesn't mean you can't communicate it to the jury orally in some way. THE COURT: That is exactly, Mr. Turner, why I was separating out the two issues, which is what I was calling the typical way, which is that written things are communicated orally but not through, as I understood it, a paralegal or two paralegals who were going to not act the part, because they would simply be reciting the words, but for purposes of this discussion act the part. Page 7 MR. TURNER: Right. It seems to me there are two issues. One, should a written communication be transmitted orally? To me, I think the answer is clearly yes. It happens all the time. The other issue is is there some danger of unfair prejudice if you have parties reading it in this way that they will engage in certain inflections or that sort of thing. I believe the Court has already sufficiently addressed that. So our position would be we should proceed as we originally planned, and if for some reason the evidence is introduced in a prejudicial way, we address that at that time, but I don't think there is any reason to expect or anticipate that at this point. THE COURT: All right. Mr. Dratel, let me have you address also these two buckets that I've separated the issue into. One is having this proceed in what I would call the typical fashion of it. There is a written document. It is on the screen. Either one or sometimes the prosecutor will with a witness do a back and forth and that is very typical, and that is different in the Court's view of potentially from what I am for purposes of this discussion calling the paralegal version. MR. DRATEL: This is different in the sense that it is not an isolated letter or paragraph or something like that, which, by the way, if someone objected to, it might be appropriate in the context of the case. So I am not suggesting that because things are done traditionally that somehow it wouldn't necessarily also be subject to the same type of problem if in fact the communications were designed for a certain type of absorption by the recipient. Page 8 In this instance it is very much the case that chats are designed to be absorbed through reading, not through hearing. So there are a couple of problems. One, the Court has already identified the distinction between transcripts of conversations that are oral to begin with and these chats. One is that there are a fair number of nonverbal parts of these communications, symbols, emoticons, things like that, all of that which is not necessarily communicable in an oral context. The second part is that these -- the way that a person perceives and absorbs the information is very much tied to the medium that it is in. So to hear it may mean that the jury is not reading it, and they really ought to read these. These were meant to be read. They are a written medium, and it is a new -- it is different. It has evolved over time. So that it is not a letter that people often read aloud in the context of a group. You don't have that in a chat context. It is not the way they exist. It is very personal. It's very intimate on a certain level, and it is designed for that medium in a way that letters do not replicate in any way. And I think that, again, because of also just the elements in there that aren't verbal, and we want the jury to absorb them in the way that they were provided to be absorbed and not to hear it and not to read it from the screen. Page 9 Also, these chats will be in evidence so it is not an issue of the jury's access to them. They can read them on the screen. Often we have transcripts on the screen that juries follow along while they are hearing them because sometimes they are not even audible so they read them more than hear them to begin with. So juries are not -- it's not an unusual issue for a jury to read a document rather than to hear it. It is not -- I mean, in the sense that oftentimes it is simultaneous. Here we are saying it shouldn't be simultaneous, it should be exclusive for purposes of reading. THE COURT: All right. So here is what my ruling is at this point in time, and we can reassess this ruling if and how this plays out there is a need to reassess it and it becomes obvious that things should change. But what I am going to do is to have the government proceed in the manner that it would typically proceed and not do anything different. In other words, we are not going do it with the paralegals. The prosecutor can proceed with either a witness on the stand or the prosecutor with another prosecutor. I will then give a limiting instruction stating that these were originally written. They were in no sense -- there is no indication that they were orally communicated. The jury should understand that. The jury should read them. They are meant to be read. The jury should note the punctuation and emoticons. But there is an interest in the convenience of conveying the information to the jury in a manner in which we can all be clear in court of what's happening at the same time, and it would be novel to have a document where there is a particular piece of evidence pointed out where there is not some specific reference to the text of that through oral communications. Trials are about the typically sensory communication of evidence. Page 10 So we'll proceed that way. Let's eliminate the paralegal version of this and just have the government proceed as they would normally have proceeded in some other case, and I'll give the instruction as to how this material should be taken and reviewed. All right? Now, in terms of the next -- MR. TURNER: Your Honor. THE COURT: Yes. MR. TURNER: May I just inquire with one question? So if the government wishes to put in a -- read in a chat after a witness has left the stand, should the prosecutor just read it in in its entirety rather than having a two-way reading of it, just the prosecution -- THE COURT: What I am suggesting is don't introduce other people into the process who appear to be actors in a way, even if they are just paralegals. If you and Mr. Howard want to just read back and forth, you can read back and forth. But I don't want other people coming in for purposes of assuming a position on the stand or somewhere else where they are doing a reading as if it's a dialogue in a scene from something. All right? Page 11 MR. TURNER: Yes. THE COURT: So we'll do it the old-fashioned way, the way it is typically and normally done at trial and nothing specific. Now, I was supposed to get an updated exhibit list from the government. Do you folks have one, or is there not one? If there is not one, then that is fine. MR. TURNER: There is one, your Honor, and we can provide that as well as an updated disc of exhibits. THE COURT: All right. Is there an updated witness list, or is the witness list that is operative that which you have already shared? MR. TURNER: There is an updated witness list and we can provide that as well. THE COURT: And have you shared all of the names at this point? MR. TURNER: Yes. THE COURT: In the past you have always shared everything with the defendants. They have all the names and they have that information? MR. TURNER: Yes. Page 12 THE COURT: Terrific. Thank you. I have received an updated witness list. In terms of the jury selection, let me just tell you folks, give you a short reminder as to how it is going to proceed. The folks will come into the room, and Joe will randomly from his box spin the box. My method is to put the 12 in the panel in the box, and of the first group there will be four alternates. Also put into the first group we'll be working for the initial questions with all 16 but the peremptories will be against the 12 first and then separately against the four as the alternates. All right? So the peremptories are the first peremptories, 10 to the defense, 6 to the government in six rounds simultaneous, and then a separate two-round, one each, as to the alternates. That will be done separately and I will make it clear when that is happening. The jurors are going to be given a pen along with some biographical questions because we'll eventually -- whoever is seated in the box before the peremptories will have an opportunity -- and, indeed, not opportunity, we're going to ask them to stand up and give us 30 seconds about themselves. What kind of job they have, what their spouse or significant other might do, if they've got children, what they read, what they watch on TV, sort of 30 seconds. On the back of that piece of paper, which is blank, they will be instructed when they first come in to write down any questions to which they have a "yes" answer, and so if I put somebody from the audience into the box we will be asking them did you have any "yes" answers and picking up from there. Page 13 Again, it's use it or lose it. You can't accumulate your peremptory strikes. If you waive for a round, which happens frequently for various tactical reasons that you folks may have, it's use it or lose it. All right. Now, what is the order of witnesses for today, if we have? Who is your first witness? MR. TURNER: Homeland Security Investigations Agent -- Special Agent Jerrod DerYeghiayan. THE COURT: Now, glossary. Have you folks reached any kind of agreement on any kind of glossary or technical presentation of any kind? MR. TURNER: No, your Honor. THE COURT: All right. What I am going to do is assess evidence as it comes in and will then I think determine how much of the evidence appears, potentially, to be highly technical, and it may be that things are explained in such a way that it doesn't get there and/or that even highly technical concepts are explained in a way that are understandable. But if I believe that things are not understandable to the jury, that things are going too quickly and words are being thrown around that can't be understood by the average juror, we'll talk about what might be a reasonable way to proceed at that time. Page 14 Now, I have -- I think we have one other issue that we wanted to raise at this time that I think it makes sense to raise in the robing room, if the defendant will consent to waive his presence. If he won't, then we can do it at the sidebar. Your choice. MR. DRATEL: We can waive, your Honor, for the purposes that we discussed. THE DEFENDANT: That would be fine. THE COURT: Thank you. So let's go on into the robing room with the court reporter to discuss this one issue. *(Pages 15-28 sealed by order of the Court)* *(Continued on next page)* Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 *(In open court)* THE COURT: Let's all be seated. So we now have a group of people who have reported to a room, so we'll get sort of an attendance sheet, if you will, as to who of the 90 or so folks who are supposed to come, how many have come, and then they'll hive off a bunch of them and bring them down. Now, all of you folks who are in the seats, all of those seats will be taken. If you have any kind of disability that requires you to be seated, then indicate that to the CSO and he'll try to find a spot for you, but if you don't have a disability and could stand, we'll need you to stand. I'm not going to right now preclude people from the courtroom. It will be up to the CSO in terms of space constraints. The family of the defendant is entitled to stay and will not be excluded from the courtroom, but others, it's depending upon the amount of space that we've got. When the jury comes in, we'll need to make room for them so they can sit down. Thank you. We'll take a break until we hear from Joe about the jury coming in. *(Continued on next page)* Page 30 *(In open court)* *(A jury of 12 and 4 alternates was impanelled and sworn)* THE COURT: Ladies and gentlemen, we're going to now take a lunch break for an hour. And when we come back, I'm going to give you some very brief instructions and then we're going to go right into the opening statements and then after that, we'll start hearing from our first witnesses. In the meantime, I want to give you one instruction before you go back there and have some lunch. Joe has gotten lunch arranged and he'll give you some preliminary instructions. Because of the timing, we're going to ask you folks to stay here and on this floor and in that jury room for today at least. That's why we arranged to have lunch for you here today. The instruction I have is not to talk to each other now or at any point in time about this case or anybody else. So if you have got any kind of device where you would communicate with anybody, don't communicate with anybody about this case, don't talk to each other about this case or anybody else that you might run into in the restroom. It's very important that the only information that you have about this case is in this room so you can listen to the evidence as it comes in at this trial. All right. Right now you can take some lunch. Page 31 JUROR: They took our cell phones downstairs. Can we go downstairs and let people know that you're on the case? THE COURT: That you won't be back? That makes sense. Just don't go outside the building. Get the phone. Joe, why don't you notify the CSOs that that might occur. A CSO might be able to go down with you to facilitate, access the cell phones so the jurors don't have to leave the building. So they can speak downstairs and turn the cell phone back in. We'll see you folks at 2:30 when Joe will have you come back out into the room and you'll take your seat. All right. Thank you. *(Jury excused)* THE COURT: Let's all be seated. Joe will get things organized back there, but we did have lunch arranged already so they have got -- the jurors have an assortment of luncheon items back there. Is there anything you folks would like to raise with me before we take our own break? MR. SERRIN: We just wanted to let your Honor know in advance that we had one demonstrative in our opening. We have already cleared it with defense counsel. THE COURT: So as long as defense counsel has seen it and hasn't raised any objections, then that's fine. Thank you for the advance notice. Is there anything else? Page 32 MR. SERRIN: Not from the government. THE COURT: Mr. Dratel. MR. DRATEL: No. THE COURT: Thank you. We will come back into this room at 2:30. At that point, I will give the normal instructions on burden of proof, credibility, beyond the reasonable doubt, open mind. I'll tell the jury about how I have LiveNote here at my computer and the few basics. That will take about ten minutes, maybe not quite. And then we'll go directly into opening statements without a further break. Let's take our break. Thank you. *(Luncheon recess)* Page 33 A F T E R N O O N S E S S I O N 2:31 p.m. *(Jury not present)* THE COURT: Anything that anybody needs to raise with me? We are ready to bring out the jury. MR. TURNER: We are ready, your Honor. THE COURT: All right. Let's bring out the jury. THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated when you get to your spot. I want to give you some preliminary instructions, and then we are going to go right into the opening statements. As I previously told you earlier today, your function, ladies and gentlemen of the jury, is to decide the issues of fact in this case. You are the deciders of fact. You are to base your decision on the issues of fact solely on the evidence. Nothing that I say is evidence. Nothing that the lawyers say is evidence. A question is never evidence. It's the answer to the question that is evidence. Objections aren't evidence. Evidence will come in in the form of testimony from the witnesses who were sworn under oath and who are testifying at trial, or in the form of documents which are formally received into evidence. Now, there are two kinds of evidence. There is direct evidence and also circumstantial evidence, and I'll just spend a moment about this. Page 34 Direct evidence is something that you have or a witness has seen, felt, heard, touched, with one of their senses directly. They were there. They can tell you about X. They heard X. They saw X. Whatever -- you know, whatever they heard or saw directly, that's direct evidence. But circumstantial evidence is proof of facts from which you may infer or conclude that other facts exist. So, in other words, you've got several of the dots but you don't have every dot in the picture, but you could infer from the placement of several of these dots along the edges that certain other facts occur. So let me give you a typical example. Let's assume that the windows are closed and you come in this morning and it is sunny outside. Over the course of the day you see folks coming in and they're coming in and they've got raincoats on and they are dripping and there is an umbrella and it is dripping wet. Now, you can't see outside. You haven't seen the rain. But you can infer, based upon the fact that you've got people dripping wet with umbrellas, that it's raining outside. That is circumstantial evidence. It is not more complicated than that. It is taking certain facts and it's from those facts inferring other facts. Now, both kinds of evidence are evidence that you can use as you deem appropriate in considering whether or not certain facts have been proven at trial. Now, you're going to hear from witnesses. They're going to come to court. They're going to testify here in front of you. And you, ladies and gentlemen of the jury, are going to have to determine whether or not you believe them, how credible do you find a particular witness. And how do you decide that? You decide that based upon how you decide that every single day in your own life. Every single day in your own life you apply your common sense to whether or not you believe somebody. And you assess all kinds of things. What's is their demeanor? How are they presenting themselves? Are they being evasive? And we'll talk more about that at the end of the case. But it will be up to you to decide how much of a witness' testimony to believe -- some of it, all of it, none of it. That will be up to you in your assessment of their credibility. Page 35 Now, in terms of the burden of proof, as I said at the very beginning, the burden of proof in a criminal case is on the government. It is the government's responsibility to prove that the defendant is guilty beyond a reasonable doubt. It is the government's burden of proof. The defendant does not carry a burden of proof in a criminal trial. And as I mentioned before, the Indictment in this case is simply an accusation; it is not proof of anything. All right? The fact that the defendant has been indicted is not proof of anything. He has pled not guilty and that's why we're here at this trial. Page 36 Now, I will instruct you at the end of the evidence about what it means to say that something is beyond a reasonable doubt. But let me just say that the defendant and his lawyers need not present any evidence in this case if they choose not to do so, because the burden, as I said before, the burden is on the government. And you can't draw any negative inference against the defendant if he does not present evidence. Now, it's very important that you keep an open mind until the close of the evidence. Evidence is not like reading a story in chronological order. Evidence comes in in pieces. You get a little bit of it from one witness and it might be out of chronological order. You need another witness or other documents to fill in some of the other pieces. So it's very important that you keep an open mind. Because you'll hear one part of a story but you might not hear the other part of the story until later. So it is very important that you keep an open mind until all of the evidence is in. The way it proceeds is that, in terms of the evidence, the government will present its evidence first. It is going to give its opening statement. The defendant will give his opening statement, through counsel. Witnesses will be called. The government will do direct examination. Then there is an opportunity for the defense to cross-examine a witness, if they choose to do so. And after that there may be some limited redirect and recross. It depends on how it goes. But that is the way in which it proceeds. Page 37 Now, there may be instances where you've got friends or family who you see in the courtroom or people that you know in the courtroom. It is very important that if you have anybody in the courtroom who you know, that you let us know, and that you not speak to that person about the case. Because as you know, you come in and out of the room at times when we bring you in and out of the room, and there may be rulings on evidence and other discussions which you are not present for. And we don't want you inadvertently to be hearing things that the jury shouldn't be hearing through a friend and/or relative inadvertently. So if Joe knows about it, then we will know to be able to give a special instruction on that day. It's just a reminder of what I have said. Now, it is very important not to speak to anybody about this case, each other, anybody at all -- a spouse, anybody in your life. You've got to keep this to yourself until the close of all the evidence, and then when you are instructed on the law you will go into the jury room and you will deliberate and talk to each other. And until you reach a verdict, you still won't talk to anybody other than each other about this case. So you can't even talk to each other until all the evidence is in and you have been instructed on the law. Now, it's very important that you also not be exposed to what the media has to say about this case, what newspapers have to say about this case or Internet blogs or people outside who may approach you. Do not let anybody approach you, talk about this case at all. OK? If anybody approaches you about this case, do not speak with them about this case at all. Don't go home and do any Internet research. Don't try to become an expert in anything or follow up on your own personal research about a particular person, place or event. For purposes of this case, you just receive the evidence in this courtroom. That is the only evidence that you should receive in this case. Page 38 You don't want to -- and, actually, people have done this and it just leads to all kinds of difficulties. Don't update your Facebook page saying I'm on, you know, X case. This is what we heard today. You know, don't update your Facebook page. Don't Twitter or tweet or send emails to people about it or texts or anything else. And I will be reminding you about not talking to each other or anybody else about this case repeatedly. And you are going to be sick to death hearing me talk about it, but it is important that I keep doing it. Every once in a while I will change the way I do it so I can try to make it a little bit different. Now, I see some of you have the pads and pens for taking notes. Take notes if you want to take notes. Different people learn in different ways and you remember things in different ways. Sometimes it helps keep you attentive. It is up to you. Page 39 Your notes are for you and you alone. They are not for you to share with your neighbor. It is not to play Tic-Tak-Toe with your neighbor. Believe it or not, that's happened in the past. So your notes are for you and you alone. And you'll leave them here at the end of the day under your chair or if you've got a particular spot in the room, and others shouldn't be looking at your notes. They are for you and you alone. Now, the lawyers here -- everybody here in this room, and in fact everybody, if there is anybody else in the room who you ever run into, but particularly the lawyers, they're not going to say hello to you because I've told them they are not allowed to say hello to you. They are not being mean or rude or nasty. OK? It is just complicated. Because if somebody says hello and they say hello in a particular way, you're like are they trying to convey a message to me. I don't want any of that. It is just easier if I say don't say hello to any of the jurors. So they'll probably cast their eyes down or look to the side. Don't think they're being rude. I've just told them don't talk to the jurors. OK? And you shouldn't talk to them either. It's just easier. It makes things cleaner. That way there is never a question about whether anybody meant something from a particular hello. Page 40 Now, LiveNote. I use LiveNote. LiveNote is a particular program which allows me to get realtime feed of what I am saying right now and anything else that is said in the courtroom. So what the court reporter is writing down I have on my screen. I do not do email, I do not surf the web, you know, while I'm here on trial. If you see me looking at my screen, I'm not figuring out, you know, anything other than just what's going on, has my screen gone to sleep. If I'm tapping it, it is because I am trying to put my name back in to open it up again. That is why I look at my screen sometimes. I want you to know so that you don't think I am distracted. All right. Now, beverages in the courtroom. My practice in my particular courtroom is that you can have beverages at your seat. You can have water. You can have hot tea. Cold tea. I really couldn't care less what kind of beverages, nonalcoholic beverages. You can have coffee. My view is what is good for the goose is good for the gander. I am going to have coffee and I don't want to do that if you guys can't have coffee. Sometimes people find it difficult to be in their seats all afternoon without having a little something to eat because they feel like they just need a little something. I don't care. Just don't bring in Doritos where you are crunching. OK? If you just need to eat a little something, that is fine. Whatever makes you comfortable. It's not like you are going to sit there with popcorn. This is not that kind of a situation. But my point is I want you to be comfortable. All right? Page 41 And so if you spill, own up to it. It is not a problem. That way we can make sure it doesn't get into the carpet and stain it forever more because it is the government. I don't get new carpet more than once every couple of decades. All right? Now, we are going to go into opening statements. Opening statements are the opportunity for the lawyers to speak to you. They have very few opportunities to speak directly to you. They have an opportunity now to speak directly to you and to give you an overview as to what they think, what their view is as to what the evidence will show. Again, what the lawyers say is not evidence. And it will be up to you to decide whether or not the evidence at trial has in fact shown what anyone predicts that it might show. Then we're going to go from the opening statements of each side into the witnesses. And after all the evidence is done a couple of weeks from now, we will then have closing statements, or summations; it is the same thing. And that will be another opportunity for the defense counsel to then address you again about what they think the evidence has shown. All right. I think that we're ready to proceed. Page 42 Mr. Howard. 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. Page 43 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. Page 44 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. Page 45 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. Page 46 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. Page 47 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. Page 48 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. Page 49 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. Page 50 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. Page 51 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. Page 52 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. Page 53 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. Um 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. Page 54 Those photographs show exactly what the defendant was doing at the time that he was arrested. Them 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. Page 55 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, I'm hear still more evidence the defendant controlled Silk Road. I'm 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,s 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. Page 56 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. Page 57 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. Page 58 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 bit coin-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. Page 59 THE COURT: Thank you, Mr. Howard. Mr. Dratel. MR. DRATEL: Thank you, your Honor. Good afternoon. May it please THE COURT: My name is Joshua Dratel, and along with the other members of the defense team, who you've already met as well, we represent Ross Ulbricht. Ross is a 30-year-old with a lot at stake in this trial, as you can imagine. It is important, as jurors -- part of your oath -- I know you understand it -- to keep an open mind, not to draw conclusions. There is direct examination and then there is cross-examination. Cross-examination of government witnesses is where we get the opportunity to ask questions. And those questions and answers, I submit to you, will tell you the story about this case. Use your common sense. Use your life experience. Those are the most important things you have with you to determine the outcome of this case. The outcome, which I submit to you, after you hear all of the evidence, will be not guilty on all of the counts. Ross has pleaded not guilty. It is the government's burden, as the Court has told you, to prove each and every element of the charges beyond a reasonable doubt. Now, I won't try to define that for you now but at the end of the case the Judge will, and it is an important, fundamental principle that protects all of us. Page 60 This case, to a large extent, is about the Internet and the digital world where not everything is what it seems. You and I are having this experience right now and you are perceiving it and you know I am here and you know the Judge is here and you know the government is here and Mr. Ulbricht is here and everyone else. Behind the screen, however, on a computer, it is not always so easy to tell. You don't know what or who is on the other side. You don't know if they are telling you the truth. You don't know if they are who they present to be. You will hear evidence. You will hear how Ross is a young man with ideas, a lot of ideas, many of which he doesn't follow through with. And Silk Road was Ross' idea. He created it as a completely freewheeling, free market site that could sell anything except a couple of items that were harmful. It was kind of an experiment, an economic experiment that after a few months was too stressful for him and it got out of hand in terms of becoming popular and what it involved -- to be involved in a site like that. So he handed it off -- you will hear, he handed it off to others. Page 61 And at the end -- I will get to the middle as well, but at the end he was lured back by those operators to be in a position, that you heard about from the prosecutor in that library that day, to take the fall for the people operating the website. Because they had been alerted that they were under investigation. They had been alerted that the walls were closing in on them. They had been alerted that time was scarce for them to escape. And Ross was the perfect fall guy because, after all, Silk Road was his idea. He was also involved in Bitcoin. He was an investor in Bitcoin. He was a trader in Bitcoin. You will hear about that. So the connection of Bitcoin and Silk Road, again, made him the perfect fall guy. So other than that day of arrest we'll see what connects Ross to the operation of Silk Road, whether it's just a digital contrivance that left him holding the bag when the real operators of Silk Road knew that their time was up. Timelines are going to be very important in this case, what's happening on the Silk Road website, what's happening with the investigation, what's happening with Dread Pirate Roberts, who we will call "DPR." And you will hear about the DPR concept and where it comes from. It comes from a movie, earlier a book, from decades ago. Nothing particular to Ross. Page 62 They won't connect him to anything particular about Dread Pirate Roberts and that name. But look at the timeline, what's happening with Dread Pirate Roberts, what's happening with Silk Road, what's happening with Ross' life, what's happening with Bitcoin and the Bitcoin market. Now, the government's claim, as you'll hear from the evidence, that Ross was Dread Pirate Roberts is a contradiction that's so fundamental and dramatic that it defies all of your common sense and life experience. You heard the government talk about what a mastermind, the complicated computer operations, the scrupulous security to run the most profitable, diverse black market Internet marketplace in history. Yet -- and this is someone who studiously avoided revealing his identity to anyone associated with the site. That is employees -- the employees will come in, they don't know Ross Ulbricht from me. The vendors, the people who sold on the site, they don't know Ross Ulbricht from me. The purchasers of drugs on the site, they don't know Ross Ulbricht from me. The confidential informants the government had operating as buyers and sellers and administrators didn't know Ross Ulbricht from me. DPR was impenetrable on that website in his meticulous consideration of his operation with communications security. And yet they are going to tell you that the same person, this mastermind, this incredibly careful person goes to a public library, gets on a public Wi-Fi system -- open on his computer is also something called BitTorrent, which is a peer-to-peer file sharing program that allows anyone access to your computer who is on that same network. Some of this is technical, and regardless of your technical background, you really should use your common sense and your life experience. The technical stuff is the easy part. The common sense is the important part. Page 63 So he is in a public place, on a public Wi-Fi, with a program open that allows anyone on a huge network worldwide access to his computer. With journals going back years, with all sorts of other evidence the government is going to come in and claim is a thread from beginning to end, that Ross is the Dread Pirate Roberts? It is a contradiction that is so fundamental that it defies common sense, and you will hear all of that in the evidence. *(Continued on next page)* Page 64 MR. DRATEL: In his apartment, they found in the wastebasket handwritten notes, handwritten notes about the site. Can you imagine that that's the same person? Can you imagine that Dread Pirate Roberts would do that in a wastebasket? This is the criminal kingpin the government has described who managed and operated the most successful and profitable Internet black market website in history: Handwritten notes in his wastebasket. You'll also hear that even before that day in September when Ross is confronted by Homeland Security investigators about materials delivered to him, phoney IDs that were delivered to him from Silk Road, he talks to them, he talks to them about Silk Road, and then what happens in the two months between then and his arrest? Does he run? No. Does he go underground? No, still living in San Francisco. Under his own name. Does he move any money? Any Bitcoin? No. Does he destroy all the stuff on his laptop that's supposedly so incriminating, that's supposedly on his laptop? No. Did Dread Pirate Roberts do all that? You'll hear about the evidence, you'll hear the evidence what happened. There's no evidence you'll hear that he traveled with the money, that he did anything to suggest that he was a criminal mastermind keeping one step ahead of the law even after the Homeland Security visit to him in his apartment in San Francisco. Page 65 Contrast that with what you'll hear about the real DPR. You'll see from the chats that the real DPR was extraordinarily sensitive to security, extraordinarily sensitive to law enforcement intrusion on Silk Road, law enforcement infiltration of Silk Road, law enforcement attempts to identify. You'll hear from the evidence that the real DPR was paying for information about law enforcement investigations. And you'll hear that he kept a file full of information provided to him and how by September 13, he was warned that law enforcement was in possession of his real name, and that name is not Ross Ulbricht. That is what compelled, you'll hear from the evidence, compelled the real DPR to put his escape plan into action and transfer the blame to Ross. You'll see how Ross, naïve, ultimately became the victim of DPR and that's why he is sitting before you now as a defendant in this case, and conveniently supplied with access and all the information to his laptop, so when FBI arrived that day, he would be left holding the bag. Also, look at Ross' lifestyle. They didn't say he didn't live lavishly, but really, when you talk about the profits of this, you'll see that money in Bitcoin is a fraction, a small fraction of what his -- the profits were from the Silk Road website. Where is the rest of the money? They haven't connected any of it to Ross. There is no connection to Ross to the rest of that money. DPR has it, the real DPR. Page 66 And the whole thing about lavish lifestyles and living under the radar, people don't operate drug empires to live a simple life enjoying the creature comforts. They do it for the money. They do it for the lifestyle. They do it for the greed. You have life experience and you have common sense. Apply it to the evidence as you hear it. The government's premise all along is that Silk Road was the product of a master computer programmer. Doesn't fit Ross' profile. They can talk all they want about self-taught and asking questions of a friend. We'll hear about that as we get into the evidence. And where is that money? The real DPR is out there. Silk Road II was online within six to eight weeks of Ross' arrest. The government also talked about violence and attempts at violence, but that's not charged here. Don't be distracted. It's not charged here. There's no evidence ever the people involved ever existed, you'll hear that and the government will read that in a stipulation, no evidence anyone was ever harmed or as, like I said, or even existed who were supposedly the targets. The Internet is an unusual place. People can create and fabricate profiles of themselves and others in ways that we may not have been able to imagine 20 years ago, maybe 25 years ago now. It's like a dating site, you get all sorts of information and when you meet them in person, they may not quite match what was on that profile. None of it may match. Page 67 When witnesses take the stand, you'll be able to judge them. You'll be able to evaluate their testimony, whether they're lying, whether they're telling the truth, whether it's a combination of both. On the Internet, how do you judge that, who you're communicating with? Some of the concepts the government talked about you'll find out a little more, the Tor, the onion router, the part of the Internet that Silk Road existed on, this deep, dark place that was developed by the United States government for legitimate means that is used legitimately in many aspects. There's nothing deep and dark about it. Bitcoin, another aspect, it's traded openly. Its value over time will be an important aspect in this case because you will hear how that $18 million was made. That Bitcoin was worth almost nothing in 2010 when an investor in Bitcoin could buy them for pennies and that it's worth hundreds and hundreds of dollars, four to $600 by the end of 2013. Think about what kind of profit you can make just trading Bitcoin. By the way, you know it's only anonymous in terms of the transaction between people in terms of Bitcoin, it's traceable. The transactions themselves are all traceable in what's called a block chain for Bitcoin. Bitcoin is not designed to be a fraud. Bitcoin is not designed to be a means of criminal activity. Bitcoin was designed to be an antifraud currency measure, digital, unduplicatable in that regard, so antifraud, and you'll hear all about that. Page 68 In regard to the witnesses, and again, by the way, just about the money, no one traced any of it back to Ross except what's on that laptop. Where is the rest of it? Let's hear the evidence or the lack of evidence. What about the witnesses? The only one who even knew Ross and this was a friend back in the beginning and others, the drug dealer they talked about is another witness as well who have made deals with the government in exchange for their testimony to avoid the serious consequences of their own conduct. They made a choice, and you'll hear about it, to provide testimony to the government in exchange for significant, significant benefits, so that they can be in that seat instead of that seat. So please, as the evidence comes in at the conclusion of the case I'll speak to you again obviously to sum up, but the case is simpler than it appears in the context of the technology. You have to apply your common sense. That's your best attribute and your life experience. Ross is not a drug dealer. Ross is not a kingpin. Ross was not involved in any conspiracy to do anything like that. He was not involved in any conspiracy to sell hacking software or phoney IDs or anything that's charged in the indictment. Page 69 And at the end of the case, after you hear all of the evidence and the closing arguments and deliberate, I submit to you there's only one verdict that the evidence will permit and that your common sense will permit, that Ross is not guilty on all of the counts against him. Thank you. THE COURT: Thank you, Mr. Dratel. Ladies and gentlemen, we'll take a brief break and then we'll come back and have our first witness. This will be our only break until we end. We're going to end right on the dot of 5:00. So we're not going to keep you today or any day past 5:00. Let's take a short break and then we'll come back and we'll go until about ten of 5:00, all right, and then we'll have our first witness. Thank you. I want to remind you not to talk to each other or anybody else about this case, about any impressions you have about this case, anything at all to do with this case, don't talk about it. Thanks. *(Jury excused)* *(Continued on next page)* Page 70 *(In open court)* THE COURT: Is there anything we need to raise before we take our own break? MR. SERRIN: Would you like the witness to take the stand? THE COURT: I'm indifferent to that. Does anybody have a preference to how that choreography goes? MR. DRATEL: I don't. THE COURT: Put the witness on the stand and that will save the minute or two it takes to otherwise get the witness. Let's take a five-minute break, seven-minute break and then we'll come on back and pick up with the witness. Thank you. THE DEPUTY CLERK: All rise. *(Recess)* *(Continued on next page)* Page 71 *(In open court)* *(Jury present)* THE COURT: Call your first witness please, sir. You have already put him on the stand. MR. SERRIN: The government calls HSI Homeland Security Investigator, Jared Der-Yeghiayan. *(Witness sworn)* THE COURT: Please be seated and it will important that you speak clearly and slowly into the microphone and I see you have water there already. Thank you. Mr. Turner, you may proceed. MR. SERRIN: Thank you. THE COURT: You may want to back up the podium a little bit more so that you're not in front of the jury like that. MR. SERRIN: Thank you, your Honor. THE COURT: There you go. Terrific. Sorry, we hadn't arranged that beforehand. Thank you very much. Perfect. JARED DER-YEGHIAYAN, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. SERRIN Q. Agent Der-Yeghiayan, who is your employer? A. I work for Homeland Security Investigations, Immigration Customs Enforcement. Page 72 Q. What is Homeland Security Investigations? A. It's the investigative branch of Homeland Security. Q. How is Homeland Security Investigations commonly referred to? A. It's referred to as HSI. Q. So what's your title at HSI? A. I'm a special agent. Q. How long have you been a special agent with HSI? A. Since 2010. Q. And where are you currently assigned? A. I'm assigned right now to Chicago O'Hare International Airport. Q. Chicago O'Hare International Airport? A. Yes. Q. What are your duties there? A. My duties include current investigations that are related to immigration customs crimes such as human smuggling, narcotics smuggling, IPR, which is different rights violations for trade mostly. Q. So how long have you been assigned to work at O'Hare International Airport in Chicago? A. I've been assigned at O'Hare, well, since 2010, I started with HSI. Q. And you said -- you've been an HSI special agent since 2010? Page 73 A. Yes. Q. And how about before that, any prior law enforcement experience? A. Yes, I was also a CBP officer, Customs and Border Protection Officer at Chicago O'Hare. Q. When did you do that? A. I started around 2003. I was hired on by Immigration Naturalization Service IMS inspector, which turned into Customs Border Protection. Q. How about after that? A. After O'Hare, I was also assigned as a counterterrorism response worker in 2005. Q. And after that? A. And then also I was assigned as a narcotic rover at Chicago O'Hare. Q. Explain what a narcotic rover means. A. There's officers that are designated at the airport to try to find narcotics that are being smuggled through. Q. So how long have you been at O'Hare International Airport as a law enforcement officer in some capacity? A. Since 2003. Q. Are you familiar with the website known as the Silk Road? A. Yes, I am. Q. And did there come a time when you opened up an investigation of the website? Page 74 A. Yes, I did. Q. When was that? A. It was October 2011. Q. And how did your work at the airport at Chicago O'Hare lead you to open an investigation of the Silk Road website? A. We also cover, as part of O'Hare, there's a mail unit that's assigned to the grounds that's an international mail unit, so we were getting in and receiving lots of drugs that were coming in through the mail through letter class mail, unusual drugs. Q. So O'Hare is an international airport, right? A. Yes. Q. So in addition to receiving passengers from foreign countries, does any international mail come through O'Hare International Airport? A. Yes, it does. Q. Where does that mail come from? A. It comes from various countries from international carriers. Q. What do you mean international carriers? A. It's -- so it would be the -- an airline that's operated by a foreign government bringing in the mail. Q. So, an airline from, let's say, the Netherlands what would that be? Page 75 A. From the Netherlands, that would be KLM airlines. Q. And they bring in the Netherlands' mail? A. Yes, they do. Q. After a plane lands at O'Hare International Airport, after an international flight lands, what happens to the mail? A. The mail that is on the plane is then taken off the airfield and taken over to the inspection area, which is in the mail unit. Q. And who inspects it? A. The Customs Border Protection officers. Q. What do they inspect it for? A. They search for various things, again, a lot of trade violations, anything that violates pretty much U.S. law that's being imported. Q. How do they inspect it generally? A. Usually with x-rays and with a canine detection dogs. Q. Any warrant required to do that? A. No, there's no warrant required. Q. Why not? A. There's a border search authority -- MR. DRATEL: Objection, your Honor. THE COURT: Overruled. A. There's a border authority that officers have that they don't need a warrant to search incoming mail coming in. Q. So what happens if contraband is found in incoming international mail? Page 76 A. If contraband is discovered, the officers will seize it and it will be documented. Q. And what involvement, if at all, do you yourself have in searching incoming international mail at O'Hare? A. As assigned as a special agent to O'Hare, I will -- if there's a narcotic seizure, generally we're notified by Customs Border Protection to investigate the seizure. Q. So tell us about the mail seizures that eventually led you to open an investigation of the Silk Road website. A. There was -- while I was assigned or I would take -- make routine trips to the mail unit to pick up various things that either the officers would seize and also to look at the various things that were suspicious that might lead to investigation, and while I was there one day, an officer brought to my attention -- Q. What time frame is this? A. This is approximately June 2011. An officer brought to my attention several -- MR. DRATEL: Objection, your Honor. THE COURT: Hold on one second. Overruled. Q. Without telling me anything the officer said, what did you see when you went to the mailroom? A. I saw there was packages, there was mail envelopes from the Netherlands containing ecstasy pills in them. Page 77 Q. How many ecstasy pills? A. Each envelope, there were multiple envelopes, and they contained one or two pills per envelope. Q. And how were they packaged? A. They were packaged in -- it was almost like a commercial-like envelope that also had -- they tried to conceal the drugs inside by wrapping it up in vacuum seal and foil. Q. What was unusual, if anything, about this drug seizure? A. It was unusual for me because I hadn't -- we haven't seen ecstasy being seized in the mail or in letter class like that in a lot of years, ever since I started pretty much at O'Hare. Q. And what was unusual, if anything, about the packaging the drugs were contained in? A. It seemed like they went to unusual steps to try to mask it, to hide it from detection, and it looks like they also -- it was commercialized in the sense that it had sticker labels on it that were printed and there was also similarities in it, too, so the multiple envelopes shared the same characteristics, outer characteristics. Q. So before this, when you had seen drugs seized at the international mail at O'Hare -- MR. DRATEL: Objection; leading a little too much. THE COURT: Why don't you rephrase. Q. Before this, what sort of packaging had you seen drugs come in at O'Hare International Airport? Page 78 A. Generally with letter-class mail, you'd see it in the way that it would -- it would usually just be, like, a single occurrence. It would be in an envelope that would be almost personalized in the sense most of the time. The commercial stuff does come in every once in a while larger shipments, but the smaller stuff with just one or two pills in a commercial type of appearance was unusual because normally you would have handwriting outside the envelope versus printed sticker labels, and it wouldn't be multiple envelopes all addressed to different people across the entire United States. Q. Was this seizure of ecstasy in June 2011 an isolated incident or were -- did more seizures follow? A. There were more seizures to follow. Q. How do you know that? A. Because I asked -- I kept on monitoring the seizures that were at the airport and at the mail unit that were coming in. Q. And these seizures that you noticed coming in, was this from one country in particular or were there different countries whose mail you were monitoring? A. In the beginning of the investigation, it was just primarily the Netherlands. After that, it did turn into other countries that we found the same stuff in other countries' mail as well. Q. So what did you notice about the number of seizures being made from the mails? Did they stay the same over time or increase or decrease? Page 79 A. The numbers were increasing consistently. Pretty much every month, they would go up in volume. Q. And what did you notice about the types of drugs being seized from the mail? Was it just ecstasy or did that change as well? A. In the same type of envelopes that we were seizing that appeared commercialized, we started seeing more than just ecstasy. We saw the drug that's commonly used in ecstasy, which is MDMA. We found it in powder and crystal form. We also found LSD. We found cocaine. We found heroin, as well as several other Schedule I and II narcotics. Q. Just could you clarify what do you mean by Schedule I and Schedule II. A. It's a classification for drugs as far as medical use goes that's designated by the government: Schedule I being no medical use and Schedule II having very limited medical use. Q. So, do you see the binder of exhibits that's in front of you? A. I do. Q. Can you turn to what's been marked as government Exhibit 100A in that exhibit book. A. Okay. Q. Do you recognize this -- is it one page or a set of pages? A. A set of pages. Page 80 Q. Do you recognize these pages? A. Yes, I do. Q. What are they? How do you recognize them? A. These are photographs that I took. Q. What are they photographs of? A. It's photographs of a seizure that we made of drugs at the mail unit. MR. SERRIN: The government offers Government Exhibit 100A into evidence. MR. DRATEL: Just note our objection. THE COURT: Government Exhibit 100A is received. *(Government's Exhibit 100A received in evidence)* MR. SERRIN: Would you publish government Exhibit 100A. Q. Could you walk us through these pages and tell us what they show, first, what are we seeing on the screen here? A. The first image is -- this is the -- it's the piece of paper that was discovered inside the envelope that's behind it, which was a seizure that was paid from the Netherlands. MR. DRATEL: Your Honor, this monitor is not working. It says no signal. There's something that might have been disconnected. THE COURT: Maybe from the noise we were having earlier. *(Pause)* Page 81 Q. I'll get back to that in a minute. When was this photo taken? A. This photo was taken December 4, 2011. Q. By the way, is that marked anywhere on the exhibit itself? A. Yes, it is. It's marked on one of the pages in the image properties. Q. So the jury can see that, go to page six please, zoom in. Can you go back to page one. So this envelope, first of all, tell me about the return address. A. The return address label in the left-hand corner says studyabroad.com. It was presented like a business. Q. Did you look up that website? A. I did. Q. And what did you find there? A. It didn't have the logo. It wasn't a website for what was advertised with the same address from the knowns. Q. What did you find inside the package? A. Inside was -- it was ecstasy pills. Q. And what kind of paper was it wrapped in? A. So there was a piece of paper inside and inside that piece of paper was a silver foil, the silver foil was all vacuum-sealed and there was a number 3 written on the outside of it. And then once you cut into the silver foil, there were multiple Ziploc baggies that were wrapped around a cotton-like material. Page 82 Q. Could you go to the next page. A. Next page, please. And then when cutting into the cotton-like material you can -- there's three pills, white pills inside of it. Next page. And then these are the pills that were discovered inside the packaging that had a speaker logo on it. Q. And did you do any test on the pills to determine what substance they contained? A. I field-tested it; yes. Q. What do you mean by field-test? A. There's a field test, a chemical test that we can perform on suspected drugs; and it would react in a way that it would let you know generally the consistencies of a certain drug. Q. And the paper here, what did it say that you found inside? A. The paper itself was labeled the Candy Shop and it said don't forget the feedback. Q. Could you take a look at what's been marked as Government Exhibit 100C, please. Do you recognize -- do you recognize these documents? A. Yes, I do. Q. How do you recognize them? A. It's a photograph I took. Q. What is it a photograph of? A. I'm sorry? Page 83 Q. What is it a photograph of? A. It's a photograph, while at the mail unit, of packages that we were -- that I recovered out of the Netherlands mail. MR. SERRIN: The government offers Government Exhibit 100C. MR. DRATEL: The same objection, your Honor. THE COURT: Why don't you establish the time frame. Q. When was the photo taken? A. The photo was taken on December 8, 2011. THE COURT: Government Exhibit 100C is received. *(Government's Exhibit 100C received in evidence)* Q. Can you publish the exhibit. What are these envelopes? A. These are envelopes that I recovered from the Netherlands' mail that we had either already found drugs in similar-style envelopes in the past, recognized them and also other ones that were suspicious. Q. Did you actually examine the contents of all of these envelopes? A. I did. Q. What were they found to contain? A. They were found to contain various drugs such as ecstasy, LSD and amphetamines. Q. And over how many days were these envelopes seized? A. This was just one day. Page 84 Q. So how typical was it by the time you took this picture that you'd be seizing this many packages in a given day? A. This is pretty standard early on when we started the investigation that we'd start out by seizing quantities such as this. Q. So what did you do with all these letters that you were seizing from the incoming mail at O'Hare? A. The letters themselves, the drugs would be seized and also the envelopes would be seized and we were holding and maintaining them as evidence. Q. Who maintained the envelopes? A. HSI did. Q. And were you involved in preserving them? A. Yes. Q. Where is that evidence now? A. That evidence is stored in a vault, an HSI vault in Chicago. Q. Can you take a look at Government Exhibit 104. Do you recognize this document? A. Yes. Q. How do you recognize it? A. I took this photograph. Q. When was it taken? A. It was taken approximately two months ago. Q. And what is this a picture of? Page 85 A. It's a photograph of all the envelopes that we seized during the course of this investigation. MR. SERRIN: Your Honor, the government offers Government Exhibit 104 into evidence. MR. DRATEL: Same objection, your Honor. THE COURT: When you say all of the envelopes that were received, what I see is something more akin to boxes. Is it your testimony that these boxes were full of envelopes? THE WITNESS: Yes. THE COURT: Were they full -- were there two or three envelopes in the boxes or was it just an envelope in the box that was actually packed full? THE WITNESS: Each box, your Honor, was filled with numerous envelopes. And on the outer side of them, it's very hard to see on the image, but there's the number of the individual seizures on the outside. So each box can contain approximately about 100 envelopes or more. THE COURT: How do you know each of these boxes contained envelopes in the manner you've suggested? THE WITNESS: I put them in the boxes. THE COURT: Government Exhibit 104 is received. *(Government's Exhibit 104 received in evidence)* Q. Can you publish the exhibit, Mr. Evert. So how many letters approximately are in all these boxes? Page 86 A. Approximately 3600. Q. And during what time period were these seizures made? A. This was from October 2011 through April 2013. Q. And how did this volume of drug seizures compare to the volume of drug seizures in the O'Hare mail in years past? A. Once these seizures started, our numbers were higher than any previous year. Q. How much higher are you talking about? A. Thousands higher. MR. DRATEL: Objection with respect to personal knowledge. THE COURT: In connection with your duties and responsibilities, why don't you connect up what information he had in the past and therefore what the comparison is based on? MR. SERRIN: Sure. Q. You mentioned before that you were a narcotics rover in Chicago O'Hare Airport for some time? A. Yes, I was. Q. And after that, what did you do? A. I also was an intel officer for a few months and then my time at CBP. Q. And that covered what time period? A. That was from 2008 through 2010. Q. And the narcotics rover duties covered what time period? A. That started 2008. Page 87 Q. Go ahead. A. And went through early 2009. Q. And throughout that time period, did you -- what involvement did you have in monitoring the narcotics seizures being made at O'Hare? A. Part of my duties were also to research, analyze and examine seizures that were happening at O'Hare. That included anything that was being seized in the entire airport, if it's ecstasy or if it's any other serious drug. Q. So from that experience, do you know how this volume of seizures that you were making at the O'Hare International mail during this time represented in the boxes compared to years past? A. Yes, I do. Q. And so how did it compare? A. These were -- it was a complete higher increase of seizures. We didn't have hardly any seizures of ecstasy in years past and this was something that was -- we never seen before. Q. At some point while you were making these seizures, did you learn about the Silk Road website? A. Yes, I did. Q. Without telling me what you heard about it, approximately when did you hear about -- did you first hear about the Silk Road website? Page 88 A. It was approximately late September, early October, 2011. Q. Did you see that website? A. Yes, I did. Q. Generally, what did you find there? A. I found it was a market that was similar to an online market that was similar to, like, Amazon, for instance, that had items for sale that were mostly illegal in nature that I could see, drugs and various other things. Q. And was there any way to see visually what the drugs looked like that were being sold on the Silk Road? A. Yes, there was. Q. How? A. There were images that were on the website posted near all the listings. Q. I'm going to ask you a lot more questions about Silk Road later, but for now, I'm going to ask what links were you able to make, if any, between Silk Road and the drugs you were seizing at O'Hare? A. We were, during the course of the investigation, we were able to link many of the seizures that we were making there to various vendors on Silk Road throughout a variety of means if it was just comparative of the actual drug we saw, that we seized and matching up the actual drug to what was being seen online and from the same countries, for instance. So, with the Netherlands mail that we primarily started seizing with, it had particular ecstasy pills that -- with certain logos on it and certain colors for the pill and those exact same pills were being advertised from sellers on Silk Road that were from the Netherlands. Page 89 And so using that, and then also conducting undercover purchases to try to match up the envelopes that we were seizing at -- through the mail unit, we were able to draw conclusions that it came from Silk Road. Q. So can you take a look at Government Exhibit 102D, please. A. 102D, Delta? Q. "D" as in Delta. A. Okay. Q. Do you recognize the pages in this exhibit? A. Yes, I do. Q. What do they consist of? A. It consists of a photograph that I took as well as images that I captured, as well as screen shot I took. Q. When you say images that you captured, what do you mean by that? A. I retrieved an image, saved an image from a website. Q. Which website? A. Silk Road. MR. SERRIN: The government offers Government Exhibit 102D into evidence. Page 90 MR. DRATEL: Previously -- can we have a line objection. If I have something different -- THE COURT: Yes, yes. Thank you. Government Exhibit 102D is received. *(Government's Exhibit 102D received in evidence)* Q. Can you publish page one of the exhibit, Mr. Evert. Is this the same thing you saw before? A. Yes, it is. Q. What's on -- these are the three ecstasy pills, right? A. Correct. Q. And they have the Candy Shop logo inside? A. Yes. Q. So can you go to page two of the exhibit. And what does this page reflect? A. This was an image that I retrieved from the Silk Road website. Q. Where did you retrieve it from? A. From a vendor that went by the name of Candy Shop. Q. When you say vendor, what do you mean? A. On the website itself, it was -- anyone can become a user, anyone can register as a user, and they also could choose to register as a vendor, as well, or become a vendor and sell anything that they wanted. Q. Okay. So could we cut to page three, please. What's reflected in this page? Page 91 A. This was a screen shot that I took of Silk Road. Q. And Mr. Evert, can you zoom into that part. What is reflected here? A. This is the listing from Candy Shop of ten Redbulls, ecstasy pills. Q. Okay. So it says seller, Candy Shop there; is that right? A. Yes. Q. And then ships from Netherlands? Is that how you matched it up to a Netherlands seller? A. Yes. I was able to sort the actual website from -- by vendors that shipped from particular country, so I was able to also search Netherlands vendors that way. Q. By the way, the 98, do you know what that means? A. I do. Q. What does it mean? A. It's a feedback rating score for the vendor. Q. And what do you mean by that? A. So the website also had feedback that was on there, so as you would leave -- as you would purchase something from a vendor, you could leave feedback on your order and rate it. And the score 100 would be the highest down to basically one or zero. Q. Let's go on to Government Exhibit 102B, "B" as in boy. A. 102B? Q. Do you recognize this page? Page 92 A. Yes, I do. Q. And how do you recognize it? A. This was a photograph that I took. Q. When did you take it? A. I took it on December 30th, 2011. Q. And what is it of? A. It's me holding up -- I was at the mail unit and I was holding up an envelope that was seized from the Netherlands and I'm holding it up and it also shows the drugs as well as being logged into Silk Road beside it on my computer. MR. SERRIN: The government offers Exhibit 102B into evidence. THE COURT: I'm sorry. I'm not really sure what I'm looking at. What were you -- THE WITNESS: I'm holding an envelope on the left-hand side and then there's drugs also below it; and then on the right-hand side is my computer and me logged into Silk Road. THE COURT: And you took that photograph all at the same time? THE WITNESS: Yes. THE COURT: Government Exhibit 102B is received. *(Government's Exhibit 102B received in evidence)* MR. SERRIN: Thank you, your Honor. Can we publish this exhibit? Q. What's on the left-hand side? Page 93 A. Left-hand side is an envelope that's seized at the mail unit out of the Netherlands mail. Q. And where are the drugs you say you seized from the envelope? A. Below it's hard to see. It's the five dots, small, black holes in the bottom that are five in a row. Q. Did you test those drugs? A. Yes, I did. Q. What did they test positive for? A. For LSD. Q. And what's on the right-hand side of the screen? A. That was -- I logged into Silk Road and found the drugs, the same drugs that we had -- that we had seized on Silk Road. Q. Where did they ship from? A. They shipped from the Netherlands. Q. Let's take a look at one more, Government Exhibit 102C, "C" as in Charlie. Do you recognize these pages? A. Yes, I do. Q. How do you recognize them? A. It was a photograph I took, as well as images I recovered from Silk Road. Q. And how do they relate to one another? A. Could you repeat. I'm sorry. Q. How do the pages relate to one another? Page 94 A. The seizures that we made at the mail unit were all from the same Silk Road vendor that we also recovered images from the Silk Road from that vendor. MR. SERRIN: The government offers Government Exhibit 102C into evidence. THE COURT: Government Exhibit 102C is received. *(Government's Exhibit 102C received in evidence)* MR. SERRIN: Publish the exhibit, please. Q. Could you explain to the jury what the envelopes in the screen reflect? A. The envelopes, each one is an individual seizure we made. And outside of the envelopes from the drugs that were recovered, we placed the drugs on top of the envelopes. The one closest to the bottom is an amphetamine that we seized, as well as ecstasy pills, MDMA, crystal. Q. Walk up from the bottom. A. Starting from the bottom, we had amphetamines as well as above it five blue ecstasy pills and above that, it was crystal MDMA powder, and as well as above that, cocaine. Q. And one of the envelopes says Dr. Amsterdam written there. Who wrote that? A. I did. Q. Why did you write that there? A. I had previously linked these envelopes to that vendor on the Silk Road username. Page 95 Q. How did you do that while we go to the next page? A. Those are the seizures that we were seizing matching up these drugs to the images that were found by that one particular vendor. Q. And just to be clear, these images, is this how you found them on Silk Road, all bunched together like this? A. No. Q. How did you find the images on Silk Road? A. Each individual image was attached to the listing for that particular product. Q. And you made a collage out of them here essentially? A. Yes. Q. So, can you put the two side by side, Mr. Evert, the first page and the second page. While he's doing that, can you just explain how you matched them up? A. So for instance, the amphetamines had the same appearance and they also tested positive for amphetamine, which was being advertised by this vendor. There was the same pills that were being offered by that vendor that we were seizing, as well as the MDMA and the cocaine. It was an unusual combination of various drugs and the particular pill, which not all the same vendors on Silk Road sold the same pills. They had all different types of pills that they would sell as well. So this was -- this was a particular envelope style that was all the same that contained the same drugs that was being offered by this vendor that was on the Silk Road. Page 96 Q. When you say unique combination, what do you mean? A. For instance, one vendor might just sell ecstasy or might just sell LSD, just one drug or one type of drug. This particular vendor offered multiple different drugs and we were able to seize those same drugs and the same pills from a particular style of envelope, the same style envelope. Q. Let's discuss in more detail what you learned about how Silk Road worked. How did you familiarize yourself with the various features of the site? A. I navigated it myself. Q. Did you establish any undercover accounts on the site? A. Yes, I did. Q. Approximately how many over time? A. Probably four or five. Q. And were you able to access any other user accounts that you didn't yourself establish? A. Yes, I did. Q. And how did you do that during your investigation? A. Various accounts would -- through the course of the investigation would either be turned over to us by people that we interviewed or talked to, some people we arrested, as well as not just regular accounts but also accounts that belonged to vendors as well as acquired administrator account. Page 97 Q. What do you mean by administrator account? A. It was one of the staff member accounts for Silk Road. Q. So did Silk Road have a support staff? A. Yes. Q. And what was the name of your support staff account that you eventually took over? A. The name was Cirrus. Q. When did you take that account over? A. It was July 2013. Q. How did you -- how long did you operate that account? A. Operated it from July 2013 until we shut down Silk Road. Q. When was Silk Road shut down? A. October 2, 2013. Q. Do you know when the defendant was arrested? A. He was arrested October 1, 2013. Q. So you were a staff member at the time of the defendant's arrest? A. Yes, I was. Q. I'm going to come back to your Cirrus account later, but let me ask, how often during your entire investigation did you visit the Silk Road website through the various undercover accounts that you controlled? A. Early on, it was once every few days, but then eventually it became everyday. Q. Approximately how many hours would you say you spent on the site in total? Page 98 A. Thousands I would say over the course of a few years. Q. Did you do any undercover buys on the site? A. Yes, I did. Q. Approximately how many? A. Approximately 50 or more. Q. So how would you even get to the Silk Road website? Just go to silkroad.com? A. No. You have to use it -- use a special program referred to as the Onion router, short for Tor, to access the actual website. Q. What was the web address of Silk Road, do you remember? A. It was silkroad Victor Bravo -- I'm doing it -- sorry. Q. Just stick with the letters. A. Sorry. Sounds all the same. Silkroadvb5piz3r.onion. Q. What is a dot onion? A. Yes. Q. What kind of web address is that? A. The dot onion would be a website that resides within Tor. Q. So generally, what is the Tor network? What's it do? A. Tor, the Tor network, it's a network on the Internet that anonymizes your traffic, anonymizes who you are and allows you also to visit these websites within Tor which are also known as hidden services. *(Continued on next page)* Page 99 Q. Is there anything illegal in and of itself about the Tor network? A. Using Tor itself is not illegal, no. Q. So is there any way to access Silk Road through the ordinary Internet? A. No, there is not. Q. You had to access it through Tor? A. Yes. Q. Did you access the Tor network as part of your investigation? A. Yes, I did. Q. Every time you visited Silk Road? A. Yes, I did. Q. Was it hard to get on the Tor network? A. No, it wasn't difficult. Q. What did you have to do? A. Visit the website, which is at torproject.org, and you can download its program, which included -- it is a Tor program bundled, which included a browser that -- Internet browser that you could use then to access this network. Q. And when you used this Tor browser, how was it different from browsing the Internet with an ordinary browser from your perspective? A. It was -- it is similar in features as a normal Internet browser, but it will allow you basically to remain anonymous while you are using the Internet and visiting other websites. Page 100 Q. When you say that, what do you mean "remain anonymous?" What information would it conceal? A. The browser itself protects your IP address, your Internet protocol address that you have when you are using the Internet. Q. What is an Internet protocol address? A. It is a unique number that is generally assigned to you when you are using a computer on the Internet. Q. Do you know how to find your IP address on your computer? A. Yes, I do. Q. What does it look like? A. It is a series of numbers. Q. So give me an example. A. Something like 50.19.236.250. Q. And what is an Internet protocol address used for? A. It's used to basically communicate when you are on the Internet from if you want to visit a website, it needs to know the connection. So your IP address is basically what identifies you on the Internet as well as any other computers that you visit or any other website you visit has to be an IP address as well. So it helps to navigate the Internet. Q. In preparation for testifying today, did you prepare a demonstration of a login of a Tor network? A. Yes, I did. Q. What kind of demonstration did you prepare? Page 101 A. It's a video that I made using my computer, using software to record what is going on within the computer. Q. When we're planing the video, can you explain the concepts we are discussing? A. Yes, I would. Q. Would you turn to Government Exhibit 107. Do you see anything there? A. Yes. Q. What do you see? A. It's a disc, the government exhibit -- I'm sorry, the government evidence disc that is labeled for the video I played. I know that because I initialed it. MR. TURNER: Your Honor, the government would request that we be able to play the video for the jury. MR. DRATEL: Just our prior objection, your Honor. THE COURT: All right. Government Exhibit 107 is received and you can publish it by playing it. *(Government's Exhibit 107 received in evidence)* MR. TURNER: May I approach, your Honor? THE COURT: Yes, you may. MR. TURNER: Mr. Evert, just let me know when you are ready. MR. EVERT: I am ready. Q. OK. So Agent Der-Yeghiayan, once we put this up on the screen, could you just direct Mr. Evert when to play and when to stop so you can talk through the video and explain what is being shown? Page 102 A. Sure. So this is -- so I'm doing right now -- do you want to pause it real fast, actually? Sorry. Go back. On the right-hand side I, just for easy, put two websites up on there. The top one is a website that you can commonly find your IP address on the Internet, and it will also show your location on a map based off that IP address. And you can simply do that by plugging it into an Internet browser and it will run and tell you what your IP address is. And then the second address that's on there is one that is a hidden service that I was describing on Silk Road. Q. I'm sorry, a hidden service? A. A hidden service that ends in ".onion." Q. So let's be clear. The second Web address, that is the Web address of Silk Road or another -- A. No. Sorry. Silk Road was shut down by this point so it is a different hidden service. Q. OK. Go ahead. A. OK. I'm sorry. If you could play -- I am going to start by basically visiting this first website with the normal browser that you would use. I am connecting to the Internet right now. And I just put in a net address. If you want to pause it. By inputting that address into the URL bar, it pulls up the Web page and the Web page then will tell me what my IP address is and put me on a map so I can see where I am basically from. Page 103 Q. A couple of things. When you say "URL bar," what are you referring to? A. It is the Internet bar up on top. Q. The address bar here? A. Yes. Q. Where is your IP address reflected here? A. It is reflected on the map itself and also down below right now. Q. Right here? A. Yes. Q. OK. Go ahead. A. OK. And so if you want to play. This shows me that I am in Chicago. This is my IP address where I am currently at in Chicago. And so now I'm going to take that hidden service dot-onion address and I am going to try to visit that -- do you want to pause it, please. I tried to visit that using the regular browser. So I put in the same dot-onion address and tried to visit it and it comes back as being not available. Q. Go ahead, please. A. If you could play it, please. So now I minimized that browser and I am going to open up the Tor browser, which this is the Tor browser and I am going to do the same steps I did before. So I'm copying the address that tells me where I'm located, and I'm running that in the Tor browser and it's going to tell me where I'm located. Page 104 If you can pause it, please. And so the Tor browser makes it appear as if I'm coming from Germany. And so it says my IP address is in Germany. So any website I visit using the Tor browser right now will think I'm in Germany. Q. And where is your apparent IP address listed on the page? A. It's in the white box in the middle as well as down below. It is the 188.138.9.489. Q. If you want to -- was that your actual IP address? A. No, that is not my actual IP address. Q. OK. Go ahead. A. And now if you want to play it, I'm going to try to visit that same hidden service, dot-onion address that I visited or tried visiting with the regular browser, and I am going to try it now using the Tor browser. And if you pause it. And so just by simply entering the same dot-onion address now with the Tor browser, it makes the website appear. So you can visit it only if you are using the Tor browser. Q. Please continue. A. And then just to show an example, with the two browsers side-by-side, I could be on the Internet. It just depends which browser I am using. One will be my true IP address on the left-hand side and the other one will be not my true address, which is one that Tor protects basically the user behind it. Page 105 Q. All right. So the video shows how Tor masks your IP address. From a law enforcement perspective what is the significance of an IP address? A. An IP address we can use to identify someone that's potentially doing something behind a computer that is doing things on the Internet. Q. So how? How is the IP address potentially useful for that purpose? A. In other investigations that I have done as well as in this investigation, if we had an IP address, we could use that to then do a search on the open Internet, and it will tell us who the Internet service provider is. And from there we could subpoena that company and do some other type of legal process or request who is the person that is either renting or leasing that IP address for that given moment in time. Q. When you say "Internet service provider," what does that mean? A. Internet service provider is a company that basically assigns out and owns IP addresses that provides you your Internet service that comes to your house, something like Time Warner or Comcast. Page 106 Q. So let's say I'm a Time Warner customer and I use my Internet connection to do something illegal on the Internet and you as a law enforcement agent find out what I did and the IP address associated with it. So just where would you go from there? A. So if you are a Time Warner customer and you -- and I guess if we are able to get your IP address from another website or from someone else that provided it to us or through investigation, I would do a search for that IP address on the open Internet. There are several websites that you can use to try to find out who the Internet search provider is. Q. It will come back to Time Warner? A. It would come back to Time Warner. Once I found out it was Time Warner, I would then issue a subpoena likely to Time Warner, and I would ask them for the subscriber information for the person that would own that particular IP address on that given date and time. Q. All right. And so if I instead use Tor to do the same thing, would the same technique work? A. No, it would not. Q. And why is that? A. Because that IP address that Tor protects you with is not your IP address; it belongs to one of the relays or the parts of the network. It is not you. Page 107 Q. How about a computer that hosts a website, are you familiar with the term "server"? A. Yes, I am. Q. What does a server mean in the context of the Internet? A. Server is just basically another word for a computer that usually hosts a website or can run a website. Q. And do you have any experience tracking down the location of a server based on its IP address? A. Yes, I do. Q. So if a law enforcement officer -- as a law enforcement officer, you are trying to track down the location of a server that hosts a website on the ordinary Internet, how would you go about that? A. Generally, not too different than how we would search for someone that had an IP address in a similar way. You could do open searches on the Internet, again, through like websites like who.is or the main tools that will tell you what an IP address is for a particular website, and it would be the same steps basically from there. We would find out who the Internet service provider it. The Internet search provider will then tell us who the subscriber is. Sometimes it might come back to a hosting company, which is generally used to host websites, or sometimes it can be the subscriber themselves that are operating that website. Q. You mentioned the who.is website. Would you just explain what kind of website that is? Page 108 A. It is a website that you could search its domain names like the www.nfl or Google.com, things like that. Q. Do you see Government Exhibit 106A, I believe it is, in your binder? A. All right. Q. Do you recognize what these are, these pages are? A. Yes, I do. Q. What are they from? A. It's a screenshot of the website "who.is." Q. All right. Would it be helpful in explaining these concepts to show this as an example of the who.is website, what it does? A. Yes, it would be. MR. TURNER: Your Honor, we would offer this as a demonstrative just to show how this website works. THE COURT: This is Government Exhibit 106B? MR. TURNER: I believe it is 106A. Q. Is that it? A. A. THE COURT: All right. Mr. Dratel. MR. DRATEL: I'm sorry, we were just -- the same objections, your Honor, that we had before. THE COURT: All right. I will assume it is the same as the prior objection. Page 109 MR. DRATEL: Yes. THE COURT: My exhibit list I think doesn't have this from the prior. We will deal with it at the break. Government 106A is received. *(Government's Exhibit 106A received in evidence)* MR. TURNER: Could you publish it, Mr. Evert. Could you zoom in up at the top. Keep going. There you go. Thank you. Actually, you are going to have to zoom in some more under the sticker, please. There you go. Yes, that is good. MR. TURNER Q. OK. So, just briefly, what does this document show? A. This shows the -- it is the who.is website. Q. And what is it a search for in the who.is website? A. This is a page on the who.is website of a search result. If you were able -- if you were to search in the box up above that says "search domain name or IP address" and enter in a domain, in this instance we looked up NFL.com, it will tell you the who.is information for that particular website, including IP address. Q. OK. Where is the IP address located here? A. It's down at the bottom in the blue colored numbers. Q. All right. And have you tried doing the same thing for a dot-onion address? A. Yes. Page 110 Q. Could you turn to Government Exhibit 106B. What is this document? A. This is who.is as well as trying to search a dot-onion address. MR. TURNER: Your Honor, again, we just offer this as a demonstrative to show the jury how this website works. THE COURT: All right. Government Exhibit 106B is received as such. *(Government's Exhibit 106B received in evidence)* MR. TURNER: Publish that, Mr. Evert. Zoom in, please. Q. OK. So what does this show? A. This would be what would generally show up if you tried to query or search for a dot-onion address. In this instance, that is the same address that I had in my video for the dot-onion address that we visited on there. Q. OK. So -- THE COURT: Mr. Turner, just for your planning purposes, there will be a couple of housekeeping matters that we will have to take up. So why don't you end in just a few minutes. MR. TURNER: This is a good place to stop, actually, your Honor. I was going to shift to another topic. THE COURT: All right. Ladies and gentlemen, we are going to break for today. I want to give you a couple of instructions. Joe will give you instructions about how to gather up your stuff and get out and where you should leave your notebooks and things like that. Page 111 I want to remind you not to talk to anybody about this case, including each other, anybody at all. Please don't try to become experts on the different parts of the Internet that you may have heard about. Don't do any research or get on and Google things or try to downloads the Tor browser. Again, it is important that all you do is listen to the evidence in this courtroom, and that's the evidence that will be used by you to decide the factual issues in this case. Again, don't email anybody about this case or update your profile in Facebook. We're going to start at 9:30 each day. So it is important that if you can get here by about 9:15, get yourself in place and all of that, that would be very helpful. Again, you can bring coffee in or tea, or whatever, water, or whatever you would like so that when we start at 9:30 we are ready to walk out and get going. We can't start until each and every one of you, all 16 of you, are here. So just be aware of that and try to be on time. It very important. Otherwise, this whole room is waiting for you. All right. Now, tomorrow when you come in, I don't know -- we've got a bunch of different cases going on right now in the courthouse. If there is anybody outside who has got any of those pamphlets or posters or anything like that, I instruct you that you are just to put your head down and keep walking. Don't read. Don't look. Don't commune or confer with anybody about anything outside of this building that might have to do with the case or the jury process or anything else. OK? Page 112 If you find that you have been approached by somebody or inadvertently you have seen something, let Joe know and then we will take it up. But I ask you, please, to try to avoid any media about this case in terms of newspapers or anything else as well as whatever may be going on outside. All right? Thank you, ladies and gentlemen. We'll see you tomorrow morning. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 113 *(Jury not present)* THE COURT: All right. Sir, you can step down. We are going to continue tomorrow morning at 9:30. So I will have you back on the stand at 9:30. THE WITNESS: Thank you, your Honor. THE COURT: Go ahead and step out. THE WITNESS: Thank you. *(Witness not present)* THE COURT: Ladies and gentlemen, let's all be seated and we'll take up a few matters now. First, and just in terms of the logistics, so I have two exhibit lists, the one that was handed to me this morning, that is I think the updated government exhibit list and then I have the one that has all of the objections on it. To the extent that there are documents that are on the new list that were not on the old list, I don't have any indication as to objection. That was the nature of why I said I assume it is the prior objection for 106B. And so I am assuming that Mr. Dratel has had an opportunity to see the documents that are not on my prior list. MR. TURNER: That is correct, your Honor. THE COURT: All right. So, Mr. Dratel, we'll take it step-by-step, but if they are just going to be the same documents of a type, then your other objections will be, I think, obvious. Page 114 MR. DRATEL: OK. THE COURT: And my rulings will be similarly, and the basis therefor will similarly be obvious. MR. DRATEL: Right. Some of them we received over the last couple of days so I'm not even sure if they are on the government's list. So sometimes it is hard to -- at least the one that we have, but it is hard to make the comparison the same way that the Court is doing. I am trying to do it in a way that covers that. THE COURT: All right. So we'll just take it step-by-step. It's not my practice to have standing objections throughout the entirety of a case, particularly when virtually all the documents were objected to. But we'll take it, again, step-by-step. So today we had a standing objection that stood for all of the documents this afternoon. It may be, Mr. Dratel, that that makes sense for tomorrow. Why don't you go through a couple and then do something similar. If you are finding it is the same, I don't mind doing that. If it is going to be repetitive for you, I don't think it is necessary for you to seem to be objecting all the time if you don't want to be, and I understand that. MR. DRATEL: Yes. And I'm not sure whether the Court -- I will check with counsel as to whether the Court included objections in your instructions to the jury about not to take any -- you know, I know the Court said nothing you say is evidence and nothing you say expresses an opinion. I'm not sure you mentioned objections specifically. But, obviously, I am conscious of that issue -- Page 115 THE COURT: Yes. I am happy if you would like me to give an instruction to the jury that, ladies and gentlemen, you should not draw any inference of any kind from the objections that counsel may make on either side. It is their responsibility and it is expected. And if you want me to do something like that, I am happy to do it. Why don't you let me know in the morning. MR. DRATEL: I think so, yes. We will discuss it. Thank you, your Honor. THE COURT: Now, that is on the objections. Was there anything you folks wanted to raise? I've got one more matter. MR. TURNER: No, your Honor. THE COURT: One I want to take up at the sidebar but one I want to do here. All right. Outside there are still some folks. That's what I was checking on before. Now, it's, frankly, going to -- what we'll have to do is -- and I think that the defense has not wanted this and so I am not suggesting the defense has any control over this. But to the extent that there are still people outside the courthouse who are approaching jurors and approaching people who they perceive to be jurors, it creates obviously issues for us and does lead us to the need, potentially, very potentially, for an anonymous jury. I am happy to make that decision tomorrow, to let it go into the morning and see whether or not we have any issues tomorrow morning. But if we do, then we will have to go with an anonymous jury and have the jurors also have -- be brought out to a different place and brought in specially. Page 116 I prefer for the defendant not to do that. I know, Mr. Dratel, you have objected and not wanted to have an anonymous jury. But if individuals are continuing, I don't really know if we've got much alternative. Do you have any views? MR. DRATEL: Yes. I will put it on the record so that maybe the press will report it, that the people think that they are helping the defense by being out there doing this. They are not. THE COURT: Correct. MR. DRATEL: When it gets to that stage that the Court has to act, it hurts us. Hopefully, that will be reported and that will reach the people. THE COURT: The Court has held off. We will try to take it step-by-step, but at this point the defendant would not like to go this way but, really, it leaves me no alternative. MR. DRATEL: Obviously, let's see how it plays out tomorrow, but I am sort of stating that on the record so that, hopefully, the people are out of my control and out of Mr. Ulbricht's control and will desist on their own. Page 117 THE COURT: We will see how things go tomorrow morning and then we'll make a decision, but we won't let it go any longer than that because it's a classic reason to allow for additional procedures. Now, those are the matters that I had apart from one additional item I wanted to take up over at the sidebar. Are there things that you folks would like to raise right now? MR. TURNER: No, your Honor. Thank you. MR. DRATEL: No, your Honor. THE COURT: All right. So we will start tomorrow morning at 9 o'clock, take up any additional housekeeping matters that may come in overnight. If there is anything tomorrow morning that you folks want to alert me to in terms of what might be coming up that I should be aware of, surprises, etc., you will let me know tomorrow morning at 9. If we don't need to take up all the time between 9 and 9:30, so be it, we will take a break and get some coffee. Can I have counsel at sidebar, please? *(Pages 118 through 119 sealed by order of the Court)* Page 118 Page 119 Page 120 *(Adjourned to January 14, 2015 at 9:00 a.m.)* * * * INDEX OF EXAMINATION Examination of: Page JARED DER-YEGHIAYAN Direct By Mr. Serrin . . . . . . . . . . . . . .71 GOVERNMENT EXHIBITS Exhibit No. Received 100A . . . . . . . . . . . . . . . . . . . .80 100C . . . . . . . . . . . . . . . . . . . .83 104 . . . . . . . . . . . . . . . . . . . . .85 102D . . . . . . . . . . . . . . . . . . . .90 102B . . . . . . . . . . . . . . . . . . . .92 102C . . . . . . . . . . . . . . . . . . . .94 107 . . . . . . . . . . . . . . . . . . . . 101 106A . . . . . . . . . . . . . . . . . . . 109 106B . . . . . . . . . . . . . . . . . . . 110 Page 121 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 14, 2015 9:20 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Sharon Kim, Government Legal Intern Page 122 *(In open court; jury not present)* THE DEPUTY CLERK: Continuation of the matter now on trial, United States of America v. Ross William Ulbricht. Counsel, state your names for the record. MR. TURNER: Serrin Turner for the government. With me at counsel table is Timothy Howard and Nicholas Evert, a paralegal from our office, as well as Molly Rosen, another paralegal. THE COURT: Thank you. Who is the person at the very far end? MR. TURNER: I'm sorry. That's an intern from our office, Sharon Kim. THE COURT: Thank you. Good morning. MR. DRATEL: Joshua Dratel for Ross Ulbricht standing next to me, also Lindsay Lewis from my office and Joshua Horowitz is counsel as well. THE COURT: Good morning. I have a couple of things to go over with you folks and then if you have any items that you want to raise, we'll take those up. One is, I wanted to make sure that everybody is okay with the position of the podium. I know that, Mr. Turner, in the middle of -- or at the very commencement of your direct yesterday, I had you move it back so that really jurors nos. 5 and 6 could have a clear view. I didn't know if you felt that setting up in that way somehow caused any concern in terms of your voice carrying or anything else. Page 123 MR. TURNER: No, your Honor. THE COURT: Terrific. In terms of the protests and/or people being outside in the front, there is nothing. As I understand it, it's empty out front in terms of that. There's just the normal morning traffic. Does anybody have any other information? MR. TURNER: No, your Honor. THE COURT: Mr. Dratel? MR. DRATEL: No, your Honor. THE COURT: Terrific. Hopefully, that will be behind us. In terms of the schedule, as you folks know, we don't sit on Fridays. I forgot to mention that to the jury yesterday, and I will do that this morning. Has there been any confusion on counsels' part as to that schedule? MR. TURNER: No, your Honor. MR. DRATEL: No. THE COURT: I'll go ahead and mention that to the jury and make sure that they understand: No trial on Friday. In terms of the defense, obviously, Mr. Dratel, you don't have to preview any evidence at all. It's not your burden. But I did note, just in terms in timing, that you hadn't previewed the names or even, generally speaking, the identity of any particular type of witness, whether there's going to be a computer expert, for instance. And for my planning purposes, we don't have to say anything to the jury. I'm wondering if there's somebody that you know of who is going to take up at least a week of time. I don't need to know who they are, but what are you predicting that point? Page 124 MR. DRATEL: Obviously, without seeing the rest of the government's case as to whether we'll even call some people because I may get them all done through the government's witnesses, -- THE COURT: Yes. MR. DRATEL: -- but I think that right now, we're looking at probably a defense case even -- my estimate right now, it's very rough, is probably three or four at the most. THE COURT: Days? MR. DRATEL: Yes. That's probably the most. THE COURT: That's fine. I do understand it's fluid. MR. DRATEL: Depending on when we get done. It could be two or one depending on when we get done with the government's case. THE COURT: I understand it's fluid. Most of it will depend on what happens in what's to come with the government's case, so you're by no means held to that. I'm just trying to get a sense of whether or not you had a computer expert in your pocket who you were thinking of having on the stand for a week, in which case, I just wanted to know that. Page 125 MR. TURNER: May I speak to that briefly. The defense is required to give us notice of any expert they plan to use and we have asked for any such notice. None has been given. So if any expert is sprung on us at the last minute, we will object for lack of notice. THE COURT: I assume you folks are giving each other all of the required notices that are necessary. I had just noted yesterday during the opening that there hadn't been a preview of anything in particular, but nor is the defendant required to do so. MR. DRATEL: Yes. And we'll provide, as soon as I have a firm intention to call a witness, we will provide it. If it's an expert, we'll do it at the earliest possible rather than at the latest. THE COURT: Terrific. Thank you. Then, did you, Mr. Dratel, want me to give the jury an instruction on ladies and gentlemen, you'll note that there are objections and there will be objections by counsel for both the government and the defendant from time to time, that's perfectly appropriate, indeed that's expected and that's counsel doing their job and you should draw no inference from the fact of objections or the Court's rulings? MR. DRATEL: I have written something up but you just covered it. Page 126 THE COURT: If you have a script, I'm happy to take it to make sure I cover whatever wording you prefer. Let me just read what you've got and see if the government has any comments. MR. DRATEL: Mine might be a little long. THE COURT: This won't take more than 30 seconds to do. MR. DRATEL: Okay. THE COURT: I'm happy to do this. Mr. Turner. MR. TURNER: I have no objection to the language. THE COURT: I will use your language, Mr. Dratel. MR. DRATEL: Thank you. THE COURT: I'll do that at the beginning. And then lastly, I just wanted to comment, as you folks know, we spoke a little bit pretrial about the fact that this case may involve varying amounts of technology. As you heard during the voir dire process, I told the jury they don't have to be experts in technology. They'll be provided with whatever evidence there is that they need to make a decision based on one way or the other during the trial. I did suggest to you folks that a glossary would be helpful or something like that. I understand you have not been able to reach an agreement, and so be it. In a criminal case, I am not going to try to come up with something or impose something. Page 127 I do want to note that to the extent the government has a view about the clarity of yesterday, I think what came out is that there's something called a tor browser. What that is I think is mumbo jumbo to most people on the jury right now. I think they understand there's a tor browser and another browser and they're different, and that tor is associated with Silk Road, but I think that that's about all that came out. So in terms of -- that will be up for the jury to decide. They may have heard it differently, but in terms of clarity, I do think clarity of the evidence is important here. The jury I do think needs to understand things. I wanted to give you a sense that there still is room for clarity. MR. TURNER: Okay. What we hoped to convey is that it also hides the IP address of the user; in our view, that's really the essence of what they need to understand. We're not seeking to try to provide a seminar on how tor works. We don't think it's really necessary, but I think the point is, it hides an IP address and, therefore, allows people to anonymize their identities and their locations. That's really all we're trying to get across. THE COURT: How ever you choose to put on the evidence and whatever points you think are most important is entirely up to you. I wanted to let you know that sometimes when you're living and breathing a case for so very long and you try to reduce it down to something that's simple, it can even be more complex than you often think, but you folks ultimately will do what you choose to do. Page 128 That's what I had. What did you folks have, if anything, that you would like to raise before we bring the jury in? MR. TURNER: Nothing else. MR. DRATEL: Nothing, except the instruction. THE COURT: How are we doing with the jury? Today is the first day, but we're getting a sense as to the time timeliness of the jury. We are currently waiting on nine. Hopefully, they'll be here shortly, but there still is jury selection going on in another big case and there are a substantial number of people still coming in downstairs as a result, which can cause some delays. So let's just take a quick break until we have got more information and hopefully we'll get our entire group here shortly. Thank you. THE DEPUTY CLERK: All rise. *(Recess)* THE COURT: Let's be seated. We have a decision to make. We are missing one juror. We have 15 of the 16. We have all except for juror no. 3. So it's the juror in the third seat. At this point, and we have called his cell phone a couple of times and gotten his voicemail and we have not received any phone calls from him, and they were instructed if they were going to be late to call. Page 129 At this point, I would be willing to proceed with one of the alternates, but I also don't think it's been such a very long time that if anyone has any opposition to that, that I would hesitate to wait a little bit longer, but we should then talk about how long we wait before we then proceed. Let me also say before people discuss their views on this that it would normally be my practice, barring any reason to do anything differently, that if the alternates are used, the alternates are used in the order in which they're seated. So we would use alternate no. 1 first, alternate no. 3 and then no. 4 so we would proceed along. So that would mean alternate no. 1 one would come down and sit in the open chair. Views? MR. TURNER: The parties briefly conferred, your Honor. I think we both agree we should provide a little more time. It's the first day after yesterday. The juror may be unfamiliar with the area, may have gotten lost, there may be a problem with the subway. Who knows? THE COURT: Have you folks discussed what amount of time you either individually or mutually agree would be the right amount of time? And I'll see whether I agree. MR. DRATEL: We haven't discussed that. THE COURT: Why don't we say 10:30 then? They were supposed to be here by 9:15 to be ready. I think a full hour, if we're unable to reach him on his cell phone and he doesn't call us, then I think that would be the right place to cut it off. Page 130 MR. DRATEL: Can we come up for a second. THE COURT: Sure. Come on up. *(At the side bar)* MR. DRATEL: The reason wanted to do it side bar, I didn't want to draw attention to the juror or embarrass him or anything. And I can't remember -- I know who juror no. 3 is, but I can't remember right now as to whether he identified where he works. But is there a possibility we could call there to find out whether, you know, he's got some problem there? I don't know what the situation is with people. Sometimes they don't recognize the implications for being chosen on a case and then all of a sudden, other things come up. And also, I guess we could maybe we could text him, too, if we have a cell number, sometimes at least -- even on my phone, sometimes texts are much more immediate in terms of my recognition of them than telephone calls. THE COURT: We have his contact information, including the mobile phone. So have we called only the mobile phone? THE DEPUTY CLERK: Yes. THE COURT: So we called the other -- we have one other number. Page 131 THE DEPUTY CLERK: No, just the mobile phone. THE COURT: Have we texted yet? THE DEPUTY CLERK: Not yet. THE COURT: We'll text. And that would be what we do and then we'll see -- I thought yesterday my explanation was, I hoped, clear. I'll reiterate it this morning that we can't start unless they're all here. We'll do that right away. And at 10:30, let's confer and see where we are. MR. DRATEL: Okay. THE COURT: All right. So I'm going to have my deputy text juror no. 3. *(In open court)* THE COURT: We're going to take a break until 10:30 or until we have a first array of jurors, whichever comes first. It is likely as a result that our mid-morning break will be truncated, so you folks should just take that into consideration. *(Recess)* *(Continued on next page)* Page 132 *(Jury not present)* THE COURT: All right. We now have a full jury and Juror Number 3 has apologized to my deputy profusely for his tardiness. So we are ready to proceed. THE CLERK: All rise as the jury enters. *(Continued on next page)* Page 133 *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. Thank you. I've just got a couple of housekeeping matters to address and then one other issue. There is not going to be trial on Fridays unless you are deliberating. All right? So Friday is a day that I do everything else, essentially, and counsel prepares to make use of the time most efficiently. So we won't have trial on Fridays. Now, if you are deliberating -- and there will be a point when you are deliberating -- then we will sit on Friday, but that's not going to be for several weeks. OK? So you are not going to have to report for trial this Friday. Also, Monday is Martin Luther King Day and that is a court holiday. The court is closed on Martin Luther King Day. And so there won't be trial on Friday or Monday, but we will be picking up on every other day of the week. The second matter is that we are going to be serving you breakfast -- a continental breakfast in the morning and giving you folks a coffee service. When I say "coffee service," it is coffee, it is tea, it is also water that you will have. So there will be a continental breakfast, and I do know that things happen in terms of people's ability to get here on time but that is an added incentive to try to get people here so that we can start promptly. Page 134 Now, the last thing is that you have heard yesterday the beginning of the first witness and you heard counsel objecting, and I wanted to just make sure that you understand that objections and lodging objections by counsel is perfectly appropriate. It is expected. You are not to draw any conclusions from the objections made by counsel. It is part of their job. And, similarly, don't draw any conclusions from my rulings other than whether the evidence in question or answer is admissible. The objections relate to legal issues and principles that are within my authority to decide, and making objections to evidence or questions or answers is entirely appropriate regardless of my rulings on any particular objection. And you will hear throughout the course of the trial both -- all counsel making objections when appropriate. All right? So I just wanted to make sure you all had heard a little bit about that. Now, without anything further, we are ready to proceed. I want to remind you, sir, that you are under oath from yesterday. THE WITNESS: Thank you, your Honor. JARED DER-YEGHIAYAN, resumed, and testified further as follows: THE COURT: All right. Mr. Turner, you may continue, sir. Page 135 MR. TURNER: Thank you, your Honor. DIRECT EXAMINATION (Resumed) MR. TURNER Q. So, Agent Der-Yeghiayan, we left off yesterday with you explaining that Silk Road was accessible only through a special network on the Internet; do you remember that? A. Yes, I do. Q. Could you just remind the jury what that network is called? A. It's called the Tor network, which is short for the Onion Router. Q. So what basic advantage does the Tor network give you as a user? Is it faster? A. Not necessarily. It provides anonymity to you so it protects you, your location on the Internet. Q. You explained a little bit of this yesterday. But, again, what specific information about you does it protect or conceal? A. It conceals your Internet protocol address, which is your IP address. Q. And a website operating on Tor, what is that called again? A. It's called a hidden service or a dot-onion address. Q. And what is the advantage of operating a website as a hidden service on Tor? A. Some of the advantages of doing that is it is harder to identify that website's IP address so it could also remain anonymous on the Internet. Page 136 Q. And at a basic level, how does Tor conceal a user's IP address, if you know? A. So basically it is a network on the Internet that is made up of a lot of computers, and when you're using that Tor browser that I showed you yesterday, that will allow you to enter into this network, and that network then will rout your traffic on the Internet through multiple computers, which basically protect you each step of the way. So it's hard for one computer to know who you are and vice versa until you exit the network and visit a regular website as well as if you visit a website within the network itself. Q. Could you turn to page -- or what has been marked as Government Exhibit 106 in your binder. Do you recognize this exhibit? A. Yes, I do. Q. Is it a diagram of some kind? A. Yes. Q. Would it aid your testimony, would it help you explain these concepts by showing this exhibit to the jury? A. Yes, it would. MR. TURNER: Your Honor, the government requests to publish the exhibit as a demonstrative. MR. DRATEL: No objection, your Honor. THE COURT: All right. Received. *(Government's Exhibit 106 received in evidence)* Page 137 MR. TURNER Q. OK. So could you just explain what the diagram shows? A. Sure. Q. You can use your laser pointer. That would be great. A. So if you are a user with your computer, this would be the entire Tor network itself which is made up of a lot of computers on the inside of it. Basically, if you want to visit another website, even if it is a hidden service that shows it is outside of Tor, which technically is inside of Tor, you would enter into the Tor network, and what the Tor network would do then is route you between multiple computers before you actually reach that website. Q. What are those computers called? A. So these internal computers within the system are called relays, and the ones that are on the external, on the outside, are called nodes. Q. OK. And I am going to use my dueling laser pointer here. So this computer, the first node that you hit, does it know your IP address? A. Yes, it does. Q. How about this computer here, which IP address does it know that your traffic is coming from? A. It will only know the computer that it came from and the next computer that it goes to. Q. Could you just explain? Page 138 A. Let me just -- so this computer would only know this IP address, and then whenever it sends the message along, it will only know the next computer's IP address. Q. So just to be clear, this computer knows the -- thinks the traffic is coming from that IP address, is that right? A. Yes. Q. This computer thinks the traffic is coming from that IP address? A. Yes. Q. And so on? A. Yes. Each computer has its own IP address internally within the network so it will only know the previous computer and the next computer's IP address. Q. So by the time that the traffic hits the hidden service at the end of the chain, what IP address does the hidden service believe the traffic is coming from? A. So the hidden service will only see that last computer, that last IP. Q. So the original IP address is hidden by multiple layers of other computers in the chain? A. Yes. Q. OK. And you mentioned yesterday that a hidden service has a special kind of Web address? A. Yes, I did. Q. Would you remind the jury what those Web addresses are called? Page 139 A. It ends in dot-onion. Q. So, again, what was Silk Road's dot-onion address? A. It was silkroadvb5piz3r.onion. Q. Was that the only dot-onion address it ever had or did it change sometimes? A. It changed. Q. Was that the last one it had? A. That was the last one it had. Q. So when you typed Silk Road's dot-onion address into the Tor browser -- and I should just be clear, you talked about the Tor browser yesterday, right? A. Yes, I did. Q. Do you have to have the Tor browser to access the network that we just saw? A. Yes, you do. Q. So when you type the dot-onion address of Silk Road into the Tor browser, what would show you up? A. The first page of the website, which should be basically a user login screen. Q. Sir, could you turn to what has been marked as Government Exhibit 108. A. OK. Q. Do you recognize this document? A. Yes, I do. Page 140 Q. How do you recognize it? A. I took this screenshot. Q. And what is it a screenshot of? A. It is of the first page, the user login page for Silk Road. MR. TURNER: The government offers Exhibit 108 into evidence, your Honor. MR. DRATEL: Your Honor, this is of the same character as yesterday's, so -- THE COURT: 108 is received. MR. DRATEL: Thank you, your Honor. *(Government's Exhibit 108 received in evidence)* MR. TURNER: Could you publish Government Exhibit 108, Mr. Evert. Q. So what is shown here, Agent Der-Yeghiayan? A. So this is the first page -- when you visit the website, this is the first thing that will appear. And it prompts you to enter in a user name and a pass phrase, which is a password, as well as you have to hit in down below it, which is a CAPTCHA, C-A-P-T-C-H-A. Q. The user name and pass phrase, do you have to have one to enter this site? A. Yes, you did. Q. And if you didn't have a user name and pass phrase, how could you get one? A. Down below there is the green lettering which says "Click here to join," and it would then take you to another page. Page 141 Q. Could anyone click here to join? Could anyone create an account on this site? A. Yes. It was public. Q. What information did you have to give about yourself in order to join? A. No information about yourself. Q. Did it matter what age you were? A. No. Q. Did it matter where you were from or what the laws were in your country? A. No. Q. Do you have to supply an email address of any kind to register your account? A. No, you do not. Q. What did you have to do exactly? A. It just asked you to create a user name and also just create a password, or pass phrase. Q. As long as it wasn't one that some other user had chosen before, was that it? A. If it was something that already existed, then it would ask you to create another user name, something different. Q. So once you had an account and entered your user name and password, what would show up? A. The homepage for Silk Road. Page 142 Q. Could you take a look at Government Exhibit 109, please. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It is a screenshot I took of the Silk Road. Q. Of the homepage specifically? A. Yes. Q. And what date did you take it on? A. This was taken September 27, 2012. MR. TURNER: The government offers Exhibit 109 into evidence. MR. DRATEL: The same objection, your Honor. THE COURT: All right. Government Exhibit 109 is received. *(Government's Exhibit 109 received in evidence)* MR. TURNER: Could you publish Government Exhibit 109, Mr. Evert. Could you zoom in on the central images on the screen. Q. OK. So what are we looking at? What are the pictures we see in the middle of the screen? A. So these are listings, various listings that were available on Silk Road. They will change from time to time. And it could be any listing within the entire website but these just all happen to be drug listings. Q. How do these listings compare to the listings that typically appeared on the Silk Road homepage? Page 143 A. This is pretty consistent with what you would see when you login. Q. Was it typically mostly drugs or some other product? A. It was mostly drugs. Q. So could you explain some of the specific offerings we see here, what they are, what type of drugs they reflect? A. So there is marijuana that is available. There is also another type of psychedelic, called 25I-NBOMe, and as well as heroin, one gram of it. You have speed, which is amphetamine. Also have black tar heroin, one gram of high quality cocaine, testosterone. You also have some more amphetamine. Q. What type of drug is testosterone? A. Steroid. As well as you have methylone, and then you have some marijuana as well as some ecstasy pills, and I'm not exactly sure what that is; it looks like a prescription drug. Q. Could you take a look at Government Exhibit 101, please. A. OK. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. This is a screenshot I took. Q. Of what? A. Of the Silk Road homepage. Q. On what date? Page 144 A. This is from April 2, 2012. MR. TURNER: The government offers Exhibit 101 into evidence, your Honor. MR. DRATEL: The same objection, your Honor. THE COURT: Received. *(Government's Exhibit 101 received in evidence)* MR. TURNER: Could you publish the exhibit, Mr. Evert. Q. OK. So this was an earlier version of the site to the one we just looked at, is that right? A. That is correct. Q. Could we zoom in on the "Shop by category" list on the left. OK. So what are we looking at here? What was on the "Shop by category" list? A. So this is the drugs category as well as subcategories for the different various drugs. MR. TURNER: Mr. Evert, could you actually zoom out and take a look at the whole category list. Q. Just to be clear, what was the predominant form of goods sold on the site as of this date? A. It was drugs. Q. And the numbers on the side of the categories, what do they reflect? A. Each one of the numbers in parentheses is a listing that is in that category. Page 145 Q. So what does it mean drugs, 2,020? 2,020 what? A. It means there is 2,020 individual listings for different drugs. Q. By "listings," what do you mean? Advertisements? Offerings? A. It's an offering, yes. Q. For each offering would there be only one item for sale or would there be more in quantity? A. Each listing could have, for example, ten pills for that one listing available or 100 pills or multiple grams up to a kilogram or more of a drug. Q. OK. And these numbers, did they change over time, the quantities of listings for the various drugs on sale on the site? A. Yes, they did. Q. And over the timeline of the site, how did they change? Did they increase? Decrease? A. They increased pretty regularly or steadily. Q. So, again, what was the date of this screenshot? A. This was April 2, 2012. Q. Could you take a look at Government Exhibit 132? MR. TURNER: Mr. Evert, could you put that on the side, please. Q. Do you recognize what has been marked as Government Exhibit 132? Page 146 A. Yes, I do. Q. How do you recognize it? A. It is another screenshot I took of the Silk Road homepage. Q. On what date? A. This is from October 1, 2013. MR. TURNER: The government offers Government Exhibit 132 into evidence. MR. DRATEL: The same objection, your Honor. THE COURT: Received. *(Government's Exhibit 132 received in evidence)* MR. TURNER: OK. So could you publish that, Mr. Evert, and zoom in on the category list. Q. So, again, what date did you take this screenshot on? A. This was October 1, 2013. Q. And how do the numbers compare to the prior shot that you took in, what was it, April 2012? A. That was April 2012. They substantially went higher in every category and as well as additional categories were added. Q. So in total there were 2,020 drug listings in April of 2012. By October how many? A. There is 13,810. Q. So if you clicked on one of the links in this category list what would then show up? A. If you clicked on the drug link, then it would take you into the drug listings. Page 147 Q. So could you take a look at Government Exhibit 110, please. Do you recognize this document? A. I do. Q. And how do you recognize it? A. This is a screenshot I took. Q. On what date? A. This is a screenshot of the Silk Road drug page from November -- sorry, September 27, 2012. MR. TURNER: The government offers Exhibit 110 into evidence. MR. DRATEL: The same objection, your Honor. THE COURT: Received. *(Government's Exhibit 110 received in evidence)* MR. TURNER: Publish it, Mr. Evert. Q. So what is depicted in this screenshot? A. This would be on the drugs category, specifically on the stimulants subcategory of drugs. MR. TURNER: And, Mr. Evert, could you zoom in on the first couple of listings, for example. Q. So the first one, it says ".5 grams high quality cocaine," and then by "seller" it says "Lloydsbrothers." Now, was that typical for a seller name? Did sellers typically put real names there or some other type of name? A. Generally it is just an obscure name. Q. What was that called? Page 148 A. It is a user name. Q. The user name of the vendor on that site selling that product? A. Yes. Q. And "ships from," what did that indicate? A. That would be where the seller would publicly advertise where they shipped their products from. Q. Roughly, how many different seller user names would you say you saw during the course of your investigation? Dozens? Hundreds? Thousands? A. Thousands. MR. DRATEL: Objection to the leading, your Honor. THE COURT: In general try not to lead, Mr. Turner. MR. TURNER: OK. Q. Roughly, how many different seller user names would you say you saw during the course of your investigation? A. A few thousand. Q. And in terms of "ships from" and the countries that the vendors would ship from, during your investigation, did you see offerings from many countries or just a few? A. I saw approximately over 40 countries. Q. So what would happen if you click on one of those individual listings in the category list there? A. If you would click on the actual individual list, it would bring up a more detailed description of the listing itself as well as just some terms basically of the purchase of it. Page 149 Q. Could you take a look at Government Exhibit 111, please. Do you recognize this document? A. Yes, I do. Q. And how do you recognize it? A. It was a screenshot that I witnessed being taken. Q. What is it a screenshot of? A. This is a screenshot of a listing that was used to buy a controlled purchase of drugs. Q. Does that mean like an undercover buy? A. Yes. Q. What date is this screenshot from? A. I believe it was -- there is no other date on there but it was around March 6, 2013. MR. TURNER: The government offers Government Exhibit 111 into evidence. MR. DRATEL: The same objection, your Honor. THE COURT: All right. Government Exhibit 111 is received. *(Government's Exhibit 111 received in evidence)* MR. TURNER: Mr. Evert, would you publish it. Q. OK. So what was it an offering for? A. This was for .5 grams of uncut crack cocaine. MR. TURNER: Could we zoom in on the product description all the way down to the bottom, please. Page 150 Q. OK. It says: "Description: Uncut crack cocaine. "Product will be send within 12 hours after order is placed. "It is possible to ship from Belgium (ask for info). "I destroy all your information after the order has been furnished. "Info: I am aware of the latest stealth packaging. "Using the best quality materials. My packaging is professional and up to date. "Working with bitcoins only. No payments outside of escrow. Shipping worldwide." Could we zoom out, please. And then could you zoom in on the top half of the page. So in the gray box there, again, could you just briefly summarize what information is displayed there? A. To the right of the image? Q. Yes. A. So it lists the seller's user name followed by their feedback rating. In this case, the name is happytimezz, with a feedback rating of 100. And it also details where that particular vendor would be shipping that product from. Their advertising they're shipping from the Netherlands. And they would also tell you where they would ship the products to. In this case this vendor is offering this product shipping worldwide. And then it is in the category, or subcategory, of crack. Page 151 Q. And then up above, it says, "Add to cart." And there is "1.65" next to a B with a line through it. Do you see that? A. I do. Q. What is that? What is the number? A. The symbol is a symbol for bitcoins. Q. So what does it reflect? 1.65, what is that for? A. It is a price for the items. It is 1.65 bitcoins. Q. So through your investigation did you become familiar with bitcoins? A. Yes, I did. Q. And at a general level, what are bitcoins? A. Bitcoins are a -- it is a virtual currency that is used that you could use to buy and sell things and trade things electronically on the Internet. Q. Was there any form of payment accepted on Silk Road besides bitcoins? A. No, there was not. Q. And what is the advantage of using bitcoins for a purchase? A. Bitcoins themselves are sort of like Tor. It anonymizes you. Bitcoins also have sort of the same properties where it would be something that also helps anonymize who you are. It doesn't really lead directly back to you. Q. So when you paid for items on Silk Road or when you pay for items with bitcoins generally, is there any identifying information attached to those bitcoins? Page 152 A. No, there is not. Q. How does that compare to like payment with a credit card, for example, when you shop on an ordinary website? A. With a credit card, if you are online and you are buying something, that usually requires that you enter information about yourself -- your name, your address, zip code -- and that information is usually checked against the credit card itself, too, and it verifies against it. Q. And to be clear, is there anything illegal in and of itself about using bitcoins? A. No, there is not. Q. Did you ever conduct -- you mentioned before you conducted undercover buys on Silk Road? A. Yes, I did. Q. Why did you do that? A. It was to match up the drugs that we were receiving in at Chicago O'Hare to try to match the envelopes that we were receiving to who we suspected were shipping those drugs. Q. And as part of those undercover buys did you learn how to acquire and use bitcoins? A. Yes, I did. Q. So how can you buy bitcoins? How can you acquire them? A. There is a number of ways. Generally, you have to buy it from a Bitcoin exchanger that will basically take your real money and exchange it for bitcoins. Page 153 Q. And where can you find an exchanger of bitcoins? A. You could find it -- it is available -- readily available online. So there is numerous exchanges you can go to online that will accept your money, real money, for bitcoins. Q. How does buying bitcoins compare to exchanging dollars for foreign currency, for example? A. It's similar in the essence that when you trade it, the actual exchanges themselves will make money on you just as a currency converter will make money on you with some commissions when you are transferring, say, dollars to Euro, dollars to pounds. Also, Bitcoin exchanges will also make commissions on you as well, so when you are buying bitcoins they will earn money off of that. Q. And what is the exchange rate for a Bitcoin? How much does it cost to buy a single Bitcoin? A. It fluctuates pretty rapidly, usually. Q. How much did the price of bitcoins change over the time period at issue in this case, 2011 to 2013? A. When I started my investigation, it was in October 2011. Bitcoins were roughly like 2 to $4 a bitcoin. And then by the end of -- well, throughout the investigation, even going into April 2013, bitcoins hit a value of $250 a bitcoin, and then by the time that we shut the site down in October 2013 it was about $100 -- a little bit over a $100 a bitcoin. Page 154 Q. Do you have a document on how you would buy bitcoins as part of your undercover buys? A. Yes, I do. Q. Could you take a look at Government Exhibit 113, please. There are a series of pages in this exhibit. Could you explain what they are? Do you recognize them? A. I do recognize it. It's -- this is -- I'm sorry. It is a purchase of bitcoins that we did, or that I did, and it's a series of screenshots that demonstrate the different websites we had to visit in order to purchase the bitcoins as well as screenshots I took of Silk Road. MR. TURNER: The government offers Government Exhibit 113 into evidence. MR. DRATEL: No objection, your Honor. THE COURT: All right. Government Exhibit 113 is received. *(Government's Exhibit 113 received in evidence)* MR. TURNER: Publish the first page of the exhibit, Mr. Evert. Q. So could you just walk us through slowly through each page of the exhibit and what it reflects, and you can just tell Mr. Evert what to zoom in on. A. You are actually right, so if you can zoom in there, that is perfect. Page 155 So we just zoomed in on this portion from -- this is an undercover Bank of America account that we established within HSI. Q. HSI is your agency? A. Yes. Q. Let me just be clear, the circles in these documents, where did these come from? A. I added these circles to the images. And so this is demonstrating the first initial wire transfers, that we have $7,000 in our bank account that we are transferring to it's an online bitcoin exchange that is called Mt. Gox at the time. Q. So Mt. Gox is the exchanger here? A. Yes. Q. OK. A. So this is showing on April 5th of 2013 we are making a wire transfer, and the information for the wire transfer is provided by Mt. Gox on their page to say to initiate a wire transfer, send it to this bank and to this routing number. And then also included in the transfer description, which is below, this is a unique -- this M03291196X is unique to our Mt. Gox profile that we had already established. Q. So you are transferring $7,000 of real currency to Mt. Gox? A. Yes. Q. Go to the next page. Page 156 A. So if you zoom up on the top part, this is the Mt. Gox page. So this is, again, an undercover account that we established. And what this reflects is after the wire transfer went through, it displayed that we had $6,989.34 in our account, that our fees that are assessed in the wire transfer, that we lost some money, but what it did is it credited our Mt. Gox account online with the money that we transferred. Q. Do you want to go to the next page. A. In the center here, now that we have our money that is in our account, we are going to try to purchase bitcoins using that money. And we want to use the entire balance that we have of cash to purchase bitcoins. And so the website -- the amount value in bitcoin fluctuated very rapidly, so we were trying to do the math very quickly to purchase the exact amount of bitcoins that would equal the amount in our balance. So this is showing us putting in a buyer request for bitcoins using that money. Q. All right. So you had $6,989 and you were trying to spend it all to buy as many bitcoins as you could? A. Yes. Q. Which is how many bitcoins? A. It came out to 27.4306907 bitcoins. Q. Then you clicked "buy bitcoins"? A. I'm sorry? Page 157 Q. Then you clicked "buy bitcoins"? A. Yes. As soon as you put in the information for how many you want to buy and at what value amount, then you click "buy bitcoins." Q. The next page, please. A. This is -- it reflects up in the right-hand corner now, after the order went through for our purchase, that we received 27.26610656 of bitcoins, and we also had a balance remaining in our account of $206.52 and some extra decimals that was reflected because the value of bitcoins changed in the middle of our order when we placed it. That is how fast it changed on us. Q. So now you have 27.26 bitcoins. What did you do next? A. After this then I logged into our Silk Road account. MR. TURNER: Next page, please. Could you go all the way over, Mr. Evert, to capture the user name. Thank you. Q. All right. So this is an undercover account you had on Silk Road? A. Yes. This is an account that I took over. Q. What was the user name of the account? A. The account was "dripsofacid." Q. Reflected over here? A. Yes. Q. Go ahead. A. So this is just showing beforehand, before we actually transferred our bitcoins, how much was in our account. Page 158 On the left-hand side I circled in red, and it shows that we had now -- I should explain this, too, is that Silk Road had the option to display to you various currencies. So it wouldn't just show in bitcoins. You could set it to show you in dollar amounts or show in Euro or show in various currencies. So this account when we took it over it was already set to display in U.S. currency. So up in the top it is showing that we had a-dollar-89 already in that account and that was in there once we took it over. Q. Next page, please. A. And so after clicking the account but in that, where I just showed you where the 1.89 was, it would take you to a page like this where I circled -- if I wanted to make a deposit of bitcoins, you would simply have to click on those green words, "Click here to make a deposit." Q. Next page, please. A. And then this page would come up after you click that, and down below I circled what it is telling me is once basically you are ready to send the bitcoins, send it to this bitcoin address. Q. We haven't heard this term before. Could you explain what a bitcoin address is? A. So a bitcoin address, which is up here on the screen, it is essentially like a bank account number. You can think of it that way, where it is a unique number that is what allows basically the bitcoin network to transfer bitcoins to and from. Page 159 Q. Is it an account at a bank? A. No, it is not an account in a bank. Q. What is it an account on? A. It is an account that exists so the bitcoin has it's called a block chain and it's what is its internal ledger that basically documents all transactions to and from. That is how it keeps track of basically who has what money where and what accounts and what money where. It is basically using these addresses, and they are all part of what's called, it is the block chain. Q. So let's just back up. Is bitcoin controlled by like a government? Is it a government-issued currency? A. No, it is not. Q. Is it controlled by a single company? Is there a bitcoin.inc that controls the whole thing? A. It's not one company. It is completely decentralized. Q. When you say "decentralized," what does that mean? A. That means that it is not owned by any government or one entity. Q. So the computers that run the bitcoin network, who are they owned by? A. It is public. It is something that you could download, and once you download the program you become a part of the network itself. And the block chain itself is contained within that program. Page 160 Q. So if you have a transfer of money from one bank to another, who keeps tracks of that information in the ordinary financial world? A. Generally the bank does. Q. So if you have money transferred from one bitcoin address to another, how is that information kept track of if there is no one central authority like a company or country? A. So the transactions are recorded within the network. It's recorded within that block chain, and since the block chain exists on every computer that runs that program, it constantly self-updates. So every transaction it will self-update the block chain on everyone's computer, basically. So the block chain is constantly updated with every transaction. Q. Is there a single block chain that is used throughout the network or are there multiple ones? A. It is a universal single block chain that everybody uses. Q. All right. So the screen says "Once you are ready send your bitcoins to this address." What did you do next? A. So from this page I copied that bitcoin address, and then I went back to my Mt. Gox page that I had to initiate a wire -- initiate a transfer. Q. Turn to the next page, please, Mr. Evert. Could you just walk the jury through this page? Page 161 A. So this is back on the Mt. Gox page. I then took that same address that Silk Road gave me to deposit the bitcoins. I entered it in to where it asked for a bitcoin address. And then I entered in the amount that I want to transfer, which is the entire balance that was in our account at the time. And we also clicked an option to pay a fee so we would have faster processing so it wouldn't remain there for -- the transaction would basically go quicker. And then once you entered that information, you click "confirm." And what it says is the transaction -- that's what's down below in the green -- it says "Transaction is underway" and it gives you a transaction ID number. Q. That transaction ID number, what is that an ID number for? A. The long string is a unique transaction ID number that is created and generated and it is also on the block chain as well. Q. OK. So you said before that every time you do a bitcoin transaction, remind me, what happens to the block chain? A. The block chain updates. Q. So could you turn to the neck page, please. What are we looking at here? A. So this is a public website. It is blockchain.info. This is one of several websites that you could use to actually search the block chain. It is a way that it basically visualizes what transactions actually are on there. So from block chain all you have to simply do is search the bitcoin address that you just -- you transfer any bitcoin address and it will tell you all the transactions in it. Page 162 MR. TURNER: I'm sorry. Mr. Evert, could you actually back out of there. Could you zoom up here, please? That's fine. Q. So this address right here, what is that address? A. That is the same address that Silk Road provided us. And this is an example of what would display normally on blockchain.info after you searched for a bitcoin address. Q. So you searched for that address -- back out, please -- and do you see your transaction from Mt. Gox reflected anywhere in the block chain here? A. Yes, I do. Q. Which one is it? A. It's -- so the second arrow from the top down, or the second arrow up in the middle there, that would be our transaction that we did that day. It is the same transaction ID number on the upper left. Q. There? A. Yes. It is same date that we initiated the transfer, which is April 10, 2013, as well as the same bitcoin amount that is 27.26 and some change bitcoins. Q. So where is the address that you sent the money to? A. It's where the arrow is pointing to. Blockchain.info will try to make it as user friendly as possible. So it will tell you from what account or accounts bitcoins were transferred to another account. In this instance it is showing that there are four accounts that actually made that transfer of 27 bitcoins to our Silk Road account. Page 163 Q. So there are four addresses on the side. Who did those addresses belong to? Who are they controlled by? A. Those are Mt. Gox's. Q. And this one was controlled by what? A. This would be Silk Road. Q. On the block chain itself, was there any -- is there any information that ties those addresses on the left to Mt. Gox? A. No, there is not. Q. Or this one to Silk Road? A. No, there is not. Q. Is there any information on the block chain itself that ties any of this money to you? A. No, there is not. Q. The next page, please. A. And so this is showing, after we initiated the transfer, the account history -- there is an account history page on Silk Road that will tell us that we in this case deposited bitcoins into the address that is provided, the bitcoin address, and it is reflecting that total of 27.27 bitcoins were credited. It also rounds up on that page; it doesn't show the entire balance. And then it shows the date, which is April 10th, 2013. And up above that I also circled -- it shows what the value is in your account at the time, which is $6,522. Page 164 Q. So by this point have all the bitcoins that you bought from Mt. Gox been transferred over to Silk Road? A. Yes. Q. Again, as part of that, has Silk Road received any identifying information about you? A. No, they have not. Q. Next page, please. A. And this is a screenshot, then, that we took of the item that we were going to try to purchase and we did purchase. It was a thousand pills of ecstasy that it was -- the cost of it, since we asked for it to display in dollars, was $5,499.99, and this was particularly coming from a vendor by the name of supertrips who was advertising that he shipped from Germany and shipped worldwide. Q. How did you initiate the purchase? A. So once you find a product within Silk Road, such as we did here, all we had to do was click on right next to the dollar amount, the "Add to cart." Q. And then what happened? MR. TURNER: Would you go to the next screen, Mr. Evert. A. And then after you hit "Add to cart," on the upper right-hand side there is a -- let me use my laser pointer -- there is a shopping-cart-like image, and it is now reflecting that we have one item in our shopping cart. And if you click on that it would take you to a page such as this that then would list the product that you added to your shopping cart, and we added in this instance the thousand pills of ecstasy. Page 165 It gives you options on how you want it shipped. There is different shipping. In this case there is free worldwide shipping offered by this vendor. The only thing that we had to do is down below enter in a name and address and then a PIN number and then click "Place order." Q. And the name that you provided, was that a real name? A. That was an undercover name. Q. Did users have to verify their name in any way in making Silk Road purchases? A. No, they did not. Q. All right. The next page, please. A. So this is a page that we took then after the transaction was complete, and it displays an order that we placed that has been verified. It assigned us a transaction ID number, which is that TX pound number, and it also gives you a status for your order, which in this case it is processing. And then up above you could see that our account now has been debited the amount of $5,499. Q. So after you placed the order, would the purchase money immediately be transferred to the seller? Page 166 A. No, it would not. Q. And why not? What would happen to it? A. Once an order was placed, it would go into an escrow account that Silk Road maintained. Q. What does "escrow" mean? A. Escrow is just -- it is basically a middleman between you and the vendor, and Silk Road would act as that, the middleman. Q. And what was the function of putting it into escrow? A. It was a way to help protect, I guess, the vendors and the buyers. So basically once that order was placed, the vendor would be notified that an order was placed and that would trigger them to ship the product, and once the actual buyer received it, then they would then tell Silk Road that they received the order and then they would release the funds basically to them. If they never got the item, then they could dispute it within Silk Road to get their money back. Q. And if you did get the product, what would you do to send the money to the vendor? A. It's called "finalizing" on the website, that you would click a button which says "Finalize." So you have the option of doing that almost right away. You could finalize an order and give the vendor the money right away if you really trusted them, or if there is an instance where the vendor might require it, that would be something that you had the option of doing at any time. Page 167 Q. Could you go to Government Exhibit 114, please. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It is a screenshot I took. Q. Of what? A. Actually, I'm sorry, it is a screenshot that I was present for, that I witnessed being taken. Q. And what is it a screenshot of? A. This is a screenshot of the order page -- orders that we placed during an undercover purchase of drugs. MR. TURNER: The government offers Government Exhibit 114 into evidence. MR. DRATEL: No objection. THE COURT: GX-114 is received. *(Government's Exhibit 114 received in evidence)* MR. TURNER: Could you pull the first three or four orders, Mr. Evert. Q. What does this page show? A. These were orders that we placed during one of our undercover buys, and this reflects multiple orders that we placed all at the same time. Q. This includes, for example, the uncut crack cocaine that we saw before? Page 168 A. Yes, it does. Q. OK. A. And this is -- so what it is showing us is each one is an individual transaction from a different vendor. And, for instance, the top one is -- we purchased one LSD blotter from a vendor by the name of fredthebaker, and the status of the order was in transit, which means that they had marked it as being shipped and mailed to us. And it was notifying us that that order went out and finalized within 17 days and that we had an option on the right-hand side to finalize or try to resolve an issue with the order. Q. Again, just to be clear, if the product comes, you click "Finalize"? A. That would then release the funds to the vendor. Q. And if you click "Resolve," what happens? A. The resolve option, once available, you could then go into almost like arbitration with the -- between Silk Road and the vendor, so basically you are going to try to resolve an issue that you have with the vendor. Q. Who were the arbitrators? A. That would be Silk Road. Q. Was there like customer support staff that would do that? A. There was customer support staff that was within Silk Road. Q. So if I am a buyer and I say that I don't get my drugs, what would the support staff do? Page 169 A. They would then do their own investigation into the transaction and review whatever history -- MR. DRATEL: I object, your Honor. THE COURT: Sustained. You need to build a foundation for that. MR. TURNER: Sure. MR. TURNER Q. Do you know what a customer support staff member would do in the event of a dispute? A. Yes, I do. Q. How do you know? A. I -- I was working as an administrator for a few months. I also kept routine, constant contact with other administrators that ran the customer support and would discuss those matters with them. Q. So based on that experience, what do you know that would happen in the event of a customer resolution dispute? A. They would look into the transaction itself. They would review private messages between the buyer and the vendor, and they would try to -- they would also do, similar to what we did, which is go onto blockchain, see if everything matches, and basically see if the transaction was -- actually did occur the way it did. And then they would also probably review previous history, as well, with the vendor. If there is a history with them maybe not shopping product, then they may, you know, side against them. If there is a history of the buyer constantly claiming they never got something, then they would probably side with the vendor. Page 170 Q. And how, if at all, would Silk Road make any money from these sales? A. Silk Road made a commission on every transaction. Q. How do you know that? A. Because it was publicly talked about by the people that -- the person that ran Silk Road as well as it was -- I tested it using a vendor account that I took over that I was able to create a listing and set a price for it, and once I looked at that same item then from a public standpoint, the value of that item went up to -- and it went up enough that matched what the advertised commission rates were. Q. So after a vendor would get paid, the payment would be in bitcoins, right? A. Yes. Q. What could the vendor do to then convert the bitcoins into real currency? A. The vendor then would have to find an exchanger, and in almost the reverse of purchasing bitcoins, would have to then exchange the bitcoins for real currency. Q. And where could they do that? A. The same exchange that we used, Mt. Gox, you could do that. There was various other exchangers that you could use, other companies similar to Mt. Gox. There is also options of selling the bitcoins. Even on the Silk Road site itself, you could sell them, exchange them for U.S. currency. You could exchange them for gold. You could exchange them for other things of item value. And you could even resell the bitcoins yourself on Silk Road as a vendor and exchange -- get cash in the mail. Page 171 Q. So did you prepare any sort of flow chart to boil down how this whole payment system works that we have been talking about for the past half hour? A. Yes, I did. Q. Could you take a look at Government Exhibit 113A. A. OK. Q. Do you recognize this document? A. Yes, I do. Q. What is it? A. It's an example of how a Silk Road payment would be conducted. Q. Would it aid your testimony in explaining these concepts to show this chart to the jury? A. Yes, it would. MR. TURNER: We would ask to show the demonstrative to the jury, your Honor. MR. DRATEL: No objection. THE COURT: All right. You can go ahead and do that. It is received as a demonstrative. Page 172 *(Government's Exhibit 113A received in evidence)* MR. TURNER: Mr. Evert, could you publish the exhibit. Q. Could you just walk us through step-by-step? A. Sure. So starting up on this up here on the left-hand side, this basically reflects, again, as you saw with our example, when we have money in our bank account and you want to purchase bitcoins, if you have real currency, then you would go to an exchanger and you would exchange your money for bitcoins. And then once you exchange it, you then transfer it to your buyer account on Silk Road. And then you place an order for whatever item that you wish to buy from the website. Once that order is placed, the bitcoins themselves are held in escrow by Silk Road. From that point, once the order is received and the buyer marks it as being finalized, he will then -- then Silk Road will get its commission rate, and then the vendor is paid their money so the bitcoins are released to the vendor. From the vendor, then if they want to now get their money or transfer their bitcoins and make it into money, they would do something similar where they would then go to an exchanger and they would receive their cash. *(Continued on next page)* Page 173 MR. TURNER: Your Honor, I have another transition point if the Court wants to take a break. THE COURT: Let's go ahead and take a mid-morning break. Ladies and gentlemen, let me give you a sense as to how the schedule will work this morning so you'll predict when your breaks are. We'll take a break now for about seven- to eight minutes, how ever long it takes you folks to get yourselves -- stretch your legs and then get back in order to come back into the room. Then we're going to take lunch today and every day from 12:45 until 2:00, about an hour and 15 minutes for lunch. So we won't take a break unless somebody needs to after this one this morning until we take our lunch break. Obviously, if you need to take a break at any time, make eye contact with me or Joe and we'll take an extra break if we need to. That's the schedule. Let's take a short break now. I want to remind you not to speak to each other or anybody else about anything having to do with this case. Thank you. *(Jury excused)* *(Continued on next page)* Page 174 *(In open court; jury not present)* THE COURT: Let's all be seated. I have one matter I want to raise. I want to note that for the evidentiary objections, most of the -- all of them have so far been dealt with in my motion in limine ruling and I just wanted to make sure that I had connected what the receipt of those materials connects to. There's an exception, which is Government Exhibit 108 had not been objected to as part of the pretrial process, nevertheless, as I had indicated pretrial, if there are things which arise which change what you might not have thought was an objectionable document and it becomes an objectionable document, then I'm nonetheless willing to entertain that, but in general, I'll be following the objections lodged on the pretrial order and if it becomes important to do so or appropriate to do so, I'll be questions why there's been a change. Sometimes it's just an oversight because there's a long list of similar documents and 108 was of that type. That is what I had wanted to put on the record. Let me just state I think that, so that's it's clear, that the listings that are coming on were referred to by the government as listings that indicated particular narcotics, etc., not as simply text on a page which had the word for those narcotics and therefore, they fall under the coconspirator exception of the hearsay rule and that's the basis for allowing them in for the truth. They're obviously directly relevant to the government's charges in this case: So that connects up to the in limine ruling which went through the rationale and case law in some more depth. Page 175 Is there anything that you folks would like to put on the record at this time or otherwise raise? MR. TURNER: No. Thank you. MR. DRATEL: No, your Honor. Thank you. THE COURT: Let's take our own brief break. Thank you. THE DEPUTY CLERK: All rise. *(Recess)* *(Continued on next page)* Page 176 *(In open court; jury present)* THE COURT: Let's be seated. Mr. Turner, you may proceed, sir. MR. TURNER: Thank you. Q. So Mr. Der-Yeghiayan, you mentioned before you did some undercover buys on Silk Road? A. Yes, I did. Q. Approximately how many did you do? A. Over 50. Q. Did you focus on vendors selling from outside the United States or inside the United States? A. Mostly outside the United States. Q. Why was that? A. Being that we were working at the international mail hub and we were receiving in so many international shipments, that's what we were focused on. Q. Can you take a look at what's been marked as Government Exhibit 103A. Do you recognize the pages in this document? Tell me when you're there. A. 103A? Yes. Q. How do you recognize them? A. As a screen shot that I took and as well as photographs that I was -- I witnessed. Q. And what are they screen shots and photographs concerning? A. Screen shot of a purchase of drugs that we did, undercover purchase from Silk Road and also the drug that we received. Page 177 MR. TURNER: Your Honor, the government offers Government Exhibit 103A into evidence. MR. DRATEL: Just the previous objection. THE COURT: All right. Government Exhibit 103A is received. *(Government's Exhibit 103A received in evidence)* Q. Could you walk us through what these pages reflect. A. So this is a screen shot from Silk Road of an item that we purchased, that I purchased that was from a seller that was from the Netherlands. The seller went by the name of uglydoll, and we were purchasing brown heroin, and it's .2 grams. Q. Next page. A. This is a photograph of an envelope that I retrieved from our undercover P.O. box that was addressed as we -- same name, same address that we put in our order. And I also know this came from the Netherlands, that's in the next photograph, based upon the stamp that's on there, and that it's also -- there was a stamp over it that shows it came from the Netherlands. The next page. Q. What did you find inside? A. So inside of it, once we opened up the envelope, there was a blue piece of paper that was in there that was taped together. So the next photograph shows us after we cut into the blue piece of paper, and behind that or inside of it, I should say, was a vacuum-sealed clear plastic bag that also contained multiple other plastic bags that had a brown powder substance that later tested positive for heroin. Page 178 Q. Go on to Government Exhibit 103B. Do you recognize these pages? A. Yes, I do. Q. What are they? A. It's a screen shot that I witnessed for a control buy and then also photographs that I witnessed when we seized some drugs. MR. TURNER: The government offers Government Exhibit 103B into evidence. MR. DRATEL: Same objection. Can we just get a date on this? MR. TURNER: Sure. Q. Do we have a time frame for these photos? A. The screen shot was taken March 6, 2013 and then the photographs were taken on March 19, 2013. THE COURT: All right. Government Exhibit 103B as in boy is received. *(Government's Exhibit 103B received in evidence)* Q. Is this the same crack cocaine that we saw earlier? A. This is the same. Q. Did you try to purchase the product? A. Yes, we did. Page 179 Q. What happened? A. So, this order was placed. And then shortly thereafter, it was about two weeks later, we received this envelope in the mail and it came from Germany, so those are German stamps on the outside. The vendor himself advertised actually that they would ship from the Netherlands, but what we found inside was the addressee -- I'm sorry, two screen shots, the next one -- the addressee had a German address and they're a German company. It says company Indoor Play. Q. Is this the return address? A. This is the return address on the package on the outside. But if you turn to the next page, this is also found inside the envelope that showed that the item was mailed through Postnl, which is for the Netherlands mail system. Q. They used a German stamp and mailed it through the Netherlands mail system? A. Yes. And it was addressed to our undercover name and our undercover P.O. box. Q. Next page, please. A. So this is the reverse side of the envelope showing you the envelope and then the next photograph shows you just sort of size, we put a pen there that wasn't with the package, as well as what was inside of it, which was -- showed several sheets of paper. And the next shot shows us, when you open the piece of paper, there was a piece of black foil that was in there that appeared to have items inside of it. Page 180 Q. Was this sealed in any way? A. It was vacuum-sealed. And the next photograph, once you cut open into this black vacuum-sealed foil, it had a clear plastic baggie, which contained a white, crystal-like substance that later on tested, and that's the next photograph, field-tested positive for cocaine using the reagent test kit. Q. So how many undercover purchases in total, again, like this did you make? A. Over 50. Q. And how many different dealers did you order from? A. At least over 40. Q. And how many different countries were they from? A. From approximately about ten or so. Q. And how many of the orders resulted in shipments being sent to the address you supplied? A. Nearly all of them. Q. How many contained what appeared to be drugs? A. Nearly all of them. Q. Did you send what you received to the lab for testing? A. Yes, we did. Q. And how many tested positive for the drug they were supposed to be? A. Nearly all with I think an exception of one or two. Page 181 Q. Could you turn to Government Exhibit 801, please. A. 108? Q. 801. MR. TURNER: Your Honor, actually, this is just a stipulation. THE WITNESS: A. I don't -- MR. TURNER: I'd like to read in a stipulation between the parties marked as Government Exhibit 801A. It concerns another Exhibit 801. THE COURT: Let me just explain to the ladies and gentlemen of the jury what a stipulation is. A stipulation is an agreement reached between the government and the defendant and his counsel regarding certain facts and you can accept those facts as stated in the stipulation as true. You may proceed, Mr. Turner. MR. TURNER: Can you publish Government Exhibit 801A, Mr. Evert. It is hereby stipulated and agreed by and between -- a little bigger so I can read it, thank you -- by and between the United States of America, by Preet Bharara, United States attorney for the Southern District of New York, Serrin Turner and Timothy Howard, Assistant United States Attorneys, of counsel, and Ross Ulbricht, by and through his counsel, Joshua Dratel, Esq., as follows: Page 182 If called to testify, Heather M. Miller, a senior forensic chemist with the Drug Enforcement Administration, would testify that: 1. Government Exhibit 801 is a summary chart reflecting 52 substances that were submitted for laboratory testing to the DEA North Central Laboratory in Chicago, Illinois by Homeland Security Investigations Special Agent Jared Der-Yeghiayan. *(a) The column labeled "Seizure Number" indicates the seizure number associated with the substance.* Mr. Evert, can you put up Government Exhibit 801 underneath here. Zoom in in the first few lines. *(b) The column labeled "Seizure Number" indicates the seizure number associated with the substance.* *(c) The column labeled "Date Analyzed" indicates the date the substance was laboratory tested.* *(d) The column labeled "Net Weight" indicates the weight of the substance submitted for testing, after removal of any packaging.* And to the next page. You can zoom in past paragraph two there. That's fine. *(e) The column labeled "Drug Detected" indicates any illegal drugs the substance was found to contain through testing a sample of the substance, using reliable laboratory procedures.* Page 183 *(f) The columns labeled "Purchase Date" and "Vendor" reflect information provided by Special Agent Der-Yeghiayan concerning the date when each substance was purchased from the Silk Road website and the vendor from whom the purchase was made.* 2. As reflected in Government Exhibit 801, all but one of the 52 substances tested positive for illegal drugs. So taking a look at Government Exhibit 801, can you confirm that in the second and third columns "purchase date" and "vendor" accurately reflect the dates of your purchases and the vendors you purchased them from? A. They do. MR. TURNER: So the government moves 801 and 801A into evidence, your Honor. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 801 and 801A received in evidence)* Q. Now, besides illegal drugs, were there any other illegal goods sold on the Silk Road website as well? A. Yes, there was. Q. And in particular, do you know whether fake IDs were offered for sale on Silk Road? A. Yes, they were. Q. And where were those offers found? Page 184 A. There was a forgeries category on Silk Road. Q. Can you take a look at what's been marked as Government Exhibit 116A, please. A. Okay. Q. Do you recognize this exhibit? A. Yes, I do. Q. How do you recognize it? A. It is a screen shot that I took from the forgery section of Silk Road on August 4, 2012. MR. TURNER: The government offers Exhibit 116A into evidence. MR. DRATEL: The same objection. THE COURT: Government Exhibit 116A is received. *(Government's Exhibit 116A received in evidence)* Q. So you said this was from a forgery section of the website. Where is that located on this page? A. In the upper left-hand corner under the categories list, it reflects that there's a forgery section which included fake IDs and passports. Q. And could you just walk us through what's reflected on the right-hand side, what sort of offerings are there? MR. TURNER: Can you zoom in a little bit, Mr. Evert. A. I can read off here, too. There's the, like, the top listing is for a UK driver's license, which also advertises that there's holograms on it and it's scannable, as well as forged prescription labels that can be customized, as well as it says 100-percent tested working, printable coupon collection, and then an official UK passport, as well as UK driver's license photo card and that comes with, it says, it advertises with a UV as well as hologram and a Polish national ID card. Page 185 Q. How common was it for you to see listings like this for fake IDs, passports? MR. DRATEL: Objection. THE COURT: Why don't you restate. MR. TURNER: Sure. Q. Was this the only time you saw offerings like this on the website or not? A. No. From the beginning of my investigation until the end, there was a forgery section. Q. Did you come across -- did you ever come across any offerings relating to computer hacking on Silk Road? A. Yes, I did. Q. Where on the website would you see those? A. Under various categories. There's a digital section as well as, like, other, like, computer equipment type of sections. Q. Anything else in the other sections that it would appear in? A. If I had -- let's see here. I think it was digital goods and electronics. Page 186 Q. Could you take a look at what's been marked as Government Exhibit 116B. Do you recognize this exhibit? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took from Silk Road of a hacking tools listing. MR. TURNER: The government offers Government Exhibit 116B into evidence. MR. DRATEL: The same objection. THE COURT: Government Exhibit 116B is received. *(Government's Exhibit 116B received in evidence)* MR. TURNER: Can you zoom in up at the top, Mr. Evert. Q. Okay. So, it says huge hacking pack, 150 plus hacking tools and programs. MR. TURNER: Then, Mr. Evert, can you scroll down. That's fine. Q. The description is huge 3GB plus action pack, it's probably the best deal on Silk Road to date, no, this is not a pack full of outdated, ineffective programs, all software files have been updated in the past two months and are guaranteed to work. I'll read a few of them account creator, admin page finder, aircracking for Windows, anonymous high orbit canon. Can you go all the way down. This pack includes almost every hacking-related tool available from white-hat (clean code) to black-hat (SpyEye, ZeuS, etc.) I will continuously be compiling and updating this pack. I will also be raising the price of this pack to $50 in the next month. Page 187 To the only person that gave something other than 5/5. 1/5 got virus in it. Are you serious? You purchased a hacking pack loaded with keyloggers, RATS, banking Trojans and other various malware. If that doesn't set off AV, I don't know what will. If you're still unsure of the programs, run in a VM or Sandboxed. Please don't purchase my listings if you lack common sense. If you have any questions, feel free to send a message. sniffsniff. Do you know, by the way, what malware means? A. Yes, I do. Q. What does it mean? A. It's a program that it's, like, a virus basically that will be placed on a computer. Q. What does AV mean in this context? Do you have any idea? A. I don't know -- or antivirus, I guess, actually. Sorry. MR. DRATEL: Objection. Well -- THE COURT: Hold on. Is it withdrawn? MR. DRATEL: Yes. THE COURT: All right. Thank you. You may proceed. Page 188 A. Sorry. Antivirus. A lot of acronyms. Q. So you said -- we covered all transactions on Silk Road had to be paid for in bitcoins. And I think you mentioned earlier that -- well, I'll just ask you, was there anywhere on Silk Road that you could go to in order to exchange bitcoins for cash or currency? A. Yes, there was. Q. And where were those exchange services offered on the site? A. There was a money section on Silk Road. Q. So, take a look at what's been marked as Government Exhibit 116C, please. Do you recognize this exhibit? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took of the money section, money category of Silk Road. Q. Time period do you have? A. It's from August 4, 2012. MR. TURNER: The government offers Government Exhibit 116C into evidence. MR. DRATEL: Same objection, your Honor. THE COURT: Government Exhibit 116C is received. *(Government's Exhibit 116C received in evidence)* Q. Can you show us where the money categories is reflected here? A. Again, on the upper left-hand side of the category, it shows that there's money, as well as subcategories within the money section of bullion, digital currencies and loans. Page 189 MR. TURNER: And can you zoom in, Mr. Evert, on the first two. Q. So did you look at the descriptions of offerings like these? A. Yes, I did. Q. And what sort of offerings -- what sort of things did they offer? A. Well, for instance, this top listing here it says 20-dollar bill and that's -- essentially they'll -- you're buying a 20-dollar bill of bitcoins, so basically you're exchanging out your bitcoins for 20-dollar bills being mailed to you and the other -- Q. To be clear, was it one 20-dollar bill being offered or could you just order as many as you like? A. You can order as many as you like, but the price set was 2.35 bitcoins per 20-dollar bill, so you can buy multiple. There's an option to put multiple numbers when you're buying your listing depending on how many is available, of course. Q. And the next listings says "I will buy your extra bitcoins." To be clear, what's on the side there, what kind of coins? A. The image is really hard to see here. Q. Are they actual bitcoins? Page 190 A. No, they're not. Q. Bitcoins are purely digital, right? A. Yes. Q. So it says "I will buy your extra bitcoins." What did offerings like that offer? A. So this is a vendor that's offering to purchase bitcoins. So if there's any extra bitcoins remaining in someone's account after they boxed something and they don't want them anymore or they don't -- they can't use it to buy something else, then they could go to a vendor like this on Silk Road and basically transfer their bitcoins and they'd give them something of equivalent cash or something through the mail. Q. So if you're a drug dealer on Silk Road, what did offerings like this allow you to do? A. So something like this would allow you to basically liquidate or launder your own proceeds that you were making as a vendor on Silk Road. MR. DRATEL: Objection. THE COURT: Sustained. Q. Without using legal characterizations, what did offerings like this allow a drug dealer on the site to do? MR. DRATEL: Objection. THE COURT: Sustained. You can approach it differently, but you can't approach it that way. Page 191 MR. TURNER: Okay. Q. If you're a vendor on the site and you have a lot of bitcoins from your activity on the site, what did these offerings allow you to do with those bitcoins? MR. DRATEL: I still object. THE COURT: I'll allow this. A. So, as a vendor on the site, a listing like this would be utilized to, if you earned bitcoin proceeds, to -- which every transaction is bitcoins, so all the money you're receiving for your drugs, you could then, instead of taking it offline off Silk Road and moving it to an exchange, you could just simply find a vendor like this on Silk Road and give them your bitcoins and they would then give you cash. You never really have to take your money off the website. THE COURT: Let me just ask you whether or not you ever exchanged bitcoins for cash using Silk Road? THE WITNESS: I never used it, but my other -- there are people that we -- accounts we took over that were doing that. THE COURT: So in the course of performing your duties and responsibilities, you became familiar with the exchange of bitcoins for cash through Silk Road? THE WITNESS: Yes. THE COURT: You may proceed. Q. Just to elaborate on that a little more, you took over an account that was engaged in this sort of activity? Page 192 A. Took over several accounts that were doing this. Q. And did you review the private -- did you review the activity reflected in that account after taking it over? A. Yes, we fully recorded the account. Q. And how could you tell they were engaged in this sort of activity? A. So, a few of the vendors that we took over, they had either direct listings that they would do things such as this or they would be buying from other vendors that were offering to purchase bitcoins, and we could see the transactions occur directly right on the site through their history as well as through their -- there's, like, private messages that they have. Q. Let's talk about those private messages. Besides enabling users to purchase items on the site, did Silk Road have any features that allowed users to communicate with one another? A. Yes, there was. Q. And what was that system called? A. It was called the private message system. Q. And how did it work? A. It was a internal messaging, sort of similar to, like, emailing or sending messages between users. Q. Can you take a look at what's been marked as Government Exhibit 117A. Page 193 A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took of an account that I took over on Silk Road. Q. What part of the account? A. This is the overview of and the in box of that user's messaging -- the messaging system. MR. TURNER: The government offers Government Exhibit 117A into evidence. MR. DRATEL: No objection. THE COURT: Government Exhibit 117A is received. *(Government's Exhibit 117A received in evidence)* Q. Actually, let me clarify. You talked about taking over account it, right? A. Yes. Q. And among the accounts you took over were vendor accounts? A. Yes. Q. And what did you do with those vendor accounts that you took over? A. When we took over the vendor accounts, we'd fully document them, so we'd go through all of the different available options and all of the information, the history that was on the account. Sometimes we'd leave it up for a day or two, but we wouldn't actually -- after that, we would then shut it down. Page 194 Q. You never used the accounts actually to sell drugs in an undercover capacity? A. No, we did not. Q. All right. Could you explain what is reflected in Government Exhibit 117A. MR. TURNER: Mr. Evert, can you zoom in a little bit and include the in box on the side there. Thank you. A. So on the left-hand side, it's bold, sort of hard to see. The in box, it just reflects that we're in an in box right now. There was also a section for unread messages and those are usually highlighted bold as well on your in box. And then there was a sent section, as well as a bulk reply section. So if you want to reply to multiple users at the same time, you could reply to multiple users. Q. And if you clicked on one of the messages, what would show up? A. On this instance, if you click on the message, the message that was sent from that user would appear. Q. Take a look at Government Exhibit 117B. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. As a screen shot that I took, again, in the same account that I took over from May 17, 2013. Page 195 MR. TURNER: The government offers Government Exhibit 117B into evidence. MR. DRATEL: The same objection. THE COURT: Government Exhibit 117B is received. *(Government's Exhibit 117B received in evidence)* Q. What's reflected here? A. This is logged in as that same user that was on the previous. Q. To be clear, where is that username located? A. On the upper right-hand corner it says hi and then the username in bold. This is -- once clicked into one of the messages, this one in particular on the upper left-hand corner it says from the user SuperTrips, so this is a dialogue between that user account and SuperTrips. And basically, there's a dialogue box that you can enter your message and then there's a history of messages below it. And the history is basically from the most recent received which is at the top down to the oldest message at the bottom. Q. It's like an email chain basically? A. It's like an email chain; yes. MR. TURNER: Can you zoom out. Q. And if you want to reply to the email chain, what do you do? A. In the dialogue box up above, you would just simply enter a message and then click the button go. Page 196 Q. In what other ways did Silk Road use to communicate with one another? A. There was also the forum that were available from Silk Road. Q. And what do you mean by forums? A. So there was a totally separate website that was a forum, an online forum where you could post messages and threads and you could discuss anything basically with other users. Q. What do you mean by threads? Can you just explain to the jury what that concept is. A. So basically, as a user on an online forum, you could sign up to become a user. And if you ever wanted to post a message to everybody, it's called a thread. So you basically start a dialogue box with the entire community and so you create a thread. You can say whatever you want and then any user could reply to that thread in what's referred to usually as posts. So posts would follow in a thread. Q. So your public conversation? A. Yes. Q. How would you get to these forums? A. The forums, there was a link on the marketplace to get to it at the bottom. Q. So when you say marketplace, what do you mean? A. Silk Road itself generally referred to as marketplace and then the Silk Road forums were referred to as Silk Road forums. Page 197 Q. The marketplace -- let's take a look back at Government Exhibit 132. Is this the marketplace? A. This is the marketplace. Q. Why don't you just -- up in the top left corner there's a green camel sort of logo. Was that affiliated with Silk Road? A. Yes, it was. Q. Was it on every page of their website? A. Yes, it was. Q. And where is the link to the community forums, the discussion forums? A. Bottom right-hand corner that says community forums and that would be a link to take you to the forums, which were also another hidden service on Tor. It's another dot-onion URL. Q. Can you take a look at what's been marked as Government Exhibit 118, please. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took of the Silk Road forums. Q. What date? A. From December 27, 2012. MR. TURNER: The government offers Government Exhibit 118 into evidence, your Honor. Page 198 MR. DRATEL: The same objection, your Honor. THE COURT: Government Exhibit 118 is received. *(Government's Exhibit 118 received in evidence)* Q. So what's reflected here? A. So this is -- these are the forums and each one of those yellow lists or yellow categories is a separate subforum. So the first one is Silk Road discussion and there are subforums on security, subforums on shipping, drug safety and so on. And these -- each one of those subforums would contain the threads that users wanted to post in that -- in those particular arenas. Q. And was membership on the forums included when you signed up for an account on the Silk Road marketplace or did you have to create a separate account on the forums? A. The forums themselves weren't connected to the marketplace by username. You would have to create another username and password to access the forums. Q. And did you yourself have any accounts in the forums during your investigation? A. Yes, I did. Q. Did you familiarize yourself with the sort of postings that appeared there? A. Yes, I did. Q. So just explain a little more. What sort of things would people post about in these various categories? Page 199 A. So, for instance, like, the Silk Road discussion forum would have general discussions about the Silk Road, anything that had to do with the market for the most part, any type of gossip that revolved around the market, there would be pretty much an overview type of discussion, or anything that was really popular, that's where you'd generally find a lot of the dialogue, in that forum. And the security subforum, you'd find topics or as it says in there about Tor, about bitcoins, about trying to keep your computer secure in the sense of trying to still remain anonymous while operating online. There's also a shipping category where you'd find a lot of different threads talking about how to ship things safely to your house or how to not be detected, different ways to conceal packages, different ways to avoid Customs, different ways to avoid law enforcement, what to do if law enforcement does deliver something to you and how to react. And then there was also a drug safety forum where they try to discuss how to use drugs safely and how to -- just different affects of different types of drugs. As well as a philosophy section, and it's economics and law where there was a lot of different philosophical discussions, all based around different things. And then an off-topic section where there were a lot of posts about -- and threads about pretty much anything. Anything pretty much was okay there. Page 200 MR. TURNER: Can you scroll down, please. THE COURT: Can you date when this screen shot was taken? THE WITNESS: Yes, your Honor. It was December 27, 2012. THE COURT: All right. Where do you get that information from? THE WITNESS: It's from the meta data that's on the next page on the right-hand side, so the picture properties. THE COURT: All right. Thank you. Q. Just briefly, let's take product offers in the middle, what was posted there? A. In product offers, the vendors from Silk Road, a lot of them had accounts on here on the forums that would post different products that they would either have for sale, they'd write up their own reviews, they'd discuss them on there, they liked to have threads that are up there for people to ask questions about. Q. Can you take a look at Government Exhibit 118A. Do you recognize this document? A. This is another screen shot I took of the forums. This is inside the product offers subcategory or subforum taken December 27, 2012. MR. TURNER: The government offers Government Exhibit 118A into evidence. Page 201 MR. DRATEL: Same objection, your Honor. THE COURT: All right. Government Exhibit 118A is received. *(Government's Exhibit 118A received in evidence)* Q. Briefly, could you explain how the structure of the forums worked here. Where are we in the forums? MR. TURNER: Go ahead, Mr. Evert. A. This would be after clicking into one of the subforums. If we clicked on the product offer forum, it would take us to a page that would look like this that then would display the most recent threads from top to bottom. And so, if a user would post a message on any particular thread, that thread would automatically go to the top of the page. There were threads that were referred to as being sticky, which then were stuck to the top and in this instance, that was reflected in the yellow color. So that first thread that's up on there, it says "to list offers in product offered section of forums," that was a sticky thread by one of the moderators of the forum; and then there was also -- then all of the threads underneath it were ones that were the most recent threads. Q. So then you click on a thread, then what happens? A. You click on a thread and it opens up and there would be the first initial post of the thread. And you can read through and if there's multiple pages, it would be indicated sort of -- on this page, too, you can see "1, 2, 3...14," that means there's 14 pages of posts in that particular thread. Page 202 MR. TURNER: Let's look at Government Exhibit 118B, please. THE COURT: Before we leave Government Exhibit 118A, did you yourself click on some of these threads. THE WITNESS: Yes, I did. THE COURT: And they performed as you stated? THE WITNESS: Yes, I did. THE COURT: And if you turn back to Government Exhibit -- I'm sorry. That was Government Exhibit 118A. If you turn back to Government Exhibit 118, did you, in fact, determine whether or not the content of any of these topical references, in fact, contained words that were consistent with that content? THE WITNESS: Yes, I did, your Honor. THE COURT: All right. Thank you. Now, you can proceed, Mr. Turner. Q. Along those lines, how many hours would you say you spent on the Silk Road forums? A. Probably thousands. Q. Can you take a look at Government Exhibit 118B, please. Do you recognize this document? A. Yes, I do. Page 203 Q. How do you recognize it? A. It is a screen shot that I took of a thread that was in the rumor mill section of the forum. MR. TURNER: We offer Government Exhibit 118B into evidence. MR. DRATEL: Objection also, your Honor, with respect to the date. THE COURT: Yes. Let's hold on 118B. Can you come back to that, Mr. Turner, or we can take a side bar if it's going to be difficult for you to do that. MR. TURNER: Sure. *(Continued on next page)* Page 204 *(At the side bar)* THE COURT: For a number of the most recent exhibits, which I was going to take up at the break there actually haven't been objection that had been noted on the pretrial order. So you've been saying objection, same objection, but, for instance, for 116A, for 116B, for 117A and for 117B there hadn't been objections on the pretrial order. MR. DRATEL: Right. THE COURT: So we can talk about if you have a new objection. MR. DRATEL: I didn't want to -- THE COURT: -- at a break. MR. DRATEL: That's fine. THE COURT: Now, which brings me to 118B, which hadn't been part of what I had reviewed as part of the pretrial order. So I had not had an opportunity to go over this particular document yet or to discuss what the issues might be. It's a little bit different from some of the others because from my very quick glance, it appears to have additional discussion, so I need to evaluate whether or not there are any hearsay issues or each if there's a hearsay objection. MR. TURNER: To be clear, we're not offering any of it for the truth. All we're doing is providing a tour of the website so the jury understands what we're going to be talking about later when we talk about forum posts of the Dread Pirate Roberts. So we would be fine with your Honor instructing the jury that this has not been offered for the truth. Page 205 THE COURT: All right. Mr. Dratel, tell me the nature of your objection so we have it on the record. MR. DRATEL: One is what your Honor recognizes, that is, we don't know whether any of these people are coconspirators who are posting in it, so there's a hearsay objection. The other is the date is markedly different on this one. This one is actually from 2015 on meta data. MR. TURNER: Maybe because it was transferred to different drive. We can get it from the original and correct it. MR. DRATEL: Or if he just testifies to that. MR. TURNER: Sure. MR. DRATEL: If it's the same time as the December 12, you know, that's fine, just so that it's -- MR. TURNER: It may be different -- this is one of the ones we updated. MR. DRATEL: Okay. MR. HOWARD: I'm sorry if you didn't get that copy. MR. DRATEL: I'm working off a disk. THE COURT: Hold on. Is the only remaining objection a hearsay objection? MR. DRATEL: Yes, that's correct. Page 206 THE COURT: Okay. So having reviewed this, I can, I believe, properly instruct the jury this is not offered for the truth. And I'll instruct the jury they're not the take it for whether or not so and so, in fact, tested a particular product or, in fact, received the particular product, just for the fact people are saying these things. MR. DRATEL: What appears on the site. THE COURT: Let's go back. Thank you. *(Continued on next page)* Page 207 *(In open court)* THE COURT: I apologize for that interruption. I try to do side bars as infrequently as possible with counsel because I do understand it takes time. Here I wanted to work out just where things stood with respect to a particular document. So, the government has offered Government Exhibit 118B. I'm going to receive that document into evidence. I'm going to give you a particular instruction on this. On this document, you'll see there are a bunch of words about people saying a variety of things: I have only tested X, Y or Z. This document is not being offered for the truth as to whether or not any particular person, in fact, tested or did any of the things that they're saying; it's for the fact that somebody wrote the words onto the page. So it's to give you a sense of what's on the forum. Whether or not these people did what they're saying they did is not the purpose of the document. So it's received for that purpose only. You may proceed, Mr. Turner. MR. TURNER: Thank you. *(Government's Exhibit 118B received in evidence)* MR. TURNER: We would move the exhibit into evidence. THE COURT: Yes. It's received in the manner that I suggested. Page 208 MR. TURNER: Thank you. Can you publish, Mr. Evert. Can you zoom into the first post with the category included, actually. That's good. Thank you. Q. So, is this an example of how a post would appear on the forum? A. Yes, it is. Q. And where does the thread -- the discussion thread start? A. It starts at the top, so there's the very first post is the beginning of the new thread. Q. And what section of the forum are we in here? A. Right now, it's in the rumor mill subforum. Q. So the subject of this post is what? A. It's "MDMA quality, from sellers on SR, please post reviews." Q. And who is the author of the post? A. It's on the left-hand side, it's a user -- by the username of kuddo, K-U-D-D-O. Q. And under that it says newbie. What does that mean? A. It was a ranking system that was built into Silk Road and the forum software. Q. And then over here under the subject, there's a date and time. What does that reflect? A. So this shows that that thread was created on July 17, 2011 at 2:52 p.m. and that was usually consistent with UTC time. Page 209 Q. Besides enabling users to post public messages to one another, did the discussion forums allow users to communicate in any other fashion? A. Yes, it did. Q. How so? A. There were also on the option besides posting public threads like this and having a discussion, that you could send private messages between one user and another. Q. Let's take a look at an example of that. Could you take a look at Government Exhibit 118C, please. A. Okay. Q. Do you recognize this document? A. Yes. It's a screen shot that I took from Silk Road forums of an account that I operated that was from the private messaging to private message overview. It was taken on August 20, 2013. MR. TURNER: The government moves Exhibit 118C into evidence for the same purpose, your Honor. MR. DRATEL: With the same limiting instruction. THE COURT: Ladies and gentlemen, the Court is going to receive Government Exhibit 118C. Similar to the document that you just saw in 118B, the words are not being offered for the truth of whether or not these people, in fact, did whatever it is they're talking about on 118C, just for the fact that somebody is posting those words. Page 210 All right. You may proceed, Mr. Turner. MR. TURNER: Can you post the exhibit, Mr. Evert. Q. Okay. Can you zoom into the top left. What does this reflect? A. This reflects being logged in, I was logged in under the username cirrus, and it shows a different -- the different features that are available to me. Q. And it says "my messages" here? A. Yes. MR. TURNER: Can you back out please, take a look at the in box, top half. Q. Briefly, what does this reflect? A. We're currently looking at the in box for my private messages and those are the individual -- each one of them is an individual message, if you will. Q. And just to be clear, is this the same private message system that we were looking at earlier or is it a different private messaging system? A. This message system was built into the forums. This is separate from what was on the marketplace. Q. So can we agree to call the one from the marketplace the marketplace private message system and this one the forum private message system? A. That would be accurate. Page 211 Q. Okay. And then down below, what's reflected in this half? A. This reflects that -- one of the messages being open, which is the top message that was on the message list and it's the, again, the most recent message followed by to the oldest message. Q. So the chain starts at the bottom? A. It starts at the bottom and then the most recent messages at the top. MR. TURNER: Again, just to walk the jury how to read through it, can you zoom back in, Mr. Evert. Q. So the bottom message, who is it from? A. This message was sent from a username astor. Q. What was the subject? A. The subject? There was no subject. Q. And it was sent to who? A. It was sent to my account, to cirrus. Q. The time and date of the message? Where is that reflected? A. It's sent on August 3, 2013, at 8:35 a.m. UTC. Q. Can we go back to Government Exhibit 132, please. Can we zoom into the bottom-right corner. So we look at the community forums and there's this link, Wiki. What did that link to? A. It led to a Wiki page that was available for Silk Road. Q. And what is a Wiki page? A. A Wiki page is -- it's similar to, like, Wikipedia. It's an online with add words. It's like an encyclopedia type of thing where the Silk Road built its own Wiki page, which is a tutorial effort that you can ask questions, it had guides, it had ethical information on it for users and for vendors. Page 212 Q. Can you look at Government Exhibit 119, please. A. Okay. Q. Do you recognize this document? A. Yes, I co. Q. How do you recognize it? A. It is a screen shot that I took on August 4, 2012 of the Silk Road Wiki page. Q. And what part of the Wiki page exactly? A. This one is on the buyer's guide. *(Continued on next page)* Page 213 Q. And what sort of guidance did the buyer's guide offer? A. The buyer's guide was something available to all users that would provide information on various things, such as like how to connect to the website as well as how to get bitcoins, and sort of step-by-step tutorials on how to navigate the site such as getting to the shopping cart, placing your order, payment. MR. TURNER: The government would move Government Exhibit 119 into evidence, your Honor. MR. DRATEL: No objection. THE COURT: All right. Government Exhibit 119 is received. *(Government's Exhibit 119 received in evidence)* MR. TURNER Q. I would like to read from some of this document. So it starts: "Buyer's guide. The currency used to buy stuff on Silk Road are bitcoin. Bitcoin uses encryption and a system of peer-to-peer double-checking to create a completely digital currency. No personal information is associated with your bitcoins at all, making them ideal for anonymous transactions. Additionally, Silk Road employs a built-in tumbler that mixes all incoming bitcoins through a series of dummy transactions before they ever leave. Click here for instructions on how to get bitcoins, or visit bitcoin.org to learn more." Are you familiar with the term "tumbler" in the context of bitcoins? Page 214 A. Yes, I am. Q. How are you familiar with it? A. I tested it out, trying to trace transactions that I put into Silk Road and out of Silk Road. Q. So what is a tumbler? What is a bitcoin tumbler? A. A tumbler is, sort of as is described there, where it is a way to try to mask your transactions on the block chain. Instead of being just a one transfer from one account to another, they try to put a lot of accounts in between that to try to throw you off from being able to see one transaction to another, basically. Q. Just to be clear, if I have a bitcoin address and I want to transfer to your bitcoin address and don't do it through a tumbler, how does it appear on the block chain? A. It would be just a direct transfer. It would be from your account to my account. Q. So it would just be like one green arrow like we saw earlier on the block chain? A. Yes. Q. If we run it through a tumbler, how does it appear on the block chain? A. Instead of going from your contract to mine, it would be split up. So the money would split up and go to multiple other accounts and then split up again go to multiple other accounts. This could basically balloon out to a lot of accounts before it starts coming back in together again and eventually hits my account. So it had a lot of accounts in between it, basically. Page 215 Q. What is the advantage of using a tumbler? A. It allows in this instance with law enforcement that I would know that -- MR. DRATEL: Objection. MR. TURNER: I can rephrase, your Honor. THE COURT: Rephrase. Q. Let's say that law enforcement -- as a law enforcement officer, you know a bitcoin address that I happen to be associated with and you know a bitcoin address of somebody else who I am sending bitcoins to. How does a tumbler affect your ability to trace my transfer of money to the other bitcoin address? A. As I demonstrated earlier, the block chain is public. Everything is public. All transactions are public. You could see that by going to a website like blockchain.info. I could go to a website like blockchain.info that I could view those transactions between one account and another account, and if there was a tumbler in between it, I wouldn't know who it's going to. I wouldn't be able to trace the money as easily. Q. OK. Let's keep reading. "Silk Road employs a escrow system for all transactions. This means that when you make a order, the bitcoins are deducted from your wallet, moves into a temporary escrow account, and after the vendor sends the order they confirm it being sent. When you receive the package, you confirm it being received, and the vendor receives the coin. Page 216 "If for whatever reason you do not receive the package, you can send the order into resolution, where you and the vendor can resolve the problem, or should that not work, Silk Road will step in and resolve the issue. Keep in mind, this system is to prevent fraud on both the end of the seller and the buyer." Can you scroll down, please. "Connecting to hidden services. "If you are reading this now, you have at least figured out how to access a Tor hidden service, good job. You have either installed for and configured your browser to use it, or you are using a proxy such as tor2web." Let me keep scrolling down, please. Let me read, "Receiving address." "From the moment you submit your order, to the moment it is displayed to your vendor, the information is fully encrypted and totally unreadable. Then, as soon as your vendor marks your package with the address and confirms shipment, the address is deleted forever and is not retrievable. For the extra cautious, you can encrypt your information yourself with your vendor's public key so that even we at Silk Road would be unable to view it even if we wanted to. See below for more ways to be safe." Page 217 Keep scrolling down, please. Stop. "Tumbler. Just when you thought Silk Road couldn't be more secure, we went one step further. The tumbler sends all payments through a complex, semi-random series of dummy transactions, each with a new, one-use receiving address, making it nearly impossible to link your payment with any coins leaving the site. The quantity, frequency, and number of transactions are all varied chaotically in a way that mimics the transactions of the bitcoin economy as a whole." Is this what you were referring to earlier in terms of the effect of the tumbler? A. Yes. MR. TURNER: OK. Could you scroll down, please. Q. "Receiving packages. "Use a different, unrelated address than the one where your item will be kept, such as a friend's house or P.O. box. Once the item arrives, transport it discreetly to its final destination. Avoid abandoned buildings or anyplace where it would be suspicious to have mail delivered. "Do not sign for your package. If you are expecting a package from us, do not answer the door for the postman, let him leave it there and then transport it as described above. Do not use your real name. This tactic doesn't work in some places because deliveries won't be made to names not registered with the address. If you think this is a problem, send yourself a test letter with a fake name and see if it arrives. Page 218 If you follow these guidelines, your chances of being detected are minimal. In the event that you are detected, deny requesting the package. Anyone can send anyone else anything in the mail." Besides the buyer's guide, did Silk Road also have a guide for sellers? A. Yes, it did. Q. Could you look at Government Exhibit 120, please? A. OK. Q. Do you recognize this document, this set of documents? A. Yes, I do. Q. What are they? A. A series of screenshots that I took of the seller's guide from a vendor account that I took over. Q. And the date you took those screenshots is what? A. It was September 18, 2012. MR. TURNER: The government submits or offers Government Exhibit 120 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 120 received in evidence)* Page 219 MR. TURNER: Could you zoom in a little bit, please. Q. "Seller's guide. "Client anonymity. "You and you alone will have your client's shipping address. This information must be destroyed as soon as it is used to label their package. When you click 'confirm shipment,' the address will be deleted forever and irretrievable. Never ask your clients for personal information. Under no circumstances should you save a copy of your client's address. Publish a public encryption key in your user description on your settings page so that customers can send you their info encrypted if they wish." Briefly, what does "encrypted" mean? A. Encrypted means just protected, basically. Q. In what way? A. From being read by anyone except for the user that it is intended to read it. Q. Then underneath that, it says: "Listing. "Choose the category that most specifically matches your listing, as this makes it much easier for your customers to find your listing. Your listing will appear in this, and all parent categories above it, though these pages are cached so it can take up to an hour for your listings to appear. "If you think your item could belong in more than one category, choose the one that suits it best and let us know about the ambiguity. We may be able to reorganize the categories in a more clear Page 220 "way. If your listing doesn't fit in any of the categories, it may be on our restricted items list. See below for details." Then it says: "Notice: Do not create listings that instruct customers to pay outside of escrow, or are used for any" other "purpose" -- excuse me, "or are used for any purpose other than to list an item to be sold for the listed price using the site checkout system. If you instruct your buyers to pay you in any other way, or to contact you off-site, your seller privileges will be revoked. You may provide backup contact methods in the case of site failure." Are you familiar with the phrase "selling out of escrow"? A. Yes, I am. Q. As used in Silk Road? A. Yes, I am. Q. And what does selling out of escrow mean? A. Selling out of escrow would basically be instead of using Silk Road as your platform to buy from one vendor, that you would do the order basically off line, that you wouldn't go through Silk Road. Q. So what does that mean if I'm a seller and I sell you drugs, let's say, out of escrow on Silk Road, how would that work? Page 221 A. So, for instance, if a user sees an item advertised that they want to buy off Silk Road, they would hypothetically contact that vendor, send him a message and say -- Q. How could they send him a message? A. Through private messaging that is built into the marketplace or the forum, and contact him and say I'll buy this item from you. Will you give me a lower rate if I just send you the money directly without doing it through Silk Road, and the vendor could comply with that -- Q. What would be in it for them if they did that? A. The buyer can obviously pay less than what the price is because they are not paying the commissions from Silk Road. The vendor then can also then benefit by getting more customers and be able to undercut prices from other vendors because they don't have to pay -- their product doesn't have the commissions on top of it. Q. And this rule against selling out of escrow, is this the only time you saw that rule, or was that a regular feature of the site? A. That was talked about quite a bit on the forums, and it was something that came up quite a bit as discussion. THE COURT: All right. Is this a good time to break? MR. TURNER: Yes, your Honor. THE COURT: Ladies and gentlemen, we are going to take our lunch break now. We are going to resume promptly at 2 o'clock. So I'd ask you to get back into the jury room at maybe ten minutes before 2 so that you can get everything organized to be able to come out right at 2 o'clock. Page 222 I want to remind you not to talk to anybody about this case and not to review any media. You know, if you go onto your phone and you are looking at news reports and you see anything that may relate to this case, you are instructed that you are not to read it. You are not to review any content relating to this case at all, whether it be in newspapers or blogs or anything at all on the Internet or on any TV or radio station. OK? It is very, very important that you -- if you hear something, see something, you turn the channel, you turn off the radio, you advert your eyes. All right? And not to speak with anybody about this case at all. Thank you. We'll see you after lunch. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 223 *(Jury not present)* THE COURT: You can step down also and take a lunch break and we will pick up again at 2 o'clock. THE WITNESS: Thank you, your Honor. THE COURT: Thank you. Ladies and gentlemen, let's all be seated. THE COURT: I am just waiting for the witness to leave. *(Witness not present)* MR. TURNER: I did want to now -- having had additional testimony from the witness relating to screenshots regarding computer hacking and fraudulent identification documents along with the narcotics, I did want to further indicate that the Court has made the findings that would be supportive of the co-conspirator exception with respect to the screenshots that had text that indicated either the word "forgery" or something else. In each case, as the government had proffered before trial and as reflected in the Court's decision on the motions in limine, the government's theory is that the defendant is in one or more conspiracies. As the law is clear, the conspiracy charged does not have to be the conspiracy to which something relates for purposes of the co-conspirator exception. I do find that there has been a sufficient showing of evidence supportive of a conspiracy in each of the instances where we have been reviewing the screenshots to support the finding of the conspiracy and then the material being in furtherance of. The reason that I say that is because it doesn't make any sense to have a listing on a website for purposes of buying and selling the item in question unless in fact the item is in fact what it purports to be. And so, therefore, it would be in furtherance of a conspiracy to engage in the activity indicated, either a narcotics conspiracy or computer hacking conspiracy or the fraudulent ID conspiracy. Page 224 This is by no means any kind of ultimate finding on any of these conspiracies. This is a different type of evidentiary finding simply for purposes of the hearsay objection, and I am required to make such findings in order to determine that the hearsay objection has been appropriately dealt with, and that's the reason for the Court taking the time to do that now. As I had indicated earlier at the sidebar, Mr. Dratel, there were a number of times when you had objected to documents where there were not objections that were indicated in the Pretrial Order. THE DEFENDANT: Your Honor -- THE COURT: I want us to understand what the objections were. MR. DRATEL: Sure. My client wishes to clarify something. Page 225 THE COURT: Yes. THE DEFENDANT: To your previous point, I just wanted to clarify something. THE COURT: Yes. *(Pause)* THE DEFENDANT: Thank you, your Honor. THE COURT: All right. Thank you. Mr. Dratel, on Exhibits 116A and 116B -- MR. DRATEL: Let me just go back and look at my notes. THE COURT: These are the screenshots of the -- MR. DRATEL: What you were just talking about, right. Hearsay, not part of -- not a conspiracy, not necessarily true. I mean, it is coming in for the truth when we have no idea whether these people are actually offering these items for sale, scamming the customers. There is no basis to believe that just based on a screenshot. THE COURT: I understand that position. I just note that you had not reflected that objection in the Pretrial Order, and it is of the type of objection that would have been the kind of thing you could have anticipated. Nevertheless, I am not going to find that you have waived that objection. I think it is of the type that you had elsewhere asserted. But if there are other places where, upon reflection, you think that we should include an objection, I am happy to think about that but I would like to have some advance notice -- Page 226 MR. DRATEL: Sure. THE COURT: -- if you've got an objection. That is the purpose of the Pretrial Order. The Court does understand that those are the objections up to this point. They are in the nature of the prior objections, similar to those which the Court has already dealt with, and then they were similarly overruled for the same reasons as set forth in the Court's in limine ruling and also elsewhere on the record today. All right. So that is also for 117A and 118 -- 117A, 117B. MR. DRATEL: Right. THE COURT: The same thing? MR. DRATEL: Just let me look at it. THE COURT: I believe 117B is not in for the truth. MR. DRATEL: Right. That's really for the truth, again, the question of hearsay. Also, the question of whether all the people who are posting messages there are not conspirators so it can't come in for the truth. I mean, there is no proof that they ever bought or sold -- THE COURT: Right. That is done with the purpose of my limiting instruction, and I will go back -- if you believe that there are some as to which there should be a limiting instruction in addition to that which I have already given, provided to the jury, I am happy to entertain that request. Page 227 MR. DRATEL: OK. THE COURT: You Will let me know. MR. DRATEL: Yes, your Honor. Thank you. THE COURT: I wanted to clarify that for Government Exhibit 801A, you did not object to it being received. There were objections noted in the Pretrial Order that I believe were simply to the underlying documents which we've elsewhere dealt with; is that right? MR. DRATEL: That is correct, your Honor. Once -- I think the condition of our stipulation is if the Court admitted it, we were not going to object, but obviously we object to the underlying connection for the same reasons that we did, obviously, in the pretrial proceedings. We objected on the basis of its connection to the charged conspiracies and things like that. THE COURT: All right. Is there anything else that that you folks would like to deal with right now? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: So if there is any other limiting instruction, Mr. Dratel, that you think the Court should provide, let me know and I will consider it; otherwise, I think I have done what I intended to do. MR. DRATEL: It is probably more in the nature of going back and looking at the exhibits to determine whether we will ask the Court to add certain exhibits to the instruction, to include them within the instruction that the Court gave. Page 228 THE COURT: Just let me know if you want to make an application in that regard. MR. DRATEL: Thank you, your Honor. THE COURT: We are adjourned until 2 o'clock. I have a matter in here at 1:30. I will try to do it in the robing room, if I can. But otherwise, just for purposes of giving me the opportunity to do it out here, why don't we just leave two spots on the far right, which seem to have less on it than the other tables. You can leave the Elmo where it is. MR. DRATEL: Do you want us to clear? THE COURT: Not everything. Only the two spots to my right. THE CLERK: All rise. *(Luncheon recess)* Page 229 A F T E R N O O N S E S S I O N 2:03 p.m. *(Jury not present)* THE COURT: I understand the jury is ready so let's get them out. THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. And for your planning purposes, typically, although things come up and change the schedule a little bit, typically we take our mid-afternoon break around 3:20 to 3:30, and then when we come back we go 'til just before 5. Just so that you have that in your mind. Again, if anybody needs a break on any other schedule, just make eye contact with Joe or with me. All right? Thank you. Mr. Turner, you may proceed, sir. MR. TURNER: Thank you. JARED Der-Yeghiayan, Resumed, and testified further as follows: DIRECT EXAMINATION (Resumed) MR. TURNER Q. Agent Der-Yeghiayan, when we left off we were talking about selling out of escrow. Do you remember that? Page 230 A. Yes, I do. MR. TURNER: Mr. Evert, could you put 113A back on the screen. Q. So, briefly, just to clarify, when you are talking about selling out of escrow, could you explain how it differs from the model shown on this chart? A. Sure. It would essentially be skipping this entire section, and the money just goes straight to the vendor but outside of Silk Road. Q. Was there an abbreviation ever used commonly on Silk Road to refer to out of escrow sales? A. It's "OOE." MR. TURNER: Could we go back to Exhibit 120, please, page 4, and could you zoom in at "Images." Q. It says: "Images. "Some cameras" -- just to clarify, can you remind the jury what exhibit we are reading here, what the nature of this exhibit is? A. It is from the seller's guide from Silk Road. Q. So it says: "Some cameras record information about you in an image's metadata such as GPS location. If you link to an image in your listing, be sure to remove all metadata from the file that could reveal details about your identity." Could you explain what's being referred to here? A. So what they're saying is basically there is data that's contained sometimes within an image, things such as the date it was taken, the time it was taken, as well as sometimes there could be GPS. So it is like satellite coordinates could even be included in an image if you use like a mobile phone. So it is called tagging your image. And basically they could locate you. So those coordinates would be where you took that image from. Page 231 Q. What sort of images would be posted on a Silk Road vendor page? A. A vendor could have an image that is for them as well as for the listings they are posting up so there would be potentially information in those images that basically law enforcement or someone else could find out who they are or where they are at. MR. TURNER: Could you go on to page 5, please. "Packaging," the entire section. Q. It says: "Packaging. "Every precaution must be taken to maintain the secrecy of the contents of your client's package. Creatively disguise it such that a postal inspector might ignore it if it was searched or accidentally came open. "Ship USPS if within the United States. They must obtain a search warrant to open any packages. "If the contents of the package have an odor or can be detected by canine or electronic sniffers, you must vacuum seal the package. Do not use odor masking agents such as coffee" beans -- excuse me, "such as coffee because dogs are trained to sniff for these, too. Check that the vacuum seal bag is holding tight around its contents otherwise there is probably a leak. Page 232 "Make sure the exterior of the package raises no suspicion. Look as professional as possible. The idea here is blend in as much as possible with the rest of the mail stream, which is mostly "business reply mail." Please print your labels, as handwritten labels can be a give away. "Protect the contents of your package. If your item is brittle (such as pills), it needs to be sent in padded packaging (such as a bubble mailer). Do not send pills or any bulky items in envelopes. Envelopes get flattened in automated sorting machines and their contents get crushed. "Do not reveal the details of the packaging you use. You can be tracked this way." How do these packaging practices compare to those you saw in the shipments that you seized at O'Hare? A. It was -- they appeared to take this advice because a lot of the packages did have -- MR. DRATEL: Objection. THE COURT: Hold on one second. Sustained. MR. TURNER Page 233 Q. Just in terms of the appearance, rather than anybody's intent, could you explain how the shipping practices you saw resembled the practices described here? A. They did have -- they did take steps to try to mask the odor. They did take steps to try to put foil around it under the belief that that would potentially block x-ray. So there is -- and as well as doubling up packaging as well. Q. In terms of the professional appearance of the envelopes that you seized? A. The packages did appear to be commercialized and businesslike in that they used printed labels and they used business logos most of the time, too. Q. So how could you become a seller on Silk Road, if you know? A. There is -- off the profile that you would have after you create an account, a user name, there would be a link on the account page to say "Become a seller," and you would simply click on that. Q. Would you look at Government Exhibit 121A, please. A. OK. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. This is a screenshot that I took from an account I took over on May 1, 2013. MR. TURNER: The government offers Exhibit 121A into evidence, your Honor. Page 234 MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 121A received in evidence)* MR. TURNER Q. Could you zoom in on the account links on the side. Do you see the link you were just describing? A. Yes, I do. Q. So where is it? A. It's at the bottom. It says, "Become a seller." Q. If you clicked on that link, what would show up? A. It would come up to a seller's contract on another page. Q. Could you take a look at Government Exhibit 121B. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It was a screenshot that I took from my account, and it is from October 23, 2012. Q. And what is it a screenshot of? A. It is of the seller's contract. MR. TURNER: The government offers Government Exhibit 121B into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 121B received in evidence)* Page 235 MR. TURNER: Could you zoom in under "Shop by category" down to "I agree," please. There you go. Q. OK. It says: "Get your products to your customers quickly, easily, and anonymously, as a Silk Road independent seller. Please read the following contract and the seller's guide carefully. By clicking 'I agree' at the bottom, you agree to abide by the guidelines and terms below when selling on Silk Road. "Seller contract. "Client anonymity. "You and you alone will have your client's shipping address. This information must be destroyed as soon as it is used to label their package. "Packaging. "Every precaution must be taken to maintain the secrecy of the contents of your client's package. It is your responsibility to stay up to date on the latest stealth shipping methods. Describe your items accurately and truthfully. Treat your customers with respect. Go above and beyond with them. Read the seller's guide. Don't skip this step, as it includes further information you will be held accountable for as a vendor. If you have used this account as a buyer, stop now. You want to use a fresh, clean account. Remember, violating the rules here will result in your vendor account being banned. I agree." Page 236 Did you ever test out what would happen if you click on "I agree"? A. Yes, I did. Q. And what would happen? A. It would take you to another page that then would instruct you to pay a fee to become a vendor. Q. Could we go back to Government Exhibit 132, please. Down at the bottom again there are links. We looked at "Community Forums" and the "Wiki." What was the "Support" link for? What did that lead to? A. That would lead to a customer support page for Silk Road. Q. And what could be found there? A. There would be a frequently asked -- it would be steps basically trying to provide the user information about if they had a question, it would link you to a frequently asked page, a questions page, as well as give you a link to have direct contact with a customer support representative. Q. What was that called when you would submit something to customer support? A. It is called submitting a ticket. Q. And what sort of issues would be submitted to the customer support on Silk Road? A. Anything from like an order that didn't go right or something, a problem with a vendor. Q. Now, did anyone on Silk Road purport to be in charge of the site? Page 237 A. Yes. Q. And how is that user known? A. As "Silk Road" or as "Dread Pirate Roberts." Q. Was he known by any shorter nickname as well? A. As "DPR." Q. Was the Dread Pirate Roberts a target of your investigation of Silk Road? A. Yes, he was. Q. Could you go back to Exhibit 132, please. Up at the top of the screen there is "A few words from Dread Pirate Roberts." What would happen if you clicked on that? A. If you clicked on that, it would take you to another page where you would have a message for the users on there. Q. What type of message? A. Like a greeting message. Q. How else did Dread Pirate Roberts, or DPR, communicate with the site's users? A. Through the forums. Q. Could you take a look at Government Exhibit 123, please. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a screenshot that I took of Dread Pirate Roberts' profile in the forums on April 2, 2012. Page 238 MR. TURNER: The government offers Government Exhibit 123 into evidence. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 123 received in evidence)* MR. TURNER Q. I just want to make sure, is this the exhibit that you are looking at? A. Yes. *(Pause)* No. 123 -- oh, I'm sorry. I was looking at 123A. Q. OK. A. But this is also a screenshot that I took on 123. Q. So you are looking at what we see on the screen here? A. This is Dread Pirate Roberts' profile page on Silk Road. Q. When did you take this screenshot? Is it indicated anywhere on the screen here? A. I took it at 2:30 -- around 2:34 a.m. UTC on May 9, 2013. Q. Let's just be clear, 2:34 a.m. or 5:17 a.m.? A. I'm sorry. That's 5:17 a.m. Q. So this is the forum profile of the Dread Pirate Roberts. Could you explain what that means? What was the forum profile? A. So each user would have a profile page on the forums that would be associated to their account. Q. And what was it for? Page 239 A. It was to -- it was basically to communicate with another user. If you wanted to, you could also check some statistics about the user or information or share information about a particular user from that page. Q. OK. And it says -- first of all, it says, "Date registered here." Actually, let's start over on the left. "Dread Pirate Roberts," is that his user name? A. Yes. Q. Then under that it says "Administrator." What did that refer to? A. It referred to as that user's title on the forum. Q. Is that something -- well, strike that. Underneath there is a little image of it looks like a pirate. Was that something that -- how was that determined, the image associated with your profile? A. That was referred to as the avatar, and it's basically a feature within the forum when you create a user account, that you could upload an image that you could use to use on your profile. Q. All right. Now look at the "Date registered" in the middle there. What does that refer to? A. "Date registered" would be the time that that account was registered, date and time in UCC. Q. Registered on the forum? THE COURT: What does "UTC" mean? Page 240 THE WITNESS: Universal Time, which is Greenwich Mean Time. THE COURT: All right. Q. How does that compare to the Eastern time zone? A. It is four or five hours off, depending on the time of the year. Q. Depending on the time of the year? A. Yeah, Daylight Savings Time. Q. OK. Where is it? Where is UTC or Greenwich Mean Time? A. Closest to England, pretty much. Q. So this is the date the account was registered on the forum? A. Yes. Q. And then it says "Local time." What does that refer to? A. That refers to the local time on the server. Q. Was this the time that you were on the page? A. Yes. Q. And then "Last active," what does that mean? A. That would be the last time the account was active on the forum. Q. What does it mean for the account to be active on the forum? A. The last time they actually took some time of step like click on something or was online or doing something on the forum. Page 241 MR. TURNER: Then can you zoom in on the signature on the bottom. Q. What was the signature for? A. That was a feature that any user can add a signature at the bottom of their profile. They could be anything that they want. Q. Like what sorts of things? A. It could be quotes. It could be that people would put sometimes their listings or links to their vendor profiles, things of that nature. Q. And was this something that the user that is associated with the profile would choose him or herself? A. Yes. Q. And this signature here, you took this shot when, again? A. This was May 9, 2013. Q. Was this typical when you would view DPR's forum profile, was this typically the signature you would see below? A. You would have this or other things usually related to that particular website. Q. Which particular website? A. It's the mises.org website. Q. Can we take a look at Government Exhibit 123A, the one you were looking at before. Do you see it in front of you? A. Which one? Q. 123A. Page 242 A. 123A, yes. Q. OK. Do you recognize that? A. I do. It is a screenshot again from Dread Pirate Roberts' administrator account from April 2, 2012. Q. So the one we just looked at was from July 2013. A. May. Q. Did I mess that up? A. The last one was from May 2013. Q. And this was from April the year earlier? A. Yes. MR. TURNER: The government offers Exhibit 123A into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 123A received in evidence)* MR. TURNER: Could you go back down to the signature. Q. OK. So there it links to mises.org there? A. Yes. MR. TURNER: Now, could you zoom out, Mr. Evert. Q. Was there a way of pulling up all of the posts of the Dread Pirate Roberts on the forum at one time? A. Yes. Q. How did you do that? A. It's whatever is available to your account, you could click on the left-hand side, underneath the avatar there is a feature called "Show posts." Page 243 Q. Right there. And did you ever review all of Dread Pirate Roberts' poses? A. Yes, I did. Q. How often? A. Pretty regularly over the course of the investigation. Q. From reviewing Dread Pirate Roberts' posts on the forum, what did you understand his role on the site to be? A. That he was in charge of the site, that he was operating the site. Q. Could you take a look at Government Exhibit 125A, please. Do you recognize this screenshot, or this document? A. Yes, I do. Q. How do you recognize it? A. It's a screenshot that I took, or, actually, that -- yeah, that I took that was in the forum of Dread Pirate Roberts -- one of Dread Pirate Roberts' posts, October 6, 2013. MR. TURNER: The government offers Government Exhibit 125A into evidence. MR. DRATEL: 125A is -- no objection. THE COURT: All right. Received. *(Government's Exhibit 125A received in evidence)* Q. OK. So it says at the top, is this the topic -- you tell me, where is the topic or the subject of the post? A. It is up at the top. It says, "Business as usual." Page 244 Q. And the date is June 18, 2011? A. Yes. Q. And it says: "Hey, gang, really sorry for the dead time there. Hopefully most of you got the message on the bitcoin forum or at silkroadmarket.org. The only major change is this forum. We have it running on a separate server with its own URL so that if the main site ever goes down again, first check here for updates. Unfortunately, this means we have separate logins for the main site and the forum. "As we mentioned before, everything was backed up and totally restored, but if for some reason a deposit didn't make it into your account or something like that, just let us know and we'll track it down and credit you. Also, we're giving everyone a 4 day grace period on taking orders to the resolution center before they are auto-resolved, so sellers, you may see some orders past due for a few days. "Thanks everyone for hanging in there with us. This work is scary and exciting all at the same time, and I'm really very happy to be on this journey with all of you. "Cheers, Silk Road staff." So could you explain when this post was announced? A. This is the first post that Dread Pirate Roberts, or the Silk Road at the time, made on the forums. *(Continued on next page)* Page 245 Q. And what was it announcing? A. It was announcing that he created another -- created the forum basically to help get messages out if there was downtime on the market. Q. So we saw before that the Dread Pirate Roberts account was registered when approximately? A. It was around June 2011. Q. And this is the very first post by that account? A. Yes. Q. And it's signed Silk Road staff, is that right? A. Yes. Q. So at that point, was the name Dread Pirate Roberts associated in any way with this administrator account? A. It was. Oh, at this time? Q. In July 2011? A. No, it was not. Q. When did that change? A. That changed approximately January or so of 2012, I believe. Q. Can you take a look at Government Exhibit 125B. Do you recognize the pages of this exhibit? A. Yes, I do. Q. How do you recognize it? A. Screen shots that I took of more posts made by Silk Road/Dread Pirate Roberts on October 6, 2013. Page 246 MR. TURNER: The government offers Government Exhibit 125B into evidence. MR. DRATEL: The previous objection, your Honor. THE COURT: Hold on one second. GX 125B is received. *(Government's Exhibit 125B received in evidence)* MR. TURNER: Can you put it on the screen, please. Q. Okay. So the subject is let's play the name game. The date is January 31, 2012. And it says, who is Silk Road? Some call me SR, SR admin or just Silk Road. But isn't that confusing? I am Silk Road, the market, the person, enterprise, everything. But Silk Road has matured and I need an identity separate from the site and the enterprise of which I am now only a part. I need a name. Actually, I already have a name picked out. It is a great name. You are going to love it. It is perfect on so many levels. But, I'm not going to reveal it until this weekend, when our customer appreciation sale is in full swing. And let's go to the next page, please. It this is approximately six days later, and it says drum roll please, and my new name is Dread Pirate Roberts. So after this, how did the username associated with this forum account appear? A. After this date, it was Dread Pirate Roberts on the forums. Q. And it says at the top here "Begin PGP signed message." And then at the end "Begin PGP signature, end PGP signature." Page 247 Are you familiar with PGP? A. Yes, I am. Q. Have you used PGP before? A. Yes, I have. Q. Can you explain at a general level what a PGP signature is and what it's used for? A. PGP stands for pretty good privacy, and it's basically a system that -- it's like stamping -- an electronic way of putting a signature or an electronic way to verify who you are that it's like putting a seal on something or stamping something as yours. Q. So what does it mean, "verify who you are"? Are you talking about a new identity or something else? A. No. Meaning, like, verify that the user that you originally know that person as as being that same user online, I guess. Q. So, what would you need -- if you see this, how do you verify that the user who sent this is the Dread Pirate Roberts? A. With this, what you'd have to do is you would have to have what's called a public key. So with this PGP software, when you use it, you give out other people your public key and people can put that into their PGP program. And something like this, if you wanted to verify if this message was signed by that person that you know who gave you that public key, it will verify it and tell you it's a good signature. Page 248 Q. Can you take a look at Government Exhibit 133. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took from the Silk Road marketplace of Dread Pirate Roberts' profile. Q. And what date did you take that? A. August 19, 2013. Q. And what does it contain? What information does it contain on the page? A. On his profile page, it contains Dread Pirate Roberts', his public key. MR. TURNER: Government offers Government Exhibit 133 into evidence. MR. DRATEL: Objection based on the same ground, based on the same. THE COURT: All right. Government exhibit 133 is received. GX 133 is received. *(Government's Exhibit 133 received in evidence)* MR. TURNER: Can you zoom in on the text and above starting with "The following PGP key." Q. So it says the following PGP key can be used to verify messages signed by the Silk Road administrator Dread Pirate Roberts. Page 249 Now, again, you took this screen shot when? A. I took it August 19, 2013. Q. So if you wanted to verify that a message sent by -- that a message posted by the Dread Pirate Roberts on some later date was posted by the same user who put this -- who controlled this public key as of August 19, 2013, how would you do it? A. Using this information here -- MR. DRATEL: Objection. Object to the form of the question. THE COURT: Why don't you restate the question. MR. TURNER: Sure. Q. Just explain. What is the point of this information? You see it August 19, 2013. What does it allow you to do? A. Using the public key, what I would do is basically copy that entire block from the beginning PGP public key to the end, PGP public key, and you would import it or bring it into your program, and then you could use that then to verify messages that are signed by that user. Q. And when you say verify the messages, as a practical matter, what does that mean? What does it assure you of? A. It assures you that the person that has that public key wrote that message that they signed. MR. DRATEL: Objection. Foundation. Page 250 THE COURT: Sustained. You'll need to come at it differently for that. The jury will disregard the last answer. MR. TURNER: I'll come back to it later. Q. Take a look at Government Exhibit 125C, please. Do you recognize this document? A. I'm still navigating. Q. Sure. A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took of other posts made by Dread Pirate Roberts on the forum on October 6, 2013. Q. And what is the post about? A. On which post? There's multiple posts. Q. What do they generally concern, the posts? A. There's multiple posts on the screen shot that demonstrate when the site -- the Silk Road site was down for maintenance. MR. TURNER: The government offers Exhibit 125C into evidence. MR. DRATEL: Objection for the reasons previously stated. THE COURT: Government Exhibit 125C is received. *(Government's Exhibit 125C received in evidence)* Q. Were there times when Silk Road would go down for maintenance? Page 251 A. Yes, there was. Q. And when it did, how would users be notified about it? A. Generally through the forum such as a post that would be made by Dread Pirate Roberts. Q. So, if we could -- where does this begin, which is the oldest post in the list? A. The oldest post would be at the bottom. MR. TURNER: Mr. Evert, can you scroll to the text there. Q. The top says main site down for maintenance, date July 22, 2011. It says we are down to fix a problem that has been causing intermittence over the past couple of days. So sorry for the trouble, we'll keep you posted if anything develops and hopefully we'll be back online asap. Would you please scroll up. The next couple of days later: We're live again, hopefully with no more problems, though if your fix didn't work, we may have to go down again sometime in the next few hours. Yeah, it looks like the fix didn't work, stay tuned for updates. Ok I think we got it, the recent feedback display on the homepage was the problem. We were displaying it -- the way we were displaying it was inefficient and using up all of the server resources, took it down and it seems to be fixed now. Page 252 Could you remind the jury was a server means? A. A server is just basically a computer that can host a website. Q. Did Dread Pirate Roberts ever post anything about the servers used to run the Silk Road website? A. Yes, he did. Q. From reading those messages, who did you understand who controlled those servers? A. Dread Pirate Roberts. Q. Can you take a look at Government Exhibit 125D. THE COURT: "D" as in David? MR. TURNER: Yes. A. Okay. Q. Do you recognize this screen shot? A. I do. Q. How do you recognize it? A. It's a screen shot I took of another post made by Dread Pirate Roberts that I took on October 6, 2013. MR. TURNER: The government offers the exhibit into evidence, your Honor. MR. DRATEL: Objection for the reasons previously stated, your Honor. THE COURT: All right. Government Exhibit 125D as in David is received. *(Government's Exhibit 125D received in evidence)* Page 253 Q. This is dated October 19, 2011, the title is "site outage". And it says we are terribly sorry for the sudden outage today. We will be back up as soon as possible. Thank you for your patience. Update, we are having to rebuild the site from a backup. All bitcoins in user accounts and the escrow are accounted for and all site data has been saved except for roughly the last 30 minutes of activity preceding the outage. Any messages you sent or activity you engaged in during that window will have to be re-done except for deposits and withdrawals. Also, all of the pictures were not backed up, so sellers will need to re-upload them. There was no security breach or anything to worry about that led to this situation. We lease server space in different locations around the globe through unaware third parties. We do this to hide the identities of those that run Silk Road in the event of a security breach in one of the servers. Unfortunately, this means we have to deal with some unreliable people who, without revealing too much detail, didn't keep their promises and led to our servers being shut down. Do you know what it means to lease server space from a third party? A. I'm sorry. Could you repeat? Q. Do you know what it means to lease server space from a third party? Page 254 A. Yes, I do. Q. How are you familiar with that? A. In the course of the investigation, we have leased server space from providers. Q. What does that mean? What does that mean to lease server space? A. It means going to a company that provides servers and basically leasing the server or leasing space on a server to host a website. Q. So does this mean, like, getting an actual, physical server delivered to you or does it mean something different than that? A. It means getting remote access to one through the Internet. Q. And where are the servers themselves hosted generally? A. Usually in various locations around the world. Q. All right. So besides -- besides Silk Road's technical infrastructure, what about the goods that were sold on the site? Were any of DPR's posts about that? A. Yes. Q. Could anything be sold on Silk Road or were there rules about that? A. There were some restrictions of items that could be sold. Q. And who appeared to set those rules? A. Silk Road itself, Dread Pirate Roberts. Q. Can you take a look at Government Exhibit 125H. Do you recognize -- I'll wait for you. Page 255 A. Yes. Q. Do you recognize this document? A. I do. Q. How do you recognize it? A. It's another screen shot of a post from the forums that I took on October 6, 2013 of posts from DPR. MR. TURNER: The government moves Exhibit 125H into evidence. MR. DRATEL: Previous objection, your Honor. THE COURT: GX 125H is received. *(Government's Exhibit 125H received in evidence)* Q. The title is forgeries and the date is August 5, 2011 and it says we are happy to announce a new category in the marketplace called forgeries. In this category, you will find offers for forged, government issued documents including fake IDs and passports. This category comes with some restrictions, however. Sellers may not list forgeries of any privately issued documents such as diplomas/certifications, tickets or receipts. Also, listings for counterfeit currency are still not allowed in the money section. What did Dread Pirate Roberts' posts reflect, if anything, about who controlled the commissions charged for sales in the website? A. It reflected that Dread Pirate Roberts did set the commission rate. Page 256 Q. Take a look at Government Exhibit 125G -- excuse me -- 125J, please. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took from DPR's posts on the forum that was taken on October 6, 2013. MR. TURNER: The government moves 125J into evidence, your Honor. MR. DRATEL: The previous objection, your Honor. THE COURT: GX 125J is received. *(Government's Exhibit 125J received in evidence)* Q. The subject is re: State of the Road Address. So is this post a response to something else? A. The "re" would stand for a reply to a thread, and that thread would have been, in this case, the State of the Road Address. Q. Are you familiar with the context of this post? A. Yes, I am. Q. What was it? A. In the state of the road -- State of the Road Address, Dread Pirate Roberts talked about different things that he was planning on doing with the website, as well as he set a new commission rate from a fixed rate that they previously had to a tiered commission rate. Page 257 Q. And were there some Silk Road users who were not happy about the change in the commission rates? A. There were replies that were in the original thread that were not as supportive of the changes. Q. Okay. From January 10, 2012, it says thank you, everyone for your comments and suggestions. One suggestion I especially like is the one about commission being affected by trade volume. To those of you that are either supportive of the change, or have faith in what I'm doing regardless of whether you see the point or not, thank you for your support! I have done everything I can to earn that trust and I cherish it. To those of you chalking my actions up to pure greed and ignoring the context for the changes, I say shame on you. When have I lied? When have I cheated or stolen from anyone here? When have I treated anyone unfairly? When have I led you astray? Why do you turn on me now when I have poured my heart and soul into this community and project? Ten percent on 50-dollar orders, we're talking about an extra $1.88. A ten-dollar order, an extra 38 cents. Do you think this site built itself? Do you think it runs itself? Do you have any clue what goes on behind the scenes to keep this going? Do you have any idea the risk the people operating this site are taking? Do you have any clue what we've been through to get here today? Do you have any clue what it's going to take to get through the next year? Page 258 Whether you like it or not, I am the captain of this ship. You are here voluntarily and if you don't like the rules of the game, or you don't trust your captain, you can get off the boat. For those that stay, we at Silk Road will continue to do everything in our power to keep this market running smoothly and safely, and thank you again for your support! Can you take a look at Government Exhibit 125K. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's another screen shot from Dread Pirate Roberts' forum account of a post he made and I took it October 6, 2013. MR. TURNER: The government offers 125K into evidence. MR. DRATEL: The previous objection, your Honor. THE COURT: Government Exhibit 125K is received. I'm just hesitating because I'm trying to determine whether or not the statements -- why don't you have the witness talk about who is saying what to whom? There are shaded areas, what they're referring to, and I'll see if there's an issue. MR. TURNER: Okay. THE COURT: But 125K is received subject to the Court confirming certain pieces of it, which I believe will be confirmed through additional testimony. Page 259 MR. TURNER: I'm just going to be focused on the last quarter of the document under quote number four, except for that quote. THE COURT: I see. Government Exhibit 125K is received. *(Government's Exhibit 125K received in evidence)* Q. So the subject line here is, again, re: State of the Road, this time, re: State of the Road comment. MR. TURNER: Can you zoom into this area, Mr. Evert. Q. Again, is the context of this thread, this post, still the State of the Road Address where his commission changes were announced? A. Yes, it is. Q. And it starts off, it says -- this little blue shaded area and it says, quote from paperchasing on January 11, 2012, 7:29 p.m., problem number four, what about the BTCs I send out to exchangers? Is that taxed? First of all, this is a formatting issue. What does it mean the quote from the blue shading? A. Within a post or reply you make, you could also quote other users or quote anything really for that matter by either selecting the previous post and pressing a button that would automatically quote it. Q. Down here? A. Yes. Page 260 Q. "Quote"? A. Or enter it in by hand, you can enter in a quote like that Q. So it's the username paperchasing that's being quoted here? A. The user is paperchasing that's being quoted. Q. And it was a post paperchasing made that said what about the BTCs. I send out those exchanges. Is that taxed? Right? A. The section in blue that follows after paperchasing on January 11, 2012 is the comment that was made by paperchasing or is being quoted from paperchasing. Q. Now, before you testified that there were bitcoin exchangers that operated on Silk Road itself, right? A. Yes. Q. So it says here underneath, this text here, who posted that? A. That would be from Dread Pirate Roberts. Q. It says I'm not sure exactly what you are talking about here, but the practices of bitcoin exchangers on that site are not affected by the new policies. Again, the site was never designed to support bitcoin exchange, but since people want to use it that way, we will accommodate and are presently working on a solution. Also, you are misusing the word tax, which I think is why you were accused of acting like Silk Road is a government. What you are referring to is more appropriately called a commission or a broker's fee. It would be a tax if I tried to take money from you based on a transaction I wasn't involved in. You are free to sell whatever you want to whomever you want without my interference, but if you are going to use the Silk Road platform to meet your customers and advertise your wares, you will need to pay a commission. Page 261 Thank you everyone for your support! Going back to the seller's guide for a minute, we talked about the rule that banned Silk Road sellers from selling OOE or out of escrow. Do you remember that? A. Yes. Q. Did DPR ever post anything about that rule on the forums? A. DPR would remind users if there was a vendor that did this, that it's prohibited. Q. Could you take a look at Government Exhibit 125G. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It is a screen shot that I took of DPR's posts from the forum which I took on October 6, 2013. MR. TURNER: The government offers 125G into evidence. MR. DRATEL: Same objection, your Honor. THE COURT: Government Exhibit 125G is received. Page 262 *(Government's Exhibit 125G received in evidence)* Q. It says here vendor roundtable/the rules are like gravity. What section of the forum was this in? A. This was in a restricted -- it was a hidden forum within the forum that was only available to verified vendors from the Silk Road marketplace. Q. And the topic is "The rules are like gravity," the date is November 25, 2012. Each week I get a report from my reps. Part of that report is the vendors who were demoted that week. There is always at least one, with the most common offenses being asking customers to pay directly, going around the escrow system, and scamming customers by asking them to finalize early. One demoted vendor this week was pleading for his account back over and over and wouldn't take no for an answer. I hate seeing that kind of thing, but for a rule to have any meaning, it has to apply in all cases all the time, like the laws of physics. Gravity doesn't care if your intention was to fly or jump, or how important or insignificant you are. It will pull you down every time in the same way. Just like that, we will enforce the rules every time, in the same way, to everyone. If you are breaking the rules, it is only a matter of time before you will be demoted. Please have the integrity to play by the rules of the game you signed up for so we don't have to keep ruining people's businesses and dealing with the fallout of scams. It's not worth it. Page 263 To those honoring the contract you signed up with (99.9 percent of you), thank you for your shining example! You testified earlier that most of the drugs -- excuse me -- most of the goods on sale on Silk Road were illegal drugs? A. Yes, they were. Q. Now, based on DPR's posts, did DPR seem to be aware of that? A. Yes, he was. MR. DRATEL: Objection. THE COURT: Hold on one second. Sustained, and that answer is struck. Q. Take a look at Government Exhibit 125L. Do you recognize this document? A. I do. Q. How do you recognize it? A. It's a screen shot of a post from DPR that I took on October 6, 2013. MR. TURNER: The government offers 125L. THE COURT: 125L as in Larry. MR. DRATEL: The previously stated objection. THE COURT: All right. GX 125L is received. *(Government's Exhibit 125L received in evidence)* Page 264 Q. The subject is just "re: chat" and it says it's great enough -- excuse me -- it's great to see that my words are resonating with so many of you. It's a privilege to have a stage to speak from here. It doesn't get said enough, and it is hard to get across in this medium but...I love you. Who knew that a softy could lead an international narcotics organization? Behind my wall of anonymity, I don't have to intimidate thankfully, but, yeah, I love you guys. Thank you for being here. Thank you for my comrades. Thank you for being yourselves and bringing your unique perspectives and energy. And on a personal note, thank you for giving me the best job in the world. I've never had so much fun. I know we've been at it for over a year now, but really, we are just getting started. I'm so excited and anxious for our future, I could burst. Did Dread Pirate Roberts run the site alone or did he have a support staff? A. He had a support staff. Q. How do you know that? A. Because I took over the account that was one of the support staff's. Q. And when you say "took over," remind the jury what you mean. A. That means that either through interview or arrests, I was given consent to utilize an account that belonged to his support staff. Page 265 THE COURT: Could you explain that a little bit more. THE WITNESS: Sure. So, through the course of the investigation, identified someone that was a support staff member that through interviewing and through talking to the person, they were -- they gave us authorization, the government, to use that account by giving us the username and password to all the different marketplace and forum that account had. THE COURT: All right. Q. What was the username associated with the support staff account that you took over? A. It was cirrus. Q. How do you spell that? A. C-I-R-R-U-S. Q. And approximately, when did you take over the cirrus account? A. It was late July 2013. Q. And was this an account on the Silk Road marketplace or the Silk Road forum or both? A. It was both. Q. When you got access to these accounts, did that access include the private message in boxes associated with the accounts? A. Yes, it did. Page 266 Q. And when you took over the accounts, were there any messages in those in boxes already? A. Yes, there was. Q. Could you take a look at Government Exhibit 126A. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It was a screen shot of one of the private messages that was in the account that I took. I took the screen shot on September 30, 2013. Q. And when you say private messages, are you talking about the forum private message system or the marketplace private message system? A. This was a forum private message. Q. And this was the cirrus account on the forum? A. Yes, it was. MR. TURNER: The government offers 126A into evidence. MR. DRATEL: The previously stated objection. THE COURT: All right. Government Exhibit 126A is received. Hold on for just one moment if you would, please. *(Government's Exhibit 126A received in evidence)* THE COURT: What was the approximate date when you took over the account, sir? THE WITNESS: Approximately July 26, 27th of 2013. THE COURT: Thank you. Page 267 You may proceed, Mr. Turner. MR. TURNER: Thank you. Can you publish the exhibit, Mr. Evert. Q. Where does the chain begin? Top or bottom? A. The post in the bottom is the oldest post. Q. Okay. It was sent July 12, 2013 a.m. So was this already in the in box by the time you took it over? A. Yes, it was. Q. And it's from Dread Pirate Roberts, and who is it to? A. It was sent to the other staff support administrators and also the account that I took over. Q. It was sent to cirrus? A. Yes. Q. And the other usernames were -- MR. TURNER: Could you blow that up Mr. Evert? A. It was samesamebutdifferent, inigo and libertas. Q. Okay. And it says hey, gang, we have a new moderator going by the name cirrus. We used to know him as scout. Cirrus has always been dedicated to our common goals and the community at large and we put what happened surrounding Mr. Wonderful behind us so he can come back onto the team. The scout persona is still off limits and should not be discussed, so we'll always refer to cirrus as cirrus, even though we know the same person is behind both accounts. And then it says -- there was a reply from cirrus. Is this by you or the person who previously controlled the account? Page 268 A. No. It was by the person who previously controlled the account. Q. It says thank you for the introduction! I'm really excited to be back and working with you guys. Missed you all! So you said these other individuals -- other usernames here samesamebutdifferent, inigo and libertas, were they also support staff members? A. Each of them did different roles within the forum and the marketplace, but they were all part of the support staff. Q. And it says that we have a new moderator going by the name cirrus. Did you actually start performing the duties of a moderator after you took over the cirrus account? A. Yes, I did. Q. Could you explain what those duties were and what you spent most of your time doing. A. So, as a moderator over the forums, it would be basically trying to keep the forum clean in the way that DPR wanted it to be. Q. Clean how? A. Clean in that making sure that posts that were new threads that were in certain subforums were moved to the appropriate subforums. So if someone posted something about security in the main discussion forum, I would move it to the security forum. Page 269 Q. When you say clean, you mean organized? A. Organized; yes. Q. Okay. A. As well as if there was something that was posted, such as they call it spam where a -- either a computer or some other person might be posting messages on the forum that was advertising or trying to put a lot of things on there that was unrelated to Silk Road, we would be, as moderator, responsible for removing those posts and deleting them. Q. What other things? A. In addition, answering customer support issues and there's a customer support forum that was at the bottom of the forums. And so, Dread Pirate Roberts wanted support staff and the moderators to respond to every one of those support threads that were on there. Q. So what were some of the comment -- support questions you answered? A. A lot of the support questions I'd answer would be things about how do I get to the site or how do I get help with this or this vendor didn't help me or didn't get my product or my bitcoins didn't show up in my account, how long should I wait, those types of questions. Q. How many hours a day would you spend working undercover as a Silk Road moderator when you took over the account? Page 270 A. Anywhere from ten to 12. Q. Ten to 12 hours? A. A day. Q. Were you paid as part of your position? A. Yes, I was. Q. By the hour or the week? What? A. By the week. Q. What was your salary? A. Salary was paid in bitcoins, and it was roughly about a thousand dollars a week. Q. And who paid you? A. It was Dread Pirate Roberts. Q. How would you receive payment? A. It would be sent to my market account that I had, so it would be credited from the admin to my account from Dread Pirate Roberts. Q. When you say the market account, you mean the Silk Road marketplace? A. Yes. Q. Can you take a look at Government Exhibit 126C. A. Okay. Q. Do you recognize this document? A. I do. Q. How do you recognize it? Page 271 A. It's a screen shot that I took of the account history page from my undercover account. I took it on September 26, 2013. MR. TURNER: The government offers 126C into evidence, your Honor. MR. DRATEL: The same objection, your Honor, as previously stated. THE COURT: GX 126C is received. *(Government's Exhibit 126C received in evidence)* MR. TURNER: Publish it, Mr. Evert. Q. What are we looking at here? Which account is this? A. This is my cirrus account. Q. Where is that reflected? A. Up in the upper right-hand corner. Q. What's on the left side? A. On the left-hand side, it's just the account history summary. So this would be a roughly a two-month history of the account of what it received. Q. So where is -- can you just point us to a sample payment of your salary. A. So the most recent payment that was received in the account on this history page would have been the one at the very top where the action came from admin. And in the notes, that number there is the user number that's for Dread Pirate Roberts that I recall. And the amount shows that I got transferred from admin eight bitcoins and that the balance in my account was eight bitcoins. Page 272 Q. How much was eight bitcoins worth at that point? A. It was about, like, $120 a bitcoin or so at that point. Q. So how much in total? A thousand dollars? A. Roughly, yeah, like a thousand dollars. Q. And beyond just knowing the user number there corresponding with Dread Pirate Roberts, how else would you know that Dread Pirate Roberts was the one sending you this salary payment? A. Some of the times when I received these, I would send a reply on the forum to Dread Pirate Roberts telling him thank you for the payment and he'd reply back you're welcome or something to that effect. Q. Can you take a look at Government Exhibit 126D, please. Do you recognize this exhibit? A. Yes, I do. Q. How do you recognize it? A. This is one of the private messages that I sent from my cirrus account on the forums to Dread Pirate Roberts. MR. TURNER: The government offers 126D into evidence. MR. DRATEL: The same objection. THE COURT: All right. Government Exhibit 126D is received. *(Government's Exhibit 126D received in evidence)* Q. Going down to the first message down at the bottom it says from you to Dread Pirate Roberts, right? Page 273 A. That's correct. Q. August 9, 2013, thanks for the bitcoins. And then the reply is you're welcome! Thanks for looking after the forums. As a moderator, did you have any access to parts of the site that ordinary users couldn't see? A. I did. Q. Like what? A. There were restricted forums that were -- that I was able to see, such as a vendor roundtable forum and there was also a recycle bin that I could see. Q. Did you have any permissions and abilities that ordinary users didn't have? A. Yes, I did. I had -- on the forums, I had administrative rights, unlimited administrative rights that I could search for different users and search through the databases that we had of users, that wasn't something openly available as a general user, as well as the ability to edit, delete and move threads and posts on the forum. Q. Were there any limits on your administrative powers? A. Yes, there were. Q. How do you know? A. Because just knowing that there was other features that I couldn't access within the admin panels and there was areas that I couldn't see that from discussing it with other people such as Dread Pirate Roberts would tell me that there's other things that's available basically. Page 274 Q. So who set the restrictions on your abilities, your administrative powers? A. Dread Pirate Roberts. MR. TURNER: Going back to 126A, can you bring that back up, Mr. Evert. Q. This message is from samesamebutdifferent, inigo and libertas, do you know what the roles of these users was on the site? A. Yes, I do go. Q. Beyond what you've already told us? A. Yes. Would you like me to go into that? Q. Yes. But you know what, let me go back to one thing before we leave the bitcoin payments. What did you do with the bitcoins you received as salary as an administrator? A. Back on the history page, you'll see that after every time we received a payment from bitcoins -- MR. TURNER: 126C, Mr. Evert. A. After every payment was received, withdraw it either the next day or the same day of, as soon as we could, and withdraw it to another undercover bitcoin wallet and then also transfer that, then, to an exchange that was also registered with an undercover account where we would convert the bitcoins into dollars and then seize them. Page 275 Q. So what agency did the bitcoins or the dollars from the bitcoins ultimately end up with? A. With HSI. Q. So let's go back again to 126A. You were about to say -- what were the roles of inigo, libertas and samesamebutdifferent on the site and how do you know? A. Samesamebutdifferent was a -- primarily a forum moderator for a little bit. He did have access over the marketplaces and admin, but that didn't last long. Instead, he focused primarily on trying to answer customer support tickets or customer support issues in the forum. Q. How do you know this? A. Because from talking to samesamebutdifferent as well as sending a lot of private messages between himself and I, we would split the work that was done because he was located in Australia, I was located in Chicago, and there were times that generally I'd be asleep, he would cover the customer support and vice versa. Q. And how about inigo? A. With inigo, inigo was primarily over vendor support on the marketplace, also had administrative capabilities on the forums. Q. What do you mean by vendor support? A. Vendor support was a feature of support that was available to vendors that they could contact vendor support if they had an issue that they needed to resolve. Page 276 Q. Like what? A. Such as like an order that a buyer hadn't paid them for or an order where there was a problem with the listings or a problem with a withdrawal that the vendor needed help with, they would give more priority to the vendors. MR. DRATEL: Object just on grounds with respect to forum violation. THE COURT: Hold on one second. Let me just read the answer. What's the basis for that answer that you just gave about the vendor support? THE WITNESS: It was through my direct chats that I had had with inigo. THE COURT: All right. I will allow it. When you reach a logical breaking point, I know it's a little early, but there are a couple of things I just want to go over so it will be good to take it a few minutes early if we can. MR. TURNER: Three more minutes, your Honor. THE COURT: Sure. Q. So inigo was in charge of vendor support. How about libertas? A. But also going back to inigo, in addition to vendor support, he also had access to customer support, which is just, again, the same thing but for customers. Page 277 Q. Buyers? By customers you mean buyers? A. Yes. So he would do a little bit of both. And then libertas was also customer support primarily on the marketplace, so he would handle the tickets that would come in for customer support on the market and respond to those and would sometimes also cover some of the duties of vendor support. Q. Did you know whether the other members of the support staff were paid like you were? A. Yes, they were. Q. How do you know? A. From direct chats with them. Sometimes when I wasn't paid, either when we were expecting to get paid, my conversations with them would also reflect that they didn't get paid, too, and they were telling me they didn't get paid. Q. Samesamebutdifferent, did he have any other nicknames? A. He did. Q. What were they? A. He also went by, for short while, symmetry, which was his administrative name on the marketplace; and then also had batman73, which was his account that he used primarily on the market; and he was also commonly referred to as SSBD, which is short for samesamebutdifferent. MR. TURNER: Your Honor, I can stop there. Page 278 THE COURT: Let's take our mid-afternoon break. Ladies and gentlemen, we'll take about 15 minutes, and then we'll resume. We'll go then until just a couple minutes before 5:00. Thank you. I want to remind you not to talk to anybody about this case, including each other. Thank you. THE DEPUTY CLERK: All rise. *(Jury excused)* *(Continued on next page)* Page 279 THE COURT: Why don't you step down and take a break as well. *(Witness temporarily excused)* THE COURT: Let's all be seated. I wanted to go over on the record the basis for a number of my rulings because the record I think is developing and I want to make sure that the record is clear as to the basis for the ruling. Now, let's go back to the government exhibits. These are all government exhibits that I'm talking about so they all begin with the prefix GX. But for a number of them, there are portions of what we have just been going over that are not offered for the truth, but there are some portions which are offered for the truth. Sometimes it might just be a snippet. So we'll go over a couple of those in terms of where they would fall within the hearsay rule. I would note that for the Vayner objections, I have found specifically as the government had proffered pretrial, that there has been a sufficient foundation laid and authenticity for the various documents through this witness who has personal, firsthand knowledge and has now laid an appropriate evidentiary foundation. So the Vayner objections are overruled. Starting with 125B and let's go through a couple of these. While the government had said in the pretrial materials I think that this was -- let's make sure that I've got the right one, see response to 125A, which puts us back to 123 -- which is that Vayner is inapposite and not offered for truth. Page 280 I think that 125B, there's a portion of it which could be considered as being offered for the truth, which is the portion and only the portion "I am Silk Road, the market, the person, the enterprise, the everything," to the extent that is offered for the truth, these, and there are a series of them, would come in under 803 as a business record relating to Silk Road or 801, subject to connection ultimately, because the ultimate factual issue as to who this is is to be determined, but based upon the government's theory, it would be 803 and 801. That actually is the same for a number of these exhibits. Now, for Government Exhibit GX 133, this is another one where there had not been an objection previously noted, and part of the reason for that is because it wasn't on the original pretrial order. So I just wanted to make sure that we had noted for the record, Mr. Dratel, what your objection is. Obviously -- well, I won't say "obviously" anything. Why don't you tell me what the basis for your objection is for GX 133? MR. DRATEL: It's hearsay. And also with respect to the business record aspect of this, there hasn't been a witness in this -- and I don't think this witness has done it at all -- which is to lay the foundation of business records in the context of contemporaneous record-keeping, verifiable. This is all coming after-the-fact. These are all posts and other things that he's coming in a year, a year or two later. I don't think that it meets the criteria for a business record, and 133 would qualify in the same way as well. Page 281 THE COURT: I have a response, but why don't I give the government an opportunity to address that if they choose to do so. MR. TURNER: We can lay a foundation. He used the forum extensively and could explain every time he posted a message, it would show up on the forums with the characteristics that have been displayed in the various exhibits. But we do think these are all, most of them are not really offered for the truth. They're just things that DPR did that show his leadership role over the site. As your Honor pointed out, to the extent they do reflect statements offered for the truth, they're party admissions we would argue. THE COURT: That would be under the other portion of the rule and some of them are under 801. Let me also, in addition to the government's response which I would agree in terms of the hearsay, I would make the additional points that as custodians of records for purposes of 803 business records are often custodians who come into business records after-the-fact, and the question is whether or not the particular business appears to have been run in all ways and in a similar fashion. Page 282 Here, this individual who is testifying based upon firsthand knowledge is also testifying based upon being an undercover albeit, but a staff member of the very business here. It's as if he went into a brick and mortar business and was working as a customer service representative in a brick and mortar business answering a telephone. Instead, he's at a computer screen. In any event, it's, as I said, subject to connection ultimately in terms of the admission of Dread Pirate Roberts because we have to connect that if the government does at all through the testimony and other evidence to come. As we know, the Court's evidentiary rulings are not on the same -- they don't have the same burdens as a criminal verdict would. It's not a beyond-a-reasonable-doubt standard; it's a preponderance of the evidence and/or, for certain rulings, just whether or not it's supportive, more supportive than other inferences. So the Court does find for purposes at this point that there's a sufficient basis. But let me go through a couple of the others because there are a number of these: 125D was not offered for the truth. That's about maintenance, and it doesn't really matter what was, in fact, happening, whether these maintenance issues, in fact, occurred or did not occur, so it's not a hearsay issue at all. As to the Vayner issues there, that is, I have overruled the Vayner issue as to all of these documents. Page 283 In terms of 125H, there is a possibility and, indeed, I would suggest that the way the questions came out, the government was asserting that the forgeries were for the truth. 125H, to the extent forgeries is offered for the truth, that falls under the business record and issue that I just talked about. In terms of GX 125J relating to commissions, the government has discussed the fact of commissions as being among the points it's intending to make at this trial; therefore, to the extent that any of it is offered for truth, there's not quite a clear statement saying "I take commissions," but that's the overall inference of that entire piece. That would be a business record. 126C, that's a business record of salary of Silk Road administrators. 126D is not for the truth. 125K is not for the truth. 125G is not for the truth in the sense that it's not being necessarily offered for whether or not Dread Pirate Roberts receives reports from his reps, but to the extent it is, it would be a business record subject to connection. 125L is in part offered for the truth. That's the statement about leading an international narcotics organization, as well as the time frame of having been at it for over a year. 125L would fall under 801 or 803, those portions which are potentially in fact offered for the truth there. There is a lot of 125L that is not offered for the truth. Page 284 In terms of 126A, that is, in large part, a coconspirator statement. 126A was drafted, as I understand it, by an administrator of Silk Road prior to the time that the witness on the standard, Mr. Der-Yeghiayan, had actually taken over; therefore, it would have been between two individuals working on Silk Road and it would therefore fall under the coconspirator statement, as well as dealing with administrative matters and therefore being a business record. So to the extent that any portion of that is for the truth, it's not clear that any of it is, it's really for the fact that it was said, it would fall under those exceptions and provisions. Those are, I think, give you a sense as to the rulings. They're all of the same type. So if I have missed one, I think it's relatively straightforward to understand based upon those rulings the similar bucket that it would fall under. Is there anything that you folks wanted to raise or to further comment on? No, your Honor. MR. DRATEL: Just a couple of things, your Honor. Obviously, we preserve our objection on that regard. THE COURT: Yes. MR. DRATEL: A couple of things, one is 125A. I think I mistakenly said no objection, and we had previously objected to that and I would like to reassert that objection. Page 285 THE COURT: Let me just doublecheck. All right. You did have an objection on the pretrial order. Does the government have a view as to Mr. Dratel's assertion now and objection that he otherwise had waived? MR. TURNER: I think it's of the same character as the exhibits that your Honor just covered. It's not really offered for the truth. It's just offered to show -- to reflect, it's an exhibit that reflects DPR's control over the infrastructure on Silk Road. THE COURT: There were two objections for 125A set forth on the pretrial order. One was a Vayner objection. For the same reasons that I have already described with respect to the other Vayner objections, that objection is overruled. I agree with counsel that 125A is not offered for the truth; it's about the fact that these words were said. There are not particular factual assertions within them and therefore it would not be considered hearsay and falls outside of the hearsay rules. Was there something else, Mr. Dratel? MR. DRATEL: Yes, two things that are related: One is that, and I'm not saying this was intentional, but Mr. Turner did, in reading, missed some words and misread a couple of times. Remind the jury that it's what's written there and not what counsel said, not so much to cast aspersions, but really it's just about when you read long blocks of texts, sometimes that happens. Page 286 The other issue on the reading is there was some inflection of particular words, the word physics. So I just think that that is not necessary obviously. And that's one of the problems with the whole issue of reading versus reading aloud and there was an emoticon on one of those which wasn't referred to at all, so I hope the jury was reading it. They should be instructed they should be reading what's on the screen. THE COURT: I can refer them, if you want me to, to the emoticons and be sure that they follow them for each of the documents. Do you want me to do that? MR. DRATEL: I think they should be instructed that they should be reading along when someone is reading it out loud because there may be symbols or other nonverbals, and the way chats are written -- THE COURT: I'll draw their attention to the symbols because of the consistency over time with the symbols. Do you want me to do that? MR. DRATEL: I just would like the Court to just -- THE COURT: I'll give them an instruction -- MR. DRATEL: Instruct them that they should be reading because these were originally written. And while they're being read aloud as an aid, the fact is, the written word is the real evidence. And occasionally counsel will make mistakes or misread, not intentionally again, but they should be looking at it and there may also be nonverbal symbols and things like that that they should be looking for and recognize. Page 287 THE COURT: Mr. Turner, do you have any objection to the Court giving that kind of instruction? MR. TURNER: No, your Honor. Two things: If counsel wants to make a correction if I've slipped up after I'm done reading a paragraph, I have no problem with that. I'm certainly not infallible. And I'm happy to say "smiley face" if there's an emoticon like that on the screen if counsel would like that read into the record. I didn't do that just because I thought counsel had an objection to doing that. THE COURT: Do you want, Mr. Dratel, for counsel to pull out the emoticons specifically when they appear or just to leave it after I have given my general instruction? MR. DRATEL: I think if someone is reading something aloud, they should say there's an emoticon, and let the jury decide what it means rather than characterizing it. THE COURT: All right. I think that's what we'll do. So I'll give that instruction and make some comments consistent with our conversation just now. Is there anything else that you folks would like to go over? MR. TURNER: No. MR. DRATEL: Just a cautionary about the emphasis issue. Page 288 THE COURT: Yes. I think with physics, it was more of what I would call a pregnant pause. It was only a nanosecond, but I understand. So to the extent, Mr. Turner, you can avoid anything like that, that would be helpful so that we don't run into any other issues. MR. TURNER: Yes. THE COURT: Anything else? MR. DRATEL: I think that's it. MR. TURNER: Yes. THE COURT: Let's take our own very brief break now that we have already taken 15 minutes and come back to get the jury out here. THE DEPUTY CLERK: All rise. *(Recess)* *(Continued on next page)* Page 289 *(Jury not present)* THE COURT: On the prior -- can you pull that door closed? There we are. On the prior evidentiary rulings, I had talked about the Commission document -- which one was it, do you folks remember? I can find it. 125J. MR. DRATEL: It is 125J, yes. THE COURT: OK. No, I don't need to add anything other than what I have already said. OK. Joe, why don't you get the jury. THE CLERK: OK. *(Continued on next page)* Page 290 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, as you get to your seats, let's all be seated. All right. Mr. Turner, you may proceed, sir. MR. TURNER: Thank you. MR. TURNER Q. Agent Der-Yeghiayan, the whole time while you were working as a moderator in an undercover capacity, who was your boss? A. Dread Pirate Roberts. Q. And in what way was Dread Pirate Roberts your boss? A. He would be the one that paid me. He would be the one that would grant me new authorities on the website. He would be the one that would give direction and make the final say on a lot of either issues we would bring up, or if there was a discrepancy or an error or something with the site, we would bring it up with him to fix. Q. And was he the boss over the rest of the support staff, too? A. Yes. Q. How do you know? A. Because whenever I would bring up an issue or discuss something with other support staff, it would always be deferred to Dread Pirate Roberts, or it would be decided by Dread Pirate Roberts in front of all the rest of the support staff, too. Page 291 Q. And by "in front of," what do you mean? A. In conversation, that would be sort of like the private message that you would see between all the moderators and staff. Q. And when Dread Pirate Roberts would communicate with you directly, how would he do so? Through what system? A. He would -- there was a -- it was referred to as staff chat that he set up, and it was a live chat server that he set up on Tor that would allow the staff to communicate in a live-like manner. Q. So let's back up. We've already seen private messages between you and Dread Pirate Roberts, right? A. Yes. Q. On the Silk Road forum? A. Yes. Q. Are you talking about something different now? A. There is private messaging on the marketplace. There is private messaging on the forums, and then, yes, this is something different that we referred to as staff chat. Q. Is staff chat a part of Silk Road or was it something separate? A. It was completely separate from Silk Road. Q. When you -- well, was it -- did it involve chatting over the ordinary Internet or was it chatting over Tor? A. It was still a Tor hidden service but it was still a tor.onion address. Page 292 Q. How did you know how to set up this ability to communicate with DPR through the Tor chat system? A. The instructions that were provided by DPR to the original operator of the account that I took over was in private message. So I was able to set up the same configuration on my computer to have that type of chat capabilities. Q. Could you take a look at Government Exhibit 127. Do you recognize this document? A. I do. Q. How do you recognize it? A. It was a screenshot that I took on September 30, 2013 of a private message that was in the Cirrus account that I was operating. Q. When you say it was in there, was this a private message that was already in the Cirrus in box by the time you took the account over? A. Yes. MR. TURNER: The government offers Exhibit 127 into evidence, your Honor? MR. DRATEL: Objection. Hearsay, your Honor. THE COURT: GX-127 is received. *(Government's Exhibit 127 received in evidence)* THE COURT: Now, are you going to read from that document? Page 293 MR. TURNER: I am partially, your Honor. THE COURT: All right. So let me just -- I meant to just mention to the ladies and gentlemen of the jury a couple of things about documents. When you hear the Court receive a document into evidence, it is the document that is the evidence. Counsel may read things, parts of it, but if the entire document is in evidence, it is the document in evidence. So, for instance, if a word gets skipped over, "it" or, you know, some word is skipped over, it is the document that is actually in evidence and the text on the page. Similarly, you have seen in a couple of these documents that there are emoticons, and so you should note that and that is part of the evidence of the document. So you can note whatever nonverbal statements may be made on the page in terms of punctuation and things of that nature. All right. You can go ahead and proceed, Mr. Turner. MR. TURNER: Thank you. Can you publish Exhibit 127, Mr. Evert. Could you zero in on the -- whoops -- the bottom message, please, down a third of the way. That is good. Q. So this was a message sent from Dread Pirate Roberts to Cirrus on July 20, 2013. This is about a week before you took over the account? Page 294 A. That is correct. Q. It says: "Hey, we are all on a more secure chat channel. Here are the instructions for joining in: "1. Download and install Pidgin." Do you know what "Pidgin" refers to? A. Yes. It's a program that you could use to do Internet chat. Q. Would you go down, please. And then, 13, it says: "Add buddy 'dread@'" and then there is a long string of text ".onion. If I'm online we'll connect. There are a few more steps to finalize OTR, but those can be done once we're chatting." What does "add buddy" mean in this context? A. Add buddy would be like adding a favorite or a friend to your account, someone you could easily connect to. Q. Could you just explain generally what is like Internet chat and how does it compare to like private messages that we had been looking at? A. Private message would be similar sort of to I guess email where you would send a message, wait for a reply. That person could reply whenever they are back online, they would see the message. Whereas, Internet chat would be something where both users are online at the same time and they communicate in realtime in the same like box in front of you. Q. And "box," you mean like window? Page 295 A. Yes. The window box, yes. Q. So did you -- I'm sorry, could you go back to 127, Mr. Evert. Could you go up to Cirrus' reply. This reply was sent July 20, the same day. "I'll get it set up ASAP. Using Adium on Mac, which has a few other fields, so it'll take a short bit of trial and error. Be there when I can!" What does Adium refer to? A. Adium is similar to Pidgin, which is another program you can use to do Internet chat. Q. What kind of computer were you using in your undercover capacity? A. It was a MacBook. Q. So what program did you install to chat with Dread Pirate Roberts? A. I used Adium as well. Q. So once you got the program set up, how often would you chat with DPR? A. It would be probably every few days or so. Sometimes it might be a week before I would chat again with him. Q. How did DPR initiate a chat with you? A. DPR would be able to see since -- I would be able to see if he was online because I would buddy him and it would notify me when he was online or available to chat. And the same thing; he would see if I was online and available to chat, too. So you just simply have to click on the user's name and you could then initiate a chat with them. Page 296 Q. Could you take a look at Government Exhibit 127A. A. OK. Q. Do you recognize this exhibit? A. Yes, I do. Q. How do you recognize it? A. It is a screenshot I took of my entire computer screen. Q. On what date? A. I took this on September 22, 2013. Q. And what does the computer screen reflect? A. It is everything available on the screen that I could see. It is not just the window that I normally take a screenshot of. Q. Does it include the chat window we had been discussing? A. Yes, it does. MR. TURNER: The government offers 127A into evidence, your Honor. MR. DRATEL: The previously stated objection, your Honor. THE COURT: Overruled. GX127A is received. *(Government's Exhibit 127A received in evidence)* MR. TURNER Q. So what are we looking at here? A. So this is -- in the background I have the Silk Road forum up on Dread Pirate Roberts' profile page. Page 297 Q. That we have seen before, right? A. Yes. Q. So where is the chat window? A. So on the right-hand side it's -- that's the chat that I opened up the profile in the chat box for Dread Pirate Roberts. So that shows what his profile looked like in the staff chat. And then on the left-hand side it is sort of hard to see, it was transparent but it was the buddy list that I had on my staff chat which I had the people that I had buddied, which is the other staff from Silk Road. Q. So you could speak to those other staff members that you talked about earlier? A. Yes. Q. Inigo, libertas and samesamebutdifferent? A. Yes. Q. Could you back out. OK. The different times that appear on this screen, could you focus in on this side of the screen, Mr. Evert. Up top it says 3:23 a.m. What time zone is that set to? A. My computer, I had it set for UTC time. Q. Universal Time? A. For the universal time, yes. Q. That is Greenwich Mean Time, like you mentioned before? Page 298 A. Yes. Q. Then in the chat window here, local time, 20:23:05, what does that refer to? A. That refers to whenever Dread Pirate Roberts would be online, it would show what the local time is for him, and as I understand it, that would be what time was on their computer. Q. And what time zone was that reflected in? A. That would be Pacific Standard -- Pacific Time. Q. Did you set that to Pacific Standard Time, or is that the way it automatically appeared? A. That is the way it automatically appeared every time you login. Q. When you chatted with people in other time zones, what time zones did it appear in? MR. DRATEL: Objection. THE COURT: Why don't you rephrase that. MR. TURNER Q. Would you talk to other staff members through chat? A. I would. Q. How would their time zones appear? A. So when I would talk to samesamebutdifferent, I knew he was in Australia. He would tell me he was in Australia. It would reflect a time zone in Australia. And the same thing with inigo, through the course of the investigation we believed that he might have been East Coast, and it was actually showing an East Coast time zone. Page 299 Q. Throughout the time when you chatted with DPR through the system, what time zone was shown when you chatted with him or for his local time entry? A. Every time I chatted with him it would show Pacific Time Zone. Q. Now, how could you tell from this window when DPR was online and available for chat? A. From this one, it would say the status. This one would tell you if he is available or if he was away or if he was offline. Q. OK. Here it is. When you chatted with DPR, how, if at all, did you document the chats? A. It would be saved in the Adium program. There is a transcript that it would run automatically in the background and log the entire chat. Q. Is there a common term used for those transcripts? A. The transcript log. Q. Is it a log? A. A log. Q. OK. Did DPR know that you were logging these chats? A. I think he did not. Q. Should you -- I mean, I'm sorry. Could you take a look at Government Exhibit 127B, please? A. OK. Page 300 Q. Do you recognize this exhibit? A. I do. Q. How do you recognize it? A. It's a copy of the chat log that I had between myself and Dread Pirate Roberts on July 29, 2013. MR. TURNER: The government offers Government Exhibit 127B into evidence, your Honor. MR. DRATEL: The same objection, your Honor, as previously stated. THE COURT: All right. Overruled. And 127B is received. *(Government's Exhibit 127B received in evidence)* MR. TURNER: Could you include the date up at the top, Mr. Evert. Q. So where is the date notated? A. Up above. Q. July 29, 2013. And could you explain how to read these chat logs? A. Sure. So each time that a user would post a message, it would be in a different color. Mine was in green in this instance with Cirrus, and then Dread would be in blue. And basically it would annotate the time that you would send the message as well as what was said, and it basically goes from oldest to newest. Q. OK. So it starts oldest at the top and then it goes down from there? Page 301 A. It works down, yes. Q. And, again, the time, what time zone is it reflected in? A. This would be UTC time. Q. And your communications are green in Cirrus and Dread is Dread Pirate Roberts? A. Dread is Dread Pirate Roberts. Q. OK. So I will read it. It is starting at 6:11 p.m. Cirrus says: Sorry, my Internet has been crappy today. Dread: No worries. Cirrus: What's going on? Dread: I had a little task but inigo is on it. Cirrus: I'm sorry, if you have anything else don't hesitate to ask. Dread: no worries, I will Cirrus: I don't know if you saw on the tech forum there were a few people reporting errors being received when trying to enter in their pin while moving bitcoins? Dread: didn't see Dread: recent? Cirrus: yes, let me send you the link Dread: I actually just moved btc from one SR acct to another without problem. Cirrus: okay, well here is the thread…. probably just isolated stupidity. Page 302 And then there is some link there. So, briefly, can you explain what this conversation was about? A. This was Dread had previously sent me a message asking for me to chat with him on the staff chat and so I wasn't online at the time. So I got online. As soon as I saw it, I got on the staff chat and I sent him that message asking him what he needed from me. I think he told me he had a task originally for me. Q. Could you take a look at Government Exhibit 127C. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It was another chat that happened between myself and Dread Pirate Roberts on August 19, 2013, using the staff chat. MR. TURNER: The government offers Exhibit 127C into evidence. MR. DRATEL: Objection on the previous grounds, your Honor. THE COURT: All right. 127C is received. The objection is overruled. *(Government's Exhibit 127C received in evidence)* MR. TURNER: Could you zoom in on the top third of the document, Mr. Evert, including the date. Page 303 Q. So this is from August 19, 2013, right? A. In UTC, yes. Q. What is the chat about? Give me an overview. A. This was just a normal chat that we just started talking to Dread Pirate Roberts, and it goes into him giving me more access on the marketplace. Q. Did he show you anything in this chat online? A. Yes, he did. He had just recently set up a new feature on the marketplace which was a new messaging system that was on there. And he was granting me access to -- it was like a admin panel on the marketplace. So he was -- to help moderate those new posts that would be placed on the marketplace, so he was going to walk me through setting that up, set up my access, as well as describing how he wanted me to moderate that section of the marketplace. Q. By "moderate," do you mean keep it organized like you described before? A. Yes. Q. So let's take a look, starting at 1:06: Cirrus: Hey, how are you? Dread: I'm good, you? Cirrus: Doing okay, what's up? Dread: Sorry, can you hang tight 5-10 min? Cirrus: Of course. Smiley face. Dread: Ok... Page 304 Dread: Are you logged into SR? Dread: If you are, please log otu. Dread: Out. Cirrus: Okay. I'm out Dread: Now go to -- And then there is a link, and is that the Silk Road dot-onion website address? A. That is. Q. And then after that, it says "support/landing," right? A. Correct. Q. So now go to that address and enter your user and pass. Let me know what happens. Cirrus: OK, standby. Got invalid login. Disregard. I'm good. What was going on there? A. Once I went to that URL and with my account -- Q. What is a URL? A. I'm sorry. The address of the Silk Road that he put in this post here, the support landing page, there was two boxes on there that -- and he told me to enter in my username and password. So the first box I entered my username and the second box I entered my password and then hit "go" on it. Q. Were you having trouble at first? Page 305 A. At first, yeah. It wasn't working the first time I tried it, but then I realized that I think I hit in the password wrong. Q. Then it says: Dread, are you in this support panel. Cirrus: It's loading. OK, it loaded. At that point what came on to your screen? A. At that point a new page appeared that I had never seen before. It was a page that had various boxes on there that appeared that I could do a number of things or that you could search a number of things, just different options I had never seen from Silk Road before. Q. Could you take a look at Government Exhibit 127D. MR. TURNER: Mr. Evert, could you move that to the top of the screen. A. OK. Q. Do you recognize this document? A. I do. Q. How do you recognize it? A. This is a screenshot that I took of that support panel on August 19, 2013. MR. TURNER: The government offers 127D into evidence. MR. DRATEL: The same objection, your Honor, as I had previously stated. THE COURT: All right. There isn't one on the Pretrial Order. Page 306 MR. DRATEL: I'm sorry. I am looking at the wrong one. Hearsay, your Honor. THE COURT: All right. So that objection is overruled. 127D is received. *(Government's Exhibit 127D received in evidence)* MR. TURNER Q. OK. So this is the support screen that came up when you said, "OK, it loaded." A. Yes, it was. Q. And there are some boxes here. One says "Customer support." The other says "Vendor Support." Another says "Resolutions." And then there is "Vendors," "Items" and "Posts" over here. Do you see that? A. Yes. MR. TURNER: OK. Could you go back into the chat, Mr. Evert, and go down a little bit. Q. OK. The next line, it says: Dread: OK. Click on the number next to unread under customer support. Should say no access. MR. TURNER: Could you zoom in, Mr. Evert, in here. Nope. Over here. OK. Go back into the chat. All right. Q. Should say no access. Page 307 Cirrus: Yes, it does. Could you explain what was going on in the chat during this time? A. So as he instructed me to click on that number, which is the green number, in this case the 107 next to unread, when I clicked on it, I got the result that said that I had no access to that. MR. TURNER: Could you back out, Mr. Evert. Q. Now, the next line of the chat says: Now click vendors, top right. Should say no access. MR. TURNER: Could you zoom into this entire thing over here, Mr. Evert. Q. OK. Yep, same thing. So what happened next? A. Again, I clicked on the number next to "unread," which is the 39 in this case, and it came back also as no access. Q. Then it says -- the next line is: Dread: Now click posts. Should load a page. Cirrus: OK. I see it. So did you click on "posts" over here? A. I clicked on posts. Q. And what came up? A. When I clicked on posts, then it took me to another page that I had never seen before on Silk Road that was -- it was like -- it was a result of messages that were flagged in that new messaging system. Page 308 Q. Could you take a look at Government Exhibit 127E. A. OK. Q. Do you recognize this document? A. I do. Q. How do you recognize it? A. It is a screenshot that I took on August 19, 2013 of the flagged messages. MR. TURNER: The government offers 127E into evidence, your Honor. THE COURT: There is no objection noted, Mr. Dratel. Do you have an objection? MR. DRATEL: No, your Honor. THE COURT: All right. Received. *(Government's Exhibit 127E received in evidence)* MR. TURNER: Put it down to the bottom panel, Mr. Evert. Zoom in a little bit. That is good. Q. OK. So what did you see exactly? A. This is the page that I would have seen. Q. Well, let's keep reading, actually. Cirrus: OK, I see it. Dread: These are flagged posts from the new discussion boards. You're going to be our quality control expert on this. Cirrus: OK. Is this connected at all to the other forums? Page 309 Dread: No, it's all on SR. What was meant by "SR"? A. SR was generally the way we referred to the market. It would just be SR, Silk Road. Q. Cirrus: OK. Dread: You can now click discuss on items, vendors and categories. We're going to be pretty strict about what gets through. So if it's off topic or inflammatory, basically anything that isn't calm, polite, etc., and on topic gets pulled. Cirrus: That's easy enough. So a lot more strict than we handle the other -- go to page 2 -- the other forum? Dread: Yes. Cirrus: Who's the people on this? Dread: The forum is the backyard party. Cirrus: Anyone? Dread: This is the storefront. Cirrus: Alright. Dread: Right now as long as you've spent $100 or more you can post or if you are a vendor. Cirrus: I see, so this is the moderator functions for the discussions on the main site? Dread: Yep. Flagged posts go here. They are sorted by weight. Weight is the total weight of all the users who flagged it. Count is the number of users who've flagged the post. Page 310 Cirrus: So basically the discussions have to be related to the products, etc., and is not for random discussions or bitching. I got it Dread: Yes, that's right. What is going on here? What was this is flags page used for? A. This flag page was used to alert basically staff or myself if there is a message on a new post -- a message system that was inappropriate or shouldn't belong on the marketplace. Q. Can you take a look at Government Exhibit 127F. A. OK. Q. Do you recognize this document? A. I do. Q. How do you recognize it? A. It is a screenshot that I took from my account of the Silk Road marketplace of one of the vendors, that new discussion page that would be available, and I took it on August 29, 2013. MR. TURNER: The government offers 127F into evidence. MR. DRATEL: Hearsay, your Honor. THE COURT: That objection is overruled. 127F, as in Frank, is received. *(Government's Exhibit 127F received in evidence)* MR. TURNER: Could you exit out of this? That is fine, and then put that up top. All the way over. Page 311 Q. All right. So this is this new type of message board that was on the Silk Road marketplace? A. Yes. Q. And it was -- there would be a single board for each vendor on the marketplace? A. Yes. There would be a page like this attached to every vendor. Q. So who is the vendor here? A. The vendor in this case is supertrips. Q. And then people can just post a message on this page? A. Yes. So long as they met the requirements that DPR discussed in that previous chat. Q. If they had spent more than $100? A. Right, or they are another vendor. Q. Then to the side there is a little flag button? A. That would be where you would report as a user on the site a post such as this, and that would then reflect on that page on this support panel. Q. So if I am a user and I click on "flag," what happens to this support panel that we were looking at earlier? A. Then that message would be reported on the flag message page that we saw earlier. Q. OK. All right. So how long did you continue working as a moderator for the Dread Pirate Roberts? Page 312 A. From July -- late July 2013 to the time that we shut down the site. So October 1st, basically once we arrested the defendant. Q. When you first started working for DPR in an undercover capacity in July 2013, were you investigating the defendant, Ross Ulbricht, in any way at that time? A. No, I was not. Q. Had you ever heard of the defendant at that point? A. No, I had not. Q. When did the defendant, Ross Ulbricht, first come to your attention? A. It was approximately around September 10th, September 11th, 2013. Q. And who brought the defendant to your attention? A. It was Special Agent Gary Alford with the Internal Revenue Service. Q. And does Gary Alford work for any other federal agency? A. He was assigned -- I think he is still aside to the OCDETF Strike Force in New York, Organized Crime Division, I think, Task Force. Q. It is A drug task force? A. Essentially, yes. Q. So without telling me what Agent Alford told you about the defendant, how, if at all, did his information change the focus of your investigation? Page 313 A. The defendant that they brought out looked like a pretty good match potentially. Q. Who did you begin investigating after you received information from Gary Alford? A. Ross Ulbricht. Q. And at that point in time, September 2013, were you working in partnership with any other law enforcement agency personnel? A. I was. Q. Who were you working with? A. I was working with, in addition to Special Agent Gary Alford, I was working with an FBI separate group in New York. Q. Did the FBI also begin investigating the defendant as a result of Agent Alford's information? A. Yes, they were. Q. At some point did the FBI obtain a warrant for the defendant's arrest? A. Yes, they did. Q. Approximately when was that? A. It was sometime late September 2013. Q. And did you take part in the planning for that arrest? A. Yes, I did. Q. And what was the plan that was developed? A. The plan was to try to get in a position where we could have the defendant in a public setting, in a public place, such as an Internet cafe or somewhere where they would be required to use Internet and that we would be able to initiate a chat with them. Page 314 Q. Initiate a chat with who? A. With the defendant. Q. OK. In terms of -- let's see. So the plan was to observe Mr. Ulbricht -- MR. DRATEL: Objection, your Honor. Q. I just want to be clear. When you are talking about initiating a chat, who were you in a position to initiate a chat with? A. I was going to utilize my access to the staff chat with DPR to start a chat with DPR once -- if we could get Ross Ulbricht into an area where he would be in a public setting. Q. I just want to distinguish throughout this discussion the DPR you are seeing with any surveillance, physical surveillance of the defendant. Can you agree to do that? A. Yes. Q. OK. So what was the point of the plan? What was the purpose of planning the arrest that way? A. The purpose of that was to -- if indeed Ross Ulbricht was Dread Pirate Roberts, if I was to initiate a chat with him while I was in a public setting, that we would try to get his computer in a nonencrypted -- in an open state where we could then observe the same chat on his computer that I would be having with Dread Pirate Roberts. Page 315 Q. When you say "unencrypted," get the laptop in an unencrypted state, what do you mean? A. What I mean by that is if it's protected by a password, get in a place where he has already logged in with that password so that the computer is open then. Q. When you say "open," what do you mean? A. Open and all of the files are available that are on the computer. Q. What could cause a computer to lock up? A. Just by shutting it down, just by closing -- if it is a laptop, by closing the lid, by -- you could set up other type of triggers that could cause it to then turn on the password. So there could be hot keys you could set up that could turn it on, or you could actually just click shut down on it as well. Q. So where was the defendant living at this time? A. In San Francisco, California. Q. Where did the defendant's arrest take place? A. In San Francisco, California, at the Glen Park library. Q. Glen Park is a suburb or a part of San Francisco? A. I believe so. I'm not sure, though. MR. DRATEL: Objection. MR. TURNER: Withdrawn. Q. On what date, again, did the arrest take place? A. The arrest took place on October 1, 2013. Q. And approximately what time of day did the arrest occur? Page 316 A. It occurred around like 3 p.m., 3:15-ish. Q. When did you arrive in San Francisco for the arrest? A. I arrived September 30, 2013. Q. The day before? A. The day before. Q. And in October 1st, 2013, where did you go to meet the arrest team? A. That day, around -- probably around noontime Pacific Time I met up with the rest of the arrest team a few blocks away from Mr. Ulbricht's home. Q. Why were you told to -- where did you meet specifically? A. It was the Bello -- it was right outside the Bello Cafe. It was an Internet cafe that was there. Q. Why were you told to go there? A. That's where the team was assembling. Q. Do you know why they were assembled there? A. It was far away enough from the home where we were not -- if we were going to be seen in a group together, that might be unusual or to try to -- it might gain his attention. And, also, that area was somewhere where he was observed the day beforehand in a public Internet cafe on his computer. Q. And how many members of the arrest team were there, approximately, do you know, roughly? A. There might have been five or six at the time. Q. Were the people in plainclothes or official law enforcement gear, or what? Page 317 A. They were -- everyone was in street clothes that day. Q. Did you see everybody there with you, or were they spread out in the area? A. I didn't know everyone that was there that day. They were spread out in different locations. There was people in different cafes up and down the area. Q. Was the plan definitely to arrest him that day, or was there flexibility built into the plan? A. There was flexibility. I mean, there was -- Q. What was the contingent on in terms of the decision to arrest him that day? A. Based upon the previous day and seeing him in the cafe, we decided that it would be better to try to see if -- return to that same cafe and use his computer as well so I could initiate the chat on that day. If he hadn't gone anywhere that day, then we would wait until the next day or even the day later. Q. What ability did you have to monitor whether the Dread Pirate Roberts was online at the time you were in this area setting up the arrest? A. I had my laptop computer on me the entire day. Pretty much had it on almost 24 hours at that point, and I was connected to the Internet using a mobile hot spot that was with me. So I had my laptop with me and my Internet connection that I could take with me anywhere. Page 318 Q. And so how were you monitoring him, DPR? A. Through the staff chat primarily because -- and the forum as well. The forum would show when he was online, and the staff chat would tell me, too, if he was online. Q. Can you take a look at Government Exhibit 128A? A. OK. Q. Do you recognize this document? A. I do. Q. What is it? A. It is an overview of the area where the arrest took place around the Glen Park library. Q. And based on your experience there, can you say whether the map fairly and accurately depicts the area surrounding the place of arrest? A. Yes, it does. MR. TURNER: The government offers Exhibit 128A into evidence. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 128A received in evidence)* Q. Could you point with your laser pointer? Do you still have it up there? A. Yes. Q. Where did you go to initially set up for the arrest? A. OK. So this is the Cafe Bello, and we were standing primarily most of the time around that corner right there. Page 319 Q. Which corner? A. I'm sorry. Right on the edge, right there in front of Cafe Bello, which is right next to the Glen Park library. Q. When you say "we," who were you with? A. I was with a computer specialist from FBI Tom Kiernan as well as Special Agent Chris Tarbell of the FBI. Q. And Kiernan, K-i-e-r-n-a-n, is that how you spell that? A. I believe so. Q. So approximately when did you arrive in that area? A. Around like later in the afternoon, so like around 12:40, 1 o'clock p.m. Q. What happened next? What happened after you arrived? A. After I arrived, I was instructed to go to the cafe where I was the previous day and to wait there to see if he would show up during the day. Q. And did he? A. No, he did not. Q. And were you monitoring DPR's online activity during this time? A. Yes, I was. Q. What was the status of that? A. He was online at the time. DPR was online on the staff chat, and he remained online through the time that I was in that cafe. Page 320 Q. OK. So what happened next? A. The cafe closed around 2 p.m. and so I left there. I went back to -- or outside that Cafe Bello, in the same area. Q. Could you just make clear, you went to a different area in that cafe. Approximately where was that? A. It was down the street. It is not on the map. It is a little bit down from that -- Q. So you walked back to Cafe Bello and then what happens? A. So I was outside Cafe Bello for a little bit, and my computer was running low on power. So I went inside the Cafe Bello to charge my computer. It was around like 2/2:40 or so, like 2:45 p.m. At that time, or really close to that time, DPR also went offline on the staff chat so he signed off. Q. Did you take a screenshot of that? A. I did. Q. Could you take a look at Government Exhibit 129A. A. OK. Q. Do you recognize that? A. Yes, I do. Q. How do you recognize it? A. It is, again, a capture of my entire computer screen on my computer at that time on October 1, 2013. MR. TURNER: The government offers Exhibit 129A into evidence. MR. DRATEL: Just as I had previously stated, your Honor. Page 321 THE COURT: All right. The objection is overruled. 129A is received. *(Government's Exhibit 129A received in evidence)* MR. TURNER: Publish the exhibit, please, Mr. Evert. Could you zoom in on this area. Q. OK. Could you explain what is shown in the exhibit? A. So this is again that staff chat on Dread Pirate Roberts' profile, and I took the screenshot right after he signed off from the staff chat, which then it is reflected on there as saying signing off 16 seconds ago. Q. So it says 9:47 p.m. What time zone is that in? A. That one is UTC. Q. So I thought before you said that you saw DPR's time zone in Pacific Time? A. I did. Q. When would that happen? A. That was only when he was online and actually active online. When he would go offline, it would revert back to my time zone and into UTC. Q. So how many hours ahead was UTC compared to your local time in San Francisco? A. It was seven hours ahead. Q. So the actual local time was 2:47 p.m.? A. Yes. Page 322 MR. TURNER: OK. And back out, Mr. Evert. Q. You said your computer was low in power. Is that reflected anywhere? A. On the upper right-hand corner. I was at 18 percent. Q. OK. So you are in the Internet cafe, Cafe Bello, at this point? A. Yes. Q. What happens next? A. I then -- I'm charging my computer. It was hard to find someplace to charge. It was completely full inside the cafe. So I was off on the side and I found an outlet, and I was notified that Ulbricht had left his home and that he was headed in the direction of the cafe. And so I unplugged my computer and went out of the cafe and crossed the street to join up with computer scientist Tom Kiernan. Q. Could you take a look at 128B, please. Do you recognize this exhibit? A. 128B? Q. Yes. A. Yes, I do. Q. How do you recognize it? A. It's a photograph of San Francisco in the area we were at on the street, where the Cafe Bello is at as well as the area where I crossed the street that day. Q. Did you take this photograph? Page 323 A. No, I did not. Q. Does it fairly and accurately depict the area you were in at the time you were just describing? A. Yes, it does. MR. TURNER: The government moves Exhibit 128B into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 128B received in evidence)* Q. So what are we looking at here? A. On the left-hand side -- Q. You can use your laser pointer if it would help. A. Over here is the Cafe Bello. You see the door entrance to it. And as soon as I was notified that Mr. Ulbricht had left his home and was headed in this direction, I exited out of that door, went across the street to a bench similar to that, where Tom Kiernan was at, and I sat down beside him. Q. Do you know who Tom Kiernan is? A. The FBI computer scientist. Q. And what happened next? A. So I sat down on the bench, and I had my computer with me. It was still open. It was still on. At that time DPR was not online when I was sitting there, and I asked Tom if he knows where the person was at, where Ulbricht was at at the time. Page 324 Q. Without telling me what he said in response, keep going, what did you observe? A. Then so while I was sitting there, I looked to my right, which is at that -- this corner right here, and I then saw Mr. Ulbricht on the corner standing there and facing this direction over on this side, waiting for the light basically to turn so he could cross the street. Q. Did you -- was he alone or with others? A. He was by himself. Q. Was he carrying anything? A. Yes, he was. Q. What was he carrying? A. He had a small shoulder bag. Q. Where did you see him go? A. So the light turned so that he could cross the street. So he crossed the street, and then he proceeded to come up the street and entered the Cafe Bello. Q. What did you observe next? A. It was probably about 30 seconds later Mr. Ulbricht came back out of the Cafe Bello, looked to his right, and then proceeded down the street in that direction. Q. Had you just been in the Cafe Bello? A. I had. Q. Was it crowded? Page 325 A. It was. Q. All right. So what did you observe next? A. Mr. Ulbricht continued to -- after he turned -- after he exited out of the Cafe Bello, he turned right and then entered into the Glen Park library. Q. Could you take a look at Government Exhibit 128C. A. OK. Q. Do you recognize this photograph? A. I do. Q. How do you recognize it? A. It's a photograph of the Cafe Bello and the Glen Park library in San Francisco. MR. TURNER: Your Honor, we offer 128C into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 128C received in evidence)* Q. So what does this photo depict? A. This would be the entrance of the Cafe Bello, where I observed Mr. Ulbricht exit out and then turn to his right and then enter into this door right here, which is the Glen Park library. MR. TURNER: Your Honor, I probably have an hour of questioning left. I don't know if this might be a good point to stop. THE COURT: Let's go ahead and continue and go until a few minutes before 5, around 5 to 5. Page 326 Q. So during this time when you observed him walking on the street, go into the cafe, into the library, what was DPR's online status? A. He was still offline on the staff chat and the forum. Q. So what happened after you observed the defendant enter the library? A. And as soon as Mr. Ulbricht entered the library, the computer scientist Tom Kiernan let me in into the library as well. Special Agent Chris Tarbell, who had been walking down the street at the time, after he came and rejoined me by the bench where I was sitting. *(Continued on next page)* Page 327 MR. TURNER Q. So Tom Kiernan went in -- he followed Mr. Ulbricht into the library? A. He did. Q. What happened after that? A. After that, Special Agent Tarbell was giving out directions to the rest of the arrest team, telling them that. Q. How was he giving directions? A. Through email. Q. Were you on those email chains? A. Yes, I was. Q. Okay. A. The directions included make sure to pull the laptop first, then arrest, and he also said to make sure to give time for the UC, which is the undercover, which would be me, to chat with him once he logs on before anyone initiates arrest on him. Q. Was there -- were there any agents in the library? A. There were other people in there. I wasn't aware of all the people that were in the library. Q. Okay. So what happened after Mr. Ulbricht entered the library and those instructions were given? A. So not too long after, maybe a few minutes later or within a few minutes, Dread Pirate Roberts came online on the staff chat. And as soon as I saw him come online, I then initiated a chat with him, trying to ask him to go into a specific place on the Silk Road -- into the admin panel to log in to check something. Page 328 Q. How did you see him come online in the first place? A. It reflected on the staff chat. It showed that he was available. It showed that he was online. Q. Did you take a screen shot of that? A. I did. Q. Can you take a look at Government Exhibit 129B. Do you recognize this exhibit? A. I do. Q. How do you recognize it? A. It was, again, a screen shot of my entire screen at the time when Dread Pirate Roberts came online. MR. TURNER: The government offers 129B into evidence. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 129B received in evidence)* MR. TURNER: Can you zoom in the same part of the screen as before, Mr. Evert. Q. The computer is up to 22 percent now? A. I got a little bit of juice. It didn't last very long. Yeah. Q. How does this reflect Dread Pirate Roberts coming online? A. On the profile it says the status turned to available and then the timezone turned back towards Pacific time. Page 329 Q. Just to make sure so we understand, it says 15:08:41. What does that mean? What sort of time is that? A. It's military time, so it would be the 15th hour of the day, so that would be 3:00 p.m. Q. So it's now 3:08 San Francisco time, correct? A. Yes. Q. So what did you do after you saw Dread Pirate Roberts online? A. I initiated a chat with him. Q. And did you take a screen shot of that chat? A. Yes, I did. Q. Or rather, did you make a log of that chat as we saw before? A. I did. Q. Can you take a look at Government Exhibit 129B. A. "B" as in boy? Q. Yes. 129C. Excuse me. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's the chat log that I had with Dread Pirate Roberts on October 1, 2013. MR. TURNER: The government offers 129C into evidence, your Honor. Page 330 THE COURT: 129C is received. Hearing nothing -- MR. DRATEL: I'm sorry. No objection. THE COURT: All right. Thank you. *(Government's Exhibit 129C received in evidence)* MR. TURNER: Can you zoom in to about here, Mr. Evert. Actually, I'm sorry, go out a little bit. Start here and go all the way down. Great. Q. There's an entry for exchanged status to offline, 9:47 p.m. Changed status to online, 10:08 p.m. Again, what does that reflect? A. As long as I'm still online and as long as my chat box that I have initiated with Dread Pirate Roberts is open, it will log every time he logs off and logs on. So this is reflecting that Dread Pirate Roberts' status had changed to offline at 9:47 p.m, which would have been 2:47 Pacific and that he changed back to online at 10:08 which would have been 3:08 p.m. Q. And then about 30 seconds later you, you write hi? A. Yes. Q. And about a minute later, you write are you there? A. I didn't get a response for about a minute, so I asked if he was there. Q. And then about 30 seconds later, there's a response: dread: hey cirrus: How are you doing? dread: im ok, you? Page 331 cirrus: Good, can you check out one of the flagged messages for me? dread: sure dread: let me log in cirrus: ok dread: you did bitcoin exchange before you started working for me, right? cirrus: yes.. but just for a little bit dread: not any more then? cirrus: no, I stopped because of the reporting requirements dread: damn regulators, eh? dread: ok, which post? cirrus: lol yep cirrus: there was the one with the Atlantis So how long had you been chatting by this point by the time you reached the last line there? A. It was about four minutes. Q. And what did you mean when you say can you check one of the flagged messages for me? A. What I was asking him to do was to log in to that support panel and that flagged message section where he gave me the access rights to administer on the marketplace. And what that would cause him to do is to force him to log in under another administrator account, which presumably would be his Dread Pirate Roberts account and would force him then to access that page; so basically trying to get him online as Dread Pirate Roberts in the marketplace as well as chatting. Page 332 Q. When you told him to go to that flagged messages screen, did you yourself have that screen full pulled up on your computer at the time? A. Yes, I did. MR. TURNER: Can you go back to 129C, please, or 129B. Q. Can you point the jury to where that flagged messages page was on your screen. A. Sorry. I have a lot of things going on at the same time. So there is in the background here, you see the outer edge of the market place and that flag message page up. Q. Did you also take a screen shot of that window in and of itself? A. I did. Q. So would you take a look at what's been marked as Government exhibit 129D. A. Okay. Q. Do you recognize that document? A. I do. Q. How do you recognize it? A. It is a screen shot that I took later on that evening of that flagged message page. MR. TURNER: The government offers Exhibit 129D into evidence. Page 333 MR. DRATEL: No objection, your Honor. THE COURT: All right 129D is received. *(Government's Exhibit 129D received in evidence)* Q. You said the end of your chat -- actually, can you pull it back up, Mr. Evert, to the top of the screen, 129C, the chat right around the bottom there. You mentioned at the end there was the one with the Atlantis. What were you referring to? A. There's another marketplace which I'm referring to as Atlantis that there was a lot of, we call it, spam advertisements that were affecting our marketplace or the Silk Road marketplace, and that was something that was constantly -- something of attention, something that we discussed. So there was a flagged message that was on there from Atlantis advertisement. Q. Okay. So what happened towards the end of this chat? A. They -- so as I'm asking to go in, he asked me about the -- about whether or not I did the bitcoin exchange before. And I was waiting for basically a sign that he was logged in at the time of the market. And as soon as he said "okay, which post," then I knew that he was -- he was on that page, that he was viewing it. So I knew that he was logged into that flag message page, which then I gave a signal to Special Agent Chris Tarbell that they should effect the arrest, and I continued typing after that. Page 334 Q. So what happened after that? A. As soon as I got done with that last message Agent Tarbell and myself got up and walked to -- walked over to the library. I didn't close my laptop or didn't shut it down, I left it online -- Q. Let me back you up. You said you gave a signal to Agent Tarbell around this point. Do you know what Agent Tarbell did in response? A. Agent Tarbell gave a signal to the team through email to go do the rest. MR. DRATEL: Objection. THE COURT: Let me think for one second. How do you know that? THE WITNESS: I was on the email chain. THE COURT: I'll allow it. Q. And at what point in the chat was that, just to be clear? A. That was right at when the last thing that Dread said, so around 10:14, which would have been around, like, the 3:14 mark. Q. So 3:14:19, Dread says "okay, which post," after that, you give the signal, after that, Agent Tarbell gives the signal to effectuate the arrest? A. Correct. Q. Was it your understanding there were agents inside the library at that point? Page 335 A. Yes. Q. So how much longer were you online available to receive chat messages from Dread Pirate Roberts? A. I kept the computer online. I walked into the library -- Q. How far was the library from where you were? A. Maybe 50 feet, and so I entered the library with Agent Tarbell and we went up the first flight of stairs, we didn't fully enter into the library, we stayed sort of -- it's an upstairs -- Q. What do you mean it's an upstairs library? A. The library is located upstairs in the building. So we went up half the flight of stairs and waited there and they brought Mr. Ulbricht -- the agents that arrested him to us at the stairs. At that point in time, I shut my computer and put it in my book bag and that was reflected on there at 10:16 p.m. so it would have been 3:16. Q. Would you like me to keep going, your Honor. THE COURT: We can end for the afternoon now. Ladies and gentlemen, we're going to end for today. We're going to pick up tomorrow morning and, again, we'll start at 9:30 and if you all can be on time, that would be really helpful. If you have any transit issues, let Joe know. You've got his numbers already so that we know where to -- know where you are and how long you're going to be. But if at all possible, please try to get here since we'll all be waiting. Page 336 I want to remind you not to talk to anybody about this case, including each other or anybody in your life to avoid any news articles either on the Internet or in print or anything that might be on the TV. If you happen to be watching the TV and something comes on, I instruct you that you may not listen to it or watch it. You must turn it off. You can turn it back on as soon as it's over. And after all of this is over, after the whole trial is over, you'll be able to go back at that point later on and look back over things, but right now, I need you not to look at anything at all, all right? We'll see you tomorrow morning. Thank you very much. *(Jury excused)* *(Continued on next page)* Page 337 *(Jury not present)* THE COURT: Let's all be seated. I wanted to state for the record some of the further rulings. There had been some conversations with inigo that were talked about relating to the type of support that had been provided. To the extent that the type of support is offered in any way for the truth in terms as opposed to the fact of providing support, which is the far more likely use those would be the conversations and communications of a coconspirator as we have previously discussed. In terms of GX 127, that is either not for the truth or it would be under the hearsay exception of coconspirator statements of the staff chat. That's really not particularly for the truth. 127A is 801, Rule 801. 127B is not for the truth. 127C is not for the truth. 127D is not for the truth. 129A, there was a Vayner objection only. That was a screen shot. It was appropriately authenticated. And 127 is not for the truth. Does anybody want to comment? Those were the bases for my rulings. So the hearsay objections, which you made two types of objections, hearsay and Vayner: Vayner I have dealt with before. Hearsay, if it's not for the truth of the statement asserted, then it's not hearsay, so that doesn't apply. MR. DRATEL: Also 117, the 117A and B this morning, and you asked if we wanted additional ones under the rubric of "not for the truth." I think they would qualify as well. Page 338 THE COURT: Let me take a look for a moment. Right. 117A is not for the truth and 117B, which is the amount, the alleged -- or the cost of a certain number of pills is not for the truth. MR. DRATEL: I think you already told the jury about 118. May I ask, let me consider this overnight whether to ask the Court to instruct the jury as to the specific exhibits that you have just listed for this afternoon as to whether we want the instruction on that or to leave that for another time. THE COURT: All right. I'll wait for your application and then depending on what it is, I'll obviously consider it. Is there anything that you folks wanted to put on the record at this point in time? And why doesn't the government give us a sense as to what is coming up. I heard you say, Mr. Turner, you have an hour left. And how long, Mr. Dratel, do you think you'll have with this witness? Is it about an hour still or less than that? MR. TURNER: An hour or less, I'd say. THE COURT: Forty-five minutes to an hour, something like that. MR. TURNER: That's probably right. THE COURT: Mr. Dratel, based upon that? Page 339 MR. DRATEL: I could take him the whole day tomorrow, the whole rest of the day. I can't say for sure because cross-examination being what it is, but it's conceivable that it could go the rest of the day. THE COURT: Fine. In terms of the next witness, what we'll do is at a break tomorrow afternoon or some point, we'll get a sense of how much more time you have left so that the government can bring over whomever is next, because I'll want to continue on with the next person right away. MR. DRATEL: I will do two things: When I come in tomorrow, after I have gone over everything again and see where I want to go, I'll give them a better sense and the Court a better sense, but also, by lunchtime I'll know. And then if you put in redirect and recross that's not extensive, we'll have a better sense. THE COURT: You folks can confer and make sure we get people lined up. Is the next person going to be the person who was second on the government's witness list? MR. TURNER: If your Honor has the most recent one, it should be Tom Kiernan, Thomas Kiernan. THE COURT: That is the next name I have, so it would be Mr. Kiernan? MR. TURNER: Correct. THE COURT: Who would be next? And he is anticipated to be slightly shorter than this witness? Page 340 MR. TURNER: Correct. THE COURT: We'll proceed as we have all discussed for tomorrow. Is there anything else we should go over right now? MR. TURNER: Not from the government. MR. DRATEL: There is one thing I wanted to clarify with respect to our objection on the business records issue, it's not only about contemporaneous knowledge or contemporaneous verification, but also the reliability of the record itself. So we would say in this context in an Internet context particularly when you have a witness who was masquerading at the time that the reliability of communications can't be validated in a way that is necessary for a business record. THE COURT: I think part of the issue is simply whether or not -- well, Mr. Turner, why don't you respond. MR. TURNER: I think you're mixing apples and oranges here. In terms of the reliability of the software, the agent testified that he spent thousands of hours on the system, knew how it worked and knew that when people would post, the time of the posts would show up, where the timestamp is and the name of the poster would show up where the username is, etc. There's no reason to believe that the system was somehow unreliable in that regard. The fact that he's an undercover, quote, masquerading as another user has nothing to do with the technical reliability of the software and what it displays. Page 341 THE COURT: Go ahead, Mr. Dratel. MR. DRATEL: One is, is that doesn't verify the substance of the communications made in those exhibits. Also, he's not a business records person for the software. THE COURT: Let's put it this way: He's an individual who participated directly in both reviewing the communications for accounts he had taken over of administrators and also creating communications himself. There's no indication in the record currently, there's no factual indication of unreliability that things were not recorded and retained in the manner in which they appear to be. If such information develops, we'll take that up at the right time there's no indication right now that the posts weren't appropriately recorded, appropriate being simply that the key strokes resulted in the letters on the page indicating what those words were in the English language. MR. TURNER: To add one more factor to the record: He was a moderator of the forum so he was responsible for keeping it organized and have the ability to do searches and that sort of thing that ordinary users couldn't do so he was in some way a caretaker of the forum and many ways like a custodian of record. THE COURT: All right. Page 342 MR. DRATEL: I was more concerned, I believe, when I was objecting about messages that occurred before he even got to that stage that he was validating that he had not been part of that he was just looking at retrospectively; but also that it's not for the truth because the business record aspect, it has to be reliable, the information in there. So the fact that it's reliable that that's what appeared on the screen doesn't mean the substance of the communications were reliable. THE COURT: I hear your point. The witness indicated that based upon his testimony, which you'll take up at cross-examination, is that when he took over an account, the account would have resident on it, if you will, whatever historical information continued to exist on it. Some of it -- there may be certain things that were gone or not gone. But I think we hear each other's positions. You've got my ruling on this. At this point in time, I don't have any basis to believe that the information that was recorded were not statements made as they appear to be indicated. They appear to be accurate reflections of words that were put on the page. MR. TURNER: Not to belabor the point, but for the record, our position is that virtually all of these communications are not offered for the truth, things like chat instructions, these were not offered for the truth value; it's just to document the role of DPR on the site as the boss of these employees. That's all. Page 343 THE COURT: I understand that. And I think I tried to indicate when certain things were not for the truth, but there are certain statements which certainly overlap with assertions that the government is attempting to prove. So whether or not you're going to turn back to some of those statements, for instance, involvement in transactions, that will be something that, if you do, I'll have made an appropriate ruling one way or the other. Let's all take our break. We'll pick up tomorrow morning at 9:00 a.m. THE DEPUTY CLERK: All rise. *(Adjourned to January 15, 2015 at 9:00 a.m.)* * * * Page 344 INDEX OF EXAMINATION Examination of: Page JARED DER-YEGHIAYAN Direct By Mr. Turner . . . . . . . . . . . . . 135 GOVERNMENT EXHIBITS Exhibit No. Received 106 . . . . . . . . . . . . . . . . . . . . 136 108 . . . . . . . . . . . . . . . . . . . . 140 109 . . . . . . . . . . . . . . . . . . . . 142 101 . . . . . . . . . . . . . . . . . . . . 144 132 . . . . . . . . . . . . . . . . . . . . 146 110 . . . . . . . . . . . . . . . . . . . . 147 111 . . . . . . . . . . . . . . . . . . . . 149 113 . . . . . . . . . . . . . . . . . . . . 154 114 . . . . . . . . . . . . . . . . . . . . 167 113A . . . . . . . . . . . . . . . . . . . 172 103A . . . . . . . . . . . . . . . . . . . 177 103B . . . . . . . . . . . . . . . . . . . 178 s 801 and 801A . . . . . . . . . . . . . . . 183 116A . . . . . . . . . . . . . . . . . . . 184 116B . . . . . . . . . . . . . . . . . . . 186 116C . . . . . . . . . . . . . . . . . . . 188 117A . . . . . . . . . . . . . . . . . . . 193 117B . . . . . . . . . . . . . . . . . . . 195 118 . . . . . . . . . . . . . . . . . . . . 198 Page 345 118A . . . . . . . . . . . . . . . . . . . 201 118B . . . . . . . . . . . . . . . . . . . 207 119 . . . . . . . . . . . . . . . . . . . . 213 120 . . . . . . . . . . . . . . . . . . . . 218 121A . . . . . . . . . . . . . . . . . . . 234 121B . . . . . . . . . . . . . . . . . . . 234 123 . . . . . . . . . . . . . . . . . . . . 238 123A . . . . . . . . . . . . . . . . . . . 242 125A . . . . . . . . . . . . . . . . . . . 243 125B . . . . . . . . . . . . . . . . . . . 246 133 . . . . . . . . . . . . . . . . . . . . 248 125C . . . . . . . . . . . . . . . . . . . 250 125D . . . . . . . . . . . . . . . . . . . 252 125H . . . . . . . . . . . . . . . . . . . 255 125J . . . . . . . . . . . . . . . . . . . 256 125K . . . . . . . . . . . . . . . . . . . 259 125G . . . . . . . . . . . . . . . . . . . 262 125L . . . . . . . . . . . . . . . . . . . 263 126A . . . . . . . . . . . . . . . . . . . 266 126C . . . . . . . . . . . . . . . . . . . 271 126D . . . . . . . . . . . . . . . . . . . 272 127 . . . . . . . . . . . . . . . . . . . . 292 127A . . . . . . . . . . . . . . . . . . . 296 127B . . . . . . . . . . . . . . . . . . . 300 127C . . . . . . . . . . . . . . . . . . . 302 Page 346 127D . . . . . . . . . . . . . . . . . . . 306 127E . . . . . . . . . . . . . . . . . . . 308 127F . . . . . . . . . . . . . . . . . . . 310 128A . . . . . . . . . . . . . . . . . . . 318 129A . . . . . . . . . . . . . . . . . . . 321 128B . . . . . . . . . . . . . . . . . . . 323 128C . . . . . . . . . . . . . . . . . . . 325 129B . . . . . . . . . . . . . . . . . . . 328 129C . . . . . . . . . . . . . . . . . . . 330 129D . . . . . . . . . . . . . . . . . . . 333 Page 347 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 15, 2015 9:19 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Sharon Kim, Government Intern Page 348 *(Trial resumed; jury not present)* THE COURT: Please be seated, everyone. THE CLERK: Continuation of the matter now on trial, the United States of America versus Ross William Ulbricht, 14 Cr. 68. Counsel, please state your names for the record. MR. TURNER: Good morning, your Honor. This is Serrin Turner and Timothy Howard for the government. With us at counsel table presently are Agent Vincent D'Agostino from the FBI, Molly Rosen, a paralegal from our office, and Sharon Kim, a legal intern from our office. Nicholas Evert will be here shortly, a paralegal from our office. THE COURT: All right. Good morning, all of you. MR. DRATEL: Good morning, your Honor. Joshua Dratel for Ross Ulbricht, who is standing beside me, Lindsay Lewis from my office, and also counsel Joshua Horowitz. THE COURT: Good morning to all of you. OK. I've got two matters to raise. One is I wanted to refer specifically to some additional support for the Court's ruling yesterday relating to the co-conspirator exception for the hearsay objections and to refer in particular to the Bourjaily case, which you are all very familiar with, I'm sure. It is a Supreme Court case. B-o-u-r-j-a-i-l-y, which requires the Court to make a finding that the various elements for the co-conspirator exception are made by a preponderance, which is what I believe I said. Page 349 I also had mentioned that there were some instances where the evidentiary rules were different. Let me just be clear that that is not the case with respect to the co-conspirator rule. It is a preponderance standard. Where it might be different, and this is a question that as yet actually unresolved, is with things, for instance, having to do with relevance and some probative evidence, and whether or not that is a lower standard than preponderance is something which is an open question but need not trouble us here. I wanted to make it clear that my findings as to the co-conspirator exception are by a preponderance of the evidence. And in terms of the screenshots in particular of the narcotics, I wanted to indicate that -- as I had said yesterday, and as the Bourjaily case makes clear, "The inquiry" -- I am reading from the Bourjaily case, "The inquiry made by a court concerned with these matters is not whether the proponent of the evidence wins or loses his case on the merits but whether the evidentiary rules have been satisfied. Thus, the evidentiary standard is unrelated to the burden of proof on the substantive issues in a criminal case," At 2278. With that said, I do find by a preponderance that as to the screenshots the vendors were in a conspiracy with Dread Pirate Roberts. It remains subject to connection to the extent that the government is asserting that Dread Pirate Roberts at that time was Mr. Ulbricht. The Court does believe at this point in time that, subject to that connection, there is sufficient proof of a conspiracy with a common criminal objective, which is the distribution of illegal narcotics. There is demonstration of that conspiracy through, for instance, the vendor contracts, which were put in yesterday. There is also evidence of personal involvement by Dread Pirate Roberts in the form of information put in yesterday of the document -- one of the two documents relating to commissions refers to commissions being taken in instances where he has and the word "involved" is used specifically and "escrow," and that creates a level of involvement as well as the finalize buttons and the arbitration process, all of which there was evidence as to yesterday from Mr. Der-Yeghiayan. Page 350 In terms of the in furtherance requirement, the Court does find that putting the screenshot of the illegal narcotics up on the Web is in furtherance of the distribution of illegal narcotics, and the reliability of the content being what it purports to be was in part supported by the testimony yesterday that there had been buys from the undercover agent, Mr. Der-Yeghiayan, that indicated that the narcotics received in response to orders from the website tested in all but one instance positive for the narcotics they purported to be. Therefore, based upon a preponderance of the evidence, I just wanted to indicate that the co-conspirator exception did apply in the manner that I suggested and with the evidentiary basis that I suggested. Page 351 The second issue is that I understand that a juror was approached yesterday on the subway platform by an individual who represented himself to be a New York Post reporter. It was an individual with a red beard. And the juror indicated that she did not speak to him and that she walked away. It is my intention -- and I should say that that was reported to my deputy. I have not had a conversation with the juror. My intention this morning is at the appropriate time to make sure that I reiterate carefully and slowly the general instructions, indicate that if anybody approaches them purporting to be a reporter or anybody else, that they should walk away and do just that. Do you folks believe that anything further need be done in this instance at this time? I mean, there are pros and cons to having people brought out here and individually questioned, but I will take applications. It was Juror No. 2, by the way. MR. TURNER: May we have a moment to confer? THE COURT: Sure. Yes. *(Pause)* MR. TURNER: Your Honor. THE COURT: Yes. MR. TURNER: The parties both agree, a limited voir dire would be I think a good idea just to get clear on what was said, if anything was said that might bias the juror in one direction or another. Page 352 MR. DRATEL: And to make sure that the juror is still obviously in the same position she was before -- in other words, mentally before the encounter. THE COURT: Yes. All right. That's fine. I think that we can do that in a low-key way. What I would propose to do is just to have her come on out and sit in her spot and ask her a couple of questions and then have her head back in. Sound all right to you folks? MR. DRATEL: That is all we had in mind. MR. TURNER: Yes, your Honor. THE COURT: Let's go ahead. We know she is here. I know you folks may have some things, but let's get her out here to do that. MR. DRATEL: May I alert the Court to a logistical issue, which is Mr. Ulbricht can't see the witness. We may move the monitor around so we can try to configure it in a way to do that. THE COURT: Oh, absolutely. MR. DRATEL: Also, if we move this back a little bit, would that be better, too, just because I am blocked off. THE COURT: It doesn't bother me. What I want to do for the podium, my main concern is that the jurors can see what is going on. You are certainly welcome to move that back a little bit so long as it doesn't create so much distance that there is another issue, but I don't think you are talking about more than a few inches. Page 353 In terms of the monitor, do whatever you need to do. I need to see Mr. Ulbricht's face as well, but I can because he is sufficiently tall that I can actually see him over the monitor. Just move it a little over. MR. DRATEL: This way is fine with me. THE COURT: Right. Also, there is no magic to that particular monitor. If you've got a smaller monitor with a similar connection, that would work. MR. DRATEL: I think this is all right. I don't think I will have a problem. I can bring it up on my own screen. THE COURT: Fine. I know we have at least one other matter from somebody who wanted to raise it. Does anybody want to raise a matter other than this? MR. TURNER: I just had two brief matters, your Honor. THE COURT: OK. MR. TURNER: One, I just want to make sure -- THE COURT: Can we just do the juror thing first? MR. TURNER: Absolutely. THE COURT: Terrific. I just want to make sure I know what the lay of the land is. We have two from the government. Anything from you, Mr. Dratel? Page 354 MR. DRATEL: No, your Honor. THE COURT: All right. So let's just get Juror No. 2 out here. *(Juror No. 2 was present)* THE CLERK: All rise. THE COURT: Let's all be seated. Juror No. 2, thank you for coming out here. I know it is a little intimidating to come out all by yourself with this whole big room full of people. I appreciate it. JUROR NO. 2: That is fine. THE COURT: I just wanted to find out from you what happened yesterday. I understand somebody may have approached you. Why don't you just tell us what happened. JUROR NO. 2: OK. I was at the Centre Street station and I was walking down the stairs to the uptown Bronx side, where the 5 and the 4 and the 6 train are. I walked down the stairs and was walking along the platform, and a reporter kind of approached me with a pad and pencil, said, "I'm from the New York Post. Can I ask you some questions?" And I just went like this with my hand (indicating) and kept walking, and that's all that happened. THE COURT: OK. All right. And what you did was perfectly appropriate and absolutely right and consistent with the Court's instructions. So I thank you for that. And let me just ask you, did the fact that you were approached in any way make you feel like you are going to be unable to be fair and impartial in this case? Page 355 JUROR NO. 2: No, not at all. MR. DRATEL: One other question, your Honor, which is -- THE COURT: I will ask it. MR. DRATEL: Yes. As to whether there has been any conversation with other jurors about that. THE COURT: I think that is very fair. One thing we want to make sure of is that a conversation even about an incident like that doesn't end up leading to conversations with other jurors, and if it has just let me know and then we'll figure out what to do. JUROR NO. 2: When I mentioned it to Joe, some of the other jurors heard me tell Joe that the encounter happened yesterday. THE COURT: OK. So did you have any other conversations with them about it? JUROR NO. 2: No. THE COURT: Did anybody say to you anything else or ask you any questions about it? JUROR NO. 2: No. I mean they heard me say it. Joe asked me, you know, what happened. And what I just told you. THE COURT: Yes. JUROR NO. 2: You know, she made a comment, "Well, that was rude," and that was it. Page 356 THE COURT: OK. All right. So I'll address that, you know, by making sure that I have communicated all the instructions properly. Will you be sure not to -- JUROR NO. 2: OK. THE COURT: -- lead to any other -- have that approach lead to any other conversation. Just tell the other jurors that you can't talk about it. JUROR NO. 2: Mm-hmm. THE COURT: I am going to mention to the jurors again that you folks shouldn't talk about anything to do with the case. It is really the broad instruction of nobody should talk about anything having to do with this case, and that covers all of the myriad ways in which the case could come up. JUROR NO. 2: OK. THE COURT: Does that make sense? JUROR NO. 2: It does. Thank you. THE COURT: All right. Terrific. So go back into the room, and even if they ask you what happened just now, just say -- JUROR NO. 2: I can't talk about it. THE COURT: Right. You can't talk about it. All right? JUROR NO. 2: Thank you. Page 357 THE COURT: Terrific. Thanks very much. THE CLERK: All rise. *(Juror not present)* THE COURT: All right. Let's all be seated. OK. Any comments on what just occurred? My view is that what I am simply going to do now is before the next break, but not right away, but before the jury goes back into the room, to give them their instructions again slowly and carefully. I can also, if people would like -- well, what would you like? Anything else other that that? MR. DRATEL: Just to confirm that it hasn't had an impact on anybody, to ask them whether or not anybody -- THE COURT: The question is do you want me to say to the entire jury panel there was a juror who was approached. The juror handled it perfectly appropriately by telling -- by just walking away and not saying anything. If anybody else is approached, please let the Court know. And was anybody else approached? Do you want me to do that? MR. DRATEL: It is a question of whether it has had an impact on anybody's ability to the judge the case impartially, that is all. THE COURT: Do you want me to ask the entire panel? MR. DRATEL: Yes, because think they all know about it by now. THE COURT: Mr. Turner. Page 358 MR. TURNER: It doesn't strike me as particularly necessary, your Honor, but I don't object to it. I think that probably the most important thing is to stress to the other jurors that if that happens, that they should do exactly what this juror did, or, you know, just make clear that they should not talk to them, perhaps, and try to avoid hearing any comments about the case that might influence their decision making. THE COURT: All right. So the press who is here in the room, you see what happens -- if this did occur, what happens when this kind of thing occurs because of the possibility of juror influence. So here's what I am going to do. When the group comes out here, I am going to then state, in order to put all of these pieces together that you folks suggested: A juror was approached. She did exactly the right thing, which is she walked away. And I want to make sure that you all understand that if the press, or anybody else even purporting to be the from the press or anybody approaches you about this case, that you do the same thing. Just walk away. Do not have a conversation. Don't talk to each other about any approaches that may be made to you about this case. Do let us know. And has anybody been approached or know about that approach other than what I said and believe that at this point they cannot be fair and impartial based on that? Page 359 Is that all right, Mr. Dratel? MR. DRATEL: Yes. Thank you, your Honor. MR. TURNER: Yes, your Honor. THE COURT: Both parties are in agreement that that would be an appropriate way to proceed. OK. Now, Mr. Turner, you had other things. MR. TURNER: Just briefly. I wanted to make sure that our position on the hearsay issue has been adequately articulated. I'm not sure it was yesterday. In terms of the forum posts and the communications of DPR, our position would be that to the extent he says anything like, you know, you've got to follow my rules or else, those statements don't have truth value; it is simply indicative of his role. To the extent that he says things like I am leading an international narcotics enterprise, that would be a party admission. That would not qualify as hearsay under 801. That would be our position. And on the offers of drugs on the website, you know, I'm not sure those are being offered for the truth. If you have simply pictures posted like that on a website with a price tag, there is no statement there. It is just making it clear that somebody is making an offer of drugs. This is a marketplace where people are offering to sell things and buying things. THE COURT: The issue comes in -- just to be very clear on the first point, I think that is exactly what I was differentiating between yesterday, the portions which are not hearsay versus the portions which could be hearsay, and we, I think, now dealt with them thoroughly. Page 360 In terms of the posts, the website vendor -- I don't mean the chat posts, I mean the screenshots. MR. TURNER: The listings. THE COURT: When you put up one that says tell us some of the things that were available on that website and the witness says "heroin," all right, not "this is a photograph which has the words on it indicating heroin," then it is being offered for the truth, I think. I think that is a fair argument. That is one that the defendant raised pretrial as part of the hearsay objections. Nevertheless, my ruling on the co-conspirator exception, sort of the reason why I am belaboring it is for that very reason, to ensure that the record is clear as to the basis for my ruling. But I do think that there is some amount of truth which is being sought after and potentially sought to come in for based upon the content. It is not just a picture of a brown block but the word "heroin" around "heroin" that appears underneath it. MR. TURNER: Understood. I just wanted to articulate our position and make sure it is on the record, your Honor. THE COURT: Do you disagree with me? Page 361 MR. TURNER: I think there are arguments in the alternative. I think your Honor is certainly correct that if it is being offered for the truth, it would certainly be statements of a co-conspirator. Under the government's theory, we made clear that we think that all the vendors are conspiring with the defendant. THE COURT: Now, I just want to pause for one second. If you don't intend something to be offered for the truth, you will need to approach the questions in a manner that makes that clear. In other words, I see that this indicates, you know, whatever, but, you know, some set of questions other than tell me the type of goods that were sold. MR. TURNER: Understood. There was one other matter that we would request to address at the sidebar, your Honor. THE COURT: All right. *(Continued on next page)* Page 362 *(At the sidebar)* MR. TURNER: I really don't think this will be a problem but I just wanted to give the Court a heads up. The witness actually is recovering from a serious respiratory illness and is on heavy antibiotics, and he reportedly was feeling very ill after yesterday's testimony. He is a tough guy and I think he will be fine today, but there may be a point when we will just request an additional break, or something like that, if he has indicated that he is not feeling well. Again, I don't think that will happen, but I didn't want it to be a total surprise if it did. THE COURT: Is there any way in which the taking of the antibiotics makes his mind unclear? MR. TURNER: No. I think it is queasiness, nausea. So I don't think it is lack of memory or lack of reasoning ability. MR. DRATEL: I appreciate that because, obviously, I would like him to be fully cognizant on cross as well. I don't want him to say he doesn't remember or things like that because he is not feeling well. I guess the purpose of my cross is to make him queazy. But you understand what I am saying. THE COURT: I do. MR. DRATEL: So if he does need time, I am OK with that because I do want him to be fully attentive. THE COURT: Let's take this, as I like to say, one step at a time. If there is a point when he is feeling unwell, then we can take a break and take another witness in between. It is very important that he be able to proceed with his faculties about him, as he has proceeded up to this point. In other words, we're not asking him to perform differently than he has performed up to this point, but we don't want Mr. Dratel to end up with a guy who suddenly can't testify because he is sick only for cross. Page 363 MR. TURNER: No. And that is why I am saying he has been fine so far and I don't think it will be a problem. I think all I want is to let him know that we let the Court know so that if he does feel like he is sick, he can let the Court know and that won't be a problem. Honestly, I don't think there is going to be a problem. THE COURT: OK. One step at a time. MR. DRATEL: OK. Great. THE COURT: Thank you. *(Continued on next page)* Page 364 *(In open court)* THE COURT: Is there any reason we can't just go ahead and bring the jury out and start right now? Anybody need a break before we start? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: OK. Let's go ahead and bring the witness in and we'll get the jury out. *(Pause)* *(Continued on next page)* Page 365 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. Thank you. I see that you folks -- it looks like the coffee service has arrived this morning. Are there tops for the coffee service? Terrific. OK. Now, remember, confess if you spill, and I will, too, if I spill up here. Ladies and gentlemen, one thing I want to mention before we start this morning is that one of the jurors was approached yesterday on the subway platform by somebody who identified himself as a member of the press, and she did exactly the right thing, which is just walked away, didn't engage at all, and that's exactly the right thing. So if that happens to you, I instruct you to do the same thing. Not to talk to anybody about this case no matter who they are. As I've said, even each other. And so it's very, very important. Now, if it does happen to you and somebody approaches you -- somebody approaches you about this case, be it from the press or somebody else, don't talk to each other about it. Mention it to Joe, and then we'll take it from there. All right? So in light of the fact that it has happened once and I have just mentioned this to you folks, is there anybody who believes that the fact that somebody has been approached and that a member of the press, or somebody identifying themselves as from the press, has approached somebody, does that make anybody feel that they can't be fair and impartial in this case? Page 366 *(The jury indicated negatively)* THE COURT: All right. Thank you. We'll go ahead and we'll continue. I want to remind the witness, sir, Mr. Der-Yeghiayan, you are still under oath from your first day and from yesterday. All right, sir? THE WITNESS: Yes. Thank you. JARED DER-YEGHIAYAN, Resumed, and testified further as follows: THE COURT: You may proceed, Mr. Turner. MR. TURNER: Thank you, your Honor. DIRECT EXAMINATION MR. TURNER Q. Agent Der-Yeghiayan, yesterday we left off talking about the defendant's arrest, and I want to get back to that in a minute, but first I want to go back to a topic that we didn't quite finish earlier yesterday. MR. TURNER: Mr. Evert, could you pull up Government Exhibit 125B and go to page 2. Page 367 Q. So this was a forum post we looked at yesterday, Dread Pirate Roberts, and it says, "Drumroll, please. My new name is Dread Pirate Roberts." First of all, I wanted to ask you, are you familiar with the name Dread Pirate Roberts in the context of pop culture? A. Yes, I am. Q. How are you familiar with it? Where does it come from? A. It came from a movie from I think it is like the '80s. Q. What is the movie called? A. The Princess Bride. Q. And what is the basic legend of the Dread Pirate Roberts in the movie? A. So in the movie there is -- the main character was the Dread Pirate Roberts, and he met up with one of his loves in his life and he confessed to them that he was not the original Dread Pirate Roberts, that he took over the identity of Dread Pirate Roberts from another guy I think by the name of Ryan and that guy got it from another guy whose name was like Cumberbundt, or something like that, and then he got it from the original Dread Pirate Roberts that was retired like 15 years earlier. And the whole point of it was that the identity was what was important, the name was important, that the name lived on. So multiple people could basically assume that name, and it is just the -- or the story of Dread Pirate Roberts would be the intimidating factor. Page 368 Q. OK. And we also looked yesterday at this "Begin PGP sign message" and "PGP signature" underneath. Let's try it again. So what is the benefit of having a PGP sign message and what does that mean? A. So a PGP sign message, again, is just a way to authenticate or validate who you are online. So when you first -- when you are talking to someone on the Internet, it is hard to always validate you are always talking to the same person every time you see them day after day. So one of the ways that we are able to identify ourselves is using this program, this PGP, because it allows you to create a key that is unique to you that you share with other people, and that key, it is a public key, you could use to verify messages from them at a later date, messages they could sign, that they will authenticate so that you will know time and time again that that person has the same key that you are talking to. It is an unique key as well. Q. All right. So did Dread Pirate Roberts post his public key anywhere on the site? A. Yes, he did. Q. We looked at this exhibit before, Government Exhibit 133. Could you put that up on the screen. Please zoom in. And when was this screenshot taken by you again? A. What exhibit was that again? Q. That was 133. Page 369 A. That was August 19, 2013. Q. And so you could take this public key and do what with it? A. This would be something that I could then use to authenticate messages that would be later on signed by Dread Pirate Roberts. Q. Like the one we just saw on the forum? A. Yes. Q. Did this public key change over time of Dread Pirate Roberts, or did it stay the same as long as you investigated the site? A. From the beginning of my investigation until the time of the arrest, it stayed the same. Q. Could we take a look at Government Exhibit 133A, please, which did not come in yesterday yet so please don't publish it. A. OK. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It was a screenshot that I took of Dread Pirate Roberts' profile on the Silk Road market page on September 19, 2012. Q. So how does that date -- well, your Honor, we would offer this exhibit into evidence. MR. DRATEL: Just a hearsay objection, your Honor. THE COURT: All right. For the same reasons that we've previously discussed, that objection is overruled. Page 370 GX-133A is received. *(Government's Exhibit 133A received in evidence)* MR. TURNER: Put that up, Mr. Evert, and zoom in down here. Q. So this is from approximately what, a year earlier than the last one? A. About, yes. Q. And it is the exact same public key? A. Yes. Q. Did you prepare any sort of demonstration for the jury today to help you explain these concepts and help explain how PGP keys work? A. Yes, I have. Q. Would it aid your testimony to give that demonstration to the jury? A. Yes, it would. MR. TURNER: May I approach, your Honor? THE COURT: You may. Q. Do you recognize the CD I am handing you right now? A. Yes, I do. Q. How do you recognize it? A. It is a disc that I initialed that contains the video that I prepared. Q. May I take it back? MR. TURNER: I am showing the witness what has been marked as Government Exhibit 133B. With your Honor's permission, may we play it for the jury? Page 371 THE COURT: Yes. I take it you have shown that to the defendant? MR. TURNER: Yes. THE COURT: All right. *(Pause)* Q. OK. So if you could do the same thing with this video that you did with yesterday's video, if you could tell Mr. Evert when to start and stop and walk the jury through what it shows, please. A. OK. So what I'm going to demonstrate here in this video is me creating a message and then digitally signing it using the key that I own. So I will show you how that process is done, how I would sign the message, and then how I could verify that that message is authentic from my key. So the first thing I am going to show you once -- if you would begin, please -- is a program that you would use to store your key. And in this instance I have already my key in there. This is one of the keys I used in my Cirrus account. Q. Agent Jared, could I just interrupt you? Is this a public key that you are talking about right now? A. This is both a public key and a private key. Q. And could you explain the difference between private key and public key? Page 372 A. Absolutely. So I not only have my public key, which I could share with other people that could verify me, and then I also have the private key, which is what is unique to me. I'm the only one that has that, and that's what allows me to create messages from my key. It basically allows me to sign messages. Q. And if you don't use your private key to sign your message, can the public key be used to authenticate it came from you? A. Without the private key, you cannot create a message. You can't sign it without the private key. Q. OK. Go ahead. A. And so right now it's paused, and, actually, you could stop it. I'm sorry. What this is is it is the profile of the key, and there is there are a few things to point out. That there is a name that you enter in when you create the key as well as an email address. This can be anything you want. It doesn't have to be anything real. In this instance the name that I used was "me" with a lot of e's. And then that is a fake email account, which is just 101010@101010.org. You don't have to enter anything that is real. It is just whatever you want to enter in, you can; it is not required to enter in anything that is real. The other thing that I wanted to point out is the create date. That is automatically added to the key when you create it. It is on there. You can't modify that or adjust it. It is part of the key. So it will document that. In this case this key was created on October 2, 2013. Page 373 So when I am going to share my key, everyone can see this information. So my public key and they have it. This is what they will see. They will see the name of me. They will see the email address that I created, and they will see when I created that account as well. And so if you could go ahead and play, I am going to show you how I would then create a message using my key and how I would sign that message, then, using it. So I'm closing out the program, and I would use simply a text file, in this instance, to then type my message. So I'm writing -- this is an example of me signing the message using my PGP key -- the message I wrote using my PGP key. So in order to do this, all I have to do is highlight the message and in this instance right click, and I need to just click things as signed. And as I click sign -- can you pause it, please -- this is then what the result will be. And it will essentially take my message, which is in the body above here. This is an example of me signing a message saying I wrote using my PGP key, and it adds this signature at the bottom. And so now I'm going to go through and I am going to find -- if I share this with someone else, they can now verify this came from me and I'll show you how I would do that. Page 374 Q. They verify it using what? A. Using, again, a program such as this, a PGP program using my public key that I would have shared with them. In this instance I have my public key so I can verify my own key. If you could play it. First, I just wanted to show you again I have highlighted that that was the original message that I typed and I signed. Then in order to verify it, I just simply have to right click and verify. And it is going to tell me -- if you could pause it, please -- that this is a good signature, and it says -- it is a good signature from the person "me" with my email address. So I was able to automatically recognize the key that I had stored in my program and verify it to that message and tell me it is a good signature. Click play, please. And I'm going to show you what would happen if I was to now alter this message after I signed it. So this is me typing extra information in there after signing the document. So it is no longer the same document that I signed. Now, I go to verify it again after I altered it -- can you pause it, please -- it is going to tell me that I have a bad signature by that user. So there is no way after you sign a document to alter it, to then manipulate it in any way. Once you sign that message, it has to stay exactly that message intact. Page 375 Q. Does that include the signature down at the bottom, if any part of that signature changes. A. That is correct. Anything on that from basically the top line that begins "PGP sign message" all the way through the very bottom has to remain exactly the same, the same amount of spaces, the same amount of characters. Everything has to be exact in order for it to authenticate. Can you click play, please. I am just going to demonstrate that again by removing the information that I added originally to it and verifying it again in the original state that it was. And it's going to come back with a good signature again, that that was the original message. So now I'm going to take -- these are on the right-hand side -- a text file of -- I will let him scroll first. Can you pause it, please. On the right-hand side there is a text file of all of DPR's posts from the forum from the beginning of his account in around June 2011 'til about May 2013. That was all of the posts that I copied out of the forum and into a text file such as this. And on the left-hand side I also have a screenshot that I took from my Cirrus account of posts that were made by Dread Pirate Roberts, and what I am going to do first is show you now if I was a user how I would acquire Dread Pirate Roberts' public key and then how would I verify basically things that he wrote. So I am going through the steps of essentially taking in his public key that he shares with everybody and then verifying things that he wrote using his signature. Page 376 So first this is -- if you want to play it, please. This is one post that I copied, again, from Dread Pirate Roberts' profile. And it came from November 2012 -- November 12, 2012, which is up on the top. And he signed a message that said "The sig checks out for me," but I will do another one just in case. And then he says -- if you could pause it right now, please. He says, and right here -- "And here is the public key that I've been using since the site began, normally located on my user page on my main site. Q. Just to be clear, the user page on my main site, is that the page we saw before with the -- A. It is referring to the Silk Road market page. Q. That is the page we saw before with the public key? A. Yes. Q. OK. A. And so you could tell that this is his public key down below because it says "begin PGP public key." So this information from here to here is his public key, again. That was a screenshot. I can't copy that text exactly and import it so I have to use that text document to do it. So what I am going to show you is that the text document on the right is the same information that is from the screenshot from the left. Page 377 If you could play it, please. So again this is the text document. I just wanted to point out that it is the same date. Now, this was copied from a user that actually has time set differently on his computer when I originally copied this stuff. So it is slightly different, but it is hours different because of the UTC variation. But, again, it is the same message and the same PGP key. So can you pause it, please. Pause, please. So right now in order to import this key -- that is actually fine. That is a good place to stop. I would highlight his public key, and what I am going to do is import it. There is a second option up here above this. And that's all I have to simply do in order to bring in his public key into my program and for me to verify his signatures at a later date. So right now I am going to import his key. So click play, please. There is nothing so important about importing it or taking it as more than that this is how I would capture it. And if you could pause it, please. It tells me right now that the import was successful and that I imported a key that was titled Silk Road with the email address staff@silkroadmarket.org and the import was OK. So it let me know that the import was successful, that I was able to capture that public key. Page 378 Q. So now it is on your computer permanently? A. Yes. Not permanently. I can delete it, too. Q. Sure. A. So if you click play, please. I'm going to show you off that same program where I keep my key. If you could pause it, please. This is now that imported key that's from Silk Road. So his public key is now available, and it lets me know that all I have is his public key with that "pub." And the one up above says "sec/pub," and that means that I have the private key and the public key for the key up above, which is mine, but. I only have the public key for Silk Road. I do not have the private key. Q. Just to be clear, the public key you are talking about, that is used to verify a signature. The private key is used to sign the signature, right? A. Yes. The private key is used to sign it and the public key is used to verify. Q. The Silk Road name, did that come from you or was that automatically generated when you downloaded it? A. That was what was created in the key when it was created by the user who created it. Page 379 Q. So you didn't create that? A. I did not. Q. And the Silk Road -- the staff@silkroadmarket.org, same thing? A. The same thing. I am going to open his profile. If you click play. Q. I just want to make clear. You mentioned earlier that you used a fictitious email address in creating your key? A. Yes, I did. Q. Do you know whether staff@silkroadmarket.org is a real email address? A. That domain, which is silkroadmarket.org, that website does exist or did exist at the time. It was a website that was on the open Internet that was used to advertise the Silk Road market on Tor. It was a redirect for people that would be maybe doing a Google search on the regular Internet. And Google searching "Silk Road," they would find that website, and that website would give you directions on how to get to the Tor Silk Road website. Q. OK. But the email address, staff@silkroadmarket.org, do you know if that was real or not? A. I'm not sure if it was -- Q. So it could have been fictitious, it could have been real, it doesn't really matter for the program? Page 380 A. Right. MR. DRATEL: Objection. Leading. THE COURT: Why don't you rephrase. MR. TURNER: I will withdraw, your Honor. A. OK. So if you click play, please. I just want to show you when I opened that -- again, if you pause it for a second -- the name that is on the account is Silk Road. The email account that was entered in by the user that created it was staff@silkroadmarket.org, and it was created on April 1, 2011 at 4:47 a.m. And that is information, again, that I can't modify that comes with the key that comes when you share it. Can you click play. So now that we have his public key stored, we can now verify messages that were signed by him. And so I am going to go through this list on my right. I am going to scroll down. Now, the bottom is the oldest messages and it starts around June 2011, and it goes chronologically to the top which, would be the newest messages, which would be May 2013. And what I'm going to do from the bottom is basically try to find one of his first signed messages that I could see, and this is the first signed one. If you could pause it, please. And this is from June 19, 2011. And it is, again, a signed message, and so I am going to try to verify this now signed message with this key that I just imported. Page 381 Can you click play, please. So, again, I copied the entire message. I simply right clicked and then clicked verify. If you could pause it, please. This then shows that I have a good signature from Silk Road at staff@silkroadmarket.org. So it is verifying that that message that was signed -- and this is what a user would do if they would see this message and maybe they didn't know if they could trust who is posting this on the forum or posting it elsewhere or posting it anywhere on the Internet, how do I know that I can trust this message that came from Dread Pirate Roberts? Because anyone could just start up an account maybe and try to fake it's him, well, this would be one way to do it because this key is somewhere that somebody would have already, something that they know they could trust him with, something that would be something that is from the past. And so click play, please. I am going to also show that this key stayed the same over time. And so I'm going to actually scroll up somewhat randomly here and go up to a post that I found from -- this is from January 16, 2012. And, again, I'm going to try to verify this. That's all I'm doing, just verifying that the message is a good signature. So when I could verify, again it comes back as a good signature from Silk Road at staff@silkroadmarket.org. I'm going to scroll up again. This time I am going to try to find something later in 2012, early 2013, to see if, again, that signature is the same signature from that same key and if it still verifies that it came from Dread Pirate Roberts' public key. Page 382 *(Pause)* Some of these I'm skipping over because they are a little bit longer and I just wanted to get a message that was shorter so you could see the entire message. So this one was from November 23, 2012. Again, this is another signed message with a signature. And just by highlighting the entire message and clicking "verify," it will tell me it is a good signature. And, lastly, I'm going to go up to my most recent copy that I had of a post that was made by Dread Pirate Roberts, and I was going to see if that one, too, will verify. That was from -- it is going to be from May of 2013. So this is the most recent post I had, and this is from May 7, 2013. When I say "most recent post I have," it is just on this particular text file. And when I click "verify," again it comes back as a good signature, that it stayed the same signature and the same key from 2011, 2012 -- late 2012 and May of 2013. I'm going to show you again -- now, if I was to alter this message that was signed by DPR -- so I typed in "altered." Do you want to pause it, please. So down at the bottom here I actually typed in "altered" on this text page. I am going to try to verify it now again that I have changed that message. Page 383 Click play, please. And if you pause it. It comes back as a bad signature now. There is no way that I could alter that message and still have it come up as a good signature. It has to stay in its original state that was created by the person that owns that key. And if you click play. Again, I am going to remove that -- actually, I could do a different version but that is the end of the video. Q. All right. So what does the fact that you were able to verify those different messages from DPR at different times imply about the user who posted those messages? MR. DRATEL: Objection. THE COURT: Why don't you rephrase it. MR. TURNER: OK. Q. So what did the person who posted those different messages from DPR at different times have to have in order for you to be able to successfully validate each of those messages? A. Since all those messages were verified with the same public key, they had to have the same private key for that entire duration. So it is one person with one -- MR. DRATEL: Objection. Objection. THE COURT: I'll sustain the objection. *(Continued on next page)* Page 384 MR. TURNER Q. Let me see if I -- without talking about the number of people involved, let me just ask you again, what would the person or persons who posted these various messages have to have in order for you to successfully validate those messages using DPR's public key? A. It would have to be the same private key for the entire duration. Q. If at any time those messages, one of those messages was posted, the person posting them lacked DPR's private key, would you have been able to validate that message with DPR's public key? A. No. It would come back as a bad signature. MR. TURNER: Let's go back to where we left off yesterday afternoon and, Mr. Evert, can you pull up 128C, please. Q. Just to recap. Yesterday you testified that you saw the defendant enter the library when you were in this area depicted in the photo, right? A. Correct. Q. And when you saw the defendant enter the library where, again, were you situated? A. I was seated across the street. Q. Would you use the laser pointer. A. I can't -- right here. Page 385 Q. Okay. And who was with you when you saw him in the library? A. It was computer scientist Tom Kiernan. Q. You testified yesterday that a few minutes after the defendant entered the library, what happened to DPR's online status? A. He went online. Q. And did you begin chatting with him after that? A. Yes, I did. Q. And where were you while you were chatting with him? A. I was seated outside, again, on the bench across the street from the library. Q. Same place? A. Same place. Q. And who, if anyone, was with you by that point, at the point when you were chatting with DPR? A. FBI Special Agent Chris Tarbell. Q. And where had Tom Kiernan gone? A. Tom Kiernan had entered into the library once he saw Mr. Ulbricht enter. MR. TURNER: Could you put up 129C on the top half of the page, Mr. Evert. That's too much. Just the bottom few lines, please. There we go. Thank you. Can you put 128C below. Q. So you said at some point during your chat, you gave a signal to FBI Agent Chris Tarbell to do what? Page 386 A. To effect arrest. Q. And at what point in the chat was that again? A. That was after the last message that I received from Dread Pirate Roberts which said "okay, which post." Q. And then you typed in the last two lines of this chat? A. Yes, I did. Q. And where were you by that point? A. I was still seated across the street. Q. After typing in the last two lines of the chat, what did you do next? A. After I got done with the last line that I typed in there, "there was the one with atlantis," I got up and moved over to the library, so I entered the library. Q. So can you take a look at Government Exhibit 128D, please. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's the outside of the Glen Park library. MR. TURNER: The government offers 128D into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 128D received in evidence)* Q. So you say you went inside the library? A. Yes. Page 387 Q. And the patron area is located where? A. As you enter into the library, the stairs go immediately to the right and go up into the library. Q. So could you look at 128F, please. Do you recognize this document? A. I do. Q. How do you recognize it? A. It's the stairway going up inside the Glen Park Library. MR. TURNER: The government offers Exhibit 128F into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 128F received in evidence)* Q. Is this where you go after you enter the library? A. Yes. Q. And who is with you at this point? A. Special Agent Chris Tarbell. Q. Do you still have your computer open at this point? A. I do. Q. Are you still logged onto staff chat? A. I'm still connected to the Internet and still logged into the staff chat. Q. Had you heard anything from Dread Pirate Roberts since you sent those last two messages? A. There were no replies, no. Page 388 Q. And at any time at this point if DPR had tried to respond to your last chat message, would you have received it on your screen? A. Yes, I would have. Q. What happened next? A. As I was standing on the stairs with Agent Tarbell, the other agents inside that effected the arrest brought Mr. Ulbricht to us in handcuffs and turned him over to Agent Tarbell. And I then shut my laptop and put it in my book bag and then escorted Mr. Ulbricht and with Agent Tarbell down the stairs of the library. MR. TURNER: Could you pull up, Mr. Evert, 129C, please, and could you zoom in at the end of the chat there. Q. Is the time when you shut your laptop that you just described reflected anywhere in the chat? A. Yes, it is. Q. Where is it reflected? A. It says you have disconnected at 10:16:36. Q. Okay. So what did you see -- excuse me. What did you do next? A. After I disconnected and we escorted Mr. Ulbricht downstairs, Agent Tarbell performed a pat-down search of Mr. Ulbricht. And then I waited there for about a minute or two before another agent came from downstairs and I asked him to stay with Mr. Ulbricht and Agent Tarbell so I could go upstairs into the library. And I wanted to go up there so I could see if there was a computer and if there was anything on that computer. Page 389 Q. So then what happened next? A. So I entered the library. And I proceeded into the library and I saw from a distance a computer scientist Tom Kiernan sitting at a seat in the library. So -- and he had a laptop in his lap. And so I proceeded to him and sat down next to him and observed the computer. And I saw on the computer screen the same chat that I had with Dread Pirate Roberts minutes earlier. Q. What was Tom Kiernan doing exactly? A. Tom Kiernan had his Blackberry phone out at the time. He was taking photographs of the computer screen. Q. Could you take a look at what's been marked as Government Exhibit 201H, please. Do you recognize what's on this photograph, this document? A. Yes, I do. Q. How do you recognize it? A. It's the computer screen that I saw in the library the day after I had met up with the computer scientist Tom Kiernan. Q. Did you take this photograph? A. No, I did not. Q. Does it fairly and accurately depict what you remember seeing on the screen? Page 390 A. Yes, it does. MR. TURNER: The government offers 201H into evidence. THE COURT: No objection? MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201H received in evidence)* MR. TURNER: Could you zoom into the box here. Mr. Evert, could you compare that side by side with Exhibit 129C and zoom in here, please. Q. So what are we looking at on the left side? A. On the left side was what I saw on the computer in the library and on the right side is my chat. Q. And how do they compare? A. They're identical. Q. Identical except for what? A. Except for -- instead of "dread" it says "me," but then my username cirrus is the same on the other screen and the colors are different. Q. Just to be clear for the record, it says "me" on which copy of the conversation? A. On the left-hand side. Q. The image of the computer that Mr. Kiernan was taking photographs of? A. Yes. Q. Could you take a look at Exhibit 201I, please. Page 391 A. Okay. Q. Do you recognize this document? A. I do. Q. How do you recognize it? A. Again, it's the computer that I saw in the library. Q. And again, did you take this photograph? A. No, I did not. Q. Does it fairly and accurately reflect what you remember seeing on the screen? A. Yes, it does. MR. TURNER: The government offers 201I into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201I received in evidence)* MR. TURNER: Could you zoom into here, Mr. Evert. Can you put it on the bottom half of the screen. The top half. It doesn't matter. Mr. Evert, before you do anything else, can you zoom in here, the last line of the chat. Q. The last line that you sent to Dread Pirate Roberts was "there was the one with the atlantis," right? A. Yes. Q. What did that refer to again? A. It referred to a flagged message that I was asking Dread Pirate Roberts to look at. MR. TURNER: Mr. Evert, can you put 129D down at the bottom of the screen and zoom in here. Page 392 Q. Do you remember this exhibit from yesterday? A. Yes, I do. Q. Where did this exhibit come from down at the bottom of the screen? A. This is the flagged message page from the admin panel that I took. Q. That you took from your computer? A. Yes. MR. TURNER: Can you back out of the top, Mr. Evert, and zoom in here. Q. Did you see that same post on Mr. Ulbricht's computer that you had directed DPR to look at? A. Yes, I did. Q. Could you take a look at what's been marked as Government Exhibit 201J? A. Okay. Q. Do you recognize this exhibit? A. Yes, I do. Q. Is this a photograph that you took? A. No, it's not. Q. Does it fairly and accurately depict something that you saw on Mr. Ulbricht's screen that day? A. Yes, it does. MR. TURNER: The government offers 201J into evidence. Page 393 MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201J received in evidence)* MR. TURNER: Can you zoom into here, Mr. Evert. Q. What are we looking at here? A. This is what I observed on the computer that showed the account was logged in as dread at the dot-onion address for the staff chat. MR. TURNER: Can you compare that with 129B, Mr. Evert. Q. And where is this image from? A. This is from my computer. Q. And this was the status window you used to check on DPR's online activity? A. Yes, it was. Q. How does the dread username compare to the dread username you saw on the screen here? A. It's the same. Q. And the avatar? A. It's the same. Q. And what program was this that was open on Mr. Ulbricht's laptop? A. That would have been Pidgin. Q. How do you spell that? A. P-I-D-G-I-N. Page 394 Q. Do you remember yesterday we looked at the chat instructions that DPR had given you on how to set up staff chat? A. Yes. MR. TURNER: Mr. Evert, can you pull those up. It's Government Exhibit 127 right here. Q. "Hey, we're all on a more secure chat channel. Here are the instructions for joining in: Download and install Pidgin." Can you go down to the bottom of this message. "add buddy dread@." Is this the same dread username you saw again from Mr. Ulbricht's computer? A. That is. Q. So about how long were you -- did you spend looking at the computer while you were at the upstairs of the library? A. Only a few minutes I was up there. Q. And what did you do after you were done? A. After that, I went back downstairs out of the library and met back up with Special Agent Tarbell who at that point, with several other agents, they had Mr. Ulbricht inside a car sitting in there, and then I observed him read Mr. Ulbricht his Miranda rights. Q. What happened next? A. And then near that area, too, the rest of the team that was there that was going to effect a search warrant then on Mr. Ulbricht's residence was meeting up, and we basically talked about how we're going to go over to the house and approach it. Page 395 Q. What house? A. Mr. Ulbricht's residence. Q. And why were you going there? A. To effect a search warrant. Q. So what happened next? A. I then -- I left that area and drove over to Mr. Ulbricht's residence. I parked outside down the street from the residence and I waited for the rest of the team to arrive. Shortly thereafter, the computer scientist Tom Kiernan and another agent arrived in a separate car, and I joined them in their car. And agent -- or computer scientist Tom Kiernan still had the computer with him at the time. Q. And what was he doing with it at the time? A. He was still taking photographs of it. Q. And what happened next after you joined him in the car? A. I asked him whether or not he could click back on the browser that was on the flagged message page to see if there was anything before that, and I was asking that because I know -- Q. Let me interrupt you. Click back on the browser, what do you mean by browser? A. It was the Tor browser that was up, the web browser. I wanted to see if they'd hit the "back" button to see the previous pages that might have been visited on that browser. Page 396 Q. What was on the browser when you saw it in the library again? A. It was on the flagged message page. Q. The one with the Atlantis reference in it? A. Yes. Q. And why did you want to hit the "back" button on the browser? What were you trying to learn? A. I know from my account from when I access that page I had to be logged in under my administrator account. So I wanted to see what account he used to enter into that flagged message page. Q. So what happened next? A. So when he clicked "back" on the browser, it then took to the support page, which you would use to click to get to that flagged message page, so the support admin panel came up on the screen. Q. Would you take a look at Government Exhibit 201K, please. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. What is it? A. This is what appeared on the computer when the computer scientist Tom Kiernan hit "back" on the browser. This is the support page. Page 397 Q. Did you take the photo? A. No, I did not. Q. Does it accurately and fairly reflect what you remember seeing on the screen? A. Yes, it does. MR. TURNER: Government offers 201K into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201K received in evidence)* MR. TURNER: If we could zoom into this part here. Q. What are we looking at again? A. This is, again, the support panel that you use to access the flagged message page that I was responsible for moderating. MR. TURNER: Could you put 127D below that, Mr. Evert. Q. What is 127D again? A. That was the screen shot that I took when I originally got access to that support panel. MR. TURNER: Could you go back to 201K, Mr. Evert, and can you zoom in up here. Q. What's the little icon here next to "support"? A. That would be the "back" button. Q. The little icon above the "back" button? A. Oh. I'm sorry. It's that's the man on the camel, the green logo. Page 398 Q. From what? A. From Silk Road. Q. And the web address, do you recognize that? A. Yes, I do. Q. What is it? A. It's the Silk Road's market URL. Q. And it has the slash support? A. Yeah, the forward slash support is what you would type in or what I'd type in to access that page. Q. And what is this over here? It says SR? A. It's a folder that says SR. Q. So, did you go back any further in the browser? A. Yes, we did. Q. Could you take a look at Government Exhibit 201L. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a what appeared on the screen on the computer after we hit "back" again. Q. This is the second time you hit "back"? A. Yes. Q. Did you take this photograph? A. No, I did not. Q. Does it fairly and accurately reflect what you remember seeing on the screen at this point? Page 399 A. Yes, it does. MR. TURNER: The government offers 201L into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201L received in evidence)* MR. TURNER: Mr. Evert, could you try zooming in here, including the address bar. Q. Had you ever seen this page before? A. No, I have not. Q. Just to be clear, you hadn't at the time, right? A. Well, previous to that, no, I had never seen it -- never saw that screen before. Q. And the address at the top, what did it say this time instead of "support"? A. It says the silkroadmarket.onion/mastermind. Q. And there's some names under here: Inigo, libertas, cirrus. Tell us who those are. A. Those are the other support staff members minus samesamebutdifferent. Q. Do you know whether DPR ever kept track of your time on the site? A. After that I knew. MR. TURNER: Can you back out, please. Can you zoom in here. Page 400 Q. Could you read off what it says here? A. It says escrow db in parenthesis USD. And then a number $4,146,736.57. And then in parenthesis, it's bitcoins 30,951.60. And then there's escrow db, which is 22,234.91 bitcoins, and accounts db, which is 180,448.96 bitcoin. Q. And from your experience working on the support staff at Silk Road, do you know whether at any given time on Silk Road there were various pending transactions into the escrow system of Silk Road? A. There were. MR. TURNER: Could you back out and zoom in down here. Q. The bottom: Unshipped, in transit, resolution. Can you remind the jury what those categories relate to with respect to Silk Road? A. The listing, when you place the order, it would say "processing." And then once a vendor will mark it as being shipped, it will say "in transit." So -- and then if -- there is resolutions as well. There would be -- there's a resolution mode for any order that you placed you can put into resolution. Q. To put into resolution means what again? A. It means to try to resolve basically a package that didn't arrive or a claim that it wasn't shipped. Q. Could you take a look at -- well, let me ask you, did you go back any further or was this it in the browser? A. No. I hit "back" again on it. Page 401 Q. Could you take a look at Government Exhibit 201M. A. Okay. Q. Do you recognize this page? A. Yes, I do. Q. How do you recognize it? A. It's what appeared on the screen after I hit "back" again. Q. Did you take this photo? A. No, I did not. Q. Does it fairly and accurately reflect what you remember seeing? A. Yes, it does. MR. TURNER: The government offers 201M into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201M received in evidence)* MR. TURNER: Could you zoom into this corner, Mr. Evert. Q. So what are we looking at here? Do you know? A. This is that same URL, the silkroadmarket URL, forward slash support, forward slash landing. This is the same page that appeared on my screen when I was given directions by Dread Pirate Roberts to access the support panel. He gave me that URL and this was the screen that appeared that I put in my username on the left and my password on the right before I could go. Page 402 MR. TURNER: Mr. Evert, could you put that on top and on the bottom, could you bring up 127C, please. Could you zoom into the area of that hyperlink. Q. Do you remember 127C, an exhibit that we looked at yesterday? A. Yes, I do. Q. Can you remind the jury what it is. A. It was a chat that occurred between myself and Dread Pirate Roberts on the staff chat where he gave me instructions and gave me more authority to access the support admin panel on the marketplace. Q. And at one minute, 14 seconds -- excuse me -- at 01:14:24 it says "dread: Now go to," and then it provides the silkroad.onion address/support/landing, is that the page that we see here up top? A. Yes, it is. Q. And then it says "and enter your user and pass and let me know what happens." So if you were on the page, what username would you enter there? A. On the left-hand side, I would have entered in "cirrus." Q. And what username did you see when you hit the "back" button on Mr. Ulbricht's computer? A. Dread Pirate Roberts. Q. And what did that indicate to you? Page 403 A. That the person had signed into that computer using Dread Pirate Roberts. Q. So what happened next after you were in the car looking at the computer? A. The rest of the team for the search warrant arrived and we effected the search warrant on the home. Q. What type of residence was it? A. It was a multifamily home, like a multiflat. Q. Would you take a look at what is marked as 130A as in apple. A. Okay. Q. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's the outside of Mr. Ulbricht's home. Q. Did you take the photo yourself? A. No, I did not. Q. Does it fairly and accurately reflect the residence as you remember it? A. Yes, it does. MR. TURNER: The government moves 130A into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 130A received in evidence)* Q. Which one is it on here? Page 404 A. It's this one right here. That's the front entrance. Q. The brown one? A. Yes. Q. So did you personally participate in the search? A. Yes, I did. Q. Were you able to locate the defendant's bedroom in the residence? A. Yes, I was. Q. How were you able to identify his bedroom? A. There were personal effects in the room that belonged to Mr. Ulbricht. Q. Such as what? A. There was a driver's license, a passport, as well as credit cards and other bank statements. MR. TURNER: May I approach. THE COURT: Yes. Q. I'm showing you what's been marked as Government Exhibit 134A. Do you recognize the document? A. Yes, I do. Q. And what is it? A. It's Mr. Ulbricht's U.S. passport. Q. Could you take a look at what's been marked as Government Exhibit 135 -- I'm sorry -- Government Exhibit 134. A. Okay. Q. Do you recognize those documents? Page 405 A. Yes, I do. Q. How do you recognize those? A. It's photographs of Mr. Ulbricht's U.S. passport and the pages contained therein. Q. Did you yourself take those photographs? A. No, I did not. Q. Do the photographs accurately reflect the pages of the passport? A. Yes, they do. MR. TURNER: The government offers Exhibits 134 and 134A into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 134, 134A received in evidence)* MR. TURNER: Could you publish Exhibit 134, Mr. Evert, and can you go to the second page. Q. In looking at the passport, can you tell where the travel markings are from here from the top half? A. Yes, I could. It's from Dominica. It's entry and exit stamps. Q. What is Dominica? A. Caribbean country. Q. And what are the dates of the travel indicated, the enter and exit? A. There's -- the blue stamp on the left -- on the right, sorry -- is an enter stamp and it's from November 15, 2012, and the stamp on the left is an exit stamp from Dominica from December 4, 2012. Page 406 Q. Did you find anything related to Silk Road in the bedroom? A. Yes, I did. Q. What did you find? A. In the trash, there was, in the bedroom, I located the rest of Mr. Ulbricht's belongings. We found -- there was a paper that was crumpled up in the trash, two yellow sheets of paper that contained writing on it that I recognized as things that were similar to Silk Road. Q. Did it say the Silk Road -- did the paper have the words "Silk Road" written on it? A. No, they did not. Q. So what enabled you to make the link that it came from Silk Road? A. There was language on it such as, like, talking about transactions and buyer weights and ratings; and there was also, like, a way to, like, rate the users on Silk Road that I recognized as well, language that was similar to that. Q. How did you recognize it? Was there something going on on Silk Road with respect to the rating system? MR. DRATEL: Objection; leading. THE COURT: Sustained. MR. TURNER: I'll rephrase. Page 407 Q. How did you recognize it as being related to anything going on at Silk Road at the time? A. There was a -- they were fairly recent, within early September, talks from Dread Pirate Roberts about revamping and redoing the buyer rating system on Silk Road. So there were discussions that were openly talked about by Dread Pirate Roberts about redoing that system. Q. Can you take a look at Government Exhibit 130, please. A. Okay. Q. Do you recognize these pages? A. Yes, I do. Q. How do you recognize them? A. These were the sheets of paper that we found in the trash. Q. Did you personally participate in that seizure? A. I was. I witnessed it happening; yes. Q. So there are two pages at issue? A. Yes. MR. TURNER: The government offers Exhibit 130 into evidence. MR. DRATEL: The previous objection, your Honor. THE COURT: All right. Government Exhibit 130 is received. The objection is overruled. *(Government's Exhibit 130 received in evidence)* MR. TURNER: Mr. Evert, can you publish Exhibit 130. First of all, can you zoom in on the very top. Page 408 Q. There's, sort of, an algebraic formulas up top. Do you see that? A. That would be accurate. MR. TURNER: Zoom out and zoom into this area. Q. Okay. Can you make out what it says there starting with "ratings"? A. Yeah. It says ratings, then buyer weight at time of purchase X TX size X and age factor, followed by calculate on page load and generate bars. MR. TURNER: Can you highlight "generate bars and ratings," Mr. Evert, and then put that on top. Q. Now what I'd like you to do is take a look at Government Exhibit 131. Do you recognize what these pages are? Where they're from? A. Yes, I do. They're screen shots that I took of posts made by Dread Pirate Roberts on October 6, 2013. Q. And what do the posts concern? A. These had to do with the overhaul that Dread Pirate Roberts was discussing in the feedback and the buyer ratings. MR. TURNER: Mr. Evert, could you put up page three of Government Exhibit -- I'm sorry. The government would move Exhibit 131 into evidence. MR. DRATEL: Objection on hearsay grounds and Vayner. THE COURT: The objections are overruled. Government Exhibit 131 is received. Page 409 *(Government's Exhibit 131 received in evidence)* MR. TURNER: Mr. Evert, can you zoom into just the first paragraph in the heading. Q. So the date of this post is August 11, 2013, correct? A. Correct. Q. And the title is "feedback system overhaul," right? A. Yes. Q. And it says, Update 08/18/2013 2213 UTC. Wow! So much feedback and ideas for ratings. I think this will be a major focus for a while until we can really flesh everything out so both vendors and buyers can have all of the information and tools they need to decide who they want to work with. At this point, there are so many things to do, we have to start thinking about what order to do things and how to transition. Everyone responds to change either positively or negatively, and I'll keep doing my best to keep the negative to a minimum. Can you scroll down a little bit, Mr. Evert. Can you zoom back in again. Great. Can you zoom in right here. All right. You see at the top it talks about ratings and it says calculate on page load and generate bars. Update 2028 UTC: Okay, I've rolled out the first set of major changes. We've done away with a percent based rating score entirely and are now displaying the ratings as a bar chart that shows the relative weight of each rating category (one through five) and a total average. Page 410 Could you go back up to the document here in the top and scroll down. Maybe could you pull out a little bit and expand. Can you highlight buyer weight, vendor weight, sales volume, age factor. And now can you scroll down here and open that up more, please. And go down here starting with the long line of text: So here's what we have so far. I want to rework how both buyers and vendors are related. We've identified six critical dimensions that I think effect how SR users should be judged, they are... Mr. Evert, I want to point out buyer weight, account age, vendor weight, total sales volume. Now, was this the only post that DPR made on August 2013 about revising, overhauling the rating system? A. No, it was not. THE COURT: Is this a good time that we can make our mid-morning break, Mr. Turner? MR. TURNER: Five more minutes along these lines -- THE COURT: Why don't we take a break right now if it's going to be five minutes. Ladies and gentlemen, we'll take our mid-morning break. I want to remind you not to talk to each other or anybody else about this case. Thank you. *(Jury excused)(Continued on next page)* Page 411 *(In open court; jury not present)* THE COURT: You can take a break yourself. THE WITNESS: Thank you. *(Witness temporarily excused)* THE COURT: The reason for the break right then was one of the jurors made eye contact and indicated that he wanted a break. MR. TURNER: Sorry for not picking that up. THE COURT: That's okay. Because sometimes when I've been just trying to find the right time, having you continue to a logical end is neither here nor there for me. I'll use this opportunity to address two of the objections that I overruled, both as to GX 130 and GX 131. In the Court's view, neither of those were being offered for the truth and therefore the hearsay objection would not be a relevant objection. In terms of I think the venue which you mentioned as to 131, Mr. Dratel, that was addressed in my in limine motion. Did you mean Vayner? MR. DRATEL: I said Vayner. I'm sorry. THE COURT: You said "venue." All right, Vayner. For the Vayner, then my ruling would be similar to that from yesterday, which is, these documents that we have gone through all have been appropriately authenticated as the require; so therefore, the Vayner objection would not be appropriate or would not be sustained. Page 412 MR. DRATEL: When they come back out, would the Court instruct the jury about 130, 131 about not for the truth, your traditional instruction in that regard? THE COURT: Sure. I'm happy to go through and to do that. MR. DRATEL: Thank you. THE COURT: I think it's obvious because it's not about whether or not -- it's just for the fact that the words "buyer weight, vendor weight" was on the page, not whether or not they were, in fact, ultimately taken into consideration. MR. TURNER: I don't think there's any unique statement on the document that can carry any truth value. THE COURT: That's sort of my point; yes. But nevertheless, I'll just indicate that those are not for the truth. If Mr. Dratel would like that, I'm happy to do that. MR. DRATEL: Thank you. THE COURT: Is there anything else that folks would like to raise before we take own break. MR. DRATEL: There's one issue. THE COURT: At the side bar, sure, come on up. *(Continued on next page)* Page 413 *(At the side bar)* MS. LEWIS: I wanted to bring it to the Court's attention that I may have inadvertently addressed -- I walked into a crowded subway car at Union Square and I saw there was woman behind me. And seeing a juror in the courtroom makes me think it may have been her. THE COURT: All right. MS. LEWIS: Such is life. THE COURT: Thank you. Thank you for disclosing that. MS. LEWIS: That was all. THE COURT: It's life in the New York City subways at rush hour. Is there anything anybody thinks needs to be done? MR. DRATEL: As long as it wasn't a New York Post reporter behind her. THE COURT: I think we're all set. Does anybody want the Court to do anything with that? MR. TURNER: No. THE COURT: Thank you. Let's take our own break for a few minutes before we resume. *(Recess)* *(Continued on next page)* Page 414 *(In open court; jury present)* THE COURT: Now, one thing I wanted to mention before we continue is there were two documents that we were just hearing testimony with respect to. One was the photograph of the crumpled notes, that's GX 130, and the other was the buyer ratings. What would you call it? Posts? MR. TURNER: Yes. THE COURT: The posts at Government Exhibit 131 that the government and the witness were going back and forth on, these are not offered for the truth as to whether or not, for instance, the calculation that was put forward, in fact, is the right calculation or the truth of any of the information. It's just for the fact that these words appeared on the page. Mr. Turner, you can go ahead and continue. MR. TURNER: Could we put Government Exhibit 131, the page back on the screen, please. You can publish the whole page. Zoom in there. We were just looking at these references to buyer weight, account age, vendor weight, sales volume, etc. Mr. Evert, can you scroll all the way down to the bottom of the message. Q. "There are a couple of other changes I have in mind, but this post is already getting long and complex, so let's leave it at that. I look forward to hearing your feedback." MR. TURNER: Could you now put up page two of the exhibit, please. Page 415 Q. So this is a forum post approximately 20 days later. Is that right? A. Yes. Q. It says more updates and ratings and reviews overhaul. And I'll read a few lines of it: The latest, the buyers may remove a weighting and/or review from the recent orders link on their account pages. The price of the transaction has been obscured in the same way that buyer stats are when the review is displayed. The style has been slimmed down further. Buyer weight now has the same freshness factor included in the rating and vendor weights (old transactions don't count as much toward a buyer's weight.) Was this a continuing topic of discussion in the forum posts around this time? A. Yes, it was. Q. So now let me go, please, to page one of the exhibit. So this the approximately 12 days later? A. Yes. Q. And it says: Buyer ratings September 12, 2013. Let's see more -- excuse me. Let's see, where were we? Oh, yeah, ratings and review overhaul. There's an emoticon there. Can you focus in on what's been marked with that has the paragraph two number on it. Page 416 It says labeling four of five as "solid, would recommend" is bringing down my average. And that's in quotes. Then it says don't worry, it's a level playing field and all vendors are experiencing this. The net effect is to give more info to buyers, distinguishing "solid" vendors from "outstanding" ones. Can you just explain what this photograph is about? A. This is in reference to the marketplace when a buyer would leave a rating for a vendor, they could label them one through five basically as far as five being the highest. And he's talking about marketing or trying to make sure you could differentiate between them being outstanding or just so-so, I guess. *(Continued on next page)* Page 417 Q. OK. And the quote here, was this like a comment that somebody had made previous to the post, the "labeling 4 of 5 as 'solid, would recommend' is bringing down my average"? A. I don't recall the previous messages on the post. Q. OK. Did you find -- well, you said before there were two pieces of paper you found in the trash? A. Yes, there were two sheets. MR. TURNER: Could you put up Government Exhibit 130, page 2, on the bottom, Mr. Evert, and keep that same thing up on the screen. Could you zoom in here. Q. OK. This is the second piece of scrap paper that you found in Mr. Ulbricht's bedroom, in the trash? A. Yes, it was. Q. And the top line says: "5- Wow! Outstanding. "5 - Wow! Best of the best." MR. TURNER: Can you highlight "outstanding" there, Mr. Evert and "outstanding" up here. Q. "4 - solid, would recommend." Can you highlight that? "3 - Meh, they're OK, I guess. "2 - definitely needs improvement. "1 - Never again!" Do you recognize some of this specific terminology from Silk Road? A. Yes, I do. Page 418 Q. How do you recognize it? A. It was similar exactly to what Dread Pirate Roberts said in his posts. MR. TURNER: Could you cut out to the first page of Government Exhibit 130, full screen, please, and zoom in here. Q. So what was down in the middle of this page? A. It was a name and a telephone number below it. Q. And the name is? A. Danielle. Q. And there is a phone number here. MR. TURNER: And, your Honor, just to make the record clear, we've redacted it from the screen but not from the paper copy that will be available to the jurors? THE COURT: All right. Q. So after you were done with the search, did you ever log back into the chat channel you had been communicating with Dread Pirate Roberts on prior to the defendant's arrest? A. Yes, I did. Q. First talk a look, actually, at Government Exhibit 129E, as in Edward. Do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It is a screenshot of my entire computer screen I took on October 2, 2013. Page 419 Q. That is the day after the arrest? A. Yes. MR. TURNER: The government offers Exhibit 129E into evidence. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 129E received in evidence)* MR. TURNER: Could you zoom in here, Mr. Evert. Q. So up 'til now we've seen a copy of that chat log in the log forum. Is this how it looked on your computer? A. This is how it looked on my computer. MR. TURNER: Now could we go back to the log screen at 129C, please. And go down just to the bottom part here. Starting a little bit farther up, starting with "Dread." Q. OK. So the conversation, again, left off at 10:14 with you saying, "There was the one with the Atlantis." You disconnected at 10:16. Now, if the Dread Pirate Roberts had ever tried to respond to your last message after you disconnected, would you have had any way of receiving that message? A. The message would have came the next time I logged into the server. Q. And when was the next time you logged into the chat server? A. At 3:32 a.m. Q. UTC? Page 420 A. UTC -- 3:33, sorry, a.m. Q. That would have been at 8 p.m. the night after the arrest? A. Yes. Q. Had you received any reply from the Dread Pirate Roberts by that point? A. No, I had not. Q. All right. Did you login subsequently after that? A. I did login after that. Q. When was the next time you logged in? A. Again, I believe hours later, so 7:19 a.m. Q. About midnight that night? A. Yes. Q. Still no reply? A. No reply. Q. Was the Silk Road website still operational by this point? A. Yes, it was. Q. When was it shut down? A. October 2nd, around -- I think like around 10 a.m., I want to say, 11. Q. So the following day? A. I believe so. Q. And when was the defendant's arrest made public? A. At that time. Q. At what time? A. Around 10/11 a.m. Pacific. Page 421 Q. October 2nd? A. Yes. Q. All right. So up until that time, did the defendant -- excuse me, up until that time, from between the time when the defendant was arrested to the time when the site was shut down and the arrest was made public, did Dread Pirate Roberts ever respond to your last chat message? A. No, he did not. MR. TURNER: That is all I have, your Honor. THE COURT: All right. Thank you. Mr. Dratel. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION MR. DRATEL Q. Good morning, Agent Der-Yeghiayan, is that right? A. It is right, yes, sir. Q. Why don't we talk about the PGP demonstration, the key that you did this morning. A. OK. Q. And just initially, there were forum posts, weren't, there's, that people couldn't validate with the public key, correct? A. That's correct. Q. And a private key, which you talked about, is just a block of text like the public key that you showed, correct? Page 422 A. Correct. Q. And when you use the term own a private key, you just mean have possession of that block of text, correct? A. That is correct. Q. So it could be cut and paste and sent to someone else, correct? A. Yes, it can. Q. It could be shared by the person who generated the key, correct? A. That is correct. Q. It could be stolen -- A. Yes. Q. -- correct? It doesn't have to be the same person who uses that private key from message to message much less year to year, right? A. It doesn't have to be, no. Q. And it doesn't have to be the same device that uses that key from message to message, from month to month, year to year, correct? A. That is correct. Q. It is really the block of text. It is not whether it is a laptop or a desk-top or a phone or anything like that, right, it is the block of text that counts, right? A. It is universal, yes. Page 423 Q. So the only thing that you know when you verify is that you're communicating with someone who is using that block of text, correct? A. That is correct. Q. It doesn't have to be the same person from message to message, just a person who is using that block of text? A. And let me clarify. It is the same text and there is also a password that is associated with utilizing that private key as well, too. Q. Right. But the same thing. The password is just like any other password? It could be typed in? It could be shared? It could be sent? It could be cut and paste? Right? A. That is correct. Q. It could be hacked, right? A. Yes. Q. So I just want to go back to that question. So the only thing that you can verify is that you're communicating with someone who has that block of text and can enter the password? A. That is correct. Q. And these keys can be passed on, correct, from person to person? A. It can be shared, yes. Q. In that way it is not really any different on a certain level than a car key, right? It can go from driver to driver and you operate the car, correct? Page 424 A. Well, it can but it needs a password, too. Q. Right. So if you had to, let's say, enter something into a car like on a punch key or something like that, it would be the same difference, right? All you had to do is a password? A. It would be key plus the password, yes. Q. Yes. The same thing if the office manager retires and has the key to the file cabinet and there is maybe also not only the key but also a little keypad on it and the next office manager comes along and says here's the file key and here's the code for the key punch, right? A. That is correct. Q. Now, what you showed us on the exhibit was that the key was created April 1, 2011, correct? A. That is correct. Q. And it wasn't created as Dread Pirate Roberts, right? There is nothing about that key that says Dread Pirate Roberts, right? A. That is correct. Q. It says Silk Road, right? A. Yes. Q. By the way, the person who creates that key would still have the information -- even if it was passed on, they still have that block of text, right? A. I'm sorry. I am confused. Page 425 Q. Let me go through it again. The person who created the key, generates the key, created the key, they would retain that block of text forever, essentially, right? A. They could save it, yes. Q. Right. Even if someone else was using the key, even if they passed on -- the office manager could have made a copy of the file key, right -- of the file cabinet key, right? A. Right. There could be multiple copies of a private key that multiple people can have. Q. And multiple people could use it at the same time? A. They could, yes. Q. Message to messaging? A. They could. Q. You talked about Dread Pirate Roberts and the movie "The Princess Bride," right? A. Yes. Q. In fairness to the author, you know it was also a book originally? A. It was a book, yes. I didn't read it, though. Q. Part of that legend is continuity, right? A. Yes. Q. And the continuity being that the essence of the personality stays the same, correct? A. Yes. Page 426 Q. And if the key changed -- withdrawn. If DPR had changed over time and the private key changed over time, that would ruin that continuity, wouldn't it? A. That would create some doubt. Q. In fact, you yourself thought that DPR changed over time, didn't you? A. There are times that there was writings that would make me think that, yeah, it potentially was a different person. Q. And even as late as August of 2013, you thought that DPR had changed in April of 2013, didn't you? A. There was discussions that I had had with another moderator who was convinced that it was a new DPR. Q. But you told people inside your organization, Homeland Security Investigations, that DPR -- you believed that DPR had changed in April of 2013? A. There -- if there is anything that you could refresh my memory? MR. DRATEL: Sure. Just for the witness, 3505-787. *(Pause)* Your Honor, I understand it can't be done electronically from our position. I guess only from the main -- I will just show him. THE COURT: I think it is fine if you just show it in hardcopy to the witness, and let the government know what you are turning his attention to. Page 427 MR. DRATEL: Yes. It is 3505-787. *(Handing)* THE WITNESS: Thank you. MR. DRATEL: Obviously, just read it to yourself, the top part. Q. And so in August of 2013, you expressed your opinion that DPR had changed in April of 2013? A. I'm not sure if the April I was referring to was 2012 or 2013. The April might have been from 2012. Q. But it is April? A. April. Q. I'm sorry. The email is August of 2013, correct? A. Correct. Q. And you talk about someone with a screen name who you thought might have been the previous DPR, right? A. There is another profile that was administrator on Silk Road as well. Q. And you thought that even though you knew that the private key was the same as it always had been, right? A. That's correct. Q. You thought there was a different DPR notwithstanding the continuity of the private key? A. There was conversation that would change, and it would be similar in a lot of ways but there would be other things that would make us think that potentially there might have been a different person behind it at different times. Page 428 Q. What I'm saying is even notwithstanding this same private key throughout, you expressed an opinion in August of 2013, basically two months before Mr. Ulbricht's arrest, correct, that DPR had changed in April, and now you don't know whether it is 2012 or 2013 in April, right? A. Correct. I think it was April of 2012, though. Q. But it doesn't say 2012, does it? A. No. Q. That is not what you put in your email, right? A. It says just April. Q. Right. In August of 2013, right? A. I don't think it is April 2013. Q. No. No. what I am saying is the email is August of 2013? A. August, yes. Q. And when you say it changed in April, you didn't say April a year ago, you said April, right? A. Yes. Q. Have you taken any acting courses? A. No, I have not. Q. What kind of computer training have you had? A. Just the basic stuff that we had from the academy. Q. What did that include? A. There are various courses on -- just basic computer classes for maintaining evidence and also documenting things as well as we also have for submitting subpoenas and things that are related to computers and investigating computer crimes, just a basic overview course. Page 429 Q. OK. So nothing about computer deception, right? A. No. Q. Nothing about how to assume an online identity different from your actual identity, right? A. No. Q. But you were able to do that flawlessly, right? A. Yes, I was. Q. You operated a number of accounts, maybe two dozen over time, maybe more, right, on Silk Road at some point or another? A. I'm not sure of the exact number but there was over a dozen. Q. And you were an administrator communicating directly with Dread Pirate Roberts every couple of days, right? A. That is correct. Q. Communicating with the other administrators -- inigo, libertas -- right? A. Yes. Q. Anybody else, administrators who you communicated with? A. The same thing but different. Q. And they never -- withdrawn. Yes. They didn't know that you were a law enforcement agent? Page 430 A. No, they did not. Q. Dread Pirate Roberts didn't know you were a law enforcement agent? A. No, he did not. Q. None of the people you interacted with on the vendor support or any kind of other -- with Silk Road users, none of them knew, right, that Cirrus was a law enforcement agent, right? A. That is correct. Q. Without any training, you were able to do that? A. Yes. Q. You had multiple persona at the same time, right? A. There were multiple identities that I would operate. Q. At the same time online, right? A. Yeah, during different periods. Q. And, again, without any glitch in terms of you never gave it away; no one ever said, oh, I know you're a cop, get off the site, right? A. No. Q. In fact, you weren't sure yourself often who you were communicating with on the site despite their screen name, correct? A. There was always a level of distrust as to potentially who you might be talking to. So there would be ways that we would try to always authenticate one another through just different language and common things that we would say to one another. Page 431 Q. And, in fact, there were times when you taught that DPR might be operating some of the other administrator accounts, right? A. There was, yeah, there was times that we didn't know who was operating what accounts. Q. And at one point it was pretty frustrating, right, for your investigation purposes, correct? A. It was very difficult, yeah. Q. In fact, at one point you said "Who's on first," right? A. That would probably be something that I would say. Q. I mean, literally, right? A. If there was an email, yeah, I'm pretty sure, yeah. Q. OK. MR. DRATEL: May I approach, your Honor? THE COURT: You may. MR. DRATEL: It was a little more complicated than I had hoped it would be. *(Pause)* THE WITNESS: Thank you. MR. DRATEL: It is the bottom of the first page, and then it is double-sided so just flip over to the top of the next page. *(Pause)* Page 432 A. I recall this, yes. Q. So you said, "Sheesh, who's on first," right? A. "Sheesh, who's on first again." Q. Because it was a complicated situation as to whether or not someone was commandeering someone else's account and who you are actually communicating with, right? A. Yeah. Specifically in this period of time there was multiple things going on with multiple accounts. Q. And that's June of 2013? A. That was June 2013, yes. Q. And Cirrus was an account that you took over, correct? A. Yes, it was. Q. And Cirrus was originally an account that was called Scout, correct? A. Yes, it was Scout before. Q. And you ultimately cultivated Scout to give up the account, correct? A. The person that originally had, yeah, the Scout account became Cirrus originally and then gave it over to me, yes. Q. At some point because you revealed to them that you were law enforcement, correct? A. The original operator didn't know that I was law enforcement, yes. Q. No, but I'm saying at some point you did reveal it and then they let you assume their account? Page 433 A. They knew that I was law enforcement when they let me assume the account, yes. Q. In fact, you were surprised when you found out Scout was female, right? A. Yes. Q. One of your challenges in getting Scout to relinquish her account and give you access to Scout, and then ultimately to Cirrus, was how to convince Scout that you were law enforcement and that DPR was tricking her -- him you thought at the time but her and that her better option, or Scout's better option was to go with the law enforcement, you had to do that online in a way that didn't impair the investigation, correct? MR. TURNER: Objection to form. THE COURT: If you understand the question, you can answer it. A. I -- Q. I will break it down. A. I guess the response is that I wasn't -- I didn't portray myself as law enforcement to Scout. That was another agent that did that. I had another account at that time that I was utilizing to talk to Scout that they did not know -- I wasn't portrayed as law enforcement. Q. But that was a challenge for the investigation, correct, as a whole? A. A challenge, I'm sorry, to? Page 434 Q. To convince Scout, whether it was you or a colleague of yours, to convince Scout that DPR was tricking Scout and that Scout's better option was to essentially align with law enforcement? A. That was another agent's goal with another account that they were utilizing. My particular goal with the account that I was utilizing was to try to get Scout to buy something from me which would then result in exchanging their name and address. Q. Right. That is ultimately what happened, right? A. That is what happened. Q. I'm saying, the other agent's challenge was this other aspect of trying to do something online that would convince Scout to essentially relinquish her account to law enforcement? A. Correct. Q. I want to go back to the beginning of your testimony. And the first time that any of this came on the radar at Chicago O'Hare International mail was June of 2011? A. It was roughly the first time that I saw a few of the packages that contained ecstasy. Q. Then you started the investigation in October of 2011? A. Yes. Q. And you told us that the seizures began to increase after June 2011, right? A. Correct. Page 435 Q. Prior to that there were hardly any -- nothing to note, if there was anything noteworthy? A. That is correct. Q. In fact, by October -- in October of 2011, there were only four seizures that year. A. That month I believe that we maintained, that we held for our investigation, there were four seizures. Q. And then that multiplied by 2012 and throughout the months of 2012, right? A. Yes. They steadily increased over that period. Q. And you said you had never seen that ecstasy before, right? You testified -- A. I hadn't seen it in the mail in the letter class like that before. Q. That is right. OK. Also, these Netherlands' shippers, right? A. I had never seen packaging like that before. Q. So anything that would have happened on Silk Road before June of 2011 really would not have come to your attention at all, right? A. It potentially could have. If there was a seizure that was made, we would have been called. Q. But you don't know is what I am saying? A. I don't know, no. Q. You have no idea really where the packages -- you don't know anything about any of the transactions before June 2011? Page 436 A. I don't. Q. And you had been there for years, in some form or another, at O'Hare as either border patrol or HSI? A. Customs and Border Protection and HSI. Q. CBP? A. Yes. Q. Customs and Border Patrol. And one of the things that -- well, withdrawn. In June 2011, there was an article on gawker.com about Silk Road, right? A. Yes, there was. Q. And the traffic on Silk Road increased significantly after that, correct? A. That was about the time, yes. Q. And also there was an NPR report in October 2011, right? A. As I have been told, yes. Q. That also publicized it, and, again, you started seeing an increase in traffic? A. That was what came out of an interview, I believe. Q. Now, you talked about border authority initially. Basically, without a warrant, you have the authority to pretty much search anything that is coming in, right, to the United States? A. Yes. Page 437 Q. You say you do a lot of x-ray and other -- and canines, right? A. X-ray, canine, and then searching by hand as well. Q. Now, all of the screenshots that you put in evidence of the silkroad.onion, they are all from 2012 or later, right? A. The majority of them, yes. Actually, all of them, yes, pretty much. Q. And were you on the site at all before 2012? A. I was. Q. Late 2011? A. Late 2011. Q. After you started your investigation? A. Yes. Q. So do you know when Silk Road first began charging commissions? A. It was apparent from the beginning they started, from what I read, they were on commissions. Q. You think it is from the very start? A. I believe it was, yes. Q. Did you ever look at the initial transaction history? A. No, I didn't have that. Q. But you have it now, right? A. I have the transaction history -- Q. Yes. You have access to it, right? A. I haven't reviewed it but I have access to it. Page 438 Q. You haven't reviewed it, right. So it is your assumption that the commissions go back to the beginning? A. That is correct. Q. But you don't know for sure? A. I don't know for sure. Q. How about the escrow system, do you know when that was instituted on Silk Road? A. I believe that is from the beginning, from when we released our first buys. Q. Your first buys were when? A. I believe it was January 2012. Q. So it has already been in existence for eight/nine months already, right? A. That is correct. Q. So you don't know anything about the transactions before then with respect to an escrow system other than when you started making purchases, right? A. That is correct. Q. Do you know when Silk Road first launched its Wiki page? A. I don't recall offhand. Q. Do you know whether it was when it launched the forum, before or after? A. The forum was around June 2011. Q. Right. So do you know whether it was launched before or after the forum? Page 439 A. I don't know if it was before or after it. Q. Do you know what the seller's guide looked like in June or July or August or September of 2011, before you first got on that site? A. No, I do not. Q. Do you know what the buyer's guide looked like during that same time period before you got on the site? A. No. Q. Do you know if there was a seller's contract of the type where it says "I agree" before you got on the site? A. No, I do not. Q. Do you know when the first heroin sale on Silk Road was made? A. No, I do not. Q. Cocaine? A. I do not. Q. Do you know when Silk Road first offered forgeries? A. No, I do not -- well, actually, from the posting that was made from Dread Pirate Roberts, I can assume that that might have been when it was announced. Q. When was that? A. I would have to look back at the screenshot. Q. With respect to 116B, which is not forgeries but the hacking tools, right, there was something called an RAT? Is that a remote access trojan, do you know what that is? Page 440 A. I am assuming a trojan that you can access remotely. Q. Trojan means something you implant into somebody's computer, right? A. It is something that would conceal itself as something else as someone's computer that might be downloaded inadvertently, a program perhaps. Q. And then allow others to operate it, right? A. It could do things like that, yes. Q. This is already in evidence, Government 106, Tor. I want to talk about Tor a little bit. OK? MR. DRATEL: Would you show government's 106, please. *(Pause)* That is it. Thank you. Q. So that is the diagram where you explained somewhat how Tor operates, right? A. That is correct. Q. And if the user, let's say, on the left initiates a communication, right, that first computer is the entry node, right? A. That is correct. Q. And the one on the right, where it says "Web server (hidden service)," where it goes from that last computer to the hidden service, is an exit node, right? A. No, that wouldn't be an exit node. Q. Where were the exit nodes? Page 441 A. This isn't completely accurate. I think it is for simple use. But, generally, exit nodes are on the outside but a hidden service is generally within, and there is what is called intrapoints that protect the hidden service, which they are all relays, essentially, within Tor. Q. Right. Obviously, there is a lot more computers than this, correct? A. Yeah. There is a lot more relays and nodes. Q. That's why it works is because there are enough computers worldwide on the Tor network to permit the relays not to be traced? A. Yes. There is -- they are all documented as well. Q. And when you say "documented" -- A. There is lists of IPs for the relays and for the nodes. Q. Right. But, nevertheless, because of the way it is done, it's very difficult, if not impossible, to trace, correct? A. It is very difficult to trace, yes. Q. And some people think that by monitoring exit nodes and looking at traffic, you can find hidden services, correct? A. We thought that we could earlier on but we realized fairly quickly that we couldn't. Q. And let's try to put it in a different analogy. If you're the user on the left and you get into a car on the street and then someone sees you get into the car on the street and then you go on the highway and you stop and you change cars and you stop and you change cars and you stop and you change cars and you stop and you change cars, when you get to the destination, no one may be able to find you, right, because assuming that that -- that you are not being surveilled the whole way through, right? Page 442 A. That is a fair analogy, yes. Q. By the way, 125H, Government's 125H, just if you want to look at it, for the forgeries. *(Pause)* August of 2011. A. Correct. Q. Thank you. Now, Tor is not, as you said, not illegal. In fact, it is widely used by millions of users to access typical Internet activity, right? A. That is correct. Q. And, for example, people, let's say, Chinese nationals in China use Tor to get around governmental restrictions on their Internet activity, right? A. That is correct. Q. And you talked about torproject.org, right, which is a website on the open Web, right? A. Yes, it is on the regular Internet. Q. Ordinary Web, we'll call it, on the ordinary Internet. And that will allow you to download Tor, correct? A. Yes. Page 443 Q. And you have been on that page, right? A. Yes. Q. And so you know that Tor was originally developed by the U.S. government -- U.S. Naval research, right? A. It originally was, yes. Q. And designed for sensitive military and government communications; that's what it was designed to facilitate? A. I believe it was between Navy ships trying to create a new network to communicate between them. Q. But now it's used by not only the military, journalists, law enforcement, as I say, people in countries where Internet is restricted, right? A. That is correct. Q. It also has real-world advantages for ordinary people, right -- well, withdrawn. Ordinary people can use it so that they aren't monitored by commercial establishments, websites, and others so that they will know their buying habits and can target them for merchandising and things like that, right? A. You can use it to protect essentially your identity, yeah, and who you are. Q. So, for example, if a website uses your search history and your buying history to decide whether you should get a discount or not, depending on your buying habits and how often you buy retail and how often you use a discount, Tor could prevent them from discriminating one way or the other -- the website against a customer who uses Tor to gain access to those sites, right? Page 444 A. Yeah. They could be tracking by your IP address, and if you constantly visit certain sites it will remember you and it could learn your buying habits and things, too. So, yes. Q. So what Tor really does is prevent whoever can, or would, from monitoring a person's Internet tracking? A. It can, yes. Q. In fact, you can use Tor as a law enforcement officer to either visit a website or some other part of the Internet without the other side knowing that it is law enforcement that's viewing a page, right? A. It could be used for law enforcement, yes. Q. It is like having a No Caller ID, right? A. Right. It won't come back to an IP address that is a government IP. Q. And a lot of people got No Caller ID for that kind of reason, right? A. That is correct. Q. Now, "hidden service" just really means that it is on Tor alone, correct? A. That it is built within Tor and that is the website that it is accessible. Q. It is only accessible -- A. Only accessible on Tor, yes. Page 445 Q. It could be anything. It could be something that someone in Iran doesn't want censored, right? A. Just by being a hidden service doesn't make it illegal. Q. There is nothing sinister about that connotation, that description, right? A. That is correct. Q. Now, let's talk about seizures. And you had an exhibit with all of the boxes, right -- A. All the seizures. Q. -- that you made at Chicago O'Hare International mail of illegal -- of contraband coming into the United States, right? All of that was drugs, right? A. Yes, it was all primarily drugs. Q. And it was primarily -- withdrawn. There was nothing on the packaging that said "As advertised on Silk Road," or something like that, right? There was nothing that said it was ordered off of Silk Road, correct? A. No. I never recall seeing any envelope that said Silk Road on it. Q. So you connected them to Silk Road because you would match the product with something that was advertised for sale on Silk Road, correct? A. Yes. Q. But you don't have any proof that that was actually ordered off of Silk Road, what you seized? Page 446 A. Only what we were able to make by comparing it to our controlled purchases. Q. Right. Only the purchases that you made, right? You were able to go on the Internet, put in the information, the fake address that you used, and then it would come to that address and then you would confirm that it was off of Silk Road. But that room full of drugs, none of that is confirmed that it came off of Silk Road, right? A. There is at least one vendor that we did arrest that told us -- MR. DRATEL: Objection. THE COURT: Overruled. He can finish. MR. DRATEL: OK. A. That during a proffer later that stated -- that confirmed that several of the packages that I showed him that were part of that collection that were mailed directly from him through Silk Road. Q. And he told you that, right? A. Yes, he did. Q. OK. There were also other websites on Tor that sell drugs, right, through the mail and through -- right? Through the mail? A. There is other hidden services that would sell drugs, too, yes. Q. And some of them -- withdrawn. Page 447 So the only thing that connects all but those few that you just talked about of seizures, all that connects them to Silk Road is that those items were advertised on Silk Road, right? A. For the ones that we did, for our buys. The other ones, yeah, were comparative analysis. Q. So if I saw a book on Amazon and then I ordered it from Barnes & Noble and it came in a package that didn't say where it was -- that didn't have either -- anything on it, can you assume where it came from -- can you confirm, rather, can you conclude that it came from Barnes & Noble's or Amazon if they both sell it just because it advertises on Amazon? A. I couldn't necessarily confirm it just from looking at it. Q. It wouldn't even have to be off of sites; people could be on Tor chat or some other private messaging, PGP, Pidgin, be in direct contact with drug dealers overseas or in the United States, order drugs through the mail? A. It could have been, yeah, independent from a market. Q. What could also happen is that someone could have been on a site, any of the Tor sites, any of the hidden services that might sell drugs, purchase ones off the site and then initiate a private conversation with the person who actually sold the drugs and do all the rest of the sales privately, right? A. That is a possibility, yes. Q. And they could tell all their friends how to do it, too, right? Page 448 A. Yeah. I suppose that is possible, yes. Q. Now, at some point you stopped making seizures, right? A. Yes. Q. You had plenty, right? A. Yes. Q. We saw the room full of seizures. The highest volume was ecstasy, right? A. The highest volume for the drugs that we maintained were ecstasy. Q. By a large margin? A. By a large margin. Q. And heroin was only 261 grams, right, of heroin? A. I believe that is about right, yes. Q. And about 457 grams of cocaine, right? A. That sounds about right. Q. That is May of 2013? A. Correct. THE COURT: Let me just make sure I understand. So counsel was questioning you about the room full of boxes, is that right? THE WITNESS: That is correct. THE COURT: And your statements were in connection with the room full of boxes? THE WITNESS: Yes. Page 449 THE COURT: So is it the case that you examined the contents of each of the boxes and that based upon your examination of those contents the quantities were as you testified? THE WITNESS: Yes. THE COURT: All right. Thank you. You may proceed. MR. DRATEL: Thank you, your Honor. MR. DRATEL Q. You talked a fair amount of bitcoin in your direct testimony, right? A. Yes, I did. Q. Bitcoin was an essential element of Silk Road, right? A. That is correct. Q. And the exchanges that you talked about that were used to cash out, the ones you talked about, like Mt. Gox and others, were all on the ordinary Internet, right? A. Correct. Q. They are not hidden services, they are not on Tor? A. They are regular websites, yes. Q. And even any exchanges that were made on the page or as a result of the people who were advertising on the page that you showed in Silk Road to exchange bitcoins, all of those things, all of those transactions still wind up on the block chain, correct? Page 450 A. Not internally within Silk Road it wouldn't. If it was a transfer between one account to another, that wouldn't be reflected in the block chain. Q. No, but if you were cashing out. A. If you were cashing it out and taking it off of Silk Road, yes, that would be reflected on the block chain. Q. The block chain, again, is this public ledger, right? A. Correct. Q. That records every bitcoin transaction where -- in terms of everything that goes from bitcoin to cash, cash to bitcoin? A. Every transaction, basically just a transfer of bitcoins between one address and another is documented. Q. So even bitcoin to bitcoin? A. Everything essentially is bitcoin to bitcoin. There might be a cash transaction that occurs outside of that, but the block chain just reflects that you just moved a bitcoin from one address to another. Q. I can't take -- there is no physical bitcoin, right? A. There is things that have been made into physical form that they sell as bitcoins that have the private key on it, but it is all done electronically, essentially. Q. Right. So it -- and as of, let's say, prior to October of 2013, and even now, you can't -- I couldn't go and take a horde of bitcoins to someone and then cash it for them without it showing up on the block chain, right? Page 451 A. Right. Q. Because they are not physical, they are a digital instrument, right? A. It is a digital instrument, yes. Q. It doesn't exist outside of a digital character? A. Just those coins but they are not widely used. Q. And it was started in 2008 or so, right, it was invented, essentially? A. Yeah. I think the white paper that originally, the concept of it was around 2008. Q. And the person who essentially invented them hasn't yet revealed themselves, correct? A. Not publicly, no. Q. And it is a bit of a cottage industry to try and identify that person, correct? A. It is. Q. Now, each bitcoin has a unique digital identity, correct? A. Each one, yeah, as I understand it, has it's unique signature to it, in a sense, or unique string to it. Q. And some of the elements of bitcoin are designed to prevent fraud, correct? A. I mean, the whole network itself, I mean, it's very well documented, I mean, throughout the whole network. Q. Well, you can't duplicate a bitcoin, right? A. I believe so, yes. Page 452 Q. You can't, or you can? A. I don't know. There has been speculation. I am not sure. I am not technical enough to say that it can't be. Q. But it can't be counterfeited? A. Not that I am aware of, no. Q. And it can't be -- well, withdrawn. Now, when you talked about -- on your direct you talked about acquiring bitcoins and you were talking about you how you did it by putting cash into an account, getting bitcoins back, right? A. Correct. Q. But there are other ways to acquire bitcoins, correct? A. There are other ways, yes. Q. Can you describe what you understand to be bitcoin mining, m-i-n-i-n-g? A. So bitcoin mining is the process of creating a bitcoin, and that is -- someone that mines would generally use a computer to specifically run a series of it is called algorithms that will try to mathematically create this like perfect string which was of all the different transactions. It confirms them. Once it is confirmed it becomes a part of a block. Once you solve a block, you get a bitcoin. And right now there is rewards that are given. And it has been -- I think it is 25 bitcoins right now you get for each block you solve as a miner, but it takes a lot of computing power. So the thing to take away from it is it takes a lot of computing power to solve this block and to be awarded these bitcoins. But people do it and try to run computers all the time to try and mine and get these rewards. Page 453 Q. So it is essentially not necessarily free but you don't have to pay for them, you have to -- you earn them essentially by -- A. Electricity is what people weigh it against generally, the cost to run their computers, but, yeah. Q. And those aren't -- I mean, those are still authorized bitcoins, right? A. Yes, they are. Q. Because the bitcoin universe is limited, right? A. It is at 21 million. Q. One of the theories of the person who invented bitcoin was that it have a cap, and bitcoins are created periodically until that cap will be reached at some point, correct? A. Correct. Q. And that's supposed to protect the valuation of bitcoin as opposed to -- I don't want to get too technical about it but monetary policy; that is why it is nongovernmental? A. To set a limit, I think. Q. By the way, you talked about computing power just a second ago. You defined a server as a computer that would run a website. Silk Road had servers, right? Page 454 A. Correct. Q. Not just an ordinary computer running it, it had -- it is a complex operation to run, right? A. Right. Basically, I just described it as a computer but, yeah, it is a server. Q. Silk Road, you have servers with significant computing power, right? A. As I understood, yeah, they were ones that could operate a website that's more heavy in traffic. Q. Now, you also mentioned on direct that the value of a bitcoin fluctuates constantly? A. It does. Q. And in April of 2013 the market eclipsed $1 billion for the first time, right? A. I believe so, yes. Q. And when you first got involved in the investigation, it was worth a couple of dollars, right, per bitcoin? A. That is correct. Q. And then you said that there was a point in 2013 where it went up to about 250, $250 per bitcoin? A. That is correct. Q. And then by the time of Mr. Ulbricht's arrest it was down to $100 per bitcoin? A. Around 100, 117, somewhere in there. Q. Then after his arrest it went up again, right? Page 455 A. It spiked dramatically. Q. Dramatically? A. Yeah, after his arrest. Q. Up to a thousand dollars for a bitcoin? A. Over a thousand dollars. Q. So people who were holding bitcoins at the time of Mr. Ulbricht's arrest and thereafter could really make a killing, right? A. I believe there is a lot of people who made money, yeah, off of that. Q. And the more bitcoins you have, obviously, the more money you are going to make on that transaction, right? A. Correct. Q. Have you ever seen a graph of bitcoin valuation over time? A. I have. Q. I show you what is marked as Defendant's B, for boy, and ask you if that is a representation of the fluctuation of the bitcoin marketplace from its inception through today -- not today, through this week? A. It looks accurate, yes. MR. DRATEL: I move Defendant's B in evidence, your Honor. MR. TURNER: No objection. THE COURT: Received. *(Defendant's Exhibit B received in evidence)* Page 456 MR. DRATEL: Could we publish it, please. It actually looks like that mountain. *(Pause)* Q. OK. So going back to 2011, if we look at the start in 2011, we see it is very close to zero, right? A. It was, yeah, approximately 2 to $4 or so at that point. Q. Then in 2013 is when it really starts to move, right? A. That is correct. Q. And then it goes down -- there is a spike in the early part of 2013, and then it goes back down to somewhere in the hundreds, right? A. That spike was at $250. Q. I'm sorry. Do you have the -- A. Laser pointer? Yes. MR. DRATEL: Can I borrow yours? THE WITNESS: Do you want it? MR. DRATEL: I will just point it out. Q. So there is a little spike in the middle of 2011, right? A. That is about a $20 spike I believe it went up to. Q. By the way, just -- and that is zero, right, that line there? A. The line is zero, yes. Q. So there we have in the early part of 2013, it goes up to about 250, as you stated, right? Then it goes back down until the latter part of 2013, and this spike right here is after Mr. Ulbricht's arrest, right? Page 457 A. It was, I believe, like starting around mid/late October, yes. *(Continued on next page)* Page 458 Q. And that goes up to over a thousand dollars per bitcoin? A. I think the highest is around a thousand or 1200. Q. Do you know what it is now? A. I believe it's around $300 bitcoin. Q. So even though a lot of bitcoin use may have been attributable to Silk Road, it survives Silk Road? A. It survives Silk Road; yes. Q. In fact, it's now used or accepted by certain large vendors, right, ordinary vendors? I'm not talking about Tor or illegal. Overstock.com accepts bitcoin? A. Yes. It's starting to hit other websites and other -- the mainstream. Q. Certain casinos accept it? A. I think there's a university that you can pay tuition with it. Q. Now, you talked about the tumbler, right, on Silk Road? A. Yes, I did. Q. Just to refresh the jury, tumbler -- I'll just try to explain it shorthand -- which is something that's designed to create confusion about which specific bitcoins are involved in a specific transaction. Is that a fair statement? A. That's a fair statement. Q. And do you know whether Silk -- do you know when Silk Road instituted tumbler? A. I don't know when they instituted it, no. Page 459 Q. Do you know if Silk Road actually used a tumbler? A. They advertised it in and I also did my own research through the block chain of transactions that I would move into Silk Road and out of Silk Road, and I observed from patterns that would resemble that of a tumbler. Q. And those started in 2012? A. Yeah, the bitcoin -- Q. In other words, your transactions -- A. Yes. Q. -- that would you monitor? A. 2012, yes. Q. So you were able, because you -- and you could see both sides of a bitcoin transaction, right -- A. Correct. Q. -- you were able to do some tracing, right? A. I was; yes. Q. Even with a tumbler, you were able to do some tracing? Or even if they were tumbled, you were able to do some tracing? A. Yes. There were accounts that we believed belonged to Silk Road that were so high in volume at the time that -- and they would stop after we would deposit money and that would lead us to believe that that belongs to Silk Road, and we'd be able to trace other transactions to that account. Q. And that started in 2012? A. Yes. Page 460 Q. And you never heard of Mr. Ulbricht until September of 2013, right? A. That's correct. Q. Now, based on your training and experience, you concluded that the system was likely designed by someone with a high level of technical expertise concerning the operation of bitcoins, right? A. It appears so, yes. Q. In fact, Silk Road had a lot of sophistication, right? A. It was sophisticated; yes. Q. And I mean that in a computer way as well as marketing and business oriented, right? A. Yes. Q. In fact, it used leading-edge encryption-based technologies, right? A. It did, yes. Q. And encryption-based technologies is really about security, right? A. Yes. Q. And you reported, right, that the operators of the website are believed to be highly experienced web administrators that take precautionary steps to protect themselves and their users, right? A. Yes. Q. Would they be the type of people who would leave handwritten notes in a wastebasket? Page 461 A. At this point, I don't know. I couldn't say whether they would or wouldn't. Q. You called it a complex criminal enterprise, right? A. Yes, I did. Q. And you used multiple confidential informants throughout the course of your investigation, right? A. Yes, I did. Q. Now, you have Mr. Ulbricht's passport still up there? A. Yes, I do. Q. And his birthdate is March 27, 1984? A. Yes, it is. Q. So in late 2010, he would be -- he would have been 26? A. Yes. Q. Now, you said on direct Silk Road operated like a lot of other websites, correct, that operate on the ordinary Internet? A. It was similar, yes. Q. And we saw on the left-hand side all the categories of merchandise, right? A. Correct. Q. And by the time you were on the site in December of 2011, it had about 2,000 or so products for sale, right? A. I think that first screen shot was about April for the 2,000 products. For the drugs, the earlier ones I think were less. Page 462 Q. Yeah, but I'm saying 2,000 products for sale total -- A. Total or so -- Q. -- like in December of 2011? A. That would be about correct, yeah. Q. And there were certain items -- by the time you got on the site, there were certain items that were forbidden, correct? A. That's correct. Q. Child pornography, counterfeit currency, weapons of mass destruction, right? A. That's correct. Q. And in fact, on the site it said -- and this is November of 2011 -- on the site it said please do not list anything whose purpose is to harm or defraud, such as stolen credit cards, counterfeit currency, personal info, assassinations, weapons of mass destruction, chemical/bio weaponry, nukes and anything used to make them. Please do not post anything related to pedophilia. To allow listings of items designed to defraud or harm innocent people would be to stoop to the level of the very people we are standing up to. Right, that's what it said on the site? A. That remained, yeah, throughout the site. Q. Now, you interviewed -- as you said before, you interviewed some people who had ordered drugs and you'd go and then confront them sometimes, right? A. Yes, I would. Page 463 Q. And they weren't of any help really in identifying Dread Pirate Roberts? A. No. They only helped with the vendors. Q. And those vendors didn't give you access in terms of to who Dread Pirate Roberts was, right? A. No. Q. Now, you mentioned that it was -- one of the seizures that was tested -- sorry. Withdrawn. One of the undercover buys that you made of the 50 or so undercover buys that you made from Silk Road, that one tested negative for drugs, right? A. That's correct. Q. But do you know how many other sales or scams or frauds that didn't provide real drugs in exchange for bitcoin? A. I don't know how many, no. Q. And it's kind of difficult for the consumer to go to the police or the fraud bureau for that, right? A. It would be, yeah. Q. In one way that it differed from ordinary websites in some respects is that the vendors would come and go, right? A. Yes, they would. Q. They would vanish for a little bit, come back, vanish. It was not that kind of organization or continuity that you would find for, let's say, Amazon where sellers were there? A. No. Some would stay for longer periods. Others would disappear periodically and then just reappear. And sometimes, they'd leave for a larger period and come back. Page 464 Q. Now, with respect to the commissions that Silk Road charged on transactions, January 2012 was when the commission structure changed, correct, and you put in those exhibits. And you verified that in September of 2012 when you opened up your first vendor account? A. That was an account we took over. Q. Sorry. When you assumed control of the vendor account. Now, do you know the volume of transactions before you had access to the site? I don't mean access in terms of with a vendor account or something when you first went on the site. You don't know the volume of transactions just from going on the site at that point, right? A. I do not know that, no. Q. And have you studied that since in terms of the volume over time? A. I've looked at -- there was other reports that are done by universities. Carnegie Mellon did a report where they did an analysis and I reviewed that which was based upon the feedback that was in the marketplace. So I reviewed their work they did, as well as I've seen results that came later on off of servers. Q. So 2013 was a huge year, right? A. I'm sorry? Q. 2013 was a huge year for Silk Road, right? Page 465 A. It was a larger year, yeah. Q. There was a big spike in volume? A. The listings went up; yes. Q. Now, the silkroadmarket.org, that is something on the ordinary Internet, right, was? A. Correct. Q. And the only way we have it is because of something called archive.org, right? A. Right. Q. And archive.org is an organization that is dedicated to capturing everything on the Internet, right? A. They capture everything on the regular Internet. Q. Not Tor? A. Correct. Q. Not anything that's on Tor, but on the ordinary Internet, archive.org's purpose is to try to capture everything? A. It takes screen shots regularly over time and it documents that on its website, that you can view a website and the screen shots that it took. Q. Right. So if I put in Silk Road, that's all you come up with, is that Silk Road market.org, right, if you did that research? A. It would lead you specifically to that URL, yes, it would pull up silkroadmarket.org. Q. And that's the way for people to see historic pages on the Internet that don't exist anymore, that you just can't get. You type in a URL and the page no longer exists, right, when you get that kind of message, you can try archive.org to see whether something is there? Page 466 A. Yes. And it will show if there's changes done also. You can change a web page over to reflect different things. Q. So that silkmarket.org was just one page, right? A. It was just one page. Q. Silkroadmarket.org? A. Yes. Q. And that was a page essentially both -- if people put in Silk Road into their ordinary Internet computer, that they might get that and then be directed to Silk Road on Tor because it kind of told you how to get there, right? A. That's correct. Q. And that page stopped operating in April of 2012, right? A. I believe that's correct; yes. Q. And there were changes throughout to the site over time, right? A. The silkroadmarket.org? Q. No, I'm sorry. Let's go back to dot-onion. A. Okay. Q. So, right, the site is changed in some ways over time, right? A. There was a whole new format in appearance to the site after I think it was in late 2012. Page 467 Q. Also, even before that, did you know from reviewing forum messages and things like that, right, that in June of 2011, June 11 of 2011 in particular that there was a message that the site was closed for a while and that it would reopen in July, right? A. From what I read on previous articles, yes. Q. And that it was going to split into two sites and you've seen that post, right, the one where it's going to split into two sites? A. I don't recall offhand. Q. Well, one -- but you testified -- A. Oh, the forum you're talking about? Yes. Q. It split into two sites, the marketplace and the forum? A. Yes. Q. And you've seen that post that announced that, right? A. Yes. Q. And that's June 2011? A. Correct. THE COURT: Mr. Dratel, just for a couple of more minutes. MR. DRATEL: This is a good time. THE COURT: Oh, this is a good time? MR. DRATEL: Yes. THE COURT: Ladies and gentlemen, we'll take our lunch break now and pick up again at 2:00. So, again, just to remind you folks, most of you, if are able, to get yourself ready to come out here a couple minutes before 2:00 so we can come on out. Page 468 I want to remind you not to talk to anybody about this case, including each other. And if anybody tries to talk to you about this case, to avoid them and just walk away and then to let Joe know, all right. We'll see you after lunch. Thank you. *(Jury excused)* *(Continued on next page)* Page 469 *(In open court; jury not present)* THE COURT: All right, ladies and gentlemen, be seated. Let's see if there are things that we need to take up. One thing that I wanted to mention is that I had not appreciated for some reason before just a little while ago that the conspiracy charge is not only an 841(a)(1) charge, but also an 841(h) charge; that is, given my comments about scope a significant difference, and I wanted to state that on the record. I have to think through what the implications of that are, but that is different from what I had been thinking. It certainly doesn't alter my ruling in terms of the bottom-line orders on the rulings which I had issued, though the scope, it is potentially the case that the scope would cause me less concern for an 841(h) than otherwise. I have to think that through. The other point that I wanted to raise was that Mr. Dratel had objected to a portion of the witness' answer where an individual who was being arrested, I believe, an alleged seller -- MR. DRATEL: Purchaser, your Honor. Never mind. I thought he was -- THE COURT: Was he a purchaser? MR. DRATEL: I think he was a purchaser because I think the testimony was essentially that when they confronted him with the package, he said, yeah, he ordered it off of Silk Road. Page 470 MR. TURNER: My recollection was it was a vendor. THE COURT: I thought it was a vendor, too. In any event, the reason I allowed that in was because, number one, it was responsive to the question in terms of presenting his knowledge; but also to the extent that there was a statement against interest under 804, it would have come in and there would have been the requisite unavailability given the timing and the reasonableness of getting someone here that quickly. So that's the basis of what I was stating because it was to support the facts that the witness had been asked to testify about. Are there any things which you folks would like to state now or issues that we should go through before we take our own lunch break? I do not have a matter in here during the lunch break. I have a meeting someplace else. You are welcome to all stay here as you see fit. MR. DRATEL: I just wanted to project that this went faster than I anticipated in large part because of the witness' cooperative manner, so obviously that's very helpful and efficient. I'm coming to a more dense part, so it's hard to say. I think at least another two hours is my guess. THE COURT: So the government can plan around that in terms of getting your next witness, Mr. Turner, on deck. That I think you had previously stated was Kiernan. Page 471 MR. TURNER: Thomas Kiernan. THE COURT: So it will be Kiernan either way, so if we start, it's possible Mr. Kiernan may get on the stand sometime between 3:00 and 5:00. MR. DRATEL: I don't think he would be on before 4:00. THE COURT: So 4:00, so between 4:00 and 5:00 maybe. MR. DRATEL: We'll see how it goes. THE COURT: If you think you're going to beat 4:00, let us know; otherwise, the government will have Mr. Kiernan here at 4:00. MR. DRATEL: I will reevaluate at lunch what I think based on how it went this morning. THE COURT: Right. Understood. Anything further that we should go over right now? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: Let me say one thing to the press also. I would ask you folks not to approach any of the jurors or to the extent that you're communicating with anybody else from your office to have them approach the jurors. Obviously, it creates issues with juror misconduct or potential bias. They're not having any misconduct on their part. It's misconduct with the jury. I had the occasion to speak to other judges in the courthouse regarding what they have done in the past. They have actually excluded the newspapers or the press itself from the courtroom, not all, the offender member of the press and/or his or her paper or if it's not a newspaper, it's an Internet source. Page 472 I'm not doing that right now. I just wanted to let you folks know what would be one of the potential courses of action that would be recommended to be taken at that time if we had another repeat. Thank you. We're adjourned for lunch. *(Luncheon recess)* *(Continued on next page)* Page 473 AFTERNOON SESSION 2:05 p.m. THE DEPUTY CLERK: All rise for the jury. *(In open court; jury present)* THE COURT: Mr. Dratel, you may proceed now. MR. DRATEL: Thank you. JARED DER-YEGHIAYAN, CROSS-EXAMINATION CONTINUED MR. DRATEL Q. Good afternoon, Agent Der-Yeghiayan. A. Good afternoon. Q. Ross Ulbricht, you learned during the course of your investigation he was an Eagle Scout? A. I did. Q. And that he was living in that house in San Francisco, right? A. There's I think there were two residents I knew of. Q. I'm saying he was in there. There were other, as well, right? A. Correct. Q. He shared that with other people? A. Yes. Q. He was not the owner of the house, right? A. I don't believe so, no. Q. You said that in his bedroom, you found credit cards, bank statements, things like that, the passport, right? Page 474 A. Correct. Q. And you investigated all of that, correct? A. Yes. Q. Because it was important to try to find out about money, right, bitcoin and location? A. Yes. Q. And there was discussion -- withdrawn. And there was a concern about, not concern, but there was an interest in how and when and in what quantity Mr. Ulbricht may have cashed out bitcoins, right? A. Yes. Q. Now, you, as a law enforcement officer in an undercover capacity, occupied and controlled the account for cirrus on Silk Road, right? A. From July from July on; yes. Q. From July -- late July, you said about the 26th, 27th of 2013? A. Around -- correct, around that date. Q. And cirrus is C-I-R-R-U-S, right? A. Correct. Q. And that previously had been the account for scout? A. Correct. The original operator that started the cirrus account was scout before that. Q. And scout changed it to cirrus before you took it over, right? Page 475 A. Scout -- the person that operated scout account created the cirrus account. Q. About two or three weeks after you got control of the cirrus account, DPR, Dread Pirate Roberts, granted you administrative rights over the Wiki page? A. I had the chat from one of the dates, but yes, it was granted to me when I was controlling it. Q. Did August 16 sound about right? A. Sounds about right; yes. Q. You were given only limited privileges, correct? A. I was given a level -- second level underneath admin privileges. Q. You never spoke to DPR on the telephone, right? A. No. Q. You never communicated in a ordinary Internet electronic communication? A. Nothing outside of Tor. Q. Right. And the same was true of the other -- to your knowledge from your investigation and your interaction with the other administrators, the same was true with them as well, correct? A. I didn't engage with them outside of Tor either. Q. Right. But I'm saying they didn't engage with DPR outside of Tor? Page 476 A. Not from what they told me. Q. And you saw no evidence of that in the course of your investigation? A. No. There were a few that were closer connected to him than me, but not -- they didn't ever say that. Q. DPR would you say was careful to conceal his identity? A. I think he was. Q. And he set up a series of security measures on the site such as this tiered level of access even for administrators and employees? A. He did. Q. Now, for Government Exhibit 127, it's already in evidence. A. 127. Okay. Q. It's up there. These are the instructions that you were given by DPR on how to get administrative access, correct? A. To clarify, this was given to the person -- Q. I'm sorry? A. I'm sorry. Q. This was given to cirrus before you were cirrus? A. Yes. Q. In essence -- now, did you learn how to get on the site from the person who was operating the cirrus account or did you go to this page to get the information? A. The person that operated the cirrus account walked me through the steps. Page 477 Q. So, in essence, it was not a difficult process for someone to walk someone through the process of getting access, as long as you had the right password or access code? A. It was a little more complicated to set up than I was -- my previous knowledge before that with dealing with, like, an IRC type of setting like this, but it was -- with the directions it was simple. Q. And you follow the directions, and you had, instead of that username and that password, if that was for DPR, that would get you DPR's access, right? In other words, you know where it says 8b username? So if that were in DPR's username and if 8c and 8d were DPR, it wouldn't be any different to get into the DPR-level of access, right? MR. TURNER: Objection; form. THE COURT: Hold on one second. Let me read it. Why don't you rephrase. Q. This is information that cirrus was given to log on, right? A. Correct. Q. So it's a username, a domain, is that a, b, c and d. There's a username, domain and password that allow a certain amount of access, right? A. I guess so, yes. Q. If you had the information for DPR's username, domain and password, that's how you would get to -- there's no other way to get in the site to your knowledge other than through this, just with a different password and a different domain and different username? Page 478 A. I don't -- I wouldn't know how he got in. I know that there's -- there are different ways to access servers or there are different ways to access programs. I don't know if he would do this from, like, almost a front-face way that you do this. I'm not sure. Hypothetically, yes, I'm guessing it is possible to do it that way, too. Q. And in terms of logging into the Pidgin chat, and just to refresh the jury's recollection, the Pidgin chat is the little box in the upper right that you were chatting with with DPR on October 1, and you had a couple of other instances of that as well, right? A. Correct. Q. And that's not on the Silk Road site, correct? A. No. That server was separate. Q. That's a separate encrypted chat system, right? A. Yeah. It's separate dot-onion address. Q. But for that one, in terms of logging on, the steps that you went through with us are the only steps for logging on, right? Nothing more complicated than that? A. That's the only ones I know of; yes. Q. But that got you on the Pidgin chat, correct? A. It was a little bit different from the Adium program that cirrus was originally using, so that's why that user or the person, the original owner walked me through it because it was different than Pidgin. Page 479 Q. And Adium is used more on Macs, right? A. I guess so. It was just the program that user decided to use, so I wanted to stay consistent. Q. You talked about timezones on that, right? And you're aware that Adium has a plugin, meaning an additional option that you can use to adjust the timezone? A. I'm not sure about a plugin for it, but I never did it. Q. And the timezone that's reflected on that, that's really just a timezone of the person's computer who is logging on, right? A. I'm assuming that that's the computer, yes, the computer's time. Q. So if you set your computer in a different timezone -- withdrawn. You can set your computer to a different time than the time, right? A. You can set your computer to any timezone you want. Q. So all that does is tell you where the computer timezone is, not where the computer is, but what timezone is provided to that --is programmed to that computer; is that accurate? A. Yes. Q. Programmed to that computer? Page 480 A. That's accurate. You can modify your timezone on the computer and that doesn't reflect where you're at at the timezone. You can put anywhere in the world. Q. Also, those chats, don't they also contain a line, and we can look at it if you need to, but it says encrypted OTR chat initiated identity not verified the other side, right? Don't they say that? A. There's OTR different plugins, I guess, that allow you to do it. It stands for off-the-record chats. Q. What I'm saying is, the ones that you've testified about, don't they say that? There's sort of a line that says it's encrypted, but the other side is not verified? A. I believe so, yeah. When you first start it up, all the chats I had with the staff would always initiate the OTR setting, so it would turn on every time I start a chat. Q. And you said before you spent thousands of hours on the Silk Road site, right, in a variety of different roles essentially: Buyer, seller, administrator. Right? A. Yeah, and just browsing, too. Q. Right. Some of that, like you said, every couple of days in direct contact with DPR, right? A. Just about, yes. Q. Is it fair to say that during that entire period, DPR never let -- and I would say he, but it could be a she, right? We wouldn't know just from the screen, right? I mean, in essence, you don't know who you're talking to, right? Page 481 A. From a user account, yeah, it could be a he or she. Q. DPR never let his or her guard down to give you a piece of personal information that enabled you to establish identity; is that fair to say? A. I don't know. For gender-wise, I didn't never really see anything that would indicate that it was a he, but some of the writing just appeared to be more masculine to me from reviewing it. Q. I'm not talking about gender. I'm just talking about in general. A. Okay. No, there wouldn't be a defined, exact way to say that it was a he or she. Q. Never let his guard down. By the way, you were surprised that scout was a woman, right? A. I was. Q. I want to take you to the day of Mr. Ulbricht's arrest, all right. And just so it's clear, you had never seen Mr. Ulbricht in person prior to you going to California the day before? A. That's correct. Q. Did you identify him from photographs or from people pointing him out, you know, in other words, the other agents saying "that's him," or did you identify him -- in other words, did they say this is him and then when you saw the photo, you saw him? Page 482 A. When I started investigating him around September tenth, 11th, it was brought to my attention. I did pull up documents such as his passport application, the photograph. I saw other photographs as well that I found online of him. Q. So that's how you were able to recognize him? A. Yes. Q. He didn't have any kind of markedly -- or different appearance that would prevent you from recognizing him? A. No. Q. You had never spoken to Mr. Ulbricht before that time, in other words, voice contact or anything else to your knowledge in terms of Ross Ulbricht? A. I had not. Q. Now, I think you testified on direct that you wanted -- that the plan was to try to have Mr. Ulbricht out in public for purposes of effecting the arrest, correct? A. Correct. Q. And that would be so he would be more vulnerable that way in terms of -- obviously in terms of just the immediacy of the arrest and your ability to track and all that, right? A. Yes. We had an arrest warrant, so we were -- wanted to initiate that in those settings. Q. And you didn't, as cirrus, or anyone else to your knowledge didn't coax him out of his house, right? A. No, I did not. Page 483 Q. So he left his residence voluntarily, right, to go to, the day before you noted, to a public Wi-Fi spot, right? A. Correct. Q. And then the next day, went to the cafe and then did not stay at the cafe but instead went to the public library? A. Was never coaxed out that I know of. Q. Right, right. But it was the plan to get him online during that period, right? A. Mr. Ulbricht himself, we would be observing him if he went to an area that would provide public Wi-Fi and then, yes, try to initiate a chat with Dread Pirate Roberts online. Q. By the way, you mentioned the passport and you seized the passport from his residence, right? That's an authentic U.S. passport, correct? A. It's an authentic U.S. passport. Q. And so, if we could pull up 129C, please. A. Okay. Q. And that's the chat that you were having at the time of Mr. Ulbricht's arrest, correct? A. Correct. Q. And so, you initiated, correct? A. I initiated the chat; yes. Q. And then you asked him can you check out one of the flagged messages for me, right? A. That's correct. Page 484 Q. And dread says sure. And then the next thing he says is let me log in, right? A. Correct. Q. So he needs to log into silkroad, correct? A. To log into the market, yes. Q. So he's already on the Internet. He's already active, so you're chatting with him, but until you ask him, he's not logged into silkroad, correct? A. I -- it doesn't appear he's logged on to silkroad. Q. And then -- by the way, you know what happens when you log in as -- withdrawn. Do you know whether or not if one logs in as DPR, as Dread Pirate Roberts onto the silkroad site, whether or not the mastermind page comes up automatically? Do you know? A. I do not know. Q. Did you ever test it? A. No. Q. During that period in the library, you're aware that there are law enforcement officers in the library, you're not sure who but you know there are people watching him, right? A. That's correct. Q. And to your knowledge no one -- withdrawn. Mr. Ulbricht still had his laptop out on a library desk, right? A. As I was told by other agents there. Page 485 Q. By the way, with respect to the mastermind, going back to the mastermind screen, you said that Mr. Kiernan is a computer scientist? A. He is. Q. That's how you described him. So you had to tell him to hit the "back" tab to find the previous screen? A. I asked him if he could go back. I think he was trying to keep it in a place or trying to keep the computer just active and alive so it wouldn't -- the encryption wouldn't turn back on or wouldn't lock. So he wasn't actively, as far as I could tell, doing anything on the screen besides keeping it alive at that point. Q. So before that chat, 129C on October 1, 2013, what was the time before that that you communicated with DPR? A. I believe I had a chat. I have to look back at my logs. Q. In fact, it was a couple of days, right? A. It might have been a few days before. Actually, earlier I think in the day, I think I had a short chat with him or it might have been -- I got to doublecheck. Q. That day? A. Not -- I'm saying earlier the day before I left maybe. Q. Weren't you concerned that -- withdrawn. Wasn't it unusual for him not to be on what you call the IRC for two days? A. On the staff chat? Page 486 Q. Yes. A. It would be a little bit unusual but there were periods that he would take some time off. Q. But did that concern you at some point? I mean, did you talk to the other agents and ask them whether they got physical surveillance because Dread Pirate Roberts had not been on the staff chat for over two days and that was unusual? A. I think he was online. I hadn't been engaging him in chat, though. Q. Do you recall? A. I'm sorry? Q. Do you recall specifically? A. I'd have to look back at my records to -- Q. I'm going to show you what's marked as 3505, 36 and 37. Just ask you to -- if you don't mind, I'll just point out to you where I prefer that you read rather than take time. So that and then through there. It goes up obviously from the oldest quote. Start on page 37 I think is how it works. A. Okay. *(Continued on next page)* Page 487 Q. So you wanted to know from Agent Tarbell whether they had physical surveillance because you said that not logging into IRC for over two days is unusual for DPR, right? A. Yes. Q. There is also something else. Do you recall that on the 29th, which is two days before, that you noticed someone with a username peaceloveharmony was what you called sitting on DPR's profile for a couple of hours; do you recall that? A. If I could see something that would help me recollect? *(Pause)* Q. I show you what's marked 3505-00775, and just ask you, again, read from the bottom to the top, essentially. A. Sure. *(Pause)* I recall this. Q. Thank you. So there was a period on the 29th of September, 2013, where someone with a username or a screen name peaceloveharmony was what you called sitting on DPR's account? A. Yeah. There was from the forums, on the Silk Road forums, there is a way to see what users were viewing actively in the forums, and what I mean by "sitting" on an account, they were viewing the profile of Dread Pirate Roberts for an extended period of time. Q. And so you asked the people on the arrest team as to whether it was any of them, essentially, right? Page 488 A. If there was anyone else that was monitoring him. Q. Right. And they said no, that it was not them? A. Right. The responses I got from the other agents that I was working with said no. Q. Right. Your conclusion was that it might be law enforcement, some other law enforcement that you were unaware of? A. I suspected, yes. Q. But it didn't have to be law enforcement, it could have been anyone? A. It could have been anyone, yea. Q. But it was unusual, right; it wasn't typical activity that someone would be monitoring that profile for that extended period of time? A. I didn't actually watch them for a long time. I was watching his account and watching the forums more vigilantly, actively for the last few days. So that's why I took notice of that. Q. And you had spent a fair amount of time yourself as law enforcement doing that very thing, right, sort of trolling through that account for periods, right? A. And watching it, yes. Q. While you were doing that, were other people doing it at the same time? Do you recall anyone else doing it? A. Generally me. I believe Special Agent Gary Alford also was watching the account on the forums as well. Page 489 Q. But he wasn't peaceloveharmony; we don't know who that is? A. I said it to him and he said no. Q. I just said, we don't know who peaceloveharmony is? A. I don't know who peaceloveharmony is. Q. Now, is it fair to say that the Silk Road site, that users, both vendors and purchasers, were extremely security conscious? A. A lot of them were, yes. Q. And there was a lot of talk on the forum about keeping track of law enforcement infiltration or attempts to infiltrate the site? A. There was discussions about that, yes. Q. And they actively discussed prior arrests and what happened to people and rumors and all of that kind of stuff? A. There would be discussions about that regularly on the forums. Q. Would you say they were very motivated in finding out more about what law enforcement is doing with the Silk Road? A. There was a lot of discussion. If there was anyone that would ever bring up something that would occur with law enforcement, then they would like to discuss that a lot. Q. Now, in April of 2012, you believe you had identified some Silk Road bitcoin accounts, correct? A. That would be correct. Q. And you were working to further identify the people behind them, right? Page 490 A. That is correct. Q. And sometime in the summer, maybe July of 2012, you believed that you had identified the person, right? A. I believe that I had a good target for it, potentially. Q. A good target, Mark Karpeles, right? A. Karpeles and an associate of his. Q. Right. Ashley Barr, correct? A. Correct. Q. Karpeles is K-a-r-p-e-l-e-s. Mark Karpeles is a French citizen, right? A. That is correct. Q. He lives in Japan, right? A. He does. Q. He is also the owner of Mt. Gox, correct, the bitcoin exchange? A. That is correct. Q. And he bought Mt. Gox I think in 2009? A. I think it was 2010. Q. OK. But you thought that -- what you had concluded there was that Karpeles was essentially behind Silk Road but that his associate Ashley Barr was DPR? A. There was -- Karpeles' English that I could see from his -- the things he would write online did not match the level of English skills that Dread Pirate Roberts possessed. So I thought it was someone else close to him, and there was a person that shared some of the same viewpoints that was working for him by the name of Ashley Barr that I suspected. Page 491 Q. He was a Canadian, right? A. He was a Canadian citizen. Q. And has a degree in computer science, right? A. He has computer science degrees, yes. Q. And he is also Karpeles' right-hand man, or was at the time, right? A. He was. Q. And so as a result you built up quite a large list of information to lead you to that, right? A. There is little bits and pieces of evidence that was pointing the investigation towards them, yes. Q. And -- well, did you say we had built up quite a large list of information to lead us to this? A. It was, yeah, a lot of little pieces, a list of exhibits. It was a lot of little things that added up to it. Q. The question is did you not say inside Homeland Security Investigations, HSI, we had built up quite a large list of information to lead us to this? A. That sounds right. Q. And you also didn't want anybody reaching out to Karpeles, right? A. There was other -- Page 492 Q. Just let me ask because I will get to that. A. OK. Q. I want to get to -- A. Other law enforcement I didn't want reaching out. Q. Right. You were worried that if someone reached out or did something that Karpeles might find out, it could impair the investigation? A. Correct. Q. Right. So -- and in fact, you let people know within law enforcement that Karpeles, he closely monitors everything, all of his websites? A. That is correct. Q. And that you thought that a lot of the websites he ran -- and he ran a lot of websites, right? He had a lot of domain names and things like that within his control? A. He hosted a lot of websites, yes. Q. So you advised avoiding visiting them since many of them appeared to be fronts and that Karpeles is actively tracking them? A. That is correct. Q. So that if someone went on and wasn't sufficiently disguised, then he might recognize it as law enforcement and then again impair the investigation? A. That is correct. Q. In fact, in August of 2012 you sent out an email and then you realized, as we all do at some point in our lives, that you left out the word "not," right? Page 493 A. There might have been an occasion like that. Q. You had to send a quick email to say not to -- A. Not to, I think, maybe contact -- Q. Right. That was an important facet of the investigation, obviously, is to keep it as confidential and as close as possible as you gathered more information? A. That is correct. Q. And at some point because -- withdrawn. It came to your knowledge that there were other investigations of Silk Road going on around the country, right? Other agencies, other offices, I mean, were investigating Silk Road, right? A. That is correct. Q. And you -- when I say "you," HSI, and yourself as a part of HSI, were operating with or working in tandem with the U.S. Attorney's Office in the Northern District of Illinois, right? A. We were docketed there originally, yes. Q. You did that in Chicago, right? A. Right. Q. So that is where you were running your investigation out of. Those were the assistant U.S. attorneys that you were talking to and keeping them advised of your progress? A. That is correct. Page 494 Q. And there are obviously other U.S. attorneys offices around the country and other agencies that were not necessarily either aware or in contact with Chicago about what they were doing? A. There was, yeah, we were doing our best to try to deconflict with other districts. Q. At some point you learned that Baltimore had an investigation, right? A. That is correct. Q. And, actually, you learned that from Agent Alford? A. No. Baltimore, the HSI agent that originally opened the case and their supervisor came to Chicago originally to talk to us about their investigation and about working together. Q. It wasn't in August of 2012 that someone from the Organized Crime Task Force told you that Chicago had input the same information about Karpeles as a target as you had? A. I was notified of that, about Karpeles, later on, but I knew of their investigation long before that, though. Q. And in January of 2013 you got permission to open up an undercover bank account to try to move money through Mt. Gox, the bitcoin exchanger, just to remind everybody, right? It is the largest bitcoin exchanger, right? A. It was at the time. Q. It was at the time. And other companies owned by Karpeles, right? A. That is correct. Page 495 Q. And so you got permission to do that? A. I got permission to open up under our investigation an undercover bank account, yes. Q. Right. Now, Karpeles is also a computer developer systems administrator, right? A. That is correct. Q. Self-proclaimed hacker? A. That is correct. Q. Who brags about his hacking in Twitter and other social media. A. He does. Q. And he has control over hundreds of websites and companies, or had at the time in 2012/2013? A. He did have hosting services, yes. Q. And you believed him to be the mastermind behind keeping Silk Road secure and operating? A. He had ties to the original silkroadmarket.org website. Q. But my question is did you not say that you believed him to be the mastermind behind keeping the website secure and operating? A. He had the credentials to do so, yes. Q. But did you say that? A. I would have said that, yes. Q. And that Ashley Barr was acting as the voice of the website under the name Dread Pirate Roberts? Page 496 A. That's what I suspected, yes. Q. Now, in April of 2013, Chicago initiated -- when I say "Chicago," HSI Chicago, your office, right -- initiated an undercover purchase from Silk Road using Mt. Gox and another Karpeles company as the bitcoin exchange? A. Yeah. We did an exchange through two different ways. Q. Part of the purpose of that was to -- withdrawn. You also suspected that Karpeles was running an unlicensed money exchange operation, right? A. I did. Q. And so this could be a way of establishing jurisdiction to charge him with that in Chicago? A. Yes, it was. Q. And in May of 2013, HSI Chicago issued a grand jury subpoena to a company called Dwolla, right, D-w-o-l-l-a? A. That is correct. Q. And that is an online payment processing system? A. Yeah. It's like an online wire transfer company. Q. It is based in the United States, right? A. I believe so, yes. It has service in the United States. Q. It was a way that Mt. Gox used to transfer money essentially in and out of the U.S.? A. It was one of the ways that they offered to either withdraw or deposit funds. Q. And bitcoin, right? It was part of the bitcoin exchange process that Mt. Gox used? Page 497 A. It was used for just the money part of it to withdraw. Q. And that was -- and the subpoena was with regard to a Karpeles company called -- and I will spell it -- M-u-t-u-m, new word, S-i-g-i-l-l-u-m? A. Mutum Sigillum. Q. Right. That was what the subpoena was for, the records for that company, right? A. Correct. Q. And the grand jury subpoena keeps the investigation secret and confidential, right? A. Correct. Q. Within law enforcement only? A. Right. Q. Then you find out the next day, May 10, 2013, that Baltimore had seized the -- how do you pronounce it, the Mutum Sigillum? A. Mutum Sigillum. Q. -- Mutum Sigillum that HSI Baltimore had seized $2 million in that company's account, right? A. They notified me by phone, yeah. Q. Then it was apparent to Karpeles that the U.S. government had him on its radar, right? A. That is correct. Q. This is May of 2013, right? Page 498 A. I believe so, yes. Q. May 10th. In fact, there were newspaper articles about it, right? A. It was a large seizure at the time, yes. Q. Sorry. More than $3 million was seized. And it was from Mutum Sigillum's Wells Fargo account, right? A. Correct. Q. And you were notified in advance that Baltimore was going to do that? A. I was told that it had already happened. Q. Right. And no one even in your office had been notified in advance? When I say "your office," I mean Chicago HSI. A. No. Q. And was that money ultimately returned to Mr. Karpeles? A. I don't know its current state right now. Q. And you thought that HSI Baltimore should have deferred that seizure because of your criminal investigation of Mr. Karpeles? A. At the time, yes. Q. Now, despite that and the fact that Mr. Karpeles was already on notice, to a certain extent, that he was on your -- not your radar but the U.S. radar -- and I am not being critical, I'm just talking about despite that, in terms of the chronology, you prepared a draft affidavit of May 29, 2013 for a search warrant for email of Mr. Karpeles, correct? Page 499 A. That is correct. Q. And these search warrants would not be on notice to him, correct? They would just be to the provider, and they would provide the information so that he wouldn't necessarily know, right? A. No. The provider -- well, he wouldn't know, yes, that the provider -- Q. So you were doing it in a way that would keep it confidential. Baltimore did it in a way where it would be public. You did it in a way that it was confidential, right? A. Correct. Q. So in your draft, which was prepared for swearing under oath, right? A. That is correct. Q. And you said that Silk Road had been launched in March of 2011, right? A. Correct. Q. And that both the marketplace and the online forum were operated by the same administrator? This was your conclusion? A. Yeah, that's what I assumed, yes. Q. And that you had done some -- you talked yesterday about whois.com, w-h-o-i-s.com? Page 500 A. Who.is, yes. Q. You talked about it yesterday for the purpose of identifying IP addresses or the people behind IP addresses? A. Correct. Q. And in your draft affidavit you talked about the whois.com for the Silk Road -- the searches that you had done for the silkroadmarket.org, right? A. Correct. Q. And when you said before -- oh, withdrawn. That the registration was March 1, 2011, and then that only went through April 13, 2011. And then there was a separate registration through March 30th, right, through 2012, I guess, right? A. There were changes in the hosting administration. Q. There were changes in the postings, right? And that there was something called sta.net, a company, right, that was involved in -- well, withdrawn -- that you concluded from your investigation was involved or connected to the silkroadmarket.org? A. That is correct. Q. And that was registered to Mutum Sigillum? A. I believe so, yes, yeah. Q. Which was Karpeles' company? A. It was. Q. And in fact, he was the contact for Mutum Sigillum; it was listed to his email address, right? Page 501 A. That is correct. Q. Ands that he was the administrative -- and that he was in administrative control of Mutum Sigillum since he had acquired it in 2010? A. That is correct. Q. And in February 11, Karpeles bought Mt. Gox, right? I think -- I apologize before for having the wrong date, but February 11th he bought Mt. Gox? A. Around February 2011. Q. If you want to see the draft, I would be happy to have you -- to have it in front of you. A. If I could, yeah. That would helpful. Thank you. *(Pause)* MR. DRATEL: I apologize but when it printed out, the numbers cut off halfway so sometimes it is hard to tell 8's from 9's. This is 3505-3085 through 3092. Yes. *(Handing)* THE WITNESS: Thank you. Q. OK. So let's go back to paragraph 18, if you could look at that. A. OK. Q. And you trace more of Mr. Karpeles' sort of electronic footprint as either corporate or personal, right? A. Correct. Page 502 Q. In terms of how you link him through whois.com, other companies, to sta and other companies that are affiliated -- that are connected, through your research and investigation, connected to the silkroadmarket.org? A. That is correct. Q. So, in fact, if you look at 19, in February 2011, Mr. Karpeles buys Mt. Gox, right? A. Sorry, you said 19th? Q. Yes. A. It stopped at 18. Q. What is the last page of that? A. Page 5. Q. On the bottom, 35 -- A. Oh, it is cut off. 03 -- Q. It is double-sided. A. It is still cut off. 03091, 92. *(Pause)* Q. I'm sorry, paragraph 17. I apologize. A. OK. Q. Do you have 17 there? A. I have 17, yes. Q. So in February 2011 -- so paragraph 17, he buys Mt. Gox in February 2011? A. That is when it is shown, yes. Q. That is a month before Silk Road launches, right? Page 503 A. That is correct. Q. And you note there that Mt. Gox handled perhaps as much as more than 80 percent of all of the bitcoin exchange in the world, right? A. That is what they advertised, yes. Q. And that was as of April 2013, right? A. Yes. Q. And, excuse me, part of your theory in terms of your investigation was that Silk Road was a device for leveraging the value of bitcoin, right? A. It appeared so. Q. Yes. In other words, that if you had cornered the market on bitcoin and could create a site that only used bitcoin and everybody used bitcoin, you would drive the price up? A. Yes. Q. And also get business as an exchange? A. Right. Q. Now, so based on that, in terms of an affidavit, you were prepared to swear that there was probable cause that Mark Karpeles was intimately involved as the head of Silk Road? A. From the connections that I listed in the affidavit draft, yes. Q. But he had already been -- he had already had that seizure of Mutum Sigillum by the time you had drafted this affidavit, right? Page 504 A. Correct. Q. And he was in Japan? A. He was in Japan. Q. Also, around the same time, in May of 2013, you submitted to Dwolla, or subpoenaed from Dwolla, the online payment processing company here in the U.S., information about -- subscriber information for certain accounts that you thought were suspicious and related to Silk Road based on the movement of bitcoin or money in and out of there, right? A. There was a subpoena issued for that, yes. Q. And that was because -- well, you thought that there could be vendors or operators that you could find with that information? A. Yes. Q. And by "operators," you mean administrators, people who were running the site? A. Potentially, yes. Q. And there was large movement of money -- withdrawn. There were large movements of money from Mt. Gox to Dwolla accounts? A. It showed, yeah, movement of money moving out of Mt. Gox through Dwolla. Q. And, by the way, on that list I think there were 16 names on that list or 16 accounts, do you recall? A. I don't. If I could see the -- Page 505 Q. Sure. *(Pause)* But do you recall whether or not Mr. Ulbricht's name was on that list of accounts? A. I don't believe that it was. Q. And ultimately you created a spreadsheet -- or received a spreadsheet from Dwolla with all of the transactions relating to Mr. Karpeles, is that right? A. It was all the Mutum Sigillum -- I'm sorry, in the Mutum Sigillum account for Dwolla for all the transactions that they had received and debited, credited and debited. Q. That is about a thousand pages long, that -- A. It was, yeah, a pretty large return. Q. And do you recall whether Mr. Ulbricht's name comes up there? A. It did. Q. Right. And there are about 20 transactions, right? A. Roughly or so, yes. Q. And they are all in the amount of probably like a thousand dollars or around there, some less? A. Around a thousand dollars. I think one was for like a few hundred dollars. Q. So nothing large, assuming you mean by "large" more than a thousand dollars, when you are talking about large movements of money, right? Page 506 A. No. There wasn't anything that compared to the other accounts, no. Q. And those were spread out over a couple of years, right? A. I believe so, if memory serves me right. Q. In fact, even after Mr. Ulbricht's arrest you went back and looked at that, right? A. I did. Q. Now, you also learned as part of your investigation at some point in the summer of 2013 that Baltimore was trying to work on an interview with Karpeles through his attorneys, right? A. That is correct. Q. And they wanted to ask him directly about Silk Road as well as his money business, right? A. Yes, they wanted to talk to him. Q. And you advised against that? A. We requested that they did not. Q. Right. But they went ahead and met with his lawyers July 11, 2013, right? A. That sounds about right, yes. Q. Not with him but with his lawyers? A. With the lawyers. Q. And then you say Karpeles' -- withdrawn. Karpeles' attorneys brought up Silk Road, right? A. That is what I was told. Q. And they say that he was willing to tell the government who he thought was running Silk Road, right? Page 507 A. That is correct. Q. And for that he would get a walk on his charges, right? A. I don't know what their deal was. Q. That's what he wanted? A. I don't know. I don't know what was discussed then. *(Pause)* Q. OK. And during this period after this all occurred -- withdrawn. So I am going to show you what is marked as 3505-300. *(Pause)* I am just going to bracket a point here. Just read that to yourself and then when you are done let me know. *(Pause)* During this period -- I'm sorry. Let me know when you are finished. *(Pause)* A. OK. Q. During this period you were upset about the work -- about the investigation that Baltimore was pursuing and how they were pursuing it, correct? A. I was upset about it, yes. Q. And you wrote a long memo with a chronology to lay out what had occurred and what the problems you saw were? A. That is correct. Page 508 Q. And as part of your investigation, as part of your preparation and all of that, you learned that Karpeles' lawyers had made this offer that they would tell the government who was behind Silk Road if he would not be prosecuted for the money exchange charges, which, by the way, had not been instituted, right? A. I'm sorry. Q. He hadn't been charged yet with any money exchange -- A. It was just the civil forfeiture, the civil seizure of the money. Q. Right. But in return for not pursuing any potential charges against him, he was willing to give that name up? That was the offer that his lawyers made, that you learned during your investigation? MR. TURNER: Objection. Foundation. THE COURT: Certainly you will answer as to what you know. If you had knowledge of that fact or if your memory is refreshed by something and now recollect something, then you may testify to it. MR. TURNER: Objection. Foundation. Hearsay as well. THE COURT: Why don't you try and rephrase it, Mr. Dratel, and come at it in a different angle. MR. DRATEL: Sure. MR. DRATEL Q. It was crucially important to you at the time to know what was going on with respect to other pursuits of Karpeles and what was going on with other agencies investigating or other U.S. Attorney's offices investigating him, right? Page 509 A. Yes. Q. And as part of that you had conversations and read memoranda and were in touch with people who provided to you information about it so that you could pursue your own investigation correctly, right? A. Be more specific. I am sorry. Q. Sure. That you wanted to know what was going on with Baltimore, you wanted to know what was going on with the meeting with Karpeles' attorneys, you wanted to know what was out there because you had your own parallel independent investigation of him going on that could be completely wiped out by what Baltimore was doing? A. Yes. And we had verbal agreements with the attorneys in that district also about that. Q. And so in the course of this and in pursuing your investigation, you learned that Karpeles' lawyers had made that offer to the government? MR. TURNER: Objection. Q. You learned through people either in Baltimore or at HSI in Chicago? MR. TURNER: Objection. Hearsay. THE COURT: Sustained. Page 510 MR. DRATEL: I will just say Rule 807. THE COURT: You know, I think now is a good time to take our mid-afternoon break so that we can take up this evidentiary matter while you folks stretch your legs. So let's take our mid-afternoon break. We'll come back in about -- probably about 12 minutes. I want to remind you not to talk to each other or anybody else about this case. Thank you. And you could take a break, too. THE WITNESS: Thank you, your Honor. *(Continued on next page)* Page 511 *(Jury and witness not present)* THE COURT: All right. Let's all be seated. So, of course, you folks know a lot more about the facts than I do, and so I'm learning about this as I hear it and don't have the background that you folks have. The residual exception of the hearsay rule is Rule 807. That is the rule that Mr. Dratel has cited. And since I know he knows the rules well, I assume that that is the one he intended to cite. MR. DRATEL: Correct, your Honor. THE COURT: All right. And why don't you folks -- I mean, as I understand the issue and as I have been hearing the issue, the issue is that the witness allegedly learned something only by virtue of being told it, that it is being offered for the truth; namely, that this particular offer was in fact made and that the offer had the terms that Mr. Dratel has in his questioning suggested. Am I right about what the problem is from the government's perspective? MR. TURNER: Exactly right, your Honor. THE COURT: All right. So so far so good. And, Mr. Dratel, tell me where you are going with this. I mean, I understand generally the issue with Mr. Karpeles. I had followed that, I think. I think it is pretty clear where you are going with that. But tell me why you need this point through this witness in this way, as opposed to after learning whatever he learned about the Baltimore investigation with Karpeles, what did you do next. That would be the typical way to avoid the hearsay issue. Page 512 MR. DRATEL: The reason is because it's the offer by Karpeles' attorneys that is the material fact. In other words, that is what it is. Their client is saying we're going to give you the name of Silk Road and don't charge us now. Karpeles was never charged. But the point is that he was offering that in return for that. They had this guy in their sites and he had never been charged. The point is that he at some point claimed to know, and our position is that he set up Mr. Ulbricht -- THE COURT: I understand. MR. DRATEL: -- maybe not in this conversation. THE COURT: I followed your reasoning. MR. DRATEL: And I think it comes under the rule, you knows, it has circumstantial guarantees of trustworthiness, I think. Otherwise, I will just -- you know, do I get to call the assistants who were at the meeting, who heard this? THE COURT: You could call the lawyer. I mean -- MR. DRATEL: I don't know who the lawyer is. I don't know his name. This is 3500 material. I don't know. This is something we learned in December 31st, in a 5,000-page 3500 material dumped on this witness. Page 513 THE COURT: That is not unusual for this or any other trial, as you know. MR. DRATEL: 5,000 pages for a single witness, I think -- THE COURT: It is not really, not when you've got an investigation that's been going on for years. I'm sure you have been involved in situations. Let's not deal with the volume because I don't want there to be some takeaway point that is not relevant to our discussion about the procedures that we used. I think we followed the appropriate procedures for the 3500. MR. DRATEL: I agree with that. I think it is Brady. THE COURT: That is a different issue, in any event. It was disclosed pretrial. Let's hear -- so your point is that under the residual exception the offer by the attorney should come in as an offer that was in fact made? MR. DRATEL: Yes. THE COURT: And then what are you planning on doing next, just so that we've got the various issues on the table? MR. DRATEL: It is more about Karpeles and Baltimore but not about that. THE COURT: All right. So that would be the extent of the conversation you want the witness to testify about? MR. DRATEL: There is one other part that I would -- that probably is part of the same piece, which is just that they were going to meet with Karpeles and this meeting was supposed to be in Guam, and I don't know whether this meeting ever occurred. Page 514 THE COURT: All right. MR. DRATEL: This is the important part. I don't care about the Guam meeting or anything like that more than this. THE COURT: I just want to get the issues on the table to deal with them as a group. Mr. Turner, why don't you address your position on this. MR. TURNER: I think we are dealing in hearsay and double hearsay and potentially triple hearsay. I think it is basically -- THE COURT: Why don't you walk through it slowly and bit by bit so that we have got a clear record. MR. TURNER: Sure. Basically, what is being asked is for this witness to testify that he heard from an attorney in Baltimore that an attorney for Mr. Karpeles had been told by Mr. Karpeles that Mr. Karpeles had information about who DPR was. I cannot possibly see how that would be a reliable statement and it would have indicia of trustworthiness. In any event, Rule 807 requires prior notice to the opposite party if this is going to be introduced, and, obviously, we had none. I would also add, your Honor, that this is all about an investigation of someone that did not pan out and, obviously, we haven't objected up to this point -- Page 515 THE COURT: Well, I assume you will go into that on redirect. MR. TURNER: Yes. THE COURT: That will be for you to take up. MR. TURNER: Obviously, it is not unusual for any number of leads to be -- THE COURT: Well, you will take that up on redirect. MR. TURNER: I understand. THE COURT: Explain to me the different levels of hearsay because I am not familiar with how this conversation occurred. Is it, Mr. Dratel, your view that this occurred from the attorney himself who was making the offer to this witness, or was it through one attorney to another attorney -- well, originating with the client to the attorney to another attorney to the witness? MR. DRATEL: The only part -- your Honor, the only part to me that is hearsay is the relation by either Baltimore or Chicago to Special Agent Der-Yeghiayan of what was said by the lawyer. The fact that the lawyer said it is not hearsay. The fact that it was said, it would not come in for the truth of it, that he could provide the name of the Silk Road operator in return, but that he offered it; that is the important thing. That is not hearsay. That is just offered for the fact that it was said. It is essentially a verbal act. It is not hearsay. It is not offered for the truth. It's offered for the fact that somebody made that offer to the government, someone whom the government was investigating. Page 516 So the only part that is hearsay is what a U.S. attorney, or an agent of the United States government, told another agent of the United States government that the government is now saying is unreliable. THE COURT: All right. Let's take this piece by piece. Let's take it from -- because the way the hearsay rule, as you all understand, is you evaluate it at each step. Would you agree, Mr. Turner, that the initial statement from the attorney for Mr. Karpeles, that his client was offering to divulge information in exchange for some form of leniency, that that is not in and of itself hearsay; that would be offered for the fact that that statement was made? MR. TURNER: I think it could be offered that way. I think there is the danger of the jury understanding it as -- THE COURT: I could give a limiting instruction, as I have. MR. TURNER: Understood. But, yes, an offer of basically a proffer, an interview, would not have intrinsic value in itself. THE COURT: Right. And that that statement, would you agree with Mr. Dratel's characterization, was made in terms of the way he's been positing it, Mr. Dratel, that is, to a U.S. attorney in Baltimore, an A.U.S.A. in Baltimore? Page 517 MR. TURNER: An assistant U.S. attorney in Baltimore is a human being, like everybody else, and the whole hearsay rule obviously exists in order to make sure that there is no misinterpretation, there is no miscommunication. THE COURT: I understand. But do you have any reason to believe that the offer was not made, that this was not a real offer? MR. TURNER: I do not know the details. I certainly wasn't present or involved in those conversations. THE COURT: But you have -- MR. TURNER: Neither was this agent. THE COURT: I understand. He can't, and you can go back on cross how he has no idea if this was true, false. All he knows is that he was told this, and he has no idea if it was in fact made. But what I'm trying to figure out is have there been other aspects of the Baltimore investigation which you have found to be unreliable in some way, which leads you to believe it is unreliable? And in terms of these particular A.U.S.A.s who were involved, let's put it that way -- and I don't need to know their names because I don't want to -- MR. TURNER: Your Honor, I am not going to comment on the general proviso of another A.U.S.A., but what I would say is that obviously even where you have highly coordinated investigations with other districts, all the time there is miscommunication, misunderstandings because those people are dealing with details in concrete situations that you are not intimately familiar with like they are. So you are going to misconstrue things they say. They are going to miscommunicate things. That is why they have the hearsay rules. And there is no reason here to believe that just because this is what Agent Der-Yeghiayan believed he heard at that time, that it should be offered for the truth and that the typical rule should not be complied with. Page 518 MR. DRATEL: Your Honor, just one thing I would add is that Agent Der-Yeghiayan thinks it is reliable. He put it in a detailed chronology of the investigation because he was upset about the way it was proceeding in Baltimore. He felt undermined by it. So he would not have included it in that chronology if he did not think it was reliable. THE COURT: One thing you can do, Mr. Dratel, is you can ask Mr. Der-Yeghiayan whether or not when he put things in the chronology, whether or not he believed the sources for that information were reliable before you get to the next step. MR. DRATEL: Fine. THE COURT: If he says not always, that may lead us down a different path. If he says -- I don't know. You do what you want to do. Page 519 But here's my -- is there something else you wanted to say, Mr. Turner? MR. TURNER: I understand. He is reporting up his chain what he has heard from others, but it still puts us right in the hearsay box. THE COURT: I don't dispute that it's in the hearsay box. I think that we've appropriately analyzed whether or not it -- how it travels up the chain. There are two statements. One statement is a statement from the lawyer to the A.U.S.A. There is a subsequent statement from an A.U.S.A. to another either A.U.S.A. or directly to Mr. Der-Yeghiayan. It almost doesn't matter whether or not it has got two hops after that or one hop after that because I think my analysis would be the same, which is that -- let me pause and make sure I have... *(Pause)* All right. Let me ask, before I go any further -- one portion of the rule does require that the adverse party have a fair opportunity to meet it. Is there anything that you think you would do if you had found out about this this morning that you can't do now? MR. TURNER: I mean, I haven't even looked at the document, extensively. I haven't had a chance to talk with the witness about it. I haven't had a chance -- THE COURT: You can't talk to the witness about it, anyway, during the pendency of an examination. Page 520 MR. TURNER: This should have been provided to us beforehand, though. THE COURT: I'm just trying to figure out what you would have done. MR. TURNER: I could have talked to the A.U.S.A. I could have talked to the lawyer. I could have done any number of things. THE COURT: OK. Here's what we're going to do. Mr. Dratel, you are going to tell me how important this is, because what we'll do is we'll hang the witness over the weekend if that is important to you. I will allow you to continue, but I won't require the government to do his redirect until we come back on Tuesday. MR. DRATEL: OK. THE COURT: So it will be both a tactical choice as well -- because I am not going to make them end the witness, and there is obviously issues involved in hanging him over the weekend for this. MR. DRATEL: Right. THE COURT: I don't know if it is that kind of point. MR. DRATEL: I would like the point to be made. So here's my proposal. I have at least an hour, at least, probably more. I could probably -- THE COURT: Don't take -- God knows, don't take up any more time than you need to. Page 521 MR. DRATEL: No. No. No. What I am saying is we won't be wasting time if we break at a time where I say, OK, we can now resolve this issue and come back Tuesday morning. THE COURT: I would rather you complete your examination so we at least know where you are ending. Are you proposing to hold yours open? I don't want to hold yours open. MR. DRATEL: No. No. No. What I am saying is I don't know where I am going to end. I am at least going to go to 5 o'clock or finish very close to it. That is what I meant. THE COURT: Well, if you're going to go to 5 o'clock, what I'll do is we'll end before you get to this issue. Don't go back to it right now. I will hold on whether or not we -- what we do with it because you both will then have had time to consider it, so will I, over the weekend, and we can then come back to it on Tuesday morning. So let's do it that way. It sounds like it's sufficiently important to you. Let me tell you my thinking on it without giving a ruling on it, and this is an issue which, in light of the defendant's interest in this, we'll hold it open until Tuesday morning. All right? So the government will not with Mr. Der-Yeghiayan be able to do the redirect until Tuesday morning, for which I apologize, but that will be the way it is. So that witness will have to just come back. MR. DRATEL: Right. Page 522 THE COURT: But do you want to hear what I am thinking? MR. DRATEL: I'm sorry. Yes. OK. THE COURT: I'm thinking that there are indicia of truth to this for 807 purposes, but I do want to consider it further and will be able to do so in light of the additional time that we will have. Having a proffer from a lawyer is not a particularly unusual type of act -- in fact, it is quite common -- and, therefore, it is a reasonable thing that a thought might occur which is that if there is any information which a potential target of an investigation has, that they might attempt to consider exchanging that for leniency. So the story that is going along with this has indicia of something which could well have happened. And the fact that it is between two A.U.S.A.s or one or more A.U.S.A. in terms of the hearsay portion, because the first portion with the lawyer is not a hearsay statement, but the fact that an offer was made -- is being offered for the truth, there are cases which suggest that sometimes indicia of reliability can come from the position of a person. That would be the kind -- and there are cases and I believe, actually, it is in the form of an attorney, not necessarily an A.U.S.A., if I am recalling my Second Circuit cases. I don't have a name but you will be able to find them. So I think that there is enough here that I am not prepared right now if we are going to be falling over into Tuesday anyway to make a definitive ruling on this. We'll let you folks noodle around with it some, and the government can then have the notice that it otherwise would have had under the rules. Page 523 And in the future we will try to head these off a little earlier. MR. DRATEL: OK. Yes. THE COURT: It is unusual for me to knowingly be in a position where we're going to hold open a witness. I don't like to do that because it leaves open the possibility that the jury's time won't be used most efficiently. But I understand the various interests, and in the interest of justice I am going to do that. So we will figure out what comes of it step-by-step, as I say. MR. DRATEL: Your Honor, can I just ask, with respect to where I'm going, because that's just one question of a larger piece, obviously? THE COURT: Yes. MR. DRATEL: So -- and as I said before, that was not any deeper than the question itself. In other words, I wasn't going to ask follow-up questions about that particular meeting. But I will still pursue the Karpeles part without that piece. THE COURT: Yes. MR. DRATEL: OK. Page 524 THE COURT: This is only about this one hearsay statement. Do what you otherwise were planning to do and do it all. MR. DRATEL: OK. THE COURT: Then we will figure out where to go from there. Yes, Mr. Turner. MR. TURNER: I would just add that because it was another office's investigation for Karpeles, that this is all going to come in through what the agent heard about that investigation from the agents involved there in Baltimore, the lawyers involved, I think there is going to be a continuing, running objection. THE COURT: All right. So there may be more to this. As we are thinking our way through it, Mr. Turner, you understand what might be coming up with other testimony. These are things you can lay out and suggest that the time we've got will be used by both sides to help put the picture together completely, and people can decide whether this particular Q and A is earthshattering enough to do this. MR. DRATEL: I will -- you know, your Honor, what I will do is, as I go through it, if I think it is something that is in the same ballpark, you know, obviously -- I know you don't want to do sidebars so that would be -- THE COURT: Well, in this case a sidebar is better than waiting until Tuesday. Page 525 MR. DRATEL: Yes. Right, I agree, because I would like to do it in sequence. I don't think that it is the same level of an issue of information imparted from others and what I am going to be doing down the road here. It is more about his investigation. THE COURT: We've got one open item and we don't have more. Let's just continue and proceed as we normally would for this. I don't expect there to be any other issues, right, that you see coming up? MR. DRATEL: No. THE COURT: All right. MR. DRATEL: Not for today. THE COURT: Let's take a very short break ourselves, come back, and we will go until two or three minutes before 5, then we'll break for the today and, in fact, for the weekend. THE CLERK: All rise. *(Recess)* *(Continued on next page)* Page 526 *(In open court; jury not present)* THE COURT: I want to state one matter before we bring in the jury. As it turns out, the Post was active yesterday on a story other than this case. And it appears from information that the courthouse has obtained that there was a red-bearded Post reporter who looks like somebody actually here who approached juror no. 2 and was in the process of writing an article about man-spreading, apparently a new phenomenon of which I was unfamiliar. In any event, that was the topic about which he was going to approach. He was not assigned to this case. So it was just really a happenstance. So I just wanted to make that clear, that nobody on this case that we are aware of has then been approached by anyone. Let's bring out the jury. I will look forward to reading the article by the Post. *(Continued on next page)* Page 527 *(In open court; jury present)* THE COURT: We'll all be seated. We have to get the witness out here. Witnesses also take a break during the breaks for the jury. Here we go. Mr. Dratel, you may proceed. MR. DRATEL: Thank you, your Honor. Q. Special Agent Der-Yeghiayan, where we left off, after -- as part of your investigation and in the course of your investigation, you communicated to Baltimore in July of 2013 that you did not want Baltimore to pursue Mr. Karpeles or to meet with him, correct? A. That's correct. Q. And you said that it would -- that you believed it would damage HSI Chicago's investigation? A. Correct. Q. Now, in August, August 15 of 2013, you are operating as cirrus on Silk Road, right? A. Yes. Q. You're operating a number of other buyer accounts, right? A. I had many available to me, yeah. Q. And you also had some seller accounts, as well? A. I did. Q. And you, at that point, drafted another search warrant for emails for Mr. Karpeles, correct? A. Correct. Page 528 Q. And so one -- this is August 15, 2013, one was for the Northern District of California, correct? A. Correct. Q. And one was for the Southern District of New York? A. Correct. Q. And they were for email accounts, Google email accounts? A. It was yeah, gmail. Q. Gmail accounts. And this is, again, three months after the seizure of Mr. Karpeles' money by HSI Baltimore that essentially put him on notice of the government investigation? A. Yes. Q. And in your affidavit, which you were prepared to sign that day and swear, right, August 15, 2013? A. I believe the date sounds right, yes. Q. If you need help, I'll be happy to -- A. That sounds correct. Q. You were ready to swear that there was probable cause to believe that those gmail accounts contained evidence of instrumentalities of narcotics trafficking and money laundering, right? A. Correct. Q. Anal that was based upon your personal knowledge, your review of documents and other evidence and your conversations with other law enforcement officers and civilian witnesses? Page 529 A. Correct. Q. And you went through a lot of the details that we discussed before about Mr. Karpeles, Silk Road market website, Mt.Gox, all of that, right? A. Yes. Q. And you wrote -- ready to swear that -- and did you ever swear to that evidence? A. Yes, I did. Q. So, you wrote I believe this evidence shows that Karpeles controlled the silkroadmarket.org website along with the tuxtele.com website and that he hosted them both at IP addresses he controlled? A. That's correct. Q. And you also cited his LinkedIn entry, right? A. I believe so, yes. Q. Where he described himself as an experienced computer programmer who, from 2003 to 2010, worked as a software developer at various companies specializing in developing ecommerce websites? A. That's correct. Q. And you wrote that based on my training and experience, I know that that type of background would make Karpeles well suited to operating an ecommerce site such as the Silk Road underground website? A. That's correct. Page 530 Q. Now, you also had a confidential informant that you cited in that affidavit, correct? A. Yes. Q. Who had worked with Karpeles for the past two years at that time -- this is 2013 -- that had worked for him two years previous to that, right? A. That's correct. Q. And that reported to -- that Karpeles operated something called bitcointalk.org? MR. TURNER: Objection, your Honor. 803. THE COURT: Sustained. Q. Did you swear to this in an affidavit? A. I swore to it, yes. THE COURT: Do you want a side bar about this? I don't want to have the colloquy in front of the jury. MR. DRATEL: A short side bar. THE COURT: Come on up. *(Continued on next page)* Page 531 *(At the side bar)* THE COURT: Let me say that I don't want to do this in front of jury. There's no inconsistent statements so the fact it that he's sworn to it doesn't get you for impeachment purposes to ability to put that in. MR. DRATEL: Right. What I want to do is get the basis for his conclusions of his investigations. THE COURT: Why don't you ask him? MR. DRATEL: That's fine. And the government's objection is hearsay, I have no problem that it's not for the truth. It's just for what his investigation collected that led him to have probable cause to believe -- MR. TURNER: But -- THE COURT: What the investigation -- so you would ask him, and tell me, Mr. Turner, what your view is. MR. TURNER: That sounds like it is being offered for the truth of the matter; he's trying to get out what the probable cause was for the affidavit. He's trying to establish that these are the facts, that show that somebody else, in fact, was running Silk Road, that somebody else is the real operator of the site. THE COURT: It's obviously, number one, we can all agree it's obviously highly relevant, right, if the lead investigator believed at one point in time in August of 2013 that somebody else might be a candidate, then how he arrived at how that fellow was a candidate is obviously relevant; and also how he changed his mind if he changed his mind would similarly be relevant. And you could go into that to your heart's content on redirect and Mr. Dratel can bring it out. Page 532 MR. TURNER: I think there are two concerns I have, your Honor, one is, I understand if he believed these things, but it's another thing to start citing the evidence that consists of hearsay from a confidential informant. That's core hearsay. THE COURT: It goes to his state of mind, though. MR. TURNER: I think it's going to be impossible for the jury to segregate that out. We're bringing out -- THE COURT: I'll give them a limited instruction, but I'm going to allow him to ask what was the basis for his view that somebody else was an appropriate target. That strikes me as in the heartland of the defense. MR. TURNER: Another problem I have is law enforcement privilege. If we're going to start getting into statements of confidential informants, these are people who have brought information to the government in secrecy. THE COURT: Here's what we're going to do. We won't have him go into the content of the communications. He can simply list, and why don't you take it carefully? MR. DRATEL: Okay. THE COURT: And let's cut him off if he's going to go into the content of any of those communications. He's just going to give an itemized list of these are the types of things I relied on. Page 533 MR. TURNER: Not only the contents but the source, the identity of somebody -- MR. DRATEL: The information -- THE COURT: What I was going to say is, the point that I think it's fair for the defense to bring out is that there was information listing the sources that led the investigator to believe at one point in time that there was probable cause for purposes of a warrant. That I think can be done in a way that does not invoke hearsay, all right. So do it in that way that does not get us into the hearsay problem. MR. DRATEL: Tell him what information -- can I lead him? THE COURT: You're on cross. MR. DRATEL: Yes, right. THE COURT: You can just say -- why don't you ask him what his conclusion is if he ever reached a conclusion and what the source was to give you an itemized list of the types of information -- MR. DRATEL: But the silkforum.org is important because it's the one that some of the initial -- THE COURT: You can't go into the content of what the bitcoin forum was. Page 534 MR. DRATEL: No. To say that he was running it. That's the information they had. THE COURT: That's definitely -- you're trying to get that in for the truth, right? That is exactly the truth, so you can't do that. MR. TURNER: We would ask for a strong limiting instruction here, your Honor. THE COURT: He's saying it's not going to go into the hearsay. I think we can do this in a way that does not suggest hearsay. MR. TURNER: My concern, is this the defense that the defendant wants to put on, that there was another individual behind it and this is the witness that they're seeking to draw that evidence out of? THE COURT: Yes. MR. TURNER: So that is being offered for the truth in terms of the evidence -- THE COURT: No. Let's go through it so we're absolutely clear on what the question is going to be. The question is going to be did there come a point in your investigation when you formed a basis for believing that there was probable cause for a warrant against Mr. Karpeles? Yes or no? You got these in mind? MR. DRATEL: Yes. Page 535 THE COURT: Then it's going to be tell me, just by source type, the type of sources that led you to that. They were written information that I had received, it was witnesses. I can lead him through that if you want to, but you can do it. MR. DRATEL: No. That's okay. If I'm running astray, you'll let me know. THE COURT: Then what do you want to do next because those are not hearsay so far. The fact that he did reach that conclusion is clearly something that he can testify to. MR. TURNER: I understand that. I guess my concern there is if he just says something like witnesses, then it makes it sound potentially more significant than it is. THE COURT: Then you can go back on cross, but that's not hearsay. That's part of a list of items. I can't preclude him from that. I don't think there's a basis to preclude him from that. MR. TURNER: As long as it's very clear that he's not saying that a witness told me that. THE COURT: No, no. We're not going to let him go into content. He can't go into the content of the communications. MR. TURNER: Then I'm not sure what he can draw out of the question. I understand that he can show -- that asking this witness whether he believes someone else was the person in charge of Silk Road is relevant, but beyond that, unless -- I don't know what the point of going further is unless the defendant is seeking to draw that information out for the truth to show there was credible evidence that somebody else -- Page 536 THE COURT: Well, he is saying this investigator reached a point of having believing there was probable cause. MR. TURNER: I'm not even sure how that is relevant, I mean, if it's not being offered for bias -- THE COURT: It's clearly relevant; I have no problem with making a relevance ruling on this. MR. TURNER: But why, your Honor, unless if it's being offered for truth. THE COURT: It's being offered for the truth of probable cause. This is not hearsay. None of this we talked about so far is hearsay. There's no statement. MR. TURNER: Right. My concern, again, is that the effect of the testimony is going to be that there were other sources -- THE COURT: He can always say there were 25 sources and he can always list the type. We don't get a hearsay problem as a matter of law until he goes into the content. I think the government's concern is that by implication, there was content. Of course, there's content in any communication. He when he says he spoke to people, there's necessarily content. He can't say what that content was, but his subsequent action led him to do something one might infer, but that's way people get around hearsay all the time. Page 537 I understand your concern. Let's take it step by step. He clearly gets to ask about the investigator having some belief. MR. TURNER: I would just, finally, I would note our growing concern that there actually is no legitimate basis here if the defense is not trying to show something like bias or anything else that, but, instead, is trying to prove through this witness the contents of other statements, statements of others, of witnesses that aren't being called in to testify themselves, basically the defense is trying to suggest there's all this evidence out there of the person who is running Silk Road. If that's the case, then the defense can introduce that evidence, but trying to get this witness to testify about that evidence, particularly when it concerns statements of others -- THE COURT: Here's what we're going to do because I think this is in the heartland of exactly what the defense wants to do, and I have to say right now, my view is it seems to be perfectly appropriate that this fellow says he put together an investigation which identified the defendant, he did it in the following way, showing that he may have put together an equally strong investigation to identify somebody else and that's issue: Is this the right guy? That strikes me as a defense that can be developed through this witness because this witness is not limited only to bias. Factual impeachment by undermining some of his testimony I think is perfectly appropriate, but I don't think we're going to solve it right now. Page 538 MR. DRATEL: No. THE COURT: Hold on. But I also think, is there anything else you can do because what I'd like to do is rather than break right now, I want to make sure I hear and think about these issues clearly because this is critical. So if the government feels as strongly and we're at 4:00 and we already have issue that this witness is coming back for on Tuesday, I'm inclined to hold both of these issues and talk about it so we can raise our voices above a whisper, but is there anything else you can go to? MR. DRATEL: No. THE COURT: That's fine. We'll break for the day and we'll talk about this then in open court. MR. TURNER: Thank you, your Honor. THE COURT: Thank you. *(Continued on next page)* Page 539 *(In open court; jury present)* THE COURT: Ladies and gentlemen, we are going to break for the afternoon because this conversation is going to take a little bit longer and I don't want to take up your time with it. So since we're at 4:00 anyway, I'm sure you'll be able to get a head start on the traffic and everything else and the commute. I want to give you a few reminders, though, because you do have between now and -- we're not going to see you again until Tuesday morning, right, so set your alarm clock. Don't forget about us. We need you here on time by 9:15 on Tuesday morning so we can pick up here in the room by 9:30. We will not meet tomorrow as I said before and Monday is a holiday, so we will not meet on Monday. I do want to remind you to take as seriously as you can possibly take the instruction not to talk to anybody about this case, anybody at all, including those in your life who you may have in your home or visitors, friends, spouses, significant others, whoever they may. Be don't update your Facebook page. I know that sounds ridiculous. People have done it before. And don't send emails about it, don't Tweet. And really, it's very important that if you run across any news articles on the Internet, on the television, newspapers, avert your eyes. Do not read them. You can read the remainder of the paper but do not read them. It's very, very important that the only information that you folks use as the triers of fact in this case is the evidence which you receive here in this room. And don't watch Princess Bride over the weekend, okay? Don't do any particular research on any aspect of this case from anything that you've heard about to further inform yourself. You will have all the facts as they develop here in this record here at trial. Page 540 See you Tuesday morning. Thank you very much. *(Jury excused)* *(Continued on next page)* Page 541 *(In open court; jury not present)* THE COURT: Let's all be seated. When the witness has left the room, let's pick up where we left off on this issue and we can speak about it then in a voice that is above a whisper, which always feels both as if it's being done more quickly than we otherwise might do. There's an urgency to it when we're at side bar and also people are constrained in terms of what they can reasonably say. *(Witness temporarily excused)* THE COURT: All right, so let's go back to the issue. We have two issues on the table. We have the one that we spoke about before and that was the earlier issue, which we'll now take up Tuesday morning as well. You folks, by the way, on any of these issues can write to me letters over the weekend and collect your thoughts and any case law or other support that you may believe is appropriate for me to have. I will read anything that you put before me. On this last issue, Mr. Dratel, so we have it clearly in mind now, can you maybe give me the kind of question or questions that you believe you could ask that you believe are not objectionable and otherwise comply with the rules of evidence and then let's get them on the record. And we'll find out what kinds of issues we have so we can think about them. Question number one? MR. DRATEL: Question number one is, you reached a conclusion based on your investigation that there was probable cause to believe that Mark Karpeles was behind the Silk Road as an operator and was using it to sell narcotics, essentially, what's in the affidavit. Page 542 Second would be, what kind of sources did you have for that information. And I would lead him saying you did your own investigation, you did a lot of Internet research, you had confidential informants, your own research, other collection by your colleagues. And then there is a whole range of information that he collected on his own through his own Internet research, which I would go into. THE COURT: "He" being the witness? MR. DRATEL: Special Agent Der-Yeghiayan, yes, that he did, and it's really Internet research that he did, and then I would just go through that with him a little bit. THE COURT: Hold on. Let's take that, okay. Let's not skip through that too quickly. I want to understand what you want to do with it. MR. DRATEL: Sure. THE COURT: I understand the type of information, you want to get a list of source types, right? So that includes, for instance Internet, confidential CI, confidential informant, etc., that's a source type. Then what's the next thing you want to do? MR. DRATEL: The next thing I wanted to do, and, your Honor, just so we're clear, because I usually don't see the need for this given how we practice in this district, but obviously I'm going to ask for it specifically: That there be no communication with the witness from the prosecution team in any respect because I am now previewing my cross, 615. Page 543 THE COURT: So to the extent that anything would be done differently -- there are things done with witnesses all the time, but they shouldn't be talking to him about the specific content of his testimony; I wouldn't expect anybody would in terms of these things. But to the extent they're going to have the kinds of conversations and communications they would normally have, then I'm not going to preclude that, but they shouldn't be preparing him on your cross. MR. DRATEL: That's right, or on the redirect because while someone is on cross, they shouldn't be talking -- THE COURT: I have no reason to believe they won't fulfill their obligations. I'm not going to give a special instruction. So you're going into he develops his own information. MR. DRATEL: Right. This is it: That the Silk Road website, from visiting the Silk Road website, I'm quoting him now, I know that this same software platform used by bitcoin.talk is used to operate the discussion forums on Silk Road. Page 544 THE COURT: The same software platform? MR. DRATEL: Correct. You can ask that in a way that is simply getting out a factual question, right? THE COURT: Let's talk about the nonhearsay way of getting at that which is, Are you familiar with bitcoin.talk, are you familiar with that software platform, are you aware of any similarities between that and the Silk Road platform, right? MR. DRATEL: He says based on my training and experience, this platform is not widely used by forum administrators. And then he reached the conclusion that the forums were likely set up by the same administrator; that is, Karpeles. And there's more to it, which is, both platforms, the Silk Road and bitcoin talk.org use something called Mediawiki version 1.17, and this is not an updated version, but the same exact version, even though the software has been updated since the 1.17 version. So he concludes I believe that Karpeles has been involved in establishing and operating the Silk Road website. And then he goes on to say in the affidavit that Karpeles is using Silk Road to increase the value of bitcoin because Silk Road generated a huge source demand for bitcoin. Then he says Karpeles has the technical expertise and experience necessary in order to establish and operate a large commercial website such as Silk Road. Further, the fact that the Silk Road relies on a highly complex system for processing bitcoin strongly suggests that it was designed by someone with extensive technical expertise related to bitcoin, which Karpeles, being the owner and operator of a major bitcoin exchange and bitcoin discussion forum, clearly has. Page 545 He also talks a little further about based on training and experience, I believe it is likely that Karpeles has worked with others in establishing and operating the Silk Road website because the postings on the silkroadmarket.org are signed Silk Road staff and written in the plural first person. Then it points to some investigative stuff. He did some other subpoenas that went out. THE COURT: There's a bunch of that that you can get at in a way that does not invoke any of the hearsay issues that we're talking about. MR. DRATEL: That's right. I'm just -- THE COURT: I understand. MR. DRATEL: But there is one piece of hearsay that I don't think it's hearsay based on my purpose, which is not with respect to the affidavit because I'm trying to go through this so we get all of this out of the way right now. THE COURT: Yeah. MR. DRATEL: But a little further on, in the context of sort of DPR and the context of more than one DPR, there was an interview done by a journalist named Andy Greenberg of DPR, someone claiming to be DPR, in August 2013, right at the same time. And in the interview, DPR says no, I bought the site from -- and I'm not going to go into that, that he bought the site from someone else and all of that, I'm not going to go into the hearsay -- but just the fact that in that interview, the person who claims to be DPR to Andy Greenberg says I'm not the first DPR, there were other DPRs before me. And Special Agent Der-Yeghiayan says in an email that sounds very much like Karpeles. That's what he says, that the person in that interview -- Page 546 THE COURT: And so your point is that Der-Yeghiayan reads -- that's the Bloomberg article? MR. DRATEL: Forbes. THE COURT: So Der-Yeghiayan reads the Forbes article that has this statement in it, and I've actually run across that, and you want to bring out that statement. MR. DRATEL: His conclusion, his conclusion that sounds very much -- THE COURT: You want to bring out the statement and the conclusion he draws from that? MR. DRATEL: Right. THE COURT: Tell me now, give me your argument as to why that's not rank hearsay. MR. DRATEL: Because it's his conclusion that it sounds like Karpeles based on his investigation. It's not whether the statement is true that there were other -- it sort of informs his conclusion and it buttresses it. Page 547 THE COURT: There's a way of getting at the "sounds" that doesn't bring out the statement, of course, so I need to understand the statement. Because the way to get out the fact that he sounds like Karpeles could be, Did you read the article? Yes. Did it -- let me finish it so the record is clear about the way it could be brought out. Were there words that were reported to be by DPR? Yes. Did you draw any conclusions? Yes. What was your conclusion? That it sounded like Karpeles. That doesn't require getting into the statement. So if you're going to get into the statement, tell me why, in terms of your argument, that's not rank hearsay. MR. DRATEL: You're right. I agree. Playing it out, that's correct. THE COURT: All right, so you could do it that way. MR. DRATEL: That's my purpose, not to get into the other stuff that we got into. THE COURT: So what you'd say is was there a Forbes article? In the Forbes article that you read, did you read it -- did it purport to have an interview with DPR? And did you draw any conclusions from that? Yes. What was your conclusion? X. MR. DRATEL: Right. Page 548 THE COURT: Okay. MR. DRATEL: In a leading way. THE COURT: What's that? MR. DRATEL: In a leading way. THE COURT: I'm playing out a nonhearsay way to do it. And now I want to get the government's view. And I am going to allow these issues, of course, to evolve over the next few days because we're all dealing with this right now for the first time. If you come up with additional questions, Mr. Dratel, I'm not going to prevent you from asking them, nor will I prevent the government from further refining its position. Mr. Turner, what's your view about these pieces? If you can take them in a granular manner, that would be helpful. MR. TURNER: Sure. Overall, I certainly understand what your Honor was saying at side bar that in terms of this being the core of the defense, that the defense wants to argue that there was somebody else running the site, but it just has to be done through competent evidence. And the fact that a witness at one time believed there was probable cause that somebody else was running the site, that in and of itself is not evidence; it's not competent evidence. And there is no inconsistent statement that's been drawn out that provides a justification to use that sworn affidavit to try to impeach the witness. Page 549 THE COURT: Why isn't an investigator who says I received the following four pieces of information, I took the following action based upon that information -- it doesn't have to be in terms of belief, not belief, when you file an affidavit in support of a search warrant, you're taking action based upon that information. In the government's view, is that line of approach acceptable or do you also oppose that line of approach? MR. TURNER: It's not evidence of anything. THE COURT: The investigator receives -- I received four pieces of information. MR. TURNER: Right. THE COURT: I then took the following act based upon those four pieces of information, that's evidence of four pieces, correct? MR. TURNER: The government's view is what should be the focus of the defense here is the four pieces of information whether -- THE COURT: And the act. MR. TURNER: I don't know what the act might be. THE COURT: If the act is to walk to a judge and get a warrant, that's an act. MR. TURNER: If the act is simply an assertion that this agent believed there was probable cause that someone was operating a website other than Mr. Ulbricht at the time, that assertion, that belief, that is not competent evidence of anything. Page 550 THE COURT: The act of "What did you do next? I sought a search warrant without the statement of law as to probable cause." MR. TURNER: Right. So that act would only be evidence that the agent had that belief at the time, but again, that belief isn't evidence of anything. If the defendant is trying to prove that there was somebody else operating Silk Road, they can do that by focusing on the underlying evidence itself. And then the question becomes, What evidence is admissible? THE COURT: Are the four facts admissible? MR. TURNER: So, for example, the report of a confidential informant obviously is clearly hearsay. THE COURT: Hold on. We're not going into the content of the report. We're going to say what information did you receive, just like he's testified for a day about the information he developed about the website itself. MR. TURNER: But there, your Honor, it was all facts that were being elicited. Here, it's just a belief of the agent. THE COURT: No, I'm moving aside from the belief. I'm taking the facts. So he says there were four facts. I read X or I did Y or I heard this. And he doesn't go into content. I had a communication; I had a visual sighting on some website. I have my four facts, can he list those four facts? In the course of my investigation, because you don't want him to skip over August, right, or April, I mean, that's part of what you've been bringing out. Page 551 MR. TURNER: It depends on what it's being offered for, your Honor. If, for example, what that information was being offered for was to show some sort of inconsistency that he says now that he never believed that anybody but Ross Ulbricht -- THE COURT: Isn't it an ultimate inconsistency? MR. TURNER: No, your Honor, because in order to prove that, the defendant needs to rely on competent evidence. In order to prove the ultimate inconsistency that it was someone else running the site, if that's what they're trying to prove, they have to prove that through competent evidence. Then it becomes a question of the individual pieces of underlying information that the agent relied on in his sworn affidavit, for example, which of those are admissible. THE COURT: Let's take a different example because you and I, our minds are not meeting here, I want to move away from the word "belief." I want to focus on analogous types of evidence as to that which we have gone over here so far with this witness. And if analogous types of evidence were reviewed by this witness and he lists those analogous types of evidence as among those that he reviewed, he can do that, right? Page 552 MR. TURNER: Right. THE COURT: I reviewed X, I reviewed Y, I reviewed Z. He can do that, right? MR. TURNER: Right -- it depends, if I may. So, for example, the forum software, that is a fact, and if the defendant wants to bring that out through this witness' testimony -- isn't it true that Silk Road, the forums operated using a certain version of forum software? Do you know that to be a fact? Did you personally observe that? Those are facts that this witness can competently testify to. THE COURT: Presumably, he might have information about the bitcoin.org. Did you become familiar with the software platform that bitcoin.org relied upon? Yes, I did. And did you compare that to the Silk Road forum software platform? Yes, I did. Did you draw any conclusions? Yes, I did. What was your conclusion? It was the same thing or similar. He can do that. MR. TURNER: Yes. Those are personal observations of this witness. He's made no hearsay issue -- THE COURT: Here's what we'll do: First, I will elicit from you whether there are any other bases upon which you sought to object to the testimony so I get a full view of your objections. Page 553 Then I want you to find a case for me, or cases, because if what you're saying is supported and it's the way that the law works, then there ought to be oodles of cases. I feel like what we're talking about is analogous types of evidence that would be described in very similar ways, but there may be something that I am missing -- MR. TURNER: We'd be happy to brief it. THE COURT: -- at 4:30 on a Thursday. It does happen. Tell me: Are there any other bases apart from this one that you just described? MR. TURNER: Other than about confidential informants, as I mentioned at side bar. THE COURT: So, the way I would articulate back to you what I understand your concern is or your objection, is that underlying the witness' statement or testimony, potential testimony about why he took certain action which is seeking a warrant, underlying that are or information which he believed were facts and based upon which he took certain action, and you dispute the reliability of those facts and you believe that those facts are themselves based upon hearsay. Do I have your point right? MR. TURNER: I'm not sure if that captures all of it, honestly, your Honor. There are a couple of points, and I think it would probably best if, at the end of the day, for us to lay this out in our papers. Page 554 I think one is certainly hearsay issues to the extent that basically what the defense is trying to draw out are hearsay assertions that were proffered as support for probable cause in a search warrant affidavit, that's not competent evidence. THE COURT: He's not going to go into the content of the communications. He would say I have these four types; I took this act. MR. TURNER: I understand. Then our larger concern is, the witness' act is irrelevant, what this witness did is irrelevant. THE COURT: I don't think it's irrelevant because if he pursued a target of this conduct and it wasn't the defendant, I think that's directly relevant to the defendant's theory of the case. MR. TURNER: My point is, your Honor, what the defense is trying to prove here is not simply that this agent pursued another target. The defense is trying to argue that this other target is the real DPR. THE COURT: They're trying to raise a reasonable doubt as to whether or not the defendant is the real DPR. MR. TURNER: But that is the assertion they are trying to prove, so that's why the hearsay concerns we have -- THE COURT: How else do you do it? Page 555 MR. TURNER: -- are so acute. The way the defense does it, your Honor, is by relying on competent evidence. So, for example, if they want to point to the fact that the Silk Road forums were based on a certain software that Mark Karpeles also used, that has nothing to do with what the agent did or didn't do or whether a search warrant was sworn out or not. It's a simple fact, and this agent observed that fact and can testify to it. It's a completely different matter for the defense to say, well, didn't you hear from some confidential informant or hear from some other witness certain information that led you to believe that Mark Karpeles was the person behind it and then go to a judge with a search warrant sworn out? All of that is being offered to try to prove that someone else was running the site and that is clear hearsay being offered for the truth of the matter. THE COURT: It's an inference. There are certain facts that are being posited to draw inferences. Here's what I think we should do: We should all get this transcript and read this portion of it that relates to what we have just all gone over. I think that to the extent that there's any question as to whether or not the defense has been building all afternoon a picture that Mr. Karpeles was, in fact, at least arguably a DPR, that I think has come out in spades. I think the jury understands that that's the argument. I have no idea what they think about it, but that I think is not -- that cat's out of the bag, right, and that this particular witness Mr. Der-Yeghiayan, for some period of time, was pursuing Mr. Karpeles, all of that's out. Page 556 So I don't know that what we're talking about, frankly, is particularly additive, but you folks, again, know more than I. And I very much hesitate to preclude something unless there's a very solid evidentiary basis when it goes to the heartland of the defendant's theory. That's why I want you to look at it, think about it, measure it against what's already in the record, and then present whatever you want to present in terms of a written submission. I'll absolutely read it. MR. TURNER: We'll do so. THE COURT: Thank you. MR. DRATEL: I wanted to add the identification of an alternative suspect and the conduct of the government's investigation with respect to that alternative suspect is core Brady in so many cases, and we'll brief that for the Court. THE COURT: In terms of Brady, the very fact that we have all this 3500 material is Brady. If you think it's Brady, then it's there. MR. DRATEL: Yes. I'm just talking about relevance. I agree with the Court, it couldn't be more relevant. And the question of competent evidence, the Court has navigated that, but we'll address it in the papers. Page 557 THE COURT: I'll tell you, it raises some issues that I would benefit from people's writing things down so that I can sit there and I can really go through it very carefully. MR. DRATEL: I'm saying, we will submit something as well, your Honor. THE COURT: If you're going to change what you're doing, let us know so we're not ships passing in the night. MR. DRATEL: Correct; I agree 100 percent. THE COURT: I am sorry that this occurred in terms of cutting things short, but I think it was necessary in light of this particular issue. We'll come back on Tuesday morning. Is there anything else that we should know about that we should preview for next week? And we're going to need to come up with a solution for that monitor because I can't see Mr. Ulbricht's face. I like to see actually everybody's face. The Court looks around. I can see Mr. Howard's face because he's closer. I don't need to see Ms. Lewis' face. MS. LEWIS: I'm fine with that. We can put it in between. MR. DRATEL: We'll figure it out. THE COURT: I had a note to myself a couple of times. MR. DRATEL: Let me review what I have left. And if there's something else that I think needs to be previewed, I'll include it in the submission and figure it out. Page 558 THE COURT: Anything from the government's perspective? MR. TURNER: No. THE COURT: What we're going to do, I'm also going to provide next week, it's likely to be Wednesday, a set of the draft jury instructions. You folks will then be asked to go back and to go through them using comments with Word so that I can just look and see what you don't agree with. We're actually working off of your draft because your draft is off of one of my prior drafts, so actually I think it's working okay that way. Tomorrow I have a full day with a million lawyers in this room, so you'll need, unfortunately, to at least clear the tables and put things someplace safe. MR. DRATEL: It will be pristine. THE COURT: Terrific. I don't mean the jury room. Well, you can't go in the jury room. We're adjourned. Thank you. See you Tuesday morning. THE DEPUTY CLERK: All rise. *(Adjourned to January 20, 2015 at 9:15 a.m.)* * * * Page 559 INDEX OF EXAMINATION Examination of: Page JARED DER-YEGHIAYAN Direct By Mr. Turner . . . . . . . . . . . . . 366 Cross By Mr. Dratel . . . . . . . . . . . . . 421 GOVERNMENT EXHIBITS Exhibit No. Received 133A . . . . . . . . . . . . . . . . . . . 370 128D . . . . . . . . . . . . . . . . . . . 386 128F . . . . . . . . . . . . . . . . . . . 387 201H . . . . . . . . . . . . . . . . . . . 390 201I . . . . . . . . . . . . . . . . . . . 391 201J . . . . . . . . . . . . . . . . . . . 393 201K . . . . . . . . . . . . . . . . . . . 397 201L . . . . . . . . . . . . . . . . . . . 399 201M . . . . . . . . . . . . . . . . . . . 401 130A . . . . . . . . . . . . . . . . . . . 403 134, 134A . . . . . . . . . . . . . . . . . 405 130 . . . . . . . . . . . . . . . . . . . . 407 131 . . . . . . . . . . . . . . . . . . . . 409 Page 560 129E . . . . . . . . . . . . . . . . . . . 419 DEFENDANT EXHIBITS Exhibit No. Received B . . . . . . . . . . . . . . . . . . . . . 455 Page 561 Page 562 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 20, 2015 11:00 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Sharon Kim, Government Intern Page 563 *(Case called; in open court; jury not present)* MR. DRATEL: Thank you for your accommodations. THE COURT: These things happen. Too bad it happened to late at night for you, but here we are and it's all set at this point. It actually did have the advantage -- please be seated, all of you -- of giving me some additional time to go through some matters. I've got one and then possibly a second matter raised by the government in a letter this morning to go over. The main matter that I wanted to address before we start is the evidentiary issue left over on Thursday, which was the subject of the significant letter submissions that I received on the 19th from both sides. Are there other issues apart from the one raised this morning and the other that was the subject of the significant submissions that you folks want to raise? I just want to get a sense of how many things we need to address before we begin. MR. TURNER: There are three others. THE COURT: Are they short or longer? MR. TURNER: Two I think are fairly short, two in particular. One of which we'd like to address at side bar. THE COURT: Is that the one from your short letter? MR. TURNER: There's an additional one. THE COURT: Then is there any that you can otherwise raise and we'll knock those off and get them done? MR. TURNER: Sure. One is very short. We think an instruction should be given to the jury at some point that any redactions they see in the exhibits should not be taken to mean anything. They're generally to protect private information that might appear in the documents. Page 564 THE COURT: Mr. Dratel, do you have any opposition to an instruction along those lines? MR. DRATEL: No, just that it's not relevant. That's why it's redacted. MR. TURNER: And another issue we wanted to raise is during cross-examination on Thursday, the defense asked Special Agent Der-Yeghiayan about whether there were restrictions about what was sold on the site, that there were no assassinations, there were no credit cards, stolen credit card information. And as your Honor is aware, your Honor ruled originally that the government cannot introduce evidence of uncharged criminal conduct that occurred on the site, and we believe that the defense's question has opened the door to that. There were guns that were sold on the site. There was counterfeit apparel. There was stolen -- there's pirated software, etc. THE COURT: Let me ask you about that because one of the reasons for the Court's ruling was not only relevancy, but it was also that the basis for getting that information in required, I believe in some instances, getting through the hearsay objection for the photographs of the website which indicated the narcotics, that there's a coconspirator exception which the Court made rulings on. But for things like counterfeit Gucci belt, the question is, if you're going to say that counterfeit things were, in fact, sold versus there were advertisements such as X, I think there's a hearsay problem. If you say there were counterfeit things sold, I think we run into this problem. If you're going to say were you aware that there were advertisements for the following things and leave that open, that's a different alley. Page 565 MR. TURNER: There are a couple of points: First of all, I think the coconspirator exception would apply to the same extent the coconspirator exception doesn't have to apply to a charged conspiracy, it's just any conspiracy. And we continue to take the position that these statements are not even offered for the truth. It would be akin to somebody posting pictures of a grocery store with the items on sale and the prices. These are not statements, but they're evidence that there's something being sold there as reflected in the advertisement. They're offers. They're not statements with a truth value. THE COURT: That's I think the second avenue that I was opening up. My suggestion is, if you're going to say these are the things that were advertised, you were asked about certain goods and services that were not being advertised, were you aware of other things that were being advertised other than what we talked about? Yes, such as these types of advertisements. Page 566 MR. TURNER: Right. THE COURT: Are you going to go any further than that? MR. TURNER: No. We can stick to advertisements or we can simply strike the testimony that was already admitted and we don't have to get into those other goods, but we do think the defense opened the door to that sort of evidence with that questioning. THE COURT: Mr. Dratel, do you have a response to that, first, whether or not we eliminate it by just striking the information elicited as to what was not sold, just on the basis with sort of a short statement that you heard testimony about what may not have been sold and the only thing that's really relevant here is information relevant to the charges. That would be one way of handling it, and not getting into the opening of the door for the other pieces. MR. DRATEL: Right. I think with respect to opening the door, though, it didn't open the door in the sense that saying what is not permitted on the site, which was accurate, does not open the door to what was permitted on the site. So in other words, the government -- it's not that the testimony was inaccurate or misleading in anyway because I didn't say that anything that the government wants to put in was not offered on the site, only those specific things that were not allowed on the site. Page 567 THE COURT: I do remember the questioning because I actually had the same thought about it falling into the opening of the door for these other pieces. One of the implications was that really bad things, other kinds of bad things were not offered on the site, for instance, things which, to pick up on a theme I think has been developed, could not harm people; that as we have seen from the signature line of certain chats, the drugs don't jump off the table and harm anyone. So I think by implication since those documents are in, the question of whether or not guns were being sold, I suppose you could argue that they don't jump off the table and hurt someone either, but it's a little further afield. It's potentially opened. Why don't you tell me whether or not you'd be willing to strike the line? I would do it in a way that is very I think very light, which is you may have heard testimony about other goods and services that were or were not sold on the site. What's relevant to you, ladies and gentlemen, of the jury is the evidence that you have and it's for you to weigh that evidence as to what has been sold on the site. MR. DRATEL: Can I think about that for a little bit. THE COURT: Yes. The other issue, was there something else, Mr. Turner? MR. TURNER: There's a third issue we'd like to raise at side bar. THE COURT: Right. We have two side bar issues. Then let me deal with the issue which we have all spent I assume a great deal of time on over the weekend. And as is the case with rulings like this, I have read the cases which you folks have presented me with, for which I thank you, and also did rather exhaustive research on our own to come up with what is the right way to analyze this evidentiary issue. And I'm speaking now about the evidentiary issue left over from Thursday afternoon. I'm going to call it the MK issue for the Mark Karpeles issue, but it also can relate to something more generically described as an alternative perpetrator issue. Page 568 I have read the letters submitted by the parties. I have read the cases and I also went back and reviewed the transcript of our prior proceedings. One thing I would note is that the prior transcript did convince me that there were, having now decided how to analyze this issue properly, there were all kinds of things to which the government probably should have -- undoubtedly should have objected earlier and we would have ripened this issue before it had gotten so far down the road. Part of the confusion here is trying to differentiate between similar types of questions when certain questions weren't objected to and then others were objected to. But let's put that issue of whether there would be a waiver to the side for a moment and let me tell you how I analytically put this issue together. I want to start from the beginning, which I think is important which is asking ourselves as to any evidentiary ruling what is this case really about. This case is about whether this defendant, Mr. Ross Ulbricht, engaged in the conduct that is charged in the counts in the indictment. So then we get to what is relevant evidence? Relevant evidence is evidence which is probative of a fact in dispute and whether the defendant is Dread Pirate Roberts or was Dread Pirate Roberts at certain points in time but not other points in time is a fact in dispute. Page 569 Then we ask what's the relevance more granularly of whether the defendant was Dread Pirate Roberts? And that is because at certain points of time, there are certain pieces of evidence where Dread Pirate Roberts does certain things which the government has presented. If Dread Pirate Roberts at that moment is Mr. Ulbricht, then that leads to one set of possible inferences; if Dread Pirate Roberts at that point in time is not Mr. Ulbricht, then it leads to another. Now, a question which is, I think, floating around in here through this is whether or not the fact that there might be - and certainly the defense is arguing - another Dread Pirate Roberts, does that exculpate the defendant? Is it exculpatory, and that it may or may not. That will be up to the jury ultimately to decide. First, the jury will decide whether they believe in the defense theory, which it has a right to pursue as to an alternative perpetrator, and the alternative perpetrator, the defense alleges, is either "the" Dread Pirate Roberts or became Dread Pirate Roberts and then framed Mr. Ulbricht and turned over his identity to him at some point in time. Page 570 Now, only if the evidence relating to the Dread Pirate Roberts at a particular point in time where the reasonable inference can be drawn that it was not the defendant could it be exculpatory; in other words, you could have the defendant be Dread Pirate Roberts at one point in time, have somebody else be Dread Pirate Roberts at another point in time and had to go back to the defendant, that's not exculpatory except for the quantum of whatever the proof is in between. For instance, if the quantity of drugs, which could be a very relevant issue, takes hold during the period of time that the defendant was not Dread Pirate Roberts, that's one thing. Of course, if the defendant is shown to join a conspiracy for narcotics distribution at any point in time, a defendant is liable for all of the acts going backwards. So as a matter of law, we know this from the Gonzalez case, there are oodles of cases from Supreme Court case law that a coconspirator who joins a conspiracy is liable for the acts which occurred prior to that individual joining so long as those acts were reasonably foreseeable to the coconspirator. So whether or not the presence of additional Dread Pirate Roberts helps is a question to be determined first based upon an analysis as to whether or not there is a second - or even if Mr. Ulbricht is a first - Dread Pirate Roberts. Page 571 Now, since Mr. Ulbricht, his counsel conceded in the opening that he started Silk Road, the timing is unclear as to when and whether the defendant allegedly left Silk Road and whether or not there's a point in time when he becomes Dread Pirate Roberts before he hands over I think according to the defense theory the website. And the evidence appears to be from the government that the defendant was found at the time of arrest acting as Dread Pirate Roberts at the time of arrest. Whether that was for that one day or whether it had gone back in time and in fact covered the entire time will be for the jury to determine. So that's sort of the relevance. Now, the Court looks at relevance broadly as the Second Circuit requires under the rules under 104, but the Court also is mindful of balancing Rule 403, which is whether or not things that require trials within trials end up being unduly confusing, misleading to the jury, and so I have that in mind and I've had that in mind as I have proceeded. The evidence of third-party culpability and alternative perpetrator is admissible if there's sufficient evidence tieing a particular person or even if it's an unknown person to the offense. That's the Wade case, Second Circuit case which you both acknowledged and cited in your papers over the weekend, a 2008 case, but you do need some direct evidence of connection. That's the other point that the Wade case makes clear, because it's very possible to have suspicion as to more than one person and this apparently happens as you folks know all the time, whereas the investigation eventually focuses primarily on one and one is primarily then tried and the other may never be tried. Page 572 So the question ultimately boils down to whether this particular defendant did the particular acts which would relate to or amount to Counts One through Seven, not whether somebody else also did those acts at the same time, in effect, duplicating those efforts. So one issue is what does the defendant have that Mark Karpeles is, in fact, DPR if there's something that we're leading up to versus just trying to get that information out of the government's witness; in other words, whether or not there is going to be other evidence offered. I am mindful of Mr. Dratel's point that the timing of the turning over of the 3500 material makes certain aspects of this more difficult for the defendant because they simply haven't had time to develop all that they would have for Mr. Karpeles, but nevertheless, the defense theory has been known since at some point many months ago. It's been previewed even to the Court. So the fact of another DPR, whether it be Karpeles or somebody else, is certainly something which I assume the defense has developed to this point and, therefore, there may be lots of things which the defendant, if he has them, would be able to present as direct evidence of that theory. For instance, now, as we all understand, it's the government's burden to show that the defendant is or is not culpable of the offenses charged. The question is whether or not the defendant wants to try to rebut some of that evidence in a particular way, but it's the government's burden in the initial instance. Page 573 So, the question is whether or not the defendant has this, for instance, like chats with a third party showing that he's about to turn over the website, soliciting interest in somebody else wanting to take over the website; in fact conveying the private key, something which indicates that there was a moment when it was copied from another computer to a different computer. There might be any variety of ways which those of you who are more technically savvy than I am could use to demonstrate that, but it's the direct evidence of another DPR which is competent evidence. Now, we used the term competent evidence on Thursday and competent evidence, just to be clear, it needs to both be relevant as a threshold hold matter, which I've already now described, but it also needs to be admissible evidence under the rules and not subject to an exception under the rules. So it's direct evidence of somebody taking over the website, it's also circumstantial of someone taking over a website, so circumstantial evidence where various dots can be placed along a line and while it's not drawn in between it, a reasonable juror could draw the inference would be competent circumstantial evidence. Page 574 It's important, and this is where the difficulty comes in and it's a difficult issue for trial judges everywhere, to distinguish between what is speculation and what is circumstantial. There's a difference between what is circumstantial evidence and what is purely conjectural or purely speculation. There's a lot written by a lot of courts on where an inference becomes conjecture or where an inference is reasonably based on fact. The point is that the logical inference must itself be based on otherwise admissible evidence; otherwise, it does become conjecture. So there is lots of case law, which we have now all had an opportunity to slow down and read, which indicates that a person's subjective beliefs is simply speculation. There are certain instances where subjective beliefs may be admissible. Those are not pertinent here. That is, for instance, in certain instances not going to an ultimate conclusion of a case where an expert witness can offer certain opinions. Indeed, lay witnesses can also offer certain opinions, but they can't usurp the fact-finding role of the jury. So let's go back to our umbrella example. It's certainly okay for witnesses to discuss on the witness stand -- this is now the circumstantial evidence example I raised during the early part with the jury -- I saw individuals enter the courtroom with raincoats, I next saw them enter with umbrellas, I saw that there was water dripping off of the umbrellas. Those are facts which the witness is seeing. The witness can't say I know it's raining or I believe it's raining because that is ultimately for the lawyers to argue from the various facts which are put in as inferences. Page 575 So this is where we get to the first part of -- and I'm going to give you folks a list of what's okay and what's not okay, it's not all not okay and it's not all okay -- of Mr. Der-Yeghiayan. What Mr. Der-Yeghiayan thought and believed it's clear to me, having now reviewed the cases very clearly and analyzed from the beginning what is competent evidence and what is incompetent evidence, that his thoughts and beliefs are irrelevant. I've also gone back through the earlier portion of the transcripts and, in fact, the government stayed away from thoughts and beliefs, but he's been brought into it a lot on cross. The government did not object to numerous, numerous instances where he was asked about his thoughts and beliefs, and I think this led to the confusion. Let me just give you folks a cite of the Johnson case at 529 F.3d 499 at pin cite 501 and also the Garcia case, and there are a number of others which stand for this proposition. This is an especially important proposition when you're talking about an investigator or a special agent because the redirect examination that could lead from this is clearly error and you can't have one side, one-hand clapping. Page 576 The clear error is the following: If allowed to say I believed at one point in time that Mark Karpeles was the DPR, and what did you base it on? I based it on the following four sources of information, the redirect becomes, Did there come a point in time when you ceased to believe that? Yes. And who did you become a believer in in terms of their guilt? I believed it was Ross Ulbricht. Can you tell me now why? Yes. Because of the following 27 pieces of information, which then become essentially a summary statement that the government would normally do during its closing arguments. That kind of conclusory summarizing testimony as to drawing inferences for the jury that the jury would be drawing usurps the jury's fact-finding role and is clearly not relevant. What is relevant is direct knowledge and responses to that direct knowledge. For instance, before I go into probable cause, let me say that it's error for the agent to testify about opinions regarding any person's culpability, particularly clear with respect to the defendant, but the same principles apply to third parties. And that is true under 701 and the Garcia case I mentioned is a Second Circuit 2005 case, the Grinage case, another Second Circuit case; the Dukagjini case, a Second Circuit case. We're not the first court to have confronted this question. And then also the Carmichael case which is a Second Circuit case from 2005 where the Court then talks about the difficulties of opening the door in that kind of case. Page 577 Let's talk about probable cause. In terms of probable cause, there have been other instances where individuals have been asked whether or not there was probable cause in their view, and that has been precluded across the board on the basis that it's a legal conclusion; that the concept of probable cause is a legal concept. Is there probable cause to believe a crime has been or is about to be committed? So it asks for an answer to that legal conclusion, and so whether it's put into the form of a statement, "I believe that there's probable cause" or in terms of a physical manifestation of that, "I sought a search warrant implicitly because I believed there was probable cause," that is similarly based upon the legal conclusion. Now, with all of that said, as we all know, there are a series of cases which are quite clear that the defendant is entitled to present a defense theory. There is a defense theory here that's clear that the defendant is pursuing as to an alternative perpetrator and he is certainly allowed to present competent circumstantial and competent direct evidence supportive of those theories, and I am in no way precluding the defendant from presenting a witness who may be able to suggest that he or she knew the real Dread Pirate Roberts and it wasn't the defendant or whatever various ways this could be shown. Page 578 And there are certain cases that are inapposite to this case but that are supportive of it, of that principle. The Alvarez v. Ercole case, in that case, there was a report of another suspect. The issue there was that the lead for the other suspect was never pursued. Here, that's not the issue. There was an investigation that was doing whatever it was doing, and it was remanded on the basis of a habeas petition that they should have allowed it to be inquired into not the truth of whether that other person was guilty or not, but of the adequacy of the investigation. In the U.S. v. White case, which is a 2012 case, in certain instances, that case indicated that the charging decisions could be admissible. There, there were other occupants of a vehicle who were charged with possessing the very firearm that then the defendant was charged with possessing. It's not apposite. And then the Wade case we talked about, the Wade v. Mantello case is supportive of the Court's view. In terms of the Arbolaez is a case that we found which is at 450 F.3d 1283 at 1290, and it's an Eleventh Circuit case, 2006. That's another case talking about probable cause in connection with an investigation being inadmissible hearsay and the statements only allowed -- if they were allowed in, it would be only for the purpose of showing some amount of truth. Page 579 So here are the questions, which, based upon all of these principles of law, appear to the Court to be clearly off limits, and then I'm going to give you the ones which I think are on limits. Off limits are things such as the following, these questions or reasonable derivatives of these questions: Did you suspect Mark Karpeles? The word "suspect" is a conjectural suspicion. Now, I will say that was asked in spades with no objection by the government earlier on. It was asked two or three times on Friday, but we'll get to what we do in terms of the government's application in its letter to strike, which is somewhat complicated. But did you suspect Mark Karpeles? There should be no further questioning into that. Did you believe Mark Karpeles was DPR? There should be no further questioning into whether or not this witness believed -- the dots can be drawn, but the belief he needs to stay away from. Do you suspect Ross Ulbricht? Do you believe Ross Ulbricht was DPR? Similar, the same witness can't do one, he can't do the other. Does he suspect that Mark Karpeles operated Silk Road? Does he suspect? Does he suspect Mark Karpeles did not operate Silk Road? Both of those are equally off limits. Any descriptions of belief that he has are off limits. However, what's not off limits are things like: Did you see X? Did you do Y? Did you investigate X? Yes. No. Did you see X? Did you see Y in connection with that work? Page 580 Now, the interview, this is now the Forbes interview we talked about that on Friday, and that is hearsay, and I don't think there's much of a debate about the content of it being hearsay. Whether or not this particular witness believed it sounded like the man on the moon, it doesn't matter, or that he believed it sounded like Karpeles doesn't matter because that's his subjective belief. Now, in terms of the offer, the offer to provide, this is the Karpeles offer, through his lawyer through another AUSA etc. to provide law enforcement with information as to who the real DPR was is also not relevant. The offer is the fact of the offer. That's the only point of that, because we know that there was no information. We know that Karpeles did not provide, based upon the government's proffer, he never provided that information. So it's not as if there's some secret name that comes out. So the fact of the offer itself is not relevant to a disputed issue of fact. It is not a disputed issue of fact relevant to this defendant's culpability whether or not an offer was made by somebody else to potentially divulge information. And it's really a way of, I believe, getting out whether or not Karpeles had inside information about Silk Road. If he did, he did, but that's a separate question from whether or not Ross Ulbricht can be tied himself through competent evidence to Silk Road in the manner the government has been suggesting. Page 581 In terms of the 807 and whether or not that gets over hearsay, first of all, I find that the fact of an offer upon analysis and taking it apart as to what each segment is for is irrelevant, but is it probative? Is it more probative than anything else that can be offered? The answer is no. It's really inviting the jury to speculate. And the other issue is that Karpeles was self-interested in making any offer at the time and, therefore, it's unclear whether he actually had any information. So the fact of the offer is suggestive of a fact of real and potentially inferentially reliable information and Karpeles -- there's no indication that he would have provided that. Now, what would be okay: Any chats on the website that DPR was handing off the website or that Mr. Ulbricht, during the time that he was in charge of Silk Road by his own admission or by his counsel's assertion, was handing off the website; evidence as to whether or not, for instance, Ross Ulbricht, when he was being viewed by law enforcement and they were tailing him, which this information has some information about, he may have limited information, but whether or not Ross Ulbricht was going to work, for instance. Was he going to an office, was he doing something else, does he effectively have an alibi defense? Are there reviews of bank accounts that reveal information that indicate payroll coming in from a third party? Is there evidence that another account was receiving Silk Road commissions looking at the account numbers and tracing the numbers through? Page 582 He can challenge the recollection of the website, challenge the buys, challenge the facts relating to the arrest. He can also seek to introduce evidence that others were tied to the servers; that there were other individuals who were leasing the servers; that Mark Karpeles or somebody else was leasing the servers; that Mark Karpeles did any number of things, X, Y, Z; that Mark Karpeles had a website if he's able to show it through a witness with competent technical evidence that the website had certain aspects of its platform that were replicated in the platform of Silk Road, that would be fair game. There are other questions which were asked which were fairly asked, which is, was Mark Karpeles running MtGox? That's perfectly appropriate. Many of the questions that Mr. Dratel asked were absolutely appropriate and are supportive of the defense theory. The questions that were not appropriate were the ones that strayed into the words "belief" and "conclusion," but where they were simply asking about facts, they are perfectly appropriate. *(Continued on next page)* Page 583 THE COURT: So what we'll have to do -- and that's the Court's ruling on this. Much of what, as a result, the defendant wanted to go into in terms of exploring the search warrant application is off limits, because the very question that was to be asked, which is what are the four sources of information that you had, X, Y, Z, and then, based on that, what did you do next. Now having reviewed the cases -- and they seem to be clear in this regard -- so long as he is able to present the witness -- the defendant is able to present direct evidence of his own defense of another perpetrator, getting the speculation of a third party, even the investigator, is an improper way to proceed. So those questions, in that way, are off limits. But the other questions of direct evidence through this witness, who had a lot to do with the Silk Road website, so if he happened to look at all the chats and looked at all the chats of DPR and/or any account associated with this witness, he can be crossed on whether or not there is clear evidence of a handoff. And the jury will then be given the opportunity to draw its inference as to whether there was or was not a handoff. This witness cannot say whether there was or was not a handoff, but he could certainly present evidence in that regard; there is no doubt about that. What we should do, I think, is there are some questions. I've got a whole bunch of them that are flagged here. I am happy to hand over my copy of the transcript to counsel for everybody to review. You need to figure out, to the extent anybody wants to go back on certain Q and A's and to the "belief" questions and the "conclusion" questions, which were allowed to go, I don't want to just do a global strike because many of the questions were fine. So the question is going to be which ones do you want to strike and does the government have a view as to how to do this without creating more problems? Page 584 So I'm not going to do it when the jury first comes out. I will take it up at another time. And I would like it to be very specific and have you folks confer on it. But when I flagged things, I flagged things which I think are also appropriate. You will see, based upon what I just said, what will jump out as you as unobjected-to questions that, based upon the Court's review of all the case law, I now believe would have had appropriate objections sustained but they were let go. So let's take it step-by-step because I don't want to eliminate things which the defendant elicited fairly, and we have to be careful as we proceed now that we do have a live objection. All right. Mr. Dratel, I know you don't agree with my ruling, but do you understand the parameters that I have set? MR. DRATEL: I think so. I have to say, though, that with respect to the offer by the attorney, it is not about -- it is not about whether he actually had information. It is the fact that someone who is under investigation is offering to implicate someone else in return for immunity from all charges that the government could bring against them -- money, business, or whatever. And also, we don't have to prove anything, and all the cases are not about proving -- Page 585 THE COURT: You don't have to prove anything. But if you want to rebut something through cross-examination, there are limits. This is part of what comes up in the 30 cases which you all cited to me and my own research. You know, of course, there are limits to cross-examination when we start to get too far afield. Because the next question will be, well, what was the outcome of the interview? And this is a witness who doesn't have that. MR. DRATEL: This is his own question -- THE COURT: No. No. No. The government will have to be able to get that. And it is too far afield. So you can show that there was another perpetrator. I am by no means foreclosing your, you know, your attempt to build that defense theory by showing that your client, or whomever had certain user names, whatever the user names are, handed off administrative capabilities to somebody else to take over that role for some period of time. MR. DRATEL: But that is not the standard in these other cases, and the reversals and Ercole, Alvarez v. Ercole is a perfect example and -- Page 586 THE COURT: Mr. Dratel, I have read those cases, and I believe that they are squarely distinguishable. I mean the Ercole case, as you know, was a very particular kind of case where not only had somebody else been implicated but somebody else had been essentially shown to be likely to be the guy. And they just didn't -- they had the name. They had the phone number, or the contact information. I can't remember how it was. And then they just failed to follow up. It is different. MR. DRATEL: But it's only different as a matter of degree. If the failure to -- it was the refusal to permit cross-examination as to that issue which was the basis for the reversal. And it was not -- and it is not a question of I have to have a photograph of DPR and it is not Mr. Ulbricht. I can establish it by inference. And just the way the government is establishing its case by inference. THE COURT: You could certainly establish it by inference, but that is why I want to differentiate between you've got to have some information that Karpeles in fact either had information on DPR or that's reliable, and/or if you are going to build Karpeles up as -- is it your view that Karpeles was not the real DPR, or is it your view that he was the real DPR? MR. DRATEL: My view is that he could be the real DPR. THE COURT: Do you have any information, other what you brought out and what is in the 3500 material, that you can proffer that draws the connection that the Wade case and the other caress say you have to have before we go off on this road? Page 587 MR. DRATEL: I can do cross-examination. I'm not required to have a witness who comes up and does that. We have other information about the fact that there are multiple -- just so it is clear what our theory is. Our theory is that Mr. Ulbricht created the website, got out a couple of month later, did not come back in at any point until the very end, was not in at the very end. He was not in a conspiracy, and he was not operating the website. The fact that he had -- what the evidence shows about what was on his laptop, fine, we will explain. THE COURT: OK. MR. DRATEL: But -- THE COURT: All of that, of course, you are welcome to explain, and you are certainly welcome to cross-examine this witness. I'll tell you. I feel very comfortable in a careful -- and with the Ercole case, it is a 2014 case. It is an unusual case because it is a reversal of a state court case. There is a remand on habeas. I read it a couple of times. But I'm comfortable. I've also read the Kiley v. White case more than once in the context of this and other cases. I'm comfortable with my ruling. Page 588 My question to you right now, so we can get going, is do you understand the parameters of what you can ask? MR. DRATEL: I think so. But I just need to complete the record just to preserve it, because with respect to Kyles v. Whitley, the Supreme Court case, Beany, the alleged alternative perpetrator, they didn't have proof. They did it all through the police investigation. They didn't have additional witnesses. They had the police. And this is combined with the police investigation issue. They are inextricable in many respects, and it is not about -- it is not just about whether it was shoddy but it is about other things that I'll get into on cross with this witness that I don't think are objectionable at all because they go to motivations and other things in terms of the investigation. So that's all part of the same piece. And I can build that by inference. I am permitted to do that by cross and by inference. THE COURT: You are permitted to do that through competence evidence through cross and through inference. The question is going to be what is appropriate for this witness to speak to, and it will be things that he perceived with one of his senses, as witnesses do, as opposed to what he may have held as a belief at one point in time. MR. DRATEL: I understand that part. THE COURT: I am not going to let them ask did you believe Ulbricht did it, tell me. And then, yes, by the way, tell me the 27 reasons why. That would be -- Page 589 MR. DRATEL: That would be his direct. THE COURT: That would be his redirect. MR. DRATEL: I am saying that would be his direct. THE COURT: No. Well, you are talking about those are inferences versus his conclusions. All right. So if you have any questions about a particular issue that you want to raise that I am not letting you raise, then present it to me, but otherwise we'll proceed with this. I'm not right now striking any of the testimony that came in. Frankly, a huge amount came in on Thursday. It will be up to really the government's burden to figure out what portions they believe are appropriately struck and then to discuss whether the defense agrees not as to whether or not they agree with the evidentiary ruling but given the Court's parameters, and if the defense does not agree with any of it, then I will just make a ruling. MR. DRATEL: There is also a waiver aspect of it. THE COURT: There is a waiver aspect of it. We haven't talked about that or briefed it. That is why I don't want to do that right now. It is complicated because it is interspersed. There are completely unobjectionable pieces interspersed with objectionable. You will be able to say Karpeles was out there. He had the computer expertise. He owns Mt. Gox. There are going to be certain things that are still going to be, I believe, in the record. We'll have to take a look at how the Q and A's come out ultimately, but there will be facts. Page 590 All right. Let's take up the two sidebar issues. Mr. Turner. MR. TURNER: Your Honor, I just wanted to make clear. In terms of -- we can look at the transcript and come up with proposed areas to strike. I just want to be able to do that before redirect, because if certain testimony is not stricken, then we would want to potentially redirect the witness a certain way to cure testimony that did come in. THE COURT: Can you have some of your colleagues help you with highlighting what you think? MR. TURNER: Yes, your Honor. THE COURT: And as little as possible. MR. TURNER: Yes, your Honor. THE COURT: I mean, there is one way of doing it which is, ladies and gentlemen, you heard the witness talking about his belief and views and suspicions about an individual. You should disregard those comments because his beliefs and views and suspicions are not relevant. It will be for you to decide. You are going to be presented with the evidence here as to this defendant and anything else that's important for you to consider, and you can decide whether or not that is sufficient to draw those conclusions yourself. Page 591 That would be one way of doing it. And then we would have to, for purposes of later on, determine if we have questions later for the jury to have read back, whether or not some of those pieces are then excised. MR. TURNER: OK. So we'll take a look -- we'll have somebody on our team take a look at that and see if we can offer specific testimony to excise before redirect. THE COURT: All right. If I understand it, there are two matters at the sidebar? MR. TURNER: Yes, your Honor. *(Continued on next page)* Page 592 *(At the sidebar)* THE COURT: All right. MR. TURNER: One is simple. One is more complicated. The simple one is if my back is turned -- *(In open court)* THE COURT: You know, I'm sorry, could you -- it is OK for you folks to talk, but could you talk outside because, actually, we have a hard time hearing because we whisper up here, or whisper lower so we can hear what we are saying here. *(At the sidebar)* MR. TURNER: So while counsel's back is turned as the case is going forward, I have heard from multiple people on my team now and multiple people in the audience that often during sidebars the defendant is turning, making contact with his family and speaking to his family in a way that multiple people have told me seems geared toward generating sympathy. So I would ask that any such communications be outside the presence of the jury. THE COURT: Can you speak to your client? MR. DRATEL: OK. I mean, you know, obviously his family is here. They are used to visiting him on a regular basis and they are not going to be able to visit him during trial because he is here. MS. LEWIS: Because of his move they are not able to visit him at all right now. They just got that paperwork. It may be weeks before they see him, including his sister who is in from Australia. This may be his only chance to have contact with her. Page 593 THE COURT: OK. I am not concerned about, so long as there is no inappropriate communication with him, just turning and saying "Hi, mom" at some point when the jury is not in the room, because there are lots of times -- now, for instance -- when the jury is not in the room. But when the jury is in the room, he should just continue looking forward. By the way, we are going to move the -- we did move the monitor. Terrific. So you will tell him. MR. DRATEL: I will. *(Pages 594 through 614 sealed by order of the Court)* *(Continued on next page)* Page 594 Page 595 Page 596 Page 597 Page 598 Page 599 Page 600 Page 601 Page 602 Page 603 Page 604 Page 605 Page 606 Page 607 Page 608 Page 609 Page 610 Page 611 Page 612 Page 613 Page 614 Page 615 *(In open court)* THE COURT: We're going to go until 1 o'clock, as opposed to 12:45. Because of the fact that the jury had to be waiting around, I have had Joe order lunch for the jury to be brought in sort of an attempt to do something for them. But we'll go right 'til 1 o'clock. At 1 o'clock I have a sentencing in here. It is a narcotics case. And so I will need to have space, probably actually on this side because it will be somebody who has a marshal there. People are welcome to stay for that but I will need room on the tables. Go ahead and bring in the jury, Joe. Oh, the witness. Is the witness coming? THE CLERK: Yes. *(Pause)* *(Continued on next page)* Page 616 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. And I want to apologize for our late start today. A couple of different things result from that. We do have lunch coming in for you folks. We will go to 1 o'clock and then we'll stop for our lunch break. I do apologize. We try not to have these kinds of things take up your time, and we'll try to use your time as efficiently as we can. We wouldn't have had that delay unless it was necessary, and I do apologize. I want to remind you, sir, Mr. Der-Yeghiayan, that you are still under oath. THE WITNESS: OK. JARED DER-YEGHIAYAN, Resumed, and testified further as follows: THE COURT: Mr. Dratel, you may proceed, sir. MR. DRATEL: Thank you, your Honor. THE COURT: Oh, one thing. I had a note to myself. Ladies and gentlemen, from time to time in documents you see redactions, which are just sort of black marks through documents. That is just because certain information is irrelevant, and so just don't even think about it. Just sort of ignore it. Proceed. Page 617 MR. DRATEL: Thank you. CROSS-EXAMINATION (Resumed) MR. DRATEL Q. Good afternoon, Agent Der-Yeghiayan. A. Good afternoon. Q. Have you ever heard of someone with a username "inlightof"? A. I have. Q. And have you ever identified that person? A. No, I did not. Q. And that was a person you were looking at at some point as DPR, right? MR. TURNER: Objection. Form. THE COURT: Sustained. Q. And we talked the other day about "peaceloveharmony," someone with that username, right? A. Yes. Q. That was someone who was, as you described it, sitting on DPR's profile for a few hours a couple of days before Mr. Ulbricht was arrested, right? A. Yes. Q. And you had asked your law enforcement colleagues whether it was them, and the people on the arrest team, it wasn't any of them, correct? A. That is the reply I got, yes. Q. And did you ever learn who peaceloveharmony was? Page 618 A. Not that I can recall. Q. Now, was there a user or someone named Mr. Wonderful? MR. TURNER: Objection. Q. Do you recall that? MR. TURNER: Objection. 401. MR. DRATEL: I didn't hear the objection. MR. TURNER: 401. THE COURT: Hold on one second. I don't know why it would apply. I will allow a few -- let me allow a few questions to develop that. MR. DRATEL Q. Mr. Wonderful was involved with Scout, correct? A. Yes, he was. Q. And who was Mr. Wonderful? MR. TURNER: Objection. Foundation. Q. If you know. THE COURT: If you know. Just testify if you know. MR. TURNER: Objection to form. THE COURT: I will allow it. You made proceed. A. Mr. Wonderful was operated by another HSI agent. Q. And was there a question -- was there a discussion between Scout and DPR about Mr. Wonderful? MR. TURNER: Objection. Form. Q. In the forums or in the private messaging system that you were able to monitor? Page 619 THE COURT: I will allow it. Overruled. A. I believe there was. On the forums you are asking? Q. No. Between DPR and Scout on the Silk Road system in one form or another. A. Later on I learned of that there was discussion between them. Q. And that was one of the reasons for a falling out between DPR and Scout? MR. TURNER: Objection. Foundation. THE COURT: Yes. So that is sustained. A. That -- THE COURT: No. That was sustained. So he will ask another question. THE WITNESS: Sorry. MR. DRATEL Q. But there was talk between Scout and DPR about whether Mr. Wonderful was law enforcement, correct? MR. TURNER: Objection. Foundation. THE COURT: Well, I think that the issue is did you actually review the communications between Scout and Mr. Wonderful? MR. DRATEL: No, between Scout and DPR, your Honor. THE COURT: Did you review the communications between Scout and DPR? Page 620 THE WITNESS: I can't recall if I did. I know there were some that were shared at a later date, but I don't know if there actually was, if I actually saw the screenshots or this was something that was told to me. THE COURT: I want you to put aside something that may have been told to you but in terms of what you recall seeing, go ahead, and, Mr. Dratel, you can ask the question in that context. Q. There was discussion between DPR and Scout as to whether or not Mr. Wonderful was law enforcement, right? MR. TURNER: The same objection. THE COURT: Well, if he knows. A. I don't recall seeing screenshots. There may have been some that were shared at a later date but I can't recall seeing them. Q. And do you recall that Mr. Wonderful and whether or not he was law enforcement, or she, was the reason that DPR took over Scout's account for awhile? MR. TURNER: Objection to form. Foundation. THE COURT: Sustained. You may re-ask it. Q. Well, DPR took over Scout's account for awhile, correct? A. Yes. Q. And wasn't that in order to investigate the Mr. Wonderful situation? Page 621 MR. TURNER: Objection. 401. THE COURT: I think the issue is do you have any information regarding why DPR took over that account? THE WITNESS: That was relayed through a source later on, yes. THE COURT: Let's put aside what you may have heard from a third, a person, a source. That's a person? THE WITNESS: Yes. THE COURT: OK. Did you see any information in connection with your review of the screenshots of Silk Road that indicated to you, at least words on a page, as to why DPR -- THE WITNESS: Took over that account? THE COURT: Took over that account. THE WITNESS: Not that I could recall. THE COURT: All right. You may proceed. MR. DRATEL: Thank you, your Honor. *(Pause)* Could you look up Government's Exhibit 126A. It is in evidence. A. OK. Q. Take a look at where it says, "Hey, gang," do you see that post? A. Yes. Q. This is July 12, 2013, right? Page 622 A. Yes. Q. So you reviewed a lot of communications involving -- withdrawn. Here it says "Cirrus," right? A. Yes. Q. And Cirrus is the same as Scout, right? A. The person that originally operated the Scout account created the Cirrus account, correct. Q. And this is kind of when they created the Cirrus account, right? MR. TURNER: Objection to form. Q. It says "post," as far as we know? THE COURT: I will allow it. A. This is about the timeframe, yes. Q. And you reviewed these; this is not when you were operating the account, right? A. This is not when I was operating the account. Q. So you reviewed a whole host of Cirrus and, before that, Scout's messages, right? A. There were other messages that I reviewed that were in the account, yes. Q. And one of the reasons you did that is because if you are going to be playing that part, you really have to know what's going on, right? A. That is correct. Page 623 Q. So let's read it: "Hey, gang, we have a new moderator going by the name Cirrus. We used to know him as Scout. Cirrus has always been dedicated to our common goals and the community at large and we've put what happened surrounding Mr. Wonderful behind us so he can come back to the team." Right? A. Yes. Q. So reading that, you had to find out what was going on with Mr. Wonderful, right? A. I was talking to that agent at the time so they had the idea -- MR. TURNER: Objection. Hearsay. THE COURT: Don't go into what your conversation was with that agent, but you could talk about what steps you took. Q. Did you go back and read posts having to do with Mr. Wonderful? A. I didn't have access to the Scout account to go back to read that. I only had access to the Cirrus account. Q. Now, the URL, the onion address for Silk Road, changed in December of 2011, correct? A. That sounds about right, yes. Q. And also around that time Silk Road instituted a new bitcoin system, right? MR. TURNER: Objection. Foundation. THE COURT: Hold on for one second. Page 624 MR. TURNER: 804. THE COURT: Well, if you know. As to everything, only testify if you know a fact. Don't speculate or guess. And so the question is do you know whether or not around that time Silk Road instituted a new bitcoin system? THE WITNESS: I don't recall about a new bitcoin system. *(Continued on next page)* Page 625 MR. DRATEL Q. I'll show you what's marked as 3505-3602 and ask you just to review the last paragraph and when you've done that, let me know. A. Okay. Q. Does that refresh your recollection that as of December 30, 2011, Silk Road instituted a new bitcoin system? A. I believe what it did is it -- it allowed multiple accounts to deposit bitcoins, so it was something that was different about the bitcoin system, yes. Q. They instituted a change? A. As far as I recall, yes. Q. Now, in June of 2011, the site Silk Road went down for a little bit, right? MR. TURNER: Objection; time frame, form. THE COURT: Hold on. June of 2011? MR. DRATEL: Yes. THE COURT: All right. If that's your recollection, you may testify. Go ahead. A. I wasn't aware of Silk Road at that time. Q. That's not my question. You know that in 2011 the site went down, right? MR. TURNER: Objection; foundation. THE COURT: Well, the foundation is only about what he -- I don't want you to say anything you don't know. At any point in time over the course of your investigation, did you learn that in June of 2011 -- did you learn whether or not in June of 2011 a new bitcoin system was implemented? Page 626 MR. DRATEL: No. It's about the site going down now. THE COURT: Do you know whether or not the site went down in June of 2011, not what you knew in June 2011, but later on did you ever learn that there had been an outage? THE WITNESS: There were posts that reflect that I believe on the forums, and there's I think articles that said that, yes. Q. So that in June 5, 2011, the website posted a message saying "Silk Road is currently closed to visitors; this will be reviewed on July first and the site will probably be reopened sorry for the inconvenience." Right? MR. TURNER: Objection; foundation. This document is not in evidence. THE COURT: I think that he's talked about his recollection. Did you ever determine whether or not the site had in fact gone down? THE WITNESS: I couldn't confirm it, no. THE COURT: One way -- did you try one way or the other? THE WITNESS: There was no way for me to. Page 627 THE COURT: It might have gone down, it might not have gone down. You don't know for sure? THE WITNESS: I don't know for sure. THE COURT: You can continue. Q. But that post was made, right? MR. TURNER: Objection; hearsay. THE COURT: I'm going to allow it. A. The post was made; yes. Q. And there were posts -- THE COURT: Let me be clear, with that particular objection, that means that the witness is testifying about what he saw or read. He doesn't know if it's true or not, but he saw a post with those words on it that had that information on it. Whether it's true or not is another question. Q. It could have been some other reason why the post was made, right? A. I'm sorry? Q. It might not have been a technical problem with the site. It could have been another reason why that post was made, right? MR. TURNER: Objection; calls for speculation. THE COURT: Don't speculate. Sustained. Q. And the silkroadmarket.org, the page that was available on the ordinary Internet that you testified about, that stopped operating in April of 2012, correct? Page 628 A. That's correct. Q. Now, with respect to forum posts, with respect to PGP keys that we were talking about, right, last week, there's no customized version of a PGP key? Withdrawn. A PGP key is generated by a computer at random, right? A. It's created when you create a new key; yes, it's created by the computer. Q. So it doesn't have any specific identifying information about the person who is creating the key, in other words, their initials or anything or numbers or any kind of -- it's not like a password where you would choose to put in the identifying information so that you'd remember it, right? A. Just on the profile itself can you -- it's customizable to enter in certain information, like a name or an email address. Q. No, I'm talking about the PGP key. A. Okay. Q. The PGP key is not like a password in the sense that you put in identifying information. It's generated by the computer? A. You're saying, like, the output? Q. Yeah, the actual key, the text block? A. Yeah. It's random digits and numbers; yes. Q. And with respect to -- talked about computers and UTC time. In fact, you yourself acknowledged in one of the chats that UTC time -- you assumed that all the computers were on UTC time? Essentially the computers ran on UTC time, right? Page 629 MR. TURNER: Objection; form, hearsay and relevance. THE COURT: Hold on one second. Let me read it. Why don't you restate the question. I'll allow a form of that question. Q. You recall a chat with DPR in which you said that essentially all our computers are on UTC time? MR. TURNER: Objection; form and foundation. THE COURT: I will allow it. You may answer. A. I believe there was a chat, yeah, that we were talking about the servers for Silk Road. Q. I'll show you what's marked as Defendant's F for identification and ask you just to review it. A. Okay. Q. Do you recognize it? A. It's a screen shot that I would have taken of a chat that was on the computer -- Q. Between you and DPR? A. No, the person that operated before. Q. And so, I -- MR. DRATEL: I move it in evidence, your Honor. MR. TURNER: I have several objections, first "the person who operated before" needs to be clarified. And if it's being offered for truth, then we object on hearsay grounds. Page 630 THE COURT: Somebody needs to hand me a copy of this document. MR. DRATEL: I'm sorry. THE COURT: That's all right. That's okay. I didn't know if I needed to look at it. I have the witness'. Let me take a quick look. All right. As of August 2, 2013, were you cirrus? THE WITNESS: August 2, I was; yes. THE COURT: All right. And how about July 23? THE WITNESS: I was not. THE COURT: You were not cirrus on July 23rd? THE WITNESS: No. THE COURT: All right. Did you take this screen shot that's been marked as Defense Exhibit F as in frank? THE WITNESS: Yes, I believe. THE COURT: And you took it on or about August 2 at the top left? THE WITNESS: That would be correct; yes. THE COURT: Was it a true and accurate reflection of what appeared on that page at the time you took it? THE WITNESS: It is. THE COURT: All right. I will allow this in, but the content of the messages themselves are not in for the truth, but you can proceed, Mr. Dratel. MR. DRATEL: Thank you, your Honor. Page 631 *(Defendant's Exhibit F received in evidence)* Q. See where it says "cirrus." It says "I always just assume we all live in UTC (or our computers anyway.)" Right? A. I do, yes. Q. And that's because essentially computers can be configured to run on any timezone, right? MR. TURNER: Objection; foundation. THE COURT: Sustained. Q. A computer can be configured so that the timezone on the computer can be anything that the operator inputs, right, the person who is operating the computer? A. That's correct. Q. Now, we talked -- you said that you had seen some messages in which the DPR PGP key had not been validated, correct? A. I believe there were times that he -- other people weren't able to validate a signed message by him, but then that would follow up with him I think reissuing another signature. MR. TURNER: Objection; hearsay. Q. You saw this on the site? THE COURT: The objection is sustained and that answer is struck. Q. But you saw that on the site? THE COURT: Why don't you reask the question and then we'll get a clean -- Q. There were some times when the signature was not valid, correct? Page 632 MR. TURNER: Objection; foundation. THE COURT: Let's start the question over again and then we'll take it one by one, because if he saw with his own eyes these kinds of things, then he can testify to it. Mr. Dratel, you may proceed. MR. DRATEL: Thank you, your Honor. Q. So you saw instances in which the PGP key was not validated from a message from DPR, correct? You saw that on the forum? MR. TURNER: Same objection; form and foundation. THE COURT: First of all, did you ever see -- were any of your messages that you tried to validate not validated? THE WITNESS: Not that I did; no. THE COURT: During the course of the time that you were using the Silk Road website, did you become aware of others who at least indicated that they had messages that had not been validated? THE WITNESS: There were times that there were posts made that the -- that another user might say that they can't validate a signature. THE COURT: Did you follow up to determine whether or not you could validate that particular message on your own? THE WITNESS: I did not. THE COURT: So you don't know whether it's, in fact, the case that they couldn't validate it or if they were just saying that? Page 633 THE WITNESS: I don't know why it wasn't validating for them at the time. THE COURT: But you saw it there? You saw the posts? THE WITNESS: I did see the posts. THE COURT: All right. Q. Government Exhibit 127B, please, if we could focus on the top part. Do you see the part right above 6:12:15 p.m. where it says "encrypted OTR chat initiated." And then it says "dread@" and there's an onion address, and it says "identity not verified." Right? A. I do. Q. And that essentially comes before every one of these Pidgin chats, right? A. I believe that, yeah, it was on every time that we initiated a chat. Q. And you said you used a program called Adium, right? A. That's correct. Q. And Adium gives you the ability to authenticate the other side of the chat, correct -- A. I'm not aware -- Q. -- in a way that can verify what's not verified on that? A. I honestly don't know if it can or cannot. Q. But you never did that -- you didn't use any kind of verification process in your chats with DPR, correct, like that? Page 634 A. No, I did not. Q. And on your side, you said that there were certain accounts that could have more than even one agent working, right? A. What type of accounts? Q. In other words, Silk Road accounts; there are certain Silk Road accounts that were operated by more than one agent? A. There were ones from time to time, yes, they were operated by multiple agents. Q. So there's nothing to tell you whether on the other side of that, an unverified chat, whether there's more than one person or who it is on the other side, correct, other than someone coming on as dread, right? A. There's no way of knowing how many people are operating that, no. Q. Now, I want to go to Government Exhibit 130, please, Government Exhibit 130, and this is the piece of paper recovered from the trash from Mr. Ulbricht's apartment in San Francisco when you searched it after his arrest, right? A. Yes, it is. Q. And it's got notes about ratings, right? A. That's correct. Q. Let's go to Government Exhibit 131, please. So if we go down to the bottom, the bottom of -- I guess also 130A, no. I'm sorry. One second. If we can enlarge that a little bit. Page 635 So this a process, going to the first post, and the posts go from bottom to top essentially, not chronologically. The oldest post would be at the bottom and the newest post would be at the top? MR. TURNER: I don't recognize this exhibit. THE COURT: What exhibit is this? MR. DRATEL: 131. THE COURT: GX 131. MR. TURNER: I see. Okay. Third page. THE WITNESS: Yes, I believe so. Q. So, the first date that this starts is in August, right, 2013? A. For this -- Q. August 11, 2013? A. Yes, I believe so. Q. And it talks about undergoing an overhaul of the ratings system, right? A. It does. Q. And this is DPR initiating it, right? A. It is. Q. And then there's another post on the 31st of August, right? A. Correct. Q. And then there's another post on the 12th of September, right? Page 636 A. Yes. Q. And these posts contain detailed discussion mostly from DPR about ideas for the ratings overhaul, right? A. They do. Q. So that's been going on as of the date of Mr. Ulbricht's arrest, it's been going on for seven weeks or so, right? A. Yes. Q. And these handwritten notes found in the trash are related to a project that DPR has been posting about for two months? A. It appears so, yes. Q. And he needed to take notes from this? MR. TURNER: Objection; calls for speculation, foundation. THE COURT: Sustained. Q. Now, an important part of your investigation was trying to find money, right, bitcoin, correct? A. Yes, it was. Q. And we went back on Thursday, bitcoin is anonymous but there's a block chain that has every transaction, right? A. Yes, it does. Q. And it's public? A. Yes, it is. Q. At some point, in October of 2012, Silk Road split some of its accounts up? MR. TURNER: Objection; form and foundation. Page 637 THE COURT: Hold on one second. Sustained. You can come back at it. Q. Did your investigation establish that Silk Road had split, based on your analysis of the block chain of Silk Road looking for accounts that could be linked to Silk Road, that Silk Road had split a main account into other accounts? MR. TURNER: Objection; same objection, form. THE COURT: Sustained. Q. At some point you identified some of the Silk Road accounts, correct? A. Yes, there were accounts we believed belonged to Silk Road. Q. That was in April 2012, right? A. I believe the date is -- sounds right, yes. Q. And part of what you're looking for is movement of bitcoins, people cashing out accounts in unusual amounts, correct, in large amounts? A. We were trying to see if we could trace the funds going in to see if it would hit something that would look like it belongs to the website and we were also trying to trace funds out of the website, too. THE COURT: Mr. Dratel, when you reach a stopping point, we're at 1:00 now. MR. DRATEL: Okay. We can stop now. THE COURT: I apologize, but we're going to take lunch now. I know we just started about 40 minutes ago. We'll come back at 2:00. We're still going to get you out on time today. We're not going to extend the day at all. You'll get out right as we had previously said, 5:00. Page 638 I want to remind you not to talk to each other or anybody else about this case. Thanks very much. See you after lunch. *(Jury excused)* *(Continued on next page)* Page 639 *(In open court; jury not present)* THE COURT: The witness can be excused for lunch, as well. *(Witness temporarily excused)* THE COURT: Ladies and gentlemen, be seated for a moment. I have a matter in this room right now. I just want to raise one thing. You folks may want to raise something and let's do it quickly; otherwise, we'll take it up just before two. What I want to raise is I see the government now is objecting a lot, as is your right to do if you believe the questions are objectionable. It is a difference from how things were being handled before. I think you'll do what you need to do, but if there's anything that people believe they can do in terms of the formulation -- now, that you know, Mr. Dratel the government is going to object -- MR. DRATEL: On every question, yes. THE COURT: In terms of form, you can refrain some of the questions and we can avoid some of that. That was not the way we were proceeding before. There was a little more leeway given to people to speak in sort of regular formed sentences, but I'm not suggesting the government doesn't have a right to object. You do. But we'll just all take into consideration as we figure out how whether it's going to continue to each question because it will take longer so you might want to pick a few. Page 640 MR. DRATEL: The government is free to do what it wants to do. MR. TURNER: I don't want to go down the same road we went before. THE COURT: I understand. I think that there are objections which are objections that you really need to make, and then there are objections where there certainly may be a legal basis for it, but the better part of valor is to stand down. You'll make your decision and what I mean, Mr. Dratel, in terms of the government being free to do what it wants to do is only insofar as anybody can object when you folks believe that you need to do so to preserve the record, and that's an important thing for you folks to do. Everybody needs to do it if you believe it's important, but there are lots of objections that are neither here nor there ultimately. You guys will decide. The rules are no different from the government than they are for the defense. Let's take our lunch break and we'll come back at 2:00. *(Luncheon recess)* *(Continued on next page)* Page 641 AFTERNOON SESSION 2:08 p.m. *(In open court; jury not present)* THE COURT: We are still waiting for one juror. Actually, I have one jury matter and I want to discuss with you folks how to deal with the struck testimony. On the jury matter, there's one juror who has got apparently issues with her place of employment which will not -- their HR policy and whether or not we can overcome this is TBD, we're going to try to overcome this -- indicates that they can have two weeks paid for jury service and then after that it has to come out of her vacation. And that may or may not present certain issues for this juror. So we're trying to determine whether or not her place of employment would see fit to make an exception in that she's already been impanelled on a jury, and it's not going to end within the time frame that she's got. If they say no, then we'll have to determine how we want to approach her about that. In discussions with counsel, the Court will discuss that with counsel, how people propose we should proceed and whether or not, if she is very concerned, whether or not on that basis we do anything about that, including replacing her with one of the alternates. That's to be determined. I just wanted to flag for you that that issue has come up today. Page 642 I have received from the government an email that was copied to counsel, all counsel, that has their proposal as to excerpts to be stricken based upon the Court's prior ruling. Mr. Dratel had mentioned before that the Court had not yet entertained arguments as to waiver, and that is correct, or any other arguments other than rearguing the Court's evidentiary ruling. Also I need to know how soon we're going to have to deal with this when the redirect is likely to begin. Mr. Dratel, let's take the last question first. How much more on cross do you have of Mr. Der-Yeghiayan? MR. DRATEL: With the exception of one question that I'll ask the Court, which is whether I'm going to go at all into the second person, I'm not sure whether I'm allowed to go at all into the second alternative suspect, whether that's something -- THE COURT: The main issue that we had dealt with was with the mises.org piece. MR. DRATEL: Right. THE COURT: If there are other aspects of it that I'm unaware of, we can take it step by step and see. MR. DRATEL: So, between an hour, an hour and-a-half I guess. THE COURT: So probably then, it's likely to be a time for break, but do you want to now preview your waiver argument? I think I understand just with the word "waiver" possibly the contour of what you're getting at, but I'd like to give you a chance to state it for the record. We can do it at the break if you'd rather not do it right now. Page 643 MR. DRATEL: I can do it at the break in a way that -- the waiver is really three parts: One is, they didn't object, and you can't put that genie back this the bottle in any respects. The second is, they're not objectionable in many respects even under the Court's ruling. And the third would be that, you know, it changes the whole nature of how an examination proceeds and that's one of the reasons why you have to object contemporaneously because then you can't go back and reconstruct it in a manner that then undoes things that you could have changed. So all of that is a factor in the waiver argument and the Court said on Thursday that it was out there already, so, you know, -- THE COURT: The fact that Mark Karpeles exists as a potential individual as to whom there is some evidence that people can draw inferences from, that would not be gone from the case. Even with the government's suggestions, there is lots of evidence in terms of questions that you asked that was perfectly appropriate in that regard. MR. DRATEL: Yes. And I think all appropriate in the context of -- not only in the context of alternative suspect, but also in the context of the conduct of the investigation, because at the end of the day, we're going to have a comparison with the investigation of Mr. Ulbricht and the conclusions that were drawn and the investigations of at least two other people and the conclusion that were drawn, and at the end of the day, the only thing that's going to be a factor for the government is something that no one can trust. That's part of the whole defense, and that's part of what these questions are about. Page 644 And it's perfectly appropriate to ask an agent and a law enforcement officer about the conduct of his investigation and how it proceeded and even -- THE COURT: I don't want to reargue the evidence. MR. DRATEL: I know, I'm just saying, the notion that now that there's no waiver when these things come in and is just -- I mean, there has to be some notion of waiver in the context of a trial in the sense of what it means to have a contemporaneous objection and what it means not to have a contemporaneous objection. THE COURT: Mr. Turner. MR. TURNER: Your Honor, the trial has gone fast. You wish you had all the law at your fingertips. I think the Court was inclined to think a lot of the testimony was admissible, which after further review is now clearly inadmissible. It's not too late for the defendant in that we're not past cross. We're still in the middle of cross. If the defense has further inquiry that's admissible that's proper about Mr. Karpeles, the defense can still pursue that, so there's no prejudice to striking the prior testimony. Page 645 And the problem with leaving it in is there's very clear circuit law that if hearsay like that comes in, the curative admissibility doctrine applies and the government can get equivalent hearsay in on redirect. So the government certainly would inquire of Special Agent Der-Yeghiayan in the same fashion that the defense inquired on cross about all the reasons that he now believes the defendant is guilty, and that would certainly be appropriate. And I think that was what your Honor wanted to avoid by striking the testimony that's objectionable that came in on Thursday. THE COURT: So here is what we're going to do -- MR. DRATEL: Just one other thing. THE COURT: Yes. MR. DRATEL: They knew full well what was in the 3500. They cannot -- it cannot be that this was not on the radar for them, then to sit by and let it all come in and then completely eviscerate the defense after the fact is unfair, and that's a waiver. They knew better than anyone what was in the context of my questions and what was in the context of Agent Der-Yeghiayan's answers. THE COURT: Mr. Turner. MR. TURNER: I would say never in a million years would I have imagined that the defense would be trying to allege that Mark Karpeles framed Dread Pirate Roberts. I don't think that was clear from the opening and that was not apparent to the government until the questioning came in that way. So the government I don't think was put on notice by the opening alone. Page 646 THE COURT: My basis for my ruling is not that the government should not have anticipated; that they may well have anticipated it. They should have objected, but they didn't. We are now where we are. We have had an objection that we have now talked about extensively, and I will strike the testimony that is indicated in the government's email to the Court, but not right now. I say that to you folks so that you can plan the remainder of your cross and the government can plan its redirect as appropriate. I do not, however, plan to point the jury to the specific Q and A's that I'm striking, unless you folks make arguments that that's what I should do. My intent, which I intend to do not right now, is to give the jury a general instruction about suspicions and conclusions that the agent reached are struck from the record and then to provide clear indication by line to the court reporter and to everyone here as to what is struck from the record, but I don't think it stands in anyone's interest to have it be put on to the screen in terms of exactly what's struck from the record. That seems to indicate taking away and giving more weight to it all at the same time. So I think it actually has issues where it compounds the problem. Page 647 But we can deal with that, the method, at another time. And when I say another time, it won't be a long time, but in terms of being able to understand what to proceed with right now, people should proceed with that view and to construct the remainder of your cross. If it goes on longer than you were anticipating, Mr. Dratel, as a result, then I understand. MR. DRATEL: I don't know that I'm prepared to do it for this reason: First of all, there are facts here and factual answers and factual questions that the government has included that should not be stricken under any circumstances. THE COURT: I have reviewed them and I do believe that what they indicated they would strike is consistent with my ruling. There are pieces that are around it, and I assume you've got the same shaded portions that I have -- MR. DRATEL: Yes. THE COURT: -- that are not struck and appropriately so, and that would remain in terms of MtGox and Mark Karpeles. I mean, he's not eliminated from the record. And you'll certainly be able to argue whatever inferences you think you can argue. Page 648 MR. DRATEL: But there are other aspects of this that are simply not -- that are factual, such as citizenship, such as the part on page 506 and 507, which is about the conduct of the investigation. It has nothing to do with -- THE COURT: I believe the government has, consistent with my lengthy ruling this morning, cabined the material appropriately. So I'll look at each of the individual Q and A's again, but you should proceed right now as if those pieces are going to be struck from the record. MR. DRATEL: I'm not sure I can proceed on this level because now I have to go back and reconstruct all this material that was unobjected to. I have to go back and look at parts of the cross that were already finished and done and then reconstruct it. I can go on with my cross right now, but then I'd like a break until tomorrow. THE COURT: No. I'm done with this issue. If the government had objected timely at the first Q and A, we wouldn't be having this issue right now because it would have been highlighted on the basis of suspicion, conjecture and belief right then as opposed to going on. MR. DRATEL: And I would have rephrased the question. THE COURT: I'm saying go back and you can rephrase at the questions right now. MR. DRATEL: But I need time to look at this. This is seven or eight different pieces. Page 649 THE COURT: We have been dealing with the possibility that this very information could be struck since Thursday night. MR. DRATEL: No. They didn't identify this until 20 minutes ago. THE COURT: No. It was obvious to me and it should have been obvious to you folks that when we were dealing with an objection about a type of testimony, that one potential result, particularly in light of the government's letter when they made an application to strike, is that certain things would be struck. The only question was what. And therefore, this should not be a big shock in terms of what's being struck. I'm not suggesting that you should like it or agree with it, but it's how we're going to proceed. MR. DRATEL: I want the equivalent so that -- I just want it to be equivalent, that's all, so that they can sit on their hands after providing all the 3500 material knowing exactly where the examination is going, they don't have to do that and now on the fly I have to do this. I don't think that's equivalent, your Honor. I'm sorry. THE COURT: I think we have the way we're going to proceed in mind. Do we have a full jury? THE DEPUTY CLERK: We do. THE COURT: Let's bring out the jury. Let's get Mr. Der-Yeghiayan back in the courtroom. Mr. Der-Yeghiayan, can you folks get him. Page 650 *(Continued on next page)* Page 651 *(In open court; jury present)* THE COURT: When you get to your seat, let's all be seated. Mr. Dratel, you may proceed, sir. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION (Continued) MR. DRATEL Q. Good afternoon, Agent Der-Yeghiayan. A. Good afternoon. Q. Going back to Mark Karpeles, he had -- he had an associate named Ashley Barr, correct? MR. TURNER: Objection; foundation. THE COURT: If he knows. A. I believe he had an employee named Ashley Barr. Q. His right-hand man essentially? MR. TURNER: The same objection. A. That is what I believed in 2012, yes. THE COURT: What I want you to do is try to, if you're going to go into conclusions or beliefs, to stay away from those to the extent that you're conjecturing. If you've learned information during the course of your investigation that is of the type you would rely upon, then you may testify to that. THE WITNESS: Okay. THE COURT: So if you know it, you know it; but if you don't know it, you're conjecturing. And let us know that, all right? Page 652 THE WITNESS: Okay. Q. So it's based upon your investigation, correct? A. Yeah, based upon my investigation, I saw that there was a later on falling out between them, that they weren't as close as I originally thought they were. Q. But initially, your investigation established that he was a right-hand man to Mr. Karpeles, right? MR. TURNER: Objection, your Honor. THE COURT: Sustained. Q. On the type of information that you would rely on in your investigation, that's the type of information you had establishing that he was Karpeles' right-hand man, correct? MR. TURNER: Objection; form and foundation. THE COURT: Sustained. Let me ask it this way: Do you have any independent information that this person, Barr, is a right hand or close associate of Mr. Karpeles? THE WITNESS: I don't. THE COURT: All right. I take it you never spoke to this associate? THE WITNESS: I never did, no. THE COURT: All right. Move on. Page 653 Q. Mr. Barr worked for Mr. Karpeles, right? MR. TURNER: Objection; foundation. Q. Based on your investigation -- THE COURT: Here's what we're not going to do. What we're not going to do is -- he's not going to speculate. MR. DRATEL: I'm not asking him to speculate. THE COURT: If you know, then you may testify. Otherwise, just tell us you don't know. A. He did work for him. Q. And during the time period that we're talking about, right, 2011, summer of 2012, right? A. Around the time period, yes. Q. And Mr. Barr is a Canadian citizen, correct? A. Yes, he is. Q. And has a degree in computer science, correct? MR. TURNER: Objection; foundation. THE COURT: If he knows he's been -- he seems to have knowledge from some basis. A. From what I found on the open Internet, yes, he does. MR. TURNER: Objection; hearsay. THE COURT: That answer is struck. If you learned something only by virtue of something that's unsubstantiated on the Internet, then we need to know that. If it's something that you're basing on something that's reliable, then that would be helpful. Page 654 Why don't you build a foundation as to what the source of his knowledge is and then we can proceed. Q. What's the source of your knowledge about Mr. Barr's education? A. It came from an Internet page. Q. Was it his LinkedIn page? MR. TURNER: Objection; hearsay. A. I believe it might have been his LinkedIn page. MR. TURNER: Objection; hearsay. THE COURT: I'm allowing him to at least figure out whether or not he's got any information. And it says you've got it from a LinkedIn page, right? THE WITNESS: I believe it might have been. I don't really recall if there was something that helped me. Q. You looked at his LinkedIn page, right? A. I did, yes. Q. And he was also an expert in Linux, correct? MR. TURNER: Objection. THE COURT: Sustained. MR. TURNER: Hearsay. Q. Based on your investigation -- THE COURT: No, you can't get in the truth of what his experience is through this witness. Let's have a side bar and we'll deal with it. I apologize, ladies and gentlemen of the jury. I really do. These are complicated issues. Trials are complicated things. Each side is doing the right thing by raising these, and I just need to make sure that we proceed carefully, all right, but I do apologize. Page 655 *(Continued on next page)* Page 656 *(At the side bar)* THE COURT: I don't want to revisit everything we've been through. I know that the defense does not agree with my rulings and so I understand that. What I would like you to do is, you can make a proffer during a break or in a letter as to what you would ask that you understand I'm precluding you from asking so I'll confirm it, so you've got it preserved for appellate purposes. But right now, my ruling is you can't use this witness about what he's read on the open Internet to confirm that certain kinds of expertise were or were not within the -- were not held by Mr. Barr or Mr. Karpeles. This witness is reviewing things on LinkedIn and he can't then say he was an expert in Linux. He can't. He can, you know, the most that he can do, and you'd never be able to rely upon it, to state he was an expert -- MR. DRATEL: I'm fine with the notion that everything that's on the Internet is unreliable and that goes for everyone, and that goes for all their evidence, too. And I'm going to move to strike all of their evidence because it's all Internet. THE COURT: What you need to do is you need to go back, because there's a difference between something appearing on an Internet where we've gone through each of the evidentiary issues, for instance, a page that says brown heroin and something where we're extrapolating from a LinkedIn page which, by the way, has got all kinds of Vayner issues, that he is in fact an expert in Linux. I have no idea who put that there, whether he put that there or somebody else put that there, he being Mr. Barr. Page 657 MR. DRATEL: It's not a Vayner issue because Vayner was about the website itself. The Russian version of Facebook had not been established. If it was Facebook, they would have let it in. THE COURT: I don't know enough about LinkedIn. I'm not a LinkedIn user myself, so as to the indicia of reliability of who can edit, I don't know whether or not this person is or is not an expert in Linux. I have no idea. You can call Barr and find out what his expertise is. I don't know where this fellow lives. MR. DRATEL: He's Canadian. I have no subpoena power over him. THE COURT: I don't know where he's located. If he's in New York City, he can be down the street for all I know. MR. DRATEL: He's in Japan. THE COURT: My point is, you can't get that kind of thing in. What other things are we likely to confront so we don't have back and forth that gets heated in front of a jury? MR. DRATEL: Talking about Karpeles' credentials? THE COURT: You can get in that there may have been information that he saw that indicated certain things, but I will give an instruction that we have no idea that it's true and you can't then -- Page 658 MR. DRATEL: We don't know what the basis is. THE COURT: Hold on. Let me say I want to make sure that you understand what you can't do is get from this witness Karpeles was an expert in X, Y or Z and then cite that in your closing that this fellow was an expert in X, Y or Z. I have no idea whether this stuff accurate or not on the Internet. MR. DRATEL: Let's find out from him where he got it from because it may be that he didn't get it from the LinkedIn page. Maybe he did other research. THE COURT: If he did, if you can build a foundation, then you can build a foundation. If he checked in with a university, for instance, and found out from the University of Ottowa that this person had received a degree in computer science, that's a different kettle of fish than looking on the Internet and surmising or a news article. MR. DRATEL: All right. THE COURT: Build a foundation. *(Continued on next page)* Page 659 *(In open court; jury present)* MR. DRATEL Q. Now, you did research on certain software platforms, correct? A. Can you be more specific? MR. TURNER: Objection; form. THE COURT: He can answer that question. You may answer. A. I'm sorry. Can you -- Q. You did research on certain software platforms, correct? A. In what context? Q. Well, MediaWiki, right, M-E-D-I-A-W-I-K-I, correct? A. I did look into that; yes. Q. And you found that there were similarities between Silk Road market and a forum associated with Mark Karpeles, correct? A. It was -- MR. TURNER: Objection; foundation on the research issue. THE COURT: There is a way of getting at this. Did you look at the MediaWiki software platform? THE WITNESS: I looked at its website from MediaWiki, yes. THE COURT: Did you look at the platform it was built on? THE WITNESS: I didn't really go too deep into the software. Page 660 THE COURT: Whether you went too deep or at a surface level, did you look at it at all? THE WITNESS: I had looked at particular websites that were running MediaWiki; yes. THE COURT: All right. And did you look at any websites that were run by Mark Karpeles? THE WITNESS: Yes, I did. THE COURT: Did the websites that were run by Mark Karpeles utilize any of the same features which you had seen from MediaWiki? THE WITNESS: I saw the same features. I believe it was the same as the Silk Road Wiki had the same features as a website that Mark Karpeles was hosting that had MediaWiki, too. THE COURT: So you perceived, by looking at it, certain features on MediaWiki as you did with the Silk Road? THE WITNESS: It was the same version number, I believe. THE COURT: The same version number? THE WITNESS: Yes. THE COURT: You may proceed. Q. That was 1.17, right? A. I believe that was it; yes. Q. In fact, it wasn't the latest version at the time? It was an older version, correct? Page 661 MR. TURNER: Objection; time frame. THE COURT: Overruled. Q. At the time you were looking in 2012, 2013? A. It was an older version when I did observe it; yes. Q. Right. So both the Karpeles site and silkroadmarket.org were operating on the same MediaWiki version that had since been updated, right? A. That's correct. Q. And based on your research, that platform is not used by a lot of forum administrators, correct? A. I did research. And I think it was something that was just opensource that was used. I couldn't say exactly how much it was used in other websites, but -- Q. But didn't you say that it was not widely used by forum administrators? MR. TURNER: Objection; hearsay. THE COURT: I will allow it. You may answer. A. It was something that came from my source that told me that. Q. But you wrote that, did you not? MR. TURNER: Objection. Q. Didn't you write that? THE COURT: Let me ask it this way: Did you look at a number of websites that were using the same platform? Page 662 THE WITNESS: I didn't -- it was information that was shared to me by my source at the time that instructed me on that. I wasn't familiar as a web administrator as the source was. THE COURT: I see, but you did personally look at MediaWiki and look at the Silk Road forum and saw some overlap in the platforms? THE WITNESS: I saw it was the same version number myself, yes, I did. THE COURT: The other information you have about the extent to which that same version number was being used by other websites or not, that was something that you personally did not perceive? THE WITNESS: That I did not perceive, no. THE COURT: All right, so I think we'll move on. *(Continued on next page)* Page 663 THE COURT: All right. So I think that you can go on. MR. DRATEL Q. Did you swear in an affidavit that "Based on my training and experience, this platform is not widely used by forum administrators?" A. It was something through the course that I learned -- Q. Did you not swear to that? That is the question. Did you not swear under oath in an affidavit that, based on your training and experience, the Wiki 1.17, the MediaWiki 1.17 version is not commonly used by forum administrators? A. That was in my affidavit. Yes, I swore to that. Q. Also, you found that the forum, and a company controlled by Mr. Karpeles, also ran something called simple machine -- I'm sorry, the Silk Road forum, and something called -- and Mutum Sigillum, Mr. Karpeles' company, ran something called Simple Machines, right, the software? A. It was the bitcoin talk forums and the Silk Road forums both ran on Simple Machines forum software. Q. And that wasn't common either? A. That was one that I wasn't familiar with, no. Q. Now, you investigated Mr. Karpeles' background, correct? A. I did. Q. And his professional background, right? A. I did. Q. And what kind of sources did you use? Page 664 A. Things that are open source information that I could -- that I could research as well as any other -- any other sources I could talk to. Q. And can you tell us about the sources that you used with respect to Mr. Karpeles' expertise in Linux, L-i-n-u-x, software -- MR. TURNER: Objection. Q. -- or Linux programs? THE COURT: He can give us the sources that he used. Let me ask it this way. In the course of investigating Mr. Karpeles' background, did you identify information which referred to any experience he had in different kinds of programming languages? THE WITNESS: I did observe some of the open source in LinkedIn pages and such that he did express -- MR. TURNER: Objection. THE COURT: All right. Did you do anything to yourself verify the truth of whatever was in those LinkedIn pages? THE WITNESS: No. I wasn't able to cross-reference that. THE COURT: All right. But I take it that you did identify certain sources which indicated to you at least that the words on the page seem to suggest that there was Linux expertise? Page 665 THE WITNESS: There was. THE COURT: And you yourself didn't verify whether or not a degree had been obtained from a particular university; you just read them on the page? THE WITNESS: That is correct. THE COURT: All right. Well, then, ladies and gentlemen, the witness is competent to testify about what he saw, that he saw a variety of sources that indicates that there was Linux expertise, but you should understand that he did not verify. So, therefore, it is not for the truth of that; it is for the fact that he saw that information. All right? MR. DRATEL Q. And the same thing with respect to PHP, which is a programming language, correct? MR. TURNER: I object. THE COURT: I am going to allow him to proceed in a similar manner that the Court just did to lay a particular foundation, and if he did not verify whether or not the expertise came from a university, we will figure that out, or from another credentialing organization. You may answer. THE WITNESS: Yes, I did. It was in the same way that I saw the Linux language there. MR. DRATEL Q. By the way, Linux is the operational system for Silk Road, right, in many ways? Page 666 A. I believe that and Ubuntu, which it runs. Q. And PHP? A. PHP is a different website programming language. Q. And the information that you saw also was that Mr. Karpeles had worked professionally in both systems, PHP and Linux, right? A. Based on the résumé that I saw, yes. Q. Now, as part of your investigation you looked into IP addresses associated with Mr. Karpeles, correct? A. That's correct. Q. And you came up with about five pages worth, lists of IP addresses, right? A. That is correct. Q. That's pretty active Internet presence, wouldn't you say? A. That is a lot of IP addresses, yes. Q. And you also found out -- and this is directly from hosting companies, right, you found out; so you verified this, these IP addresses, right? A. Yes. Through subpoenas, yes. Q. Yes. Also you verified, through the subpoenas, that Mr. Karpeles was actively using the support for a software called MYSQL, correct? MR. TURNER: Objection. Q. MySQL. Page 667 MR. TURNER: Objection. Form. THE COURT: I will allow it. A. I believe he was using MySQL yes. Q. Do you need to be sure? A. It's hand in hand with PHP so I'm assuming, yes, he did. THE COURT: Don't assume. A. If you have something I could reference, yes, I will certainly look at it. Q. Sure. *(Pause)* MR. DRATEL: 3505-3767. Q. If you just look at that first paragraph (handing). A. Sure. *(Pause)* OK. Q. And so you got confirmation through the subpoenas that he had a port open for M-y-S-Q-L, MySQL? A. That is correct. Q. That's also something that is used in Silk Road, right? A. I believe so, yes. Q. Silk Road relied on a highly complex system for processing bitcoins, right? MR. TURNER: Objection. Foundation. Q. Based on your investigation? MR. TURNER: The same objection. Page 668 THE COURT: I will allow it. Do you want to rephrase it? MR. DRATEL: No. If the Court will allow it. THE COURT: I will allow it. A. I'm sorry. Could you repeat, please. Q. Sure. Based on your investigation, Silk Road relied on a highly complex system for processing bitcoins, correct? A. Yes, it did. Q. Now, in addition to some of the other subpoenas we've talked about, you also subpoenaed a service in Germany called G small M and small B H -- I'm sorry, BSB Service. Capital G small M small B capital H, right? That is the German suffix for corporation, GmbH. But you subpoenaed that with respect to Mr. Karpeles as well, right? A. I believe it is the 1API, yes. Q. Now, in all of those returns on the subpoenas that you got from that stuff, the IP addresses, was there anything about Mr. Ulbricht in any of that? A. There was not. Q. Now, even after Mr. Ulbricht was arrested, you continued your investigation of Mr. Karpeles, correct? A. I wanted to see if there was any other ties to him, yes. Q. And were there any inferences in the notes on Mr. Ulbricht's computer with respect to Mr. Karpeles' involvement and associations with Silk Road? Page 669 MR. TURNER: Objection. Form. THE COURT: Sustained. Q. Did you review notes from Mr. Ulbricht's computer? A. I did. Q. Did you find any inferences of Mr. Karpeles' involvement and association with Silk Road? MR. TURNER: Objection. Form. Foundation. Hearsay. THE COURT: Sustained. MR. DRATEL: Foundation is -- THE COURT: No, you can do it, but you can't ask him were there any differences. You can show him different things. The jury is the body that will draw inferences. That's the way it is. MR. DRATEL Q. Did you find inferences -- THE COURT: I'm not going to allow finding inferences. If you want to ask him about certain facts he saw on the website, you can. MR. DRATEL: Could we have a sidebar, your Honor? THE COURT: I am not going to do a sidebar on this one. MR. DRATEL Q. When you reviewed Mr. Ulbricht's notes, or what were on -- withdrawn. Page 670 You reviewed what was on Mr. Ulbricht's laptop, correct? A. I did. Q. And part of that was you were looking for things about Mr. Karpeles, correct? A. I was looking for any associations with Mr. Karpeles, yes. Q. Did you find any? A. There was his name mentioned on some text documents, yes. Q. Now, the bitcoin forum that we are talking about, shortly after Mr. Ulbricht was arrested there was a report that you received -- and this is not for the truth, this is for the report -- that it had been hacked, correct? A. I believe so, yes. MR. TURNER: Objection. Hearsay. THE COURT: Well, it is not for the truth. It is just for the fact that the report indicated that. You don't know whether or not it was in fact hacked, do you? THE WITNESS: I do not, no. THE COURT: You can go ahead and continue. MR. DRATEL Q. And that would eliminate the ability to find information on bitcointalk.org that might have some integrity, right, because that would eliminate that prospect because it would have been hacked, right? Page 671 MR. TURNER: Objection. It calls for speculation. THE COURT: Sustained. Q. If it had been hacked. THE COURT: No. He is not an expert witness to talk about the evidence of hacking. Q. You never saw Mr. Karpeles' laptop, correct? A. No, I've never seen his laptop or computers. Q. Mr. Karpeles also controls a lot of websites, correct? A. He was a hosting provider, yes. Q. And part of the your investigation in terms of trying to keep the integrity of your investigation intact, you advised other agents and other agencies not to go on Karpeles' websites because he tracked them, correct? MR. TURNER: Objection. Relevance and foundation. THE COURT: I will allow it. *(Pause)* There is a form issue with the word "integrity." Why don't you re-ask the question in a form that I will allow. MR. DRATEL: We are beyond that. It is the next question which is about -- THE COURT: No. The question you had was in part of your investigation -- MR. DRATEL: I'm sorry. Q. So in part of your investigation, in order to keep it confidential, to keep targets from being advised of the fact that they were under investigation, you strongly advised people in the government -- your colleagues, other agencies -- not to go on Karpeles' website because you were afraid that he would be able to see that, had they done so, they would be advised of the investigation, right? Page 672 MR. TURNER: Objection. Relevance and foundation as to the latter part of the question. THE COURT: I will sustain the objection, but there is a form of it that you can ask but you are adding in a lot of other stuff. Q. Did you advise your colleagues in HSI around the country, as well as other agencies, not to go to Karpeles' websites and not to visit them? A. The websites that I listed in my report, I did say do not visit those websites. I said that, yes. Q. And the reason was because you wanted to keep the investigation confidential, right? A. It's what we do in investigations, yes. Q. You were afraid that if someone went on one of those sites, it might give Karpeles notice that the government was looking at his sites? A. That is why, yes. Q. You are also familiar with someone named Anand Athavale. I don't know if I am pronouncing it correctly, but A-n-a-n-d is the first name, last name A-t-h-a-v-a-l-e. Page 673 A. I am. Q. And he is a Canadian? A. He is a Canadian citizen, yes. Q. He lives in Vancouver, or lived in Vancouver during 2012 and 2013? MR. DRATEL: Objection. Foundation. THE COURT: Why don't you build a foundation for that so we'll see what it is based on. Q. Did you find out that he lived in Vancouver during that period of time? MR. TURNER: Objection. Foundation. Q. Did you do an investigation to find out that he lived there? MR. TURNER: Objection. Foundation. THE COURT: Did you look to try to find out where this guy was from? THE WITNESS: I did. THE COURT: What kinds of information did you look at? Did you look at a passport? THE WITNESS: I believe it is from travel records. THE COURT: And travel records from Homeland Security or the Canadian counterpart? THE WITNESS: It is from Homeland Security. I am trying to recall. I'm sorry. THE COURT: These are records maintained by the customs folks when people would enter or exit the national boundaries? Page 674 THE WITNESS: That is correct. THE COURT: And they maintain records as part of that recordkeeping function as to the citizenship reported of the entrant or exiter? THE WITNESS: They do. THE COURT: All right. And what did that indicate to you for this individual? THE WITNESS: He was crossing over around Vancouver. Actually, initially I think it was Toronto and then later on it was north of Vancouver. THE COURT: Did it give any indication as to his declared citizenship status? THE WITNESS: We -- throughout the process of the investigation, later on we did confirm through Canadian customs that he was a Canadian citizen, and we did get records from the RCMP. THE COURT: All right. Thank you. Mr. Dratel, you may proceed. MR. DRATEL: Thank you, your Honor. MR. DRATEL Q. Now, you also did an investigation in terms of his Internet presence, correct? A. I did. Page 675 MR. TURNER: Objection to form. THE COURT: I will allow it. There was an objection. I was letting you go ahead. I was overruling the objection. MR. DRATEL: Thank you, your Honor. Q. And the list of domain names that he owned was four pages long, right? A. I believe so, yes. Q. And the list of his current known IP addresses was a half page, right? A. From what I got back from the subpoenas, yes. Q. And he also is someone with computer proficiency based on what you learned in your investigation, correct? MR. TURNER: Objection. Foundation. THE COURT: Why don't you approach it the same way as you approached the other one? Q. What were the sources of your information with respect to Mr. Athavale and who he was and what he -- and, you know, his Internet presence and his Internet -- and his computer proficiency? A. I believe he had also a LinkedIn page, as well, where he would describe his credentials. MR. TURNER: Objection. Hearsay. THE COURT: Sustained. Let me ask it this way. Did you look at a LinkedIn page that appeared to be associated with this fellow Athavale? Page 676 THE WITNESS: I believe so, yes. THE COURT: Did you investigate whether he himself put the information on the page or whether somebody else put the information on the page? THE WITNESS: I wasn't able to tell if he put it on himself but I assume so, yes. THE COURT: But you saw a page that appeared to be associated with this individual, and based on that page you saw information that indicated he had some computer experience? THE WITNESS: Yes. THE COURT: And you didn't separately verify that, is that right? THE WITNESS: No, I did not. THE COURT: But you saw that there was a LinkedIn page which simply provided information indicating that he had computer experience? THE WITNESS: Yes. THE COURT: All right. So we don't know, ladies and gentlemen, whether it was true or not. We just know there was a LinkedIn page that was in existence that indicated this individual had some computer experience. Whether that LinkedIn page was accurate or not or by this individual or somebody else purporting to have that name is unknown. You may proceed, Mr. Dratel. MR. DRATEL: Thank you, your Honor. Page 677 MR. DRATEL Q. And this, again, was in the latter part of 2012, correct, like November 2012? A. Correct. Q. And, by the way, Vancouver is in the Pacific Time Zone, right? A. Yes, it is. Q. And at some point have you reviewed any private messages on the Silk Road service that existed -- on the Silk Road websites or servers or anything on Silk Road, have you reviewed any private messages that had the name Anand Athavale in them? MR. TURNER: Objection, your Honor. THE COURT: Give me one more word. MR. TURNER: 403. THE COURT: I will allow this question. You may answer. A. Looking for his name on the servers? Q. Have you seen any entries in the universe of Silk Road on the servers that has his name? A. If there is something to help me recollect my memory? Q. Private messages. Someone named "deathfromabove"? MR. TURNER: Objection, your Honor. THE COURT: Sustained. MR. DRATEL: He wanted me to help him. THE COURT: I know. But you are connecting that, the two. So you can build a foundation for it. Page 678 MR. DRATEL Q. I show you what's marked as Defendant's E, for identification. MR. TURNER: Is this being offered to refresh recollection, your Honor? MR. DRATEL: Yes. MR. TURNER: Then I object to foundation. MR. DRATEL: He asked for me to show him something. THE COURT: I've got to see what it is first before I figure out if there is a problem. *(Pause)* All right. I will allow you to -- MR. TURNER: Your Honor, can we have a sidebar? THE COURT: No. I didn't allow one for him. I will take it step-by-step. So ask your next question, Mr. Dratel. MR. DRATEL: Thank you, your Honor. Q. I just ask you to look at that, read it to yourself. THE COURT: And who put the -- MR. DRATEL: Redactions? THE COURT: Redactions? MR. DRATEL: We did, your Honor, for a reason that I can explain later. THE COURT: All right. Page 679 MR. DRATEL Q. Have you seen that before? A. Not that I recall, no. Q. Now, with respect to Mr. Ulbricht, you subpoenaed the entirety of his Facebook account, correct? I'm sorry, withdrawn. The government got a warrant for the entirety of Mr. Ulbricht's Facebook account, right? A. I wasn't included on that, that I recall. Q. How about Google? You are aware of it, right? A. I am aware of Google, yes. Q. PayPal you are aware of, right? A. I believe there was multiple subpoenas issued. A lot of them was done through FBI and not through me. Q. And you have also reviewed his travel history, right, from the same kind of records that you looked at when you talked about Mr. Athavale, right? A. I reviewed Mr. Ulbricht's travel records, yes. Q. And basically one trip per year, right? A. I believe that is accurate, yes. Q. One was to Costa Rica, correct? A. I believe so, yes. Q. And did you learn during the course of your investigation that his parents have a business in Costa Rica? MR. TURNER: Objection. Foundation. Page 680 THE COURT: Well, I will allow it. I mean, did you ever receive information indicating that one way or the other? THE WITNESS: I saw open source information off the Internet that would indicate that, yes. THE COURT: Did you ever confirm it independently of that open source information? THE WITNESS: No, I did not. THE COURT: All right. So you heard or saw information from the Internet which is not separately confirmed? THE WITNESS: That is correct. THE COURT: All right. So, ladies and gentlemen, whether or not the parents have a business in Costa Rica is not yet in the record, but the witness saw information indicating something to that effect but did not confirm it. MR. DRATEL Q. You got his Mt. Gox account records, right? A. Yes. The Mt. Gox records were also I believe through subpoena. Q. Weren't you given the account number by Karpeles' attorney? A. I was not -- MR. TURNER: Objection. Q. The government? THE COURT: And if you have personal knowledge, then testify to it, but don't speculate if you weren't given a number. Page 681 THE WITNESS: It was given to the Baltimore office. MR. TURNER: Objection. Foundation. THE COURT: That is struck since it is not your personal knowledge. Did you learn of that through a communication with somebody, through an A.U.S.A. in Baltimore? THE WITNESS: Through the U.S. attorneys. THE COURT: The fact of it, that he received that information, is OK, but you can't get the truth of the account number if you are not going to connect the dots. MR. DRATEL: I would move it under 807. Q. So you were told that by an assistant United States attorney? MR. TURNER: Objection. Hearsay. THE COURT: Sustained. Q. And Karpeles was still under investigation at the time, correct? THE COURT: Can we get the timeframe. Q. October 12, 2013, eleven days after Mr. Ulbricht's arrest, right? A. We were still looking at him for money service business service charges, yes. Q. Now, going back to Mr. Karpeles, you never saw his laptop, right? Page 682 A. No, I have not. Q. You never saw his desk-top or any computer belonging to him, correct? A. I have not. Q. You never saw his phone, his smart phone or any other phone, right? A. No, I have not. Q. You never had access to any of the servers that he maintains overseas, right? A. I have not. Q. With respect to Mr. Athavale, the same thing, right? You never saw his laptop? A. No, I did not. Q. His phone? A. No, I have not. Q. Any electronic device that he owns? A. Nothing belonging to him, no. Q. You have heard of someone named Richard Bates, correct? A. The name is familiar, yes. Q. Well, he is someone whose name came up just prior to Mr. Ulbricht's arrest, correct? MR. TURNER: Objection. Form. Foundation. Q. You learned of his name just prior to Mr. Ulbricht's arrest, correct? Page 683 THE COURT: I will allow that. A. I'm sorry. I am having a hard time refreshing my recollection. Do you have something that can help me recollect my memory? Q. Sure. *(Pause)* MR. TURNER: Could I see the document? MR. DRATEL: Sure. *(Counsel conferred)* THE COURT: Did I hear you say it was 2935 through 36? MR. DRATEL: Yes. Q. Just look at it right here. A. Sure. *(Pause)* OK. Q. So Richard Bates is someone whose name came up in your investigation of Mr. Ulbricht, correct? MR. TURNER: Objection. Form. THE COURT: I will allow it. A. This was something that was brought to my attention by Special Agent Gary Alford. It wasn't actually part of my investigation. Q. It was basically about Bates' profile, right? MR. TURNER: The same objection. Hearsay. THE COURT: I will allow it. Page 684 A. There was discussions that he had where he brought up a possible lead in connections to Bates. Q. Right. He had certain things in common not only with Mr. Ulbricht but also with DPR? MR. TURNER: Objection. Again, hearsay. THE COURT: Sustained. Q. Some of the things were about his political views, right? MR. TURNER: Objection. THE COURT: Sustained. *(Pause)* Q. Did you look into Mr. Bates at all? A. No, I did not. Q. Now, before lunch we were talking about bitcoins and the accounts that you had identified -- that Homeland Security had identified as being part of Silk Road, do you remember? A. Yes. Q. So in August of 2012, you had identified several bitcoin accounts associated with Silk Road that had the equivalent of over -- talking about bitcoins in terms of value at that time -- of over $5 million dollars, U.S. dollars, right? A. Yes. Q. And that that had gone up from May of that year, right? In May -- withdrawn. In May of that year, there was only about $2 million worth of bitcoins in the account, correct? Page 685 MR. TURNER: Objection. Lack of foundation. THE COURT: Just so that I'm clear and so I understand the question, do you mean the number of bitcoins changed or the value of the bitcoins changed, or both? MR. DRATEL: I am going to get to that, your Honor. Q. So this is based on your investigation, right, and your monitoring of those wallets, those accounts, correct? MR. TURNER: Objection. The foundation, how these wallets are associated with Silk Road. THE COURT: Well, in connection with your review of the commissions that might be obtained through purchasing them on Silk Road, did you look at any records? THE WITNESS: It was in connection with our purchases we did and moving money in and out. These were records or addresses that we identified in the course of the investigation that we suspected were associated to Silk Road. THE COURT: And did you monitor the account information for those addresses? THE WITNESS: I did. THE COURT: All right. And during what period of time are you talking about, Mr. Dratel? MR. DRATEL: Well, through the middle part of -- there is a series of dates in 2012. THE COURT: So did those numbers fluctuate -- in terms of numbers of bitcoins fluctuate throughout 2012? Page 686 THE WITNESS: It increased steadily in that account up to a certain period. THE COURT: All right. OK. Mr. Dratel, why don't you pick it up from here. MR. DRATEL: Thank you, your Honor. Q. So in July of 2012, there were about 500,000 bitcoins in an account, correct? MR. TURNER: Objection. Form. "An account." THE COURT: I will allow it. MR. DRATEL: I mean, the account we are talking about. If I have to repeat everything in every question, I will. But thank you, your Honor, for allowing me. Q. So in that account that you were monitoring, July 10, 2012, the account had 503,825 bitcoins in it, right? A. That sounds about correct, yes. Q. And the value of a bitcoin at that time was $7.10, correct? A. Sounds about accurate, yes. Q. So that would be about $3-and-a-half million in bitcoins? 5 times 7, add the zero -- A. Carry. Yes. Q. I mean, you did the math at one point, right? A. I had a calculator, right, yes. Q. Now, so there is 500,000 bitcoins in the account, and there were 144,000 bitcoins seized from Mr. Ulbricht's laptop at the time of his arrest, right? Page 687 A. 144,000 bitcoins, yes. Q. So there were 500,000 bitcoins in July of 2012 in that account. Now, that was 16 months before the arrest was made, right, before the site was taken down, correct? A. That is correct. Q. So you had the entirety of those 15/16 months of how many bitcoins Silk Road would collect -- withdrawn. Silk Road continued to make sales, collect commissions for those additional 16 months, correct? A. They did. Q. And those would be reflected in bitcoins, right? A. It would. Q. And also not $7 per bitcoin but by October 1st of 2013, bitcoin was at $100 per bitcoin, right? A. That is correct. Q. So that's fourteen times, right, the value? A. Yes. Q. So if it was 3.5 million in July of 2012, just those 500,000 bitcoins -- not even including the other 16 months -- just that amount of bitcoins, it would be worth 70 million, right -- I'm sorry, 50 million? A. That sounds about right, yes. Q. 14 times three-and-a-half. Now, if someone had cashed out those 500,000 bitcoins when bitcoins were at $250 per bitcoin, which occurred in the spring of 2013, right? Page 688 MR. TURNER: Objection. Form. Foundation. MR. DRATEL: I haven't finished the question. THE COURT: I think it is the hypothetical nature of it. Why don't you stick to what happened in this account? MR. DRATEL: All right. Q. Bitcoin, during the period that we were talking about before, October 1st, 2013, bitcoin peaked in the spring of 2013, correct? A. Yeah, around April it did. Q. To 250? A. Yes. Q. $250 per bitcoin? A. $250 a bitcoin. Q. So that would make that 50 million one-and-a-half times more, right? A. Yes. Q. 125 million? A. If it -- yeah, if the volume stayed the same in bitcoins in the accounts, yes. Q. Now, Silk Road made an estimate of $1.2 billion in sales, right, in the course of its -- from the government's investigation, Silk Road made $1.2 billion in sales, right? MR. TURNER: Objection. Foundation. Page 689 Q. It is in the complaint, right? MR. TURNER: Objection. THE COURT: Do you know if bitcoin -- strike that. Do you know if Silk Road is alleged to have -- strike that. Do you know the volume of sales Silk Road had during the period of time that spans this investigation? THE WITNESS: Only what was shared with me by the FBI. THE COURT: Did you yourself look at any documents relating to the Silk Road website that indicated to you the volume of sales? THE WITNESS: There wasn't anything directly on the website that would tell you what they -- what the volume was, but there was what came out of the FBI investigation on the server, that they came to that figure for the complaint. THE COURT: Why don't you try it in a different way? MR. DRATEL: I also move it under 801 as a -- well, not front of the jury. THE COURT: We'll pick it up at our break. MR. DRATEL Q. Anyway, so based on the information that was developed, the FBI concluded that Silk Road had made $1.2 billion in sales over the course of its lifetime, correct? MR. TURNER: Objection. Hearsay. THE COURT: All right. If he only knows about that from hearing about it from somebody else, then it would be hearsay. Page 690 Do you have any independent sources of information where you learned the volume of sales, either approximately or concretely, that occurred on Silk Road? THE WITNESS: Other than what was shared with me from them, no. THE COURT: All right. And that's hearsay. So -- MR. DRATEL Q. Did you ever read the complaint in this case? THE COURT: That is hearsay, too, so it is not admissible evidence. Q. Now, in November of 2012, you computed that Silk Road was earning $2 million a month in commissions, right, based on the value of bitcoin and the volume of sales that you were able to monitor during that period, right? A. Sounds about accurate. Q. And, again, back in 2012, bitcoin hadn't nearly even approached that $100 per bitcoin, right? A. No. It was under $10, I believe. Q. Right. So by the April of 2013, that same $2 million in commissions would have been worth a lot more, right? If it was about $10, it would have been worth ten times as much, $20 million a month in commissions with the same volume, right? A. Well, the commission was based on the sales price, and the sales price would have fluctuated when compared to the value of bitcoin. So, I mean, it would have been relevant to the cost of the bitcoin. Page 691 Q. Now, that $144,000 -- I'm sorry, the 144,000 bitcoins that were seized from Mr. Ulbricht's laptop, right? A. Yes. Q. They were worth $29 million at the time of seizure, right? A. Yes. Q. And by November 18, 2013 -- withdrawn. The price of bitcoins skyrocketed, as we talked about Thursday, right, after the arrest? MR. TURNER: Objection. Timeframe. Q. After October 1st, 2013, by the end of the year, between then and the end of 2013, bitcoin at one point exceeded $1,000 per bitcoin, right? A. It went over a thousand dollars, yes. Q. And as of November 18, 2013, that $29 million worth of bitcoin would have been worth $96.5 million, right? A. Yes. Q. So anybody holding bitcoins during that period of six/seven weeks would have seen a 500 percent return, right? A. That's accurate, yes. Q. There was a significant amount of law enforcement activity devoted to investigating Silk Road, right? A. Yes, there was. Page 692 Q. Multiple agencies? A. There were multiple agencies involved, yes. Q. Multiple United States Attorney's offices? A. Multiple United States Attorney's offices. Q. Multiple offices even with within your agency, Chicago, Baltimore, other places, right, New York? A. That is correct. Q. And you, as part of your investigation, and others, would try to -- withdrawn. During the course of your investigation, you managed to gain control of a number of user accounts with Silk Road, correct? A. Yes, I did. Q. Most of them buyer accounts? A. I mean, it was split up, buyer/vendor accounts, yes. Q. So -- and you alone had more than a dozen, maybe even two dozen, that you could sign on to, right? A. I had not that many, but I probably had like six or so that I created myself on the market, six or so that I created on the forums. Q. No, not that you created, but also in addition to the ones you created, also the ones that you assumed control over when people either were arrested or voluntarily gave you access to their account, right? A. That is correct. Page 693 Q. So that increases that number, doesn't it? A. It does, yes. THE COURT: So how many of those, approximately, did you have? You got the six that you created yourself? THE WITNESS: Correct. THE COURT: How many, approximately, did you take over in one form or another during the entire time that you were in the business of taking over accounts? THE WITNESS: Approximately about a dozen. THE COURT: All right. So you touched personally about 18 accounts? THE WITNESS: That sound about right, yes. THE COURT: All right. MR. DRATEL Q. And you also told us, I think Thursday, that some of these accounts other agents had access to as well? A. Some of them, yes, other agents I gave the username and password to. Q. So you might be on one day and another agent might be on another day, right? A. Not if it was being utilized in an undercover capacity. It would only be one agent utilizing it. Q. And during this period of time, one of the reasons for taking over these accounts were to make the undercover purchases that you had talked about, right? Page 694 A. Oh, a few of them were used in that capacity, yes. Q. So you made about 50 such purchases, right? A. That was from one account, yes. Q. And the purpose of those purchases was not to keep the site going, right? A. No, it wasn't to keep the site going. Q. But at the same time you are sending money overseas -- bitcoins overseas to drug dealers, who were pocketing that money, right? A. It's going into, yes, their hands. Q. And you don't really have access to them the way you would if someone who perhaps was in the United States doing the same thing even if you could identify them, right? A. We have processes through MLAT that could give us reciprocity, especially with a lot of governments that we were dealing with at the time, to get legal action if we needed to. Q. But at the time you were essentially, as part of the undercover operation, putting money into these drug dealers' pocket, right, without any recourse in the sense that they weren't being arrested, right? A. We were doing that for the purpose of trying to arrest them. Q. Right. But isn't that one of the reasons why the undercover buys stopped? A. No. There was money that had to be allocated for those purposes, and at the time we just didn't have -- we stopped actually collecting seizures around April 2013, and then we stopped doing buys after that since we weren't collecting the seizures. Page 695 Q. And in those purchases that were made through the undercover accounts, you were also paying a commission to Silk Road, right? A. That was something that was automatically taken out, yes. Q. And you don't know whether that has ever been recovered, right? A. I don't know if the exact bitcoins that we put in got recovered or not, no. Q. Now, the government -- withdrawn. You had administrative privileges in July of 2013 as Cirrus, right? A. On the forum I did, yes. Q. And the government, the U.S. government, got access to the Silk Road servers no later than July 23, 2013, right? A. The FBI did. Q. And the FBI could have pulled the plug right then because they had the servers, right? A. I don't know what their capabilities were at the time. Q. Well, they had the servers, correct? They physically had possession of the servers, if they wanted, correct? MR. TURNER: Objection. Foundation. Page 696 THE COURT: Why don't you dig in a little more to what the FBI had and what this witness knows. Q. As of July 2013, the FBI knew the location of Silk Road's servers, right? A. They had an image that came back as a server. Q. But they knew the location of where that server existed as a physical thing? MR. TURNER: I object. As to this witness' foundation? THE COURT: Why don't you investigate with this witness what he knows about the location. Q. You know where the location was, right? A. They had an up IP address for where they got the image that did come back as being Silk Road's server. Q. But what I'm saying is you know where the servers were located, right? MR. TURNER: Objection. Foundation. Q. You know that -- MR. TURNER: Objection. THE COURT: Sustained. Q. -- from the investigation of the information that has been verified, right? MR. TURNER: Objection. THE COURT: Sustained. You need to ask it differently. Page 697 Q. During the course of your investigation you learned the physical location, the country, that those servers were located in, right? MR. TURNER: Again, objection. Foundation. MR. DRATEL: I am asking if he learned. THE COURT: He can answer that yes or no. A. Only from what I was told where they were at is what I knew. THE COURT: Did you learn from any other source apart from what you were told? Did you see any written documentation about that, about the location of the Silk Road servers? THE WITNESS: I did not. THE COURT: All right. MR. DRATEL Q. You were told by law enforcement agents to facilitate your investigation? MR. TURNER: Objection to the hearsay. THE COURT: Sustained. MR. DRATEL: Under Rule 807 again, your Honor. THE COURT: The objection is sustained. MR. DRATEL Q. Did you know that the FBI knew where the location -- you knew that they were going to image the servers, correct? MR. TURNER: Objection. Again, hearsay. THE COURT: Well, let me ask you. Did you yourself ever -- did you have any personal involvement in the imaging of the servers? Page 698 THE WITNESS: No, I did not. THE COURT: Did you receive written documentation that related to the imaging of the servers? THE WITNESS: No, I did not. THE COURT: All right. He is not the right witness for this so we'll do it through somebody else. MR. DRATEL: Your Honor, I do have another question for him, which is: Q. Didn't you tell FBI New York when to image the servers because when the traffic would be less, that the admins won't be on the site? A. Is there a particular date that you are referring to? Is this later on when I had access to the control? If you could be more specific? THE COURT: Did there come a point in time when you communicated with anyone else in law enforcement as to a date when the servers would be imaged, from your perspective? THE WITNESS: I didn't have any involvement in the initial capture of the Silk Road server. THE COURT: All right. MR. DRATEL: I am going to show this for impeachment, your Honor. I show you 605, 3505-605. THE COURT: Did you have any involvement in any of these subsequent captures? Page 699 THE WITNESS: Subsequent captures I might have, yes. THE COURT: And the word "capture" there refers to the imaging of a server, is that right? THE WITNESS: Right, the actual imaging. THE COURT: All right. MR. DRATEL Q. So you were informed that the FBI was going to, in your words, take down the servers, right? THE COURT: Hold on. The question is -- for impeachment purpose, the question, for which it would be impeaching, is whether or not he told the FBI on a particular date to take down, not whether or not he learned of a takedown. Q. All right. So on July 20 -- in July 2013, I think it is the 22nd, yes, 22nd of July 2013, you told the FBI a specific time to take down the servers, right? A. There would be a time that -- Q. First let's answer that question. Did you tell the FBI a specific time that would be a good time to take down the servers? A. I did. Q. And that was because you said there wouldn't be a lot of administrative work on the site and so that -- is that right, there wouldn't be admins? A. There wouldn't be administrative action on the site, yes. Page 700 Q. That was because you wanted it to be done in a way that nobody could notice, right, if possible? A. I would think, yes. THE COURT: Mr. Dratel, we are going to take a mid-afternoon break. Is this an OK time for you to stop? MR. DRATEL: This is fine. THE COURT: Ladies and gentlemen, let's take our mid-afternoon break. And I want to remind you not to talk to each other or anybody else about this case. Thank you very much. THE CLERK: All rise as the jury exits. *(Continued on next page)* Page 701 *(Jury not present)* THE COURT: You can step down because you are on break as well. *(Witness not present)* THE COURT: All right. Let's all be seated and see what we've got. In terms of the line of questioning relating to expertise, I think I had been clear that what the witness learned about in terms of expertise that was unconfirmed is what he learned unconfirmed. It won't be usable testimony for the purposes of saying X was a computer expert, but there will be ways of wording it that there was indications attached to his name. You will have to be very careful how that is used because it is not in for the truth. Is there anything that you folks would like to raise right now? MR. TURNER: Can I just make a record on that, your Honor? THE COURT: Yes. MR. TURNER: Because those statements aren't relevant for anything unless they are being offered for the truth. And the government objects to what Scott, the agent, read on LinkedIn coming in for the truth. Anybody can create a LinkedIn page. Anybody can say anything they want about themselves on a LinkedIn page. That is why there are rules of hearsay that exist. Page 702 So the fact that he read it as plaintiff's word, it doesn't gift it any more legitimacy or doesn't make it any more admissible. And I just am afraid that -- I recognize your Honor wants to give a limiting instruction, but there is really no other relevance for it coming in except for the truth of it. So that is what the government has concerns about. THE COURT: I understand the government's concern. My ruling stands. I think I have given them an instruction each time that this has occurred. The jury I think seems to nod knowingly. They understand the difference. And, look, there are ways in which I think the limiting instructions are effective. You folks will have to be very cognizant of those limiting instructions when you decide how to use the information in your closing. But your objection, Mr. Turner, is noted. The Court is trying, with many of the now very active evidentiary objections, to draw appropriate lines. The lines are sometimes lines where the question is not perfect but it is not so imperfect as to create a terrific issue if allowable, and that has been true on the government's direct examination as well. So I'm hopeful that people will after this witness get themselves into a routine where we just let each other do our thing. But we'll take it as it comes. I mean, the objections, generally speaking, they have been appropriate and so they require rulings. Page 703 *(Continued on next page)* Page 704 THE COURT: Did you have anything to do before we take a break? MR. DRATEL: Yes. On the complaint, just one sentence from the complaint about these figures, talking about Silk Road, these figures are equivalent to roughly 1.2 billion in revenue and 79.8 million in commissions at current bitcoin exchange rates. And this is from the complaint and it's from paragraph -- but it's an admission by a party opponent under 801.2(a), (b), (c) or (d). It fits all of them. It only has to fit one. THE COURT: That is an interesting argument because you would never allow a whole variety of statements to be put in from a complaint with any evidentiary basis that were against the defendant. Typically, statements in complaints have no -- they have zero evidentiary value apart from what comes in by virtue of the trial. So I hear your point. I think that if you want to make a point about what kind of business was conducted on Silk Road -- MR. DRATEL: No. It's the numbers that the government said -- the government is going to take a dramatically different position at this trial. THE COURT: It doesn't matter. MR. DRATEL: But it does because it's an admission by them of a certain number and now they're going to do a much lower number; and the only reason they're doing a much lower number is because they want that number to mysteriously all of a sudden match what's in Mr. Ulbricht's computer as opposed to a number four or five times that. Page 705 THE COURT: Mr. Turner, why don't you address it? MR. TURNER: I can address that. First of all, the complaint explained that the figures given were based on the present value of those bitcoins at the time of the complaint. At the time, we weren't able to convert the bitcoins so that they matched the value of the bitcoins at the time of each sale in question, so the value of bitcoins is fluctuating. So, you could have had ten bitcoins received by the site in 2012 that were worth a lot less than they would be when they were received for sale in 2013. The complaint which is based on the total number of bitcoins that flowed to the site were converted to the value, the exchange rate of bitcoins at the time that the complaint was sworn because of our limitations that we had. The reason the figures were changed when we introduced the aggregate sales and aggregate profits from the site later on is because now we have a chance to go through the transaction of data more carefully. Each transaction in the database records the number of bitcoins received and the value of those bitcoins at the time of each sale. That's what the data reflect. THE COURT: Why don't you address -- Page 706 MR. DRATEL: That's not a true value. THE COURT: Hold on. Why don't you address the evidentiary issue as to whether or not this could be an admission of a party opponent? MR. TURNER: It's not a statement against itself and it's not a statement of this witness, so all it is is a statement of a particular agent based on what he knew at the time. MR. DRATEL: That's exactly what the rule requires. It doesn't require being against interest. The rule requires for (a) the party's own statement in either an individual or representative capacity; or (b) a statement of which the party has manifested an adoption or belief in its truth -- this is sworn under oath September 27, 2013 for the purpose of obtaining an arrest warrant against Mr. Ulbricht; (c) a statement by a person authorized by the party to make a statement concerning the subject; or (d), the statement by the party's agent or servant concerning a matter within the scope of the agency or employment made during the existence of the relationship. It qualifies under any of those. MR. TURNER: None of these statements were made by this witness or any agent of this witness or this agent did not swear out the complaint, so it's not an admission by this witness. MR. DRATEL: And I'm not asking that of this witness. I'm moving it independently -- Page 707 THE COURT: You can't get it in through this witness every possible statement made by the government as an admission by a party opponent. MR. DRATEL: By itself, it's admissible. In other words, by itself; it doesn't need a witness. THE COURT: If it doesn't need a witness and it can be by itself admissible, I need some cases on that or a case or two, because in terms of the way this is -- we don't need it right now, right, because it can come in at any point in time. MR. DRATEL: An admission is an admission. THE COURT: You're using the complaint in a very unique way in terms of getting in an admission through a complaint. It's not typical; it's not typically the way complaints are used as you know, even when evidence is coming in contrary. I will look at it, however. I have not looked that question before and given that it's not necessary to get it in through this witness, there's no urgency to doing it right now. MR. DRATEL: I'll call Judge Maas if I have to, Magistrate Judge Maas. He signed the complaint. He read it. They came to him as the United States government. They're going to resist this, okay. THE COURT: You know -- MR. DRATEL: We'll call the judge. Page 708 THE COURT: Whether or not any testimony on this would be relevant from a judge or from anyone I think is part of the question that I want to explore. So I need to investigate whether or not what you're suggesting is an admission, which is a statement in a complaint at the outset of a case when many things changed. It may be, Mr. Dratel. MR. DRATEL: It's under oath. THE COURT: I'm not suggesting it's not under oath. That's the best information at the time. MR. DRATEL: But -- THE COURT: Hold on. I'm not suggesting you can't have it. What I'm suggesting is, if it doesn't have to come in through this witness, I need to look at it because I've never had an attorney try to use a statement from a complaint as evidence in a criminal proceeding because you certainly never want any of the evidence obviously against the defendant to come in. MR. DRATEL: But that's not the point. THE COURT: Even if there was evidence from a coconspirator, that there's a coconspirator statement recited in the complaint, you'd never want that in. MR. DRATEL: That doesn't matter because if I was impeaching with grand jury testimony, I wouldn't put in the whole grand jury. I'd put in the part that impeaches the guy. That's neither here nor there. And the fact that -- Page 709 THE COURT: Look, I need to look at this is what I'm suggesting. MR. DRATEL: I'm also saying to you, the fact that a party changes its mind during the course of a litigation does not vitiate the fact that at one point it took that position under oath as a fact and that's an admission. THE COURT: You know, you may be right. And it may be right in the sense other than for this particular witness or it may be right for another witness. I need to look at it. That's what I'm suggesting. Is there anything else on this topic? MR. DRATEL: No, your Honor. THE COURT: I would take from anybody who would like to put in a letter any cases that they have supporting that position. Since it doesn't have to come in through this witness, it can come in tomorrow morning. Anything else we need to deal with before we take a break? MR. TURNER: Not from the government. MR. DRATEL: No, your Honor. THE COURT: Thank you. We'll take a short break and then come on back and stay until. *(Recess)* *(In open court; jury not present)* THE COURT: Let's bring out the jury. Page 710 *(Jury present)* Mr. Dratel, you may proceed, sir. MR. DRATEL: Thank you. MR. DRATEL Q. Based on your investigation, going back to Mr. Karpeles for a second, based on your investigation, what you were able to verify from your subpoenas, that silkroadmarket.org was being run off a web hosting company owned by Mr. Karpeles? A. Yes. Q. Thank you. Now, I want to go back to July 22, 2013. And we talked about FBI access to the servers. Now, you knew that the imaging of the server, the Silk Road server was going to be done in the country where the servers were located, right? MR. TURNER: Objection; foundation. THE COURT: Why don't you establish what kind of knowledge he has about that and then you can take it step by step. Q. Well, the FBI had the IP address for the Silk Road server, correct? MR. TURNER: Objection; foundation. THE COURT: Sustained. Q. Have you seen documents from the FBI with respect to its knowledge either before -- MR. TURNER: Objection. Q. -- either before or since with respect to -- Page 711 THE COURT: I'll allow this. MR. TURNER: Objection; hearsay. A. I haven't seen documentation of an IP that I was told about it. THE COURT: You did not see documentation about an IP address? THE WITNESS: Of? THE COURT: A server that allegedly had the Silk Road site resident on it? THE WITNESS: Not that I recall, but I know they had an IP address. THE COURT: Okay. All right. Q. Now, at the time in July of 2013, when you told the FBI a good time to take down the servers, what did you mean by "take down"? A. I know that they were -- they were going to do an image of it so they would have to take it offline. I was guessing they'd have to take it offline to image it. Q. You didn't mean take down as in stop the servers from continuing to be used to sell drugs around the world? A. No. I believe they were taking it down to image them to take a capture of it. Q. But not to stop the site? A. Not to stop it, no. Q. In fact the site went on for the rest of July, August and September, right? Page 712 A. It did. Q. All the while, the FBI had the image of the servers and the IP address for the servers, right? A. They did. Q. So there was a lot of pressure to get to the point to get to the point to take down the site entirely, wasn't there? A. There was -- there was pressure from our management and from, yeah, from basically our management and from the people that are working with the U.S. Attorney's Office; yes. Q. And nobody was comfortable with the FBI having all this information and this website selling drugs all over the world continuing to operate, right? MR. TURNER: Objection; form. THE COURT: Sustained. You can ask him a little bit differently as opposed to everybody, your comfort level for everybody. Q. Were you comfortable with having all this information and the site continuing to run unimpeded? A. It's not a call for me to make. It's something that it's for the U.S. Attorney's Office to make. Q. I'm not talking about the call. I'm talking about your comfort level with continuing to let the site operate. MR. TURNER: Objection; relevance. THE COURT: Sustained on those grounds. Page 713 Q. Wasn't there a discussion among agencies about that, about the need to do something about the site? You just said management was not comfortable with it. What was that? And this is not hearsay this is just for the fact that it was said. MR. TURNER: Objection. MR. DRATEL: This is not the investigation. THE COURT: We have now -- MR. TURNER: Form and relevance. THE COURT: We're going to change the question. You have a couple different questions embedded in there because you started off on one tact and then went to a different one. Restate the question. MR. DRATEL: Okay. Q. You said before in your answer that management had an issue -- there was pressure from management about letting the site continue to run. What was that pressure? How did it manifest itself? MR. TURNER: Objection; relevance. THE COURT: I'll allow that. A. There was obviously a concern it wasn't necessarily a pressure, there was concern over -- there's pressure about wanting to shut down the site and do it properly, I mean, we want to do it and take down the site properly. Q. What does that mean, "properly"? A. Well, just by turning off a server doesn't completely shut down the site. If -- especially with like a Tor site, you would have to have ownership of it. You would have to have a key over it. If you don't have full control over it, someone can just pop it back up again on another server somewhere else. And if you don't arrest the person that's running it, then -- there, too, they can just reopen the site again and you let on your hand, you let on your investigation and you didn't really solve anything then at that point. Page 714 Q. In fact, Silk Road 2.0 was up and running by early November of 2013, right? A. Silk Road -- there was a Silk Road 2.0; yes. Q. And virtually identical service as Silk Road that was operated on those other servers, right? A. It was very similar to Silk Road 1, yes. Q. Now, with respect to closing the site down, there was discussion among law enforcement about doing it as early as May or June, right? A. If there's a document you're referring to to help me recollect. Q. Sure. It's marked as 3505-3004. I'd ask you to read the highlighted parts. You can read the rest of it if you want, but let me know when you're finished. A. Okay. Q. So, you had been told at one point that the FBI said it would take the site down in May or June of 2013, right? Page 715 A. That was a rumor that I heard from another HSI office. Q. And you yourself on the 23rd, the very day that the sites were imaged, you said that they were -- you were getting close to taking the website and all the operators down, right? A. We were making progress at that point, yes. Q. Getting close? A. Getting close. Q. Now, when Silk Road 2.0 obviously was back up in early November, that was after Mr. Ulbricht's arrest, right? A. It was. Q. Now, as we've discussed, this investigation was being pursued by a number of different agencies in a number of different locations in the U.S., right? A. It was. Q. And internationally, too, right? A. Yes. Q. And is it fair to say that there was some competition among agencies with respect to this investigation? MR. TURNER: Objection; relevance. THE COURT: Sustained. Q. Weren't different agencies -- withdrawn. HSI was pursuing it in Chicago, right? A. Yes, we were suing Silk Road in Chicago. Q. And also HSI Baltimore was pursuing it, right? A. There was also an investigation of Silk Road within HSI Baltimore. Page 716 Q. And the Secret Service was involved in that, right? A. There was a task force, yes. Q. And HSI Baltimore and HSI Chicago didn't always see eye to eye, correct? MR. TURNER: Same objection. THE COURT: Overruled. A. Can -- there was differences, but I mean, it was both going after similar targets at the same time. Q. Right. But there were differences in how to do it and differences on who would get credit for it, right? A. Well, there was differences on the work that we were putting in and how we were going after the targets. There's a different method for investigating -- they had different methods than what we did. Q. And Chicago, and you in particular, were concerned that by giving out information to other locations, whether it's HSI or task force or others, would be compromising that information because it might be used in a way that would impair the confidentiality of the investigation? A. There were concerns over how information would be disseminated if it was disseminated properly or if it or if it would be shared in ways that was outside of our knowledge. Q. In fact, Chicago and Baltimore even had a meeting to try to resolve differences, correct? Page 717 MR. TURNER: Objection; relevance. THE COURT: Sustained. Q. Well, the differences in how to proceed between Chicago and Baltimore were so dramatic that there had to be a meeting, right, to try to resolve it? MR. TURNER: Objection; relevance. THE COURT: Sustained. Q. There was a meeting between Chicago and Baltimore about the direction of the investigation and splitting responsibility responsibilities, right? A. Can you be more specific on a time frame? Q. Sure. February 2012, February 1, 2012? A. That was -- the initial meeting that we had I believe with or around about the time -- February, you said 2012? Q. Yes, uh-huh. A. I believe that might have been a coordination meeting among multiple agencies. Q. And Baltimore said at that meeting that it was shutting down Silk Road soon, right? MR. TURNER: Objection; relevance and hearsay. MR. DRATEL: Goes to the investigation. THE COURT: Hold on. Let me think about it. I'll allow a few more of these. I think I know where you're going and it's not offered for the truth, so I'll allow it. MR. DRATEL: Right. Page 718 THE COURT: You may proceed. Q. So Baltimore said in February of 2012 that it was going to shut down Silk Road soon? A. They -- I believe they said something similar, that they believed they could shut it down quickly. Q. There was concern about Baltimore taking the information that you had gathered in Chicago and then issuing subpoenas for the same targets, right? THE COURT: Why don't you -- just so we're clear and the record is clear, just ask him about his concerns as opposed to generalized concerns. MR. DRATEL: Sure. Q. One of your concerns was that your work product, in essence, that you had input into law enforcement computers was then being taken by other offices and they were issuing subpoenas and potentially compromising the investigation, right? A. There's a proper procedure on how to disseminate information between law enforcement agencies, and one of the concerns if it isn't done through that proper procedure that it could then lead to duplication of efforts and other agencies pursuing other aspects outside of the investigation. Q. And that was going on through 2012, correct? A. There were concerns from time to time about things of that nature, yes. Page 719 Q. And another source of difference of opinion was whether or not Baltimore should meet with Mr. Karpeles' lawyers or meet with him? MR. TURNER: Objection. THE COURT: Sustained. Q. You were frustrated a fair amount of the time by these problems, right? MR. TURNER: Objection; relevance. THE COURT: Sustained. Q. Now, you were also worried that the New York office, the law enforcement in New York would somehow tip off the investigation of Silk Road, right? A. Is there a particular time frame? Q. Yes. August of 2012? A. There was multiple -- a lot of things were going on with multiple agencies, there was a long period of time, and in between that at different points in time, different representatives from multiple agencies would contact me and contact us in a variety of ways and it wouldn't always come from just one source within the agency. It would come from other people from different locations. So there was always concerns based upon what those particular agencies are doing when they're getting involved how far along their investigation is in compared to ours. So there was time periods along the way that we would have -- we would be concerned obviously about where an agency, if they were contacting us, where that would lead. Page 720 Q. So to get back to my question, you were concerned about New York in particular, correct? MR. TURNER: Objection. THE COURT: What was the objection? MR. TURNER: Relevance. THE COURT: I think I know where it's going, so I'll allow a few more of these, but why don't you get to where it's going so I'm not thinking the wrong thing. MR. DRATEL: I'm trying. THE COURT: Okay. Try to pull it in quickly; otherwise, I'll think that I've gotten your direction wrong. A. Is this the New York OCDETF group you're talking about or just -- Q. Intel reports coming from New York -- intel reports from New York, right? There were intel reports issued by New York? MR. TURNER: Objection; form, vagueness. THE COURT: I'll allow that. You may answer. A. There was -- that had to do with a particular intel group that was based in the northern part of New York that was -- the seizures that we were taking in in O'Hare, they were trying to do deliveries and trying to do actions on those particular packages that were interfering with our investigation on the vendors as we were pursuing the vendors with those seizures. Page 721 Q. The problem was that an agent in New York was including your seizures on their intel report, correct? A. They were including seizures that we were holding already for our investigation in a product that was used to disseminate seizures out to be used by other agencies. Q. And you thought that putting -- and doing that, you thought could potentially jeopardize over a year's worth of investigation evidence, right? A. By -- yes, by taking those seizures and put them out there falsely to other agencies to use them in different ways without letting me know about our investigation, yes, they can jeopardize it. Q. Fast-forwarding to September of 2013, you were also concerned that Chicago HSI, once the focus was on Mr. Ulbricht, Chicago HSI might not get any place at the table with respect to this investigation, right, in terms of credit? A. If there's a particular email that you can help me recollect my memory. Q. Sure, 319. 3505-319. A. Thank you. THE COURT: So what's the question? MR. DRATEL: I didn't know if he was finished reading it already. A. Okay. Page 722 Q. September 20, 2013, you were concerned that the Southern District of New York would prosecute people allegedly involved in Silk Road without anyone else being involved in the prosecution, right? A. Well, this was in reference to a meeting between Baltimore and Chicago at the time where it was going to be occurring where -- trying to make -- trying to basically include them in with the arrest with Ulbricht to share the information that we had from the New York case and find ways to bridge differences with your investigation. So this was something that was being discussed between a manager and I about just some of the different ways that we could approach that and how it could be perceived after the take-down. Q. Wasn't one of your concerns -- THE COURT: Mr. Dratel, are you close to the line of questioning or should I get a proffer on relevance, because I don't think I was correct. MR. DRATEL: I'm close to the end. That's fine. THE COURT: A question or two? MR. DRATEL: Why don't you come over to the side bar and let me know the relevance and see if I'm on the same page. *(Continued on next page)* Page 723 *(At the side bar)* THE COURT: I just wanted to get a sense of the relevance. I have in my mind where I think you could be going, but I also think I may be wrong. Otherwise, I don't see how it's relevant. MR. DRATEL: It's about the progress of the investigation and the fact that at a certain critical point, once Mr. Ulbricht was on the radar of the Southern District of New York, that everyone else had to fall in line or else they would not be permitted to participate, and that ultimately -- and this is all in the 3500 -- he says to his supervisor or his whoever he is talking to, he says and these -- he's talking about Baltimore -- he said basically unless people do it the way the Southern District wants, that they can whine all they want, but it won't stop SDNY from prosecuting all of them without any of us. THE COURT: My ruling is that's irrelevant. I had a different version. That's not where I thought you were going. MR. DRATEL: It is relevant. THE COURT: It's not relevant. It's not relevant. MR. DRATEL: Once Mr. Ulbricht came on the radar, everything else was shunt to the side because the Southern District was going to get its way and these people had to -- THE COURT: My ruling is that's not relevant. I had a different version or view. Page 724 MR. DRATEL: Which is? THE COURT: I'm not going to give you your relevance -- MR. DRATEL: Conspiracy theories? THE COURT: It was about ten questions ago, I thought you were going someplace else, so I allowed this but that's not relevant. MR. TURNER: There's also a reference to Mark Karpeles to the document shown to him and I'm worried about defense counsel asking questions about how Mark Karpeles was stalling the investigation, how they were going to Mark Karpeles again. THE COURT: We're going to leave this line of questioning. Thank you. MR. DRATEL: You said "this line of questioning." I also was going to ask him because subsequently to all of this at the end of the September, he is invited by the Southern District to participate in the arrest of Mr. Ulbricht, it's basically like a largess by the Southern District and he recognizes that a hundred percent. THE COURT: Also irrelevant. MR. DRATEL: I think it is. *(Continued on next page)* Page 725 *(In open court; jury present)* MR. DRATEL Q. Now, with regard to competition -- withdrawn. With regard to agencies and the arrest of Mr. Ulbricht, afterwards wasn't HSI Chicago concerned about having the HSI banner be on the seizure at some point? MR. TURNER: Objection; form and relevance. THE COURT: Sustained. Q. Now, you spent thousands of hours on Silk Road you said, right? A. I did. Q. As a supposed buyer, right: In other words, utilizing buyer accounts, utilizing seller accounts? A. I did. Q. As an administrator? A. I did. Q. And the first time you heard Ross Ulbricht's name was either September 10 or September 11 of 2013, right? A. Around that time frame. Q. You had been investigating the site for two years, right? A. Yes. Q. And many of these accounts that you took over were from back of 2012, right, or the ones that you even started, many of them go back to 2012, right? A. Some of them do, but I mean, if there were accounts taken over regularly, even in 2013. Page 726 Q. Now, there were other federal agencies investigating as we talked about, right? A. There were other agencies investigating; yes. Q. And in the manner we discussed, they shared their work product with you, right? A. A lot of them did; yes. Q. And do you know about state and local enforcement? Do you know how many accounts they had running on Silk Road? A. I have no way of knowing. Q. Do you know how many other federal agencies, how many accounts they were running on Silk Road? A. We had a method to try and deconflict that through a headquarters component. Q. What was the total amount of accounts that the federal law enforcement community was running on Silk Road, U.S. federal? A. I don't know the total number, but we could submit a name and just see if it -- if anyone else was either looking at it or was aware of. Q. So you don't know how many? A. I don't know how many; no. Q. And how about by foreign law enforcement, other countries that could have been looking into Silk Road? Do you know how many accounts they were running? A. I do not know. Page 727 Q. You used other facets of your investigation, too, right, right? MR. TURNER: Objection; form. Q. In pursuit of your investigation you used a lot of materials, right, a lot of methods, right? THE COURT: Why don't you restate that. You have methods, materials, facets. Q. You had a lot of methods in your investigation, right? A. Used as many investigative methods as possible. Q. And as many sources as possible, right? A. As many sources as we could; yes. Q. So that's subpoenas and search warrants, right? A. We used subpoenas and search warrants, yes. Q. Confidential informants? A. And confidential informants. Q. What's a Tecs, T-E-C-S? What's a TECS? A. It's the name of the program, not the program, the system that Customs and Immigration uses for their databases. Q. Did you use that as well? A. Yes, I did. Q. And you also had help from people who had expertise in computers and bitcoins and Tor help you as well, right? A. We had confidential informants and other people that we would talk to from time to time. Q. And when you gained access to these accounts, one of the purposes was to try to find the identity of DPR, right? Page 728 A. If possible, yeah; that was one of the main priorities. Q. And you had substantial contact with DPR, right? A. After acquiring the cirrus account, yes. Q. But you also had a chance to look at all of his forum posts and everything else that was available on the site, right? MR. TURNER: Objection to form; "everything else available on the site." THE COURT: Hold on. You can restate. Q. Forum posts, you had access to that, correct? A. To the ones that were available to my account, yes. Q. And also once you got on the site in 2012, you had access to the forums, right? A. Yes, but there was a limited access depending upon your user role as to how much you could see under that user role. Q. Okay. And then did you increase that user role over time? A. I did. Q. And finally you were administrator, right? A. That's correct. Q. During all of that time until September 10, Mr. Ulbricht never appeared on your radar? A. He did not. Q. Until a digital trail presented him to you on a silver platter, right? Page 729 A. Until Special Agent Gary Alford brought it to my attention, Mr. Ulbricht was not part of my investigation. Q. And this is late September 2013, right, after -- five months after Mark Karpeles is put on notice of a federal investigation based on a seizure of his accounts at Dwolla, right? MR. TURNER: Objection to the "late September." It misstates prior testimony. THE COURT: It has a couple of objections. Why don't you restate. Let's not put argument in there. Q. Mr. Karpeles was on notice of a federal investigation as a result of the May 2013 seizure of his accounts as we discussed on Thursday, right? A. Yes, for the money seizure, yes. Q. And Ross Ulbricht comes on your radar three and-a-half months later, right, maybe four months? A. In September of 2013. Q. May, June, July, August. Nothing further. Thank you? THE COURT: All right. Thank you. Mr. Turner. MR. TURNER: Thank you, your Honor. REDIRECT EXAMINATION MR. TURNER Page 730 Q. Good afternoon, Special Agent Der-Yeghiayan. A. Good afternoon. Q. Good to talk to you again. On cross, you were asked about the difficulty of figuring out who was on the other side of the screen when you were talking to DPR, Dread Pirate Roberts? A. Yes, I was. Q. And am I right that every conversation you had with him was on Tor? A. Every conversation I had with him was on Tor, yes. Q. And he was security conscious, right? A. He was security conscious, yes. Q. Did he reveal many personal details about himself in the conversations he had with you? A. No. Nothing personal. Q. So it was hard for you to figure out who DPR was just from your own line of communications with him, is that right? A. It was difficult to try to identify who the real person was, yes. Q. So what was the whole purpose of arranging the arrest the way that you did it? MR. DRATEL: Objection. THE COURT: Sustained. Q. You testified on direct that you would be -- the plan for the arrest was what? A. The plan for the arrest was to try to get Mr. Ulbricht in a public setting and then to initiate a chat with Dread Pirate Roberts for the purposes of seeing if -- Page 731 MR. DRATEL: Objection. THE COURT: I will allow it. You may continue. THE WITNESS: For the purposes of seeing if the chat would match between the person we were arresting and Dread Pirate Roberts. Q. To see who was on the other side of the screen that day? MR. DRATEL: Objection. THE COURT: I'll allow it. You may answer. A. Yes. Q. And when you saw the defendant go into the library that day, you were monitoring DPR online, right? A. Yes, I was. Q. And when he walked in was DPR online or offline? A. When he walked in, he was offline. Q. And after he went in, what happened to DPR's online status? A. He went online. MR. DRATEL: Objection as to form. THE COURT: Overruled. Q. Did you start chatting with DPR after he went online? MR. DRATEL: Objection to form. THE COURT: I'll allow it. Page 732 A. Yes, I did. Q. And what happened to the chat once the defendant was arrested? MR. DRATEL: I'm going to object based on the chat because it's unclear what kind of chat. This whole thing about online is a specific medium that they were communicating through, not anything precise. THE COURT: Ladies and gentlemen, the chat that's been referred to so far has not been oral communications, it's been the written chat. MR. DRATEL: That's not what I mean. THE COURT: I'm going to -- why don't you, Mr. Turner, why don't you back up and talk about the type of chat and I will allow it. MR. TURNER: Sure. The jury heard about this chat before. Can we put up Government Exhibit 129C back on the screen. Zoom in on the text please up at the top. Could you zoom in on the text, Mr. Evert. There you go. Q. Now do you know what chat I'm talking about? MR. DRATEL: That's not the issue. The issue is the medium. THE COURT: I will allow it. MR. DRATEL: It's not -- THE COURT: I'll allow it. We've been through this on direct. It's more of the same. Page 733 You may proceed, Mr. Turner. MR. TURNER: Mr. Evert, can you please zoom in to the right side of the screen. Zoom in fully. Perfect. Thanks. Q. Okay. So do you remember this chat, Agent Der-Yeghiayan? THE COURT: This is GX 129C? MR. TURNER: Yes. A. Yes, I do. Q. What happened in the chat after the defendant was arrested? A. There was no response from dread. Q. And when you went up to the library to look at the defendant's computer, what did you see on the screen? A. I saw an identical chat that I just had with Dread Pirate Roberts. Q. Who was on the other side of the screen that day? A. Ross Ulbricht. Q. Now, let's take a look at this chat -- by the time you had this chat, you had been working for DPR for how long? A. Since late July 2013. Q. Over two months, right? A. Yes. Q. You had had numerous chats with him up to this point before, right? A. I had. Q. Could just anybody strike up a chat with DPR on this system? Page 734 A. No, they could not. Q. What did you have to have? A. You had to have log-in credentials that are provided by Dread Pirate Roberts. Q. And how did he provide those to you? A. It was provided to the original operator through a private message. Q. And it was a private message on the Silk Road forum, right? A. Yes, it was. Q. And would DPR ever contact you on the Silk Road forum? A. He would send private messages to me, yes. Q. Would he sometimes tell you to get on chat? A. Yes, he would. Q. And then after he told you that on the Silk Road forum, what would happen on the chat window? A. Then he would initiate a chat with me on the staff chat. *(Continued on next page)* Page 735 Q. So the connection between the DPR on the Silk Road and the DPR on the chat was seamless, is that right? MR. DRATEL: Objection. THE COURT: Sustained. Why don't you rephrase that. MR. TURNER: Sure. Q. What credentials did you have to have to log into your chat account in the staff chat system? A. I had to have a unique username, which wasn't really a username. It was a string of characters and numbers, and a password. Again, that was provided to me. Q. So what did DPR have to have in order to log into his side of the chat? MR. DRATEL: Objection. Q. What did any user of this sort of system have to have in order to log into the chat? A. They had to have a username and a password, I'm assuming. Q. Was there ever a time when you were chatting with DPR where someone seemed to take over your account and start sending messages to DPR that you had no control over? A. Can you repeat that. Q. Was there ever a time when you were chatting with DPR and someone seemed to take over your account and send messages to DPR that you had no control over? A. No. Page 736 Q. It never happened. So on the date of the defendant's arrest, when you started up this chat with DPR -- if you go back to the chat, please. You can leave it up on the screen. Could you actually back out a little bit more. Right here. You start off the chat, you said, "Hi." And DPR said back, "Hey." Right? MR. DRATEL: Objection. Q. Is that how the chat went? A. Yes. Q. He didn't ask why are you appearing on my screen? MR. DRATEL: Objection. THE COURT: Sustained. Q. He didn't say who are you? MR. DRATEL: Objection. THE COURT: Sustained. Why don't you just ask him what the communication consisted of. Q. When you say "check out," "can you check out one of the flagged messages for me," you were referring back to a prior conversation you had had with him earlier, is that right? A. Yes, I was. Q. What conversation was that? A. There was multiple chats that I had with him ever since he provided me access to that administrator page and to the flagged message section of the marketplace. Page 737 Q. When did he first show you the flagged messages page? A. I would have to go back on the exhibit. Q. Was it days before or weeks before or even longer before? A. It was weeks before. Q. So weeks before you had this chat he had shown you the flagged messages screen? A. Yes. Q. And when you brought it up here, he didn't say what flagged messages screen are you talking about? MR. DRATEL: Objection. THE COURT: Sustained. Q. He said, "Sure, let me login." What did he have to log into in order to get to the flagged messages screen? A. In order to access that page, you would have to have administrator rights. So you would have to have an account that would have access to that support page. Q. Then later he asked you, unprompted, "You did bitcoin exchange before you started working for me, right?" Now, the person you took over the Scout account from, the Cirrus account from, what kind of business was she involved in? MR. DRATEL: Objection. Foundation. Q. If you know? Page 738 MR. DRATEL: Foundation. THE COURT: Why don't you try to build up a foundation for it, first. Q. Do you know what sort of business the person who took over the Scout account or -- MR. DRATEL: Objection. Foundation. THE COURT: No. Let me just hear the question first and then I will decide if I will let him answer. Q. Do you know what sort of business the person who was engaged -- excuse me. Do you know what sort of business the person who you took over this Cirrus account was engaged in? MR. DRATEL: Objection. Foundation. THE COURT: Can you answer that "yes" or "no"? THE WITNESS: Yes, I do. THE COURT: All right. How did you obtain that information? THE WITNESS: There was -- THE COURT: Just tell me generally the source of information that you used. THE WITNESS: Clear. It is a choice point. So it is a government operated account that we have that gives business data based upon like Social Security number, things of that linked to a person, so it will tell if they have a business registered to him. Page 739 THE COURT: All right. I will allow the question. MR. DRATEL: I am still going to object on foundation. THE COURT: I hear you. MR. TURNER Q. What sort of business was that person involved in? A. They had a bitcoin business. Q. Had you ever mentioned to DPR on your Cirrus account that you were involved in a bitcoin exchange business? A. Not that I recall. Q. You never represented that in your undercover capacity? A. No, I did not. Q. So if DPR knew this from Cirrus, he would have heard it before you took over the account -- MR. DRATEL: Objection. Q. -- is that right? THE COURT: Sustained. Q. When did you take over the Cirrus account? A. Late July of 2013. Q. So that would have been information conveyed to DPR more than two months before this conversation, is that right? MR. DRATEL: Objection. THE COURT: You can ask it differently but he can't answer that question. Sustained. MR. TURNER Q. After you saw the chat on the defendant's computer, you eventually took part in the search of the defendant's residence, is that right? Page 740 A. I did. Q. And you testified about the handwritten notes you recovered from Mr. Ulbricht's bedroom, is that right? A. Yes, I did. Q. And during cross-examination, the defense asked you something like would someone running Silk Road be so careless to leave notes like that in the trash; do you remember that? A. I do recall that, yes. MR. TURNER: Can you put the notes back up, by the way, Government Exhibit 130. Q. Do these notes say Silk Road on them anywhere? A. No, they do not. Q. Do they say illegal drugs on them anywhere? A. No, they do not. Q. How were you able to recognize what these notes were about? A. From my account that I was operating on Silk Road and being active in the Silk Road forums, it was something that stood out to me. Q. If a random person picks these notes -- MR. DRATEL: Objection. Q. -- out of a trash bin, would they have any idea that they concerned Silk Road? MR. DRATEL: Objection. Page 741 THE COURT: Sustained. Q. By the way, you said earlier that you identified Ross Ulbricht's bedroom in the residence by the personal effects that were inside the bedroom, right? A. I did. Q. Passport, credit cards, that sort of thing? A. Yes. Q. Did you recover the personal effects of anyone else in that bedroom? A. There was another alias, I believe, on one of the documents. Q. Beside "alias" documents, did there appeared to be anyone else who lived in that bedroom with him? MR. DRATEL: Objection. THE COURT: I will allow it. A. No. Q. By the way, you were asked on cross about travel records that you reviewed for Mr. Ulbricht? A. Yes, I was. Q. And I think you testified you saw maybe one trip or two trips a year, something like that? A. I believe that was what I recall, yes. Q. The travel records you have access to from HSI, do you have access to records for trips anywhere around the world that Mr. Ulbricht took? Page 742 A. Only trips that have an international nexus, so a connection. So it has to be somewhere outside the country or coming from outside into the country. Q. To or from the United States, right? A. Yes. Q. If he flies from one foreign country to the other, you don't see that in your records? A. I do not see that, no. Q. You were asked on cross about someone named Mark Karpeles repeatedly, right? A. I was. Q. And one of the questions you were asked concerned software called MediaWiki, do you remember that? A. I do. Q. You testified that there was a website you thought was associated with Mark Karpeles -- MR. DRATEL: Objection. Q. -- that used MediaWiki software? THE COURT: Hold on. Let me just read this. Hold on. *(Pause)* THE COURT: I will allow it. Q. Right? A. Yes. Q. And what is MediaWiki software? A. It's an open source. It is a free program that you could download from the Internet. Page 743 Q. What is it used for? A. It's used to create Wiki pages. Q. FAQ pages, right? MR. DRATEL: Objection to leading. THE COURT: Sustained. Why don't you ask it differently. Q. What do you mean, Wiki pages? A. So information pages, so it could be used to provide information. Q. It is a tool for building pages -- MR. DRATEL: Objection. Leading. Q. -- on websites? THE COURT: I will allow it, just to sort of cut through this. A. Yes, it is. Q. Go ahead. A. Yes. Q. And when you say "freely available," what do you mean? A. That means that anyone on the Internet can download it. Q. Anyone on the Internet can download it for free, right? A. Yes, without paying for it. Q. Just like are there browser software programs that you can download from the Internet for free? A. Yes, there are. Page 744 Q. And sometimes those programs change from time to time, right? A. Yes. There is different versions, updated versions. Q. So some people can download one version and then it can change and some people can download the next version? MR. DRATEL: Objection. THE COURT: I will allow it. A. Yes. Q. So you noticed that the same MediaWiki software was running on -- was used to create Silk Road's FAQ page, is that right? A. Yes. The same version of MediaWiki was used on the Silk Road -- Q. Do you have any idea how many thousands or tens of thousands websites -- MR. DRATEL: Objection. Q. -- had FAQ pages still using the same -- MR. DRATEL: Objection to the form. THE COURT: I will allow it. A. I do not know. Q. I think you testified about Simple Machines software? A. I did. Q. And what is that software used for? A. It is to create online forums. Q. Like a discussion forum, right? A. Yes. Page 745 Q. Is that freely available software? A. Yes, it is. Q. Can anybody download it? A. Anyone can download it for free. Q. And use it to create a forum on whatever website they want? A. Yes. Q. You testified about PHP and MySQL, is that right? A. Yes. Q. What are those programs used for? A. It's just a free program that you could download that is a language that helps you build and create websites. Q. Do you have any idea how many thousands or millions of websites use PHP or MySQL? MR. DRATEL: Objection to form. THE COURT: Why don't you ask a different -- Q. Do you have any idea how many websites in the world use PHP or MySQL? A. I don't but I know it is popular. Q. You testified on cross that there was a time when you were looking at whether Mark Karpeles might be involved in operating Silk Road, correct? A. Yes. Q. And in terms of what initially led you to look at Mark Karpeles, you testified it was something about the silkroadmarket.org website, is that right? Page 746 A. Yes. Q. Remind the jury, what is the silkroadmarket.org website? A. It was a website that was on the regular Internet that if you were to search Silk Road on a regular Internet browser, you would potentially find this website first, since it wasn't on Tor, and it would redirect you, give you directions step-by-step on how to access the Silk Road marketplace on Tor. MR. TURNER: Your Honor, may I approach? THE COURT: You may. Q. I'm showing you what's been marked as Government Exhibit 149. A. OK. Q. Do you recognize this exhibit? A. I do. Q. What is it? A. It's a screenshot from archive.org of a Silk Road market page. Q. Silkroadmarket.org? A. Silkroadmarket.org page -- MR. TURNER: The government offers Exhibit 149 into evidence. MR. DRATEL: Objection. Vayner. THE COURT: You need to lay a foundation for this witness for this document. MR. TURNER: Your Honor, we have -- if I can, I will authenticate it under 902 with a declaration from archive.org, and we won't have to have a sidebar. We have already discussed archive.org, and it came through the cross as a tool that can archive reliably websites over time. Page 747 THE COURT: I need to take a look at that testimony to remind myself of that. I am going to allow the document for the moment, subject to connection. MR. TURNER: Thank you. THE COURT: And then, ladies and gentlemen, I will let you know if there is a issue and we need to strike it. But you can proceed. *(Government's Exhibit 149 received in evidence)* MR. TURNER: So could we publish Government Exhibit 149? THE COURT: You may. MR. TURNER: Thank you. Can you zoom in? Q. All right. So was this all there was to the website? A. This was all there was. Q. And it just told you how to get to the actual Silk Road website on Tor, right? A. Yes. Q. It wasn't the actual Silk Road website at all? A. No, it was not. Q. It wasn't on Tor? Page 748 A. It was not on Tor. Q. It was just on the ordinary Internet? A. It was a regular website, yes. Q. And because it was on the ordinary Internet, you were able to look up its true IP address on who.is like you told us about before, right? A. Yes. MR. TURNER: May I approach again, your Honor? THE COURT: You may. Q. I show you what's been marked as Government Exhibit 150. A. OK. Q. Do you recognize this Web page? A. Yes, I do. Q. Where is it from? A. It's who.is -- a screenshot of who.is searching silkroadmarket.org. MR. TURNER: The government offers Government Exhibit 150 into evidence under 803(17). MR. DRATEL: Objection, your Honor, Vayner. THE COURT: All right. I need to take a look at it. *(Pause)* I will allow it. Government Exhibit 150 is received. *(Government's Exhibit 150 received in evidence)* MR. TURNER: Can you publish Government Exhibit 150, Mr. Evert? Could you zoom in here. Zoom in just on that half, please. Page 749 Q. OK. So you looked up silkroadmarket.org on who.is, right? A. Yes. Q. And you found it was controlled -- it was on a server that was going to -- MR. DRATEL: Objection. MR. TURNER: Your Honor, I'm trying to get done before 5. THE COURT: Even though you are trying to get done, we may have to have him back anyway, so take your time. MR. TURNER: OK. Q. So where did you find the IP address resolve back to? A. It came back to a server that was under XTA, an XTA server. Q. You testified on cross that you found that xta.net was registered to Mark Karpeles, right? A. Yes. Q. You found that based on publicly available information? A. Yes. Q. So you decided to look for Mark Karpeles, is that right? MR. DRATEL: Objection. MR. TURNER: Your Honor, this has already come in through cross. MR. DRATEL: I know, but the leading parts -- THE COURT: Try not to lead. I will allow it. Try not to lead. Take your time. Page 750 MR. TURNER Q. So you decided to look for Mark Karpeles, is that correct? A. Yes, I did. Q. You wanted to see if there was anything further -- MR. DRATEL: Objection. Q. -- in this connection? MR. DRATEL: Objection. THE COURT: Sustained. MR. DRATEL: Objection as to the -- THE COURT: I'm sustaining it. MR. DRATEL: OK. MR. TURNER Q. You testified on cross you got a search warrant on Mr. Karpeles' email, is that right? A. Yes, I did. Q. And you searched through all those emails? A. Yes, I did. Q. When did you finish looking into those emails, by the way? A. It took me awhile, a few weeks, a month maybe. Q. What time of year? When did you -- A. It's hard to say. Q. Was it in 2014? A. Because I think by the time we got it later on, it probably ended early 2014. Q. OK. So this was after Mr. Ulbricht's arrest you finished looking up through all those emails, is that correct? Page 751 A. Yes. Q. And when you looked through all those emails, what kind of company did you learn that Mr. Karpeles ran? MR. DRATEL: Objection. Foundation. THE COURT: Well -- MR. DRATEL: Hearsay. THE COURT: Hold on. I get the drift. Sustained. We are going to have to come at it a different way, based on what we did earlier. Gander/goose. What's good for the goose is good for the gander. Q. What sort of email did you see? What were the emails about? MR. DRATEL: Objection. THE COURT: I will allow there to be a topical description, but it is not for the truth. It's just for the topics. You may proceed. A. Generally, I mean, it was about his hosting services that he had, so the majority of the emails that were coming through revolved around that as well as his bitcoin business. MR. DRATEL: Objection. MR. TURNER: Your Honor, this all came in during cross. Q. You testified on cross he hosted websites, is that right? Page 752 A. Yes, he did. Q. OK. So what was his Web hosting company called, by the way? A. KalyHost. MR. DRATEL: Objection. Foundation. THE COURT: I will allow it. Q. K-a-l-y-h-o-s-t? A. H-o-s-t. Q. Did it go by any other names that you saw in emails? MR. DRATEL: Objection. THE COURT: Ladies and gentlemen, if he did and didn't confirm it, then it wouldn't be in for the truth, it is just for what he saw in the email, and the email may have had certain words, and I will allow is for that purpose. A. AutoVPS I believe was the name of the other company. Q. Remind the jury what a Web hosting company does. A. Web hosting is a company that you could go to to host websites. Q. Right. A. So you could buy services from them. Q. And does that involve renting server space from the companies? A. That does include that. Q. So if you -- you said earlier that you looked up Mr. Karpeles and there were many, many servers registered to him, many IP addresses registered to him, right? Page 753 A. That's correct. Q. If you own a car rental company, do you own a lot of cars? A. You own a lot of cars, yes. Q. What do you do with those cars? You rent them out to? A. Other people. Q. Right. Do you control where those other people drive with the cars? MR. DRATEL: Objection. THE COURT: Sustained. Q. With a Web hosting company, when the Web hosting company rents out its servers to other people, does the Web hosting company control what the customers put on their websites? A. No, they do not. THE COURT: We are going to end in just about two minutes on the dot. MR. TURNER: I think I can almost get through, your Honor. I think I can get through. THE COURT: But don't rush it in terms of I'm not sure that this witness -- I don't know whether this witness will be on or off the stand, so I just want to make sure that you don't proceed on that assumption. Go ahead. MR. TURNER Q. All right. Now, when a customer of a Web hosting company sets up a website, is there any type of information the customer has to provide in order to register the website? Page 754 MR. DRATEL: Objection. THE COURT: Sustained unless you can build a foundation for that. Q. Do you know? A. Just what I have observed through looking through Mark Karpeles' emails. MR. DRATEL: Objection, your Honor. Q. Let's back out of this area of the document here, please, Mr. Evert. You testified before that you are familiar with the who.is database, right? A. I am. Q. Is this database relied on regularly by people to figure out who websites are registered to? MR. DRATEL: Objection. MR. TURNER: I am building a foundation, your Honor. THE COURT: I know but not to "everybody." You can ask him if he relies upon it. MR. TURNER: Sure. Q. If a person -- well, excuse me. Do you rely upon who.is in order to determine who a website is registered to? A. There is information you could use off of that, yes. Page 755 Q. It is a publicly available database that is available for that purpose? A. Yes, it is. THE COURT: All right. We are going to end here, Mr. Turner. MR. TURNER: OK. THE COURT: I know that you have made a valiant effort to get through it. But you are going to have to come back another day. All right. Ladies and gentlemen, I want to thank you for your patience with us today. And I want to remind you not to talk to each other or anybody else about this case, and to avoid any mentions of this case that you may see in any news reports or media reports of any kind. And we'll see you tomorrow morning. We'll start at 9:30, I hope, right on time. Thank you very much. Good night. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 756 *(Jury not present)* THE COURT: Why don't you go ahead and step down, sir. Let's all be seated here. *(Witness not present)* THE COURT: Not knowing what there will be on these topics for any recross, which I am considering in light of all the back and forth we have, we have had a lot of evidentiary objections -- for instance, if there were recross, I would not necessarily cut it off. I didn't want to have you end with this witness and then have pressure whether or not to bring him back. I wanted to for this particular witness, given the difficulty we have had with everything today, to proceed and let it unfold as it needs to unfold. Mr. Dratel, Mr. Turner had suggested earlier that he is about to end with this witness. I have one, two, three, four, five, six topics I think he has covered. That doesn't mean that you have to cover all of them, but at this point are you thinking of any recross? MR. DRATEL: Yes, your Honor. THE COURT: Approximately how long do you think you will take on one or more of those topics? MR. DRATEL: Your Honor, let me just look through my notes. THE COURT: Yes. *(Pause)* Page 757 MR. DRATEL: I would think right now we're about 15 minutes. THE COURT: All right. Terrific. So we ought to then plan on, if all goes well in the morning we'll be moving on to our next witness, which will, I'm sure, some relief to us all. In terms of tomorrow's examination, is there anything that people expect to come up that we ought to be thinking about right now versus having to deal with it tomorrow? We now know the nature of, generally speaking, where folks are getting exorcised and not. MR. TURNER: With respect to this witness or the next, your Honor? THE COURT: No. Right now I am just dealing with this witness. I just want to see whether there is something that we know of that is going to come up, for instance, that's going to be getting into areas that we'll need to address. Because, if so, I want to have a chance to think about them and you folks as well. MR. TURNER: To the extent the defense wants to revisit the issues that we went over today in terms of getting back to the agent's beliefs about -- THE COURT: I will let him preview that. MR. TURNER: -- on redirect -- THE COURT: There is nothing else that you are going to be doing on your redirect that you expect will raise particular issues? Page 758 MR. TURNER: Not that I can think of right now. THE COURT: All right. Mr. Dratel, are there things which you expect will raise particular issues? MR. DRATEL: On this witness? THE COURT: On this witness right now for tomorrow morning. MR. DRATEL: Not directly related to the redirect. THE COURT: All right. OK. If anybody has any cases on the statement relating to the complaint, I'm not finding anything that's jumping out at me, but I don't have time to look at it closely right now. Give it to me the first thing in the morning and I'll read it. I also have gotten and you folks could presumably get a copy of the sealed portion of the transcript. If you want to get a copy of it and look at it and tell me whether there is anything that comes out of it that you think we need to talk about tomorrow morning, we will do that at 9 as well. Is there anything else, folks? No? MR. TURNER: Nothing here. MR. DRATEL: No, your Honor. THE COURT: All right. I will see you folks tomorrow morning. We are adjourned. THE CLERK: All rise. *(Adjourned to 9 a.m., Wednesday, January 21, 2015)* Page 759 INDEX OF EXAMINATION Examination of: Page JARED DER-YEGHIAYAN Cross By Mr. Dratel . . . . . . . . . . . . . 617 Redirect By Mr. Turner . . . . . . . . . . . . 729 GOVERNMENT EXHIBITS Exhibit No. Received 149 . . . . . . . . . . . . . . . . . . . . 747 150 . . . . . . . . . . . . . . . . . . . . 748 DEFENDANT EXHIBITS Exhibit No. Received F . . . . . . . . . . . . . . . . . . . . . 631 Page 760 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant, ------------------------------x New York, N.Y. January 21, 2015 9:22 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Sharon Kim, Government Intern Page 761 *(Trial resumed; jury not present)* *(Case called)* THE COURT: Good morning to all of you. The first thing I would like to do is to have you, Mr. Dratel, while I am addressing a couple of other matters gather up what I have been referring to as the AA posts that you wanted to compare to the mises piece, the mises.org piece, so I can just take a quick look at them. I have reviewed the portion of the transcript yesterday, as I had told you I would, early relating to that discussion. So I just want to take a quick look and see whether or not we're able to do anything with that. MR. DRATEL: I'm not sure what the Court means in terms of are you talking about the language analysis? THE COURT: Yes. We dealt at sidebar with an evidentiary issue, and you wanted to use some mises posts of some sort with the Silk Road forum. MR. DRATEL: No, it is not the mises posts with the Silk Road forum. What it was was -- THE COURT: Two different. One was a mises.org. MR. DRATEL: It was not mises.org necessarily. It was this witness' analysis, comparison of the writing that he attributed to Anand Athavale and Dread Pirate Roberts' writing as well in comparison. THE COURT: Do you have -- Page 762 MR. DRATEL: Yes. I can find it from the 3500 -- THE COURT: If you can. Because what I am wondering is whether or not there is a way of doing something that is a factual-based series of questions. In other words, in terms of were you familiar with these mises whatever they are called, whatever the right word is called. Did you review them in the course of your investigation? Yes. And did they have the following name associated with it? Or whatever they are. Did you separately look at Y? And then you can draw -- he can't talk about his conclusions, and I won't let him talk about his assumptions, but you can, through argument, draw whatever inferences you want to draw. This is the first issue. Yes. But I need to see the stuff -- before I even know if that works, I need to see the materials. MR. DRATEL: Sure. MR. TURNER: Your Honor. THE COURT: Yes. MR. TURNER: I don't think the defense has the actual mises.org. The defense is referring to the defendant's own analysis. THE COURT: I understand he has referred to it like that. I'm trying to get underneath that and to see if there is something factually that will work. So let me see what he's got and then we'll figure out if there is anything that we can do with it. Page 763 The conclusions of the analysis I'm not allowing in, but whether or not there is the data that he used to do the comparison, this witness used to do the comparison, whether or not that could be presented to him. Did you use this data? Yes. Did you compare it to this? Yes. That is something that I want to assess. MR. TURNER: We would still be left with the authentication issue, your Honor. This witness does not have the necessary foundation to -- THE COURT: I believe that if he physically possessed the documents, then Mr. Dratel can resolve that by saying did you do anything to determine other than the fact that you printed these off the Internet. I mean, it is up to argument, the weight that the jury gives it. They are not coming in for the truth. They are not going to be -- let me just see what he's got. OK? We've got other issues to deal with. Let me deal with some other issues first. OK? The other issue is Complaint Paragraph 22C. I have reviewed case law relating to the admissibility of complaints signed by government agents. I believe that Mr. Dratel is correct that that one paragraph can be put in. I didn't receive any letters from you folks. So it's Paragraph 22C. Now, the way that that would be done would be stating: In September 2013, the government made the following statement, and the paragraph would be read in its entirety. But based upon the Ramirez case, in the Second Circuit 1990, as well as some certain other cases, that appears to be something which can be done. Page 764 Mr. Turner. MR. TURNER: Your Honor, we haven't had a chance to look at that case. We ask for the opportunity to do so. THE COURT: Did you find any other cases? You folks were tasked last night with coming up with any case law you felt was supportive of your respective positions? MR. TURNER: That was considered hearsay. The problem is the defendant isn't even offering it for the truth. They are offering it to try to impeach him, essentially. THE CLERK: He offered them separately. He made a proffer. I agree with you, and I had considered whether or not this should be done in the context of the defense case. That is one possible issue. However, Mr. Dratel did specifically recite the hearsay rules to get it in as an admission. In fact, he cited three of them, one of which I think is more applicable than the other two; that is the party admission. MR. TURNER: But, your Honor, that principle applies when the party is trying to put that proposition in for the truth. What they're trying to do is say the government made an inaccurate statement. They are trying to sort of impeach this statement. Page 765 THE COURT: No. I think his theory, from his opening, which is why I've also considered the materiality of it and wondered whether this is a collateral issue solely for impeachment but then I recalled that in his opening Mr. Dratel, as I understand part of your point, it's that this website was alleged to have been making money hand over fist. So where is -- show me the money. Basically, where's the beef. And if the defendant wasn't caught with the beef, then that's a point Mr. Dratel wants to make, that that absence is an additional circumstantial fact supportive of identity. I think that is the argument. So I think he wants it in for the truth. Am I wrong about that? MR. DRATEL: No, your Honor. You are correct. It is an admission and it doesn't have to impeach, and the Court is correct with respect to the GAF case. THE COURT: Yes, I have read the GAF case. MR. DRATEL: It is really dispositive. It also says that a party -- and, also, the Court mentioned Ramirez, also, Warren, you know -- and I will just quote from it, where, quote, the government has indicated in a sworn affidavit to a judicial officer that it believes particular statements are trustworthy, close quote, the Court -- and then the quote continues -- may not sustain an objection to the subsequent introduction of those statements on grounds that they are hearsay. Page 766 THE COURT: Right. MR. DRATEL: That is 22 -- THE COURT: Yes, I read the Warren case. I think that is a D.C. Circuit case. The GAF case had to do with a bill of particulars, but I think it is sufficiently close that the principle applies. MR. DRATEL: Right. And I think, also, GAF also stands for the proposition that even if the party changes its strategy or its position in litigation, that prior position is admissible. THE COURT: That was the situation in GAF where they had two different bill of particulars. MR. TURNER: Your Honor, if I may? THE COURT: Yes. MR. TURNER: First of all, the government would like an opportunity to look at this law, and this is law that we haven't had an opportunity to see. It is not an urgent -- THE COURT: You were supposed to look at it last night. I did last night go over the things that were going on for this morning. MR. TURNER: We did, your Honor, but we never received anything from the defense. We don't know what specific cases your Honor looked at. We would simply like an opportunity to take a look at those cases ourselves and address them. I want to make clear, though, your Honor, the government is not changing its position. The amount of bitcoins we're talking about is still the same. Page 767 THE COURT: It is still 1,229,456? MR. TURNER: It is slightly higher, but the point is the valuation -- THE COURT: That is actually stated here. That bitcoins had fluctuated greatly. That actually is why, in terms of completeness, I had suggested that Mr. Dratel would read the entirety of the paragraph. MR. TURNER: Precisely. That is why this is going to cause juror confusion. The amount of bitcoins is not significantly changing -- THE COURT: If you folks can find cases contrary to -- I think Mr. Dratel has got his hands on the rights cases, which are the same ones I have looked at, with the addition of the Santos case, which is a case where the Second Circuit actually -- it was an old case. It was pre-rules. But then later on, in a later case, the Second Circuit ends up saying we want to reaffirm the holding in Santos. If you want to take a quick look? But at this point, Mr. Dratel, if you wanted to use this for impeachment, you can use anything for impeachment. But in terms of reading it, we'll hold off for a little while. You can do that at any point in time. You can do it when the government rests, but I'm not at this point going to have a ruling stand yet that he is precluded from reading it, because I think the better reading is that as to this paragraph he can read it. Page 768 MR. TURNER: Your Honor, one more suggestion. We're going to have a witness toward the end of our case who is going to testify about the statistics, about the bitcoins that were seized from the defendant's computer, from the Silk Road server. If the defense wants to use it in the course of cross-examination to try and impeach the witness' statement or something like that, I think it would make a lot more sense then. All I'm saying is that there is no urgency now in case you -- THE COURT: The point is that I want to make sure that while the current witness is still on the stand Mr. Dratel has an opportunity to use this. The witness may have in fact read the Complaint in this action. If the witness, who has testified about the amount that he found in certain accounts was X, if this is of any value to impeachment, I don't know that it is, but I want to make sure that there is no ruling precluding the use of 22C from the Complaint for impeachment purposes. Moreover, separately, and at another time, it is my inclination to allow it to be read in as a party admission. A party admission need not be an inconsistent statement to come in. But we don't have to -- I agree with you on the latter point that we don't have to face that issue until a little bit later. But I want to make sure Mr. Dratel understands he can use 22C. Page 769 MR. DRATEL: Thank you, your Honor. THE COURT: All right. Now, the other issue is -- I'm waiting for the mises.org -- MR. DRATEL: I'm trying to look for them and engage in the discussion at the same time. By the way, your Honor, yesterday I believe what he said was you did not ask for a letter from us, you had the cases, indicating the cases. THE COURT: The last thing, while you are looking for the mises stuff -- let me just tell you while you are looking for it, what I am thinking of, Mr. Dratel, is literally taking the two factual pieces, the mises piece and the other piece, asking him have you looked at each of them. Not asking him about his conclusions. And if then you want to ask him did he notice the word ABC and it happens to match ABC, he can stay yes, but not ask him if he drew any conclusions about whether this guy was DPR. What you can then do is through argument draw whatever inferences you believe are appropriate. But it's the factual back and forth that I think could be appropriate while the speculative conclusions would not be. MR. DRATEL: OK. THE COURT: OK. That is what I am thinking. We'll see if the evidence would work. Page 770 MR. TURNER: Your Honor, again, the evidence is being offered that Anand Athavale posted these things, and all that would be relied upon would be a page that the agent -- THE COURT: You can go back and say -- I mean, I would expect Mr. Dratel would have no problem saying: Do you know for a fact who posted these? MR. TURNER: Right. THE COURT: And this guy can say: No. All I know is they were associated with this name. I didn't do any independent verification. MR. TURNER: Then it should not come in. It is a threshold issue, your Honor -- THE COURT: No. Because I will tell you why it is relevant. It is relevant because during the course of the investigation there was an exercise that was done, and I'm not putting it in for the truth of whether these are from Anad, whatever his name was, or not, that there were certain materials -- they could have been from a trashcan -- compared to other materials. It was part of what he did. I'm not asking or confirming whether or not Anad was in fact the author of the mises piece at all. It is just that he did this analysis. He compared the two. And then we can figure out where to go. But the fact of the comparison I don't believe is hearsay. I don't believe it's irrelevant because it's probative of identity, which is a material issue in dispute. And I believe that his exercise -- whether the exercise was based upon competent evidence or not is a different issue. It's not the pages which are being admitted for some sort of truth-finding exercise, it is the exercise. Page 771 MR. TURNER: It is not a hearsay issue, your Honor. I am not arguing it is a hearsay issue. It is an authenticity issue -- THE COURT: No. But the authenticity is that -- I mean, all I need these pages for, to come in for, the only purpose is that those are the pages he used. They're authentic pages which he used. Whether they are in fact authentic from mises or in fact authentically from a particular person is different from whether he in fact held them in his hands or looked at them on the screen and used them. If you have doubt that these are the pages he used, then we have an authenticity issue. If there is no doubt that these are the pages he used, it is not about authenticity of the pages, it's about authenticity of the underlying information. MR. TURNER: The government, your Honor, so if you look at Vayner, the issue there was the document -- there has to be evidence the document is what it purported to be. THE COURT: And that was a pause. What it purported to be were the pages this fellow used. Page 772 MR. TURNER: Right. In Vayner it was purported to be the Russian Facebook page of the defendant. OK? And the Court just didn't say, well, there are pages on the Internet and that is fine. The Court said that they're being offered as pages of this particular defendant and there has to be authentication. If I may? Here, it's clear the defense is offering this as pages posted by Anad Athavale. So Vayner carries over. You can't simply have the agent say, well, I had his name Anad Athavale on it and, therefore, that is enough to authenticate it. THE COURT: No. I think that the purpose in Facebook was to show that particular statements in Facebook were true and that were statements of the posting party. That's not part of this exercise. MR. TURNER: It wasn't to show that they were true. It wasn't a hearsay issue, your Honor. It was an authentication issue. THE COURT: Before they got to the hearsay issue. MR. TURNER: The point is this exercise your Honor is referring to is only relevant insofar as they are trying to show an alternative perpetrator theory. THE COURT: Yes. MR. TURNER: The alternative perpetrator theory is there is this guy out there, Anad Athavale, and he posted all of these things on mises.org, and his language choices match up with Dread Pirate Roberts. Things like he spelled "a lot" a-l-o-t instead of with a space. It is actually quite silly when you look at it closely. In any event, in order to prove that theory, like your Honor explained yesterday, you have to have the chain of inferences laid out. You have to be able to offer the chain of inferences. Here it is a key inference or it is a key point along that chain of inference that the pages at mises that this Agent looked at were Anad Athavale's actual posts. Page 773 THE COURT: What I'm suggesting is he cannot testify and would not be allowed to testify that these were Anad Athavale's posts. All he can say is I found these -- as part of my investigation, I found these things on the Internet. I did the following comparison to things on Silk Road. Full stop. MR. TURNER: And as long as there is absolutely no mention of Anad Athavale -- THE COURT: Not "no mention." He can look at the page and say this, but he can also say I have no idea whether it was him or not. I have no idea if John Doe posted these. All I know is that was the name. MR. TURNER: But, your Honor, if that had been the way things go in Vayner, then the Court would have said, well, no, it is fine, just let it in and then the jury can be instructed that the agent has no way of authenticating this issue but it should go to the jury anyway. That is not how the Vayner Court applied the rule. It is a threshold issue. Page 774 THE CLERK: I hear you. I am using it for a different purpose. Let me see the information on both sides of this. I don't know if it works in the way that I'm suggesting. MR. TURNER: And, again, we just stress that the proper way -- if the defense wants to establish this theory, the proper way to do it is actually put the mises.org posts before the jury, properly authenticate them. Then they can draw the inferences. They don't need the agent to do so. The agent's opinion -- THE COURT: He is not going to draw -- I am not going to let him draw his conclusions. MR. TURNER: Then there is really no need for the agent to testify about it. THE COURT: Here's the point. Part of his investigation was looking at a variety of information, and there were a variety of facts which indicated circumstantially and built a case. These are among the facts that eventually circumstantially fell off. The jury might credit them more than he credited them, but it is up to them to credit them. And -- MR. TURNER: This is exactly what the Johnson line of cases talks about, that sort of the investigative background, the story of how the investigation proceeded, is not relevant and that -- Page 775 THE COURT: But that was for the investigative background to show -- in the Johnson case, it was to show really sort of important things coming in that were hearsay as background. And the Court said no, no, no, no, no, you can't wedge in as background these clearly disputed issues of fact. That's the Johnson case. That's not this. Let me see what Mr. Dratel has. This may or may not go anywhere, but I do want to see what the lay of the land is. MR. TURNER: OK. But just to finish the thought, I think the Court in Johnson emphasized the dangers of introducing background evidence like this, because it can give the impression the agent found this important, the agent, you know, had suspicions about this evidence at the time. That is why the Court said it's generally not relevant, and -- THE COURT: I hear your point. Mr. Dratel, do you have anything to hand over? MR. DRATEL: Yes, I do, your Honor. Thanks. Some of them are not consecutive so I've -- well, there are a couple -- I've categoried them -- THE COURT: Can I have the prosecution come up here as well? Walk me through these. MR. DRATEL: Oh, sure. This is all from the 3500, obviously. This is from emails, and then the top part is a profile of Mr. Athavale. Page 776 MR. TURNER: Can we be clear when you are talking about emails? MR. DRATEL: Emails from the agent. This is an email from the agent or a report, really, from the agent. And it lists first the usernames -- I mean the IP addresses, usernames. And then on this page it starts with the writing analysis that he has done. There is an earlier -- there is also a report that he has written, which is another part, which is essentially the same but it just appears in a different part of the 3500, where he talks about there is an extensive analysis of distinct writing styles, sayings, spelling mistakes, clichés, and specific nuances which have led to determining -- and then it is redacted -- it is a highly likely target. In fact, four pages are redacted. I think it is what is in this report and in other parts of the 3500. I don't really understand the redactions. There are a lot of redactions in the 3500 of the agent. For a period, I assume, that they had things that were properly redacted. I think this is not properly redacted, but I imagine that we have it in this report so I'm not sure that there is an issue. But, anyway, then he goes on to list them in about six pages worth. And he also talks at another point about -- and I'm not sure if it is in this one. Let me just see if it is in this part, where he talks about having sent it to a college professor. Page 777 MR. TURNER: Is it irrelevant? MR. DRATEL: The fact that he sent it is not a conclusion. If the government wants to bring out a conclusion, that's fine. *(Pause)* THE COURT: Do you have the -- what you have here -- and I'm focused on the "boths," do you have the two things that were being looked at that resulted in that determination? MR. DRATEL: No, I don't have the mises posts because it is just digested here. This is the sort of longer version of that in terms of it has the quotes pulled out, to a certain extent, on what he based it on. There is another section in this part that goes into it in greater detail in terms of the analysis. MR. TURNER: Your Honor, what's being done here is we are talking about thousands of posts. Instead of trying to get a competent representation of those posts, he is just drawing on this agent's memories, this agent's perceptions. If it is going to be done right, the right way to do it is to have the actual documents themselves. This is akin to us drawing somebody off the streets and saying, hey, do you remember looking at a bunch of posts on a website and were there similarities between the posts and what you saw on the Web page. That is an improper way to prove our case. It should be an improper way for the defense to prove their case. Page 778 THE COURT: The difference is this is an agent who is not pulled off the street who was tasked with being careful and accurate within the constraints. Here's what we're going to do. We're going to -- let me just sort of see if I can do a series of questions. *(Pause)* THE COURT: What are these things called, these posts? MR. TURNER: It is a report of email. I can go back and find the first page. THE COURT: What was he comparing it to, the mises compared to? MR. TURNER: To DPR posts. THE COURT: On what? MR. TURNER: On the forum -- also, everything he gets his hands on from DPR. THE COURT: OK. This is what I am going to allow. I'm going to allow questions along the following lines. MR. TURNER: Should I take notes? THE COURT: No, I'm going to hand you my page. Did you look at the posts from the mises.org? Whose name appeared? Do you know if in fact it was this person? He will say no. Did you confirm that it was this person? So it is clear he did not confirm. Did you compare what you found from the mises' posts to anything else, in fact, to the DPR forum? Yes. Did you look at words? Yes. Did you make certain factual determinations as to the appearance of words in certain places? Yes. Page 779 What I do not want, and will not allow, is his conclusion here where he talks in the first one: "Both use the same writing style." OK? He can't say that. MR. DRATEL: Right. THE COURT: But he can say both spell the word "realtime" with a hyphen. That is an English language comparison. The government can then go back on cross and unsettle, undo the mises posts. MR. TURNER: Your Honor, I just want to make sure we have a clear record. When your Honor says the agent can be asked did you do anything to confirm this came from this person, that goes to the reliability of the document. And that's the whole point of the rules of evidence, that documents that aren't proven to be reliable should not come in in the first place. That is the very reason -- the same thing with the LinkedIn pages yesterday. If they cannot be shown to come under a hearsay exception, they can't just go to the jury with the instruction that they can't be -- that the agent didn't do anything -- THE COURT: Well, what you can do on cross-examination is bring out that he has no idea if this was from this person or another person or the man on the moon. But I am going to allow this. I understand the government's position is that they oppose vigorously. Page 780 MR. DRATEL: Your Honor, just two things. One is with respect to instead of asking him a sort of imperative question, "Did you confirm," can I ask him "Did you do anything to confirm?" because I don't know the answer? THE COURT: Fine. MR. DRATEL: Can I say, "Did you send all of this material to a college professor for analysis?" Just that question. MR. TURNER: We argue that it is irrelevant to anything. THE COURT: Well, it is not irrelevant. Yes. MR. DRATEL: Thank you. THE COURT: All right. The last thing we'll take up at another time is how to deal with the strikes. I don't want to take it up now. Do we have a full jury, Joe? THE CLERK: We do. THE COURT: We are going to proceed. All right? MR. DRATEL: Your Honor, the government has provided me a proposed instruction which I have some problems with, so we'll try to work on that. Page 781 THE COURT: All right. Thank you. Let's bring out the jury. Get Mr. Der-Yeghiayan on the stand. MR. TURNER: Are we going to redirect, your Honor, or back to cross? THE COURT: We are going to go to redirect and then go back to cross. But I will allow Mr. Dratel, if necessary, to go beyond the scope of the redirect to correct my rulings from yesterday. MR. DRATEL: Thank you, your Honor. *(Pause)* MR. DRATEL: Your Honor, while we are waiting, could we just do a quick sidebar? THE COURT: They will be horrified if the jury walks out and see us at the sidebar. It will be like, you know, Groundhog Day. THE CLERK: All rise as the jury enters. *(Continued on next page)* Page 782 *(Jury present)* THE COURT: All right. Ladies and gentlemen, as we get to our seats, let's all be seated. And we are still on the redirect of Mr. Der-Yeghiayan. And you remain under oath, sir. Do you understand that? THE WITNESS: I do. Thank you. JARED DER-YEGHIAYAN, Resumed, and testified further as follows: THE COURT: Thank you. You may proceed, Mr. Turner. MR. TURNER: Thank you, your Honor. REDIRECT EXAMINATION (Resumed) MR. TURNER: Could we put Government Exhibit 149 on the screen, please? Your Honor, I believe the defense is now going to stipulate to the admission of this document. MR. DRATEL: Yes, but just as it appeared on archive.org at that time. THE COURT: All right. Thank you. 149 is received. *(Government's Exhibit 149 received in evidence)* MR. TURNER: Mr. Evert, could you zoom into the top Paragraph there. MR. TURNER Page 783 Q. OK. So it says, "This is not the Silk Road, but you are close. The Silk Road is an anonymous online market. Current offerings include marijuana, harsh, shrooms, LSD, ecstasy, DMT, mescalin and more. The site uses the Tor anonymity network, which anonymizes all traffic to and from the site, so no one can find out who you are or who runs Silk Road. For money, we use bitcoin, an anonymous currency." Yesterday you testified that this website was hosted at a Web hosting company controlled by Mr. Karpeles, right? A. Yes, it was. Q. And the name, again, of the company was what? A. It is KalyHost. Q. Did it go by another name as well? A. There is AutoVPS. Q. And you testified yesterday you searched emails associated with Mr. Karpeles' Web hosting company, is that right? A. Yes, I did. Q. Did you find any emails from the email address staff@silkroadmarket.org in there? A. Yes, I did. MR. TURNER: May I approach, your Honor? THE COURT: You may. Q. Do you recognize this exhibit? I'm showing you what's been marked as Government Exhibit 151. A. I do. Page 784 Q. How do you recognize it? A. It's one of the emails that I observed in Mark Karpeles' email account. MR. TURNER: Your Honor, the government offers Government Exhibit 151 into evidence. MR. DRATEL: Objection. THE COURT: Give me one more word. MR. DRATEL: Oh, hearsay. Foundation. MR. TURNER: It is not being offered -- THE COURT: Overruled. Government Exhibit 151 is received. MR. DRATEL: Your Honor, also authenticity. There are no headers. There is nothing. This could have been -- THE COURT: Why don't you do a little more to lay a foundation as to this, and then subject to that foundation it is received. MR. TURNER Q. Where did you receive the documents from? A. The email came from Gmail from Google. Q. OK. THE COURT: Was that part of the subpoena response. THE WITNESS: It was the search warrant results that were returned by Google. THE COURT: Thank you. You may proceed. It is received. Page 785 *(Government's Exhibit 151 received in evidence)* MR. TURNER: Could you put it up on the screen, Mr. Evert. Could you zoom in on the top. Q. It is from "staff@silkroadmarket.org." The date is March 18, 2011. It's to "support@autovps.net." The question is: "How do I upgrade my memory for my VPS with AutoVPS?" Do you know what the terms "VPS" refers to? A. It is virtual private server. Q. Do you know what that term means? MR. DRATEL: Objection. THE COURT: Sustained. Q. Have you ever rented server space before? A. I have. Q. From that experience, are you familiar with the term "virtual private server"? A. I am. Q. So based on that -- MR. DRATEL: Objection. Q. -- can you explain what virtual private server space is? THE COURT: No. This question is fine. You may answer. A. Essentially, it's space that's allocated or taken from a server that's assigned to you. So it acts as if it is a server of its own. So it is just taking space and giving it to you and allowing you to use it like a regular server would. Page 786 Q. And this email address, to support@autovps.net, in reviewing the emails that you saw in that search warrant return, did you see other emails that were addressed to support@autovps.net? A. I did. Q. What are those emails generally about? MR. DRATEL: Objection. MR. TURNER: Not for the truth, your Honor. MR. DRATEL: Objection. THE COURT: You could give some topics. You may answer. A. Basically -- I mean, for the most part, customer-support-related inquiries related to the hosting service. MR. DRATEL: Just objection, your Honor, with respect to any inference that it is from silkroadmarket.org. He is talking about entirety, right? THE COURT: Let's talk about that at the break but I have allowed the answer. MR. TURNER Q. Just to be clear, are you talking about customer support inquiries from multiple other customers or just staff@silkroadmarket.org? A. There were multiple customers. Q. OK. So support@autovps.net was used to receive customer support inquiries? Page 787 MR. DRATEL: Objection. Q. Is that basically your testimony? MR. DRATEL: Objection. THE COURT: Overruled. A. Yes. Q. Now, did -- and just to be clear, when you were talking about the search warrant for emails, it is a search warrant for emails associated with Mark Karpeles' Web hosting company, is that right? A. There were multiple, yeah, email accounts, I mean, we looked into for Mark Karpeles. *(Continued on next page)* Page 788 MR. TURNER Q. Now, did Mark Karpeles' web hosting company KalyHost AutoVPS help their customers register their websites? MR. DRATEL: Objection. THE COURT: Based upon your review, was there information which indicated that to you? You may answer. A. Based upon my review and then also had registered before, I participated in registering -- also from my review, I've seen it and from registering the site through KalyHost. Q. So you yourself tested it out by registering a site on KalyHost? A. Yes, I participated in that. Q. Can you explain briefly what it means to register a website? A. It means to provide information to basically claim ownership over a website name and to provide your personal details to take ownership of it. Q. So when you registered a website on KalyHost, did KalyHost ask you for any information like that? A. They did. Q. What sort of information? A. There was information such as like a point of contact, so it asked for your name, email address, address, telephone number, as well as technical point-of-contacts and administrative point-of-contacts. Page 789 Q. Were you required to verify that information in any way? A. No. Q. Is there any way the public can view register information associated with website addresses? A. Yes, there is. Q. And how can they do so? A. It's called a who.is database, so it's a public database that records that information when you do register a website. It keeps track of basically what information you provide when you do register it so you can search that publicly. Q. Is that information available in the who.is web page that we looked at earlier? A. That available there; yes. Q. Can you put GX 150 back on the screen, please. Can you zoom in here. Going back to this web page, who does it reflect registered the silkroadmarket.org website? A. The information provided shows that it was registered to Richard Page at 11640 Gary Street, Garden Grove, California, 92840, and it's a telephone number, and then as well is an email address which is richardpage@gawab.com. Q. Did you look into whether this address -- and, Mr. Evert, can you zoom in here so it's very clear. Did you look into whether this address, 11640 Gary Street, Garden Grove, California, was a real address? Page 790 A. I did. Q. And whether the phone number was a real phone number? A. I did. Q. How did you do that? A. The address I looked up in our -- the Clear database that we have access to, as well as the telephone number I checked as well. Q. What is the Clear database a compilation of? A. It's a compilation of credit data that's provided, as well as, like, utility bills and public information generally about people, so it stores that information. Q. And is Clear generally accepted and relied upon by law enforcement to check address and phone number information? A. Yes, it is. MR. DRATEL: I'm going to object, your Honor. MR. TURNER: 803.17 provides the basis. MR. DRATEL: This is a database full of hearsay. THE COURT: I'm going to allow it. Q. So, what did you find? A. The address wasn't registered to anybody, so it reflects to me that it wasn't -- there wasn't anyone ever registered to that address. There wasn't utility bills, anything ever associated to that address. Q. Did you find the real address with that number? A. No, I did not. Page 791 Q. What about the phone number? A. The telephone number wasn't registered to anyone of that name. Q. Have you seen this information for Richard Page anywhere else? A. I have. Q. Where? A. When I searched Ross Ulbricht's computer after the arrest. Q. Where did you find it on Ross Ulbricht's computer? A. There was a file by the name of "aliases" on his computer and there was a text document titled "info" that had the same information on there, so the same name, as well as the -- what appeared to be to me names, passwords and usernames for AutoVPS and for KalyHost and for I believe gawab as well. Q. It included the exact same address? A. It did. Q. And the exact same phone number? A. It did. MR. TURNER: No further questions. THE COURT: Thank you. Mr. Dratel. MR. DRATEL: Thank you, your Honor. Can we come up for a second one clarification. It takes a minute. THE COURT: Okay. (Continued on next page) Page 792 *(At the side bar)* MR. DRATEL: I'm just trying to be careful, because mises.org has not come up, I want to ask him what that is and why he was looking at it. That's all. It's part of the investigation, what was the relevance to the investigation? So just two very quick questions on mises.org. THE COURT: Okay. MR. DRATEL: Thank you. *(Continued on next page)* Page 793 *(In open court; jury present)* RECROSS EXAMINATION MR. DRATEL Q. Good morning, Special Agent Der-Yeghiayan. A. Good morning. Q. Was there a time -- I want to draw your attention back to Anand Athavale we spoke about him yesterday, A-T-H-A-V-A-L-E, correct? A. Correct. Q. He was a Canadian citizen who at one time you were looking at, right? A. He was one I investigated, yes. Q. And during the course of your investigation, did you come across a site called mises.org, m-i-s-e-s.org? A. Yes, I did. Q. And what is that? A. It's a website that's set up for libertarian beliefs, as well as there's an online forum associated with it, too. Q. And as part of your investigation, did you -- what was the relevance to your investigation of mises.org? A. There was -- I observed on the bottom of Dread Pirate Roberts' profile that he would link articles from that website for things for people to read. So there would be, on his signature line on his forum profile, he would link mises pages. Q. And did you look at posts from the mises.org forum? Page 794 A. I did. Q. And did you look at posts under the name Anand Athavale? A. It wasn't under his name. Q. What was it under? A. It was under Liberty Student. Q. And how did you connect that to -- did you do anything to connect that to Mr. Athavale? A. I did. Q. And what was that that you did? A. I looked through his posts that were publicly available. I was looking for anything that would be personal indicators to help me identify who -- MR. TURNER: Objection. THE COURT: I'll allow this. MR. TURNER: It calls for the agent's conclusion. A. -- who the person was that was potentially behind that identity on that forum. Q. And at some point, did you compare those posts for libertystudent.org and -- I guess, what facts led you to associate libertystudent.org with Mr. Athavale? MR. TURNER: Objection. THE COURT: Sustained. We'll go on to the next piece. Q. So did you compare those posts from libertystudent.org to anything? A. I compared the posts by Liberty Student on mises to forum posts from Silk Road from Dread Pirate Roberts. Page 795 Q. Anything else from Dread Pirate Roberts? A. As well as undercover chats, as well that I had access to -- and I believe -- there might have been other -- whatever else I had access to, if it was from the marketplace or from anywhere else that was cited from Dread Pirate Roberts at the time. Q. And did you compare the two posts, the words in the two posts, I mean in the two sets of posts, libertystudent.org versus Dread Pirate Roberts? A. I did. Q. And did you find similarities? MR. TURNER: Objection. THE COURT: Did you find sometimes the same word in one as well as the other? THE WITNESS: There were commonalities; yes. THE COURT: Why don't you go through some of the factual commonalities, if there are any. MR. DRATEL: Thank you. Q. And do they both spell "labor," L-A-B-O-R as "labour," L-A-B-O-U-R occasionally, right? A. That was one of them, yes. Q. Both use and spell the word "real-time" with a hyphen between real and time, right? A. That's correct. Page 796 Q. Both use the word "lemme," L-E-M-M-E as opposed to "let me," right? A. There were occasions, yes. Q. Both end sentences with comma, right, question mark? A. Yes. Q. Both spell "route" R-O-U-T-E as "rout," R-O-U-T? A. Yes. Q. Both use the term "intellectual laziness"? A. Yes. Q. Both use the term and actively discussed the concept of "agorism" and the "agorist"? A. Yes. Q. And do you know what that is? A. No, no, I don't. Q. Both use and spell the word "counter-economics" with a hyphen between counter and economics, right? A. That's correct. Q. Both used the term "the ladder" in quotes before the "and" after "ladder," right? A. They did. Q. Both quite often capitalize smaller words when they want to emphasize, right? A. Yeah, like a -- capitalize an entire word, yes. Q. Neither uses hyphens to space out sentences or thoughts, right? Page 797 A. Yes. Q. Both start sentences with "and" and "but" quite often, right? A. Yes. Q. Both will commonly not capitalize the first word in a sentence when replying short and quick? A. Yes. Q. Both used the term "the heart of the matter"? A. That sounds correct, yes. Q. Both quite often will use a backslash, the symbol for backslash on the computer to split words with similar meaning and the second word never having the space after the slash, right? A. That's correct. Q. Both used the term "altruistic," right? A. Yes. Q. Both used the term "pal," right? A. Yes. Q. Both used the term "war mongering"? A. Yes. Q. Both used the term "phoney," P-H-O-N-E-Y, right? A. Correct. Q. Both discuss and mention authors Murray Rothbard, right? A. Correct. Q. And Samuel Konkin? Page 798 A. Konkin? Q. K-O-N-K-I-N? A. Yes. Q. Do you know who they are? A. They were inspirations for Dread Pirate Roberts according to his posts. Q. Are they libertarians? A. As far as I'm aware. I'm not too familiar with them, but yes. Q. Both commonly end sentences with a smiley face or the wink smiley face emoticons? A. On their forum posts; yes. Q. Both sometimes end sentences with the word "amigo"? A. Yes. Q. Both use the term "a narco-capitalist" with a hyphen in the middle? A. Yes. Q. Both misspell the word "alot," meaning that they spell it -- that they're both spelled, in the comparisons that you did, as one word as opposed to two words, "alot" A-L-O-T as one word? A. That's correct. Q. Both have discussed the paleo human, P-A-L-E-O? A. Yes. Q. And they're both use the same expletive, right? There's an expletive? Page 799 A. I believe so, yes. Q. And you wrote a report about that, correct? MR. TURNER: Objection. THE COURT: I will allow this question. A. Yes, I did. Q. And you also sent these sets of posts to an English professor at a university to examine and analyze, right? A. Yes, I did. Q. Now, during your redirect yesterday afternoon, you mentioned that DPR was security conscious, right? A. He was, yes. Q. Did he ever mention he was keeping a journal? A. Not in my posts or private messages or chats, no. Q. Did he ever tell you that he was saving chats on his computer? A. Not that I recall, no. Q. Did he ever tell you that he was using public Wi-Fi? A. No. Q. Now, by the way, when he was out in public the day of the arrest, when Mr. Ulbricht was out in public on the day of his arrest, that was not at your prodding. He went out on his own voluntarily into a public place, right? A. He did. Q. But it was you who asked him to log onto Silk Road, correct? Page 800 A. I asked Dread Pirate Roberts to log onto Silk Road, yes. Q. So let's look at 129C, please, Government's 129C. Now, when you talked about the chat yesterday, that's not part of Silk Road, correct, the chat itself? A. It's not on the marketplace or the forum. Q. Right. It's a separate information called Pidgin, right? A. It's -- I believe it's a Java server that was on Tor. Q. Also called OTR, Off The Record, right? A. It can be done in OTR, yeah. Q. But it's a separate Tor chat program not part of any of the Silk Road website or forums or anything like that, right? A. It was separate from it; yes. Q. So that's what he was logged on to when you realized he was online, correct? A. When I was -- when he came online, this is what indicated to me that he was online, was the chat. Q. Pidgin, not Silk Road, right? A. Correct. Q. He wasn't on Silk Road until you asked him to get on Silk Road, right? A. That's correct. Q. And you say "check out one of the flagged messages for me," and then it says "sure," right, "let me log in"? A. Yes, it does. Page 801 Q. So he's already online on Pidgin, which is the chat program, but he's not on Silk Road at that point, right? A. From -- yeah, from this, yes. Q. And you were asked by Mr. Turner yesterday about who was on the other side of the screen that day, right? A. Yes. Q. And you satisfied yourself based on going into the library looking at the screen that Mr. Ulbricht was on the other side of the screen that day, right? A. Yes. Q. But you can't testify, can you, about who you know was on the other side of the screen (in)any other communication you had with Dread Pirate Roberts, can you? A. No, I cannot. Q. After all, everybody on Silk Road thought you were somebody else for a couple of years, right? A. For the -- MR. TURNER: Objection. THE COURT: Why don't you reframe it. MR. DRATEL: Okay. Q. You were on Silk Road from some time in early 2012 through the end of September of 2013 under various account names, correct? A. I utilized multiple account names, yes. Q. And no one knew your real identity, right? Page 802 A. I only actively chatted, though, with -- primarily with the cirrus account, though, but the rest of the ones were primarily used for either buys or for screen shots. Q. They didn't know your identity, your real identity, right? A. Not on any one of them, no. Q. They had no idea who was on the other end of that screen, did they? A. No. I never told them, no. Q. Also with respect to "flagged messages," you identified the post you were looking for, right? A. At the end of the chat, I told him "the one with atlantis." Q. Right. In terms of who is on the other end of the screen, we went through that exchange before with respect to there was a period of time in which you weren't sure whether DPR was operating someone's account, whether it's SSBD, right, that's a username, correct? MR. TURNER: Objection. THE COURT: Hold on one second. Sustained. Q. Now, you were asked about Government Exhibit 130 on redirect, right, the handwritten notes, right? A. Yes. Q. And you asked whether they said anything about Silk Road or illegal drugs, right? A. I was asked that, yes. Q. But you're aware that in July of 2013, just a couple of months before Mr. Ulbricht's arrest, that he was interviewed by Homeland Security, right? Page 803 MR. TURNER: Objection; foundation. Q. You're aware that he was interviewed, aren't you? A. Yes, I was. Q. And you're aware that it had to do with a shipment from Silk Road, right? MR. TURNER: Objection; foundation, hearsay. THE COURT: You need to go back over that and lay a foundation for it. Q. During your investigation, you became aware, right, that Mr. Ulbricht -- withdrawn. That Homeland Security interviewed Mr. Ulbricht about -- and you've read -- withdrawn. During the course of your investigation, you were kept apprised of what was going on, correct? MR. TURNER: Objection; hearsay, vagueness. Q. For purposes -- you read reports -- THE COURT: Hold on. Ask the question. Q. You read reports about an interview of Mr. Ulbricht by Homeland Security, correct? THE COURT: You can answer that yes or no. A. Yes, I did. Q. And the subject matter was about a package shipped by Silk Road, a Silk Road vendor, correct? Page 804 MR. TURNER: Objection to the hearsay. THE COURT: Right. That's sustained. Q. Now, you were asked also on redirect about travel records, right? A. That's correct. Q. And you said there were some aliases. You ran those aliases for travel records, too, didn't you? A. The aliases for travel records? Q. In other words, any aliases for Mr. Ulbricht that you might have found, you ran them for travel records, too, didn't you? A. I can't recall if I did. Q. Now, we talked about that he takes about a trip a year out of the country. And you were asked about international travel, whether you could determine whether he went from one country to another country, right; you couldn't tell that from the travel records that you looked at in terms of a sheet that you got from border authorities, right --in other words, either leaving the country or coming into the country is what you said, right? A. The records that were reflected in the database that we have access to just shows where they're coming from and where they travel to. Q. But you also had the passport, right? A. I didn't have that until after the arrest. Q. Right, but you had it now and you've had it for quite some time, right? Page 805 A. Yes. Q. So the case passport is in evidence, right? A. Yes. Q. It's Exhibit 134, right? A. I believe so, yes. Q. If we can go to the next page, please. Those are the only stamps in there, right, there's one for Australia, one for the Island of Dominica and one for Costa Rica, right? A. Correct. Q. So if he went from Costa Rica to Brazil, there would be a stamp, wouldn't there, on his passport? A. Not necessarily. There's -- I've worked as border inspector for a lot of years, so I do know that sometimes there aren't always the stamps for the countries they enter into. It just depends. Q. So you know whether he would have been stamped or not? A. I couldn't tell you if another country would for sure stamp it or not. Sometimes they do, sometimes they don't. Q. Those three stamped it, right? A. They did stamp it. Q. And it matched exactly what you had on the travel records, right? A. I'd have to go back and review it, but -- Q. The MediaWiki, right, we talked about that? A. We did. Page 806 Q. And the fact is, though, that the commonality between the Karpeles website and silkroadmarket.org was about the version of MediaWiki, right? A. The version was the same, yes. Q. But it was an outdated version, right? It wasn't the current version at the time, right? A. At the current time, it was an outdated version; yes. Q. So of all the people who use MediaWiki, do you know how many use an outdated version? A. I don't know how many use an outdated version. Q. It's free, right? You can upgrade it for free, right? A. You can, yes. Q. Now, with respect to -- I'm showing you what's marked -- and I'll go back to travel for a second and show you what's marked as 3505-3051 and just ask you to review it. Let me know when you're finished. A. Thank you. Okay. Q. Does that refresh your recollection that the travel records that you reviewed from your database matched exactly the stamps on the passport? A. The stamps match, yes. Q. Now, with respect to the AutoVPS, the Karpeles company, right, is another one of Mark Karpeles' company, right? A. Yes. Q. By the way, silkroadmarket.org moved from one Karpeles company to another Karpeles company, right, at one point, from KalyHost to XTA? Page 807 A. It was, yeah, I believe registered through the one and then I think the domain name server changed over to XTA, yes. Q. And those subpoenas -- I mean, the warrants that you got to look at those emails was part of your investigation of Mr. Karpeles, correct? A. Yes, it was. Q. But, in fact, you did not get those emails, they were not produced until months after Mr. Ulbricht was arrested, right? A. It took a while for the return to come back, yes. Q. If we can look at Government's 149, please, if we could go to the bottom, the very bottom, please, to the URL. In fact, that's from archive.org in March of 2011, right? A. I believe March 4. Q. That's what that 20110304 is right after web slash, right? A. Yes, it's the date. Q. So that's the date that appeared -- going back, archive.org, again just to refresh, just captures pages of the Internet, right? A. It does. Q. And then it puts them in an archive, right? A. It maintains it, yes. Q. And what they do at the bottom in that webarchive.org URL, the Internet address, is that it tells you what date it captured it, right? Page 808 A. Correct. Q. So it captured this particular screen March 4, 2011, right? A. March 4, 2011, yes. Q. By the way, if we go back up to the message, it's from Silk Road staff, correct? A. It was signed, yes, Silk Road staff. Q. Not Dread Pirate Roberts or anything like that, right? There's no Dread Pirate Roberts there? A. That didn't come until I believe January 2012. Q. Correct. At one point you showed us I think it's Government Exhibit 123, the Dread Pirate Roberts profile on Silk Road, the profile page and the registration? A. Yeah. Q. Do you recall? A. I recall, yes. Q. You don't know when that may have been changed to the name Dread Pirate Roberts from another username, right? A. That one was the Silk Road account that changed to Dread Pirate Roberts after he announced his new name on that post. Q. Now, let's look at Government Exhibit 150 which we just saw this morning. Can we look on the left side. There's a date of registration -- no, further down, right there. A. Correct. Page 809 Q. It's registered on February 28, 2011, right? A. Yes. Q. And then it expires -- it expired February 28, 2012. It says "expires on," right? A. Yes, it did. Q. Now, if we look to the right side, that's the one by Richard Page, right? A. The one on the left is by Richard Page, yeah. Q. The one on the right, the registration date is May 18, 2012, right? A. Correct. Q. That's roughly two and-a-half months after the expiration of the one on the left, correct? A. Correct. Q. So let's see who it's registered to as of May 18, 2012. Go down further. There it is. So it's registered to Qin Shu Tong, correct? A. Correct. Q. In China, right? A. In China. Q. And you checked that out, right? A. I looked into that, yes. Q. No apparent connection to anything, right? A. No. Q. So this particular registration with respect to anything connected to Richard Page was over by April of 2012, right? Page 810 A. It wasn't renewed and then it was bought by someone else. Q. Right. Now, you talked about the emails you got from Mark Karpeles' companies, right? A. Correct. Q. Those are the only accounts at Google, right? A. There was -- for him, I believe there was a few. He had a personal one and then he had one that was to Evoni (ph) which is a company. Q. But from Google? A. It all is through Google, yes. Q. You don't know about email accounts that he may have had on proprietary servers of his own, right? A. I do not know of any. Q. So you didn't get to look at those if they exist, right? A. I didn't. Q. Did you ever get to look at any of his Tor chats? A. I did not find any Tor chats from him. Q. Any Java or Off The Record or Pidgin chats of his? A. I did not. Q. Did you get anything from any other servers with respect to Mark Karpeles other than Google? A. Nothing about -- I mean, we did a broader search on another individual from his company, but no. Q. Do you know whether he keeps a journal? Page 811 A. No. Q. Going back to Dread Pirate Roberts for a second, that is announced in the early part of 2012, right, February 2012? A. Yes. I believe so. Q. Now, Mr. Karpeles owns web hosting companies, right? A. He does. Q. A number of them? A. He is -- yeah, well, KalyHost and then he has the AutoVPS, which is a virtual server hosting. Q. And XTA, right? A. XTA, I believe that was the name server. I don't know if that was -- you might be able to register sites on that, too. Q. But a web host can monitor the traffic of their customers, right? A. I believe so, yes. Q. In fact, they can also set rules for their customers, right? A. They can. Q. They also know identifying information about the people who rent space on their server, right? A. They should have, yeah, like registration information or things that are provided to them, yes. Q. I'm sorry. I didn't mean to cut you off. A. That's okay. It's just basic information, whatever is provided, as well as, like, account billing information they should have. Page 812 Q. And also IP addresses and things like that. In the way that the server connects to the outside world, the web host knows all of that because it comes through their equipment, right, correct? A. They should be able to tell that, yes. Q. Kind of like a landlord, right? A. That's a way to describe it, yes. Q. The same thing is true of anyone who runs a bitcoin exchange, right, in terms of knowing about their account holders? A. It changed over time. I think originally a lot of them didn't require very much information to register an account, but a lot of them changed where they started requiring sort of know your customer information. Some actually requires Social Security numbers. Q. But also they can monitor account activity and account movement, they're in a perfect position to do that because it all has to come in and out of their exchange, right? MR. TURNER: Object; foundation. THE COURT: Sustained. Q. As part of your investigation, you looked at MtGox records, right? A. I did. Q. And you looked at how exchanges operate, correct? Page 813 A. I did. Q. And exchanges have all of the information with respect to transactions that their account holders do in the context of bitcoins? Everything that goes through that exchange is information that's -- that the bitcoin exchange has? A. It should be visible to them; yes. Q. So any of the tracing that you could do on the block chain, the bitcoin exchange can certainly do with respect to each account holder? A. They should. Q. Now, we had a car rental analogy yesterday about bitcoin and about servers and rentals. Using bitcoin and even in the context of web hosting, so you may have a fleet of cars that you own but people are driving them but you can put a GPS in there, right, and know exactly what everyone is doing in every one of your cars, right? A. You could. Q. Now, the bitcoin issue: Total commissions collected by Silk Road totaled -- as computed by the government, 614,305 bitcoins was the total commissions collected by Silk Road during the course of its operations, correct? MR. TURNER: Objection; foundation for this witness. THE COURT: Lay a foundation for this witness. Q. You looked at Silk Road, right, as a business, correct, you examined it in terms of revenue and things like that, right? Page 814 MR. TURNER: Objection; form, vagueness. THE COURT: I'll let you answer it if you understand the question. A. I mean, I reviewed the site. I reviewed the transactions on it, the vendors, what was publicly available to me. Q. All right. And you are also familiar with the complaint in this action, right? A. The complaint for Mr. Ulbricht? Q. Against Mr. Ulbricht? A. Yes. Q. The complaint -- so you know that the amount of bitcoins the government computed for the commissions for Silk Road were 614,305 bitcoins? A. I'd have to see the complaint, but yes, it sounds right. Q. I'll show you what we'll mark as Defendant's I for identification and just ask you to read that paragraph, please. THE COURT: So he said this is consistent with what he thinks. This is just to refresh his recollection? MR. DRATEL: Correct. A. Okay. Q. Does that refresh your recollection that the government computed the amount of bitcoins of commission -- I'm sorry -- that the amount of commissions Silk Road earned during the course of its existence up until the point of Mr. Ulbricht's arrest was 614,305 bitcoins? Page 815 MR. TURNER: Your Honor, object. Again, a foundation and also beyond the scope of redirect. THE COURT: I'll allow this one because we're into it just to finish it off. You may answer. A. It does reflect that, yes. Q. And that would be -- and at the time of Mr. Ulbricht's arrest, the government put the total revenue of Silk Road at $1.2 billion, right, in current -- in the value of bitcoin at the time of his arrest, right? MR. TURNER: Objection; foundation, relevance and beyond the scope of redirect. THE COURT: All three of those are true. Why don't you try it a different way -- Q. The government -- THE COURT: -- with this witness. MR. DRATEL: Sure. Q. The government was looking to estimate or get a handle on the revenue that Silk Road had earned during the period of time from the beginning of its existence through Mr. Ulbricht's arrest, correct? THE COURT: Let me ask it this way: I want to see whether or not this is the right witness for this. Were you involved in the efforts by the government to calculate the total number of transactions on Silk Road? Page 816 THE WITNESS: No, I was not. THE COURT: Were you involved in any efforts by the government to calculate not only the number of transactions, but any corresponding value in terms of bitcoins or U.S. Dollars at any particular point in time? THE WITNESS: No, I was not. THE COURT: I think you'll need another witness for these questions. MR. DRATEL: I have nothing further. THE COURT: All right. Thank you. Mr. Turner, are we okay or do we need a break? Let me take a look at the jury. We're all right. Let's continue. Thank you. This will be the end of this witness. I think we're almost done. We'll see how this goes. There's always a bit of back and forth, but I think we're close. MR. TURNER: Mr. Evert, if you can put GX 134 back on the screen. The passport, can you zoom in on the bottom dates there. REDIRECT EXAMINATION MR. TURNER Q. The date of issue on the passport is what, Agent Der-Yeghiayan? A. The date that the government issued that document. Q. Right. But what does it appear here? A. April 26, 2012. Page 817 Q. Any trips that the defendant took before this date, there are not going to be stamps on the passport, right? A. Not on this passport, no. Q. KalyHost. In terms of monitoring or collecting information about its customers, when you registered a website on KalyHost, you didn't have to verify your information, correct? A. No, I did not. Q. And in terms of their ability to see what IP addresses you're logging in from, if you're coming in through Tor, can they see your true IP address? A. They would see the Tor exit node. Q. Can they see your true IP address? A. No. Q. Mises.org, you said is a libertarian website, right? A. Yes, it is. Q. And it's a particular brand of libertarianism, is that right? A. I believe so, yes. MR. DRATEL: Objection. THE COURT: There's very little you can do on this. I'll allow one more question on it. Q. You looked at posts on mises.org, right? A. I did. Q. Were there terms that were commonly discussed on the website? Page 818 A. There were commonalities, I mean, the way the people spoke on there. Q. Did they speak about agorism? A. They did. Q. And you mentioned some names. Samuel Konkin and Murray Rothbard, did those names come up? A. Yes, they did. Q. Not just on the liberty whatever it is you were looking at, but across the site, is that right? A. It was not just on Liberty Student's account. It was across the site. Q. Users of that site generally were interested in those concepts and authors? A. There was discussions about those authors, yes. Q. Did you find any profile in liberty reserve -- excuse me -- any profile on mises.org in the defendant's name? A. I did. Q. With the defendant's picture on it? A. I did. Q. Did you find a profile of the defendant on YouTube? A. I did. Q. With the defendant's name on it? A. I did. Q. And the defendant's picture on it? A. Yes. Page 819 Q. Did you see the subscriptions on the YouTube page? A. I did. Q. Did they include any subscriptions to mises.org? A. Yes, there were. MR. TURNER: No further questions. THE COURT: Thank you. MR. DRATEL: A couple, your Honor just based on that, based on that. THE COURT: My goodness. Okay. Just two or three. MR. DRATEL: Yes. RECROSS EXAMINATION MR. DRATEL Q. With respect to travel, your records go back before April 2012 with that passport, right, your database goes back much further than that, right? A. Not on that particular passport -- Q. Not the passport. For Mr. Ulbricht, when you looked at the database for travel in and out of the United States, it's not limited to the time of that passport? A. No, it's not. Q. It goes well before that, correct? A. The travel history is not based on the passport. Q. And with respect to -- THE COURT: That was two. MR. DRATEL: I'm sorry? Page 820 THE COURT: I was counting. That was two. You get two more. Q. Mr. Ulbricht had his accounts on mises.org and YouTube in his own name, right? A. He did. Q. Mr. Athavale, you associated him with an alias, correct? MR. TURNER: Objection. THE COURT: Sustained. Q. And you said the commonalities that you found with respect to the mises.org posts of Liberty Student and DPR you sent to a college professor for analysis, right? MR. TURNER: Objection; asked and answered and relevance. THE COURT: It's been asked and answered. You can answer it again. A. It was analyzed; yes. THE COURT: We're all set. You're all done, Mr. Dratel? MR. DRATEL: Yes. Thank you. THE COURT: Thank you. You may step down, sir. THE WITNESS: Thank you. *(Witness excused)* THE COURT: We're going to go on to your next witness, ladies and gentlemen. And maybe this is a good time, just because we're at the next witness, to take a quick break. Let's not take a long break. Come back in. Just to stretch our legs. We'll get the next witness already on the stand just to save some time and we'll start right up. So it's just a five-minute, seven-minute break as quickly as we can get out and get back in. Page 821 *(Jury excused)* *(Continued on next page)* Page 822 *(In open court)* THE COURT: This was to take a quick break before we get the next witness out. If we can get him or her on the stand. Is it still Mr. Kiernan? MR. TURNER: Yes. THE COURT: All right. Is there anything you folks want to raise? I want to take a quick break. MR. TURNER: An issue to flag: We want a jury instruction about this Anand Athavale thing, that the testimony about the mises.org cannot come in in order to prove that Anand Athavale was an alternative perpetrator. No link was made in any authentic way. THE COURT: Why don't you do this: If you are asking for an instruction, draft up something, share it with Mr. Dratel. If you can't come to any agreement, you'll present that to me without agreement. And if you can, then I would consider what you folks prepare, but the request is noted. MR. TURNER: Thank you. MR. DRATEL: Just one other thing, 151 we never received until this morning. We keep getting exhibits on the fly, and I just wish that we could have a stationary target to prepare from. That's all I'm asking. THE COURT: It was, I think, in the nature of rebuttal. MR. DRATEL: We got it when he testified. Page 823 THE COURT: Sometimes they're hard to get in advance. MR. DRATEL: I literally got it handed to me during the examination. MR. TURNER: As I received it. THE COURT: Do the best you can. I expect you'll do the best you can. Let's take a quick break. *(Recess)* *(Continued on next page)* Page 824 *(In open court; jury present)* THE COURT: Mr. Kiernan, I'm going to ask you to remain standing and I'll have my deputy swear you in. *(Witness sworn)* THE COURT: Thank you, Mr. Kiernan. Please be seated, sir. THE WITNESS: Thank you. THE COURT: There's water there and I see you have a bottle of water also on the side. It will be important for you to pull yourself up to the mic. and speak clearly and directly into the mic. Mr. Howard. THOMAS KIERNAN, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. HOWARD Q. Good morning. A. Good morning. Q. Who do you work for? A. The FBI, the Federal Bureau of Investigations. Q. And how long have you worked with the FBI? A. Twenty-three years. Q. And what is your position at the FBI? A. I'm currently a computer scientist with the FBI. Page 825 Q. What are your duties and responsibilities as a computer scientist? A. Sure. I collect, review and analyze digital evidence. Q. Are you familiar with what a forensic image is? A. I am. Q. And what is a forensic image? A. It's a image of a hard drive or a digital media that makes an exact duplicate of the original drive that you are looking at, so you're making a copy of someone else's drive basically. Q. In your role as a computer scientist at the FBI, do you have experience in reviewing the forensic images of computers? A. Yes. Q. In the course of your career, how many forensic images of computers would you say you have examined in total approximately? A. Hundreds of computers that we have gone through. *(Continued on next page)* Page 826 Q. Do you have any specialized training with computers? A. Yes. I'm a FBI -- I am a CART technician, which is a Computer Analyst Response Team, which I have training in also. Q. And what is your educational background? A. I have a computer science degree from St. John's University. Q. I am going to draw your attention to October 1, 2013. A. Sure. Q. Were you involved in an arrest that day? A. I was. Q. And whose arrest was that? A. The defendant, Ross Ulbricht. Q. Do you see that person in the courtroom today? A. I do. He is at the second table wearing the pink-collared shirt. MR. HOWARD: May the record please reflect that the witness has identified the defendant? THE COURT: So reflected. Q. Now, in what city did this arrest take place? A. This was in San Francisco. Q. And what part of day did this take place? A. Afternoon, approximately 3:15. Q. When did you first arrive in San Francisco for the arrest? A. For the arrest, I was there two days prior to the arrest. Q. And what were you involved in in the days leading up to the arrest? Page 827 A. I had helped out with some of the surveillance that was going on during that time period. Q. And what was the initial plan for the defendant's arrest? A. The initial arrest was going to be on October 2nd, which is at his residence, but it was on this -- it was geared to the 2nd of October. Q. And did that plan, did it go as planned? A. No, it did not. Q. And why not? A. We had the opportunity to arrest the defendant with his laptop and his laptop on at the time. Q. And what was the importance of arresting the defendant with his laptop on? A. So with the laptop on we can beat or get past any type of encryption problems that would arise on a laptop. Usually -- encryption is when you have your laptop, or a hard drive, and the data on top of it is in a format that is not humanly readable that we can't get to. So to get there with the laptop on and at a point where it is on, we were able to get the machine and pull up live data from the machine. Q. Now, were there other people involved in the arrest team? A. Yes. Q. Where was the arrest team deployed on October the 1st? A. On the 1st we were situated all around the area at the time, all in a -- in plainclothes, just trying to blend in with the surroundings. Page 828 Q. And what location were you in? Where were you? A. I was -- myself, I was across the street from the library, from a little cafe and back from the library spot, but right across the street from the library. Q. And why were you in that specific location? A. We had witnessed the defendant in that area before, a couple of days before that, when we were there doing surveillance. So we knew he was in that area, or we were hoping that he would come back to that area. Q. Do you know where Mr. Ulbricht was living at the time? A. Yes, I do. Q. And how do you know that? A. We had done surveillance in front of his residence. Q. And approximately how close was his residence from the place where you were stationed near the public library? A. Maybe a five-minute walk from his spot down to the cafe and the library. Q. At some point did you learn that Mr. Ulbricht was approaching the area? A. We did. MR. HOWARD: Now, Ms. Rosen, could you please publish Government Exhibit 128C, which has already been admitted into evidence. Page 829 Q. Do you recognize what this photograph depicts? A. I do. Q. And what does it depict? A. That is the area where we were actually sitting before we entered the library. I could use my pointer, right? Q. Go ahead, Mr. Kiernan. A. Here we go. So this area here, this cafe area, we were directly across the street, on this side of the street, from there, just sitting on a bench, me and the UC at the time, Jared -- I can never pronounce his last name but it was Jared. The library was right over here, where we were waiting to enter into. Q. Now, sorry, you were sitting with Special Agent Jared Der-Yeghiayan, correct? A. Yes. Q. Were there other agents involved, too? A. Not where we were sitting but in the area, yes, there were other agents in that area. Q. And they were also in plainclothes? A. Yes. Q. So at some point did you observe the defendant when you were at this location? A. I did. I did. I just saw him take a -- when he was walking on this side of the street, he took a quick peek in that little doorway there, which seemed like a coffee cafe, and then he just continued on past this area right into the library right there. Page 830 Q. Now, after you witnessed the defendant enter the library, did you see the undercover officer do anything? A. He just opened up his laptop to start a session, I guess. Q. And what was the plan for the undercover opening his laptop? A. To try to get into a conversation with DPR. Q. What did you do next? A. That's when I left my area and entered into the library, just across the street. Q. And once you entered the library, where did you go? A. The library was two -- it was a couple, it was two floors -- well, the library itself, the entranceway and then I went up to the second floor, where the actual entrance to the main library section was. Q. Now, I'm going to ask you to flip in the binder that is sitting in front of you to what's been marked for identification purposes as Government Exhibit 128G. A. Got you. Q. Do you recognize this? A. I do. Q. What is this exhibit? A. This is a photograph of that second floor entrance into the library. Page 831 Q. Did you take this photograph? A. I did not take this. THE COURT: May I pause for one second? I think that my binders have taken a walk, and they will walk back. *(Pause)* OK. So what number are you on, Mr. Howard? MR. HOWARD: 128G. THE COURT: Thank you, sir. You may continue. MR. HOWARD Q. Is it correct, you just testified that you did not personally take this photograph, correct? A. No, I did not take this photo. Q. But does this photograph fairly and accurately depict the area of the library that you just described? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 128G. MR. DRATEL: I have no objection, your Honor. THE COURT: Received. *(Government's Exhibit 128G received in evidence)* MR. HOWARD: Could you please publish it on the screen. Q. So you described it as the area of the library that you first went to after you entered, correct? Page 832 A. Yes. Q. Was there anyone else with you while you were at this location? A. Not with me going in but inside there were some agents already stationed. Q. Could you depict where in the photograph this was? A. Sure. Right back in here, just behind this pole, basically in front of this little terminal there. Q. Once you arrived at that location, did you meet with the other agents? A. We did, yes. Q. And what happened during that meeting? A. During that -- it was a pretty quick meeting, but we were trying to come up with a way to have the defendant turn away from his laptop. So he was sitting inside. So we were trying get him -- a diversion. We were trying to create a diversion so we could grab the laptop, take it, and start processing it, start looking at it. Q. This is to obtain the laptop in an unencrypted state, correct? A. Correct. Yes. Again, the goal was to get to the laptop in its unencrypted state. We wanted to look at that laptop. Q. Did you have a search warrant for the defendant's laptop at the time? A. We did. Page 833 Q. Can you please flip to what's been marked for identification purposes as 128H in your binder. A. Yes. OK. Q. Do you recognize this exhibit? A. I do. Q. And what is it? A. A picture internal of the library approximately where the defendant was sitting. Q. Did you take this photograph? A. I did not. Q. Does the photograph fairly and accurately depict the area that you just testified about in the library? A. It does. MR. HOWARD: The government offers Government Exhibit 128H. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 128H received in evidence)* MR. HOWARD Q. Mr. Kiernan, you described this as the area that you first observed the defendant in the library, correct? A. It is, yes. Q. Can you describe where in this photograph you observed the defendant? A. Sure. I was situated to the left over here. You see this pole standing there? I was in that area behind the case of books or magazines in that area. About 20 feet away, something like that. Page 834 Q. And where was the defendant specifically located? A. He was approximately in this area here, almost in this same spot as that gentleman in there, in that picture. Q. What were you able to observe about the defendant before he was arrested? A. Just that he was using his -- his laptop was on and he was using his machine, just sitting there. Q. What did you see next? A. I saw two agents come from this area here, walking this way. I mean, towards the windows, right, would be better, toward that "Science Fiction" sign there. And I witnessed them. They tried to do our plan that they were talking about. So they get into a verbal dispute. They start, the male and the female agent, like a domestic dispute, and they started yelling at each other right behind the defendant's area. Q. And so what happened after they started yelling behind the defendant? A. Sure. The defendant, like anyone would do, would look like what's going on. And that's when the male agent reached, grabbed the laptop, pulled it over to the side. The defendant started to rise, as anyone would do. Then the female agent grabbed it from the male agent, and that's when I came from my position and took the laptop from the female agent. Page 835 MR. HOWARD: Your Honor, may I approach the witness? THE COURT: You may. Q. I just handed you what's premarked for identification purposes as Government Exhibit 200. Do you recognize this exhibit? A. Can I open it? Q. Go ahead. *(Pause)* A. Maybe I can't. It is not going back in the bag, that's for sure. All right. Let's see. Got it. OK. Yes. Q. Do you recognize this exhibit? A. I do. Q. And what is this exhibit? A. This was the laptop taken from the defendant. Q. And how do you recognize it? A. From the serial number and bar code and the paper with it. MR. HOWARD: The government offers Government Exhibit 200. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 200 received in evidence)* MR. HOWARD Page 836 Q. What brand of laptop is this? A. This is a Samsung 700Z. Q. And when you say "700Z," what are you referring to? A. That is the model number of the laptop. Q. Now, what did you do with Mr. Ulbricht's laptop after you seized it? A. After I grabbed it I went to the other side of the table, where the arrest was made, and started a triage on the laptop. Q. So what is a triage? A. A triage is, again, looking for if encryption is running on the machine. So I start looking for signs of that, and then I start taking pictures of what I'm doing at the time. It is just I'm going through the computer in as safe a way as possible to start collecting evidence from the machine. Q. And why was it necessary to do this triage? A. Again, the encryption is tough, it is tough to defeat. So the triage is, again, to make sure that I can start getting valuable evidence from the machine in its live state, while the machine is on. Q. How can a laptop become locked or encrypted? A. Sure. By the closing of the lid will usually enable encryption. Screen savers, little programs that lock it out. Things like that will enable encryption on the machine if it is running. Q. Does every laptop have encryption running on it? Page 837 A. No, not every laptop. Q. Did you extract any documents as part of the triage? A. Yes, I did. Q. And how did you do this? A. I had a USB drive with me, a brand new USB drive that I plugged into the defendant's laptop and started what I could take documents from his current home directory folder, which is the directly that most of your documents remain in. That is the stuff you use most. That is where you put your documents. MR. DRATEL: Objection. THE COURT: All right. Well, the portion of the answer "stuff you use most" is struck but the remainder of the answer stays. You may continue, Mr. Howard. MR. HOWARD Q. Mr. Kiernan, what kind of operating system was the computer running? A. Linux in a flavor called Ubuntu. Q. What is an operating system? A. It's the software that lets you interface with your computer. It lets a human actually interface with your machine so you can get to your files and your Web browsers and things like that. Q. What are other popular kinds of operating systems? A. Sure. You probably know Windows or Macintosh OS's. Those are other types of operating systems that are out there, popular ones. Page 838 Q. Do you have training in reviewing computers running the Linux Ubuntu system? A. I do. Q. Is the home directory you testified about part of the Linux Ubuntu system? A. It is. Q. And how many computers have you reviewed that have had the Linux Ubuntu system on it? A. Hundreds of computers. THE COURT: How do you spell the Ubuntu? MR. HOWARD: I believe that is you U-b -- THE WITNESS: U-b-u-n-t-u. THE COURT: All right. Thank you. MR. HOWARD Q. And what is the significance of the home directory, that you testified about, on a Linux Ubuntu system? A. It's the directory where you keep most of your files. That's the directory that holds your data. And it holds the user accounts is in the home directory of the Linux system. Q. What is a user account? A. A user account is an account that is created by usually the person setting up the laptop to give yourself access to the machine, to the parts of the machine that you would use. So it is that part of the machine. Page 839 Q. And how are user accounts labeled? A. The name that you give it, the name that you send to that account. Q. In other words, the user can choose any name they want, correct? A. Correct, yes. Q. Now, what, if anything, did you do to document what you were doing while you were performing what you were calling the triage of the laptop? A. Sure. I was taking pictures of what I was doing with a BlackBerry, my BlackBerry FBI-issued phone. Q. And why were you using a BlackBerry? A. Ah, that's what I had with me at the time. That's what I received. Q. Now, if you could please flip in your binder to what has been marked for identification purposes as Government Exhibit 201A. A. Sure. *(Pause)* Q. Do you recognize this exhibit? A. One second. Sorry. *(Pause)* Yes, I do. Q. And what is this exhibit? Page 840 A. This is a photograph of the defendant's computer at the time of the arrest, or the time that I had it. Q. Did you take this photograph? A. Yes, I did. Q. And how soon after obtaining the laptop did you take this picture? A. Right after. MR. HOWARD: The government offers Government Exhibit 201A. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 201A received in evidence)* MR. HOWARD Q. So, Mr. Kiernan, is it your testimony that this is the first photograph you took of the defendant's laptop? A. Yes. Q. Did you do anything to the laptop, click on any windows, do anything at all before you took this picture? A. Ah, no. No. MR. HOWARD: If we could please just zoom into this window right here, Ms. Rosen. Q. Can you describe what this window contains? A. Sure, except for that big flash I had there when I first started taking the pictures. That's the Pidgin chat client, the Pidgin chat program that allows communications between individuals, and this is a chat with the username Cirrus. Page 841 Q. Do you recognize the username Cirrus? A. I do. Q. And how do you recognize it? A. That's the account that our undercover was using. MR. HOWARD: Now, if you could, Ms. Rosen, if you could just zoom in on the upper left-hand corner of the screen. Q. Here it says "Ubuntu desk-top." What does that mean? A. That was the software -- the operating system that was running on the defendant's computer. Q. Now, does Government Exhibit 201A indicate -- anywhere indicate the time that the photograph was taken? A. Yes, it does, on the second page. MR. HOWARD: Ms. Rosen, could we please flip to the second page and zoom in on the upper right-hand corner. Q. Here it says, "Properties." What is the information that's depicted here? A. Sure. That's metadata that comes with files. So the picture is part of your file that you look at. This metadata is sometimes -- not "sometimes," it is embedded within these files. So this is just the date and times of the times that I took the pictures. Q. So let's first look down here at the bottom where it says "Camera Properties." A. Sure. Page 842 Q. "Camera model: BlackBerry 9930." What is BlackBerry 9930? A. That is my phone. Q. And below that it says, "Date Taken, October 1, 2013, 6:15:56 p.m." A. Yes. Q. What does that refer to? A. That's the time I took the picture in Eastern Time. Q. And why is it reflected in Eastern Time? A. That is what my phone settings were at. Q. And what time zone is San Francisco in? A. Pacific. Q. And at that time how many hours back was it? A. Three. Q. If you look up here under "Picture Properties," there is a line that says, "Modified: October 1, 2013, 3:15:56 p.m." What does that reflect? A. That the converted time from Eastern to PST, minus the three hours. We just took the three hours off. That is what it looks like. Q. Now, Mr. Kiernan, could you just take a moment and flip through your binder of what's been marked for identification purposes as Government Exhibits 201B through 201G, and let me know when you are ready. A. OK. B through G? Page 843 Q. B through G. A. Got you. *(Pause)* OK. Q. Sir, do you recognize what all of these exhibits are? A. Yes. Q. What are they, generally? A. Photos that I took of the defendant's laptop at the time of the arrest. Q. Did you take these photographs? A. I did, yes. Q. Now, as with Government Exhibit 201A, is the time of each photo reflected in the metadata on the second page of each exhibit? A. Yes, it is. Q. And for each one under "camera properties," is the time reflected in Eastern Time rather than Pacific Time? A. It is, yes. MR. HOWARD: The government offers Government Exhibits 201B through 201G. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 201B through G received in evidence)* MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201C, please. Page 844 Q. Now, Mr. Kiernan, what time was this photograph taken local time? A. 3:17 p.m. Q. And earlier you testified that the defendant got arrested at about 3:15, correct? A. About, yep. MR. HOWARD: Ms. Rosen, if we could just zoom in on the top bar here, please. Q. Here it says, "Tuesday, October 1, 3:17 p.m." What does this mean? A. The date and time that the computer had on it when it was running. So the time stamp of the computer. Q. And right to the right here, there is the word "frosty" next to a little white picture. Now it is yellow after the highlighting. A. That was the username that was logged in at the time. Q. And is this the username that you were talking about before on the Ubuntu system? A. Yes, the created username, correct. Q. And who's username? A. Frosty, the defendant. That's his username that he created for that. MR. DRATEL: Objection. Q. What user account was the defendant logged into at the time that you took this computer? Page 845 A. The Frosty account. MR. HOWARD: Could you please zoom out, Ms. Rosen, and zoom in on this window right here. Q. What is this window? A. That is a picture of the active buddy list, again, from that Pidgin client that -- from the other pictures which were the actual conversations, there is a buddy list from that same program that shows you contacts that -- your contacts that you use on the chat. Q. Right here, what is the first contact on the buddy list? A. Cirrus. Q. And the second one right under here? A. Inigo. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201D. Now, if you could zoom in on this window that starts up here. Q. What is this window on defendant's computer? A. This is a browser window pulled up to the foreground. So it is a browser window of a website. Q. And what kind of browser was this? A. This was the Tor browser. Q. If you could just look up here, it says, "Support Tor Browser" on the top. Page 846 What is a Tor browser, Mr. Kiernan? A. It is a browser, the same as your regular browser, basically, except you are connecting through the Tor network to sites that aren't available to your regular browser. It is a program that allows you to view those things. Q. Was this Tor browser running when you arrested -- sorry, when you seized the defendant's computer? A. Yes, it was. Q. Now, if you could just zoom in here on the little tab here. Here it says "Support" and a little thing to the left of it. What is that? A. That is the -- it is the support page of the Silk Road server, and to the left is the Silk Road icon, the logo associated with Silk Road, a man on a camel. Q. And right here, this white box here, what is that white box? A. That's the URL, the page that is actually visited on your browser that was present -- that it was looking at at the time. Q. So turn to the first part of the address, silkroadvb5piz3r.onion, are you familiar with that address? A. I am. Q. And what is that address? A. That is the address of the Silk Road server. Q. And right here it says dot-onion. What does dot-onion mean? Page 847 A. Dot-onion is how you route to a -- or how you get to sites on Tor, dot-onion Tor sites, as opposed to the sites that you are usually used to going to, like a dot-com or dot-edu, not that you can't get to them through the Tor browser but the dot-onion is a special category on the Tor network that you can get to through the Tor browser. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201G, please. Q. And, Mr. Kiernan, what is this window here, the white window? A. That is a picture, again, of the full buddy list that was running on the computer at the time. Q. You had taken photographs by this point, correct? A. At this point, yes, I was. Q. What is the white window here? A. Yes. Again, that is the buddy list from that Pidgin software. Q. So, again, we have cirrus and inigo and also later on the list we have mg and smed? THE COURT: Is that right? A. That is correct, yes. MR. HOWARD: Now, Ms. Rosen, could you please publish Government Exhibit 201J. Q. And what is this window, Mr. Kiernan? A. This was the bottom of that buddy list that you just saw. Page 848 Q. I direct your attention to the little icon here on the bottom right-hand corner. Do you recognize what that is? A. I do. That's the logo associated with or the avatar associated with the user account Dread Pirate Roberts on the Silk Road site. Q. Up here there is a little what appears to be some sort of stop sign or some sort of traffic sign? A. Yep. Q. Then next to it is "dread@pl5mmj2ron" and I can't tell, that looks like h-u-t-y, a bunch of characters, dot-onion? A. Yes. Q. Do you recognize what this is? A. Yes. That's the account of the -- that is the Pidgin account to log into the Pidgin client. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201D to the jury. Q. Earlier you testified this is the Tor browser, correct? A. Correct. Q. What, if anything, did you do to look at what other Web pages had been visited previously by the user of this computer? A. Sure. I used the Tor's -- the Tor's, the browser's back button to go back. Q. Could you indicate where the back button is? A. Sure. It's right under the word "Support" with the little icon and the arrow facing to the left. Page 849 Q. And what does clicking on the back button do? A. It brings you to one page before the one that you are currently on. It brings you back one page in your browser. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201K. Q. And so what does this depict, Mr. Kiernan? A. This is the result of clicking that back button, bringing you to the one page before. MR. HOWARD: Ms. Rosen, if you just again zoom in on the URL bar at the top. Q. So here at the beginning it says "silkroadvb5piz3r.onion." Is that the same Silk Road address you testified about earlier? A. Yes. Q. Here at the end it says "slash support." What does that mean at the end of an address? A. That is the page that you are actually on, the actual -- it is the page that you are on. Q. And who picks the name of the page? A. The person designing the website. Q. Did you click on the back button again? A. I did. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201L. Q. Mr. Kiernan, do you recognize what this depicts? A. I do. Page 850 Q. And what is this? A. This, again, is the previous page to the one we saw before. This is the mastermind page of the Silk Road site. Q. And why do you call it the mastermind page? A. I am just going by the name that it is called on the site itself. MR. HOWARD: Ms. Rosen, could you zoom in on the top, please. Q. So here at the end of the address it says slash mastermind; is that what you are referring to? A. That is, yes. Q. Again, this would have been chosen by the designer of the site, is that correct? A. Yes. MR. HOWARD: If you could zoom out for a second? And zoom in on this fifth row right here. Q. Here it says "cold BTC" and below it "144,336.40," correct? A. Correct. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 201M, please. Q. And what does Government Exhibit 201M depict? A. Again, this is the -- hitting the previous button, this is one page before the mastermind page. MR. HOWARD: So let's zoom in on the top of the URL bar on the top of the page, please, Ms. Rosen. Page 851 Q. And here at the beginning is the same Silk Road address that you testified about earlier? A. It is, yes. Q. And what is the name of this page? A. Landing. Q. And down here in this box, what does it say? A. Dread Pirate Roberts. Q. And what does this indicate? A. This was the login name associated with -- the login name used to get to those other pages that you saw before, the mastermind, the support page, all of those pages there. Q. Now, approximately how long did you spend with the laptop in the library performing this triage? A. The whole time, for about three hours. Q. What did you do with the laptop after you completed the triage? A. I gave it over to RCFL, which is a computer team out in San Francisco. The agent's name was Beeson, Chris. Q. So let's take a step back for a second. After you were done with the laptop in the library, what did you do next with the laptop? A. We transported it back to the defendant's residence. Q. And at what point did you provide it to Special Agent Beeson? A. After we were back at the residence, we gave it back to Special Agent Beeson. I gave it to Beeson. Page 852 Q. Did there later come a time that you had access to the contents of the laptop again? A. Yes. Q. And how did that occur? A. That occurred -- after they imaged the drive or made a duplicate of the drive, we got a copy -- we got that copy back to us in New York. Q. And in what format did you get the copy of the hard drive? A. It came on a hard drive. It was a digital -- a forensic image of the defendant's computer that came on a hard drive back to us. MR. HOWARD: Your Honor, may I approach the witness? THE COURT: You may. *(Handing)* THE WITNESS: Thank you. Q. So I just handed you what's been marked for identification purposes as Government Exhibit 500. Do you recognize this? A. Yes. Q. And what is this? A. This is the result of the images taken by Chris Beeson that we got back to us in New York. Q. And how do you recognize it? A. Again, by the serial number on it and the serial number bar codes that match on this. Page 853 MR. HOWARD: The government offers Government Exhibit 500. MR. DRATEL: Your Honor, I think that has to be subject to connection. THE COURT: Let me ask, that is the hard drive that you understand was provided to you from Beeson? THE WITNESS: Correct. THE COURT: All right. All right. It is received. *(Government's Exhibit 500 received in evidence)* MR. HOWARD Q. Now, what did you do after obtaining this hard drive? A. After obtaining this hard drive, I made a staging copy of it. So what I do is I take the drive from Beeson that has the image on it. I plug this into a write locker, just a device, a piece of hardware that connects to the hard drive. And I take the images that were there and I copied them to a drive, or a NAS drive that I have with me. Q. So you create a staging -- what is a staging copy? A. A staging copy. It is a copy that I can work on without working on this one. Q. And you indicated that you plugged it into a write locker. What is a write locker? A. A write locker just takes -- makes this so I cannot write anything to it. Even with the format it is in, the images -- I don't want to write anything to the hard drive, basically. Page 854 Q. Was the working copy the same as the original? A. Yes, it was. Q. And how do you know that? A. I performed an MD5 Hash on my copy that I made. And an MD5 Hash is just a digital fingerprint of the files that I received. And I performed one on what I got from Beeson, and I do my own, just make sure that those match, and I know I'm working on a good copy of the data. That's all. Q. So you are doing a comparison of the hash values to show that they match and they show that they are the same copy? A. Correct. Q. Please flip to what has been marked as Government Exhibit 200A, please. A. Sure. I am running out of room up here. Q. Mr. Kiernan, would it be helpful if I remove the laptop? A. Please. I don't want it to wind up on the floor. MR. HOWARD: May I approach, your Honor? THE COURT: You may. *(Pause)* Q. Do you recognize what Government Exhibit 200A is? A. I do. Q. And what is it? A. A screenshot I took of the MD5 Hashes. Page 855 Q. You said you took this screenshot, correct? A. Yes. I'm sorry. A screenshot I took. MR. HOWARD: The government offers Government Exhibit 200A. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 200A received in evidence)* MR. HOWARD: Ms. Rosen, if you would publish 200A, please. Q. So here it says, "MD5 Hash, Computed hash" and a long string of characters that start with a 1e61. A. Yes. MR. HOWARD: If you could zoom in on that. Q. What is this? A. That is the result of the mathematical -- the equation of the program run on the imaged drive that make that hash, make that value. Q. This was the value that you compared with the value of the file from Special Agent Beeson? A. Correct. Right. THE COURT: Wait. Q. Down here it says January 5, 2015. THE COURT: Wait a second. I want to make sure that I understand what the two things are that are being compared. So there is the hard drive that you received from Beeson? Page 856 THE WITNESS: Right, which had the -- I'm sorry. THE COURT: Which had had the image? THE WITNESS: Right. It had a hash on it, too, but it is the actual hash from the defendant's laptop when they made that image. THE COURT: OK. So when there was an initial image made on the defendant's laptop that Mr. Howard just took back from you and on the hard drive on the laptop, did it have a hash there? THE WITNESS: Yes. THE COURT: Was there a hash there? THE WITNESS: Yes. That is what I am comparing it to. THE COURT: So you are measuring the hash on the laptop to the hash on the Beeson drive? THE WITNESS: Right, that is coming back. THE COURT: All right. I am with you now. MR. DRATEL Q. To be clear, this hash, is this hash of the Beeson drive or it's a hash of the staging copy that you made? A. Both, yeah. So when they perform the image, right, when they said sda4_crypt.dd, that is the name of the file that was made by Beeson from the laptop. All right? That gets put on the drive here, this one. And when I look at it, I compare that hash value with the one that is here, which is the image of the drive from the defendant. Page 857 THE COURT: I see. THE WITNESS: That is all. Q. Just real quickly, at the bottom here, on the bottom right, it says January 5, 2015. A. Mm-hmm. Q. That is the date that you took the screenshot? A. Yes. Q. This was after you performed the analysis of the hard drive? A. Yes. Q. Now, what would have happened if one file had gotten changed during your analysis of the laptop? A. Those MD5s change. They would be different. Q. They would no longer be a match? A. Right. The fingerprints wouldn't match. Q. So after you received the image and made a staging copy, what, if anything, did you do to analyze the contents of the laptop? A. I mounted the image, the DD file, using a tool called FTK Imager. Q. What does it mean to mount the image? A. You see, it's one file right now. When you mount an image, when you -- you take that file and you put it back into the contents over there, the file system comes back up. So you can actually read what was on that drive at the time. You can read the files on it. Page 858 Q. And what kind of software did you use to read the files that were in the image? A. That was the FTK Imager software. Q. Do you have any training using FTK Imager? A. Yes. Q. Approximately how many computers have you analyzed using FTK Imager? A. Hundreds. Q. Mr. Kiernan, if you could take a moment and flip in your binder to what has been marked for identification purposes as Government Exhibits 211 through 216. A. OK. Q. Do you recognize what these are? A. Yes. Q. And what are they? A. These are screenshots of FTK Imager and some of the results. Q. Who took those screenshots? A. I did. MR. HOWARD: The government offers Government Exhibits 211 through 216. MR. DRATEL: No objection. THE COURT: Received. Page 859 *(Government's Exhibits 211 through 216 received in evidence)* MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 211, and if you could zoom in on the left. Q. What does this left -- upper left-hand corner window represent? A. Sure. So that's the file structure from the defendant's laptop. MR. HOWARD: Could we just zoom in on that window. Q. Right here at the top it says "sda4_crypt.dd." What is that? A. That is the file created during that image. That is the file that gets created during the imaging of the drive. Q. And below here we have all of these little folders with names by them. What are these? A. So that's your file structure, your directory, kind of like a filing cabinet that you have at your house where you put all your different files into them. So each drawer is a different folder. And then under that you could have more folders and so on and so on to get to -- Q. I'm sorry. I didn't mean to cut you off. A. That's OK. Q. If you could zoom in down here where the folder is labeled "home." A. Sure. Page 860 Q. And "frosty." This is the home directly on Ubuntu Linux system that you testified about earlier? A. It is. Q. And what does the home directly contain on the Ubuntu Linux system? A. That contains user accounts. Q. How many user accounts did you find on the defendant's computer? A. Just this one. Q. What was the name of that account? A. Frosty. Q. Did you review the contents of files that you found on the defendant's computer? A. I did. Q. During your review of the defendant's laptop, did you find any photographs of the defendant? A. I did. Q. Can you please take a minute to look at what's been marked for identification purposes as Government Exhibit 273 in your binder. A. Sure. *(Pause)* OK. Q. Do you recognize what this is? A. I do. Page 861 Q. And what is the exhibit? A. It is a file found on the defendant's laptop. Q. And how many pages is this exhibit? A. It is two. Q. What is the second page of the exhibit? A. The second page contains the file structure again and some metadata associated with where I found the file. Q. By the way, are there other files that you extracted from the laptop other than this? A. Yes, there are. Q. And for every file that you extracted, did you also include a screenshot of where it was located and its metadata, as you described? A. I did. MR. HOWARD: The government offers Government Exhibit 273. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 273 received in evidence)* MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 273. Zoom in on the top. Q. Mr. Kiernan, is this the contents of the file you just testified about? A. Yes, it is. Q. It says, "Ulbricht, Ross William." It is a passport. Page 862 Can we go to the second page, please. Now, this is the screenshot from FTK Imager, is that correct? A. Yes. Q. And so what is depicted along the very bottom? If you could zoom into this. What does "home/frosty/documents/ archive/documents/reference/ids.jpg mean? A. That is the folder structure or where the file actually was contained on the drive, like what you saw before. MR. HOWARD: Could you zoom out, Ms. Rosen. Q. And what is this window right here on the lower left-hand corner? A. That is the metadata or the data which is describing what that file actually is. Q. Now, are you familiar with metadata on the Ubuntu Linux operating system? A. I am. Q. So, first, I want to draw your attention to the "Date Modified" field, January 5, 2007. What does the date modified field mean? A. The date that it was modified, or changed, or made a change to it. Q. So how could, let's say, a document be modified? A. Going into a document, adding something to a document, removing something from a document, that will change the date modified. Page 863 Q. So this represents the last date that the file was changed, is that correct? A. Yes. Q. Right above that, we have a field called "Date Created." What does date created refer to? A. That's the time or the date that the file was actually put on that machine or that volume, that computer. Q. Does this field refer to the date that the file was created -- first created anywhere? A. No, not a born date but when it is on that machine. Q. So here to the right we see a date of May 8, 2012. A. Correct. Q. That is the date created, correct? A. Correct. Q. Now, in this instance the date created is after the date modified? A. Correct. Q. So what does that indicate to you, Mr. Kiernan? A. That the files were put there at a different time. That is all. They were probably copied over or moved over -- MR. DRATEL: Objection. A. -- or backed up. They were copied over -- MR. DRATEL: Objection. THE COURT: I will allow it. Page 864 A. They were just moved at a different time. Q. Does this indicate to you whether or not this file was first created on this computer? MR. DRATEL: Objection. THE COURT: Based upon your experience, what does that information indicate to you? THE WITNESS: That it was just on a different machine or a drive at a different time and put here later on. Q. Now, this date created of May 8, 2012, is this the only file you found on defendant's computer with a date created of May 8, 2012, or were there others? A. Oh, there were others. Sure. Q. Approximately how many others? A. Hundreds of them. I mean, there are others there. Probably when that user account was created on the machine. MR. DRATEL: Objection. THE COURT: Overruled. Q. Based on your training and experience, in seeing that many -- that quantity of files with that same date created, what does that indicate to you? MR. DRATEL: Objection. THE COURT: I will allow it. A. I'm sorry. Can you repeat that? Q. From your training and experience -- A. Yes. Page 865 Q. -- based on seeing the large quantity of files with the same date created of May 8, 2012, what did that indicate to you? A. Yeah. The files were moved from either another computer or another piece of media to the machine for later on. Q. What is the "date accessed" field? It says October 2, 2013. A. Just when it was looked at or accessed, touched. Q. That was the day after the defendant's arrest, correct? A. Correct. Q. And why would this date be after the defendant got arrested? A. Because we were doing a live image. The machine is on. So all those files, you know, they unfortunately get -- not "unfortunately." They are just accessed during that time, during that imaging of the machine. The machine is on so we're not turning it off to take it so that gets changed. Q. Does this metadata indicate whether or not the file was changed when it was accessed for the purpose of your image? A. It does not. Q. Does it indicate whether or not the file was changed when it was accessed for the purpose of the image? A. No. Q. Was it changed? A. No. The files weren't changed. Page 866 Q. So, Mr. Kiernan, if you could now flip to Government Exhibit 274 in your binder. A. Sure. Q. Do you recognize what this is? A. I do. Q. And what is it? A. Again, a file taken from the defendant's laptop. Q. And who took it from the defendant's laptop? A. A file that I extracted from the defendant's laptop, yes. MR. HOWARD: The government offers Government Exhibit 274. MR. DRATEL: I have no objection. THE COURT: Received. *(Government's Exhibit 274 received in evidence)* MR. HOWARD: Ms. Rosen, could you please publish it. Q. Did you find any chat logs on the defendant's computer? A. I did. Q. And what is a chat log? A. Depending -- it's a file that records or keeps the conversations between two people. Like if you use your phone, if you go back and check your text messages, the same type of deal. It just puts it into a file, depending on the client that you are using at the time on the machine. Q. And what kind of chat program did you find on the defendant's computer? Page 867 A. I found Tor chat on the defendant's computer. MR. HOWARD: If you could please publish Government Exhibit 215, which is already in evidence. And if we could zoom in on the left, upper left window. Q. Mr. Kiernan, this is the directory structure of the computer again, is that correct? A. Yes, it is. MR. HOWARD: And if we could zoom in on this little area here. Q. Here is a folder that says ".torchat," correct? A. Correct. Q. What is that folder? A. That is the full folder for Tor chat when you load -- when you install Tor chat on your computer. Q. Now, Mr. Kiernan, you testified earlier that when you first got the defendant's computer, you saw a Pidgin chat program window open, is that correct? A. That is correct. Q. Is that a different program than Tor chat? A. Yes, it is. Q. Did you find the Pidgin program also installed on the defendant's computer? A. I did. MR. HOWARD: Now, Ms. Rosen, could you please publish 215 again. Sorry. I had one more question. Page 868 Could we just zoom in on the upper right window. Q. What are these lists on the left side of the window? A. That's the log files associated with Tor chat as it keeps the logs on your computer. *(Continued on next page)* Page 869 Q. And if we can just zoom in on a couple of those. That's good. Here you can see there's a whole bunch of characters followed dot log. What does dot log mean? A. Just the formality or the extension of the file that's there. It's just called dot log in this case. Q. So Mr. Kiernan, what is Tor chat? A. A program, again, to allow you to communicate with other people in a program. It -- it's person to -- it's communication between people on the Tor network as opposed to open network. Q. Have you personally ever used Tor chat? A. I have. Q. Have you tested Tor chat? A. I have. Q. Have you saved the logs of Tor chats on your own computer? A. I have. Q. If you save a Tor chat log to your own computer, how is your part of the conversation labeled? A. The username "myself." Q. And if you save a log of a chat you have on your computer, how is the other side of the conversation labeled? A. With the name given to that other user, your other buddy. Q. And who gives that name to the other user? A. The user of the computer. The user of the Tor chat program. Page 870 THE COURT: Why don't you ask the same question, Mr. Howard, in terms of "myself." I'm unclear whether it's a name you designate for yourself or whether it's an automatic name given. Q. Mr. Kiernan, is "myself" something that you choose for yourself as a user of Tor chat, or is it automatically selected to you by the program? A. The program gives you that user account, the username and the log as "myself." Q. And the name of the other party in the conversation, is that automatically selected for you? A. No. You can assign that a name. Q. Could it be assigned anything the user wants? A. Yes. Q. So, for example, if you're chatting with your mother, you can label it "mom" if you want, right? A. Correct, because the usernames in Tor chat are long, tough-to-read names. You can see, as a matter of fact, from that log file it's the actual name of the user on there. So to make it human-readable, you give it an easier-to-use name like "mom." Q. So if we could please look at Government Exhibit 222 in your binder, please. Do you recognize what this exhibit is? A. I do. Q. What is this exhibit? Page 871 A. This is a log file from that Tor chat directory. Q. This is from the defendant's computer? A. From the defendant's computer; yes. Q. And did you extract this file? A. I did. MR. HOWARD: The government offers Government Exhibit 222. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 222 received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 222, please. Zoom in on the first few lines there. Q. Is this what a Tor chat log looks like, Mr. Kiernan? A. It is. Q. So let me just describe the very top line it says "This log file is not signed and has no cogency of proof." Are you familiar with what that is? A. I am. Q. What is that? A. That's, again, a default setting when the log file starts getting created, it puts that in there. Q. So in other words, all Tor chat log files automatically include that at the top, correct? A. They'll put it in there, yes. Page 872 Q. And you testified that you tested and used Tor chat yourself, right? A. I have. Q. And you've saved your own logs, correct? A. I have. Q. Have the logs been true and accurate copies of the conversations that you logged? A. They have been, yes. Q. Now, if we can just -- I'm going to direct you to the second line here where it says 2012-04-24, 17:06. What does that mean? A. It's the date and time of the chat. Q. So it's April 24, 2012, correct? A. Correct. Q. And what format is the time depicted in? A. It's based on the 24-hour clock. Q. So what time is that in time that we more commonly use? A. 5:06. Q. To the right of there, you see this sSh, it's a lower-case S, big S, little H. What is that? A. That's the name given -- that's the name that was assigned to one of the chat participants. Q. It's the other participant in the chat that was logged, correct? A. Yes. Page 873 Q. And it says "greetings" to the right. What is that? A. That's what was typed in, "Greetings." Q. And the next line next to date and time it says "myself: hi there." A. Yes. Q. What is "myself"? A. "Myself" is the user of the client software on the computer. Q. The user who is logging the files on the computer, correct? A. Yes. Q. Now, Mr. Kiernan, can you please flip to what's been marked for identification purposes as Government Exhibit 22B in your binder. Do you recognize what this is? A. I do. Q. What is this? A. An excerpt from the full chat log. Q. Is that an excerpt of the Tor chat log we just looked at? A. Yes, it is. Q. Did you participate in the creation of this exhibit? A. I did. Q. Is this a true and accurate excerpt from the full Tor chat log? A. Yes. they are. Yes. MR. HOWARD: The government offers Exhibit 222B. MR. DRATEL: No objection. Page 874 THE COURT: Received. *(Government's Exhibit 222B received in evidence)* MR. HOWARD: Ms. Rosen, can we publish this and zoom into the top. Q. Right at the top it has 4XSB, a long list of characters, dot log. What does this refer to? A. That's the log file this was found in. It's the user's Tor name. Q. Is this the name of the file as it was stored on the defendant's computer? A. Yes. Q. And here it says "page 1/5." What does page one of five refer to? A. That's the -- "1" being the page that this was on and "5" is how many pages were in the whole chat. Q. So this indicates, in other words, that this is the first page of the larger Tor chat file, correct? A. Yes. Q. And that the larger file had a total of five pages, correct? A. Correct. Q. So I'm going to read it right now. "It's sSh: May I ask to whom I am speaking? A formality of course, myself DPR and you are. SSh: This squid." Page 875 Whose computer was this chat recovered from? A. The defendant's. Q. Mr. Kiernan, I want you to take your time and look through what's been marked in your exhibit binder as 222A all the way through 232E, and let me know when you're done. Look at them generally and let me know. A. I'm sorry. 222A to? Q. To 232E. A. Okay. Q. So do you recognize these exhibits? A. I do. Q. What are they? A. All excerpts from the Tor chat logs that were found in the defendant's computer. Q. And again, these are not full chat logs. They're excerpts, correct? A. Correct. Q. Did you participate in the creation of these exhibits? A. Yes. Q. Are they true and accurate excerpts of the entire log files? A. They are, yes. Q. Does each also contain the file name of the full log file at the top like Government Exhibit 222B? A. Yes. Page 876 Q. And does each excerpt also indicate where in the larger Tor file -- the Tor chat log file it was located? A. Yes. MR. HOWARD: The government offers Government Exhibits 222A, 2223, 2224, and 2225 and 225B, 2226A through 226I, 227A. Apparently, I said four "2's" at one point when I should have only said three "2's." Where was I? THE COURT: 227A. MR. HOWARD: Through 227H, 2228, 222 -- sorry. Just two "2's", 9A through 229E; 231A through 231C; and 232A through 232E. And that's it. THE COURT: So no 228? MR. HOWARD: All of them start with "22." Why don't we do it this way: So we have 2A, 3, 4, 5A and 5B, 6A through 6I, 7A through 7H, 8, 9A through 9E. Now, it's 231A through 231C and 232A through 232E and that should cover it. THE COURT: All right. MR. HOWARD: Just note that 229B was cut at the last second, so that's not one that should be included. THE COURT: All right. Thank you. Mr. Dratel. MR. DRATEL: We had some prior objections which we repeat. THE COURT: Yes. Page 877 MR. DRATEL: To the extent they weren't covered, the others, we make the same objections Vayner, 403. And because there has been some alteration of numbers, there have been some changes. THE COURT: Understood. Those objections are noted. They're overruled. And those documents are received. *(Government's Exhibits 222A, 223, 224, 225A-225B received in evidence)* *(Government's Exhibits 226A-226I, 227A-227H, 228 received in evidence)* *(Government's Exhibits 229A-229E, 231A-231C, 232A-232E received in evidence)* MR. HOWARD: Thank you, your Honor. Q. In your review of the defendant's laptop, did you discover files that appeared to be journal entries? A. I did. Q. Mr. Kiernan, can you please look in your binder what has been premarked for ID purposes as Government Exhibit 240A through 240D and 241. A. Yes. Q. Do you recognize these exhibits? A. I do. Q. And what are they? A. Files I extracted from the defendant's laptop. MR. HOWARD: The government offers Government Exhibits 240A through 240D and 241. Page 878 MR. DRATEL: The same prior objections. THE COURT: All right. Those objections are noted, overruled and those documents are received. *(Government's Exhibits 240A-240D, 241 received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 240A. Q. What is the title of this file, Mr. Kiernan? A. 2010.docx. Q. And what is the date that this file was last changed as reflected in the meta data? A. 2/27/2011. MR. HOWARD: Ms. Rosen, can you please add the highlights to this document just for the ease of reading them in. I'm going to read the highlighted portions now. If we can zoom in at the top. "2010. I started the year in the middle of my stint with Good Wagon Books. Donny and I had worked on it the last quarter of 2009 and we were trying to ramp up by hiring people to go door-to-door. It was a real struggle and by the end of our trial partnership, it was clear that we hadn't grown the business to the point that it made sense for me to stay on. "I had to find a job quickly, so I turned to Craig's List and found American Journal Experts. For the next six months, I edited scientific papers written by foreigners. It sucked. The hours were flexible, but it drained me. I hated working for someone else and trading my time for money with no investment in myself." Page 879 Can we go to the next page, please. "While all of this was happening, I began working on a project that had been in my mind for over a year. 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 that could lead back to them. I had been studying the technology for a while, but needed a business model and strategy. I finally decided that I would produce mushrooms so that I could list them on the site for cheap to get people interested. I worked my ass off setting up a lab in a cabin near Bastrop off the grid. In hindsight, this was a terrible idea and I would never repeat it, but I did it and produced several kilos of high quality shrooms. On the website side, I was struggling to figure out on my own how to set it up. Driving out to Bastrop, working on Good Wagon, and trying to keep up my relationship with Julia was taking all of my time. By the end of the year, I still didn't have a site up, let alone a server." Ms. Rosen, can you zoom out to the next page, please. "In 2011, I am creating a year of prosperity and power beyond what I have ever experienced before. Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator. Good Wagon Books will find its place and get to the point that it basically runs itself. Julia and I will be happy and living together. I have many friends I can count on who are powerful and connected." Page 880 Ms. Rosen, can you please publish Government Exhibit 240B. Q. Mr. Kiernan, what is the name of this file? A. 2010.ODT. Q. And where was it located on the computer? A. I'm sorry. 2011.ODT. Q. And where in the defendant's computer was it located? A. This was in his home/frosty/Documents/journal/2011 directory. Q. And what was the date when this file was last changed? A. 2/5/2012. MR. HOWARD: Ms. Rosen, can you please add the highlights to this document as I'll read them, if you can just zoom in the top. "2011. Still working on Good Wagon Books and Silk Road at the same time. Programming now. Patchwork php mysql. Don't know how to host my own site. Didn't know how to run bitcoind. Got the basics of my site written. Launched it on freedomhosting. Announced it on the bitcointalk forums. Only a few days after launch, I got my first sign-ups and then my first message. I was so excited I didn't know what to do with myself. Little by little, people signed up, and vendors signed up, and then it happened. My first order. I'll never forget it. The next couple of months, I sold about ten pounds of shrooms through my site. Some orders were as small as a gram and others were in the qp range. Before long, I completely sold out. Looking back on it, I maybe should have raised my prices more and stretched it out, but at least now I was all digital, no physical risk anymore. Before long, traffic started to build. People were taking notice, smart, interested people. Hackers. For the first several months, I handled all of the transactions by hand. When they came into my local bitcoin client, I matched them up with the amount of time" -- I'm sorry -- "with the amount and time of the purchase and did all of the necessary account adjustments. Between answering messages, processing transactions, and updating the codebase to fix the constant security holes, I had very little time left in the day, and I had a girlfriend at this time!" Page 881 I'm skipping ahead. "So, while still manually processing transactions and responding to a bigger and bigger message load, I learned to use codeigniter and began rewriting the site. At some point around this time, I also learned how to host my own site and was on my own servers." "Rewriting the site was the most stressful couple of months I've ever experienced. I worked all day everyday, still processing transactions by hand, dealing with scammers, answering messages, meeting new strange people through my site and getting to know them. When I finally got the site ready, there were several new features including a tumbler and automatic mated payment processing." Page 882 "AND in addition to these stressors, Silk Road got its first press, the infamous Gawker article. When you look at the historic #s, you can see right when it happened. A huge spike in signups, and the beginning of an upward trend in commerce that would continue until the time of this writing, and hopefully for much longer. There was really a smattering of press at this time including the local news in FL! Most interestingly, two U.S. senators came out against the site and against bitcoin. They made a big deal out of it and called for a shutdown of the site." "Some major advances were price pegging, vendor ranking, a more sophisticated feedback system, buyer stats, transaction logging and building up the admin toolset. Most importantly, the market began its path to maturity. Vendors and buyers forged great relationships, more vendors came in to fill holes in the market, other completed and variety, customer service, and professionalism emerged. After making about $100k an up to a good 20-$25k monthly, I decided it was time to bring in some hired guns to help me take the site to the next level. This would prove to be the biggest challenge I ever faced. I actually got to see a fairly wide range of employee types. SYG, the schmoozer who winds up being a waste, DA, the model employee. Super enthusiastic, hard working and trainable. Then there was Utah, professional who does it for the money. Gets the job done, but his heart isn't always in it. First I put up an ad for a system administrator. I needed someone to help me take the back end to the next level in security. I had many candidates duke it out in the forum on many topics from os to isolation to software to security. In the end, I made what I thought was a wise decision." Page 883 "I was still working with SYG, so Utah was set to work on rewriting the site. Around this time, Variety Jones showed up. This was the biggest and strongest willed character I had met through the site thus far. He quickly proved to me that he had value by pointing out a major security hole in the site I was unaware of." "He convinced me of a server configuration paradigm that gave me the confidence to be the sole server administrator and not work with someone else at all. He has advised me on many technical aspect of what we are doing, helped me speed up the site and squeeze more out of my current servers. He also has helped me better interact with the community around Silk Road, delivering proclamations, handling troublesome characters, running a sale, changing my name, devising rules, and on and on. He also helped me get my head straight regarding legal protection, cover stories, devising a will, finding a successor and so on. He's been a real mentor. Shortly after I met VJ, I started looking for a right hand man, an administrative assistant of sorts. Someone to answer messages, manage the forum and Wiki, and eventually even dispute resolution. I found that man in Digital Alchemy, who was one of the original members of the site and had been modding the forums for pretty much the whole time. There were lots of applicants, but for some reason DA stuck out as promising, and he has turned out to be invaluable. He quickly learned how to respond to messages and keep things running smoothly. Before long he was managing the forums, the wiki, the messages, the resolution center, scam prevention, and odd jobs for me like mini-research projects and tedious tasks." Page 884 Q. Now, Mr. Kiernan, at the end of this excerpt, there was a reference to an employee named DA. Did you find any references to DA in the Tor chat log files? A. I did, yes. MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 232B, which has already been admitted into evidence. Zoom in on the top half, a half at a time. "myself: Are you ready to become judge jury and executioner. Da: Yep." Page 885 And then there's an emoticon. "myself: OK, click resolutions, form your support panel. Myself: This will pull up the most past-due resolution. Da: It's loaded. Myself: Top line is how many past due resolutions there are. It says "under review" to the users. The next six lines are the transaction details. Kill resolution link finalize the resolution without crediting buyer or seller. You rarely need to use this, but sometimes both parties are completely unresponsive and you need to clear it out of your queue." By the way, I note this is a conversation from January 8, 2012. The conversation continues: "myself: Left stats table is the buyer. Purchases are the number of purchases that were eventually finalized and not canceled and doesn't count open orders. Refund rate is the total money returned to the buyer from the resolution center divided by the total money spent. And the time-frames are the stats from the past 30 days, 90 days, and the life of the buyer's account. Keep notes of what these numbers mean so you can review them if you forget." Ms. Rosen, can you please publish Government Exhibit 232A, which has already been admitted into evidence. Page 886 Q. Mr. Kiernan, at the top it says here pages "148-149 out of 257"? A. Yes. Q. Does 257 refer to the total number of pages in the full Tor chat log? A. Yes, it does. Q. So now I'm going to read dated March 14, 2012. "myself: Do you make purchases with a DigitalALCH account. Da: [...] No, not for a while. I had at one point but only to way out there drop location. States away :)" Emoticon. Da: I use the KindestDaze generally. Myself: That's good. Your name is getting higher profile on the forums and we wouldn't want anyone with your address from past orders to compromise you. We might want to construct a new identity for you though. Da: Say that I'm quitting. Yea? Myself: Maybe, or just disappear. Let's think on it for a few days. Da: IRL or online? Myself: No, just online. My concern is that LE will see that DA is a player at Silk Road by your forum presence and then track down who you bought from and sold to under that name and then find you irl. Page 887 Da: Damn. I really like the DigitalALCH moniker. It really fit me. Oh, well freedom is better than prison." Emoticon. "myself: Yep. I got to protect my assets too. Da: Do you mean me? Or outside assets. Myself: You." MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 222A, which has already been admitted into evidence. Q. Mr. Kiernan, this is page one of a Tor chat log chat that's a total of 16 pages, correct? A. Correct. Q. It's dated April 20 -- the first excerpt is dated April 20, 2012, correct? A. Yes. Q. "sSh: I have the forum to manage and the profile updates review. Is there anything else you'd like me to get doing, or shall I refer to DA for such business. Myself: Normally DA, but since he is out of commission, he can't manage it. Myself: That's fine for now. Once we get you trained on support, you'll have plenty to do before he's recovered." It picks up again on April 21, 2012, correct, Mr. Kiernan? Page 888 A. Yes, it does. Q. "Myself: OK, go to .onion/support and tell me what you see. SSh: I see an entire screen of new options! Many radio boxes with various labels. Myself: Perfect. I'll give you a little tour. New vendors, you are familiar with. Click messages. The number next to it is the number of unread messages for SR support and vendor support. Vendor messages go to the front of the queue. It's just like the bulk reply view in the main messages area, but it pulls up something like 75 messages at a time and the options to the right of the message are a little different. SSh: All right. I've got it loaded. It seems that quite a few people need assistance today. Myself: Actually the only difference is the forward to DPR box. If this is checked it forwards all unread messages from the user to me." And once again, the next section starts on April 21, 2012, right? A. Correct. MR. HOWARD: "myself: We already gave him his seller status back, so just tell him to change it. We should have told him to change it before we made him a seller again. Page 889 But I don't want to go back and forth taking and giving. SSh: Okay then. Should I put in a direct message, or add it to the support message on the list page. Myself: Just add it to the message since we haven't sent them off yet. SSh: How's this sound: Your Vendor Status has been restored. Please change your profile to comply with the seller's guide. Best of fortune regarding your business here on the Silk Road. Myself: That's good, but give him a warning too. Something like. Please read the seller's guide very carefully. If we find you out of compliance again, your selling privileges will be permanently removed." Ms. Rosen, can you please publish Government Exhibit 240C, which is already in evidence. Q. Mr. Kiernan, what is the name of this file? A. Daily.ODT. Q. And where was it located on the defendant's computer? A. This was under the home/frosty/documents/journal/2011Q4/December/week 4 directory. Q. And does the meta data indicate the date on which the file was last saved? A. Yes. 12/29/2011. Page 890 Q. "12/29/2011 chatted with VJ again today. Him coming onto the scene has reinspired me and given me direction on the SR project. He has helped me see a larger vision. A brand that people can come to trust and rally behind. Silk Road chat, Silk Road exchange, Silk Road credit union, Silk Road market, Silk Road everything! And it's been amazing just talking to a guy who is so intelligent and in the same boat as me, to a certain degree at least. So, today we talked mostly about the exchange, what to charge, boundary conditions, etc. Then I went for a surf with Billy Becket. Caught a couple of good waves, chatted with him took some wipe outs and went in. Soon after, I ran around the city with Ashley and Kelly. We drank some beer, walked around the city and botanical gardens. I then went out with Jessica. Our conversation was somewhat deep. I felt compelled to reveal myself to her. It was terrible. I told her I have secrets. She already knows I work with bitcoin which is also terrible. I'm so stupid. Everyone knows I am working on a bitcoin exchange. I always thought honesty was the best policy and now I didn't know what to do. I should have just told everyone I am a freelance programmer or something, but I had to tell half truths. It felt wrong to lie completely so I tried to tell the truth without revealing the bad part, but now I am in a jam. Everyone knows too much. Dammit." Mr. Kiernan, during this excerpt, there was a reference to an employee named VJ? Page 891 A. Yes. Q. Did you find any references to VJ in any Tor chats? A. I did, yes. MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 226G, which has already been admitted into evidence. THE COURT: Just for your planning purposes, we'll end in about three minutes for lunch. MR. HOWARD: Maybe it makes sense to do this exhibit and then take the break. THE COURT: That's fine. Q. Mr. Kiernan, was this another Tor -- this is an excerpt of another Tor chat log recovered from the defendant's computer? A. Yes, it is. Q. And up here it says "page 312 of 1,096." Does that reflect that there were 1,096 pages in the full chat log? A. Yes, it does. Q. And this takes place on January 15, 2012, correct? A. Correct. Q. "VJ." Emoticon or some sort of symbols. "Kicks self for assuming. Should have asked for the code long ago. Just didn't see the need. Mark it down as a learning experience for me as well. Myself: This whole thing has been on a wing and a prayer. Besides basic php and html I've learned everything on the fly. Page 892 Vj: Well, I'm glad I didn't go for that nap, this was much more rewarding. Vj: And you've done a damn fine job but you're becoming more of a target for hackers and better ones as time goes by. Myself: I hadn't opened a Linux terminal until I left freedom hosting a month after the site launched. Vj: Just thank FSM that they didn't start on you earlier. Myself: FSM? Vj: #Diety. Myself: Ahh. Vj: Flying Spag. Myself: I've been incredibly blessed. Vj: I have a lot of admiration for the big brain on you. I don't know two other people that could have done it. Myself: I was a hairs breath from going to jail before the site even launched for growing shrooms." Q. Mr. Kiernan, all of these chat logs that we have reviewed, whose computer were they recovered from? A. The defendant's. THE COURT: Ladies and gentlemen, let's take our lunch break now. We'll resume at 2:00. I want to remind you not to talk to anybody, including each other about anything having to do with this case. Thank you. Page 893 *(Jury excused)* *(Continued on next page)* Page 894 *(In open court; jury not present)* THE COURT: Mr. Kiernan, you can take a break. We're going to pick up again at 2:00. THE WITNESS: Yes. *(Witness temporarily excused)* THE COURT: Let's all be seated. I just had two things: One, Mr. Dratel. You had asked for the hard drive to be received subject to connection. I thought that I heard enough for it to be received, but if you perceive by who is going to testify, if anything occurs that undoes that, then obviously we'll take that into consideration, but it did appear to me there was enough to get it authenticated. MR. DRATEL: That's the reason why it's sort of the cart before the horse to a certain extent. THE COURT: I understand. MR. TURNER: We'll complete the chain with the next witness. THE COURT: Thank you. Then there were the series of exhibits with the 22s that we had, all of which were subject to various objections, including some that weren't noted on the pretrial order because they came in afterwards. I just wanted to make it clear the nature of the Court's rulings. The objections were, among others, the Vayner objection. The Court does believe that given the testimony of this witness, that there is sufficient grounds for authenticity. Page 895 In terms of it not being part of the charged conduct, that's really a relevance objection, and the Court finds that these are directly relevant to a number of issues in the case. In terms of 403, the Court does not find that these are substantially outweighed by the danger of unfair prejudice or misleading the jury or wasting time; indeed, they are evidence which is necessarily to the government's case in terms of the theories that they have posited and not unduly prejudicial, so the Court did allow those, and all of those really fall under the same rationale. Was there anything that you folks wanted to raise before we took our own break? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: Thank you. I do have one matter at 1:00. Oh, I don't. It's been taken off-calendar. I don't have a matter at 1:00, so you folks are welcome to keep all of your things there as you see fit. Thank you. We'll return at 2:00. *(Continued on next page)* Page 896 AFTERNOON SESSION 2:10 p.m. *(In open court; jury present)* THE COURT: Let us all be seated. Mr. Howard, you may proceed, sir. MR. HOWARD: Thank you, your Honor. THOMAS KIERNAN, resumed. DIRECT EXAMINATION CONTINUED MR. HOWARD Q. Good afternoon, Mr. Kiernan. A. Good afternoon. Q. So in the morning, you testified that it took approximately three hours to do the triage of the laptop, right? A. That's correct. Q. Again, what were you trying to do with the laptop triage? A. Preserve evidence and not let the laptop get into a state of encryption. Q. And following the triage, you provided the laptop to Special Agent Beeson? A. I did. Q. And approximately how long were you performing the triage in the library itself? A. In the library? About an hour or so. Q. And what happened after you were finished in the library? A. We took the laptop and I carried it and transported it to the defendant's residence. Page 897 Q. And how did you transport it there? A. We had a van or we had a car outside. Q. Did you drive? A. I did not drive, no. Q. And what, if anything, did you do while you were in the car with the laptop? A. Just ensured that the laptop stood on. I didn't want the laptop to turn off during that time. Q. And what did you do after you arrived in the defendant's residence? A. I continued triage, kept the laptop running and then waited for Special Agent Beeson to show up to give it to him. *(Continued on next page)* Page 898 MR. HOWARD: Now, Ms. Rosen, could we please publish Government Exhibit 222G again for just a quick moment. Sorry, I meant 226G. Pardon me. Q. So, Mr. Kiernan, this was the excerpt that we read before we took the break for lunch, correct? A. Correct. Q. Right here at the top it indicates it is page 312 out of 1096, correct? A. It does, yes. Q. Were there other chat excerpts that were taken from this 1096 page file involving VJ? A. Yes, there was. MR. HOWARD: So at this point, Ms. Rosen, if you could please publish Government Exhibit 226F, please. Q. Mr. Kiernan, this is page 964 of the 1096-page chat log, right? A. Correct. Q. This conversation took place on June 1, 2012. A. Yes. Q. "Vj: Also, Variety Jones is dead, poor fella. No more seed biz for him. "Myself: :( "Myself: you goin by cimon now? "Cimon: I was keeping that going as a way to get btc legally in the UK, but I'm leaving the UK, and the legality elsewhere means it's best I shut it down. Page 899 "Cimon: I have no idea what i'm going by now, dammit! "Myself: well I just changed you from vj to cimon on torchat. "Myself: so yer cimon. "Cimon: there ya go. "Cimon: and that's how changes are made. "Cimon: cimon it is." Now, Mr. Kiernan -- actually, Ms. Rosen could you put that back up for a second. So, Mr. Kiernan, up here at the top, we have the name "VJ," correct? A. Correct. Q. And who names the other side of a Tor chat that's logged on a one zone computer? A. The user of that computer. Q. And so down here at 5:53 p.m., you see "Simone"? A. Correct. Q. Is that a different user than VJ? A. A different username. Q. Right, but is it the same person in this chat? A. Yes. Q. What appears to have happened? A. The associated name given by the user of the computer, the defendant, changed it to Cimon. Page 900 MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 227B, which has already been admitted into evidence, and zoom in, please. Q. This is on August 31, 2012, correct? A. Correct. Q. "Cimon: Hey, could you scratch together a little org chart for me, so I know who's supposed to be doing what, on the forums and support? "Myself: sure "Myself: support "Me "Indica|Sativa "SquidShepherd "Forum "Admins "Me "Indica|Sativa "Mods "SquidShepherd "Limetless "Nomad bloodbath "Guru "Myself: Squid talks to indi, indi talks to me. very occasionally Squid and I will talk." Ms. Rosen, could you please publish Government Exhibit 227A, which has already been admitted into evidence. Page 901 And this chat occurred on October 24, 2012, correct? A. Correct. Q. "Myself: DA and squid both went awol "Myself: squid said his comp died and is waiting on a replacement, but that was about 5 days ago now "Myself: DA is gone for good "Cimon:" expletive, "I haven't seen DA onlne since we talked, what happened with him? Myself: got a new guy on who seems good and am looking for another "Myself: he slowly flaked out. the last I heard he had a family emergency to rush off to and didn't know when he'd be back "Myself: right now I'm spending about an hour a day on resolutions and inigo (new guy) is chipping away at the messages "Myself: I tried recruiting from bitcointalk.org "Myself: but I may just dip into the local community "Cimon: dude, really? "Myself: well? "Myself: working for a criminal enterprise isn't exactly attractive "Myself: to everyone "Cimon: What were you paying squid? Page 902 "Myself: $900/week "Cimon: What are the major issues CSRs deal with now? "Myself: the toughest stuff is keeping up with the vendors and knowing when to demote them "Cimon: not including resolutions "Myself: that ties into the resolutions "Myself: besides that, answering messages is pretty trivial, just time-consuming "Cimon: how many vendors get demoted, and how many permanently? "Myself: messages, resolution, vendor quality control "Myself: 1-3 per week "Cimon: what are the issues, just non-delivery? "Myself: it varies "Myself: just a sec "Myself: faking feedback, going around escrow, loan scamming, exchange scamming, fake product..." MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 240D, which is already in evidence. Q. Mr. Kiernan, what was the name of this file as it was saved on the defendant's computer? A. 240D? Excuse me. "Daily.odd." Q. Where was it located on the defendant's computer? A. This is the "home/frosty/documents/journal/2012/Q1/January/ week one" folder. Page 903 Q. And what was the date that this file was last changed, according to the metadata? A. 1/1/2012. Q. "January 1st, 2012 "Well, I'm choosing to write a journal for 2012. I imagine that some day I may have a story written about my life, and it would be good to have a detailed account of it. I did some work in the morning, can't remember now exactly what it was, but it wasn't long before I was responding to text messages and making plans to hang out on the beach. It was a holiday for everyone, so the beach was as packed as I've ever seen it, a teeming mass of humanity, helicopters flying overhead, waves crashing, a real spectacle. I was offered a ticket to a warehouse party by Nicole, but just couldn't bring myself to accept. I just was not in the partying mood. George also invited me to join him camping for 2-3 nights. I wanted to go, but the swell is low and it's just too much time away from Silk Road, and there is so much to do before the rents get here, and before I leave for Thailand. I need to get DigitalAlch set up handling the resolutions, and it just seems like Variety Jones gives my broad sweeping tasks on a daily basis. Emma, Jessica, Cally, Kim, Tim and a couple others, Mike, were all on the beach with me. Playing paddle ball and soaking up the sun. I've been thinking a bunch about what is next for me. I like my little life here in Bondi, but what if I love Thailand, or want to go on even further? I don't want to go backwards, and while I could see a lot more in Australia, I'm not even taking the opportunities that are coming up as it is. I need to find a place I can work from cheap and off the beaten path." Page 904 MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 225A, which has already been admitted into evidence. Q. Mr. Kiernan, this is page 2 of the 15-page chat log, is that correct? A. Correct. Q. "Myself: go here "Myself: http://silkroadvb5piz3r.onion/support "Myself: let me know when you are there "Scout: just waiting for tor … okay, i'm there and it's saying 'no access' "Myself: you are signed in with scout? "Scout: yes "Myself: do you know how to figure out your account id? "Scout: i did many months ago. lol. remind me? "Scout: oh i found it "Myself: what is it? "Scout: 77594f7023 "Myself: try again Page 905 "Myself: refresh "Scout: okay, it worked - i'm in. "Myself: cool "Myself: it's kind of a mess "Myself: but once you learn the tools, it's not so bad." MR. HOWARD: Ms. Rosen, could you please publish that again, and can you zoom in on the first three lines of the chat and put it at the top of the screen, please. And you could please publish 201K on the bottom of the screen, please, and zoom in on the URL bar. Q. So, Mr. Kiernan, here you see during the chat "myself" says "http" and then an address. Do you recognize that address? A. Yes. Q. And is that the same address that you saw in -- on the Tor browser that was running on the defendant's computer? A. It is, yes. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 225B, which has already been admitted into evidence. Q. Mr. Kiernan, this chat is on January 26, 2013, correct? A. Correct. Q. "Myself: so, im down a set of hands as of 12 hours ago "Myself: now would be a great time for you to come on board if you are still interested Page 906 "Myself: or do you still have reservations? "Scout: the only reservation i have is about the safety of being part of the staff. safety from legal issues, that is. having a hell of a time getting past that worry. "Myself: the way i got over it is by looking at the risk/reward "Myself: if you look closely at the risk part of it "Myself: you can break it down into 2 parts "Myself: chances of getting caught, and what will happen if you get caught "Scout: right - and i have no idea what the answer is to either of those hypotheticals Myself: I'm not 100% about the what will happen part. It's not like there have been cases in the past like ours. But when you look at the chance of getting caught part, it's incredibly small "Myself: put yourself in the shoes of a prosecutor trying to build a case against you "Myself: what evidence could they pin on you? "Myself: there is nothing on your laptop for them to use, if you obscure your bitcoins propperly, there is no way for them to trace them back to me. Realistically, the only way for them to prove anything would be for them to watch you log in and do your work. "Scout: right. which, as i understand it, they could. Page 907 "Myself: this is just a realization I've come to after doing this for almost 2 years "Myself: sure, someone could stand behind you without you realizing it "Myself: we are definiely on the cutting edge, the fringe. I'm not sure how else to put it, but the biggest con about this work is not the risk of going to jail or having your life disrupted "Myself: it's getting used to and living with that possibility no matter how remote "Myself: and keeping your work a secret." Ms. Rosen, could you please publish Government Exhibit 241. Q. Mr. Kiernan, what is the name of this file as stated on the defendant's computer? A. "Log.text." MR. HOWARD: Ms. Rosen, could you just add the highlights to the portions that we will read for now. Q. And, Mr. Kiernan, the first entry on the top of the first page is labeled March 20, 2013, correct? A. Correct, yes. Q. "Someone posing as me managed to con 38 vendors out of 2 btc each with a fake message about a new silk road posted about cartel formation and not mitigating vendor roundtable leaks. Worked on database error handling in CI." Page 908 "4/9/2013: Ssbd considering joining my staff. "04/10/2013: Some vendors using the hedge in a falling market to profit off of me by buying from themselves. turned of access log pruning so I can investigate later. Market crashed today. Being blackmailed again. Someone says they have my ID, but hasn't proven it." "4/11/2013: Set up tor relays. Asked scout to go through all images on site looking for quickbuy scam remnants. Cimon told me of a possible ddos attack through tor and how to mitigate against it. Guy blackmailing saying he has my id is bogus." "4/13/2013: Inigo is in the hospital, so I covered his shift today. Zeroed everything and made changes to the site in about 5 hours." "4/14/2013: Did support. inigo returned. Started rewritting orders->buyer_cancel, been getting error reports about it." "5/1/2013: Symm starts working support today. Scout takes over forum support." "5/3/2013: Helping smed fight off attacker. site is mostly down. I'm sick. Leaked IP of webserver to public and had to redeploy/shred. Promoted gramgreen to mod, now named libertas." MR. HOWARD: And now, Ms. Rosen, could you actually just stay on the next-to-last page of this exhibit and just focus on the very, very bottom, the last entry. Page 909 Q. What is the date of the last entry in this log file? A. 9/30/2013. Q. What does the metadata reflect about the date that this file was last changed? A. That's not on my copy I have here. MR. HOWARD: Do you want to go to the next page. Can we zoom in on the bottom left-hand window here. Q. And what does the metadata, Mr. Kiernan, indicate about the date that this file was last changed? A. 10/1/2013. Q. Now, Mr. Kiernan, could you flip in your binder to what's been marked for identification purposes as Government Exhibit 242. A. Yes. Q. What is this exhibit? A. A file that I exported from the defendant's laptop. Q. What was the name of the file? A. "Weekly_report1-4-13.txt." Q. Where was the file located on the computer? A. This is from the home/frosty/backup/reference/reports folder. Q. On what date was -- according to the metadata, on what date was this file saved to the defendant's hard drive? A. 1/5/2013. Page 910 MR. HOWARD: The government offers Government Exhibit 242 into evidence. MR. DRATEL: The same objections, your Honor. THE COURT: All right. Those objections are overruled. GX242 is received. *(Government's Exhibit 242 received in evidence)* MR. HOWARD: Ms. Rosen, could you just please add the highlights. Just go to the very top, including the title. Q. "Weekly Report 1-4-2013. "I. Important "A.) Still getting dozens of users who have fallen for the fake SR phishing sites." Zoom out. At the bottom: "Demoted: NorCal420HookUp "Reason: blatant ooe deals, he even had a listing for ooe deals so he could get feedback." Would you go to the last page of the metadata, and could we focus in on the left bottom corner. Mr. Kiernan, what is indicated about the date -- where does it indicate when this file was saved from the defendant's computer? A. 1/5/2013. Q. Where on the file is it? Can you just point with your laser pointer? A. Somebody took my laser pointer. The "Date Created" entry, right there. Page 911 Q. And does the file indicate when the file was last edited? A. Yes. Q. And what date was that? A. 1/5/2013. Q. Now, Mr. Kiernan, was this the only report of this format that you found on the defendant's computer, or did you find other similar ones? A. I found similar ones. Q. And where were they located on the defendant's computer? A. In that same directory. MR. HOWARD: Ms. Rosen, can we zoom out on this file and look at the top right-hand corner. Q. Is this the folder in which you found these similar reports? A. Yes. Q. Do the other reports similarly have dates in the title? A. They do, yes. Q. Did the dates correspond to the dates within the documents? A. They did, yes. Q. And are the dates modified generally consistent with the dates in the titles and in the documents? A. They are, yes. MR. HOWARD: If you could zoom a little further, Ms. Rosen, just the ones that are labeled "weekly report," from here to here. Page 912 Q. So we have weekly report 11-3-12, 11-12-12. We have 1-25-13 at the bottom. If you would scroll down. *(Pause)* We have some dated in February and March of 2013, isn't that correct, Mr. Kiernan? A. That is correct, yes. Q. In your review of defendant's laptop, did you find any copies of individuals belonging -- sorry, identification documents belonging to other individuals? A. I did, yes. Q. Could you please flip in your binder to what's been marked as government -- sorry, actually, Ms. Rosen, could you publish Government Exhibit 216, which has already been admitted into evidence. Do you recognize what this depicts, Mr. Kiernan? A. I do. It's the directories where I found those files. Q. And what is -- Ms. Rosen, could we just zoom in on the path name down here. What is the name of the folder that you found these ID's in? A. Sure. The home/frosty/backup/reference directory. MR. HOWARD: Could we zoom back out, Ms. Rosen, and zoom in on the upper right-hand corner of the screen. Page 913 Q. What does this depict, Mr. Kiernan? A. This is just a file listing of everything that was in that directory, the directory I just spoke of. Q. Here we have files that are labeled inigo.jpg.gpg, symm.tar.gz.gpg, libertas.jpg.gpg, cirrus.jpg.gpg and then another file pics.tar.gz.gpg. Are you familiar with files with the extension ."gpg"? A. I am, yes. Q. What kind of files are those? A. Those are encrypted files. Q. Were you able to access the contents of those encrypted files? A. I was, yes. Q. How were you able to do that? A. I used PGP to unencrypt them. I found a password on the defendant's laptop that I tried to put in and was able to recover those files. Q. So, Mr. Kiernan, would you please flip to what has been marked as Government Exhibit 256 in your binder, please. A. Sure. OK. Q. Do you recognize this exhibit? A. I do. Q. What is it? A. It's the unencrypted file that I found in that directory structure. Page 914 Q. This is after you used the password you found on the defendant's computer to successfully decrypt the files? A. Yes, this was after. Q. What is the file name? A. This was "inigo.jpg.gpg." Q. And this file was located in the directory that we were just looking at? A. In the IDs directry, yes. MR. HOWARD: The government offers Government Exhibit 256. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 256 received in evidence)* MR. HOWARD Q. Here you can see it is a Virginia driver's license with the name Andrew Michael Jones, with an address and other personal identifiers, correct? A. That is correct, yes. MR. HOWARD: Ms. Rosen, could you please -- I'm sorry, what was the file name again? What was the name of the file? A. Inigo.jpg.gpg. Q. Now, Mr. Kiernan, in reviewing the Tor chats on the defendant's computer, did you find any chat logs involving communications with anyone identified as Inigo? A. I did, yes. Page 915 MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 229A, which has already been admitted into evidence. Q. And this is dated October 17, 2012, correct? A. That is correct, yes. Q. "PatHenry: I got that DL scanned for you "Myself: hi "Myself: send it over "PatHenry: let me know if you got it "Myself: handsome devil "Myself: is your address the same? "PatHenry: :) "PatHenry: why thank you "PatHenry: yes for now "PatHenry: I will be moving in the next few months to northern virginia "PatHenry: where im originally from "Myself: ok "Myself: I'm just getting your permissions set up so you can access the support panel "PatHenry: cool. I log into the main site for that correct? "Myself: how was doing your assignment? "Myself: yes, login as inigo and I'll give you the url in a sec Page 916 "PatHenry: squid gave me the support link, just let me know when I have access "Myself: is the page loading for you? "Myself: a bunch of boxes with forms in them "PatHenry: it just said no access but I havent tried again since giving you my user id "Myself: try again "PatHenry: trying now "PatHenry: okay im in "PatHenry: thanks "Myself: cool, I'll let squid take over. don't touch anything you haven't been fully trained on, and take lots of notes, don't trust your memory! "PatHenry: yes sir "PatHenry: notebook handy. "PatHenry: thanks again sir :) "Myself: you bet :)" Mr. Kiernan, the next part of this file starts on October 17, 2012, correct? A. Yes. Q. And in this excerpt we have the user "myself" and the user "inigo," correct? A. Correct. Q. Were the prior excerpts taken from the same file? A. Yes. Page 917 Q. And the prior excerpts involve PatHenry and myself, correct? A. That's correct. Q. So what does this indicate that this name is now Inigo? A. Just that that buddy list that we talked about before, the contact list had been changed by the defendant. Q. And this chat box, the next excerpt is from October 17, 2012, correct? A. Correct, yes. Q. "Myself: How's your first day going? "Inigo: Tor has been giving me such a headache." The next excerpt is on October 21, 2012, correct? A. Yes. Q. "Myself: CSR = customer support rep "Inigo: how many of us are there? "Myself: right now just you and squid. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 229C, which has already been admitted into evidence. Q. Mr. Kiernan, is this another chat with Inigo from the same log file? A. It is, yes. Q. And is this dated November 5, 2012? A. Yes. Q. "Inigo: So uhh we have a vendor selling cyanide. Page 918 "myself: Link please "inigo: Getting it now." Then Inigo sends a link: "http://silkroadvb5piz3r.onion," and then a lot more text. "myself: was it reported, or did you stumble on it? "inigo: it was reported "inigo: not sure where we stand on this, hes not listing it as a poison, but its only the most well known assasination and suicide poison out there "inigo: lol "inigo: at the same time, fentanyl has been used to assasinate people too, but we allow that to be sold for recreational use "inigo: but this isnt a drug "inigo: its tricky "myself: cyanide has a bad reputation "myself: as you say "myself: the vendor lists a bunch of legit uses "myself: and there are plenty of poisions you can get off the shelf "inigo: very true "myself: some of the drugs we allow are poisons in certain dosages "inigo: so we're going to allow this? "myself: it's bad for image/pr Page 919 "myself: just brainstorming with ya "inigo: ah ok "inigo: yeah it deff is "inigo: i almost want to order some haha :X "inigo: just to keep on hand "myself: I think we'll allow it "inigo: ok "inigo: i kind of like the idea of allowing all kinds of industrial chemicals, whatever they may be used for "myself: it's a substance "myself: and we want to err on the side of not restricting things "inigo: absolutely "inigo: this is the black market after all :) "myself: it is, and we are bringing order and civility to it." Ms. Rosen, could you please publish Government Exhibit 223, which has already been admitted into evidence. Mr. Kiernan, this is from a different log file, correct, than the last one we read? A. Yes, it is. Yes. Q. And this chat occurred on October 25, 2012? A. Yes. Q. "Cp: do you need to see my id? "Myself: yes Page 920 "Cp: or can i just tell you my name? like i did a few months ago "Cp: yea, I can do that, ill have to get brave enough to do so, lol "Myself: I'll need your id with current address. It will be stored encrypted "Myself: and I will probably never need to decrypt "Cp: so, I guess ill just have to trust you on that "Cp: thats a big trust "Myself: Yea, that's true." Mr. Kiernan, the next section starts on October 25, 2012, correct? A. It does, yes. Q. Up here, the entire chat log that this was taken from was 259 pages, correct? A. Correct. Q. "Myself: you'll need to keep notes all week and then write a report "Myself: at the end of each week "Myself: so that's the only thing you'll keep local "Myself: that's a bit incriminating "Cp: okay, I have a true cryptd hd" Now, Mr. Kiernan, in your role as a computer scientist, have you encountered something called TrueCrypt? A. I have, yes. Page 921 Q. What is TrueCrypt? A. TrueCrypt is a piece of software that enables people to encrypt or basically take your files, put them into a safe type of deal, and so other people can't access them, basically. Q. Now, Mr. Kiernan, the next portion of the chat is on October 26, 2012, correct? A. Yes. Q. "Cp: what will be my main responsibilities? "Myself: at first, answering support messages. "Myself: We get 100 - 200 per day "cp: are those just from vendors? or are they from buyers as well? "Myself: both "cp: will I answer directly to you? or is there someone in between? "myself: you will talk to me and inigo "myself: did you come up with a new name for yourself? "cp: havent really thought about that yet "myself: I'll be introducing you to inigo shortly "cp: okay, any names that you like? "myself: it's up to you "cp: ill think of one shortly "myself: how about pokerface "cp: lol "cp: thats a great one Page 922 "myself: or holdem "cp: i like holdem too "cp: or fullhouse "cp: fluh "cp: flush "myself: flush? "cp: its a poker hand "myself: yea, is that what you'd like to be called? "cp: full house, flush, straight "cp: I like flush "cp: how is my identity protected "cp: thinking of worst case scenario -- "cp: of course "myself: well, the only record I'll have of it is your scanned photo id, which I will encrypt and store on my laptop where I use whole disk encryption on a hidden OS volume "cp: okay, I think i already have my driverslicense here on my computer "cp: i had to scan it a year ago "cp: so, that should be easy "myself: is the address the same? I'm going to send you a letter to confirm "cp: yes it is "cp: Also, are you the only person that knows all the employees? Page 923 "myself: Yes, no one knows anyone else "cp: Good." Mr. Kiernan, the next part of the chat or the next excerpt starts on November 4, 2012, correct? A. Correct, it does. Q. "Flush: was my salary of 1200 that you paid me last friday was that for this week? "Myself: your pay is $900/wk "Flush: 900 i mean "Myself: friday's pay is for the preceeding week." Mr. Kiernan, the next part starts at November 7, 2012 at 11:44 a.m., correct? A. Correct. Q. "flush: i had a few people letting me know that someone is selling cyanide "Myself: yea, we're allowing it "Flush: do we allow that? "Flush: okay "Myself: what do you think "Myself: ? "Flush: cyanide can be used for other purposes "Flush: than nafarious ones "Flush: its actually a blood pressure medication "Flush: but its very dangeous "Flush: and there are other purposes for it as well... its very popular for poisoning." Page 924 Mr. Kiernan, the next excerpt is from November 8, 2012, correct? A. Correct. Q. That is from the same chat log? A. The same log, yes. Q. "Myself: if you find yourself idle while I'm gone, I would like you to do some recon on the competition. see what's out there in terms of alternatives to Silk Road. what are they doing better than us. how big are they. read up on BMRs forum and site and see what they are up to for me "Flush: thats funny, I had planned on looking into BMR." Mr. Kiernan, the next chat is from page 81 of 259 of the same chat log? A. The same log, yes. Q. November 22, 2012? A. Yes. Q. "Flush: got a ? for you.. How much are we growing each month? Just out of curiosity.. "Myself: hmm "Myself: lemme pull up the latest "Myself: looks like around 15% "Flush: wow, thats huge "Myself: that # is confidential fyi Page 925 "Flush: and its the darknet "Flush: understood "Myself: dude, we're selling drugs "Myself: there is nothing to compare this to "Myself: or course this last month the data is quite skewed. There is a massive tank in sales on the chart. should snap back though." Mr. Kiernan, the next excerpt is on December 11, 2012, correct? A. Correct. Q. "Myself: where I think we are lacking is in quality control. We don't have the tools built and I am sure there we can improve there. I'm talking about making sure vendors are complying with the rules" Mr. Kiernan, the next section is from December 22, 2012, correct? A. That is correct. Q. "flush: selling stolen credit cards is vioalation right? "Myself: yes "Flush: k." "flush: also accepting moneypak instead of bitcoins "flush: right? "myself: yes, that would be going around escrow. The next section is five days later, on December 27, 2012, correct? Page 926 A. Yes. Q. "myself: you're in charge of vendor support for now, and inigo is in charge of customer support. Also, I want you to go back through all of the vendors you demoted and give them a second chance. Send them a message like this: "We'd like to give you a second chance to get your account back in good standing. This will be your last warning. If you disregard the Seller's Guide again, your vending priviledges will be lost permanently. To bring your account back into good standing, you must pay for the commissions you should have paid on all of your out of escrow transactions to date. It is your responsibility to determine how much this comes to. If you low-ball it, we will investigate and permanently demote your account. If anything you should include a little extra as an apology and show of good will. Send this money to 'SR Quality Control' via your account page. Message me when this is done." Mr. Kiernan, this next excerpt is from December 31, 2012, correct? A. Yes, it is. Q. That's page 190 of the 259-page Tor chat log, correct? A. Correct. Q. "Myself: one more thing. We have investigated your account have found that you have done many out of escrow deals, meaning you take the coind directly to by pass SR fees. This is in violation of the Seller's Guide and your vendor agreement. Your account has been suspended. Page 927 "We'd like to give you a second chance to get your account back in good standing. This will be your last warning. If you disregard the Seller's Guide again, your vending priviledges will be lost permanently. "Flush: yea, thats a good one, ill replace the one that i have with this one." Mr. Kiernan, can you please flip to what has been premarked as Government Exhibit 255 in your binder. *(Pause)* Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. A file pulled off of the defendant's laptop. Q. What is the file name? A. To do underscore weekly. Q. And what does the metadata reflect about the date that this file was saved to the defendant's computer? A. 10/1/2013. MR. HOWARD: Would you please publish -- I'm sorry. The government offers Government Exhibit 255. MR. DRATEL: The same objection as previously. THE COURT: All right. The objection is overruled. GX255 is received. Page 928 *(Government's Exhibit 255 received in evidence)* MR. HOWARD: Ms. Rosen, could you please zoom in on the very top section here. You see here: "Pay employees. "inigo - $1500 "libertas - $1500 "batman73 - $1000 // ssbd "cirrus - $1000 "smedley - $2500 "spock8642 - $500 // drx." Would you zoom out, Ms. Rosen. Ms. Rosen, could you please publish Government Exhibit 229E, which has already been admitted into evidence. Q. Mr. Kiernan, is this a chat log excerpt dated October 19, 2012? A. It is, yes. Q. "Inigo: another question. do you recommend that i wash my btc from you through bitcoin fog? or are they already mixed sufficiently that I can send them to Mt. Gox to exchange? Also, should I even use Mt. Gox? Or should I be converting them more anonymously? I was thinking maybe one of those prepaid VISA cards that you can load with bitcoin "Myself: I would avoid mtgox if possible. I wouldn't worry about bitcoin fog unless you are trying to move a large amount. Page 929 "Inigo: ok "Myself: read up on the bitcoin wiki for alternatives "Inigo: k "Myself: you could also hit up the exchangers on sr." Now, Mr. Kiernan, in your review of the defendant's laptop, did you discover any files that appeared to be an expense report? A. I did, yes. Q. Mr. Kiernan, could you please flip in your binder to what has been marked for identification purposes as Government Exhibits 250. THE COURT: Two-five-zero? MR. HOWARD: Yes. A. OK. Q. Do you recognize this exhibit? A. I do. Q. What is it? A. A file extracted from the defendant's laptop. Q. What was the name of the file? A. SR underscore accounting.ods. Q. And what type of file is it? A. It seems to be -- or it is a spreadsheet. MR. HOWARD: The government offers Government Exhibit 250. MR. DRATEL: The same objection, your Honor. Page 930 THE COURT: All right. There wasn't an objection on the pretrial order but we'll talk about that at the break. GX250 is received. *(Government's Exhibit 250 received in evidence)* MR. HOWARD Q. So, Mr. Kiernan, focusing on the top "sr_accounting.ods" -- Ms. Rosen, could you just zoom in on that. I am having trouble seeing it myself -- what does that refer to? A. That is the file name. Q. And who picks the name of the file? A. Whoever created it. Q. And what are the columns in this chart? A. "Date, expense, total expense, revenue, total_revenue, total" and "notes" are the columns. Q. Mr. Kiernan, now, are the rows in this chart in chronological order? A. Yes, they are. Q. And what is the first -- the first row here, what is the first date? A. 7/17/2010. Q. July 17th, 2010? A. July 17th, 2010. Q. How many pages does the spreadsheet go? A. Eight pages. Q. And what is the date of the last entry in the spreadsheet? Page 931 A. 7/3/2013. Q. And what does the metadata in the file indicate about the last date that this file was changed? A. 7/3/2013. MR. HOWARD: Ms. Rosen, if you could please go back to the first page of the exhibit and add the highlights. Would you zoom in on them so we could read off a couple. The first page, July 18, 2010, under the "expense" column, it is $25. "Notes" column says "lab clothes, carry over from fall 2009." Underneath that there is July 18, 2010. And in the "Expense" column it is $31. In the "Notes" column, "Petri dishes, carry over from fall 2009." Further down the page, we have July 26, 2010 and "Expense" of $80, and the "Notes" say "Pressure cooker." Down here, October 15, 2010, $33 expense. The notes say "humidifier." Ms. Rosen, actually, can you go to the May 2012. Q. Do you see here -- this one isn't highlighted, but April 28, 2012, $1,150 and the notes say "laptop," correct, Mr. Kiernan? A. Yes. It does, yes. MR. HOWARD: Ms. Rosen, can you move up to the top of the page. Q. Here we have February 21, 2012, an expense listed of $132 for "server rent," correct, Mr. Kiernan? Page 932 A. That's correct. Q. Mr. Kiernan, was this the only reference to server rent in this chart or are there others? A. There are others. Q. Below that there is a date, March 2, 2012. And in the "Income" column, $65,933, and under "Notes," "commissions," correct? A. That's correct. Q. Is this the only reference to commissions in this chart or are there others? A. There are others. Q. Down here we have March 10, 2012. "Expense" of $3,200, and the "notes" say "payroll," correct? A. That's correct. Q. Is this the only reference to payroll in this chart or are there others? A. There are others. MR. HOWARD: Ms. Rosen, could we now publish Government Exhibit 226C, please. Actually, there is just one more thing on the last one, pardon me, 250. On that page with the highlights, please. Can you zoom in on the last highlighted row. Q. Mr. Kiernan, here it says May 11, 2012, a $4,000 listing in the "Expense" column, and the notes say "420 grand prize," correct? Page 933 A. That's correct. Q. Now, in your review of the Tor chat logs, did you find any references around this date to a 420 sale? A. I did, yes. MR. HOWARD: Ms. Rosen, could you please now publish Government Exhibit 226C, which has already been admitted into evidence. Q. Now, Mr. Kiernan, this is, again, pages 575 to 576 of a 1096 page chat log, correct? A. That is right, yes. Q. This conversation starts on March 23, 2012? A. Yes. Q. "Myself: here's a rough draft for ya. Roll up a doobie and put your party hat on because the biggest stoner holiday is just around the corner, and we've got alot of ganja to deliver! We're pulling out all the stops to celebrate 420 this year. Starting at 4:20 pm on 4/20/2012, we'll be giving away 420 prizes every 420 seconds! WOO!!! Gift cards, badass consumer electronics, real gangsta shit! And to top it all off, we're sending one lucky buyer on a dream vacation with all the trimmings!!! The buzz around this is going to be HUGE!" Now, Mr. Kiernan, this picks up and this is from the same Tor chat log, correct? A. The same log, yes. Page 934 Q. Pages 576 to 577 of 1096 pages? A. That is correct. Q. And it is on March 23, 2012, correct? A. Yes. Q. "vj: hmm - I wuz thinkin' dat we'd mebbe not go commission free for this one "Myself: really? "Vj: mebbe 1/2? on 'em? "Vj: I'd like to think that we can bring more to the party than just dropped commissions. We're filling the prize barell already. "Myself: nah, it's just 3 days! "Vj: and a mil in sales "Vj: But ok, this time. But seriously, read the announcement, and you'll see it doesn't lose much if you drop that one fragment on comission free ;) "Myself: we'll be doing a mil in sales every week at full commission before long "Myself: I think it's leading by example for the vendors. they will be more generous if we are "Vj: true. There is that, and no one will have a klew what the sale totals are. "Myself: and we're selling drugs here, first one's free little jonny! damn that sounds aweful "Vj: ha!!! Let's give away a couple of playground sets, with swings and slides, just to complete the picture. Page 935 "Myself: sponge bob canoe and life size my little pony with every hash purchase of 50 btc or more!" Mr. Kiernan, now, this continues -- this is from the same Tor chat log, correct? A. The same log, yes. Q. This is pages 917 to 918 of a 1096-page chat log, correct? A. That is correct. Q. And it starts: "vj: Dude, I'm worried about our winner. "Myself: whasamatta "Vj: He's trying to dry out "Vj: Heroin "Vj: it's not working. "Vj: and I think his recent influx of cash didn't help "Myself: oh geez "Myself: fuck, what are we doing "Vj: Yeah, he told me some time ago he was trying to quit, but SR made it kinda tough "Vj: So I've been doing sessions with him, giving him someone to talk to "Myself: do you think he can't make the trip? "Vj: I dunno, I'm sure he's gonna run out of spending money early, that's for sure. "Vj: Now, his friend coming from Aus doesn't imbibe, so I'm hoping he'll be a good influence. Page 936 "Vj: I'm just worried that it's not the kinda place you wanna get caught trying to score H, or posessing it. "Myself: what does he want to do? "Vj: Oh, he's all gung ho to go, it's me that's worried ;) "Vj: We'll go ahead as planned, the situation was just getting to me, so I'm spreading around the Dread "Vj: so to speak ;) "Myself: shoulda thought more carefully about dropping $4k on an addict "Myself: maybe our next prize will be 3 months in rehab." Mr. Kiernan, could you please flip to what's been marked for identification purposes as Government Exhibit 251 in your binder. A. Yes. *(Pause)* OK. Q. What was the name of this file? A. Networthcalculator.ods. Q. And what was the date of this file -- according to the metadata, what was the date that this file was first saved on the defendant's computer? A. Umm, let's see. 6/17/2012. Q. And what was the date that it was last edited? Page 937 A. 12/2/2012. Q. What kind of file is this? A. A spreadsheet. MR. HOWARD: The government offers Government Exhibit 251. MR. DRATEL: Objection, your Honor. Vayner and hearsay. THE COURT: All right. There weren't any objections noted in the Pretrial Order, but we'll talk about that at the break. GX251 is received. *(Government's Exhibit 251 received in evidence)* THE COURT: The objections are overruled. MR. HOWARD: So, Ms. Rosen, could you please zoom in on the columns from here to the first black line. Q. So the columns here, Mr. Kiernan, are "Date," "Liquid Assets," "Hard Assets," "Total Debt," "Net Liquid," "Net Worth," and "Notes," correct? A. Correct. Q. And here it says, "August 06." Net worth is listed at 821, and "Notes" say "started at PSU," correct? A. That's correct. Q. And here we have May 07. The net worth is listed as 13809.78, with a note saying "Just before buying house," correct? Page 938 A. Correct. Q. January 11 -- we'll skip one -- it says -- under the "Net Worth" column, it is 29,539, and the note says "start as CEO of Good Wagon." A. That's correct, yes. Q. April 2011, net worth is listed here under that column as 29948, and the notes column says "launch sr," correct? A. That's correct. Q. Let's skip down all the way to September 11, this one. Net worth -- under the net worth column, it says "100992." Notes column says "hire syg and h7"? A. That's right, yes. Q. December 11, the first one, under the net worth column, "238645," "fire syg"? A. Correct. Q. Jan 12, under the net worth column, it says 68647, and the notes say "bitcoin theft," correct? A. That is correct, yes. Q. And in June 2012, or June-12, under the net worth column, it says "14238400"? A. Yes. Q. And what was the date that this file was last saved? A. 12/2/2012. MR. HOWARD: Could you zoom out, please. And now zoom into this column right here in the light blue. Page 939 Q. The columns are titled "Hard assets inventory" and "value (USD)," correct? A. Correct. Q. And the first row says "sr inc" under "Hard assets inventory," correct? A. Yes. Q. What is the number under the value column listed next to "sr inc"? A. 104 million. Q. The next one down here says "Samsung 700z? A. Correct. Q. And the value is listed as $800, right? A. That's right, yes. Q. What was the model and brand of the defendant's laptop? A. Samsung 700z. Q. And down here there is a section entitled "Bitcoins," correct? A. Correct. Q. And there seems to be a number of entries under there with various values, correct? A. Yes. Q. And, Mr. Kiernan, what was the title of this spreadsheet? A. "Networthcalculator.ods." MR. HOWARD: Ms. Rosen, could we just go back to the left side real fast. Page 940 Q. So here you see this one, September 11. The reference says "hire syg and H7," correct? A. Yes. Q. In your review of the Tor chat logs, did you find a Tor chat with a user identified as H7 around September 2011? A. Yes, I did. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 224, which is already in evidence, and zoom in, please. Q. Mr. Kiernan, this is an excerpt taken from an 88-page log file, is that correct? A. Yes. Q. And the first excerpt starts on September 30, 2011, correct? A. Yes. Q. It says: "[Logging started] "H7: Hi, I wanted to let you know whats going on before the weekend. Ive got a SRM instance running on my end. I have created a revised SQL search query, now i need to change it to the Active Record Class used on the site. "Myself: great, glad you are up and running and starting to make progress. When do you think you'll have the new search function ready for me to test? "H7: soon Page 941 "H7: if i do any work over the weekend ill let you know, but probably monday or tuesday "Myself: ok, that doesn't tell me much :P I'm not trying to put pressure on you or anything, it just helps me to know. "Myself: that sounds good "Myself: have a great weekend. I've got another little project for you after the search is done before you start the security audit, so message me Monday or Tuesday when it's complete. "H7: thanks, ill talk to you then. have a nice weekend :-)." *(Continued on next page)* Page 942 MR. HOWARD Q. The next part is October 3, 2011, is that correct? A. Yes. MR. HOWARD: "h7: Hi, i've written a new search function. Im pretty happy about it, although it does contain one "work around." H7: the only changes are in controllers/silkroad.php search_results function. H7: what format do you want it in? Myself: just send me your version of controllers/silkroad.php Myself: I'll let you know if I have any trouble with it, or questions. Are you ready for your next challenge? H7: yes, whats next? Myself: We've been having issues with users getting their accounts hacked. I think the main issue is from sites pretending to be Silk Road and stealing the user's login info. Myself: Can you look at the login functions and see if you can come up with a way to mitigate this problem?" Q. Mr. Kiernan, the next excerpt starts October 21, 2011, is that correct? A. That's correct. MR. HOWARD: "H7: Silk Road, i would like to take next week off. I have to take care of some other projects and i figure you are busy with this outage anyways. The git repo should not take long after i get back. Page 943 Myself: ok, hopefully I won't be busy next week like I've been busy this week. How much did you work this week? H7: 35 hours H7: Ive got the notes on cleaning the code for thrid pary audit if you want it now. Myself: sure, send it over. I'll see you on the 31st then?" Q. And the next excerpt starts from the same chat log, correct? A. The same log, yes. Q. October 30, 2011, is that right? A. That is correct. MR. HOWARD: "H7: How was your week? Myself: not bad. I will be travelling soon, so I have much to do before I go and I didn't get as much as I wanted, but this week I will focus on getting out of town. H7: Ok." THE COURT: I think you left out the word "done." MR. HOWARD: Pardon me. "Myself: Not bad. I will be traveling soon, so I have much to do before I go and I didn't get as much done as I wanted, but this week I will focus on getting out of town. H7: Okay." Thank you, your Honor. Page 944 THE COURT: When we are done with this one, let's take our afternoon break. MR. HOWARD: Sure. "H7: Is it just you over there? Myself: I have people to take care of, but I'll be travelling alone. is that what you mean? H7: No, When you leave town will anyone be looking after the servers? Myself: oh, yes indeed H7: Because i see "The Silk Road Staff" written in messages, but i dont know if its just you or not. Myself: it's basically just me, but more and more I am trying to spread the responsibility around. You are a big part of that.;)" Emoticon. Did you want me to stop in the middle or should I finish the exhibit? THE COURT: You can finish the exhibit and then we'll take our break. MR. HOWARD: Thank you, your Honor. Q. Mr. Kiernan, the next section starts on November 9, 2011, correct? A. Yes, it does. Q. And this is page 27 of a total of 88 pages in this chat log? A. In this log, yes. Page 945 MR. HOWARD: "Myself: Okay, I want to give you a 50 percent raise to $1,500 per week. You're going to be managing people and that always comes with extra headache so I want you to be well compensated for it. H7: Thank you. Myself: Sure, thank you! So, we've received several applicants already. They are sending their applications to the username Silk Road HR on the main site. There is a link in the footer now called "careers" that is directing them there. Myself: I'll give you access to that account so you can see who you want to bring in for a trial period. H7: Okay. Myself: We've talked about it before, but basically I want you to create tasks that can be given a dollar value corresponding to your estimate of the time they should take at a rate of $25/hour. If a new person is giving you bad results, or isn't communicating well, or for whatever reason they aren't working out, gently let them go and block them out of the repo. You'll probably want to figure out a good way of communicating with your team, either through torchat, or the git site, or whatever. You'll need to keep track of what your team members have earned, and each week I'll send you the coins for you to disburse. Try to keep it below $2,000 per week unless I let you know that we can support more. H7: Okay. Sounds good." Page 946 Q. Mr. Kiernan, the next excerpt starts on December 15, 2011, correct? A. That's correct. MR. HOWARD: "Myself: By the way, I'm going to be unavailable from about 4:00 a.m. UTC Friday to about the same time on Sunday, so I'll send you your pay tomorrow. H7: K, you forgot me last week. And can you send 100USD to Silk Road HR for this weeks bounties. Myself: You are right, so sorry about that. Sending $3,000 now for last week and this week. H7: Why $3,000 for two week? Myself: Aren't I paying you $1,500/WK? H7: It was 2,000 a week last time you paid me. Myself: Our sales were up a bit that week so I thought I'd give you a bonus. The last rate we had talked about was $1,500 a week, though. H7: I recall you asked me to work full time on the group development and the new server/hosting. Since then you have told me to focus on group development. Was I supposed to revert to part-time. Myself: No. Yeah, I guess you are right, sorry my memory isn't serving me right now." THE COURT: All right. Is this a good time for a break? Page 947 MR. HOWARD: Yes, your Honor. THE COURT: Ladies and gentlemen, let's take our afternoon break. I want to remind you not to talk to each other or anybody else about this case. Thank you. *(Jury excused)* *(Witness temporarily excused)* *(Continued on next page)* Page 948 *(In open court; jury not present)* THE COURT: Let's all be seated. One request that we had gotten from the jury was that they wanted some magazines to read while they were just spending time in the jury room. MR. DRATEL: Not during the testimony. THE COURT: Not during the testimony. I have had four, five just random magazines picked up in which I do not believe there are any articles or reporting on Silk Road. They are Vanity Fair, New York Magazine, Sports Illustrated, the NFL Sports Illustrated and Vogue, and they're all from the current newsstand. If you folks would like to look at them and assure yourself that there is nothing in here that you object to in terms of them just being used as sort of doctor-room, dentist's office reading. MR. DRATEL: Did the Court look through them already? THE COURT: We looked through them. I personally have not. That's why I'm offering them to you folks to look at them. MR. DRATEL: It's New York Magazine, right? THE COURT: I believe it's New York Magazine. I encourage you folks to take a quick look to ensure yourselves there's no problem and then we'll put them in there. There's no rush. If anybody finds any articles on this case, please let me know. I don't intend to be turning over anything that requires the jury to themselves avert their eyes, but that's the only issue that I had on that one. Page 949 We had a couple of documents that were objected to: GX 242, GX 250, 251 and 255. And as to those, for the Silk Road expense report, there had been no objection lodged. You had said, I believe, Mr. Dratel, Vayner and some of the other objections and hearsay. MR. DRATEL: I'm not quite sure why we missed that one, but yes, in the same character in terms of some of the other documents. THE COURT: I'm not holding you to a waiver. Would the government like to respond in terms of 250? Mr. Howard. MR. HOWARD: This document was recovered from the defendant's computer. We had the testimony from the computer scientist. I think it's properly authenticated under Vayner. THE COURT: The Court agrees. And in terms of hearsay, there's either the information is not there for the truth or to the extent it is, it would be an admission subject to connection by a preponderance of the evidence. Exhibit 251 is the net worth calculator spreadsheet. I believe that your objections were the same for 251. MR. DRATEL: That's correct. THE COURT: And the Court's rationale for that is the same as well. Page 950 For 255, that was the weekly to-do list and the only objection there was hearsay. I don't believe that that was offered for the truth. Mr. Howard. MR. HOWARD: That's correct, your Honor. THE COURT: So it doesn't fall within the hearsay rules. And 242 was the weekly report. That similarly had a Vayner issue. We have talked about that. I do believe that the Vayner issues had been eliminated by the foundation, and then in terms of hearsay, it's not offered for the truth. Am I correct, Mr. Howard? MR. HOWARD: Yes, your Honor. THE COURT: That's the bases for those rulings. Now, we do need to talk about, as I said I would do, not this morning but at another break, the striking of the testimony that I had said I would strike. I wanted to elicit from you folks, if you want to make any suggestions, your views as to how that should be done. I have previewed what the Court was suggesting was its thoughts on that, which was to give a generalized instruction. You'll note that the testimony that has been struck has now gone up on ECF as an order of the Court. It should have been posted. So the court reporters should strike and will make sure that they strike the portions which are referred to in the shaded portions of today's ECF filing related thereto, and we'll make sure that it's absolutely clear. Page 951 But in terms of instructing the jury, Mr. Turner. MR. TURNER: I drafted something for your Honor's consideration. It's fairly simple. You heard testimony while Special Agent Der-Yeghiayan was on the stand concerning his personal beliefs or suspicions about particular individuals at various points during his investigation. I instruct you that what the agent believed or suspected at any particular time, whether about the defendant or others, is not evidence, and you are to disregard any such testimony. THE COURT: Can you repeat that. Pick up with "personal beliefs and suspicions." MR. TURNER: Sure. Personal beliefs or suspicions about particular individuals at various points during the investigation I instruct you that what the agent believed or suspected at any particular time, whether about the defendant or others, is not evidence, and you are to disregard any such testimony. THE COURT: Mr. Dratel. MR. DRATEL: Yes. One is, I don't think it was mentioned, the defendant. The witness said nothing about any suspicions about the defendant. That's highlighting something that wasn't in the testimony. So I don't think you should say about the defendant because he didn't talk about that. Page 952 THE COURT: I actually think it was more helpful to have it about it the defendant. MR. TURNER: That's how it was intended. MR. DRATEL: But it makes it seem like he somehow suspected the defendant and they're supposed to ignore that, but he never testified about that. THE COURT: Fine. If you want it out, that's fine. MR. DRATEL: Yes. And after that first sentence it's sufficient. The personal beliefs and suspicions about other people, that testimony should be ignored. You don't need to repeat it. It should be streamlined. THE COURT: I also intend to say, so that the jury is not confused, I'm going to actually give the entirety. I don't think that it's very long. It's going to take seconds: As to other testimony from Mr. Der-Yeghiayan, you may consider it during your deliberations and give it the weight that you believe it deserves. I don't want there to be any confusion and somehow have the jury misunderstand that we're only striking a piece and not all. MR. DRATEL: Could you just add to that the usual -- consistent with my general instructions at the end of the case about credibility? THE COURT: Yes. Page 953 MR. DRATEL: So that it doesn't -- THE COURT: I'll say consistent with all my instructions at the end of the case. MR. DRATEL: Right. THE COURT: I'm not going to pull out one instruction. I will give that instruction, all right -- MR. TURNER: Thank you, your Honor. THE COURT: -- when they come back as a housekeeping matter. Is there anything else that we should go over before we take our own brief break? MR. HOWARD: Not from the government. MR. DRATEL: No, your Honor. THE COURT: Thank you. Let's take our own break. *(Recess)* *(Continued on next page)* Page 954 *(In open court; jury present)* THE COURT: I had one housekeeping matter that I wanted to go over with you folks. You heard testimony while Mr. Der-Yeghiayan was on the stand regarding personal beliefs or suspicions he may have had about particular individuals at various points during his investigation. And I instruct you that what the agent suspected about others isn't evidence and should be disregarded. Now, consistent with all of the instructions I'm going to give you at the end of the case, there was other testimony that Mr. Der-Yeghiayan provided which you may consider during your deliberations and give it the weight that you deem that it deserves. So it's the suspicions, all right? Thanks. Mr. Howard, you may go ahead and proceed, sir. MR. HOWARD: Thank you, your Honor. THE COURT: I realize sometimes I have to think about how what I'm saying reads in the transcript. When I use the word "suspicions," I meant it's the suspicions that should be disregarded. I hadn't finished that last sentence. Thank you. Mr. Howard, you may proceed. MR. HOWARD: Thank you. Q. Mr. Kiernan, in your review of the defendant's laptop, did you have files with reference to computer servers? A. I did, yes. Q. What is a computer server? Page 955 A. It's a machine that will actually host or run a website or a database, something to that effect. It's the place that you connect to when you actually go to the site, like Google has servers behind it. When you go to Google's website, there's a machine behind it that's actually producing the answers for you. That's what a server basically does. Q. How are computer servers identified on the Internet? A. Through an IP address. Q. What is an IP address? A. An IP address is a numeric number used to actually get to a computer, kind of like a phone number, how you call somebody on your phone. It's a unique number associated with the server or any computer any time you're on a computer, and it allows you to actually get to that destination point. Q. Mr. Kiernan, can you please flip to what has been marked for identification purposes as Government Exhibit 264, please. A. Sure. Okay. Q. Do you recognize what this is? A. I do. Q. And what is it? A. It's a file extracted from the defendant's computer. Q. And what was the name of the file? A. Servers.ODS. Q. And what is an ODS file? A. It's a -- this is a spreadsheet. Page 956 Q. And according to the meta data, what was the date this file was first saved on the defendant's computer? A. 3/24/2013. MR. HOWARD: The government offers Government Exhibit 264 into evidence. THE COURT: Mr. Dratel. MR. DRATEL: Just the hearsay and Vayner. THE COURT: Those objections are overruled and GX 264 is received. *(Government's Exhibit 264 received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish the zoomed-in highlighted version of this chart, please. Why don't we look at the column titles, please. Let's try part of it at the top. Q. So here we have the columns are alias, type, host, email/user, host, pass, username, pass, IP address, correct? A. That is correct, yes. Q. And the IP address what you just testified about being a unique way that servers are identified on the Internet? A. How they communicate on the Internet, yes. MR. HOWARD: I've been advised the team is working on getting a clearer version up. THE COURT: Thank you. That or you may want to hand around a piece of paper to the jury so they can actually see it because I don't think that it's legible on the screen. Page 957 Q. For the record, the highlighting, that's been added by the government. The file and the computer, Mr. Kiernan, did not contain any highlights, correct? A. No highlights, no. MR. HOWARD: I'm going to get a copy to pass around to the jury, if that's okay. THE COURT: Yes. Do you want to maybe go on and come back to this or does this fit right where you are now? MR. TURNER: I think it takes a second to autofocus. We should have it. Q. Mr. Kiernan, are you able to read the titles of the columns in the version that's in front of you? A. Yes, I can see them in this version right here. THE COURT: Could you pull down this for a second so I can just see. He was referring to some columns before in the dark. I see. Okay. THE WITNESS: That's nice. Q. The columns are alias, type, host, email/user, host pass, username, pass, IP address, correct, Mr. Kiernan? A. That's correct. Q. And the IP address, as what you testified, is the unique way that servers are identified on the Internet, correct? A. That's correct, yes. Q. And the other is the remaining columns are location, expires, use, notes and there are some additional columns further down the page, correct? Page 958 A. Correct. Q. Now, to draw your attention to a couple that the government has highlighted. There's one here that you can see, what is the alias of this server I'm pointing to? A. Bora. Q. And what is the IP address that's listed for that server? A. It's 193.107.86.49-53. Q. And what -- does the chart describe the location of the server? A. Iceland. Q. And what does it describe about the use of the server? A. Market back end. Q. I'd like to direct your attention to the other rows highlighted here labeled "gala" under the alias. A. Yes. Q. What does it reflect about the IP address for this server? A. 207.106.6.25. Q. And what does it say about the host for the server? A. Jtan.com. Q. And what does it list as the email/user of this server? A. Ggb. Q. What does it list about the location of the server? A. USA. Page 959 Q. And what does it describe about the use of the server? A. Backup. Q. I just want to draw your attention to one more row that's not highlighted, this one right here, there's Bora and then there's one that says BTC, correct? A. Yes. Q. And there's an IP address? A. Sure. Q. What is the IP address? A. 193.107.86.34. Q. Where is that located? A. Iceland. Q. What is the described use for that server? A. Live wallets, and then in parenthesis, archive wallets. Q. Now, Mr. Kiernan, what is listed on the very next line as the use of the following server? We haven't talked about this server, but what is listed in the "use" column? A. I'm sorry. For which? Q. It's this one -- you just said live wallets? A. Yes. Q. What is the use of the following server? A. Oh, the one after it? Q. Yes. A. The 178 -- that's smed has. Q. In your review of Tor chats recovered from the defendant's computer, did you find any references to smed? Page 960 A. I did; yes. MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 231A, which has already been admitted into evidence. Q. And this chat is dated May 4, 2012, correct? A. Yes. MR. HOWARD: "Myself: can I get your thoughts on something? Smed: always Smed: i am your slave :) Myself: vm isolation vs. seperate physical machines vs. jails, permissions, etc. Smed: yeah Smed: interesting stuff Smed: the more moving parts you have, the more doors you have to protect Myself: "attack surface" yea? Smed: yeah Smed: i have been staring at the ceiling a lot over this project and how to go about it Myself: lots of ins and outs, lots of what have yous, lots of strands in the 'ol duder Myself: shead Smed: i think a medium footprint is best.. it's impossible to be small.. you just cant do it. all paths lead down to the same road.. you will have 1 or 2 servers under constant attack by people you dont want getting in Page 961 Smed: so my job, as I see it, is to make sure that when they do get in that you can get back up and running with minimal damage Smed: for example.. moving btc to cold storage offline as soon as daily funding estimates are reached Myself: prevent, detect, redeploy Smed: yes! Myself: patch Myself: and on and on Smed: yeah, exactly" Just leave us on this page for a second. Q. Mr. Kiernan, in the first line it says by smed, "For example, moving BTC to cold storage offline as soon as daily funding estimates are reached." Do you see that? A. I do. Yes. Q. Do you have familiarity with bitcoin transactions? A. I do. Q. Do you have familiarity with what cold storage refers to in the context of bitcoins? MR. DRATEL: Object; foundation. THE COURT: Why don't you build more foundation for that before he answers, before he answers that last question, all right? Page 962 MR. HOWARD: Sure. THE COURT: In connection with his work how has he encountered cold storage, etc. MR. HOWARD: Yes. Q. In connection with your work as a computer scientist at the FBI, have you had experience with bitcoin wallet files? A. Yes, I have. Q. Have you had experience in dealing with bitcoin wallet files on computers you've examined? A. Yes. Q. Are you familiar with how bitcoins are stored? A. I am. Q. Are you familiar with terminology used to refer to various bitcoin wallets and where they are stored? A. Yes. THE COURT: Go ahead. Q. So do you -- are you familiar with what the phrase cold storage means in reference to bitcoins? A. Yes. Q. And what does it refer to? A. Sure. So when you're running a bitcoin wallet, you have a -- it's a live, working device, not device but software. It's -- what you do is, when you take your wallet from the live working machine, basically you move it offline; you take it and copy it someplace else so the computer doesn't have access to it, others don't have access to it and the wallet is basically in a cold storage state. You can't make changes to it at that point. Page 963 THE COURT: You move the wallet off the computer? THE WITNESS: You can. You just move it to a place that it's not working in that program anymore. So it's not accessible to the actual coins, to the actual program running. THE COURT: I see. You may continue. MR. HOWARD: Ms. Rosen, would you please publish Government Exhibit 231B, which has already been admitted into evidence. Q. And this chat is dated May 4, 2012. Is that correct? A. Yes. Sorry. MR. HOWARD: "Smed: i should be pushing you some code tonight or tomrrow Smed: i'm up against multiple deadlines due to travel schedule Myself: stress! Smed: :) Smed: i'm going to finish mods to your login function hopefully tonight Myself: hey smed, run into some trouble with the code you mentioned yesterday? Page 964 Smed: what code did you have problems with? Myself: none, just wondering if you had trouble since you said you'd push me some by now, but it sounds like you are just busy getting out of town Smed: actually.. i should have something in a bit" *(Pause)* MR. HOWARD: I'm sorry. I didn't realize it was done. Ms. Rosen, can you please publish Government Exhibit 231C, which has already been admitted into evidence. Q. This chat begins on May 15, 2012, is that correct, Mr. Kiernan? A. Yes. MR. HOWARD: "Myself: hey, got a minute? Smed: always Myself: thanks, just wanted to check in with you. can you give me a quick rundown of where we've been, where we are, where we are going in the development process? I'm getting a bit disoriented as new things have come up since we began and I don't have anything tangible to orient around. Smed: Sorry about that. My bad completely Myself: no worries, we don't exactly have the most freedom communication wise Smed: exactly!! I'm glad you see it.. Normally, my development process is quite open. The nature of the firewall between you and the rest of the world has left a large gap in my normal way of doing things and my habits have not been suffificently corrected to make that extra step Page 965 Smed: Where we are.. Smed: We have a fully functional "escrow management system" in it's most raw form Smed: it moves BTC between users, in both roles as shoppers and merchants Smed: admin/overlord role has the power to do anything it wants as far as approving or rejecting transactions Smed: this 'system' in it's current form is going through some fine tooth comb work right now to ensure that nothing has been missed when it comes to decimal places, confirmations etc Smed: existing test results have shown a high degree of accuracy in reguards to all transactions Smed: i have not yet been able to cheat the system, however those final tests (trying to cheat) have not been marked as complete yet because we have not let cimon loose on it ;) Smed: That side of the project is Team 1 Smed: Team 2 is working on the more public side of the shopping system Smed: the vendor management piece Smed: I have had several set backs and delays in the vendor part and that side was behind for about 3 weeks due to the moron factor Page 966 Smed: however, team 2 came through last week with part 2 of 3 Smed: really where i'm at is this.. Smed: I have replaced your entire foundation.. i probably have a little bit more efficient approach only because hindsight is 20/20 Myself: always good to get a fresh set of eyes on a problem Smed: exactly Smed: from what I have seen.. if you did it right now i dont think you would change much from what i'm doing Smed: i've focused a lot on abstraction of the concepts Smed: making each one of them a bit more accessable individually Smed: but the concepts are yours either way Myself: well, I'm not one to hold your feet to the fire on estimates, I know you are working hard, but are we behind our intial estimate at this point? Smed: I'm going to be testing the latest submission tonight and tomorrow.. the order management stuff.. will know more about that side afterwards Smed: I am a little behind on part, but some of the additional code work (ykey etc) will allow me to catch up Page 967 Myself: how does additional work equal catching up? Smed: because i'm bringing in more people to help me Myself: ahh Smed: Just so it's said.. I have lots of motivation to get this done to where I stay in your good graces" Q. Would you flip to what has been marked as Government Exhibit 254 in your binder for identification purposes. A. Okay. Q. Do you recognize this exhibit? A. I do. Q. What is it? A. It's a file pulled from the defendant's laptop. Q. What was the name of the file? A. Interview_questions.txt. Q. And what was the location of the file? A. This was found in the home/frosty/backup/reference/directory. Q. And on what date was this file last saved on the defendant's computer? A. 6/5/2013. Q. And when was it first created on the defendant's computer? A. Also 6/5/2013. MR. HOWARD: The government offers Government Exhibit 254 into evidence. Page 968 MR. DRATEL: Prior objections, your Honor. THE COURT: Those objections are overruled. GX 254 is received. *(Government's Exhibit 254 received in evidence)* MR. HOWARD: Zoom in on the top, Ms. Rosen. Q. And I'm sorry, the name of the file was interview_questions.txt, right? A. Correct, yes. MR. HOWARD: "What kind of computer did you use laptop/desktop? What model and how old is it? What OS do you use? Do you use whole disk encryption? Do you use a Tor bridge? Do you use a VPN or proxy? Who in your life knows of your involvement with Silk Road? Does anyone IRL know you are a mod on the forums? Does anyone (IRL or here) know I've offered you a promotion? How long will it take you to wrap up your other responsibilities and begin training? Are there any major situations in your life that might pull you away from your responsibilities here on short notice (health, family, etc.)? Do you have an income stream outside of SR? How do you intend to launder your earnings?" Q. Mr. Kiernan, could you please flip to what's been marked as Government Exhibit 270 in your binder for identification purposes. A. Yes. Q. And do you recognize this exhibit? Page 969 A. I do. Q. And what is it? A. Again, a file extracted from the defendant's laptop. MR. DRATEL: Objection, your Honor. Withdrawn. THE COURT: All right. Proceed, Mr. Howard. Q. And what was the name of this file? A. 1.text. Q. Where was it located in the defendant's computer? A. Sure. This was under the home/frosty/documents/archive/documents/op/prof/sec/security/ Arto directory. MR. HOWARD: The government offers Government Exhibit 270. MR. DRATEL: Same objections as prior. THE COURT: All right. Those objection are overruled. GX 270 is received. *(Government's Exhibit 270 received in evidence)* MR. HOWARD: Ms. Rosen, can you just zoom in on the top section maybe down to about there. It starts "On Sep. 15, 2009, at 17:01, Ross Ulbricht wrote," and now there's a section with the little caret signs: "Dear Arto. Thank you for being open to my questions. I don't want to bother you too much, but I find this topic fascinating and very applicable. The impression I get is that the technology is getting close but not quite there yet." Page 970 Q. What does the sections that is marked with the caret signs in this document appear to be? A. An email. Q. And what does the section that is marked with these little caret signs appear to be? MR. DRATEL: Objection as to drawing conclusions. THE COURT: Why don't you describe whether in your experience in your job you've seen documents which have a format similar to this. THE WITNESS: Okay. Yes, I've seen emails or documents with this type of format where it has the -- this conversation split between basically a "from" and a "to," like a thread of emails or a thread that keeps getting included on your emails before. This is based in a text file as opposed to a real email would look like from your email clients, but it's the appearance from that same type of format. So to me, it looks like an email conversation and it's divided by the greater-than signs. Q. What does the greater sign portion refer to? A. That would be the person -- that would be, in this case, it would be what Ross Ulbricht wrote in his email. MR. HOWARD: Now, Ms. Rosen, I just want to read only the parts that have the carets by it. "Dear Arto. Thank you for being open to my questions. I don't want to bother you too much but I find this topic fascinating and very applicable. The impression I get is that the technology is getting close but not quite there yet. What do you think of Tor browsing and Tor hiding services? Is it as anonymous as they say it is? The hidden services part sounds interesting, but I have been unsuccessful in actually accessing any of the existing ones yet including eCache." Page 971 Ms. Rosen, can you zoom in on the bottom part and highlight the section with the carets, please. "With Pecunix, I understand it is a goldbacked digital currency. Can I anonymously and securely deposit funds? Can I anonymously and securely withdraw funds in the form of fiat currency or gold? I can see how it would work as a closed system, but is there a way to integrate it with the rest of the economy securely? "I would love to be able to set up an online storefront that couldn't be traced back to me (Tor hidden services?) where my customers could buy my products (revealing their identity only to me) and transferring funds to me anonymously and securely (Pecunix?). I suppose this is the ideal. What are the key pieces that are currently missing that would make this a reality. Once again, I appreciate your willingness to discuss these matters with me." Q. Mr. Kiernan, would you please turn to what's been marked for identification purposes as Government Exhibit 280 in your binder. Page 972 A. Okay. Q. Do you recognize this exhibit? A. I do. Q. And what is that? A. A file extracted from the defendant's computer. Q. And where was it located on the defendant's computer? A. This was found in the home/frosty/backup/reference/directory. Q. What was the name of the file? A. XMPP.txt. MR. HOWARD: The government offers Government Exhibit 280. THE COURT: Mr. Dratel. MR. DRATEL: Hearsay and Vayner. THE COURT: All right. Those objections are overruled and GX 280 is received. *(Government's Exhibit 280 received in evidence)* MR. HOWARD: "1. download and install pidgin." And then there's a weblink to add Pidgin. "2.10.7.exe" 2. close pidgin 3. download and install off-the-record (OTR) 4. start pidgin 5. enable OTR from the plugins menu Page 973 6. make sure Tor is running 7. create a new account 8. basic settings 8.a. protocol: XMPP 8.b. username: *** 8.c. domain: pi5mmj2ronhutyxv.onion 8.d. password: *** 9. advanced" Some more instructions 9a through 10c. "11. add the account. if it doesn't connect, double check the socks port Tor is listening on and change step 10.c. accordingly 13. add buddy "dread@pi5mmj2ronhutyxv.onion". if I'm online we'll connect. There are a few more steps to finalize OTR, but those can be done once we're chatting." Ms. Rosen, can you please move this to the left-hand side of the screen and publish Government Exhibit 127 on the right side of the screen, which is already in evidence, which is a forum post from the Dread Pirate Roberts -- sorry -- a private message from the Dread Pirate Roberts. Can you focus on actually on the instructions part, the text. Q. Mr. Kiernan, how does the instructions that appear in the private message from Dread Pirate Roberts on the right side compare with the document you recovered from the defendant's computer? Page 974 A. They're identical except for the username and the password fields on the right-hand side of the screen have been filled in. Q. Mr. Kiernan, can you please flip to what's been marked as Government Exhibit 271 in your binder. A. Okay. Q. Do you recognize this exhibit? A. I do. Q. And what is it? A. It's a file extracted from the defendant's computer. Q. And what was the date that the file was last modified? A. 8/21/2009. Q. And what was the date that this file was saved to the defendant's computer? A. 5/8/2012. Q. Is this the date that you described previously that there were a lot of files that were saved on the computer on that date? A. Yes. MR. HOWARD: The government offers Government Exhibit 271. MR. DRATEL: Same objections as previously. THE COURT: All right. Those objections are overruled. GX 271 is received. *(Government's Exhibit 271 received in evidence)* Page 975 THE COURT: "The construction and operation of clandestine drug laboratories, second edition. Revised and expanded, Jack B. Nimble." It says Jelly PDR version. The second page, can we zoom in on the table of contents. And I'm just going to read the section contents: "Preface to second edition, the risks, security, scanners and monitoring equipment, safety, location and facilities, when to stop and how, glassware, heating, stirring and mixing, fume hoods, miscellaneous equipment, scaling up, procurement of suspicious items, tablets, capsules, and other packaging materials, computers." "Appendix one is more equipment; appendix two, watched chemicals; appendix three, watched laboratory equipment; appendix four, legitimate businesses that use laboratory equipment; appendix five, common products and the valuable chemicals they contain; and appendix six, recommended reading." Ms. Rosen, can you flip through some of the pages. Don't spend too much time with it. *(Continued on next page)* Page 976 MR. HOWARD: OK. Ms. Rosen, you can take it off. MR. HOWARD Q. Mr. Kiernan, could you please flip to what has been marked as Government Exhibit 272 in your binder. A. OK. Q. Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. A file extracted from the defendant's computer. Q. And what is the date this file was last changed? A. 9/21/2013. Q. What does the metadata reflect about the date that the file was first saved in the defendant's computer? A. 9/24/2013. MR. HOWARD: The government offers Government Exhibit 272. MR. DRATEL: The same objections, your Honor. THE COURT: All right. GX272 is received. The objections are overruled. *(Government's Exhibit 272 received in evidence)* MR. HOWARD: Ms. Rosen, publish Government Exhibit 272. Let's zoom in on the text on the back. "Silk Road proof September 20 DPR," and then a heart symbol. Ms. Rosen, you can take that down. Page 977 Q. Mr. Kiernan, could you please flip to what has been marked as Government Exhibit 275 in your binder? A. OK. Q. Do you recognize what this exhibit is? A. I do. Q. What is it? A. A file extracted from the defendant's computer. Q. What is the title of the file? A. "Ops.txt." Q. Where was the file located in the defendant's computer? A. This was in the "home/frosty/backup/reference by me" directory. MR. HOWARD: The government offers Government Exhibit 275. MR. DRATEL: The same as before, your Honor. THE COURT: All right. Those objections are overruled. Government Exhibit 275 is received. *(Government's Exhibit 275 received in evidence)* MR. HOWARD: We'll publish this at a later time, your Honor. THE COURT: All right. MR. HOWARD Q. Mr. Kiernan, could you please flip to what has been premarked as Government Exhibits 290 and 291 in your binder. A. 290 and 291, OK. Page 978 Q. Do you recognize these exhibits? A. I do. Q. And what are they? A. Files extracted from the defendant's computer. Q. And what is the name of Government Exhibit 290, the name of the file? A. 290, yes. "Dominica-economic-citizenship2011.pdf. Q. And where was it located on the defendant's computer? A. This was in the "home/frosty/backup/reference/ politics/Dominica" folder. Q. And what is the title of Government Exhibit 291, the title of the file? A. Oh, "Disclosure form." Q. And where was that located on the defendant's computer? A. The location, file location was in "home/frosty/backup/ reference/politics/dominica" folder. Q. Is that the same folder that Government Exhibit 291 was found in? A. Yes. Q. What are the dates -- what is the date that Government Exhibit 291 was first saved to defendant's computer? A. 5/1/2012. Q. And how about Government Exhibit 291? A. I'm sorry, that was 291. Q. So to be clear, let's go to 291 -- Page 979 A. I'm sorry, 291, yes. Q. What date was that? A. 5/8/2012. Q. How about the other one, 290? A. Sorry about that. 290, 5/8/2012. MR. HOWARD: The government offers Government Exhibits 290 and 291. MR. DRATEL: Objection on 403, hearsay, Vayner, and that is it. THE COURT: All right. DXs -- sorry, Government Exhibits 290 and 291 are received. The objections are overruled. *(Government's Exhibits 290 and 291 received in evidence)* MR. HOWARD: Thank, your Honor. Ms. Rosen, could you please publish Government Exhibit 290. Q. Mr. Kiernan, this is the first page of the document that is depicted on the screen, correct? A. Yes. Q. Here it says "Commonwealth of Dominica Economic Citizenship Program, Guide of Reference 2011." MR. HOWARD: Ms. Rosen, could you add the highlights to the document. Let's zoom in on the bottom here. "Benefits of passport of the Commonwealth of Dominica. Dominica recognizes dual citizenship, and you are not required to renounce your other citizenships. Besides that, Dominica does not notify authorities of your country of residence or citizenship on your Dominican citizenship." Page 980 "Dominican citizenship is the most affordable option and the one quicker to obtain. It requires a $75,000 U.S. donation for a single option and $100,000 U.S. for a family option, and normally takes 2 to 5 months." Could we now publish 291, please? Zoom in on the top. It's titled, "Disclosure Form - Individual." Q. And, Mr. Kiernan, this was found in the same folder you said as the guide that we just saw, correct? A. Yes, the same folder. MR. HOWARD: Ms. Rosen, could you zoom back out. Can you zoom in on the name, this box here. Last name Ulbricht, first name Ross, middle names William. And then we have the beginning of a Social Security number on the last line. Could you go to the next page, please. Zoom in on this additional personal information. OK. Q. I'm not going to read all of this in, but we have fields including date of birth, place of birth, names of family members, and other identifiers; correct, Mr. Kiernan? A. Correct. MR. HOWARD: Ms. Rosen, could you slide down just a little bit on that page. Page 981 Q. And here you see a cell phone number that's been redacted, an email address, "rossulbricht@gmail.com," correct? A. Correct. MR. HOWARD: Zoom out, Ms. Rosen. Down -- can we just zoom in on this bottom section, please. Q. "Residences: (List all residences) (other than your current) you have had for the last 10 years." One from 9/2009 to 5/16/2012. There is an Austin, Texas reference. And then lower than that there is a July 2006 to September 2009 State College, Pennsylvania, reference. Correct? A. Correct. MR. HOWARD: Can you go to the next page, Ms. Rosen. Just keep on going. Can you zoom in on the "Education" section here? Q. "Education: "List all academic and trade schools attended." I'm not going to read all of it, but College/University, University of Texas at Dallas from August 2002 through May 2006, and then Pennsylvania State University from July 2006 through September 2009. At the bottom we have "List All Academic Degrees Conferred." "BS Physics, UT Dallas, May 2006; M.S. Materials Science, Penn State University May 2009." Page 982 On the next page, the columns are "Name of Employer, Address of Employer, Position Held, Dates, Month and Year, and reason for leaving." And the first row is "Self (IT consulting)," and the reason for leaving, it says "Current" there, right? A. Yes, it does. Q. And what is the time period that he has been self-employed, according to this column -- row, I'm sorry? A. Sure. March 2011 to the present. Q. And what is his previous employment listed as? A. Good Wagon Books. Q. What are the dates that are listed for his employment at Good Wagon Books? A. November of 2009 to May of 2011. Q. And what is listed as the reason for living -- for leaving? A. "Business was liquidated." MR. HOWARD: Ms. Rosen, could you please move to the last page of this exhibit. And then right here above the signature line. Above it, please. Thank you. Q. The last paragraph: "I authorize investigation of all statements contained herein and the references and employers listed above to give you any and all information concerning my previous employment and any pertinent information they may have, personal or otherwise, and release the company conducting the investigation and the government of Dominica from all liability for any damage that may result from utilization of such information." Page 983 Mr. Kiernan, can you please flip in your binder to what has been marked for identification purposes as Government Exhibit 295. A. OK. Q. Do you recognize this exhibit? A. I do. Q. And what is it? A. A file extracted from the defendant's computer. Q. And what date was this file first saved on the defendant's computer, according to the metadata? A. 5/8/2012. MR. HOWARD: The government offers Government Exhibit 295. THE COURT: Any objection? MR. DRATEL: Yes, your Honor. Hearsay and Vayner. THE COURT: All right. Those objections are overruled, and Government Exhibit 295 is received. *(Government's Exhibit 295 received in evidence)* MR. HOWARD Q. So, Mr. Kiernan, how many pages is this exhibit? A. Two. Q. And so what is depicted right here on the -- is this another screenshot from FTK Imager? Page 984 A. Yes. Q. And where was this file located? A. This was in the "home/frosty/documents/archive/documents/op prof sek/security/aliases/Richard Page" folder. MR. HOWARD: Can you zoom out please, Ms. Rosen, and can you zoom in on the top left-hand corner here. Q. Is this an image showing -- another image showing the directory structure of the defendant's computer? A. Yes. MR. HOWARD: And can you zoom in on this part, Ms. Rosen. Q. And so is the directory that you just referenced as to where the file was located reflected in this? A. Yes. Q. Can you just point it out? A. Sure. The name of the folder is "Richard Page." Q. That was in a folder called "Aliases," correct? A. Correct. Q. Which is, in turn, in a folder called "security," correct? A. That's correct. Q. What does the metadata of the document reflect about the date that this file was first saved to the defendant's computer? A. 5/8/2012. Q. Is that this reference right by the "Date Created" field? Page 985 A. Yes. Q. And earlier you testified that there were a lot of files with that date on them? A. Yes. MR. HOWARD: Can you zoom out, please. Q. What is contained on the bottom right-hand corner of this exhibit? What does this part of the screenshot represent? A. Oh, the contents of the file, what was in the file. It is a viewer for that. Q. So we have: "Name: Richard Page. DOB: 5/13/1977. Married. Address, or "Addr:" 11640 Gary Street, Garden Grove, California 92840, United States. Phone is 714-620-7320. PGP pass phrase, and then a redacted area there. Is there text in that section that is redacted? A. Yes. Q. And down here we see the word KalyHost, AutoVPS, Silk Road, staff@SilkRoad.org, correct? A. Correct. MR. HOWARD: Ms. Rosen, can you please move this to the left-hand part of the screen. Could you publish Government Exhibit 150 on the right-hand side, which has already been admitted into evidence, which is the who.is information for silkroadmarket.org. Can you just zoom in here. Actually, a little higher, please. Right there. Actually, you were in the right place. That is my fault. Page 986 And a little higher. Just a little bit. Q. So here it says, "Domain history info for silkroadmarket.org," right? A. Correct. MR. HOWARD: Could you scroll down, Ms. Rosen. Here it says -- I'm sorry. Pause it for a second. Q. "Old registrar information, March 12, 2011," correct? A. Yes. Q. Could you go down Ms. Rosen. And this says -- can you focus on this little block right here? Right here. Here it says: "Registrant contact information. Name: Richard Page. Address: 111640 Gary Street. City: Garden Grove. State: California. Zip: 92840. Country: U.S. Phone: +1.7146207320. And email: Richardpage@gawab.com. Mr. Kiernan, how does the information on the who.is lookup compare to the information on the file that was recovered from the defendant's computer? A. It's the same. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 212, which has already been admitted into evidence. Q. Mr. Kiernan, what does Government Exhibit 212 depict? A. 212 is the file structure of the defendant's laptop, of the "var/www/market" directory. Page 987 Q. Let me zoom in over here. Is this upper left-hand window again the file structure of the defendant's computer? A. Yes. Q. And so you are talking about the var/www directory, correct? A. I am, yes. Q. Is this one of the folders you are referring to? A. Correct, that is one of the folders. Q. So what is -- you have experience with Linux-based computers, correct? A. I do, yes. Q. Approximately how many have you analyzed in the course of your career? A. Hundreds. Q. So what kind of files are stored in var/www directory on a computer running Linux? A. Typically website files, Web server files. Q. And what can such website files found on a laptop in this kind of directory be used for? A. For maybe backup there or to test out, to try -- MR. DRATEL: Objection. Objection. THE COURT: Well, apart from this document, your general experience, why don't you discuss that. THE WITNESS: Sure. Usually that directory structure on a Linux machine will house or hold Web files for the actual Web server working. So for this you can run it to practice, to test, to backup a website, or things like that would generally appear in this file structure. Page 988 Q. Did you review the files in this directory? A. I did. Q. And did this directory contain files associated with any website? A. Yes, they did. Q. And what website was that? A. The Silk Road website. Q. Mr. Kiernan, could you please flip in your binder to what's been marked for identification purposes as Government Exhibits 268 and 269. *(Pause)* A. OK. Q. And what are these exhibits? A. These are files extracted from the defendant's laptop. Q. And from what part of the laptop? A. This was from the "var/www/market/public" directory. Q. And you testified that this is a part of a Linux system in which Web page files could be stored, correct? A. Sure. Yeah. Q. Did you take these screenshots? A. I did, yes. Page 989 MR. HOWARD: The government offers Government Exhibits 268 and 269. THE COURT: Mr. Dratel. MR. DRATEL: I am just going back to the page, your Honor. *(Pause)* On Vayner, your Honor. THE COURT: All right. That objection is overruled. Government Exhibits 268, 269 are received. *(Government's Exhibits 268, 269 received in evidence)* THE COURT: There wasn't an objection noted pretrial, but we will go over that at the break. MR. HOWARD: Ms. Rosen, would you please publish Government Exhibit 268. Q. So is this another screenshot from FTK Imager? A. It is. Q. And as with the other ones we've seen, is the contents of the file contained in the bottom right-hand corner? A. Yes. Q. What is the title of this file? What is it called? A. This is called "closed.PHP." Q. What does "php" mean? A. It's a scripting file or files that can sit on a server running php software. Basically, they are Web pages. That is how they look on the machine hosting that website. Page 990 MR. HOWARD: And, Ms. Rosen, can you zoom in on the bottom right-hand corner. Q. This is the one that contains the contents of the file, correct? A. Yes. Q. And here it says, "Silk Road anonymous market." Do you recognize what this is, what I am pointing to on the screen? A. Yes. That is the Silk Road logo. Q. It says here: "Silk Road is down for maintenance. More information can be found on the forum here," then a link, correct? A. Correct. Q. And the link includes a dot-onion address, isn't that correct? A. That is correct. MR. HOWARD: Ms. Rosen, would you please publish Government Exhibit 269, please. Q. Is this another file that was recovered from the part of the computer used to store website files? A. Yep. Ah, yes. Q. And what was the names of this file? A. This was "dpr_key.php." Q. And this is also a website code -- it is a php file? A. Right, it is a php file. Page 991 MR. HOWARD: Could you zoom in on the bottom right-hand corner of the screenshot, please. Q. And this, again, this part of the FTK Imager shows the contents of the file, correct? A. Yes, it does. Q. It says: "The following PGP key can be used to verify messages signed by the Silk Road administrator Dread Pirate Roberts. Begin PGP public key block," a bunch of text here and then "End PGP public key block." What is a PGP key, Mr. Kiernan? A. It's a key to enable -- to verify or to enable people to share documents back and forth. The keys basically lock the message that's being shared. To actually read it, you share your public key with other people so they can open or verify things that you get from them. MR. HOWARD: Ms. Rosen, can you just move this to the left-hand side of the screen and just focus on the actual contents. And on the right side, can we please publish Government Exhibit 133, which is a screenshot taken by Special Agent Der-Yeghiayan of the Silk Road website. And can we zoom in on the text here. Above that, please. "The following PGP key can be used to verify messages signed by the Silk Road administrator Dread Pirate Roberts. Begin PGP public key block." A bunch of text. And "End PGP public key block." Page 992 Q. Mr. Kiernan, how did this file on the defendant's laptop compare to this page from the Silk Road website? A. They were the same. Q. Now, what kind of -- is this a public key or private key, Mr. Kiernan? A. These are public keys. Q. Did you find in your analysis of the defendant's computer, did you find a corresponding PGP private key? A. I did, yes. Q. Mr. Kiernan, would you please flip in your binder to what has been marked for identification purposes to Government Exhibit 296. *(Pause)* Do you recognize what this is? A. Yes. Q. And what is it? A. This is the file extracted from the defendant's computer. It's the Silk Road private key. Q. How many pages is this exhibit? A. Two. Q. What is the second page of this exhibit? A. The second page is when I imported that key into a different program, a PGP -- a GPG program to get the statistics of that file. Page 993 Q. Mr. Kiernan, is that a screenshot that you took? A. Oh, I'm sorry. Yes, it is. Yes. MR. HOWARD: The government offers Government Exhibit 296. MR. DRATEL: Objection. Vayner and hearsay. THE COURT: All right. Those objections are overruled. GX296 is received. *(Government's Exhibit 296 received in evidence)* MR. HOWARD Q. So, Mr. Kiernan, is this another screenshot taken from FTK Imager? A. It is, yes. Q. What is the name of the directory that's depicted here on the upper -- the files, what directory are they from? A. The "Home/frosty/backup/keys" directory. MR. HOWARD: And could you focus in on the top right-hand window, Ms. Rosen. Q. These are the files that are located in that directory? A. Yes. Q. And where did you find the corresponding private key for the Dread Pirate Roberts? A. In this directory. Q. And which file was it? A. SilkRoad.asc." Page 994 Q. Can we please flip to page second -- page 2 of the exhibit. Can you explain what is depicted in this screenshot? A. Yes. So this was the gpg software where I imported the keys from that other public -- from that file, from the defendant's laptop. Q. What is gpg software? A. It's software to trade -- not trade, but it's software used to create keys, pass out keys. So when I sign my stuff, my mails or my documents, I can give you the other key to actually verify it is my stuff. MR. HOWARD: And so can we zoom in on this window here, Ms. Rosen, the whole window. If you could do the whole window. Q. And so what does this depict, Mr. Kiernan? A. That depicts the opening of that ASC file that you saw before, and it shows the name of the key, the Silk Road, the email associated with the key, the staff@silkroadmarket.org. And then if you go down, the date that the key was created. And if you continue down, it says "key." And right next to it it has "secret and public key" contained within that file. Q. So what does "secret and public key" mean? A. So I could build -- well, it contains both keys. I could sign stuff and open stuff using this and verify stuff using these keys. Q. If this wasn't a private key, if this was a public key, what would it say there? Page 995 A. Just have the public -- "secret" would be off there. Public key would be the only thing you could see there. Q. What was the date this private key was created? A. April 1st, 2011. Q. And were you able to verify that this matched with the public key? A. I was able to extract the public key from it, yes. Q. And did it correspond to the public key for the Dread Pirate Roberts that you found on the Silk Road website and the on the defendant's computer? A. Yes. THE COURT: Mr. Howard, you've got about eight minutes left. All right? Just to give you a sense of timing. MR. HOWARD: For the day, your Honor? THE COURT: For the day. MR. HOWARD: I think there would be a few more questions, and then it would be an appropriate time for a natural breaking point, if that works. THE COURT: Absolutely, I want you to use the time or for sure. I just wanted to give you a sense of what you've got left. MR. HOWARD: Thank you, your Honor. MR. HOWARD Q. Mr. Kiernan, can you please flip in your binder at what has been marked for identification purposes as Government Exhibit 212A. Page 996 *(Pause)* A. OK. Q. How many pages is Government Exhibit 212A? A. Three pages. Q. Do you recognize what this exhibit is? A. I do. Files extracted from the defendant's computer. Q. And where on the computer were these files located? A. These were in the var/www/market/application/views directory. Q. Is this part of the same var.www directory that you described that was used to have Web page files? A. Yes. Q. Did you take these screenshots? A. I did, yes. MR. HOWARD: The government offers Government Exhibit 212A. THE COURT: Mr. Dratel. MR. DRATEL: Objection on Vayner and hearsay grounds, your Honor. THE COURT: All right. Those objections are overruled. Government Exhibit 212A is received. *(Government's Exhibit 212A received in evidence)* MR. HOWARD: Ms. Rosen, could you please publish page 1. Page 997 Q. Are all the pages in this exhibit various screenshots of files found within that directory used for website files? A. Yes. Q. What is the name of the file that's depicted on the first page? A. About.php. Q. Could you focus on the bottom right-hand corner. A. I can, yes. MR. HOWARD: Ms. Rosen, why don't we just focus on maybe the top of this. We will see it a little bigger. Q. So, Mr. Kiernan, there is also -- there is this text here that's inside little brackets. A. Yes. Q. What does that represent? What is that? A. That's actually code within the file. It doesn't get rendered correctly in this viewer. Q. Are you familiar with that kind of code? A. Yes. Q. Can you describe -- can you read or point to on the screen if this file was loaded in a browser, what is the text that would appear? A. Sure. Q. Read it, please. A. "Greetings and welcome to Silk Road." That would be one of them. "I know you can't wait to get to the good stuff, but please take a moment to read this message. It's been written to help keep you safe," and things like that. Page 998 Q. That's enough. Can we go to the second page of this exhibit. What was this file called? A. This was called "logo_hi-res.jpg." Q. What kind of file is a JPG file? A. An image file, a picture file. Q. Was this also found in that same section of the defendant's computer? A. The same section, yes. Q. Do you recognize the photograph that that file contains? A. I do, yes. It's the Silk Road logo. MR. HOWARD: Ms. Rosen, can we flip to the last page of this exhibit. Q. What is the name of this Web page? A. "Sellers_guide.php." MR. HOWARD: Ms. Rosen, can you zoom into the bottom right-hand window. Q. Again, this contains certain Web page code, correct? A. Correct, it does. Q. Could you please read the first two lines of what the text would appear like and point to it on the screen if this was loaded into a Web browser? Page 999 A. Sure. "Sellers Guide. You and you alone will have your client's shipping address" -- I'm sorry. Above that, it is "Client Anonymity." Yes. Right there. "This information must be destroyed as soon as it is used to label their package," and so on. Q. Now, if you read the next couple of lines. A. Oh, sure. "Never ask your clients for personal information. Under no circumstance should you save a copy of your client's address. Publish a public encryption key in your user description on your settings page." Sorry. All the way over here. MR. HOWARD: Ms. Rosen, can you zoom out, please. Can you zoom in on the upper right-hand window. Q. And, Mr. Kiernan, what are all of these files that include ".php" at the end? A. They are all Web page files. Q. Here we have "Buyers_guide.php," "Category." We discussed some already, like "DPR_key.php," correct? A. Correct. Q. Reviews.php? A. Yes. Q. Support.php, user.php? A. Yes. Q. Write_review.php? Page 1000 A. Yes. Q. These are all Web pages? A. Yes. Q. Mr. Kiernan, would you please flip in your binder to what's been marked for identification purposes as Government Exhibit 212B. A. 212B? Q. Do you recognize what this is? A. Yes. Q. And what is this? A. A file extracted from the defendant's computer. Q. And did you take this screenshot of this file? A. I did, yes. MR. HOWARD: The government offers Government Exhibit 212B. THE COURT: Mr. Dratel. MR. DRATEL: The same objections, hearsay and Vayner, your Honor. THE COURT: Those objections are overruled. Government Exhibits 212A and B are received. *(Government's Exhibits 212A and 212B received in evidence)* MR. HOWARD: Can you zoom in on the upper right-hand corner. Q. What was the name of this file, Mr. Kiernan? Page 1001 A. This file was mastermind.php. Q. Are you familiar with the "mastermind" page from the Silk Road website, Mr. Kiernan? A. I am. Q. And when have you seen it before? A. I've seen it when I was doing this laptop, looking at the laptop, and when I was on the defendant's -- when I took the pictures of the defendant's laptop. Q. And who chooses the titles for Web page files? A. The designers of the website. MR. HOWARD: Your Honor, this would be a natural breaking point if you want to stop here. THE COURT: Yes. Ladies and gentlemen of the jury, we will end for the day. We'll pick up tomorrow morning at 9:30. I want to remind you not to talk to each other or anybody else about this case. I want to remind you, also, to avoid any news articles or media that may discuss this case in any way. If you run across anything, avert your eyes. I instruct you that you must do so. And, also, I want to remind you not to try to go on the Web and do any research on your own. It is very important that the only evidence that is used to decide this case is the evidence you receive in this room. So don't try to go off onto Google and become an expert in Linux or anything else. All right. Thank you. We are adjourned for the evening. We'll pick up tomorrow morning. Page 1002 THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1003 *(Jury not present)* THE COURT: Mr. Kiernan, we'll pick up at 9:30 tomorrow morning. So you can also step down. Thank you. THE WITNESS: Thank you, your Honor. *(Witness not present)* THE COURT: All right, ladies and gentlemen. Let's all be seated for just one moment. I just wanted to very quickly go through the exhibits that had had objections as to which the prior rulings, I wanted to be sure that we understood that they apply. GX264 was received and the Court overruled the Vayner objection for all of the reasons that we've already discussed, and, indeed, that is the same for each of the electronic documents, that this witness has authenticated them appropriately. And in terms of hearsay, these are not for the truth, nor is 254 for the truth or 270, 275, 295, 280, 268, but I want the government to make sure with 268 that that is right, that you are not offering it for the truth. 269 not for the truth. 296 not for the truth. 212A and B not for the truth. There is one of them, the Dominica Guide, 290 and 291, not for the truth, 291 being the application. 272 was the photograph with the bags of what could be whatever they are. That was objected to in the Pretrial Order under 403. So the Court additionally had undertaken a 403 analysis, and finds that given the charges in this case, that evidence is both relevant but it is not unduly prejudicial. Its probative value is not substantially outweighed by any prejudicial effect. Certainly, at most, the inferences that could be drawn are consistent with the charges in this case, and it is no more serious than that. It also was properly authenticated. Page 1004 Mr. Howard, were any of the documents which I had mentioned things which the government had intended to offer for the truth? MR. HOWARD: Your Honor, to the extent that some of them included statements of the defendant, we would seek to admit them as party admissions. THE COURT: All right. To the extent that there are portions where it is not only by the -- allegedly by the defendant subject to connection, but that it's for the truth associated with the defendant, as opposed to associated and not for the truth, then they would be party admissions in the same manner that we previously discussed subject to connection. MR. HOWARD: Yes, your Honor. MR. DRATEL: Your Honor, just because it is on his laptop doesn't mean it is a party admission. Everything on his laptop is not by the defendant. THE COURT: Subject to connection. As we all know, the subject to connection will be a finding by a preponderance of the evidence. That is what the evidentiary objections require. And so when the government's case is in, we'll determine whether or not ultimately all the "subject to connection" statements have been met or not met, and we'll take that up at that time. Page 1005 All right. Anything else that you folks wanted to raise? MR. DRATEL: Just one thing. I will wait for the government first, just in case. MR. HOWARD: Yes, your Honor. There is an additional witness that we plan on calling tomorrow. It is a very short witness. It is Special Agent Gregory Fine from the Federal Bureau of Investigation. THE COURT: All right. And tell me why Mr. Fine is coming in now and was not on your original list. MR. HOWARD: Yes. Special Agent Fine is only going to be testifying about the seizure of thumb drive devices from the defendant's residence. The relevance of the files to the government became more clear following what the defense previewed in their opening statement. So he will be authenticating the seizure of thumb drives. Mr. Kiernan tomorrow will testify about an analysis of files that were recovered from that thumb drive. THE COURT: All right. So he is simply to authenticate the thumb drives? Page 1006 MR. HOWARD: Yes. THE COURT: That is really his entire purpose is to say I was there, I got the thumb drives, do a chain of custody? MR. HOWARD: Yes, your Honor. THE COURT: All right. Mr. Dratel. MR. DRATEL: Do we have all of the exhibits that they are going to put in? I want to make sure. THE COURT: Do you have everything that you are going to use with this fellow? MR. HOWARD: Yes. They are in the 200 series. THE COURT: And they have already been turned over to the defense? MR. HOWARD: They have, your Honor. THE COURT: All right. MR. DRATEL: OK. THE COURT: Any 3500 material, I take it there probability isn't any, but if there is, you have given it to the defendant? MR. HOWARD: Yes. We just need to verify that he didn't send any emails that we can assert 3500. Based on his role in the search, we doubt there is anything. We'll get that immediately and promptly provide it to the defendant. THE COURT: Thank you. Mr. Dratel. MR. DRATEL: Not 5,000 pages. Page 1007 The only thing I wanted to add, your Honor, not about that, but about some of the exhibits that came in -- I think most of the exhibits that came in today through Mr. Kiernan were different than the original ones that we had. I don't mean different altogether, but in terms of how they were sent to us. So, for example, many of them, in terms of the time that we interposed objections, did not have metadata or a different kind of presentation of metadata. So I think that may be one of the reasons why there may not be objections to some of them previously and there are now. I'm not saying that is all of them, but I just wanted -- there are differences. We are getting the series of exhibits as the government has posted them. THE COURT: I have not found that you have waived objections. I have been allowing you to put them on the record, and we have been dealing with them. If there are any other issues which you want to raise, you can either raise them on cross-examination with this witness if there are differences, or if there is anything that you should bring to my attention, go ahead and bring it to my attention either now or tomorrow morning about that. MR. DRATEL: It is just more about timing for that particular issue. THE COURT: All right. Anything further, folks, that we should go over tonight? Otherwise we will meet tomorrow morning at 9. Page 1008 MR. HOWARD: Nothing from the government, your Honor. MR. DRATEL: Nothing, your Honor. Thank you. THE COURT: One thing I do want to encourage you folks, because things have a way of coming up, as we know, if we could be here close to 9, that would be helpful. Otherwise we end up starting with ourselves at 9:20. We don't get the jury out here until 9:40 or 9:45, today at 9:50. So let's just give it a go. All right. Thank you. We are adjourned. THE CLERK: All rise. *(Adjourned to 9 a.m., Thursday, January 22, 2015)* Page 1009 INDEX OF EXAMINATION Examination of: Page JARED DER-YEGHIAYAN Redirect Mr. Turner . . . . . . . . . . . . . 782 Recross By Mr. Dratel . . . . . . . . . . . . 793 Redirect By Mr. Turner . . . . . . . . . . . . 816 Recross By Mr. Dratel . . . . . . . . . . . . 819 THOMAS KIERNAN Direct By Mr. Howard . . . . . . . . . . . . . 824 Direct By Mr. Howard . . . . . . . . . . . . . 896 GOVERNMENT EXHIBITS Exhibit No. Received 149 . . . . . . . . . . . . . . . . . . . . 782 151 . . . . . . . . . . . . . . . . . . . . 785 128G . . . . . . . . . . . . . . . . . . . 831 128H . . . . . . . . . . . . . . . . . . . 833 200 . . . . . . . . . . . . . . . . . . . . 835 201A . . . . . . . . . . . . . . . . . . . 840 201B through G . . . . . . . . . . . . . . . 843 500 . . . . . . . . . . . . . . . . . . . . 853 200A . . . . . . . . . . . . . . . . . . . 855 211 through 216 . . . . . . . . . . . . . . 859 273 . . . . . . . . . . . . . . . . . . . . 861 274 . . . . . . . . . . . . . . . . . . . . 866 222 . . . . . . . . . . . . . . . . . . . . 871 Page 1010 222B . . . . . . . . . . . . . . . . . . . 874 222A, 223, 224, 225A-225B . . . . . . . . . 877 226A-226I, 227A-227H, 228 . . . . . . . . . 877 229A-229E, 231A-231C, 232A-232E . . . . . . 877 240A-240D, 241 . . . . . . . . . . . . . . . 878 242 . . . . . . . . . . . . . . . . . . . . 910 256 . . . . . . . . . . . . . . . . . . . . 914 255 . . . . . . . . . . . . . . . . . . . . 928 250 . . . . . . . . . . . . . . . . . . . . 930 251 . . . . . . . . . . . . . . . . . . . . 937 264 . . . . . . . . . . . . . . . . . . . . 956 254 . . . . . . . . . . . . . . . . . . . . 968 270 . . . . . . . . . . . . . . . . . . . . 969 280 . . . . . . . . . . . . . . . . . . . . 972 271 . . . . . . . . . . . . . . . . . . . . 974 272 . . . . . . . . . . . . . . . . . . . . 976 275 . . . . . . . . . . . . . . . . . . . . 977 290 and 291 . . . . . . . . . . . . . . . . 979 295 . . . . . . . . . . . . . . . . . . . . 983 268, 269 . . . . . . . . . . . . . . . . . . 989 296 . . . . . . . . . . . . . . . . . . . . 993 212A . . . . . . . . . . . . . . . . . . . 996 212A and 212B . . . . . . . . . . . . . . .1000 Page 1011 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 22, 2015 9:10 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Sharon Kim, Legal Intern Page 1012 *(In open court; jury not present)* THE COURT: This is the Continuation of the matter now on trial, the United States of America v. Ross William Ulbricht, 14 Cr. 68. Counsel, state your names for the record. MR. TURNER: Good morning. Timothy Howard and Serin Turner for the government, joined by Nicholas Evert and Molly Rosen and Sharon Kim who is a student intern. THE COURT: Good morning all of you. MR. DRATEL: Good morning. Joshua Dratel with Ross William Ulbricht and Lindsay Lewis and Joshua Horowitz. THE COURT: Good morning to all of you. I have one matter to raise just relating to the letter that I got from the government this morning and to give you folks a sense as to how I think we should proceed on that. We have a juror who had called 45 minutes ago saying that he thought he would be ten to 15 minutes late due to a plumbing issue that he had to address but he only thought it would be ten to 15 minutes, so I think we're look at 9:40 anyway, unless he gets here earlier. Do you folks have things that you would like to raise? MR. HOWARD: Just one issue we'd like to address at side bar. THE COURT: Okay. So there's one issue for the government. Page 1013 For you, Mr. Dratel, anything? MR. DRATEL: No, your Honor. THE COURT: Before we go to side bar, let me just deal with the complaint of bitcoin amount, and this relates to the defense application to read the paragraph 22C, if my memory serves, from the complaint relating to the bitcoin amount. I think we are in agreement at least that the GAF case, among others, does provide a basis to read documents of that type. It seems that there's a dispute between the government and the defense as to whether or not there's a material fact which needs to be addressed by virtue of this. My suggestion is sufficient unto the day. Let's see how the government's case comes in and whether or not the defense believes that there's still a basis for asserting a material dispute of fact. I reviewed yesterday the way in which I perceived, based upon the defense opening, that the issue came into the case. Whether or not the factual dispute is resolved by virtue of whatever the proof is, that I think remains to be determined. So let's wait and see whether or not, Mr. Dratel, your application remains and you want to do that at the conclusion of the government's case. It's perfectly appropriate for you to do so if there still is a remaining dispute of fact on that issue. MR. DRATEL: I just want to say, I think this case is completely distinguishable from GAF, in fact, the Court says it's distinguishable from GAF. So it's a theory of issue, not a question of a representation made by the government in a binding way, which was a sworn complaint under oath. It's extraordinarily different. Page 1014 THE COURT: Let me just make sure that I have put my view clearly, which is, as a matter of law, the statement in the complaint is the kind of statement, if there's a material dispute of fact, which can be taken as an admission. MR. DRATEL: Right. Thank you. THE COURT: Now, the question is whether or not there's a material dispute of fact, and that is something which the government is taking issue with. My view is sufficient unto the day. If, at the end of the government's case, there's no remaining material dispute of fact on that issue, so be it. You may choose that you don't want to pursue this. If you believe that it remains, we'll talk about it, but I think the legal principle we're now resolved on. Yes, Mr. Turner. MR. TURNER: I just want to note on our part, we actually don't agree that GAF applies to an agent affidavit. It's not like a bill of particulars. But in any event, we don't think the Court needs to address that issue because even if it does apply, we don't think there's a genuine conflict in the representations being made. THE COURT: All right. I think the rationale of bill of particulars versus complaint may give -- is not as much of a distinction as -- the difference between those two types of documents is not so much of a distinction. The rationale of the GAF court really was a document put forward by a government agent in furtherance of a governmental position sworn in under oath, which this was. Let's put it aside. I think we understand how we're going to be dealing with it, which is at the end of the government case. Page 1015 That was my issue. Let's hear the issue that you folks wanted to raise at side bar. MR. DRATEL: With respect to side bars, because we have had some long ones, if Mr. Ulbricht can be present at side bar. THE COURT: Well, come on up. *(At the side bar)* MR. TURNER: This is brief. I want to note the government's continuing concern about the defendant turning to communicate with his family in the presence of the jury during side bars. Members of my team noticed it yesterday. The marshals noticed it. There was an entire news article that talked about all the communications between the defendant and his family in part in the presence of the jury. So I just ask that the defendant be reminded again to save those communications until times when the jury has gone back to the jury room. Page 1016 THE COURT: Mr. Dratel, will you remind your client of that? MR. DRATEL: Okay. Thank you. THE COURT: It's obviously difficult for -- I didn't see the news article. I don't read the press while the case is ongoing, unless somebody feels like they need to bring something to my attention. I'll have my deputy pay attention to the issue. What I need to understand is what would be the measures that the government would be suggesting should be taken and if there was and issue. One possibility is to move the parents and the family to a different part of the courtroom. There may be other increasingly necessary measures, but let me have Mr. Dratel talk to his client about that. MR. DRATEL: Not saying anything. I'm not acknowledging that there has been an issue. THE COURT: I haven't seen anything myself, but I haven't been looking. And it is an issue because there shouldn't be communicative conduct that can convey things to the jury, but if Mr. Ulbricht is going to come up during side bars, this issue will be eliminated as we proceed because he'll be here and not there. MR. DRATEL: Right. Thank you. THE COURT: Remind him since he's standing here. He can hear. Page 1017 THE DEFENDANT: I'm aware, and I'm listening. THE COURT: Thank you. *(In open court)* THE COURT: We're checking on the jury. We might have lucked out, including the person who thought he might be late. If the defendant wants to come up to side bar, which is perfectly fine with the Court, the marshals will come up. That's protocol. I want you to be aware of that because the jury may or may not draw an inference from that. You know, you folks can weigh the competing issues. I don't have a problem with that occurring. We're waiting for Joe to see how the jury is doing. MR. DRATEL: Thank you. THE COURT: Anything else we should deal with right now? MR. HOWARD: Not from the government's perspective. THE COURT: Okay. Mr. Dratel, anything else from your perspective? MR. DRATEL: No. THE COURT: Joe is checking on them. Let's take a brief break. Hopefully, we'll be able to start very shortly as soon as we have a full array of jurors. *(Continued on next page)* Page 1018 *(In open court; jury present)* THE COURT: Mr. Kiernan, I want to remind you, you are still under oath from yesterday. THE WITNESS: Okay. THE COURT: Mr. Howard. MR. HOWARD: Thank you, your Honor. DIRECT EXAMINATION (Continued) MR. HOWARD Q. Good morning, Mr. Kiernan. A. Good morning. MR. HOWARD: Your Honor, may approach the witness. THE COURT: You may. Q. Mr. Kiernan, I just handed you what's been marked for identification purposes as Government Exhibit 502A. Do you recognize this exhibit? A. I do, yes. Q. What is this? A. These are two thumb drives that were recovered from the defendant's residence. Q. And how do you recognize them? A. From the markings on them and from the paperwork provided with them. MR. HOWARD: The government offers 502A. MR. DRATEL: I don't think -- one second, your Honor, with respect to this specific -- no objection. Page 1019 THE COURT: All right. Received. *(Government's Exhibit 502A received in evidence)* Q. Mr. Kiernan, what is a thumb drive? A. It's a media device that you can hold files on. It's a little smaller than a hard drive, but it has the same purposes as a hard drive. You can store files from -- on the devices. Q. And how many thumb drives are contained in Government Exhibit 502A? A. Two. Q. What is the storage capacity of each of those thumb drives? A. One was a four gig thumb drive, and the other one was a 16 gig thumb drive. Q. Did there come a time when you reviewed the contents of the 16 gigabyte thumb drive? A. Yes. Q. How did you get access to the contents of that thumb drive? A. Through a -- again, with the images that we had created, I had made a staging copying of that -- of the drive, and we were able to look at the drive using the FTK Imager. Q. Again, is a staging copy, what you testified yesterday, a working copy for you not to affect the original? A. Correct, correct. Yes. Q. Did you do anything to confirm whether the staging copy was identical to the evidence on the original thumb drive? A. Yes. We used the MD5 Hash, the digital fingerprint, to make sure that what I was looking at was the actual true copy of these two drives. Page 1020 Q. Could you please take a moment and flip to what has been marked as Government Exhibit 502 in your binder, please. A. I'm sorry. Which one? Q. 502. A. 200s, right? Q. 502, in the very back. A. 502. Oh, yes, there it is. Okay. Q. Do you recognize what this is? A. I do. Q. And what is it? A. This is a standard report from FTK Imager. Q. What does it depict? A. It depicts the checksum value of the -- of the drives here, the digital fingerprinting. Q. Does it indicate anything about the MD5 Hash value? A. Yes, it does. It has it here. MR. HOWARD: The government offers Government Exhibit 502. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 502 received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 502. Page 1021 Q. Mr. Kiernan, see here at the bottom it says MD5 checksum and then a long string of characters starting with "fc12"? A. Correct, yes. Q. What is that long string of characters that we just pointed out? A. That's the number that's produced when you run that program, that MD5 program on the devices. Q. That's what you refer to as essentially the fingerprint? A. That's the fingerprint. That's the number that that represents, yes. Q. Now, could you now flip in your binder to what's been marked for identification purposes as Government Exhibit 205A. A. Okay. Q. Do you recognize what this is? A. Yes. Q. And what is it? A. This is the checksum that I took of the imaged files of the thumb drives to make sure that I'm working on the same -- a good copy of those drives. Q. And you took this screen shot? A. I took this screen shot, yes. MR. HOWARD: The government offers Government Exhibit 502 -- sorry -- 205A. MR. DRATEL: No objection. THE COURT: Received. Page 1022 *(Government's Exhibit 205A received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish Government Exhibits 502 and 205A side by side. Actually, let's focus on 205A. Let's do that full screen. Q. Mr. Kiernan, you see here it says computer hash? A. Yes. Q. I'm sorry, up here on the MD5? A. MD5, yes. Q. And then here it says "fc12," a long string of characters. Can you highlight that, Ms. Rosen. What does this represent here? A. Again, that's the value created when looking at the thumb drives that I had, that's the checksum, that's the fingerprint that's created. Q. And did it match with the original copy? A. It did, yes. Q. Did you analyze the contents of this thumb drive? A. I did. Q. And what did you find on the copy of the thumb drive after you started to analyze it? A. I found two files. Q. Could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 297. A. Okay. Got it. Q. How many pages is this exhibit? Page 1023 A. This is two. Q. And what is it -- do you recognize this exhibit? A. I do. Q. And what is it? A. This is a screen shot of the files stored on the thumb drive, the 16 gig thumb drive; yes. Q. What is the second page? A. The second page is a process used to look at one of those files. Q. Did you take the screen shots of the images depicted in Government Exhibit 297? A. Yes. MR. HOWARD: The government offers Government Exhibit 297. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 297 received in evidence)* MR. HOWARD: Could you please publish 297, please. Q. This is another screen shot taken from FTK Imager? A. That it is, yes. Q. What device? A. The 16 gig thumb drives. MR. HOWARD: So, Ms. Rosen, could you please zoom in on the upper right-hand window. Q. And what is listed in this window, Mr. Kiernan? Page 1024 A. The files that were contained on that thumb drive. Q. A second ago, you mentioned two files in particular. Which ones are those? A. Correct. Those two files are the backup.tar.gz.gpg above that, not the fileslack one. Q. The one I'm pointing to right now? A. Yes, the one in green there. And the other file is www.tar.gz.gpg. Those are the only active real files on that drive. The Xs represent files that were deleted that I did not recover. That's how it comes up. Q. Based on your review of the thumb drive, do you know what date those files were saved? A. Yes. 9/23/2013. Q. And what, if you look at those two files that you just discussed, they end in ".gpg"? A. Correct. Q. What is a gpg file? A. Again, that was encrypted software that had those two files encrypted, encryption software. Q. Were you able to open these files despite the encryption? A. I was, yes. Q. And how were you able to do that? A. Again, by finding a password on the defendant's laptop that -- was I able to open them. MR. HOWARD: Would you please publish the second page of this exhibit, Ms. Rosen. Page 1025 Q. Mr. Kiernan, what does this screen shot depict? A. Just to verify that the file was actually decrypted after I put the password in. This is just the software tool that I used to do it. That's all. Q. I would like to first focus on the file www.tar.gz.gpg. You were able to successfully decrypt that file, correct. A. Yes. Q. Did you analyze the contents of that file once you decrypted it? A. Yes. Q. What did you discover? A. Those -- the files in that tar file, that file, were similar to the ones I found on the laptop under that web directory if remember from yesterday, that var www directory, so it seemed to be a backup of that. MR. DRATEL: Objection. THE COURT: I'll allow it. Overruled. Q. Mr. Kiernan, you said that these files were saved on September 23, 2013 to the thumb drive, correct? A. Correct. Q. And is that the reason you believe it's a backup of the files on the computer? A. Yes. MR. DRATEL: Objection. Page 1026 THE COURT: Overruled. Q. And that www/var directory that you testified about yesterday, isn't it correct that you testified that that contained web pages from the Silk Road website? A. Yes. It was a var www, but, yes. Q. And yesterday we walked through a number of exhibits that were from the directory that contained files from the Silk Road website? A. Correct. Q. Did you find each of those exhibits those same files in this backed-up version? A. Yes. Exhibits -- MR. DRATEL: Objection. THE COURT: Overruled. Why don't you strike the word "backed-up" and just say "version." Rephrase. Q. Did you find the same files that were introduced as exhibits yesterday in the folder on the laptop containing Silk Road website files as were found in this file that was saved on September 23 to the thumb drive? A. I did; yes. Q. Now, let's focus on the other file we discussed, the backup.tar.gz.gpg file. A. Okay. Q. You were also able to successfully decrypt that, right? Page 1027 A. Yes. Q. Did you analyze the contents of that file? A. I did, yes. Q. And what did that appear to contain? A. That appeared to contain a different version of the files that I found on the defendant's laptop under the home/frosty/backup directory, that directory. Q. And you testified that those files were saved to a thumb drive on September 23rd, 2013, correct? A. Yes. Q. Now, yesterday we discussed a number of exhibits that were taken -- that you extracted from the back -- from the backup directory on the computer, correct? A. Correct. Q. Did you also find copies of those same files in that file from the thumb drive? A. Yes, in this version, yes. Q. Were there any differences? A. Yes. They were -- seemed to be -- well, it didn't seem to be. They were older versions of what we had found on the laptop. Q. Now, Mr. Kiernan, could you please flip to what's been marked for identification purposes as Government Exhibit 298 in your binder. A. Okay. Page 1028 Q. Do you recognize what this is? A. Yes. Q. And what is this? A. That was the log.txt file. Q. Where did you recover this log.txt file? A. This was 298 -- it's from the thumb drive of the uncompressed -- the unencrypted file. This file was part of that. Q. Which of the two files that you -- which of the two files is that from? A. From the USB drive. Q. Earlier you testified there were two files you decrypted from the thumb drive, correct? A. Correct. Q. There was the one that contained the Silk Road website files, correct? A. Yes. Q. And there was one that contained the backup files, correct? A. Yes. Right. So this was from the backup -- the backup file, that backup file that we had found on the USB thumb drive, so it's from that uncompressed file, the backup file. Q. Can you please take a look at the last page of this exhibit. A. Yes. Q. What is the last page of this exhibit? Page 1029 A. This is a screen shot of the contents of the USB drive -- of the -- I'm sorry -- of the uncompressed -- the un -- the decrypted backup file that was found on the USB drive that I decrypted. MR. HOWARD: The government offers Government Exhibit 298. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 298 received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish the last page of Government Exhibit 298, page six, please. Q. Mr. Kiernan, this is another screen shot you took from FTK Imager depicting the file from the thumb drive? A. Yes. Q. And what is depicted in the upper left-hand window of the screen? A. So that's the directory structure starting with the USB of the unencrypted file called backup.tar.gz right there. Q. And there included within a folder called frosty, correct? A. Yes. MR. HOWARD: Could you zoom out, please, Ms. Rosen. Q. Now, where was the log.txt file found specifically on the thumb drive? Ms. Rosen, can you zoom in on the bottom left-hand corner here. Page 1030 A. On the thumb drive, after it was de-encrypted, the file name is backup.tar.gz, which contained files in it, so it's backup.tar.gz, it's home/frosty/backup is where it is on the uncompressed version of that file. Q. What does the metadata reflect about the date that that file was saved to the thumb drive? A. 9/20/2013. MR. HOWARD: Ms. Rosen, can you please publish page five of this exhibit, and could you please move this to the left side. Q. Earlier you testified -- did you find a similar file on the defendant's laptop? A. Yes. Q. Could you please publish Government Exhibit 241 on the right side of the screen, which has already been admitted into evidence, and please go to page five. Now, Mr. Kiernan, the one on the left side is the one from the thumb drive, right? A. That's correct. Q. And the one on the right is the one from the defendant's laptop, right? A. Yes. MR. HOWARD: Ms. Rosen, can we zoom in on the last couple of entries on each of these pages. Why don't we try top and bottom. It might be more clear. Page 1031 Q. Now, to be clear, Mr. Kiernan, is the top one from the USB drive? A. Yes. Q. And the bottom one is from the defendant's computer? A. Computer, correct. Q. And what is the last entry on the one taken from the USB drive? A. 9/19/2013. Q. "r&w pinged me and asked for meeting tomorrow," correct? A. That's correct. Q. And you testified that this file was saved on September 20, 2013 -- A. Yes. Q. -- according to the metadata? A. Right. Q. Could we zoom in on the bottom here starting at 9/19/2013, to the bottom. "9/19/2013 red pinged me asked for meeting tomorrow." That's similar to the last entry of the version you found on the thumb drive, correct? A. That's correct. Q. And there are additional entries for 9/19 to 9/25/2013 as well as 9/30/2013 on the version that was recovered from the defendant's computer, correct? A. That's correct, yes. Page 1032 Q. So I'm going to read this now: "9/19 to 9/25/2013 red got in a jam and needed 500,000 to get out. Ultimately he convinced me to give it to him but I got his ID first and had Cimon send Harry, his new soldier of fortune to Vancouver to get $800,000 in cash to cover it. Red has been mainly out of communication, but I haven't lost hope. Atlantis shut down. I was messaged by one of their team who said they shut down because of an FBI doc leaked to them" dealing "vulnerabilities in Tor." THE COURT: I think you misspoke in terms of the word "dealings." It's "detailing." Q. Pardon me. "...detailing vulnerabilities in Tor. 9/13/2013 spoke with inigo for a while about the book club and swapping roles with libertas. Had revelation about the need to eat well, get good sleep and meditate so I can stay positive and productive." MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 214 to the jury, which has already been admitted into evidence. Q. Mr. Kiernan, what does Government Exhibit 214 depict? A. Screen shot of a -- from the defendant's computer of a wallet.dat file. Q. Let's zoom in on the bottom left-hand corner here. And where was this wallet.dat file located? A. This was in the home/frosty.bitcoin directory. Page 1033 Q. Are you familiar with what a wallet.dat file is? A. Yes. I am. Q. What is it? A. It's the file that contains your bitcoin wallets, your addresses where you store your bitcoins. Q. And what, if anything, did you do with this file after you discovered it on the defendant's laptop? A. Extracted it and gave it to Special Agent Ilhwan Yum. MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 213 -- pardon me -- the last exhibit that we looked at, the wallet.dat file. THE COURT: Ilhwan Yum? THE WITNESS: Yum, yes. THE COURT: Y-U-M? THE WITNESS: Yes. THE COURT: Thank you. THE WITNESS: You're welcome. Q. What device was the wallet.dat file on? A. Oh, this was back on the laptop. MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 213, please. Q. Mr. Kiernan, what does Government Exhibit 213 depict? A. This is a directory structure of the MySQL database under the -- called "market." Q. And on which device was this from? Page 1034 A. Again, this is back on the laptop. MR. HOWARD: Ms. Rosen, can we just zoom into this area right here. Q. And where was the file located, Mr. Kiernan? A. Yes. All these files are located under var/lib/mysql/market. Q. And what kind of files were contained in that folder? A. Database files. Q. What is a database? A. A database is a collection of records or information that you want to organize and keep in a nice forum. So a digital way to do it is a database. You store it in the database like a phone book, per se, or your contact list on your phones. Those are all databases. It just makes it easier so you can search for people, search for things, phone numbers, where you live -- where someone else lives, and you could do combos. You can query the database to get all the people that you know that live in New York City but also work at a company here; and the object of it is just to make it a lot easier to find data on your hard drives. Q. Did you look at the contents of the database? A. I did. Q. And what did the database appear to contain? A. It contained some entries of drugs and items like that. MR. HOWARD: Ms. Rosen, can you please zoom into the upper right-hand corner of this screen, give me part of the page. Page 1035 Q. What is depicted in this window, Mr. Kiernan? A. The layout, the tables contained within the database. Q. I'm going to read a couple of the files here. There's balance log, withdrawals, transaction log, archive, categories, messages, users archive, transaction log -- can we scroll down, Ms. Rosen. We have featured items, shipping, deposits, vendor details. You can take it off the screen, Ms. Rosen. Now, Mr. Kiernan, you testified earlier that the purpose of trying to arrest the defendant at his laptop was to prevent his computer from becoming encrypted, correct? A. That's correct; yes. Q. And you also testified that not every laptop is encrypted, correct? A. No, not every laptop. Q. And what does a user have to do to encrypt the data on his laptop? A. Usually enable some type of software that enables encryption. Q. And if a user has encryption available on the laptop, how can the encryption be activated? A. Like we had talked about, same thing: You can close your laptop, you can log out of your laptop, power failure would cause a laptop to go back into an encryption state, things to that nature. Page 1036 Q. And what, if anything, did you do during the triage process to prevent these things from happening? A. During the triage state, we continued to make sure the computer was active, looked for any type of screen-savers or programs running that would try to disable the laptop or turn the laptop off and put it into a sleep state that would enable encryption once again. That was mostly what the triage was for. Q. When you were performing your triage, were you able to determine whether there was any encryption running on the computer? A. Yes. Yes. So using a -- I opened up a terminal window to -- it's just a program to get a little bit behind the scenes of what you -- the nice, gooey, pretty picture interface that you're used to seeing on the screen, just to run some commands to see if -- what was running on it. So I did a listing of what types of programs were running in the background to look for an encryption-type software, and I was able to find a file that showed that encryption was enabled on the machine. Q. What would have happened if the defendant had closed his laptop before the FBI seized it? A. It would have went into an encrypted state. Q. And what would have happened if you had not been able to keep the laptop alive while you were performing your triage? Page 1037 A. It would have turned into a brick basically. It would have been tough to -- it makes it a lot harder to get into -- into the machine to actually get any data off of the device. MR. HOWARD: The government has no further questions. THE COURT: Thank you. Mr. Dratel. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION MR. DRATEL Q. Good morning, Mr. Kiernan. A. Good morning. Q. I want to go back to actually where you ended with the day of the arrest, the day that Mr. Ulbricht was arrested. By the way, the encryption, when you talked about closing the laptop where it basically made it inaccessible, right? A. Yes. Q. So him being in a public place was an important factor, right? A. Yes. Q. Because if you had to go through the door of his apartment, he would have had an opportunity to close his laptop, right? A. That's right. Q. I want to go back to Government's Exhibit 128H, please. And that's a paragraph of the Glen Park library, correct? Page 1038 A. That's correct, yes. Q. And that's where Mr. Ulbricht was arrested, right? A. Yes. Q. He was arrested -- if we can enlarge the right part, I guess, yes. That's fine. He was arrested at the table where the person is sitting against the window, is that right? A. Yes. Q. And in fact, Mr. Ulbricht was sitting not where that person is, but he was actually sitting with his back to where we are and he was looking out the window, right? A. He was -- what I remember, he was just like that. Q. You've been interviewed in preparation for your testimony, correct? A. Yes. Q. You sat down with the government, right? A. Yes. Q. More than once, right? A. Several times. Q. Yes. And didn't you tell the government that Mr. Ulbricht had his wack to you looking out a window? Didn't you say that twice to the government? A. I don't -- do you have anything to show me? Q. Sure. I'll show you what's marked as 3508-2 and 3508-7. If you could look at 3508-2 and 3508-7 and the first highlighted portion on that page and the highlighted portion on that page. Page 1039 A. Sure. Q. Does that refresh your recollection, that you told the government twice in preparation for this case that Mr. Ulbricht's back was to you and he was looking out the window? A. I don't know what these are, but that's what it says there, yes. Q. And could we go to Government's Exhibit 225B, please. If we can scroll down a little bit. This is a conversation that you -- you didn't read it. Mr. Howard read it yesterday, right? This is something you got off the laptop, right -- A. Correct, yes. Q. -- you got off the drive that was given to you? The highlight version reads -- and this is -- just to put this back in context, this is Dread Pirate Roberts and this is on a Tor chat, right? A. These are from the Tor chats, yes. Q. And Dread Pirate Roberts is responding to someone working for him that the person is concerned about being arrested, right, about law enforcement? And Dread Pirate Roberts responds "There is nothing on your laptop for them to use, if you obscure your bitcoins properly, there's there is no way for them to trace them back to me. Realistically, the only way for them to prove anything would be for them to watch you log in and do your work," right? Page 1040 That's Dread Pirate Roberts, right? A. That's what it says. Q. And that's January of 2013, right? A. Yes. Q. So if we could go further. Again Dread Pirate Roberts: "Sure, someone could stand behind you without you realizing it," right? Yes? A. Yes. Q. So Dread Pirate Roberts understood full well the dangers of having his back to anyone who could sneak up behind him, right? MR. HOWARD: Objection; speculation. THE COURT: Sustained. Q. You testified yesterday, right, that the argument dispute that was contrived to distract Mr. Ulbricht was, in fact, behind him, right, and he turned around? A. Yes. Q. So if we go back to 228 -- I'm sorry -- 128H, Mr. Ulbricht really couldn't be sitting in that spot where that person was against the window because the other two people would have to be behind him, right? A. That's where I remember him. Q. But you told the government twice in preparation for this case that he had his back to you looking out the window? A. It's here. It's in this document here. Page 1041 Q. You deny that you said that? A. Yeah, I mean. I don't deny I said it, but it's here in the document. If that's what that is, then, yes, I said that. *(Continued on next page)* Page 1042 Q. OK. Now, just going back to 228 -- I'm sorry, 225B, which we were just looking at. So if we go back up a little further to the first part, so it says: "There is nothing on your laptop for them to use. If you obscure your bitcoins properly there is no way for them to trace them back to me." But all of the material that you put in yesterday, and some of what you put in today, came from an image that Mr. Beeson provided to you from Mr. Ulbricht's laptop? A. That is correct. Q. The journals, right? A. Yes. Q. The Tor chat logs; thousands of pages of Tor chat logs, right? A. Yes. Q. PGP keys, right? A. Yes. Q. Now, you have a background in security, correct, in Internet security, right? A. Yes. Q. You have taken courses; you have trained that way, right? A. Yes. Q. And aren't you -- isn't it part of the security for a PGP key is not to make it available on your computer, your private key? Page 1043 MR. HOWARD: Objection to form. THE COURT: Sustained. You can rephrase. MR. DRATEL Q. Isn't it a fundamental part of security not to keep your PG -- your private PGP key available on your computer in a manner that can be viewed by anyone on that computer? A. No. You have to -- the key has to be somewhere. If you set it up on your computer, that's where you would keep your key. The idea behind it is to store it in a safe location, like an encrypted, again. Q. And you put it in a file that says "Key," is that a good way to disguise it? MR. HOWARD: Objection. THE COURT: Sustained. Q. But you wouldn't put it in a file -- would you as a person trying to be secure put it in a file with the name "Key" on it? MR. HOWARD: Objection. THE COURT: Sustained. Q. Do you instruct people on how to disguise PGP keys on their computer? A. I don't -- Q. Have you been instructed? Is there training on that? A. Is there training on that? No, there is no training on where to keep your PGP key. It is your secret key. So if I was doing it, I would have an encrypted laptop and keep my key there, and when I turned off my laptop the key would be safe. Page 1044 Q. And you would put it in a file called "key"? MR. HOWARD: Objection. THE COURT: Sustained. Q. And when you say -- throughout your testimony, you said "pulled off the defendant's laptop," "pulled off the defendant's laptop." In fact, what you're working with is not the defendant's laptop, correct? A. Not the -- it's a copy of what was on the defendant's laptop. Q. Right. It was a copy that you didn't make? A. A copy I didn't make, no. Q. Right. A. That is correct. Q. It is what you received from Mr. Beeson? A. Yes. Q. So when you say "off the laptop," "off the laptop," it is really off of a copy of a copy, right? In other words, Mr. Beeson gave you a hard drive that was not the hard drive from the laptop but an image of the laptop? A. That is correct. Q. And then you made a copy of that and worked off of that? A. Yes. Q. So -- and you didn't participate in the imaging that Mr. Beeson did, correct? Page 1045 A. That's correct. Q. Also, when you said -- sometimes you said it's up to the designers of the site, right, in terms of certain issues with respect to Web pages and things like that? MR. HOWARD: Objection to form. THE COURT: Overruled. A. I did, yes. Q. And when you -- and when you say "designers," that doesn't mean that it can't be modified at some point, right, by other people? A. The names of it? Q. The way the site appears, the names of fields and the way of the Web pages. A. Sure, it could be changed, again, by the designer or -- Q. When you say "designer," it doesn't have to be the same designer as the initial designer, it could be other people later on, right? A. Yes. MR. DRATEL: Now, if we could go to Government's Exhibit 201A, please. Go further up. Go to the metadata. *(Pause)* Q. So this is the one where your phone -- you are taking this with your BlackBerry, correct? A. That is correct, yes. Page 1046 Q. And your BlackBerry registers East Coast time, right? A. It does, yes. Q. Even though you're standing in the Glen Park library in California, your electronic device in your hand has East Coast time, right? A. It does, yes. Q. So it doesn't reflect where you are? A. Time zone, no. Q. Right? A. Time zone, no. Physically I'm still in San Francisco. Q. Right. So the time zone reflected in your electronic device in the metadata is not accurate as to where you actually are? A. That's correct. Q. So metadata is just digital data, right? A. It is. Q. Now, we talked just for a second -- you have training in network security, correct? A. I do. Q. And you were an informational technology -- information technology specialist, is that one of the positions you have held? A. Yes. Q. So could you explain what that involves in terms of training? Page 1047 A. Information technology specialist? Q. Yes. A. Yes. That is more on the side of maintenance and things to that nature of computer systems. Q. Keeping networks secure? A. Keeping networks secure. Q. Teaching best practices to people who work on networks? A. Just, again, managing computer systems for users and things like that. Q. Now, by the way, the photos that we've seen that you've put in evidence were not the only photos that you took of the laptop, correct? A. No. No. Q. I want to show you what's marked as Defendant's G, for identification. I will give you the original. A. OK. Q. And I ask you if you recognize that? A. I do. Q. Is that a photo that you took? A. It is, yes. Q. Is it a photo of the defendant's laptop that you took October 1, 2013, at the time -- at or near the time of his arrest, or shortly after his arrest? A. Yes, it is. Page 1048 MR. DRATEL: I move it into evidence, your Honor. THE COURT: Mr. Howard. MR. HOWARD: No objection. THE COURT: Received, defendant's Exhibit G. *(Defendant's Exhibit G received in evidence)* MR. DRATEL: Thank you, your Honor. So if we could publish it, please. Q. Now, this window shows one of the programs that was operating at the time of Mr. Ulbricht's arrest, correct? A. It does, yes. Q. And it is a program called BitTorrent? A. It's called TransMissions but it is a BitTorrent client, yes. Q. Right, it is a BitTorrent client. Could you explain what that means? A. It is a file sharing program that allows you to -- it allows you to upload and download files that you want to look at. It's based on seeds that are up on the network that you pull. You pull down the seed and you can populate your data with -- populate your folders with the data. Q. And it is very popular for music and movies and things like that, correct? A. It is, yes. Q. It is called a peer-to-peer network, is that one of the ways this is described? Page 1049 A. It runs on something like that, yes. Q. And it involves your computer connected to the Internet, right? A. Yes. Q. I'm trying to break this down rather than have a compound question. A. That's fine. Q. Your computer connected to the Internet with all other people who are on that same network, that BitTorrent network, who are connected to the Internet, right? A. Yes. Q. In other words -- and they can -- if they identify files on your computer that they want to share, they can take them from your computer, right? A. Not that easy but you have to give the Torrent to them to actually get files from your computer that you designate. It is not willy-nilly where you can go anywhere on your computer, but you designate spots that you can download from -- not put on but download from. Q. But, in other words, you share the files, essentially? A. Essentially you are sharing some of your files. Q. And so this says, it says: "Sending to 7 of 9 connected peers," right? A. Yes. Q. So that means that there are seven computers out there in the world that are actually connected to Mr. Ulbricht's computer right there? Page 1050 A. To -- Q. Through this network? A. To his specified location that he gave. Q. Right. But to his computer? A. Yeah, to his computer. Q. Do you see what's downloading there is the Colbert Report, right? A. Yes. Q. It is not complete at that point, right? A. It doesn't look to be. Q. It only looks like about 8-and-a-quarter megabytes of 197 megabytes, right? A. Yes. Q. So that takes some time, correct? A. Yeah. Depending on connection speeds and things like that, but yeah. Q. So you have to have an open port to the Internet on your computer to operate BitTorrent, correct? A. You do. The protocol is required that a port or a connection spot is open. Q. And the fact that he's downloading at that time, that that process is going on, means that the port was open at that time, right? Page 1051 A. It was connected. Q. And that you know from your training makes one vulnerable, correct, to have an open port like that -- it makes your computer vulnerable? A. That's how the Internet works. There is open ports on a lot of different surfaces. It is the nature of the Internet. Something has to get transferred back and forth. So, yes, a port was open on the machine to allow BitTorrent, that client, to work. Q. But that also means that those with sophisticated computer skills could exploit an open port as well, correct? A. Is it possible for that to happen? Yes. Q. In fact, you could be exploited by hackers, by viruses, right; all sorts of things can get into your computer through BitTorrent? Even BitTorrent downloading, you can have viruses and malware that come with those files, right? A. With the files you download? Q. Yes. A. Yes, they can contain programs that do things like that. Q. I'm sorry. Programs? A. There are programs that can be used maliciously, yes. Q. Maliciously, including to operate a computer remotely, right, that kind of malware can be -- A. They make that stuff but it's again ... Q. And knowing a port is open on a computer, for someone trying to exploit that computer makes it easier to get in, right, if you know that there is a port there that's available? Page 1052 A. That's incorrect. It is not easier. It gives you opportunities but it does not make it easier. It is the software guarding that port that is -- Q. But, I mean, it is easier than no port at all open, correct? A. Yes. Again, that's how the Internet works. You have these ports that are open. Q. And does the FBI allow you to run BitTorrent on your machine at work? THE COURT: Let's have a sidebar. *(Continued on next page)* Page 1053 *(At the sidebar)* THE COURT: I'm concerned that you're trying to make this witness into a general expert on BitTorrent. I have no problem -- obviously you are fully entitled to explore what acts this witness took with respect to the testimony he has given and explore his background in terms of whether he was qualified to do that. But you can't make him into a generalized expert on BitTorrent. This has gone far afield. MR. DRATEL: That is my last question on this subject. THE COURT: We are not going to this question. It is irrelevant with this witness. It's beyond the scope of his direct. All right? I mean -- MR. DRATEL: I don't think it is beyond the scope of his direct. THE COURT: Absolutely. Are you aware that the FBI allows BitTorrent? MR. DRATEL: It is for purposes of the security, in other words, the lack of security of BitTorrent. THE COURT: That is not relevant. Whether the FBI allows BitTorrent on their computers is not relevant to whether or not the particular computer here -- you've got to establish that it was running BitTorrent. If you want to explore whether or not, if you've got a good faith basis to believe -- a good faith basis to believe that the files were placed on this computer, Mr. Ulbricht's computer, through the use of the BitTorrent program, then go after that. But I am not going to let you go into the practices of the FBI. Page 1054 MR. DRATEL: It is the practice -- it is a fundamental question of security. This is a completely insecure system for someone who -- THE COURT: That is not this case. Thank you. Let's go back. *(Continued on next page)* Page 1055 *(In open court)* MR. DRATEL Q. You have been trained and certified in the Linux operating system, correct? A. Correct. Q. A number of courses and certifications -- A. Yes. Q. -- that you have taken with respect to Linux in particular? A. Oh, yes. Q. And you talked about the Tor chats that you created as a test, as an experiment, right? A. Yes. Q. And you saved them, right? A. Yes. Q. So could you describe the process by which you saved them? A. Sure. Turn on the -- inside Tor chat in Tor chat client there is an enabling button that allows you to log your chats and save my chats. Q. So, in other words, you had to affirmatively hit the enable button to save them? A. Yes. Q. So that was a decision -- conscious decision to save them on your part? A. Yes. Q. And Tor chats can easily be deleted from a computer, right? Page 1056 A. Sure. Q. You wouldn't even have to save them at all. Unless you hit the button, they wouldn't be saved? A. Yes. Q. And there are programs that can wipe away even any trace of what's happened on a computer previously, right? A. Yes. Q. And with respect to the chats that we saw, some of the ones -- and, again, Mr. Howard read them, you didn't read them, but some of them were snippets from chats, obviously, from a long series of chats, right? A. That's right. Q. And the snippets sometimes were different days and they were separated by a black line, right, some of them? A. Yes. Q. So those weren't all continuous; some of them were separated by time? A. Yes. Q. Now, that line that's on the top of each chat as it appears initially -- not in the way that it was done for purposes of reading them into evidence, but initially the line that says the log file is not signed and has no cogency of proof; do you recall that? A. I do, yes. Q. And that's automatically generated at the beginning of each chat, right? Page 1057 A. Yes. Q. And that means that there is no way to validate that these particular log files were generated on that computer, correct? MR. HOWARD: Objection. THE COURT: I will allow it. A. I'm sorry. Can you repeat that? Q. Sure. What that means is that there is no way to validate that those log files were in fact generated on that computer? A. Not generated but that's where they were saved. Q. Right. OK. So it doesn't -- OK, not generated. And those log files don't take up a lot of space, correct, about 15 kilobytes? A. No, they're small. They are text files. They are not big. I don't know the size of them. Q. And a kilobyte is about a thousandth of a megabyte, right, roughly? A. Somewhere about there. Q. 1024 bites to a megabyte? THE COURT: Hold on. I think that because your question and his answer were interspersed, I'm not actually sure if it is 1024, which you want it to be, or a thousand, or if you care. MR. DRATEL: I don't necessarily care. I was just trying to be precise. Page 1058 A. 1024 is what it is, but we will go with a thousand. Q. So those are files, because of the size of the files, the physical text files, they could be quickly transferred, correct? A. Yes. Q. Even over the Internet, correct? A. Yes. Q. And that is basically true for all the text files we saw, right, that they are small? A. They are small -- Q. Ones -- even some of those spreadsheets are relatively compact, right, in terms of size? A. Yes. It is not a huge file. Q. And you talked about the mastermind screen. A. Yes. Q. And the mastermind.php file? A. Yes. Q. And the mastermind screen is the one that you found by hitting the back button, right, from the screen that was on the laptop when you first received it? A. That's right. Q. And did you have an opportunity to examine any of the other php files that were in that var/www directory? A. Where? On the laptop? Q. What you had, the copy that you had. Page 1059 A. Yes. Q. And do you know whether a user logging into the Silk Road site, using the password and username for the Dread Pirate Roberts' account, would automatically be directed to that mastermind page? Would that be -- do you know whether that would be the first thing that would come up? MR. HOWARD: Objection. Beyond the scope. THE COURT: Hold on. Let me just read his question. *(Pause)* THE COURT: I will allow it. A. Can you repeat that? Q. Sure. Do you know whether a user logging on to the Silk Road site, using the Dread Pirate Roberts' username and password to get on to the Silk Road site, would automatically be directed to the mastermind page? A. I don't know. Q. I am going to show you what's marked as Defendant's J and ask you to look at just first what it is. Do you recognize that? A. Yes. The code looks familiar. Q. Is that from the php files? A. Yes. Q. From the image that you were given of the laptop, right? A. I don't know if from the laptop or the server. MR. HOWARD: Objection to foundation. Page 1060 THE COURT: Well, why don't you try to build a more concrete foundation. MR. DRATEL: Sure. Q. You've reviewed this document in the course of your investigation, correct? A. Yes. Q. That looks familiar to you? A. This looks familiar, yes. Q. And you don't know whether it is from the server or from the laptop, or could it be from both? A. It could be from both. Q. And it would be either from the Silk Road server or from the laptop image that you -- of Mr. Ulbricht's laptop that you reviewed, right? A. Yes. MR. HOWARD: Objection. Beyond the scope. THE COURT: Well, I don't know whether it is or not. I have to see where this is going. I will allow a few more questions. MR. DRATEL: OK. Thank you, your Honor. I would move it in evidence, your Honor. MR. HOWARD: Objection. THE COURT: Well, I think that I'm going to receive it subject to connection. Obviously, whether it is in the server or the laptop, if that becomes important, then you will need to determine which it came from. If that is an irrelevancy, then since it came from one or the other, there would be a sufficient foundation. So I would receive it. Page 1061 So it will be received subject to any later testimony which may require a different ruling. You may proceed. MR. DRATEL: Thank you, your Honor. THE COURT: Defense Exhibit J received. *(Defendant's Exhibit J received in evidence)* MR. DRATEL Q. So if you look at the lines that are marked on page 2, do you see that? A. Yes. Q. So from looking at those, is it possible now to answer the question as to whether a person logging on to the Silk Road site with the username and password of Dread Pirate Roberts would automatically be directed to the mastermind page? A. I don't know. Q. And, by the way, php -- I'm sorry, go ahead. A. Like you said, I could read the php script and I could tell. I don't know. Q. I'm sorry. You said you could read the php script? A. I don't know the context of the script, that is all. Q. Php is a script, essentially. We talked yesterday about operating systems, right, and so an operating system would be Ubuntu as part of a Linux-based operating system, right, kind of like Windows -- Page 1062 A. Yes. Q. -- or Mac; Yosemite I think is the current version. But php is what's called a scripting program, right? A. It is, yes. Q. And by that we mean sort of how you build a site, essentially, a website? A. Yes. Q. And is it somewhat similar to, in a Windows-based environment, say html? A. Html, similar but not the same. Q. Not exactly, but it is the same -- in other words, it is the way that website appears, its fields, that's the php part, right? A. Yes. THE COURT: All right. Let's take our mid-morning break now, ladies and gentlemen. And I want to remind you not to talk to anybody else about -- anybody about this case, including each other or anybody else. And we'll come back in just a few minutes. Thank you. THE CLERK: All rise as the jury leaves. THE COURT: And, Mr. Kiernan, you can step down and take a break. THE WITNESS: Thank you. Page 1063 *(Continued on next page)* Page 1064 *(Jury and witness not present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. I want to find out where you're going, Mr. Dratel, because what you can't do with this witness is -- I've allowed, in response to the government's objection about going beyond the scope, I have allowed you some room, but what you can't do is make him into a generalized computer expert for the defense. You are welcome, of course, if you have complied with the appropriate disclosure requirements, to call your own expert or to call a percipient witness. But the mastermind page came in through the back button series. It was a percipient witness set of testimony, as opposed to generalized how you would enter the username. The username was there, but the coding behind it was not the subject of this witness' testimony. MR. DRATEL: He testified about php. He testified about the website pages. This is from the laptop. We are going to establish that with him. And it is from the laptop, and he said he looked at php files. He should just -- THE COURT: You have to stay within the scope of the direct. So the direct is not just because he mentioned php, every php question you can think of that might be helpful to the defense, it is to go after what this witness testified about. The scope of his direct, as you know, determines the parameters of the cross. And so you are welcome to go anywhere with the cross. But his direct was actually quite narrow. It was here's what I got. Here are the files I extracted. Page 1065 MR. DRATEL: He put in the entire laptop. That is fair game now. THE COURT: It is not fair game now. MR. DRATEL: He can't just ignore it by not asking the witness. He examined the entire laptop. THE COURT: You can get him, through cross-examination, on any one of the files he testified about. Go after that. But you've got to tie it specifically to the file in the extraction process. The two things he did was extraction, and then this file came out of this directory, which had this folder in it. That's it. MR. DRATEL: No, but there is more. He puts in a whole document, essentially. If someone puts in a 30-page document and he only testifies about page 2, that doesn't put the other 29 off limits, I mean, on cross if they are part of the same document. THE COURT: Sometimes it does. It depends. And so just because he's got a laptop that he's authenticated doesn't mean he can be your laptop expert. Now, to be clear -- to be clear, if you want to call somebody to talk about php, the laptop more generally, BitTorrent more generally, that's the defense case, but this witness is not your generalized computer witness. Page 1066 MR. DRATEL: He is not an expert. I'm not making him an expert. He testified, number one, about the mastermind page yesterday. And he testified about the mastermind file on the laptop in the php directories. That makes him fair game for -- THE COURT: That does not make him -- MR. DRATEL: I can't be limited to just -- then I have no cross if all I can do is just talk about what they've talked about. Cross is much further than that. THE COURT: No. What you can do is talk about whether or not in fact the file that he looked at on the computer was not a php file, it was really something else, whether or not his definition of php was inaccurate. You go dig into anything that he testified about. Whether when he pushed the back button it somehow corrupted the file, changed the file, whether or not he's reading the directory and the file paths correctly. Let me hear from the government, but I am concerned that this is going to go on far longer than it needs to go because you are trying to make him into a different witness. MR. DRATEL: He answered the question, no, he can. I just want to now establish that it's in the laptop -- THE COURT: I know, but we are going to be coming back to the same problem again and again. MR. DRATEL: I don't think so. THE COURT: Let me hear from the government about your view. Page 1067 MR. HOWARD: Your Honor, I think the Court has it absolutely right. That is why we are objecting as to the scope of the cross-examination. Mr. Kiernan simply testified to the extraction of files from certain locations on the laptop. He did not testify about how the scripts worked, how they operated, or anything of that sort. And it is apparent that Mr. Dratel is trying to go further than the scope of Mr. Kiernan's direct, which was just simply about locating and extracting files from the digital evidence. MR. DRATEL: He didn't. He went further. He talked yesterday about the purpose of php and -- THE COURT: You can go after -- if his definition of php was wrong and you want to undermine his credibility in terms of his expertise by asking him whether the definition is correct, that is fair game. Absolutely. No doubt about it. That is absolutely impeachment material. If, however, by merely mentioning the word "php" you are now going to find other kinds of php material which would be helpful to the defense, he's not your witness. You need a different witness, either that the government may later call where you can use it or where you yourself call. But we are going to stay within the scope of the direct or this is going to become a detour and frolic. You need to call a witness to make the points you want to make if it is beyond the scope. I am not going to allow it to be very far afield. Page 1068 You know what's within the scope of the direct. MR. DRATEL: I disagree, your Honor. OK. So -- THE COURT: Well, stay within the scope of the direct. And if you are able to stay within the scope of the direct, then it will be clear to us both that you understand what I'm saying. If you continue to go outside the scope of the direct, I will sustain the government's objections. The government should continue to object if it believes it is outside the scope of the direct. I wanted to see where this was going. It's going outside the scope. I want to say, for the fifth time I think now, I am by no means suggesting that the defense can't put on evidence it believes is appropriate as to these very topics, as to these very documents, as to these very files, but it's for the defense to do if it's not for the purposes of directly going into the scope of the direct of this witness. Let's take our own break and then we'll come back. THE CLERK: All rise. *(Recess)* THE COURT: All right. Let's bring out the jury. *(Continued on next page)* Page 1069 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right, ladies and gentlemen. When you get to your seats, please be seated. Mr. Dratel, you may continue. MR. DRATEL: Thank you, your Honor. MR. DRATEL Q. So let's go back to your creating those Tor chats, where you create the Tor chat that showed that myself was you, right, on the Tor chat? Do you know what I'm talking about? You testified about that on direct. A. Yes. Q. So you set up your computer with Ubuntu, right? A. Yes. Q. And Linux, right, which Ubuntu runs on? A. They run the same, yes. Q. Do you know how Mr. Ulbricht's laptop was set up, in other words, the methodology of how the Tor chat program was installed? A. No. Q. And, in fact, Linux is highly customizable, right, meaning -- withdrawn. A user who installs Linux has a lot of options, correct? A. Yes. Page 1070 Q. And can make a custom version for themselves based on a lot of variables? MR. HOWARD: Objection to form. THE COURT: Sustained. Q. A user of Linux has a lot of options of features to put on their system and how they get on the system, correct? MR. HOWARD: The same objection, your Honor. THE COURT: I will allow this one question. A. Yes. You can customize your install. Q. And there is something called a kernel, correct, k-e-r-n-e-l? A. That's correct. Q. That is an essential part of the Linux operating system? A. Yes. Q. And the composition of the kernel is also a critical factor in terms of its customizing, correct? MR. HOWARD: Objection. Beyond the scope. THE COURT: Sustained. MR. DRATEL: Your Honor, he did an experiment -- THE COURT: Sustained. MR. DRATEL: He -- THE COURT: Sustained. Q. In your experiment, do you know -- you used a bundle of Linux -- or Tor chat, right? Withdrawn. Linux is an open-source program, correct? Page 1071 A. Yes. Q. It is available for free on the Internet, right? A. Yes. Q. And both Linux and Ubuntu are perhaps not as popular as Windows but they're popular, right? MR. HOWARD: Objection. THE COURT: Sustained. Q. The Linux kernel is essentially the glue that holds the software and the hardware together, right, for Linux? MR. HOWARD: The same objection. THE COURT: Sustained. Stay within the scope of the direct. MR. DRATEL: Your Honor, this is within the scope. THE COURT: Sustained. MR. DRATEL: Can I have another sidebar, please? THE COURT: No. Move on to your next line of questioning. MR. DRATEL Q. So you don't know if the kernel that Mr. Ulbricht had -- THE COURT: Leave "the kernel." Q. You used a Tor chat -- withdrawn. You downloaded Tor chat through something called the Debian package, correct, D-e-b-i-a-n? A. And AppGet, yes. Q. I missed that last one. Page 1072 A. The install command is AppGet. Q. Oh, OK. But that's a preconfigured package that has all of the Tor chat elements in it and you just put it right in on the machine, right? A. Yes. Q. OK. But it can also be done in sort of a DIY, do it yourself, where a user can take code and put it in separately. They don't even have to buy the package as a bundle. They can do it on their own with the various components, correct? MR. HOWARD: Objection. Beyond the scope and foundation. THE COURT: Sustained. MR. DRATEL: Your Honor, it's not beyond the scope. THE COURT: Sustained. MR. DRATEL: May I be heard? THE COURT: No. You can be heard on this at the next break. Go on to your next line of questioning. MR. DRATEL Q. So in the experiment that you described yesterday, you don't know that the way that you installed Tor chat on your computer and the version of Tor chat was the same as that on Mr. Ulbricht's computer, right? A. That's right. *(Continued on next page)* Page 1073 MR. DRATEL Q. So, the experiment that you ran -- withdrawn. The purpose of a scientific experiment is to try to replicate as much as possible - and frankly completely - all of the elements of one set of events so that you can match them to a second set, right? MR. HOWARD: Objection. THE COURT: Sustained. Q. If an experiment doesn't have the same elements in it to get to a result, it's not a valid experiment, is it? THE COURT: Why don't you ask it in terms of the experiment he did. MR. DRATEL: Yes. That's what I'm trying to do. THE COURT: No. You're saying "if an experiment." Not any generalized experiment. Talk to him about the experiment he did. MR. DRATEL: That's what I was doing before. That's exactly what I was doing before. THE COURT: Try again. Q. In your experiment, Tor chat is an essential element of your experiment, correct? A. Not essential, but it's -- the download was important to get, yes. Q. Could you have done it without Tor chat? A. I needed Tor chat to run -- it wasn't an experiment. I wanted to make sure that the log files, what directory they would start in and if logging was enabled by default. Nothing more complicated than that. Page 1074 Q. You were trying to create a Tor chat so you could see if "myself" was you on the Tor chat, correct? A. That was part of it; yes. Q. So you needed Tor chat for that, right? A. Yes. Q. There are different versions of Tor chat, correct? A. I don't know how many versions there are of Tor chat. Q. And you have no idea what version Mr. Ulbricht downloaded? A. I don't know, no. Q. And you don't know whether he downloaded it through a Debian package or whether he did it himself by taking components off the Internet and making the Tor chat program accessible on his computer, right? A. That's right. Q. So, when you do an experiment like that, the experiment that you did, if you don't know what went into it, how can you verify what came out of it? A. "Myself" is the user of the computer. Q. On the one that you did, correct? A. On the one that I did. Q. And you didn't do it on the one that Mr. Ulbricht's laptop had, right? Page 1075 A. I didn't do it with the version that he had, or I don't know what version he had on his. Q. Right. A. Right; that correct. Q. Now, Linux -- you talked about creation dates, modification dates, right? A. Yes. Q. Linux has timestamps for three times of files, right, three types of timestamps, correct? A. Yes. Q. One is an "M" time, right? A. Correct. Q. C time, right? A. Yes. Q. And "A" time, right. "M" time is for the modification time of a file, right? A. Yes. Q. When the content of the file was last modified, right? A. That's right. Q. "A" time is for access, right? A. Yes. Q. When the last time it was opened or reviewed, right? A. Accessed. Q. And "C" time is not creation time, correct, Linux doesn't recognize creation time the same way Windows operating systems do? Page 1076 A. It does in the ExT4 version of the file system. Q. And when did that come out? A. 2010 I believe. Q. So do you know what was running on Mr. Ulbricht's? A. ExT4; yes. Q. So you're saying that recognized "C" time? A. Oh, yes. Q. That was the creation time? A. Yes. Q. It's not the last time that metadata associated with the file was changed, that's not what "C" time is in a Linux system? A. No. Q. Now, you're familiar with Linux, right, you again have certifications in programs, right? A. Yes. Q. And there's an option on Linux called Touch by which you can change -- you can manipulate these metadata times, right? A. There is. Touch files. Q. So it doesn't have to -- so when something says "May 8, 2012," that could have been changed somehow by the Touch system, right? A. You can always change file systems, I mean, times, I mean. Q. So metadata just tells you a number, right? A date, a time. It doesn't verify that that's the date something actually happened, correct? Right? Page 1077 A. It verifies the time that the files were there and created and modified, but those are -- again, they're editable. Sure. Q. Metadata is editable just like content, right? A. Correct. Q. In the Tor chat files are ordinary text files that can be edited even after they're created, right? A. Yes. Q. So you talked about MD5 Hash values, right? A. Yes. Q. And the files that you took off the computer, you said you had copied a couple of files initially, correct? A. Yes. Q. Before you gave it to Mr. Beeson, right? A. Yes. Q. And you didn't do any hash values for those, right? A. No. I don't have any fields. Q. So just to make clear about the hash values, the hash values you're comparing is not to the laptop itself, correct, it's from the image that Mr. Beeson created, right? A. It's the hash value from his image. Q. Right. So it's not from the laptop. It's from the image? A. The image is from the laptop, right, it's from the image that he created. Page 1078 Q. The hash value is from his image, right? A. Correct. Q. In other words, you're comparing what you copied on your computer to the image you got from him and they matched, right? A. Yes, yes. Q. Not from the laptop itself? A. That's where the image was created from. Q. But it's not a hash value from the laptop itself? A. No, not from the laptop itself. That's in a different -- that was on the hard drive that came back that was a brick that we couldn't actually look at. Q. Now, by the way, as far as encryption goes, on Ubuntu, this -- the encryption that was running is an option on Ubuntu, right? A. Yes. Q. So anyone who downloads Ubunto can use that encryption option? A. I'm sorry. Say that again. Q. Anyone who downloads Ubuntu operating system could avail themselves of that encryption option that was on this machine? A. Sure. Q. And you don't know whether closing the laptop would have turned it on, right, made the files unavailable, right? You don't know because you didn't close it, right? A. We closed it later on, and we weren't able to get to any of the file systems. Page 1079 Q. And was that -- Mr. Beeson was involved in that? A. Yes. Q. So that was really his work, not yours? A. Well, correct. Q. Right, so that's what you heard? MR. DRATEL: I move to strike that, your Honor, as hearsay. THE COURT: That answer is struck. Q. Now, with respect to hash values, there can be problems with MD5 Hash values, correct? A. Yes. There is a one -- there is an older problem with MD5s that it was able to recreate -- it's one of those long shot-type deals that happened -- that was you're able to create a file and make another MD5 with the same number, but with two different files. It's a known problem. Q. And in fact, there's a better system called SHA1, right? A. Yes. Q. And, in fact, if we look at Government Exhibit 205A -- or 201, whichever. Look at 205A or 201. I saw 205A this morning, so that would be easiest. In fact, there's a section for SHA, right? A. Yes. Q. But you didn't do that one. You just did the MD5? A. Yes. We used the MD5. Standard. Page 1080 Q. Even though SHA1 is more reliable? A. They're both very reliable. Q. SHA1 is more reliable, correct? A. Yes. Q. Now, let me talk about some of the exhibits that were admitted through you yesterday. If we can go to 240A, please, if we can scroll up a little bit. This is a journal entry that you put in, right? A. Yes. Q. And it's labeled "2010," correct? A. Yes. Q. So if we can go up to the part that the government did not read yesterday. And I'll read it: "Up to this point, I had been working on selling my rental house in Pennsylvania. It had helped me stay afloat with around $600/mo in Cashflow, but finally the sale came to a close. I made about $30k off the whole thing, and could finally start trading again. I had been practice trading for a while and saw an opportunity to take my $30k And make it as a day trader. $30k isn’t alot to start with, and I didn’t Get off to a very good start with my trading. Around that time, another opportunity came into my life. Donny Had gotten a job offer from his brother in Dallas to be the VP of sales at Their milling company. He didn’t know what to do about Good Wagon which he had grown somewhat to the point that he was making around $6k per month in sales. He made me an offer. 50% of the company and a $3k per month salary to take over and run the business going forward. I took the deal and we went to work on it. By the end of the year, we had our best month on record with about $10k in sales in December." Page 1081 This is 2010, correct -- go back to the top just for a second -- right? A. Yes. Q. So let's go further down, the next highlighted portion, again not read by the government: "I went through a lot over the year in my personal relationships as Well. I had mostly shut myself off from people because I felt ashamed of where my life was. I had left my promising career as a scientist to be an investment adviser and entrepreneur and came up empty handed. More and more my emotions and thoughts were ruling my life and my word was losing power. At some point I finally broke down and realized my love for people again, and started reaching out. Throughout the year I slowly re-cultivated my relationship with my word and started honoring it again." Let's go to 240B. This is "2011" it says, right? A. It does. Q. So let's go to the highlighted portion, again not read by the government yesterday: "At some point, a hacker found some major flaws in my code. I sent it to him for review and he came back with basically “this is amateur shit”. I knew it too. I tried to work with him but I think he lost interest and since I wasn't charging commission, I only had my shroom money to pay him with. Thankfully that quadrupled from bitcoin increasing in price, little did I know I could've cashed out at 8x higher for a total of 32x! That would have gotten me off to a hell of a start. As it was, I cashed out all the way up and all the way down. I called the peak, my timing was just off." Page 1082 If we go down further -- no, I think that's it for that. No. Okay. I'm sorry. I just want to ask you a couple of questions while we're talking. The bitcoin came up. You talked yesterday about cold storage bitcoin, cold storage? A. I did. Q. And the bitcoins don't become physical at that point, right? A. Never physical. Q. They're always digital, right? A. That's right. Q. They're always electronic, they're always in a file, right? A. Yes. Q. Or a wallet, let's say, right? A. Yes. Q. And transactions cashing out of them are going to be registered on the public block chain, right? A. That's right. Q. Let's go up. This is another paragraph or another section not read by the government: "It looked like I didn't have to process the transactions manually anymore, but then the rot started. Some where the site accounting wasn't balancing and I was losing hundreds of dollars every few hours. I started to panic. I tried everything I could think of, but couldn't stop the bleeding. It was getting to the thousands of dollars and I was losing sleep and getting slow. I didn't give up though. I rewrote the entire transaction processor from scratch and some how it worked. To this day I don't know what the problem was." Page 1083 Now, I want to look at 232A which is a Tor chat. This is March 14, 2012? A. Yes. Q. And it's between "da" and it says "myself," right? A. Yes. Q. And it says "We might want to construct a new identity for you though," right. A. That's what it says; yes. Q. And if you go down further and the person asks "IRL or online." IRL means in real life? A. Oh. You're asking? Q. IRL? A. Yes. I'm sorry. Q. "Or online," right? DA is asking "myself," I guess that's Dread Pirate Roberts, right? Page 1084 MR. HOWARD: Objection; foundation. THE COURT: Overruled. Why don't you just reask the question attached to this. MR. DRATEL: Sure. Q. IRL to your knowledge is in real life? A. In real life; yes. Q. And in this chat, DA asks Dread Pirate Roberts "IRL or online," right? A. Yes. Q. Distinguishing the two things, right? A. Yes. Q. Real life from online? THE COURT: Hold on. He can't testify as to what was meant by these people, but he can say what the word "IRL" means to him. Q. And Dread Pirate Roberts answers no, just online. My concern is that LE, and that's law enforcement, right? THE COURT: Hold on. He's not going to interpret what the writers meant. He didn't do it yesterday. He's not going to do it today. You can put somebody else on the stand to do that. Q. "My concern is that LE will see that DA is a player at Silk Road by your forum presence and then track down who you bought from, and sold to under that name and then find you irl." Now, that application for the Island of Dominica that you looked at yesterday, right -- Page 1085 A. Yes. Q. -- all of the personal identifying information with respect to Mr. Ulbricht that was in there - name, address, social security - all the things in there was all accurate, wasn't it? MR. HOWARD: Objection. THE COURT: Sustained. Q. Do you know of any of it that was inaccurate? MR. HOWARD: Objection. THE COURT: Sustained. Q. Did you check as to the accuracy of any of that information? THE COURT: I'll allow that. A. Personally, no. Q. And in that document, he provides references, right, persons, correct? A. Correct. MR. DRATEL: Nothing further. THE COURT: Thank you. Any redirect? MR. HOWARD: Thirty seconds if you don't mind. It will be very brief, your Honor. THE COURT: All right. Redirect examination. REDIRECT EXAMINATION MR. HOWARD Page 1086 Q. On cross-examination, you testified about BitTorrent, correct, BitTorrent? A. I did. Q. And BitTorrent was on the defendant's computer, correct? A. It was, yes. Q. And it's basically a file-sharing program? A. Yes. Q. You can -- MR. DRATEL: Objection. THE COURT: Sustained. Let's put it this way: You had better state very carefully with only the limited amount that was opened by the defendant. Don't go beyond that. Q. Did you look at the settings of the BitTorrent program on the defendant's computer? A. Yes. Q. Did you see where -- what the settings indicated about where files downloaded to the defendant's computer would go? A. Yes. Q. And what folder did that indicate the files would go? A. The home/frosty/downloads folder. Q. Did you look at the contents of that folder? A. Yes. Q. And what was contained within that folder? A. Movies, books, things to that nature. Page 1087 Q. Were any of the files that were admitted as exhibits during your direct examination found in that folder? A. No. Q. You testified about the Tor chats on cross-examination, correct? A. I did. Q. And you've logged your own Tor chats, is that right? A. I have. Q. And have the logs of those Tor chats been true and accurate transcriptions of the Tor chats that you have had? A. Yes. Q. And you found the Tor chats we put in on direct examination, you found them on the defendant's computer, correct? A. I did. MR. DRATEL: Objection. THE COURT: Overruled. You may proceed. A. Yes. Q. You testified on direct that you found encryption -- an encryption process was active on the computer, correct? A. Correct, yes. Q. If the defendant had been able to close his computer before he was arrested, would you have been able to access the Tor chat files? Page 1088 MR. DRATEL: Objection; objection. THE COURT: I will allow it. A. No. MR. HOWARD: Let me check with cocounsel and see if there's anything else, but I think we're done. No further questions. THE COURT: Mr. Dratel. RECROSS EXAMINATION MR. DRATEL Q. To be clear about the last point, you didn't close the laptop, correct? A. Correct. Q. So you don't have any personal knowledge as to what would have happened had that laptop been closed, right? A. I know when I got it back -- Q. No. A. Personal, no. MR. HOWARD: No further questions. THE COURT: He may still be going. MR. HOWARD: Pardon me. Q. Now, you testified about BitTorrent on redirect about files, about download destination, right? A. Yes. Q. But you can't sit here now and testify that you know all of the activity that went on through that open port on that computer, either that day or some other day when he was downloading something else? Page 1089 A. Not from the whole time period. Q. Right. A. But that's a BitTorrent -- Q. But that's a BitTorrent, but the port is open and it gives access to the computer, correct? A. It gives access to the BitTorrent client. Q. Right. But people who -- and that means those seven users out there who have it, right, who are connected? A. That's right. Q. And as we said before, it could contain all sorts -- that anything you download, can contain all sorts of malware, right, malicious -- A. Possible. Q. -- malicious software that can be used against the person who is operating the computer, right? MR. HOWARD: Objection. THE COURT: Sustained. MR. DRATEL: I have nothing further. THE COURT: Thank you. Anything further, Mr. Howard, like one question? MR. HOWARD: Yes. It is one question -- two questions, but start with one. REDIRECT EXAMINATION Page 1090 MR. HOWARD Q. Mr. Kiernan, did you review the contents of the defendant's computer for malware? A. Yes. Q. Did you find any -- THE COURT: I stopped Mr. Dratel on the malware. MR. HOWARD: I'm sorry. Withdrawn. No further questions. THE COURT: Thank you. You may step down. THE WITNESS: Thank you. *(Witness excused)* THE COURT: Would the government like to call its next witness, please. MR. HOWARD: The government is calling Special Agent Greg Fine. We're getting him right now. *(Witness sworn)* THE COURT: Mr. Fine, please be seated. And it will be important for you to pull up your chair and adjust the microphone so that you can speak clearly and directly into the mic. THE WITNESS: Thank you. THE COURT: Mr. Turner, you may proceed. MR. TURNER: Thank you. GREGORY FINE, Page 1091 called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. TURNER Q. Thank you. Good afternoon, Special Agent fine. A. Good afternoon. Q. Where do you work? A. For the Federal Bureau of Investigation. Q. What is your position there? A. I'm a special agent. Q. And what office of the FBI are you in? A. The San Francisco division. Q. Were you one of the agents involved in the search of Ross Ulbricht's residence following his arrest on October 1, 2013? A. I was. Q. And was that search pursuant to a search warrant? A. Yes. Q. What was the address of the residence? A. 235 Monterey Boulevard in San Francisco, California. Q. And were you able to locate the defendant's bedroom in the residence? A. Yes. Q. And how were you able to do so? A. During the search, we found some of his personal effects. Q. Like? Page 1092 A. We found his Texas driver's license and his passport. Q. And did you find any computer devices in the bedroom? A. Yes. Q. What did you find? A. Found two thumb drives. Q. What are thumb drives? A. They're USB devices so essentially storage for -- storage for digital files. Q. And you plug them into a computer? A. Yes. MR. TURNER: May I approach. THE COURT: You may. Q. I'M showing you what's been marked as Government Exhibit 502. It's already been admitted into evidence. Do you recognize what I've shown you? A. I do. Q. How do you recognize it? A. These are the two USB drives that we found in Mr. Ulbricht's room. Q. Where did you find them? A. On the nightstand. Q. And what did you do with them after you found them? A. We seized them pursuant to the search warrant, we packaged them up and I transported them to the evidence room in San Francisco. Page 1093 MR. TURNER: No further questions, your Honor. THE COURT: Thank you. Mr. Dratel. MR. DRATEL: No questions, your Honor. THE COURT: Thank you. You may step down, sir. THE WITNESS: Thank you. *(Witness excused)* THE COURT: Would the government like to call its next witness, please. MR. HOWARD: The government would call Richard Bates. THE COURT: All right. *(Pause)* THE COURT: Mr. Bates. *(Witness sworn)* THE COURT: Mr. Bates, please be seated, sir. It will be important for you to pull yourself up so you can speak directly into the mic. Mr. Howard. MR. HOWARD: Thank you, your Honor. RICHARD CHAPMAN BATES, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. HOWARD Q. Good afternoon, Mr. Bates. Page 1094 A. Good afternoon. Q. How old are you? A. I am 31 years old. Q. And where do you currently live? A. I currently live in Austin, Texas. Q. And where do you work? A. I work for eBay. Q. And what do you do for a living? A. I am a software engineer. Q. Are you familiar with Ross Ulbricht? A. Yes, I am. Q. And how are you familiar with him? A. I went to college with him at the University of Texas at Dallas, and then I have reunited or rekindled our friendship when I moved to Austin in 2010. Q. When did you first meet the defendant? A. That would be sometime in the summer of 2002 when I was just now starting college, freshman year. Q. What did you study in college? A. I studied computer science. Q. And what did the defendant study in college? A. He studied physics. Q. Do you see Mr. Ulbricht sitting in the courtroom today? A. Yes, I do. Q. Could you please identify him by something he's wearing? Page 1095 A. It looks like he's got a gray sweater on and, what is that, a red and black-striped tie, I believe. MR. HOWARD: Will the record please reflect that the witness has identified the defendant. THE COURT: So reflected. Q. Now, Mr. Bates, I want to direct your attention to 2011. A. Okay. Q. Did the defendant share a secret with you? A. Yes, he did. Q. And what was the secret? A. He shared with me that he created and ran the Silk Road website. Q. And what was the Silk Road website? A. It was a Tor-based website where people could buy and sell drugs. Q. And why did the defendant share this secret with you? MR. DRATEL: Objection. THE COURT: Sustained. Q. Did you provide -- did the defendant tell you why he told you the secret? A. I issued him basically an ultimatum because he wanted programming assistance. That's why he told me about it. Q. Did you provide help? A. Yes, I did. Q. And for how long did you provide help? Page 1096 A. I provided help unknowingly in 2010; and then during 2011, I knew for a while and that went on into the summer of 2011. Q. So we'll circle back to discuss that more in detail later. Turning your attention to October 2013, did you learn at some point the defendant got arrested? A. Yes, I did. Q. After that, did you talk to any law enforcement agents? A. Yes. Q. To be clear, did law enforcement agents come to you or did you reach out to law enforcement agents? A. They came to me. Q. And where did this occur? A. This occurred just outside my apartment. Q. And can you describe what happened during that encounter? A. To put it succinctly, I lied to them. Q. What happened? A. They, you know, asked me what I knew about Ross. And I said, you know, I didn't know that he was working on the Silk Road when I knew that he was. Q. And why did you do that at the time? A. Because I was scared. Q. Now, are you testifying here today in part based on an agreement with the government? A. Yes, I am. Q. And what kind of agreement is that? Page 1097 A. It's a nonprosecution agreement. Q. And what is your understanding of what your obligations are under the agreement? A. My understanding is that my obligations are, you know, to meet with prosecutors, to tell them the truth, and to tell the truth to this Court here today. Q. Now, what is your understanding of what the government will do if you fulfill your part of the agreement? A. That they will not prosecute me for three specific things: The technical assistance that I gave Ross that he used to, you know, run the Silk Road; they will not prosecute me for the work I did with Ross where we tried to create a bitcoin exchange; and they will not prosecute me for drugs that I purchased for personal use. Q. Now, let's talk a little bit about your personal use of drugs. What kind of drugs have you used? A. I have used marijuana, MDMA, psychedelic mushrooms, Vicodin and one time I purchased antibiotics. Q. When did you first start using illegal drugs? A. It was soon after graduating in 2007. Q. And what were your sources for these illegal drugs? A. At what time? Q. After 2011. A. After 2011, I was buying drugs on the Silk Road primarily. Q. How did you learn about the Silk Road? Page 1098 A. I learned about the Silk Road when Ross told me about it. Q. And what was your username on Silk Road? A. My username was mêlée spelled M-E-L-E-E. Q. What kinds of narcotics did you purchase from Silk Road? A. I -- basically the list I had gone over before, that would be, you know, marijuana, MDMA, mushrooms, Vicodin and antibiotics. Q. Focusing for a second on mushrooms, when was the first time you used them? A. The first time I used them was in 2011. I tried a very small amount that Ross had given me. Q. Do you remember that incident when you -- when he gave you those mushrooms? A. Yes, I do. He had a large, black trash bag that was, you know, running kind of empty. It looked like it had been full at some point -- MR. DRATEL: Objection. THE COURT: Sustained. You can continue. THE WITNESS: Do I just continue? THE COURT: Just pick up. THE WITNESS: Okay. Give me one second. A. So, yeah, I got them from him. He told me they were kind of old, but I could have some if I wanted any, and he gave me a small Ziploc bag with them in it. Page 1099 Q. Did the defendant have any discussions with you about where he got those mushrooms from? A. He told me that he had grown them. Q. During 2011, how frequently were you using illegal drugs? A. During 2011, not that frequently. I'd say, you know, you know once every couple months. Q. Approximately when was the last time you used illegal drugs? A. That would be in the summer of 2013. Q. Now earlier you described that you first met the defendant in college, correct? A. That is correct. Q. When did you graduate from college? A. I graduated in 2007. Q. And where did you live immediately after graduating? A. I lived in the Dallas/Ft. Worth area. Q. Do you know where the defendant went after college? A. He went to Pennsylvania for graduate work. Q. Do you know where he went to graduate school? A. I believe it was Penn State. Q. Did you stay in touch with the defendant after he moved to Penn State? A. We were, you know, Facebook friends. We kind of stayed in touch that way. Q. And earlier, you testified that you reconnected with him when you moved to Austin? Page 1100 A. Yes, that's correct. Q. Can you describe what happened. A. I -- when I moved to Austin, I looked at my Facebook page and I said well, who do I know that lives in Austin and I saw that Ross lived there, and, you know, I remembered we had hung out a couple of times, we went on a spring break trip. And I said hey, man, I'm moving down to Austin and we should hang out. And then after I moved down, we, you know, that's what we did. We hung out. We went cliff-jumping a few weeks later. Q. And in late 2010, how frequently did you see the defendant? A. In late 2010, I'd say weekly. Q. Were you aware of what the defendant did for a living back then? A. At that time, I -- my understanding was that he had a book business called Good Wagon Books, and I also saw him editing some academic papers, and my understanding was he was being compensated for that, as well. Q. Was the defendant familiar with the fact that you were a computer programmer? A. Yes, he was. Q. During late 2010, did you have any discussions with the defendant regarding computer programming? A. I'm sorry. What was the year again? Q. Late 2010? Page 1101 A. Late 2010? Yes. Q. And generally what kinds of discussions were you having? A. In late 2010, he was asking me some PHP programming questions, a few questions about server administration. Q. Could you please flip in your binder to what's been marked for identification purposes to Government Exhibit 1000. A. Yes. Q. Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. This is a Google chat conversation between Ross and me. Q. And what is a Google chat conversation? A. It's, you know, a text-based communication, you can go through the website or your phone and talk to another person via text. MR. HOWARD: The government offers Government Exhibit 1000. THE COURT: Mr. Dratel. MR. DRATEL: I just need to look. The numbers have changed. So I just need to go back and find them. Vayner and hearsay, your Honor. THE COURT: Those objections are overruled. Government Exhibit 1000 is received. *(Government's Exhibit 1000 received in evidence)* MR. HOWARD: Ms. Rosen, can you please publish Government Exhibit 1000. Can you zoom in on the top of the message, please. Page 1102 Q. Mr. Bates, here it says at the top "Subject: Chat with baronsyntax@gmail.com." What is baronsyntax@gmail.com? A. That is my personal email address. Q. Down on the "to" line it says "To rossulbricht@gmail.com." What is rossulbricht@gmail.com? A. That's Ross' email address. Q. And what was the date of this chat communication? A. This was October 25, 2010. MR. HOWARD: Now, Mr. Evert, can you please scroll down to the body of the message, please and zoom in down to here, please. Q. There are references in this messaging to baronsyntax. What does that refer to? A. Those are the parts of the conversation that I wrote. Q. And how about the parts that are labeled as "me"? A. Those are the parts that Ross wrote. Q. "Me: howdy Baronsyntax: hey Me: what's the latest? Me: make it to work? Baronsyntax: yeah, it seems to be running just fine now." Emoticon. Page 1103 "Me: sweet Me: mind a programming queastion? Baronsyntax: No queastions please. but you can ask me a ques..on if you'd likfe." Emoticon. "Baronsyntax: I am the grammar facists Me: i can tell." Emoticon. "Me: ok Me: log() is included in Math::Trig in perl, but my admin won't include the module..." And then there's some more discussion. Can you describe what is happening in this conversation? A. Yes. He's having an issue with perl, and there's a library function that he wants to use but can't and is asking me if there's another way to use it. I'm providing assistance to him. Q. Is this the only time the defendant asked you for help with computer programming? A. No. Q. How frequently would he ask you for help in late 2010? A. In late 2010, it was very frequent. Q. How about early 2011, was he still asking you questions regarding programming? A. Yes. Q. During this time period, did you know what the defendant was working on? Page 1104 A. If we're talking about early 2011? Q. That's correct. A. Not -- I believe the time that I knew about it was late February/early March of 2011. Q. But before that -- A. No, I didn't. Q. -- did you have any discussion about what he was working on? A. Yes, I did. And I asked him, you know, basically what are you working on and he told me it was top secret. Q. Can you please flip now in your binder to what's been marked for identification purposes as Government Exhibit 1001. Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. It's another Google chat conversation between Ross and me. MR. HOWARD: The government offers Government Exhibit 1001. MR. DRATEL: The same as the previous objections. THE COURT: Those objection are overruled. GX 1001 is received. *(Government's Exhibit 1001 received in evidence)* MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 1001. Page 1105 Q. What is the date of this chat communication, Mr. Bates? A. This is February 28, 2011. Q. To be clear, are the names and the parts of the conversation labeled just like the last one we looked at? A. Yes. Q. Baronsyntax is you and "me" is the defendant, correct? A. That's correct. MR. HOWARD: "Baronsyntax: I'm officially forbidding you from mentioning your secret project to me again unless you are going to reveal it. Me: Can I ask you programming questions for "no particular reason". Baronsyntax: Yea." Q. So Mr. Bates, what was going on in this conversation? A. This was kind of the build-up to where I issued him an ultimatum not long after this where I told him that he needs to either tell me what he's doing or leave me out of it. I kind of became a little suspicious. I thought he might be trying to hack into some website or something, but the fact that he just said top secret worried me a little bit. Q. And after you gave the ultimatum, what happened? A. He was in my apartment and I told him tell me about it or leave me out of it, and he told me about it. And he said something along the lines of, you know, it's a -- I'm working on a website where people can buy drugs. Then he had his laptop at the time and he showed me the Silk Road homepage for the first time. Page 1106 Q. Did he use your Internet when he did this? A. No, he didn't. We were worried that it might somehow be traced back to me, so I told him one of my neighbors had an open Wi-Fi network. Q. And what do you mean by an open Wi-Fi network? A. I mean a Wi-Fi network that doesn't have password protection and it was, you know, one of my neighbor's Internet access. Q. And what did the defendant show you about the website? A. I remember seeing the homepage, I remember seeing the green camel for the first time and pictures of drugs. Q. What was your reaction when you first learned about this? MR. DRATEL: Objection. THE COURT: Overruled. A. So -- sorry, what was the question again? Q. What was your reaction when you first learned? A. I was shocked but I was also very intrigued because, I mean, I didn't know how this, you know, could be even possible. I think my immediate reaction was they're going to shut this thing down really, really soon, and that's when he first explained Tor to me and he told me it accepted payment in bitcoin. Ross had told me about bitcoin before, but I didn't really listen to it and now I was very much paying attention. Page 1107 Q. At the time you had this conversation, had you heard of Tor before? A. No. Q. And what did the defendant tell you about Tor? A. Basically that it's, you know, a network that anonymizes or tries to anonymize web traffic. MR. HOWARD: Your Honor, may I approach. THE COURT: You may. Q. Mr. Bates, I'm handing you what's been marked for identification purposes as Government Exhibit 1005. A. Yes. Q. Do you recognize what this is? A. Yes, I do. Q. And what is it? A. This is a recording of a voicemail that Ross left me on 2011. Q. Do you remember the date that this voicemail was left? A. I believe it was March 15, 2011. Q. And do you remember what time of day this was approximately? A. It was just after 6:00 p.m. central Time I believe. Q. Are you familiar with the defendant's voice? A. Yes, I am. Q. How do you know that this CD, this exhibit, this thing in front of you contains that recording? Page 1108 A. Yesterday we went over it and they had me listen to it to confirm that it was a voicemail, and I initialed and dated it right there. MR. HOWARD: The government offers Government Exhibit 1005. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 1005 received in evidence)* MR. HOWARD: May I approach, your Honor. THE COURT: You may. MR. HOWARD: Mr. Evert, can you please play the recording. *(Audio recording played)* *(Continued on next page)* Page 1109 MR. HOWARD: I'm sorry. Would you please play the recorder. *(Audio played)* THE WITNESS: Something went wrong. *(Audio replayed)* MR. HOWARD Q. What happened after this voicemail was left for you? A. Not long after that we communicated on Google Chat about a problem he was having with the Silk Road being down. Q. Would you please flip in your binder to what's been marked for identification purposes as Government Exhibit 1006. *(Pause)* Do you recognize what this is? A. Yes, I do. Q. And what is it? A. This is another Google Chat conversation between Ross and me that happened shortly after that voicemail was recorded. MR. HOWARD: The government offers Government Exhibit 1006. MR. DRATEL: The same objections. THE COURT: Those objections are overruled. GX1006 is received. *(Government's Exhibit 1006 received in evidence)* MR. HOWARD Q. Now, Mr. Bates, what was the date and time of this conversation? Page 1110 A. This is March 15, 2011, and if my time conversion is correct, this is 6:36 p.m. Central Time. Q. When you say "conversion," what are you referring to? A. It's listed on the paper as being Pacific Daylight Time, and I'm converting it to Central Time, which is where Ross and I were both located, in that time zone at the time. Q. And this is shortly after that voicemail we just played, correct? A. That is correct. Q. And are the parts of the conversation labeled just like the others we reviewed earlier? A. Yes, they are. Q. You are "baronsyntax" and the defendant is labeled as "me." A. That is correct. Q. "Baronsyntax: What's the problem? "Baronsyntax: You happened to call when I was in the bathroom "Me: My site is down and I don't know why. Too much traffic I think. I get an error about too many open connectons. Might be my amature coding left open connections everywhere, don't know "Baronsyntax: What kind of connections? "Me: Doesn't say. Maybe mysql "Baronsyntax: ok, so you've got some requests that leaves a mysql transaction open - is that what you're thinking? Page 1111 "Baronsyntax: Are you looking at apache logs or what "Baronsyntax: I don't have any frame of reference here "Baronsyntax: Would it be better if I called? "Me: Yea, if you can I don't want to be a nusance" So what happened during this part of the -- during this conversation, Mr. Bates? A. During this conversation he tells me that the Silk Road is down and he's speculating as to why that might be. And then I'm trying to help him figure it out. I'm basically trying to troubleshoot. Q. And what was your understanding of what the defendant was referring to when he said "my site is down"? A. That was the Silk Road. Frequently, when we were talking in Google Chat, we would refer to it as "the" site or "my" site by the defendant. Q. Is there a reason you did it that way? A. Because we knew that, you know, this is something that if -- I guess if someone was reading the conversation, since this is over -- this is not encrypted protocol, that we didn't want them to know that we were talking about Silk Road. Q. What do you mean by an encrypted protocol? A. An encrypted protocol would be, you know, software that has some precautions in it that are designed to prevent anyone except the intended recipient from reading the message. Page 1112 Q. Now, if you could please flip to what's been marked in there for identification -- sorry, marked in your binder for identification purposes as Government Exhibit 1007. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. This is another Google Chat conversation between Ross and me that happened I think a few hours after the last one that we looked at. MR. HOWARD: The government offers Government Exhibit 1007. MR. DRATEL: The same objections, your Honor. THE COURT: Those objections are overruled. GX1007 is received. MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 1007 and zoom in on the message. Q. Mr. Bates, you testified this happened the same night following the previous conversation, correct? A. That's correct. Q. So I'm not going to even try to read the first four lines labeled "baronsyntax." Could you just describe what's going on overall here? A. You know, I have to -- this was a while ago, but I believe what's happening here is I'm giving him commands to run on his server terminal. I know tail dash F is a way of looking at the output of a file realtime, and that's used for log files so that you can see them as they're being updated. Lsof is a, you know, either a UNIX or Linux program that lists the open files on a system. And here I'm telling him, you know, tell me what files are open and search for php -- that's what that "grep php" is. In essence, I'm trying to help him figure out why the site is down. Page 1113 Q. By "the site," you mean Silk Road? A. Yes. Q. The last two lines of this chat go: "Baronsyntax: My neighbor has an open Wi-Fi network "Me: Sounds good." Emoticon. What were you discussing here? A. I believe that we were talking about either him coming over to my place or me going over to his place. It sounds like if I say my neighbor has an open Wi-Fi network, we were at least entertaining him coming over to my place. Q. Why were you telling the defendant that you had an open Wi-Fi network? A. Well, my neighbor has the open Wi-Fi network. This is, again, related to, you know, it not being traceable back to, you know, any of us. It would be -- if they did trace back the connection, it would go back to my neighbor and not either of us. Q. You had your own Internet connection at this time, correct? Page 1114 A. That is correct. Q. Now, Mr. Bates, would you please flip in your binder to what's been marked for identification purposes as Government Exhibit 1008. Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. This is another Google Chat conversation that happened later in the evening after the one that we just looked at. MR. HOWARD: The government offers Government Exhibit 1008. MR. DRATEL: The same objections, your Honor. THE COURT: All right. Those objections are overruled. Government Exhibit 1008 is received. *(Government's Exhibit 1008 received in evidence)* THE COURT: And in just a few minutes, Mr. Howard, we will break for lunch but we've got a few minutes. MR. HOWARD: Thank you. MR. HOWARD Q. Now, Mr. Bates, are your parts of the conversation and the defendant's parts marked in the same way as all the other chats we have looked at today? A. Yes, they are. Q. "Baronsyntax: I'm just now reading about the tor network "Me: yea, site's down again Page 1115 "Me: what are you reading? "Baronsyntax: just the wikipedia page. Apparently tor does a lot of encryption/decryption. Could be an expensive operation "Me: im so stressed! I gotta get this site up tonight. It's so weird because the site is accessable through tor2web, but not by directly accessing the .onion url "Baronsyntax: I'm not sure how that stuff works "Me: i wish i did." So, Mr. Bates, what's going on in this part of the conversation? A. I'm, you know, talking about the first time I read documentation about Tor, and Ross is reiterating that, you know, he's stressed because the Silk Road is still down in some fashion and that he can't access the onion URL. Q. And what is the onion URL? A. Ah, in a dot-onion URL, you know, if you go to like Google.com, that's -- in a normal Web browser, that's the website address for Google. In Tor you would have to go to something dot-onion in the Tor browser to get to the site. Q. Now, could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 1002. Do you recognize what this is? A. Yes, I do. Q. And what is it? Page 1116 A. This is another Google Chat conversation between Ross and me that happened a few days after the last one we looked at. MR. HOWARD: The government offers Government Exhibit 1002. MR. DRATEL: The same objections, your Honor. THE COURT: Those objections are overruled. Government Exhibit 1002 is received. *(Government's Exhibit 1002 received in evidence)* MR. HOWARD Q. Now, what is the date of this online chat, Mr. Bates? A. This is March 17, 2011. Q. A couple days after the voicemail and the previous chats we have reviewed? A. That's correct. Q. And are the parts of the conversation labeled just like all the other ones we reviewed? A. That's also correct. Q. "baronsyntax: You still hiring for your book business? "Me: yea, the team is getting full, but there are still some spots, have someone in mind? "Baronsyntax: possibly, what kind of work is it? "Me: weekend job, door-to-door, pays $12/hr on average "Baronsyntax: weekends only? "Me: yep. Sat and sun "Baronsyntax: yeah, he's probably going to want more hours than that. Thanks for humoring me though :-) Page 1117 "Me: sure." Let's take a pause. What was going on in this part of the conversation, Mr. Bates? A. This was a while ago but I think we're -- yeah, we're talking about a friend of mine who was looking for work and possibly Ross hiring him at the book business that he ran. Q. And at the time -- at this time, did you understand him to be involved in the book business? A. Yes. Q. And what was the name of that business? A. I believe it was Good Wagon Books. Q. This was in addition to Silk Road? A. At this time, yes, it was in addition to. Q. Let's continue down the chat: "me: my site had a 40 minute spot on a national radio program "me: friggin crazy, you gotta keep my secret buddy "baronsyntax: I haven't told anyone and I don't intend to "me: i know i can trust you "baronsyntax: I don't even know the onion url. I might tell people about the site though - if that's ok? "baronsyntax: I won't even mention I know someone who runs it Page 1118 "me: mmm....ok, gotta have a good story for how you found it in case they ask." THE COURT: Now, Mr. Howard, it may make sense to -- do you want to have the witness answer a question on that piece because we are going to have to break for lunch? MR. HOWARD: I think it would make sense for us to just recap that to start the next. It ties into the subsequent portion. So maybe you should just break here. THE COURT: All right. We'll break. Ladies and gentlemen, we are going to break for lunch. I want to remind you not to talk to each other or anybody else about this case or anything having to do with this case. And we'll pick up again at 2 o'clock. Thank you very much. THE CLERK: All rise as the jury leaves. THE COURT: (To the witness) You can step out as well. Thank you. *(Continued on next page)* Page 1119 *(Jury and witness not present)* THE COURT: All right, ladies and gentlemen. Let's all be seated. I've got a couple of things. Let me just talk about the last series of exhibits, which were Government Exhibits 1000, 1001, 1006, 1002. It is the series relating to the chats between this witness, Mr. Bates, and Mr. Ulbricht. I've overruled defense objections and I just want to state why. If there were other government exhibits in that series, I mean to include them in this. In terms of the Vayner objection, this witness has sufficiently authenticated these chats. And in terms of hearsay, they're either -- they are of two types of content. Either it is not for the truth, or to the extent there are pieces for the truth, they are admissions by Mr. Ulbricht. But, for instance, whether or not, in 1006, Bates went to the bathroom is not for the truth, but there are portions which may be for the truth in terms of some of the pieces that Mr. Ulbricht stated. That's what I wanted to raise. Mr. Dratel, you wanted to make a record on some of the testimony that you wanted to elicit from Mr. Kiernan? MR. DRATEL: Yes, your Honor. He conducted an exercise -- really, an experiment -- that was designed to allow, which he did in the beginning of his testimony, which was predicate to all the Tor chats, which was that by setting up Tor chat and then creating some chats, that the person operating the computer would be "myself" on the chats. The underlying program that's used for that -- and how it's composed -- is essential to that experiment. Page 1120 You can't have an experiment where you have different elements on each side of the experiment and have it be valid. And I was not allowed to get into that. It is directly relevant to his direct. I can't immunize it just by not asking it when it is an implicit and a central part of what he did. You can't say, ah, I'm running an experiment, you know, on a substance and then have a different substance. You can't have a gas mileage experiment with cars and you use two different types of gasoline. That's what I was getting at. And I couldn't do it. And I am moving for a mistrial on that basis. And I'm also moving for a mistrial because the Court then said in front of the jury I can call a witness. It's not my burden. I have no burden. You put the burden on me. THE COURT: The motion for a mistrial is denied. I am entirely comfortable with all of my limitations in terms of what was within the scope of direct and what was outside of the scope of the direct. I believe that in the context of what was occurring, my comment was entirely appropriate. However, I will instruct the jury that the defendant does not have a burden. Page 1121 My point for you, Mr. Dratel, is to the extent the defendant would like to put on evidence, which is entirely his choice, ultimately, that he would like to present, he can do at that, or not. It will be up to the government to put together the facts which the jury will use to determine whether or not the government has carried its burden of proof as to each of the charged counts. Mr. Howard, would you like to respond at all to -- or, actually, it was Mr. Turner? Which one of you was it? It was Mr. Howard. MR. HOWARD: It was me, your Honor. And I do believe the defendant was -- I'm sorry, the defense counsel did ask some questions regarding about whether the witness knew for sure about whether the burdens were correct. So that testimony was elicited in some form. THE COURT: That's my point about how when it was within the scope, I allowed it. When it was outside of the scope, I disallowed it. All right. Is there anything further that people would like to say on any topic before we break for lunch? I do have a matter in here at 1. It is a criminal matter. So I'll need a little bit of space at the first two spots. Is there anything that anybody else would like? MR. TURNER: Not from the government, your Honor. THE COURT: Actually, I do have one more thing. Page 1122 Mr. Dratel, anything else? MR. DRATEL: No, your Honor. THE COURT: All right. One thing I wanted to raise. I want to have a copy of the jury instructions hopefully either later today or tomorrow morning. In the proposed verdict form -- and we're going to have to go through the instructions, obviously, at another time but I want you folks to have it. For the continuing criminal enterprise, I want you folks to take a look at 848, the statutory provision, and at the Alleyne case and determine whether or not there are additional issues which should be in your view either contained or not contained on the verdict form. MR. TURNER: I just didn't catch that, your Honor. THE COURT: On the continuing criminal enterprise. MR. TURNER: The name of the case. THE COURT: Alleyne, A-l-l-e-y-n-e. It holds that if there is going to be a statutory minimum imposed by virtue of a statutory requirement, the jury must determine beyond a reasonable doubt that that requirement has been met. So to the extent that there are provisions of 848 that require supervisory findings and/or other findings, I believe those need to be called out, but they are not on the proposed verdict form. So I am soliciting people's views. MR. HOWARD: We will look into that, your Honor. THE COURT: All right. Thank you. Page 1123 That is all I've got. All right. I'll see you all at 2 o'clock. THE CLERK: All rise. *(Luncheon recess)* *(Continued on next page)* Page 1124 A F T E R N O O N S E S S I O N 2:05 p.m. RICHARD BATES, Resumed, and testified further as follows: *(Jury not present)* THE COURT: All right. Let's bring out the jury. THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. And before we get going, I wanted to go back over one matter with you. As you heard me say at the beginning of the case -- and I want to repeat now -- the defendant in a criminal case does not bear the burden of proof. He is not required to call any witnesses. The government bears the burden of proof in a criminal case from the beginning and all the way through. So whether or not the defendant -- he is not required to call any witnesses, and any comments of mine that may have suggested that he should or ought to, you should certainly disregard. The defendant does not bear any burden of proof. All right. Thank you. Mr. Howard, you may proceed, sir. MR. HOWARD: Thank you, your Honor. MR. HOWARD Q. Good afternoon, Mr. Bates. Page 1125 A. Good afternoon. MR. HOWARD: So, Mr. Evert, could we please publish Government Exhibit 1002, which is where we left off before the lunch break? THE WITNESS: Before I had a folder with these exhibits in them. I don't have that. MR. HOWARD: May I approach the witness, your Honor? THE COURT: You may. MR. HOWARD: So, Mr. Evert, could you please zoom in to the middle of the conversation, starting at "My site had." "me: my site had a 40 minute spot on a national radio program. Friggin crazy, you gotta keep my secret buddy "baronsyntax: I haven't told anyone and I don't intend to "me: i know i can trust you "baronsyntax: I don't even know the onion url. I might tell people about the site though - if that's ok? I won't even mention I know someone who runs it "me: mmm....ok, go..a have a good story for how you found it in case they ask "baronsyntax: I'll just tell them I saw it on 4chan or something." "Me: coo." So, Mr. Bates, what is going on in this part of the conversation? Page 1126 A. In this part of the conversation Ross was excited that Silk Road was getting some media coverage. And eventually I asked him if it's OK if I just tell people that I know that the Silk Road exists without, you know, associating him or myself with it. And he approves of that as long as I have a good story. Q. And continuing down the chat: "baronsyntax: What was the national radio program? Conservative talk radio? "me: ill tell ya in person, i don't want to talk to much over unsecured channels "baronsyntax: gotcha. Need to switch to TorChat soon." So, Mr. Bates, what's occurring in this part of the conversation? MR. DRATEL: Your Honor, the conversation speaks for itself. THE COURT: I will allow it. You may give your view as to what's happening in the conversation with the cross. A. This conversation happened over Google Chat, which is, as I said earlier, I believe not encrypted, and Tor chat was -- after I learned about Tor, I thought wouldn't it be neat if there was a chat program that worked on that, and a simple Google search led me to TorChat. And I suggested to Ross that we use that to communicate securely and privately. Q. Did you, in fact, later have communications with the defendant over TorChat? Page 1127 A. Yes, I did. Q. Can you please flip in your binder to what has been marked for identification purposes as Government Exhibit 1003. Do you recognize what this is? A. 1003? Oh, yes. This is a Google Chat between Ross and me. MR. HOWARD: The government offers Government Exhibit 1003. MR. DRATEL: The same objection, your Honor. THE COURT: The same as the ones just in the immediately prior ones? MR. DRATEL: Yes. THE COURT: All right. Those objections are overruled. GX1003 is received. *(Government's Exhibit 1003 received in evidence)* MR. HOWARD Q. So, Mr. Bates, what is the date of this online chat? A. This is April 1, 2011. MR. HOWARD: Mr. Evert, could we please zoom in on the conversation, please. The top half. Thank you. Q. "baronsyntax: All my friends think your site is really cool :]) "Me: :) "Baronsyntax: I told them I know the guy who runs it "Me: you should be quiter Page 1128 "Me: quieter "Me: sp? "Me: i think you mentioned something to jon too, huh? "Baronsyntax: I didn't tell anybody about it - this is just the only idea I had for an April Fool's joke "Me: aww geez "Baronsyntax: All I told Jon was that it was cool "Me: even so, shhhh." So, Mr. Bates, what is occurring in this conversation? A. This is an April Fool's joke that I laid on Ross, which in retrospect is not very funny. Q. And what was the joke? A. The joke was that I told everybody that -- about the Silk Road and told everyone that I know the guy who runs the Silk Road, when in fact I had not told anybody about Ross' involvement. Q. So did you -- you continued to provide programming help to Mr. Ulbricht after you learned he was running Silk Road, correct? A. That is correct. Q. And why did you do that? A. Because he was my friend. Q. What sorts of things, generally, do you remember him asking for help on? A. I remember him asking me some php questions. I remember him asking me about object-oriented programming, a little bit of Web design. I remember us talking about encryption a little bit. That's all that's coming to mind right now. Page 1129 Q. Are you familiar with what a computer server is, Mr. Bates? A. Yes, I am. Q. Did you ever have administrative access to Silk Road's servers? A. No, I did not. Q. Was it ever offered to you? A. Yes. There was one time, granted, Ross and I had both been very heavily drinking, and I was at the bar and Ross came up to me and said something akin to, Hey, do you want to be an admin. I understood he was talking about Silk Road. I turned back to him and I said, I've already got a job. Q. Did the defendant talk to you about -- tell you why he was asking you? A. Yes. Earlier he had kind of complained -- he vented a little bit to me about some of the administrative duties that he had. He had to resolve conflicts between buyer and seller in case something went wrong with the transactions. He also had to monitor the site. It had certain rules about things that could or could not be posted and he had to enforce that, and he told me the workload was becoming too much and he would have to hire some admins. Q. And when did this conversation occur, approximately? Page 1130 A. I believe this was in March of 2011 at some point. Q. What, if anything, did the defendant provide you in exchange for your help on Silk Road? A. Nothing but his friendship. Q. How long did you continue to provide assistance with programming help on Silk Road? A. I continued to provide help going into the summer of 2011. Q. And what happened? A. I grew increasingly uncomfortable. Primarily, I recall there was a news article about Chuck Schumer, you know, telling the FBI to investigate. I recall that being sometime in June of 2011. I remember after that came out, I went over to Ross' apartment and I told him, "You know, they're looking for you, right?" And he just said, "Yeah." Going after that, I at some point, maybe a few weeks, possibly a month later, I remember having a conversation with him where I said, "You know, hey, have you ever thought about doing something legitimate, something legal?" And that's when he first mentioned the idea of creating a bitcoin exchange to me. And then a little later we actually started working on that project. Q. And was the bitcoin exchange a legitimate project? A. It started off that way. We had discussions later about possibly using it to launder money. Q. Now, while you were working on this bitcoin exchange, were you aware of whether or not the defendant was still working on Silk Road? Page 1131 A. Yes. To my knowledge he was still working on Silk Road. Q. And how do you know that? A. We had conversations about it. I assume that if he was to stop -- MR. DRATEL: Objection. A. -- he would have mentioned it. THE COURT: Sustained. Don't assume. THE WITNESS: OK. MR. HOWARD Q. Can you flip in your binder at what has been marked for identification purposes as Government Exhibit 228, please. THE COURT: Can you give a timeframe of when the bitcoin exchange work was occurring, Mr. Howard. Q. So when, approximately, did you start working on the bitcoin exchange project with Mr. Ulbricht? A. It really ramped up around the September and October timeframe. Q. How long did you work on it with Mr. Ulbricht? A. A. It wasn't long after that, around late October or November, you know, we started having disagreements and I became not as interested in the project. To be specific, we had discussions about who else could be hired. I wanted to vet other programmers. And there were some discussion about me also having a job at the same time, which, you know, would make me not able to contribute as much to that project. Page 1132 Q. And so what happened after you had those discussions about you having a job at the time? A. After that, you know, he was also going to Australia. He sent me a contract. I never replied to that message and I never signed it. Q. So approximately when did you start working on that bitcoin exchange project? A. November of 2011. Q. And during the time that you were involved in that project, was it ever operational? A. No. Q. Can you please flip in your binder to what has been marked for identification purposes as Government Exhibit 228. Do you recognize what this is? A. Yes, I do. Q. What is this? A. This is a TorChat conversation between Ross and me. MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 228, which is already in evidence. Q. Now, Mr. Bates, how are your parts of this conversation labeled? A. They are labeled as "r." Q. And what are Mr. Ulbricht's parts of the conversation labeled as? Page 1133 A. They are labeled as "myself." Q. Starting on October 6, 2011: "r: Hey man, I've got an idea how we both can make a little bit of money "myself: i like money "r: You don't have a job besides the site right now, do you? "myself: nope "r: ok, hear me out. If it's not your bag, that's fine "myself: right on "r: I've got lots of stuff I've been meaning to ebay, but I don't have the time. How about I give it to you, you sell it and take care of packaging and I give you 20% and you can pay me my share in BTC "myself: haha, I need someone to do that for me too! "r: haha "myself: I still haven't sold my two cars "r: well, that's a little harder to do on ebay "myself: yea, that's a craigslist project "r: I've got like an old radar detector and an old GPS, a police scanner I haven't programmed since I moved and I don't use anymore, that kinda of stuff "r: well, if you decide that's something you wanna do, let me know. Otherwise I'll probably just find one of those local services Page 1134 "myself: i have a friend who just lost a job that might want to do it "r: ok, as long as he's trustworthy "myself: I'll have him contact you." So, Mr. Bates, what was occurring during this conversation? A. During this -- MR. DRATEL: Objection. The conversation speaks for itself. THE COURT: Overruled. THE WITNESS: Sorry. What was the question again. Q. What was occurring during this conversation? A. I was suggesting to him that I had some things that I was selling, and if he wanted to, I could give them to him and he could sell them on eBay and package them and deal with taking pictures and all of that and I would give him a cut. MR. HOWARD: So, Mr. Evert, could you please zoom in on the top two lines of the conversation we just read. No, on the first page, please. *(Pause)* Q. So, here, on October 6, 2011, you say: "You don't have a job besides the site right now, do you?" And "myself" responds: "Nope." What were you referring to when you asked him if he had a job besides the site? Page 1135 A. I was referring to the Silk Road website. Q. Now, how did you understand the defendant to be making money at the time? MR. DRATEL: Objection. THE COURT: Overruled. A. Umm, at the time I knew he had some money and I did know that he was receiving some money from Silk Road and from the bitcoin. Q. And how do you know that he was receiving money from Silk Road? A. At some point we discussed it. I don't remember exactly when. Q. And did he ever explain to you how he got money from Silk Road? A. As I recall, it was a percentage of the transactions. So when someone had a transaction, he would get a percentage. MR. HOWARD: Mr. Evert, let's go to the next part of the excerpts. October 11, 2011: "myself: you want to get together tonight or tomorrow? "r: either would work for me. On an unrelated note, Aspen's new BF is quite the drug dealer "myself: ok, let me make sure I'm free tonight... "r: apparently they have LOTS of MDMA Page 1136 "myself: rly!!! "r: yeah, but they are charging more than SR is "myself: ha! Ok, I'm free tonight... wanna see my new place? "r: You're not living at that girl's place anymore? "myself: same place, have you been here? "r: dude . . . "myself: when were you here?!?! "r: I helped you move in "myself: forhead smack. Right right, well, anyway. my place or yours? "r: either one. I've got to swing by office depot or something for a whiteboard "myself: ok, I don't really feel like driving, so is my place ok? I can cook us some dinner while I wait for you "r: sure "myself: cool, what's your eta? "r: text me your address again and I'll glympse you when I leave at least an hour "myself: ok, glimps me when you are leaving the store and I'll start cooking then -- "1200 Treadwell St, apt. 119, 78704. "r: going offline now "myself: cya." Mr. Bates, what was happening during this conversation? Page 1137 A. I guess let's look at the beginning part. So starting -- MR. HOWARD: Mr. Evert, would you turn to the second page, please, and zoom in here. A. So starting here, a mutual acquaintance of Ross and I, named Aspen, had a new boyfriend who was selling MDMA. I mentioned it to Ross because I knew that he was interested in MDMA. And I also thought he would find it interesting that they were charging more than Silk Road was because he was running -- MR. DRATEL: Objection. THE COURT: Overruled. A. Because he was running the Silk Road at this time. Moving on into the conversation, we start talking about me coming over. I was going to get a white board so that we could diagram some things about the bitcoin exchange. And I think that's everything in the conversation. Q. And, Mr. Bates, at the end of the conversation there was an address, 1200 Treadwell Street, Apartment 119. Are you familiar with that address? A. Yes. It's where Ross was living at the time in south Austin. Q. Now, Mr. Bates, I want to direct your attention to November 11, 2011. Page 1138 Did you see the defendant that day? A. Yes, I did. Q. And can you explain what happened? A. I was having a party, a 11/11/11 party to celebrate the date as just an excuse to have a party, really. Ross showed up early to the party and he wanted to speak with me. He started by asking me, you know, have you told anybody about, you know, my involvement in the Silk Road. And I had tried to tell one person but I don't think I communicated across. We were at a bar and I was very drunk. And then he explained to me very panicked that someone who knew about his involvement had posted to his Facebook wall something along the lines of I'm sure the authorities would be very interested in your drug-running site. And he told me that he, you know, deleted that post, unfriended the person. And at that point I told him you've got to shut the site down. This is all they need. Once they see this, they can get a warrant and it's over. This is not worth going to prison over. And he told me that he couldn't shut down the site because he had already sold it to someone else. Q. How did the defendant appear to you as he told you this story? A. He was nervous. Q. And did the defendant tell you about who else he had told about the Silk Road website? Page 1139 A. To my knowledge, Ross had told two people -- his ex-girlfriend Julia and me. Q. When the defendant told you that he sold the site, did you believe him? A. Yes, I did. Q. Now, following that party at your house on November 11, 2011, did you have any further discussions about Silk Road with the defendant? A. Yes, I did. Q. Where was the defendant -- let's take a step back. At the time of the 11/11/11 party, where was the defendant living at that time? A. He was still living in Austin, Texas. Q. And at some point did he move away from Austin? A. Yes. I think it was somewhere around the Thanksgiving timeframe he went to Australia. Q. And so later did you have any discussions about Silk Road with the defendant? A. Yeah. A few times over Google Chat, I would send him links about Silk Road usually when there was some sort of problem like some sort of security issue or someone getting arrested, and I was really kind of trying to insinuate, hey, aren't you glad, you know, that you don't have to deal with this anymore. Q. Can you please flip in your binder to what has been marked for identification purposes as Government Exhibit 1004. Page 1140 *(Pause)* Do you recognize what this is? A. Yes, I do. This is another Google Chat conversation between Ross and me. MR. HOWARD: The government offers Government Exhibit 1004. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 1004 received in evidence)* MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 1004. Q. What is the date of this conversation? A. This is February 5, 2013. MR. HOWARD: Mr. Evert, could you zoom in to this section here. Q. And in this chat how are your parts of the conversation labeled? A. They were labeled as baronsyntax@gmail.com. Q. How about the defendant's parts? A. They are labeled as "me." Q. "baronsyntax@gmail.com: Did you see slashdot last week? "Me: negative "Baronsyntax@gmail.com: There was something posted on Friday that you might have found interesting "Me: I'll take a look, thanks. Glad that's not my problem anymore :) Page 1141 "Baronsyntax@gmail.com: yes "Me: I have regrets, don't get me wrong... But that shit was stressful. Still our secret though, eh? "Baronsyntax@gmail.com: yup. I'm spilling the beans when I turn 65 though. "Me: lol. OK." So, Mr. Bates, what was he referring to in this part of the conversation? A. At some point Ross had asked me not to send him links about the Silk Road anymore, and so I got kind of creative and I said, you know, did you see slashdot last week. I don't remember exactly what the article was about but I know it was related to Silk Road. Here he kind of acknowledges that, you know, he's not working on it at that time. And I tell him, you know, it's still a secret but when I turn 65, long after the statute of limitations is up, I may tell someone. MR. HOWARD: Your Honor, may I just talk with co-counsel for one minute? Maybe not. THE COURT: Yes. MR. HOWARD: No further questions, your Honor. THE COURT: All right. Thank you. Mr. Dratel. CROSS-EXAMINATION Page 1142 MR. DRATEL Q. Good afternoon, Mr. Bates. A. Good afternoon. Q. And the first time you met with the government was October 3, 2013, correct, about this case? A. I believe it was that date or around that time. Q. And that was very soon after Mr. Ulbricht had been arrested, right? A. That is correct. Q. And as you said before, you lied to the government, right? A. That is correct. Q. And you lied because you wanted to stay out of trouble? A. That's correct. Q. And they asked you about Mr. Ulbricht and Silk Road, right? A. Yes, they did. Q. And they asked you whether you were an administrator on the site? A. That's correct. Q. And you denied that, right? A. Yes, I did. Q. And you said you had no idea that Mr. Ulbricht was operating Silk Road, right? A. That is correct. Q. And that you had no idea what Mr. Ulbricht was doing with the website, correct? Page 1143 A. That's also what I said. Q. And you also said that you didn't know anything about Mr. Ulbricht and a bitcoin exchange, a bitcoin site, right? A. I recall differently. I recall that as they were leaving, I told them that I worked with him on a bitcoin exchange and it never came to fruition. Q. I show you what's been marked as 3513 -- sorry, 3513 -- three-five-one-three dash 55. I ask you to look at the end of the second paragraph. A. OK. Q. Read it to yourself, please. A. The second-to-last paragraph? Q. The second paragraph, the end of the second paragraph. Just read it to yourself. *(Pause)* A. OK. Q. And did you not tell the government, or did you not deny that you knew anything about Mr. Ulbricht and a bitcoin business? A. I'm sorry, I'm a little confused. Does it say that I denied it somewhere in here? I'm not seeing it. MR. HOWARD: Objection. THE COURT: Sustained. MR. DRATEL: Let me just point to the part of the document that I'll need -- Page 1144 MR. HOWARD: Objection. As a matter of fact, may we request a sidebar? To be clear, there has been no foundation that -- I think it is probably better for us all to have a sidebar. THE COURT: All right. *(Continued on next page)* Page 1145 *(At the sidebar)* MR. HOWARD: Your Honor, I believe the witness testified that he had a different recollection. There was no foundation that he couldn't remember. He improperly is trying to refresh his recollection when the witness himself denied that he had a memory. MR. DRATEL: I'm not refreshing his recollection. I'm impeaching him. This is a prior consistent statement, if he adopts it. If he doesn't, he doesn't. This is what the 3500 material is. THE COURT: I will allow it. Let me see. MR. TURNER: It is those -- THE COURT: It is just 302? MR. HOWARD: Yes. THE COURT: Let me just think about this. MR. DRATEL: Every judge in this courthouse -- THE COURT: I never worry about that. Never. *(Pause)* I'm going to allow it on the basis that it's not a prior inconsistent statement because we have no idea if he even made the statement that is in that document. Hold on. But he can show him that, for whatever it is worth, that somebody wrote it down and does that refresh his recollection that in fact he didn't tell him that. MR. DRATEL: Your Honor, it is not a refreshed recollection. This is what it is. Page 1146 THE COURT: This is not a prior inconsistent statement? MR. DRATEL: It is, because 3500 is prior statements of the witness. I don't get this unless it is deemed by government to be a prior statement of the witness. It doesn't have to be signed. THE COURT: You get it for a variety of reasons. MR. DRATEL: Not 3500 material. THE COURT: You can't put this into evidence, right? MR. DRATEL: I'm not putting it into evidence. THE COURT: I'm saying if it is a prior inconsistent statement, then you can put it into evidence. MR. DRATEL: I can ask him if he -- THE COURT: You know it is not a prior -- MR. DRATEL: I can -- THE COURT: Hold on. I get to finish my sentence and so you do you. OK? MR. DRATEL: OK. THE COURT: Then I will let you finish your sentence. MR. DRATEL: OK. Thank you. THE COURT: A prior inconsistent statement has a particular meaning under the hearsay rules. And it's a prior inconsistent statement of the witness. Something that is written down on a 302 doesn't have the kind of evidentiary value of a prior inconsistent statement. Typically, I think it is has to be, under the rules, under oath and a prior inconsistent statement under oath. Page 1147 MR. DRATEL: No, it doesn't. THE COURT: I will take a look. Hold on. *(Continued on next page)* Page 1148 THE COURT: Let's take mid-afternoon break. All right? I hate to have you guys waiting because then I know it is just like wasting your time. We'll work this out and then you come back out and then we'll go smoothly. All right? And I want to remind you not to talk to each other about this case. *(Continued on next page)* Page 1149 *(In open court; jury not present)* THE COURT: Let's all be seated. Mr. Dratel, 801(d)(1) does require an inconsistent statement to have been given under oath under the penalty of perjury. MR. DRATEL: That's not the -- THE COURT: Give me your rule. MR. DRATEL: 613. THE COURT: Now the word "statement" here, Mr. Howard. MR. HOWARD: Yes, your Honor. It's not the defendant's statement. This is hearsay. It's someone else's statement about what he said. THE COURT: Correct. MR. HOWARD: So it can't be admitted as extrinsic evidence of an inconsistent statement. THE COURT: Correct. You can use a 302 for impeachment purposes for the purposes of refreshing his recollection, as I was explaining to you, where you can say to him I'm showing this to you now, does this refresh your recollection that in fact you did tell someone. And he can either say no, it doesn't refresh my recollection or he can say yes, but you can't get it in as his statement. MR. DRATEL: I'm not getting in it, but he can adopt it just like -- THE COURT: If his recollection is refreshed, it's neither here nor there. Page 1150 MR. DRATEL: No. But just like I did with Mr. Kiernan where I showed him a memorandum of an interview, he did not write the memorandum of this interview. Every single case, you get a 302 by an agent of a witness' statements or proffer of a proffer interview. You use it to impeach them by saying did you not tell the government X on X date. And if he says -- if he looks at the thing and says, yeah, I did, because you confront him with it -- and if he says no, then you're stuck with it. THE COURT: Exactly. MR. DRATEL: He hasn't answered that question as to whether he told the government. THE COURT: I think it's not, though, an inconsistent statement. You were saying before that you can get it in as an inconsistent statement. MR. DRATEL: It is inconsistent. THE COURT: You are doing exactly what I had suggested over here that you can do. You can do it in the following way, which is the witness says I told them X. You say, didn't you really tell them Y. He says I told them X. Then you say let me show this to you; does this refresh your recollection that you told them Y. And he'll say it doesn't refresh my recollection because I have no idea who wrote this. Or he'll say actually, maybe it has spurred on a memory, yes. That's the way you use 302s. Page 1151 MR. DRATEL: No, actually I think Mr. Howard is right. There was no failure of recollection. And it's not a refresh -- I can use anything to refresh recollection. I don't need 302. I can use anything. That's not the issue. The issue is it's a prior statement by the witness provided in 3500. The government certainly adopted it. They're not giving it out of some largess. And while there are different practices in different places, here, 302s are considered 3500 material. And this is not technically a 302, but it's a report by a government agent acting within the scope of his authority. The point is, if there's an inconsistent statement there, I can confront the witness with it saying did you not tell the government on such and such a date the following. And if he says yes, I did, just like Mr. Kiernan said yes, I did -- or he can say no, and then I'm stuck with it. And even if he says yes, I can't put in the statement; I just have the impeachment. THE COURT: Mr. Howard. MR. HOWARD: Your Honor, if he proceeds that way, that's fine, in that manner. THE COURT: But it's not coming in for the truth. MR. DRATEL: It's impeachment. It's purely impeachment. THE COURT: Purely impeachment. Page 1152 MR. DRATEL: Does your Honor still have the page? THE COURT: I didn't take the page. I think the jury is taking a break. Let's take, like, as little time as we can take, get ourselves back here and see if we can gather up the jury and then come on back up. THE DEPUTY CLERK: All rise. *(Recess)* *(Continued on next page)* Page 1153 *(In open court; jury present)* THE COURT: Mr. Dratel, you may proceed, sir. MR. DRATEL: Thank you, your Honor. May I approach, your Honor. THE COURT: Yes. MR. DRATEL Q. Can you just read the underlying statement to yourself and then I'll ask you a question after you've done that, the underlying sentence. A. It says here "Bates -- " Q. No. Don't read it out loud. A. Just read it to myself. Okay. Q. Just read it to yourself. And now if you have, I'll be able to ask you a question, okay? A. Okay. Q. Did you not tell the government October 3, 2013, or a date right around there, that first interview, did you not tell the government that you had no idea that Ross Ulbricht was involved in any bitcoin business? A. I believe it's possible I may have contradicted myself at that time. I remember very specifically as they were leaving I told them, you know, we worked on a bitcoin exchange together but it never came to fruition. Q. Okay. Thank you. So, November 21, 2014 is the date of your agreement with the government, right -- withdrawn -- your proffer with the government, correct? Page 1154 A. That is correct. Q. You had an interview. And that's also the date of your agreement, right. Q. If you need to, I can refresh your recollection. A. Please do. Q. I'm sorry. The date of the agreement is December 12. Does that sound right? A. That sounds correct; yes. Q. But your interview was November 21, right? A. That sounds right. Q. Of 2014? A. Yes. Q. When you met with the government on November 21, you didn't have any kind of agreement with the government as to what was going to happen to you, right? A. That is correct. Q. And you knew that if you were charged and convicted of being involved, of participating in the Silk Road and the sale of drugs that you could face a life sentence, right? A. I don't know if I imagined it being so harsh, but I knew that I could go to prison. Q. For a long time, right? A. For a long time. MR. HOWARD: Objection. Page 1155 THE COURT: Overruled. Q. You said for a long time right, yes; you agreed? A. Yeah. Q. And part of that November 21 meeting with the government was about telling the government about your involvement so you would hope that you could avoid getting charged, getting convicted, going to prison, right? A. That was not a specific goal, but my lawyers told me we have to tell them the truth, come clean, and then maybe we can come to some kind of agreement, not necessarily a nonprosecution agreement. Q. Ultimately you got a nonprosecution agreement, correct, right? A. That is correct. Q. You're not going to be prosecuted at all? A. No. Q. And what you have to do is testify here, correct? A. I have to tell the truth here today. Q. You have to testify here today, right? You couldn't refuse to testify? A. No, I could not. Q. And all of your assistance would be provided pursuant to specific instructions and control of the United States Attorney's Office, right? A. I'm sorry. Could you repeat the question one more time. Page 1156 Q. Sure. Any assistance that you would provide to federal criminal investigators would be pursuant to the specific instructions and control of the U.S. Attorney's office and designated investigators? MR. HOWARD: Objection to form, your Honor. THE COURT: I think he's asking him whether that's his understanding. Overruled. Q. Is that your understanding? A. I'm sorry. Is this in my agreement? Q. If you can't recall, I'd be happy to refresh your recollection. A. Yeah. I would like to see it. Q. Okay. I'm showing you what's marked as 3513-65 and I'd ask you to read to yourself the last sentence on the page. A. Okay. Q. Does your agreement provide that any assistance that you provide to the government, to investigators would be provided pursuant to specific instructions and control of the U.S. Attorney's Office and designated investigators? MR. HOWARD: Objection to form. THE COURT: You can rephrase it: Do you recall that? Q. Does that refresh your recollection that your agreement provides that any assistance that you provide to the investigation is pursuant to specific instructions and control of the United States Attorney's Office and designated investigators? Page 1157 MR. HOWARD: The government has the same objection. THE COURT: Overruled. A. So that -- my understanding of the instructions is, you know, them telling me things like I need to be at, you know, we're going to meet at this time, that kind of thing. Q. I'm asking about your agreement. Does that refresh your recollection -- A. I'm talking about the agreement. MR. HOWARD: Objection. THE COURT: Hold on. We have to get a question and an answer and a clean question. So what's the question, Mr. Dratel? MR. DRATEL Q. Does 3513-65 refresh your recollection that your written agreement with the government requires that any assistance that you provide be pursuant to specific instructions and control of the United States Attorney's Office and designated investigators? THE COURT: You can answer that. A. Yes; that is what it says verbatim. Q. Now, your agreement also provides that the government determines whether or not you have given false, incomplete or misleading testimony or information or otherwise violated your agreement, right? Page 1158 A. Perhaps you could point that out and refresh my memory again if it's highlighted. Q. Sure. A. Is it that one? Q. Yes. It's the first sentence there. Some of it is not highlighted but you can read the whole sentence silently. A. Okay. Can you please repeat the question. Q. Sure. That it's the government that determines whether or not you've given false, incomplete or misleading testimony or information or otherwise violated the agreement, right? That's if the government determines? A. Yes. It says "If the government has determined..." Q. Right. So there's no arbitrator involved, right, it's the government that gets to make that decision. You understand that, right? A. I suppose, yeah. Q. And so if the government determines that you have not honored your agreement, that if you've given false or misleading testimony or otherwise violated the agreement, they can rip it up, right? A. Yes. It would mean that I could be prosecuted. Q. Correct. You'd be prosecuted for all the things that you're essentially getting a pass for, right, the things that you mentioned on direct, right, your assistance with respect -- Page 1159 A. Yes. Q. -- your assistance with respect to Silk Road, right? A. Yes. Q. Your assistance with respect to the bitcoin operation to the extent it was involved in money laundering, right? A. I said that we discussed the possibility of using it for money laundering. Q. But that's part of your agreement, right? A. It is in the agreement; yes. Q. And also your personal use of drugs during the period of -- of a couple of years, right? A. That is correct. Q. And the agreement provides that if the government determines that you have violated the agreement, that everything you said to the government, not only in the context of here, but also all that you've said in your meetings with the government, all that's admissible against you if the government chooses to prosecute you, right? A. That sounds correct. Q. And that anything that may be outside the statute of limitations by the time you're prosecuted, as long as it was within the statute when you signed the agreement, you could be prosecuted for, right? A. Yes. That sounds correct also. Q. So your choice is testify here for the government, you reached that agreement with the government, or face those charges and a very serious prison sentence, right? Page 1160 A. That sounds correct. Q. You chose to be there on the witness stand instead of there as a defendant, right? MR. HOWARD: Objection. THE COURT: Why don't you rephrase. Q. You chose to make your agreement with the government and testify rather than be charged? A. That is correct. Q. And you know -- and you knew when you signed the agreement and you know here today that it's whether the government is satisfied with your testimony as to whether that agreement holds; it's not whether Mr. Ulbricht is satisfied or the judge or anyone else, right? It's whether the government is satisfied, right? A. So I recall during the proffer agreement I asked my attorney, I said to him what if I tell the truth and they don't believe it, and he told me -- may I continue. Q. I don't know. It's a privileged conversation. THE COURT: It is a privileged conversation. THE WITNESS: I apologize. THE COURT: Let me explain to you that you have a privilege between yourself and your attorney insofar as you've had any communications that were private between yourself and your attorney. Page 1161 THE WITNESS: Okay. THE COURT: You can choose to waive that privilege, but there are lots of implications about that you would want to likely confer with an attorney about, all right? THE WITNESS: Okay. THE COURT: So if it's a private conversation between you and your attorney, that's where the privilege attaches. Mr. Dratel, why don't you pose a question. MR. DRATEL: Rather than get into a privileged conversation, I'll move on THE COURT: All right. Q. You talked about commissions this morning, one question and answer - or maybe this afternoon - during your direct, correct? A. Yes, I did. Q. And that subject with the prosecutors just came up very recently, right? A. I don't know. Can you please explain the question. Q. Sure. The idea of commissions at Silk Road, that just came up recently in your discussions with the prosecution, not back in November of 2014 but much more recently, right? A. I don't recall. I do remember us talking about it recently. I don't remember if we talked about it before then. It's possible. Q. But you remember talking about it recently, right, very recently? Page 1162 A. Yes, I do. Q. Within the last week, right? A. Yes. Q. In fact, you never discussed commissions with them before, right? A. I'm not sure. Q. Now, in terms of bitcoin, you invested in bitcoin at one time, correct? A. That is correct. Q. When it was ten dollars a bitcoin, right? A. That sounds about right. Q. And you put $100 in? A. Something like that. Q. And you cashed out when it was $160 per bitcoin? A. Again, that sounds about right. Q. If you want, I can refresh your recollection. A. Please do. Q. It's one you may have up there still. A. No, I just have the proffer -- yes, okay, this is the one. A. Yes, this was the -- I've read it here. Q. Okay. By the way, you read that, does that refresh -- never mind. Withdrawn. Okay. So you invested at ten, cashed out at 160, right? Page 1163 A. That sounds correct. Q. And that's sometime around 2013 you think? A. Yes. Q. In fact, it helped to finance your trip to San Francisco in April 2013? A. That is also correct. Q. And you relied on Mr. Ulbricht with respect to information about bitcoin to some extent at least in the beginning, right? A. I heard about bitcoin from him initially. Q. And the idea for a bitcoin exchange was really Mr. Ulbricht's idea? A. Yes, it was. Q. And it was an exchange site that would allow buyers and sellers to exchange -- rather, to monitor all bitcoin exchanges simultaneously? A. I don't -- not monitor, but it would work on top of other exchanges was part of the idea. So that if you had an order, it could be fulfilled by our exchange directly or by another exchange indirectly. Q. And this obviously would be on the Internet? A. That was the idea. Q. The split was going to be 60 percent/40 percent in Mr. Ulbricht's favor? A. That sounds about right. Can I look at the contract? Q. Sure. I don't have a contract, but I'll show you something that's marked 3513-64. Directing your attention to a specific part and then ask you if it refreshes your recollection. Look at the bracketed -- the first bracketed one. Page 1164 A. Okay. What is your question? Q. That the proposed split would be 60/40, Mr. Ulbricht and you, for the bitcoin exchange? A. There is a contract that was written out that specifies that specifically, but that number sounds correct to me. Q. You testified today that -- about why you withdrew from that project, but principally, it was because you were unwilling to put in the time because of your other job, right? A. That was definitely a major factor. Q. And it was something that required a lot of work? A. That is correct. Q. And a lot of programming work, right? A. That is also correct. Q. And that's your specialty? A. Yes. Q. And that was your responsibility for the particular project, right? A. Yes, I believe that that is specified in the contract that wasn't signed. Q. So, as you mentioned, you asked -- you asked Mr. Ulbricht to explain bitcoin to you, right, back in March of 2011? A. That sounds correct. Page 1165 Q. And you obtained a bitcoin wallet, right? A. Yes, at some point. I don't recall exactly when but yes, I did. Q. Would April 2011 sound right? A. That's perfectly possible it was at that time. Q. Let me show you 3513-31. A. Okay. Q. Let me show you 3513-31 and ask you if it refreshes your recollection that you had a bitcoin wallet in April of 2011. A. Yes. Q. And in fact, you had a Google Chat with Mr. Ulbricht about it that day, right? A. That's correct. Q. And you were going to encrypt your bitcoin wallet, right? A. That was something I had planned on doing, yes. Q. And that's for security purposes, right? A. That's correct. Q. And you were going to keep it on a thumb drive, right? A. That's also correct. Q. Now, you also asked Mr. Ulbricht where you could monitor bitcoin exchange rates, right, back at the same time in April 2011? A. That sounds correct. Would this help refresh my memory? Q. No. There's another. 3513-37. I'm going to ask you to just review that and then when you have, let me know. Page 1166 A. I'm sorry. Can you repeat the question one more time. Q. Sure. That you asked Mr. Ulbricht where you could monitor the bitcoin exchange rate, right? A. That's correct. Q. And that's April 28, 2011 is when you did that, right? A. That is correct. Q. And in fact, you had a Google Chat that day about bitcoin? A. Yes. Q. And with respect to the bitcoin exchange project that you had with Mr. Ulbricht, as you testified, it lasted into early November of 2011, right? A. Yes. Q. And it started in the summer? A. The idea started in the summer. I remember the work really ramped up around September and October. Q. Okay. And a lot of it was programming issues that you were trying to solve, right? A. That sounds correct. Q. So, let me show you what's marked as 3513-57. Show you what's marked as 3513-57. A. What number was that again, the last one. Q. Fifty-seven. Look at the bottom right. That's what I'm talking about. A. Okay. Okay. What's your question? Q. And so do you recognize that? Page 1167 A. Yes, I do recognize this. Q. What is it? A. This is a Tor chat between Ross and me. Q. And is it at around the same time or even the same day as Government Exhibit 228, October 2011. A. It's a little bit -- you said October 28? Q. No. The sixth. A. October 6. Okay. Yes, part of this conversation happens on October 6, 2011. MR. DRATEL: I move it in, your Honor, as Defendant's 3533-57 -- let's call it R-57. THE COURT: All right. Any objection? MR. HOWARD: No objection, your Honor. THE COURT: Defense Exhibit R-57 is received. *(Defendant's Exhibit R-57 received in evidence)* THE COURT: Just give me the Bates number one more time. MR. DRATEL: 3513-57, your Honor. THE COURT: Thank you. Q. While we're waiting, let me just ask you some other questions about bitcoin in terms of you, at some point, before this, before October back in the spring of 2011 when you were becoming interested in bitcoin, you were invested in silver at that time? A. That's -- I owned physical silver. Page 1168 Q. But you were also interested in the market price for that at the same time as well? A. Yes, because I own some. Q. And bitcoin was -- looked more attractive as an investment at that time? A. I'm not sure. Q. But you talked about it with Mr. Ulbricht? A. Yes. Q. About the relative attractiveness of bitcoin and silver and how they were doing in the market? A. Yeah. We talked about how they were doing in the market; yes. Q. Mr. Bates, let me have what is highlighted because that makes it easier for me and I'll give you this one and I'll be able to direct you to where it is. Thanks. So if we go about two-thirds down the page -- I'm sorry -- go about one-third down the page at 19:14. A. Okay. 19:14. Q. It says -- if we can just make that a little larger if possible and I can read it here, but I don't know if everybody can read. Okay. "R" is you, correct, Mr. Bates? A. Yes, that's correct. Q. "I need to talk to you sometime about you interact with bitcoin. Page 1169 R: I can use the bitcoinj lib, but I don't know what I'm doing." And L-I-B, do you mean library? A. Yes. Q. And "myself" is Ross? A. That's correct. Q. "Okay. Let me look up the link, just a sec. Have you read this." And this is Ross again. And that's a link, correct? A. Yes, that is a link. Q. This is Ross again: "I of course used the JSON-RPC PHP library, but they have examples for a bunch of different languages. Myself: Including java and perl. Myself: I've gotta jump in the shower, ttyl." And what does that mean? A. Talk to you later. Q. "R" is you. "Suweet." And is that just the spelling of the word sweet with an extra sylabble in there? A. Yes. It's meant to be stressed, but yes, it says suweet. Q. "And this is JSON too. R: I should be able to use what I wrote today to access this too. R: So you have everyone's bitcoin address in one instance of bitcoind. Page 1170 R: Okay. This is pretty neat. Myself: Tell me more about what you are working on." And there's an emoticon. "R: Okay. I think I'm going to start by making a JSON-RPC wrapper to bitcoin documentation says it only accepts local calls by default. Reply when you get this." So you're talking there about the technical aspects of writing program for this bitcoin exchange, right? A. Yes. Q. And further on down the page at 1909, and I'll just summarize it, you are also talking about making a java wrapper, right? Go to 1909. A. Yes, that's correct. Q. And so you're talking about making a java wrapper so you can do the bitcoin stuff in java, right? A. That's correct. Q. And java being a program language, right? A. Yes. Java is a programming language. Q. Thank you. And you continued to talk to Mr. Ulbricht throughout -- even into 2013 about bitcoin, correct? A. Yes. I believe we probably had conversations about it. Again, if you have something to refresh my memory. Q. Sure. Let me show you what's been marked as Defendant's AA. So, after you've had a chance to look at that, does that refresh your recollection that in April of 2013 you were discussing bitcoin and bitcoin values and trading bitcoin with Mr. Ulbricht by chat? Page 1171 A. I was not trading bitcoins with Mr. Ulbricht. Q. No, I don't mean -- the discussion with Mr. Ulbricht? A. Yes. The discussion was with Mr. Ulbricht and it was about bitcoin prices and that I had just sold some. Q. Very good. Now, you know at certain points -- withdrawn. At certain points in the spring of 2011, Mr. Ulbricht and you discussed trading in bitcoin and money that could be made in terms of the fluctuating price of bitcoin, right? A. That sound correct. Q. And in April of that year, Mr. Ulbricht told you -- and you would be chatting with the Google chats, right? A. Yes. Q. And Mr. Ulbricht told you that he made $4,000 over one weekend if he sold out, if he had sold; in other words, the appreciation in value? A. Is that in -- I'm having trouble remembering that again. Q. Okay. That's the 3513-37. A. Ah, there we go. Yes. Q. Okay. Right? A. Sorry. Q. I'll repeat the question. A. Repeat the question. Page 1172 Q. That if he had sold his bitcoins that weekend, he would have made $4,000? A. Yes. Q. And that ultimately in May, he does sell some bitcoins. In a chat he mentions to you that he sold all of his bitcoins and that he was going to get back in the market, hopefully at a lower price. That's a different one. Let me show you -- let me refresh your recollection of that. This is 3513-38. Let me know when you're finished. A. Okay. Q. Does that refresh your recollection that in a chat on May 31, 2011, Mr. Ulbricht told you that he had sold all of his bitcoins and was trying to get back in at under a dollar? A. Yes. That's what he told me. Q. And a couple of weeks later, you mentioned to him that his prediction of a bitcoin crash in the price had been correct and that bitcoin had, in fact, gone down in value? A. I do recall there being a crash sometime around that time. I don't remember Ross' prediction. I'm sorry. This was all many years ago. Q. I'm sorry. That's a different one. I'll go back to that in a minute, but since you have this one here now, also, Mr. Ulbricht in June of 2011 told you that he would have made $250,000 if he had cashed out -- rather, he tried to, but that the market had closed, that he was unable to? Page 1173 MR. HOWARD: Objection; hearsay. THE COURT: Are you offering it for the truth? MR. DRATEL: No, your Honor. THE COURT: All right. You can answer. A. Yes. There was an incident where Mt.Gox was hacked. There was extreme volatility. And he told me, you know, he would have made a quarter of a million dollars if he had -- if his -- I believe he said that his orders were undone as part of Mt.Gox's correction. Q. You also had a discussion with Mr. Ulbricht about bitcoin mining, right? A. About -- are you asking about how bitcoin mining -- we had discussions about how bitcoin mining works? Q. Yes. A. I think that that's probable that we did. Q. Now, in terms of your relationship with Mr. Ulbricht, he was a fun person to be around? A. Very much so. Q. And you also shared some political philosophy, right? A. At that time, yes. Q. And you mentioned, and it comes up in some of the chats that are in evidence, Mr. Ulbricht's girlfriend he was living with at the time in Austin, right? Her name was Julia? A. Yes. Page 1174 Q. It was her friend who put up the Facebook post, correct? A. That is what Ross told me. Q. So there were three people who knew: There was you, there was his girlfriend Julia, as you said on your direct testimony, and that other woman as far as you know, the other woman who is Julia's friend who put something up on Mr. Ulbricht's Facebook page? A. There are four people, if you include Ross himself. Q. Yes, but I'm saying, other than Ross. A. Other than Ross, what I was told was that -- obviously, I knew about it, and I was told about two other people who knew about it. Q. You were the person who wanted to switch over to Tor chat, correct? A. I was the one who found the program, and I did suggest that we use that. Q. And you had to prod Mr. Ulbricht over a period of time to do it, right? A. There were problems connecting on the software. I believe somewhere there's a conversation where we talk about us trying to connect, so we didn't keep that Tor chat connection open all the time. So there were instances where we would say let's go to Tor chat basically. Q. But also wasn't there a series of times where you were on Google Chat and you said we should be doing this on Tor chat? Page 1175 A. That sounds accurate. Q. Now, your relationship with Mr. Ulbricht, did it -- withdrawn. He went to Australia in the fall of 2011, correct? A. He went to Australia and then Costa Rica and a few other places, but at that time, I think it was Australia that he went to. Q. And you didn't know when he would be back at that point? A. I don't believe I did know, no. *(Continued on next page)* Page 1176 Q. And the relationship dissipated somewhat after that, right? A. Yes, a little bit. Q. And so there were a lot fewer chats in 2012 and 2013 than there were in 2011, correct? A. That's correct. Q. In fact, when he moved to San Francisco, initially you weren't aware of that? A. I was not aware of that initially, but I messaged him and found out he was in San Francisco. Q. Now, I want to talk about you have a background and degree in computer science, right? A. That is correct. Q. And you have been in a programming capacity all your professional life, right? A. That's also correct. Q. And you worked at PayPal, right? A. Yes. Q. And then you left PayPal for eBay, right? A. This actually gets a little complicated because eBay owns PayPal, so technically my contract was with eBay and I have moved within that organization. Q. And one of the things you have done as a programmer at PayPal is designing portions of adaptive payment systems? A. That is correct. Q. Did that give you some insight into creating this bitcoin exchange? Page 1177 A. Actually, I don't think so. Q. Was that basically from the ground up, the bitcoin part? A. Yeah, the bitcoin exchange would have been from the ground up. There were a lot of -- you know, this is really managing buy-and-sell orders, which is a little different than what I was doing at PayPal, which is, you know, just processing a transaction. Q. Now, you've seen some of the government exhibits that you've looked at this morning from the chats, right? And I want to talk about the technical discussion between you and Mr. Ulbricht in 2010, in 2011, OK? So in terms of the dates, those are all either in the latter part of 2010 running through the spring of 2011, correct? A. To my recollection, yes. Q. Well -- A. Well -- Q. We can look -- we can just go through them and -- A. Pardon me. The question is our technical conversations went through -- Q. Withdrawn. A. OK. Q. When you were asked by Mr. Ulbricht, in 2010, about technical questions, the initial questions were about a programming language called Perl, right, P-e-r-l? Page 1178 A. Yes, that's correct. Q. And that was about the Good Wagon Books Company that Mr. Ulbricht was running, right? A. That is what he told me, yes. Q. And he was trying to work on a website, right? A. That's what he told me. Q. And you were able to help him with respect to certain of those questions that he had, right? A. I certainly tried. I think I did. Q. Well, let's look at Government Exhibit 1,000, please. So if you look at that chat, is there any doubt in your mind that it's about Good Wagon Books and not Silk Road? A. If you go to the bottom of this chat, he does tell me this is about the artofbooks.com. Q. Right. So -- but I'm saying in terms of the technical part of it, the Perl part of it, is there anything that would lead you to believe that it had anything to do with Silk Road, which you were discussing later on? A. The only thing he did -- I know that he did lie to me now. It's possible, but I think it's a reasonable assumption to assume -- sorry, I'm not supposed to assume, am I? Q. That's right. A. Umm, I -- Q. Is there anything technical about that in the Perl language that had anything to do with what you know about Silk Road? Page 1179 A. No. Q. And all the Perl discussions are about that subject, correct, about Good Wagon Books, to your knowledge? A. I believe so. Q. Now, when Mr. Ulbricht starts talking about php, that's different, correct? A. My recollection is when he switched to php is when I began asking him what he was working on, and that's when he started telling me it was top secret. Q. Right. And that's in the early part of 2012 -- I'm sorry, 2011. Sorry, the early part of 2011? A. I think it may go back into late 2010. Q. And he had questions for you about Ubuntu, right? A. Yes, he did. Q. And about Debian, D-e-b-i-a-n? A. Yes. Q. Now, was he -- withdrawn. He was having some difficulty with those things, correct, with some of the programming issues? A. I don't know if that's accurate. Debian and Ubuntu are operating systems so there wouldn't be necessarily programming involved. Q. How about php? A. Php is a programming language, yes, so -- Page 1180 Q. So he was getting frustrated, he told you, right, about php -- about learning php? A. I don't recall him saying he was frustrated about learning php but he did have issues with php. Q. I am going to show you what's marked as Defendant's P. *(Pause)* MR. DRATEL: OK. We'll come back to that. Q. OK. So when you first saw Silk Road, you said you were intrigued by it, correct? A. I was intrigued by the technology that it was built upon. Q. And even the concept, right? You compared it to Craigslist, did you not? A. I think at one point I probably did. Q. And so even after that point you had continued to assist Mr. Ulbricht with respect to technical questions that he had? A. We're talking about 2011 again? Q. 2011, yes, the first half of 2011. A. Yes, I did help him. Q. You may have provided him code on occasion, right? A. I believe that there were times I provided code snippets in chat. I don't remember writing any code. At that time I had a particular disdain for php so I really think I would have remembered if I had written any significant php. Q. And he would send you code -- Mr. Ulbricht would send you code occasionally? Page 1181 A. Again, he sent me code snippets. Q. Right. And you would review it and delete it, right? A. Review it and delete it? Q. Yes. A. I don't -- oh, yeah. Sorry. There was one time over TorChat that he did send me a zip file that had the php code for the Silk Road website. I looked at that. He asked me to review it. I looked at it for a little bit and ultimately did end up just deleting it. Q. So one of the reasons why you deleted it is you didn't want it on your computer, right, anything connecting you to that? A. Yes. Q. OK. You can look at P now, Defendant's P. A. Mm-hmm. Q. And I just ask you if you recognize that? A. I have no reason to believe that this is not an actual conversation, but I don't remember it very well. But we can talk about it. Q. But April 2011, right? A. Yes. Q. Actually, I just ask you if it refreshes your recollection -- A. A little bit, yes. Q. -- that Mr. Ulbricht was frustrated trying to learn Cake, C-a-k-e, php? Page 1182 A. Yes, which I'm not sure what that is right now. I believe it might be a module or library on top of php. Q. In terms of Mr. Ulbricht's state of mind during this period, as time passed you observed that he was getting under more and more stress, correct, during the period in 2011 now that we are talking about -- that first half of 2011? A. There were times when he seemed stressed, as is evidenced by the voicemail. Q. Yes. And, also, though, you observed that it was occupying too much of his time and he was dealing with crises on the site, right? A. He did have a number of, you know, problems with running the Silk Road, yes. Q. And you observed that that was wearing on him, correct? A. That's my opinion. Q. Yes. And you told him that you thought it was a good idea for him to get out because it was having an effect on him? A. I did tell him -- I don't recall if I did, actually. I do remember that on November 11th I did tell him to shut down the site. Q. But he did express to you on some of the chats that we saw and other times that you met him in person that he was stressed out by all of this? A. Yes. Q. He also told you he was overwhelmed, right? Page 1183 A. That's possible. Again, is there something to help me remember? Q. I show you what's marked as 3513-25. Just look at the highlighted portion. Does that refresh your recollection that March 29, 2011 in a chat Ross told you he was overwhelmed? A. Yes, he did tell me on this date that he was overwhelmed. I'm not sure based on the context if this is about Silk Road or not but it very well possibly could be. Q. Now, after Mr. Ulbricht returned from Australia and from some other trips, you were in touch with him in May of 2012, correct? A. That sounds correct. Q. And you chatted with him and you asked him how he was doing and he said "chillin'," right? A. Again, you're going to have to refresh my memory but that sounds right. *(Pause)* MR. DRATEL: Just a second, your Honor. I'm sorry. *(Pause)* Q. So -- and occasionally you said that you would send Mr. Ulbricht certain articles or links that you had seen about Silk Road, correct? This is during 2012. A. Yeah, this is going on 2012 into 2013. Q. Right. Page 1184 A. Yes. Q. And ultimately he asked you not to send him any more, correct? A. Yes. Q. And you saw Government's -- if we could have Government's 1004? So Government's 1004, you mention, "There was something posted on Friday that you might have found interesting." Then Ross says, "I'll take a look, thanks." By the way, this is Google Chat, right? A. That's correct. This is on -- Q. Not TorChat? A. This is on Google Chat. Q. So -- and then Ross says, "I'll take a look, thanks. Glad that's not my problem anymore." Right? And that's -- what you said to him was about Silk Road, correct? A. That is correct. Q. And then there is an emoticon. And what do you take that emoticon to be? A. That is a smiley face. Q. As in happy, right? A. Yes. Q. And you say, "Yes." Because you are in agreement, right? That is a good thing? Page 1185 A. I'm in agreement that he communicated to me that he was happy. Q. And then he says -- Ross says: "I have regrets, don't get me wrong ... but that shit was stressful." Right? A. That is what it says. Q. Then he asks you to continue to keep the involvement secret, right, that he was involved in? A. Yes. *(Pause)* THE COURT: Well, I was thinking of taking a short additional break, anyway. And it looks like you are looking for something? MR. DRATEL: Yes, and then I will wrap up, your Honor. I appreciate it. THE COURT: Let's do that. We'll take a short break. We are going to go to 5 o'clock on the dot, or a minute or two before. As I mentioned to you, we are not going to sit tomorrow, on Friday. All right? So when we break at 5, it will be we will break until Monday morning. But for right now we'll just take a short break. And remember not to talk to each other or anybody else about this case. Thank you. THE CLERK: All rise as the jury leaves. THE COURT: You can take a short break, too. *(Continued on next page)* Page 1186 *(Jury and witness not present)* THE COURT: Are you folks talking about timing? MR. TURNER: Yes. THE COURT: I am interested, too. MR. TURNER: Your Honor, the issue is our next witness is from San Francisco. I expect my direct to be pretty compact. THE COURT: What does that mean? MR. TURNER: 15 minutes. So I am hopeful we can finish with him today so that he doesn't have to fly back here Monday. THE COURT: The only issue is that we need to end by 5, because we do have some jurors, as you folks know, who has got childcare and other issues on the back end. So we can't ask them to stay. You know, how much longer do you have with this witness? MR. DRATEL: Five minute, ten minutes, maybe, at most. THE COURT: OK. So why don't we then just -- we'll try to take as quick a break as we can. Come right back on out. I only broke because we had taken the earlier break and I didn't want to keep people and make them uncomfortable. So we will come back out and just proceed as expeditiously as possible. All right? THE CLERK: All rise. Page 1187 *(Recess)* THE COURT: Let's get the jury back out. It is always hard to get 15 people out in five minutes, but they are gathered again. It took a little while to get them all rounded up. *(Continued on next page)* Page 1188 THE CLERK: All rise as the jury enters. *(Jury and witness present)* THE COURT: All right. Let's all be seated. OK. Mr. Dratel, you may proceed, sir. MR. DRATEL: Thank you, your Honor. MR. DRATEL Q. I just want to go back to something we talked about earlier, about the bitcoin market in June of 2011 and you couldn't recall about Mr. Ulbricht making a prediction. So I'm just going to show you what's marked as Defendant's CC. I just ask you to look at that and then I'll ask you a question. *(Pause)* Does CC refresh your recollection that at some point in June 2011 you commented that the bitcoin market was crashing, just like Mr. Ulbricht said it would? A. Yes. Q. Thank you. And with respect to another one that we just did right before the break, which is in May of 2012, when you asked him what have you been up to and he said "chillin'," so I'm going to show you what's marked as Defendant's P. A. The date on this is accurate? MR. DRATEL: Yes. Your Honor, we have an agreement that the date is accurate because it is a series of chats sort of in a row. Page 1189 MR. HOWARD: That is correct, your Honor. THE COURT: All right. Q. So does that refresh your recollection that May 15, 2012, you reached out to Mr. Ulbricht and said "How are you doing" and he said "chillin'"? A. Yes. Q. Thank you. Now, in terms of your meetings with the government, did you ever bring them your laptop for review? A. No. Q. Ever bring them a desk-top for review? A. No. Q. Ever bring them anything you ever worked on, any computer you worked on for review? A. No. Q. And there were two people who knew about your involvement -- beside yourself, two people who knew about your involvement in Silk Road, right? A. At which time? Q. At the time -- before you were confronted by the government in October of 2013, there were two people who knew about your involvement in Silk Road, correct -- Mr. Ulbricht, right? A. Mm-hmm. Q. And a woman you confided in sometime in 2012? A. In 2012? Q. Well, when was it? You confided in a woman that you had involved in Silk Road, correct? Page 1190 A. I tried to confide in a woman and a particular friend of mine in 2011. I don't think it was communicated across. We were both at a bar drunk. Q. Is that Shelli? A. Yes. Q. Didn't she say she didn't want to hear any more about it when you told her about that? A. I don't remember. Maybe. Q. Maybe. MR. DRATEL: I have nothing further, your Honor. Thank you. THE COURT: Thank you. Mr. Howard, anything further? MR. HOWARD: The government has no further examination of this witness. THE COURT: All right. You may step down, sir. *(Witness excused)* THE COURT: All right. Would the government call their next witness, please. MR. HOWARD: Your Honor, before we do that, the government would like to read just one Tor chat excerpt that is already admitted into evidence as we get the witness. THE COURT: All right. What government exhibit is this? Page 1191 MR. HOWARD: Just give me one moment and I will pull it up. It is 226D, as in dog. Mr. Evert, could you publish it. Page 59 of 1,096. December 9, 2011: "vj: IRL - is there anyone with a clue at all? Girlfriend, boyfriend, bunny you talk to, online buddy's who you've know for years? Gramma, priest, rabbi, stripper? "myself: unfortunately yes. There are two, but they think I sold the site and got out and they are quite convinced of it. "vj: good for that - when do they think you've sold? "myself: about a month ago "vj: and do they now notice the demands on your time? These the kinda people you'll know forever, or would a move work someday? "myself: no, I live no where near them anymore. One I'll prob never speak to again, and the other I'll drift away from." Continuing from the same chat on page 314 of 1,096 on January 15, 2012: "vj: Have you even seen The Princess Bride? "myself: growing up my parents had the last half of spaceballs and the last 3/4 of the Princess Bride and all of Romancing the Stone. that pretty much sums up my personality. "vj: Well, that's about as well rounded as one can get. So you know the history of the Dread Pirate Roberts. Page 1192 "<-- it's a thought I'm working on, so humour me "myself: can't quite remember. "myself: Wesley was him though yea. Took up his name "vj: and over the years, a new one would take the name, and the old one would retire. "myself: yep "vj: You need to change your name from Admin, to Dread Pirate Roberts "<-- isn't kidding - start the legend now "myself: I like the idea "vj: <-- has just put 12 solid hours of thought into it. Clear your old trail - to be honest, as tight as you play things, you are the weak link from those two prev contacts "myself: goes along with my captain analogy "vj: and the whole thing - I quite love it." MR. TURNER: Your Honor, the government calls FBI Special Agent Forensic Examiner Christopher Beeson to the stand. THE COURT: All right. Mr. Beeson. THE CLERK: Please raise your right hand. CHRISTOPHER JON BEESON, called as a witness by the government, having been duly sworn, testified as follows: THE CLERK: Please state your full name and spell your last name for the record. Page 1193 THE WITNESS: It's Christopher Jon Beeson, C-h-r-i-s-t-o-p-h-e-r J-o-n B-e-e-s-o-n. THE COURT: Mr. Beeson, please be seated. And it will be important for you to pull your chair up so you can speak clearly and directly into the mic, sir. THE WITNESS: Very good. Thank you. THE COURT: All right. Mr. Turner. DIRECT EXAMINATION MR. TURNER Q. Agent Beeson, who do you work for? A. I work for the Federal Bureau of Investigation. Q. How long have you worked for FBI? A. I've worked for the FBI for 28 years, the last 20 as a special agent. Q. What FBI office are you assigned to? A. I am assigned to the San Francisco office of the FBI. Q. And what are your duties at that office? A. I'm assigned to the Silicon Valley Regional Computer Forensic Laboratory, where I am a Special Agent Forensic Examiner. Q. And as part of your role as a Special Agent Forensic Examiner -- I should say, by "forensic examiner," are you talking about computer forensics or another type of forensics? A. Computer forensics. Page 1194 Q. As part of your role as a Special Agent Forensic Examiner, are you ever called in to help with seizures of digital evidence for investigations by FBI offices outside San Francisco? A. Yes, I am. Q. What typically is your role in those situations? A. Typically when we are involved in collection of digital evidence for other FBI offices, our role is simply that, to collect and preserve digital evidence. So identify particular computer devices, what's going to be seized, etc., and then it will be forwarded on to the other FBI office for analysis. Q. On October 1, 2013, were you called upon to help in connection with an arrest of a target of the FBI New York field office? A. I wasn't called upon to assist with the arrest but, rather, the search of computer evidence. Q. OK. The recovery of that evidence? A. Yes. Q. Whose arrest was it? A. It was the arrest of Ross Ulbricht. Q. Where were you called upon to go that day? A. We were told to respond to 235 Monterey Boulevard in San Francisco. Q. Do you know whose residence that was? A. I was told it was the residence of Ross, Mr. Ulbricht. Page 1195 Q. Was this before or after Mr. Ulbricht had been arrested? A. I'm sorry, counsel, one more time. Q. Was this before or after Mr. Ulbricht had been arrested? A. I was called just following his arrest. Q. So approximately what time of day did you arrive at the residence? A. I arrived about 5:30 p.m. Q. Anyone come to assist you? A. Yes. One of our Task Force officers, Sergeant Brian Rodriguez, with the San Francisco police. Q. Were any law enforcement personnel already there by the time you arrived? A. Yes. There were several FBI agents already on the scene. Q. Did that include Thomas Kiernan from the New York field office? A. Yes, Mr. Kiernan was there. Q. What was Mr. Kiernan doing when you arrived? A. He was accessing a laptop inside the residence in one of the bedrooms. Q. I'm showing you what's already been marked as Government Exhibit 200 and admitted into evidence. When you have a chance to look at it, can you tell me, do you recognize this exhibit? A. I do. Q. And how does this laptop compare to the one you saw Mr. Kiernan working on? Page 1196 A. It's the same laptop. Q. How can you tell? A. Looking at the markings on the back of the laptop, I can see from previously reviewing pictures that it has markings and stickers on the back that indicate it is the same. Q. Those pictures you took? A. Yes, they are. Q. So what were you there to do exactly with the laptop? A. So my role in this instance was to assist in the collection of the data that's on the laptop; basically, copy the data off of it. Q. And who did you understand would be responsible later for actually reviewing the contents of that data? A. I didn't know a particular individual was going to be responsible, but I know that it was going to go to the New York FBI office. Q. In the ideal situation, what procedure do you use to copy the contents of a computer when you observe it? A. So typically when we respond to a site and we're going to collect a computer or digital evidence, what we're going to do is we're going to start from a computer that's powered off. Right? We aren't going to typically use one that's powered on. We're going to power it down. And we're going to frequently remove the hard drive, and we're going to copy all the data that is on the hard drive off to one of our own hard drives or some other form of storage. Page 1197 Q. Why does it help to turn the computer off like that? A. Well, when file systems are live and up and running, the data can change as things are going on. And so what we do is by powering it down, all that data is isolated on the hard drive. It can't be altered in any way. Q. Now, could you do that here? A. We couldn't do that here. Q. Why not? A. Well, once I responded to the scene and spoke with Mr. Kiernan, he advised that the laptop was encrypted. It was using a form of encryption. And so when encryption is deployed on a computer, frequently if we don't have the password there is nothing that we can do with that data if it is encrypted. Right? We would have to break that encryption. So in this instance we had to capture the data while the computer was still running. Q. So walk us through what you were able to do with this laptop. A. So once we took possession of the laptop from Mr. Kiernan, what I did is I started off by copying data that we believe would be most useful. And we did that in the form of what is called a Tarball. Similar to, for a Windows user, it would be like a zip file. A lot of people have seen zip files. It is just a way to containerize files. Page 1198 And we started by creating those Tar images of groups of data which we believe would be of most value. You see, in this instance, we didn't have enough time to know how long we were going to have access to this laptop. Q. So when you got it, you said it was encrypted but do you mean it was actually encrypted or there was just a danger of it becoming encrypted? A. So the data is encrypted on the laptop, but the operating system, like Windows -- this particular laptop was using Ubuntu Linux -- the operating system was interfacing between that encryption and allowing that data to be seen and viewed and copied. Q. So just in layman's terms, was the computer on? A. Yes, the computer was on. Q. And was it logged in? A. Yes, it was logged in. Q. So you had access to the account that was logged in? A. Yes. It would be just as if any of us logged into our normal computer at work. It was sitting there waiting for what would you like us to do. Q. OK. So while the computer was in this live state, were you able to determine whether you had access to all of the data on the hard drive or only some of it? A. Well, so what we determined was that the computer was set up in such a way that it could either run Windows or Ubuntu Linux. Page 1199 Q. So it had a Linux half and a Windows half? A. Essentially, yes. Q. What part of it did you have access to? A. At that time it was running Ubuntu Linux. Q. It can't operate both at the same time? A. Not at the same time. Q. So what did you do while you were logged into the Linux side of the computer? A. Could you be more specific? Q. So you had access to the Linux side of the computer. A. Mm-hmm. Q. What did you do to recover data? A. Like I said, initially what I did was I started looking at the home directory. For example, on Linux that would be like the "my documents" folder in your Windows computer. Right? And I started by containerizing all the files that were in that folder on the laptop, and then I did a series of other folders. OK? And once I completed that and we still had access to the laptop, we decided that we wanted to make an image, which is a complete copy, of the unencrypted version of the whole volume or partition that was running Linux. The hard drive is divided into multiple segments, and one of those segments was fully accessible at that moment for us and so I wanted to create an image of that. Page 1200 Q. And by "partition" you are referring to the Linux half of the computer? A. Yes. Exactly. Q. OK. So were you able to make a complete copy of that Linux partition? A. I was. Q. And where did you copy the data onto? A. I copied the data onto an FBI-owned hard drive. Q. I'm showing you what's been marked as Government Exhibit 500. *(Pause)* Do you recognize this exhibit? A. I do. Q. How do you recognize it? A. It is a hard drive which contains consolidated data from our search. Q. And among the data on the hard drive, did you include the data from the Linux half of the computer, the Linux half of the laptop? A. Yes, I did. Q. Did you give that data a filename on that hard drive? A. Yes, I did. Q. What was that file name? Page 1201 A. That file name was sda_crypt.dd. Q. Is it sda or sda4_crypt? A. I have to refer to my notes. I thought it was sda4_crypt. Is that right? Did I say sda? Q. You said "sda" originally. So which is right? A. Sda4. Thank you. Q. Besides the laptop, were there any other digital devices that you helped preserve as part of Mr. Ulbricht's arrest? A. Yes, we did. Q. Showing you what's been marked, already been admitted into evidence, as Government Exhibit 502. A. OK. Q. Do you recognize this exhibit? A. Yes, I do. Q. How do you recognize it? A. This exhibit is marked with a yellow sticker. It's also a 16 gig SanDisk USB thumb drive. Q. And there is another thumb drive in there as well? A. That is correct. There is also a 4 gigabyte USB thumb drive. Looks identical, almost. Q. So what did you do with these thumb drives? A. So these thumb drives were brought to me later and I imaged them in their entirety. Q. And what did you do with that copy of the data? A. That data was also consolidated onto this disc, Government Exhibit 500. Page 1202 Q. And what did you do with the -- I'm sorry. The thumb drives, what is the exhibit number you see in front of you? A. I see 502A. Q. OK. I think I misspoke and I said 502. So let the record reflect that 502A is in front of the witness. So once you loaded all this data onto the hard drive, what did you do with the hard drive? A. So once we consolidated everything onto this drive here, this hard drive was shipped to the FBI New York Field Office. Q. Before you sent the hard drive to the New York Field Office, did you hash the various files that you put onto the drive? A. Yes, I did. Q. Including the sda4_crypt file? A. Yes, sir, I did. Q. And the files from the thumb drives? A. Yes. Q. And can you explain what it means to hash a file and why that is done? A. Sure. So a hash is a way to generate a digital fingerprint of data. OK? And it's unique to that group of data. It's a way that we can authenticate a file to make sure it hasn't changed. Page 1203 Q. OK. So if you take the sda4_crypt file, how do you hash it? A. How do I hash it? Q. Yes. A. So what I'm going to do is I'm going to use a tool, computer tool application, and I'm going to run -- I'm going to tell the application to read this file in, and the application will take all the data, the data stream in that file, and will generate a hash value. Q. Is that like a long string of numbers? A. It is. It is a 32-character hexadecimal string, so it is numbers and letters. Q. And if you have one file that is just a tiny bit different than another, what is the difference between the hashes? A. It is substantially different. So when you look at two hashes, if the file is changed in only the smallest way -- a period is deleted from a text file, for example -- the hash will result in an entirely different appearing value. Q. So the hash values that you calculated, did you record them anywhere? A. I did. Q. Would you take a look at what's been placed in front of you, the binder of exhibits, there is an Exhibit there 500A. Do you recognize this document? A. I do. Page 1204 Q. What is it? A. It is a -- this is a file -- a printed file that I created that has the hash value and file name of every file that we provided on this hard disc to the FBI in New York. MR. TURNER: The government offers Exhibit 500A into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 500A received in evidence)* MR. TURNER: Publish 500A, please, and go to the middle of page 2 and zoom in at sda4_crypt. Q. Mr. Beeson, can you help me find it? A. Yes. It is in the center of the page. I lost the laser pointer that somebody gave me. There we go. Q. So maybe we can zoom in right there. Is that the hash value you calculated? A. Yes. It is the hash value that starts with "1e610e." There we go. Q. And could you take a look at Government Exhibit 502A -- sorry, is it 205A? *(Pause)* A. I believe it's 502. Q. It's 205A. We've already actually gotten it into evidence. MR. TURNER: Could we put it on the screen, Mr. Evert? THE WITNESS: My apologies. Page 1205 MR. TURNER: That is not it. Q. 502. Sorry about that. Do you see 502 in your binder? A. I do, sir. Q. OK. Did you create that document? A. I did. Q. What is it? A. This is a printed log from one of the tools that we use to create forensic images of media, whether it be thumb drives, hard drives. Q. And so what does it reflect? A. It is a summary of information from a log -- 16-gigabyte hard drive, Government Exhibit 502A. Q. Does it include a hash value for the data from the 16-gigabyte thumb drive that you referenced earlier? A. It does. Q. Where is that hash value reflected? A. It is actually reflected in two places on that document. One is where it said "computed hashes" about the middle of the page, "md5 checksum." Yes. And then again at the bottom where it was re-verified that it was the same. So the first hash was when we copied the data, and then we copied it to all of those files that are listed there, USB Sandisk 801, 802. And then the lower hash value indicates that it again checked and the fingerprint was the same in both instances. Page 1206 Q. So you had fingerprinted the data. You sent it to the New York field office. And then what can the New York field office do with those fingerprints? A. So they can also hash this data and make sure that the data didn't change or get damaged at any time during shipping or during access. Q. Did you take any pictures while you were working on the laptop? A. I did. Q. Can you take a look at 501A, B, C and D in your binder and tell me if you recognize those. *(Pause)* A. Yes, I recognize them. Q. And what are they? A. These are screenshots that I took of the laptop when -- well, a while after we had imaged it. We had already made our copies. And I took these screenshots there of open Windows applications that were running on the laptop when I first encountered it. *(Continued on next page)* Page 1207 MR. TURNER Q. What did you take those shots with? A. My FBI-issued camera. Q. And does the exhibit reflect the time that the camera shots were taken? A. The metadata from each picture is here, yes. Q. Does the metadata accurately reflect the time that the shots were taken? A. Yes. So it turns out that my camera was about 40 minutes slow at the time I took these pictures. So all the times reflected in the metadata for the picture is 40 minutes slow. Q. Okay. MR. TURNER: The government offers these Exhibits 501A, B, C and D into evidence, your Honor. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 501A-501D received in evidence)* Q. Can we look at 501A. Please. What does this depict? A. 501A is a picture of an open Tor browser session. Q. And 501B? A. This is the lower half of the same browser window. Q. 501C? A. This is a photograph of an open chat session. Q. And 501D? A. This is a picture I took of some commands that I was issuing in trying to copy the laptop early on, and I wanted to record it for -- mostly for my note-keeping, my recordkeeping. Page 1208 Q. At the bottom, there's a line that says frosty@frosty. Can you explain what that reflects. A. Sure. Frosty@frosty in Linux or in Unix, the host name for the system and the user in this system show up here in these terminal windows. So what this indicates is that the user Frosty is currently logged into the host or the computer named Frosty. Q. Can you just break that down a little bit. When you have a computer, let's say in Windows, what's a default host name for a computer in Windows? A. Oftentimes in Windows, it's just "My Computer". Q. And can the user rename the computer? A. They could. They could name it Chris' computer. Q. Can you do the same thing in Linux? A. Absolutely. You can use any host name you'd like. Q. What does it indicate the computer name of this computer was? A. The computer name was Frosty. Q. And on that computer, the user can create accounts on the computer, right? A. That's correct. Q. So what accounts was logged into this computer at the time? A. According to this terminal window, Frosty. Page 1209 MR. TURNER: No further questions. THE COURT: Mr. Dratel. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION MR. DRATEL Q. You just mentioned that you took some photographs of the laptop? A. Yes, sir, I did. Q. And the ones that you put in evidence were not the only photographs, correct? You took additional photographs? A. That's correct. Q. Let me show you what's marked as Defendant's H -- A. Thank you. Q. -- and just ask you if you recognize that. A. I can't say that I do recognize this as one of the photos I took. I may have. I took numerous photos of open screenshots. I would have to see the file information or the metadata relating to this photo to confirm it. Q. Okay. I'll go -- A. Because I did take several shots. Q. Yeah. And several shots of the laptop, right? A. That's correct. Q. I'll move on. We'll find them. So, in terms of trying to capture what was on the laptop, the use of the tar command, correct, T-A-R? Page 1210 A. That's right. Q. That's to archive the files that you tell it to copy, right? A. That's correct. Q. The command is really just essentially like any other command on a computer, just telling the computer what to do with a keystroke or series of keystrokes, right? A. Yes, sir. Q. Essentially, it reads those files and then places them in an archive, the tar command, right? A. That's correct, much like a zip file, sir. Q. And but by doing this, you change all the access times for all those files that you're tar'ing to the time when you tar, right? A. The access times can be changed; yes. Q. Isn't that what happened here, that the access times were all changed by that tar'ing command? A. Because I'm not the forensic analyst on this case, I don't know exactly whether or not those were changed. Q. Well, there's a way to tar without changing access dates, right? A. I am not familiar with the way for sure. Q. But if the access files are changed, then they only reflect the time that you tar'ed it, right, and not the access files that existed on the laptop itself? Page 1211 A. If, in fact, the access times were changed as part of the archiving process, then, yes, they would have been changed to the current time when the archive was created. Q. Now, you're familiar with the Guidelines for Evidence Collection and Archiving issued in 2002? A. Not specifically, sir. Q. Are you familiar with a section that says don't run programs that modify the access times of all files on the system, e.g., tar or X copy? A. If I'm not familiar with the section, I wouldn't be familiar with that specific -- Q. Now, while you were running the tar command on the Frosty directory -- and by the way, Frosty is the main directory on the computer? A. It's the home directory. Q. The home directory. So you received an error message, correct? A. While I'm tar'ing? Q. Yes. A. I may have. Q. Do you recall? A. I don't recall for certain. Q. Let me show you what's part of 3512-1. 3512-1 -- and I'll give you the entirety of it so that you can look at it. Just ask you to look at page three, this is double-sided, and that second paragraph. Page 1212 A. Sure. May I ask you for clarification. I just want to make sure I'm at the right photograph. It starts "Frosty user folder"? Q. Yes. A. I'm ready. Q. Does that refresh your recollection that you received an error message during the tar process? A. Yes, it does. These are my notes. Q. Yes. I'm saying that refreshes your recollection. I have to ask a question a certain way for evidentiary purposes. A. Yes, it does, sir. Q. Okay. Thank you. And the error message was "File changed as we read it exiting with failure status due to previous errors." Right? A. That's correct. Q. And at that point, you weren't sure whether you had properly copied all of the files -- whether the tar process had been completed at the point that you got that error message, correct? A. That's correct. Q. And there are a number of possible reasons for that kind of error message, right? A. Yes. Q. And one is that while the -- as you mentioned -- withdrawn. Page 1213 Just go back a bit. You talked about live capture versus the machine being off, correct? A. Yes. Q. So if the device is off, then you're not worried about changing files, right, but while it's on, files can be changing while you're tar'ing, right? A. That's correct. It's a live file system, so things are happening constantly. Q. Right. And that's one of the possible reasons for an error message, correct? A. It's a likely explanation for this error message. Q. You didn't know precisely, though, right, and you don't know even today what the precise reason for that error message was? A. I don't, nor do I know the file that caused the message. Q. And when you created the disk image of Mr. Ulbricht's laptop, you didn't use any proprietary computer forensic software, right? A. I did not. Q. And that's -- some of that software can automate the process of capturing a hard drive image? A. In a live capture scenario, sir? Q. Well, is that different? A. It is. Q. All right. So you used a piece of software called DD, right? Page 1214 A. Yes. Q. And that's built into many Linux-based operating systems? A. Yes. Q. And that's a delicate program, right? A. It's a powerful program. Q. In the computer world, doesn't DD have a widely-accepted meaning in the forensics community for disk destroyer? A. I'm not familiar with that. I've -- I've heard it or read it, but it's not what it means. Q. But it can have disastrous consequences for imaging if a mistake is made, correct? A. Yes. As I said, it's a powerful tool. Q. And so at 7:42 p.m. that evening, the first of October, you attempted to generate an MD5 Hash value of the device mapper of on the drive on the computer, right? A. Of the folder depth mapper. Q. What did you attempt to get an MD5 Hash for? A. Well, I attempted several MD5s, so I just want to make sure I'm answering. Q. At 7:42. A. One moment. Okay. Could you repeat that question for me, sir. Q. Sure. Yes. At 7:42 p.m., 1942 hours essentially, you attempted to get -- to generate an MD5 Hash value, right? Page 1215 A. Actually, what I was attempting to do was to DD the disk, to make a copy or an image of the disk; and at the same time, take that data stream as I read it and pipe it into MD5 sum which would generate my digital fingerprint of the disk at the same time. Q. Right. And that failed, right? A. It did. Q. Permission was denied? A. That's correct. Q. So, then you re-performed the command, though, but without doing an MD5 Hash value at the same time, correct? A. That's correct. THE COURT: You have just a couple of minutes left on today's session, Mr. Dratel. MR. DRATEL: I don't know that I'll finish, your Honor. THE COURT: Just to let you know that we'll end at 5:00. MR. DRATEL: Okay. Thank you. Q. Now, the live capture environment, because you're not sure what -- you're not capturing an inactive image, that the image is active, it's called slurring; is that right? A. I'm not familiar with the term slurring. Q. Well, you knew that the DD file that you created was not a replica in exact terms of computer forensic terms of the hard drive because of the active file system at the time, right? Page 1216 A. It was a replica at the instantaneous point in time when it was made. Q. But it wouldn't match the DD file you created even a second later? A. It would never match because every time I typed something into the keyboard, parts of the file system would change again. Q. And you didn't generate the MD5 Hash until a couple days later, correct, October 3? A. That's correct. Q. And that was when you had started the random access memory - what we call RAM - capture of the laptop, correct? A. That's correct. Q. And are you familiar with the term "order of volatility" in terms of computer forensics? A. I am. Q. So you attempt to capture the most volatile parts of the system first, which is the memory, correct? A. I think in this instance it's arguable. Q. But that's the general principle, right? A. The general principle is, yes. Q. But you didn't try to capture the memory until you'd already done two other processes, correct? A. That order was very carefully selected; yes. MR. DRATEL: I'm kind of going into a different area, Judge. Page 1217 THE COURT: How much more do you have? MR. DRATEL: I probably have about ten to 12 minutes left. THE COURT: Ladies and gentlemen, we will break for today and come back on Monday. And I want to remind you not to talk to each other or anybody else about this case. I also want you to make sure that if you run into any media or news articles about this case, that you avert your eyes and that you don't update your Facebook account or do any tweeting about this case of any kind. We'll pick up on Monday at 9:30, and I'll see you then. Thanks very much. Have a good weekend. *(Jury excused)* *(Continued on next page)* Page 1218 *(In open court; jury not present)* THE COURT: You can step down, sir. Thank you. *(Witness temporarily excused)* THE COURT: Let's all be seated. Mr. Turner, I know your witness has been hung over the weekend, but it's important that people not feel too rushed if they have got additional examination. MR. TURNER: We try. THE COURT: So we gave it a go and it will be what it will be, so we'll pick up with Mr. Beeson then on Monday morning. At this point in time, does the government have much redirect? MR. TURNER: No. THE COURT: So who is going to be the next witness then after him? MR. TURNER: The next agent would be Special Agent Gary Alford from the IRS. THE COURT: And then after Mr. Alford? MR. TURNER: Then HSI Special Agent Dylan Critten. THE COURT: Those are the next two on my sheet. MR. TURNER: We are going to make some relatively minor additions to our witness list. We're going to be calling one document custodian, I believe, and we're also going to have one additional agent testify. It shouldn't be more than 20 minutes or so of testimony. Page 1219 THE COURT: All right. In terms of the document custodian, is there any -- have you folks discussed whether it's the kind of thing that there can be a stipulation as to so we can eliminate the need for the custodian? MR. TURNER: We can discuss it. But I think it's the sort of thing that a document custodian from the company will be able to explain. We were originally going to have an agent testify about it, but as we thought about it, we thought it would be easier to explain it to the jury. THE COURT: Whatever you choose to do. Sometimes document custodians can be eliminated through stipulation. If they can't be, then they can't be. MR. TURNER: Of course. THE COURT: In terms of any other additions, I assume you'll confer with Mr. Dratel first to see whether or not there is any objection to that or if you can talk about the reason on that so there's no need for any kind of court intervention with that. MR. TURNER: Yes, your Honor. THE COURT: Have you previewed each other about that already? MR. TURNER: About five minutes ago. THE COURT: Confer first and then write me a letter if I need to look at anything in advance or we can deal with it Monday morning, but if it's helpful for me to get up to speed in advance -- if it's a response for certain testimony and you want to preview that, you can do that. Page 1220 Would the government also go through the witness list and adjust whatever times now that you see how things are going and what you may want to do or not do in terms of what your projections are. MR. TURNER: We'll submit a revised witness list over the weekend. THE COURT: Terrific. Based on what you said, and I have no idea what the cross-examination would be, it strikes me that we would be likely to get to the -- for the government to rest on around February 2, which would be about a week from Monday. Does that seem about right or do you think in your gut it's going to go faster or slower or do you just not know? MR. TURNER: I think that sounds about right, your Honor. THE COURT: Then, Mr. Dratel, is there any adjustment to what we had talked about that first day that you know of now? We talked about how long you thought you would take. I'm trying to get a sense frankly. We have juror number ten who will have some timing issues at some point, which I'll try to resolve, but I may not need to or they may not need to be resolved if we're going to end before the middle of the month. Page 1221 MR. DRATEL: I don't know that it's any different in the sense of certainly in terms of commitment, but we do have a better crystallization of what we are going to want to do in that context. But I'll try by the end of tomorrow, certainly by the end of Sunday, to have something prepared. We'll be getting our notices to the government. I think we're in a position now to provide -- in other words, to commit to certain things at least on a level of what we wanted to. We have gone far enough that I can make certain decisions in that regard. THE COURT: I would say, if it turns out from the government's review of its witness list and going through the timing again, if it still looks like the government might rest on a week from Monday, thereabouts, about Tuesday/Wednesday, I'll start asking you, Mr. Dratel, for a better estimate and whether or not you for sure know one way or the other whether the defendant is likely to testify. You don't have to make a final decision, of course, until the moment you call him, but just to get a sense of timing. MR. DRATEL: Sure. Your Honor, I just wanted to say that obviously I've just learned about the new witnesses, but I also learned about a witness the government is not intending to call anymore. MR. TURNER: I think it's subject to discussion. MR. DRATEL: Okay. Page 1222 THE COURT: All right. Then I'll get the new witness list. Let me see. Those are the new estimates. Yesterday the government had mentioned that it wanted to request a jury instruction or instruction to the jury. I did then give the instruction that we discussed. Was there anything else that the government believed was necessary? Do you remember this? MR. TURNER: Yes. THE COURT: Do you think it's taken care of? MR. TURNER: Yes. THE COURT: I didn't know if there were two instructions you were thinking of in terms of that that were going to be separate, one for the AA, one for the other pieces. MR. TURNER: No, I think your Honor's instruction was sufficient, combined obviously with the direct testimony. THE COURT: I have little notes of things that are open. You'll get the jury instructions, your first draft, tomorrow. My practice is to iterate. Depending upon how much time we have, my goal would be to get comments from you folks Monday evening, hopefully in Word form, just in comments and the text, and we start a charging conference on Tuesday at 9:00. What I'll do is, we'll start with whatever page people have comments on first and you'll both give me your comments. If you've got language changes, you'll give me language changes as opposed to sort of, you know, 'I don't really like the way this is.' Page 1223 So if you have issues, be as specific as possible and if you disagree with an instruction, come prepared with a case cite or whatever it is you think supports your view. And can I get a copy of GX 226, Government Exhibit 226. It's the chat that you read, Mr. Howard, just before Mr. Beeson was called. MR. TURNER: I believe it's 226D. THE COURT: Maybe I just had written it down wrong and that was why I didn't see it in my book. I've got 226D. Fine. Is there anything that you folks would like to raise? MR. TURNER: No, your Honor. THE COURT: Mr. Dratel. MR. DRATEL: No. Thank you, your Honor. THE COURT: Then we'll pick up Monday morning at 9:00 with us and I'll receive over the weekend from the government, or whenever it is, the revised witness list. You folks will talk. You'll let me know if there are things that you know of in advance that you want to raise by letter, and you'll get a copy of the draft jury instructions tomorrow. Thanks. We're adjourned. THE DEPUTY CLERK: All rise. *(Adjourned to January 26, 2015 at 9:00 a.m.)* * * * Page 1224 INDEX OF EXAMINATION Examination of: Page Direct By Mr. Howard . . . . . . . . . . . . .1018 Cross By Mr. Dratel . . . . . . . . . . . . .1037 Redirect By Mr. Howard . . . . . . . . . . . .1085 Recross By Mr. Dratel . . . . . . . . . . . .1088 Redirect By Mr. Howard . . . . . . . . . . . .1090 GREGORY FINE Direct By Mr. Turner . . . . . . . . . . . . .1091 RICHARD CHAPMAN BATES Direct By Mr. Howard . . . . . . . . . . . . .1093 Cross By Mr. Dratel . . . . . . . . . . . . .1142 CHRISTOPHER JON BEESON Direct By Mr. Turner . . . . . . . . . . . . .1193 Cross By Mr. Dratel . . . . . . . . . . . . .1209 GOVERNMENT EXHIBITS Exhibit No. Received 502A . . . . . . . . . . . . . . . . . . .1019 502 . . . . . . . . . . . . . . . . . . . .1020 205A . . . . . . . . . . . . . . . . . . .1022 297 . . . . . . . . . . . . . . . . . . . .1023 298 . . . . . . . . . . . . . . . . . . . .1029 1000 . . . . . . . . . . . . . . . . . . .1101 1001 . . . . . . . . . . . . . . . . . . .1104 1005 . . . . . . . . . . . . . . . . . . .1108 Page 1225 1006 . . . . . . . . . . . . . . . . . . .1109 1008 . . . . . . . . . . . . . . . . . . .1114 1002 . . . . . . . . . . . . . . . . . . .1116 1003 . . . . . . . . . . . . . . . . . . .1127 1004 . . . . . . . . . . . . . . . . . . .1140 500A . . . . . . . . . . . . . . . . . . .1204 501A-501D . . . . . . . . . . . . . . . . .1207 DEFENDANT EXHIBITS Exhibit No. Received G . . . . . . . . . . . . . . . . . . . . .1048 J . . . . . . . . . . . . . . . . . . . . .1061 R-57 . . . . . . . . . . . . . . . . . . .1167 Page 1226 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 26, 2015 9:27 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Page 1227 *(In open court; jury not present)* THE DEPUTY CLERK: This is the continuation of the matter on trial, the United States of America v. Ross Ulbricht, 14 CR 68. Counsel, state your names for the record. MR. TURNER: Good morning. Serrin Turner for the government. With me at counsel table is AUSA Timothy Howard, Special Agent Vincent D'Agostino from the FBI, and Molly Rosen, a paralegal from our office. Nick Evert will be here shortly. MR. DRATEL: Joshua Dratel for Ross Ulbricht standing beside me. Joshua Horowitz is here as well. Lindsay Lewis is trying to get into the building downstairs. THE COURT: Mr. Horowitz gets an A because he's always the first one here of anyone. Thank you. Good morning, everyone. We have a couple of things to go over. I want to talk first about the timing for the next few days in light of this significant snowstorm that actually we're in the process of getting right now. The snow has started outside. My intention is to adjourn today at noon. We have got some jurors who come from Rockland County and some who really need to get home because they are necessary for childcare and other things and I don't want them to be stuck here. It can create some very difficult issues. Then my thought is that we would, in light of the -- and I have been monitoring the reports and it doesn't seem like this is a fake storm that's going to go away, it seems like it's a real one -- that we'll tell them right now that we will not have trial tomorrow. I want to hear from you folks if anybody opposes this, and then for Wednesday, I think it depends on whether or not a lot of snow is, in fact, dumped on the area and how quickly people are able to get it cleaned up and what the conditions are where some of the jurors are. Page 1228 I'm going to have Joe communicate with some of the jurors who are in the more far-flung locations on Tuesday to see whether or not they're able to get out, and then he will communicate with them all by text or phone to let them know. They're also going to be instructed for Wednesday to call into the court's auto line, which is if the courthouse is closed, generally there's an auto line that everybody can call and Joe will make sure they have all got that phone number, but if the court's closed, that's it. It doesn't matter if they can get in. But if the court is not closed but Manhattan is okay but folks can't get in from Westchester or Rockland, then we're going to have to hold off on Wednesday, as well. I will nevertheless tell them that Wednesday we will start not at 9:30, but at 10:00 for them. So the best-case scenario would be starting at 10:00, which would mean we would start at 9:30, just to give people a little bit of extra time to get through this. Page 1229 How does that sound to you folks? MR. TURNER: Sounds perfectly appropriate. MR. DRATEL: That sounds exactly the same. THE COURT: So we'll see. It may mean that we end up with half a day today and then Thursday and nothing in between but we'll play it by ear. I think we have all lived through some snowstorms now and we have had snowstorms with less snow that have resulted in significant disruption. I wanted to fill you in on Juror No. 4. I have been in communication with Juror No. 4's employer regarding the requirement of this particular employer to use vacation time after two weeks of trial time. Now, we don't quite hit two weeks until I think half a day after we adjourn today at noon for her. We have been trying to get them to accommodate this unusual situation where it's a longer trial than most trials. Jury selection here was quite involved. I have not heard back whether or not they'll be able to make the accommodation. If they can't, we'll have to discuss what to do next and confer with Juror No. 4 as to how she feels about it. We do know it was a concern of hers, which is why we have been trying to get an accommodation. Juror No. 10 was the juror who has a potential issue around the 14th of February that she had previewed up at the side bar during voir dire. That may or may not be a problem. We'll play that out as we go, but those are the two that I'm aware of. I just wanted to fill you in and make sure that everybody has the same information about those. Page 1230 Witness lists: I've gotten this morning a revised witness list from the government. I take it has been shared with defense. MR. TURNER: Yes, your Honor. THE COURT: Tell me what's different. I can compare the two but why don't you give me a summary. MR. TURNER: One moment, your Honor. THE COURT: I see. You put in dates which will now be different yet again. MR. TURNER: Right. Actually it looks like this is slightly outdated. Gary Alford will be our next witness. Then Alex Wilson -- I'm sorry -- Alex Miller from Stack Exchange, that will be a brief witness who is just a document custodian. In terms of what else is different, I believe the only other difference is we are no longer planning to call Andrew Michael Jones as a witness. I'm sorry. We are planning on calling Vincent D'Agostino, the special agent here, to give brief testimony. Basically we have shortened it. Overall, we have shortened it. The witnesses we cut are shorter, their testimony. THE COURT: Terrific. Thank you. Anything further on this? We'll pick up with Mr. Beeson this morning and hopefully we can get him off the stand and he can get on a plane before he gets snowed in. Page 1231 MR. TURNER: Dubious, but there's hope I guess. THE COURT: You think it's too late for that? MR. TURNER: Probably. We would note that we have asked defense counsel witness list and are still waiting for a witness list from the defense. THE COURT: I had told Mr. Dratel that I would start pressing him on Wednesday, so I'll press you whenever you're ready but no later than Wednesday. Do you want to preview anything. MR. DRATEL: We did send the government an expert notice yesterday last night. THE COURT: All right. MR. DRATEL: Probably the extra time today, we can put together, probably overnight, for the government so we can get some others. There may be one daytime decision that -- in the next day or two. THE COURT: We'll stay tuned for that. The jury charge: You folks should have received a copy of the jury charge, which we used yours as a reference and I went through each of the differences between that what we believe the correct statement of the law is and figured out what you had changed from my Delva (ph) charge and decided whether we cared. In light of the fact that we'll have tomorrow off, if you folks could get us the Word version with comments, track changes, by tomorrow late afternoon, 5:00, 6:00, that would be helpful. That way, we can start in on it Wednesday morning. Page 1232 MR. DRATEL: What we were thinking of doing would be to communicate between the parties to see if we can narrow the issues that we presented to the Court. THE COURT: Terrific. MR. DRATEL: It would give us additional time. THE COURT: Terrific. One of those I note, and I may need letters about this, you folks will need to figure out whether or not you'd like to state your position in a letter so that it can be something that we can all focus on. It has to do with a CCE. So the continuing series of violations, as you folks know, there's a fair amount of case law on this. There's the Richardson case and a number of other cases, but there seems to be a difference of view, certainly as between you folks. And it will be for you to let the Court know whether or not you've got support for your respective positions as to, number one, whether or not there has to be a specification of the series of violations in the verdict form, which I think the answer to that question is no; and the extent to which they need to be listed for the jury specifically in the charge or elsewhere, and I think the answer to that is open to debate. In terms of the indictment, I think that it does not need to be listed in the indictment, though there are some courts which suggest that it's useful to do so. Page 1233 But I'd like to get your views on the open issues with respect to the CCE because how that gets dealt with is very important, all right. Does that make sense? MR. TURNER: We'll do that. THE COURT: Terrific. Thanks. We can fold in the Alleyne issue relating to CCE into that process, perhaps. There may not even be any debate between you folks as to whether or not that needs to occur. I'm on Part 1 for the next two weeks. Because of the delays in the trial -- we pick Part 1 a year or more in advance. Originally, we were not scheduled for trial at this time. That's fine. As you folks know, and the audience may not know, Part 1 is like judge-on-call. It's like being the doctor-on-call. It's 24/7 and it's for a two-week period. Typically, there's nothing after 7:00 p.m., so it's not really a difficult thing in the middle of the night. It does mean we've got things shifted around so that I can take things before I come out here. I can take things at the break. I can take things at lunch hours. It does mean that there may be something if it was incredibly urgent that couldn't wait for a break or a lunch hour that I have to take. That would be unusual. It does happen. As you folks know, you've probably all been people on the side of coming into judges who are in Part 1 needing something urgent. We'll play that by ear. I don't expect any big issues. I really don't. Page 1234 That's what I have. What do you have? Anything? MR. TURNER: No, your Honor. THE COURT: Mr. Dratel. MR. DRATEL: No. THE COURT: We're waiting on seven. It is possible that one thing I had considered was whether or not -- it had not started snowing until about an hour ago -- that there may be some people who were sufficiently concerned about the snow that they just are not going to chance it. We haven't heard from the seven. Is that right? Two are on their way. The ones who are furthest out are actually already here. Hopefully, we'll get the others soon. If there's nothing else, we'll take a break until these folks arrive. One thing, Mr. Dratel, as long as we have a minute and I don't know, is there another cooperator on this list? MR. TURNER: Yes, Mr. Duch. MR. DRATEL: Yes. THE COURT: If you're going to go into your doing this, the line of cross, which is not atypical, you're doing this to get a break on the penalty, there was an objection during -- I was rereading the transcript -- there was an objection during Bates for life, a lifetime of imprisonment. Don't mention "life." You can do "substantial." You can do "significant." You can do lots of other words, but lifetime imprisonment, unless you can show that they were going to be getting life -- in other words, mandatory life or something else, the range is not something that you should be going into. Page 1235 As you know, there's lots of cases on this. It actually treads into the area of jury nullification, so life in the situation of the cooperators is off limits. MR. DRATEL: I think I'm permitted to go into it. THE COURT: To life? MR. DRATEL: I understand the Court's ruling, but I'm making my record. THE COURT: Why don't you give me a case that says you can go into life imprisonment for a range. It's not a statutory -- there's no requirement for these folks. There are so many crimes which carry up to life, and the use of the word life, when somebody reasonably expects that they're going to get far less, conveys to the jury a sense that this particular trial involves something different. Now, to the extent that that's the message to be conveyed, that's the message that we dealt with during the in limine motions. MR. DRATEL: I'll look at the cases, but in my experience and what I think is appropriate based on the number of factors, one of which is when this guy pled guilty, he was told you can face up to life in prison, I don't know, I don't think it's your Honor, I think it's Judge Griesa is the judge on that case, but the -- Page 1236 THE COURT: Not Duch, Bates. MR. DRATEL: So whatever the maximum penalty is, they're told, and whatever he was charged with is a factor in a decision to cooperate. THE COURT: Well, if you have particular facts relating to pressure placed upon a particular cooperator, that's what I want to elicit from you. If there's a particular reason why for this cooperator it's more relevant than it might otherwise be, but there are a series of cases on naming the penalties and going into things that are more than just the words of substantial, significant, more than a decade, and there are lots of ways of getting at it. But you give me what you would like and if Mr. Duch, if there's something really specific for him, so be it. MR. DRATEL: Also, I thought it was relevant for Bates, too, but obviously the Court has ruled, in terms of his own -- THE COURT: I didn't sustain the objection. I let it go because it was already out and I didn't want to pause on it. I thought I would preemptively discuss the issue. Sometimes the government doesn't care about a particular point. This is my view. Does the government have a position on this? MR. TURNER: For Bates? Page 1237 THE COURT: Not Bates, because Bates is done and locked and loaded. I'm not going to go back over Bates. MR. TURNER: For Duch, to be candid, I think we would draw on direct the maximum penalty is he's facing 40 years. THE COURT: The maximum for him is 40? MR. TURNER: Yes. THE COURT: He's looking at a (b)(1)(B)? MR. TURNER: Yes. MR. DRATEL: But it's (b)(1)(A) weight. THE COURT: But if it's (b)(1)(A) weight and he's pled, then under Alleyne, he can't get a statutory maximum greater than 40. MR. DRATEL: I understand that, but when he made the decision to cooperate -- THE COURT: You can always use (b)(1)(A) weight for purposes of the 3553(a) factors also, but he can't raise a statutory max now. MR. DRATEL: No, I understand that in what he's facing, but what I'm saying is when he was sitting there with his lawyer deciding whether to cooperate, he was aware -- if he's not, he's not, but you know, that he was facing a significantly greater penalty. THE COURT: You folks will present to me whether or not there are particular facts that were used to pressure that fellow that would be relevant to his bias. Obviously, bias for a cooperator is a big point, which the defense can freely explore, but I want to make sure that we're within the limits of the law. Page 1238 I think we're still waiting on folks. Let's take a break until they all show up. *(Continued on next page)* Page 1239 THE COURT: Let's bring out the jury. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. Before we get going I want to fill you in on the schedule for the next few days. Today, because of the snow, we'll be ending at noon and I know that the snow itself isn't supposed to really become particularly bad until three o'clock or so or even later but I am concerned about some of the folks who are in further removed areas being able to be sure they can get home in a safe way. So he we will end at noon today. We will not have trial tomorrow. While it's possible the storm will pass us by, I think it's sufficiently looking like it's going to land here that I don't want to have people wondering about what kinds of childcare arrangements and other arrangements they need to make. So we're going to go ahead and call it a snow day for tomorrow for you folks essentially no matter what happens. For Wednesday my hope is that we'll be able to resume, that tomorrow, late tonight some time the snow will stop or tomorrow early they'll get the roads clear and we'll be able to for Wednesday get people here. To give you a little bit more time we'll start at ten a.m. on Wednesday. We'll still only go till five but we'll start at ten a.m. on Wednesday. Now with that said, Joe is going to speak to some of you to get -- he's got all of your contact information. Make sure he's got exactly where you are going to be or a cellphone to connect with you folks. But he's going to connect with some of you who are living outside of the city to see how the conditions are on Wednesday. Because even though Manhattan's clear and the courthouse is open, that doesn't mean you are going to be able to get in if you are snowed in in Rockland County. So Joe will be communicating with you folks. As you know, we can't go forward unless you are all here so we need to assess the conditions where you folks are. Page 1240 If it looks like it's just awful there's an auto line and Joe will give you the phone number for it for the court, the entire building. And that will tell you if the courthouse is closed. If the court house is closed there is no way we are going to be having trial. It's possible that if the courthouse is open that we won't have trial Wednesday if some of you can't get here. So bottom line to summarize, today at noon, then we're going to call off tomorrow, Wednesday at ten a.m. that's what we're hoping. Thank you. I want to remind you, sir, you are still under oath from Thursday. Mr. Dratel, do you want to continue, sir? MR. DRATEL: Yes. Thank you, your Honor. CROSS-EXAMINATION Page 1241 MR. DRATEL Q. Good morning, Mr. Beeson. A. Good morning. Q. I just want to go back to something I showed you last week Thursday and show you a different version. This will be Defendant's H and ask if you recognize that. A. I do recognize it as one of the pictures I took. Q. Of the laptop while you were working with it? A. Yes, this is a screen shot. MR. DRATEL: OK. I move it into evidence, your Honor. MR. TURNER: I have no objection. THE COURT: Received; Defendant's Exhibit H. MR. DRATEL: Thank you. MR. TURNER: So looking at "H" we can get it published. *(Pause)* Q. And looking at "H" you see on the top of that line across and that's a bitcoin client program operating right where it says the Colbert report? A. Unfortunately, I don't know for sure what it is. I can see that it says the Colbert report but I don't know what kind of application it is. Q. But if you look at the metadata that's part of this exhibit now which -- did that enable you to recognize it, by the way? A. Yes, it did. Thank you. Page 1242 Q. So that's the 7:56 p.m. on October 1, 2013? A. That's what it says, yes. Q. 40 minutes off? A. 40 minutes off. Q. Which way though? A. It's slow. So we'd have to add 40 minutes to this time making it 8:36. Q. 8:36 p.m. San Francisco time? A. Yes, sir. Q. And it says 197 -- no, it says 197 megabites uploaded 26.10 MB, right? Do you see on top of the red line? A. Yes, I do. Q. Now, you took these photos after you had already imaged the laptop, correct? A. My recollection is that the laptop was in the process of being imaged. In other words, I had started the process and was taking these photographs at that time. Q. Did you testify Friday that you had already made your copies that you took the photos after you had imaged it? A. I would have to refer to my notes to be sure on the times. A lot of times things are done as I go. You know, once I start something I can start something else. So exact times I can't recall. MR. DRATEL: I just want to publish for a second Defendant's G which is already in evidence. Page 1243 *(Pause)* Q. And there it says "uploaded 8.35 megabites". Can you see that? A. It's a little blurry on my screen but it looks like it could be 8.35. Q. OK. An on the one that we just saw that you took it's 26.1 megabites, right? A. Yes. Q. So, are you not familiar with the program that's running on Defendant's H? MR. TURNER: Objection; asked and answered, beyond the scope and relevance. THE COURT: Sustained. Q. And you didn't generate the MD5 hash value for the laptop until October 3 when you started the RAM capture? A. Correct. Q. And the RAM capture is essentially the running memory on the laptop? A. Yes. RAM is random access memory, that's correct. Q. Can you just define that for the jury, please? A. Yeah. So, random access memory is the memory in your laptop or computer that's used by not hard drive storage. It is that instantaneous memory that the basic code for the programs get loaded into RAM and then your computer can use it in there. Page 1244 Q. And that gives you a window -- it gives you a ability to see what processes are running on a computer, right, RAM? A. Whether it gives you what processes are running -- everything get's loaded into RAM. So all the binary codes, all the codes that the computer needs to run is loaded into RAM. That could be the active process. That could be the operating system and so forth. Q. So on October 3 which is two days after you received the laptop you began to do the RAM memory capture? A. That's correct. One of my associates and I just to be clear. Q. And you weren't quite sure how to do that RAM capture, correct? A. The RAM capture was nontrivial. Q. Right. But you weren't quite sure how to do it. You asked for assistance, in fact? A. I did. Q. You asked whether there was a RAM capture tool that you could use for it? A. That's correct. Q. And this is a relatively new field in computer forensics, RAM capture? A. No. I wouldn't say it's a new field. Q. Well, one of the things that is part of the RAM capture is encryption keys and passwords and other things that are stored in the memory, right? Page 1245 A. That's correct. MR. TURNER: Objection. THE COURT: Overruled. Q. And the processes that the computer -- the process of the computer programs that are running on the computer is something else that RAM can tell you, RAM memory capture would be able to reserve for you? A. That information can be in RAM. Q. And the active network connections at the time that the capture occurred would be something else? A. It can be. It doesn't necessarily mean that it is. Q. And it could also determine whether there were malware or viruses or other programs running on the system, correct? A. It could be, yes. Q. Now, you've used a piece of software called FMEM, F-M-E-M, to try to acquire the RAM memory? A. That's correct. Q. And system memory is broken down into registers called ranges; s is that right? A. That's correct. Q. And for FMEM you have to specifically point the program at the registers that you want the system that you'd rather that you want to capture, right? A. That's correct. The RAM is divided into chunks, into groups, so to speak. Some are more protected than others. Page 1246 Q. OK. And so -- and if you don't direct the capture process at the right registers of RAM they will go to something called uncachable, U-N-C-A-C-H-A-B-L-E? A. I believe so. Q. And you weren't sure at the time about this, is that fair to say? A. Well, this is why I obtained the help from one of my associates. Q. But in fact, the FMEM capture did not work entirely, correct? A. Upon capturing what I believe was the third register or third section of the memory FMEM crashed the computer. Q. And when it crashed the computer you were no longer able to get any of the RAM capture that you had not gotten initially, correct? A. We were able to continue with the capture after the computer was restarted. Q. Now, you in doing your RAM capture you consulted the manuals on the computer in an attempt to find out how to proceed, right? A. I don't recall consulting any manuals on the computer. Q. Did you keep a running roster of commands that you issued the computer during your work? A. Yes, we did. Page 1247 Q. I am going to show you what's marked Defendant's I for identification -- "K", I am sorry. Call it Defendant's K for identification. And ask you to look at page two of this document. I ask you if that refreshes your recollection that you consulted the manuals on the computer? A. These are not the manuals for the computer. These are manuals for the applications MEMDUM and FMEM that may or may not have been on the computer. Q. Right, but you were looking for them? A. Yes. Q. And did you find one for MEMDUM? A. I don't recall whether one came up or not. Q. Well, there's no such file for that on a Lenox system, is there? A. There could be. Depends on the Lenox system. Most likely there was not but I don't remember for certain. Chances are since I then checked for a manual for tool FMEM that there was no tool for MEMDUM on the system. Q. And so you never got a full RAM memory capture, correct? A. Can you define a full RAM memory capture, please? Q. Well, why don't you. A. Well, the difficulty in RAM capture is that it's live, so it's ever changing and it's ever active. When we captured what I believed was the third register or third group of memory from the RAM, the system crashed which is not that uncommon in RAM captures. And so after we were able to restart we restarted with our own version and move onto the next and we continued to capture the other registers that were still there. Page 1248 Q. But when you had the capture open before it crashed it has all the operations going, correct? A. Yes. Q. And so once it crashes and then you reboot it, you've lost all of that information that's included that went live before it crashed, right? A. You do not lose all of the information. Q. But you lose information? A. Do you lose information. Q. And you don't know what information you lost? A. You do not know. Q. And that information is lost to us forever, essentially? A. It is. MR. DRATEL: Nothing further, your Honor. THE COURT: All right. Thank you. Mr. Turner, anything further from the government? MR. TURNER: One moment, your Honor. *(Pause)* MR. TURNER: Briefly, your Honor. REDIRECT EXAMINATION MR. TURNER Q. Agent Beeson, I talked to you about how when you are doing a live capture, things are changing. Could you explain a little bit more what that means if you type something on a keyboard just a single press of a keyboard does that change -- Page 1249 A. Yeah. So in performing a live capture of basically capturing data from a running computer whether it be from the hard drive or from the RAM, everything that we do is to some degree altering information. And so our goal is to minimize that alteration to the maximum we can but we do have to use the computer in order to capture this information. Q. So the sort of alterations you are talking about thought, does that involve -- A. Absolutely, not. It's very minimal footprint. We were trying our very best to not alter anything to the extent we can. Q. You talked about some errors you ran into or crashes. Any of those prevent you from making a full and complete copy of the Lenox half of the computer that we talked about on direct? A. No, it isn't. Q. And those errors, could any of those errors have resulted in the generation of thousands of pages of TOR check logs on the computer that weren't there before? A. Absolutely, not. MR. TURNER: No further questions. MR. DRATEL: Briefly, your Honor. THE COURT: All right. Page 1250 RECROSS EXAMINATION MR. DRATEL Q. But the RAM capture, we lost the ability to see what the computer was doing at that time, correct, in the full range of it, correct? A. Yes. Q. Including connections to the internet, correct, in connection with what was going on with the internet? A. I supposed. That's define as anything it's part of the group of things that could be in there. Q. And the questions of malware and viruses and whatever else might have been on there we'll also never know, right? A. Potentially. MR. DRATEL: Nothing further. Thank you. THE COURT: All right. Thank you. MR. TURNER: Excuse me. One more question, your Honor. THE COURT: One. REDIRECT EXAMINATION MR. TURNER Q. The RAM capture didn't prevent from you seeing what historically had been on the computer from years before? A. No. MR. DRATEL: Objection as to form. THE COURT: Overruled. Page 1251 RECROSS EXAMINATION MR. DRATEL Q. You have no idea when anything was put on that computer, right? A. I did not conduct the forensic exam on that computer, so. THE COURT: All right. Thank you. You may step down, sir. Would the government like to call its next witness, please. MR. TURNER: Yes, your Honor. The government calls Internal Revenue Services Special Agent Gary Alford. THE COURT: All right. Mr. Alford to the stand, please. GARY LUIS ALFORD, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. TURNER Q. Good morning, Agent Alford. A. Good morning. Q. Who do you work for? A. Internal Revenue Service Criminal Investigation. Q. And what's your position at Internal Revenue Service Criminal Investigation? A. I am a special agent. Page 1252 Q. How long have you been a special agent with the IRS? A. Approximately, six and a half years. Q. Where are you currently assigned to work? A. The New York Organized Crime Drug Enforcement Strike Force. Q. What's the Strike Force do? A. It's a task force of state, local and federal agencies and we are charged with investigating, disrupting and dismantling major drug trafficking organizations. Q. What are yours duties at the strike force? A. All the law enforcement duties whether it be surveillance, interviews, conducting warrants, arrests. Q. So did there come a time when you were assigned to an investigation of the Silk Road website? A. Yes, that was my first assignment. Q. First assignment at the Strike Force? A. Yes. Q. When were you detailed to the Strike Force? A. At the end of March 2013. Q. And as part of your investigation into the Silk Road website did you make any efforts to identify the operator of the website? A. I did. Q. And did you ever do any searches on the Internet as part of that investigation? A. I did. Page 1253 Q. What were you looking for it? A. I was looking for the first mention of the Silk Road website on the Internet. Q. And how did you search for the first mention of "Silk Road" on the ordinary Internet? A. I started using Google searches. Q. OK. Did you restrict your search to certain date ranges? A. Yes. When you search Google there's a task bar at the top where you can restrict the date or customize the date. So, I was aware of when the Silk Road allegedly had begun, so I had restricted the date, so I would search before that. Q. Why were you searching for the first mention of the Silk Road website? A. Because the Silk Road website was on a hidden part of Internet TOR and TOR hidden services. So it does no good or let's say a person who is not familiar with it for it just to be there. You would have to have, someone would have to tell you about it. So I figured that it would have to be on a regular Internet and someone would have to tell you where to go on the hidden Internet. Q. OK. So could you take a look at the binder in front of you, Government Exhibit 301. A. I see it. Q. Do you recognize that document? A. Yes, I do. Page 1254 Q. What is it? A. It's a representation of a Google search. Q. That you did? A. Yes. Q. As part of your search for the first mention of the Silk Road website on the ordinary Internet? A. Yes, a representation of what I did. MR. TURNER: The government offers Exhibit 301 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 301 received in evidence)* MR. TURNER: Publish that. *(Pause)* Q. OK. So first of all, what were you searching for in the Google search box? A. Well, I was searching for -- I know that since it was a Silk Road website you had to have Silk Road. But that's a pretty generic term that we have a lot of responses. So I know all the addresses on the TOR hidden services we use a dot on it. So I would put a term that would be restricted to what would be on the Silk Road website. Q. Then there's this circle part of the screen. What does that reflect? A. That's how you would test the date range of what you are searching. So you can just put in an end date. So I'll put in January 31 because all information was that Silk Road had begun in February of 2011. Page 1255 Q. OK. So you kept searching back, pushing the date range further and further back? A. Correct. Q. And here you were searching for the results before January 31, 2011? A. Yes, sir. Q. What did you get? A. I got back what you see there, a response about a bitcoin talk forum. Q. So bitcointalk.org, what is a bitcointalk.org? You visited the site? A. Yes. Q. What sort of site is hosted there? A. It's a discussion forum surrounding bitcoins. Q. So did you click on this link? A. Yes, I did. Q. What did it take you to? A. It took me to a forum, a discussion thread. Q. Can you just remind the jury what a discussion thread is? A. On these forms you -- people would post a topic. So in this particular one the topic was a heroin store and people would comment and discuss that particular topic. Page 1256 Q. Could you take a look at what's been marked as Government Exhibit 302 in your binder. A. Yes. Q. And do you recognize this document? A. Yes, I do. Q. How do you recognize it? A. It's a screen shot that I took during ny investigation. Q. What is it a screen shot of? A. The heroin discussion thread. Q. When did you take that screen shot? A. June 3, 2013. Q. Is that, approximately, when you first visited that thread? A. Yes. MR. TURNER: Government offers 302 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 302 received in evidence)* MR. TURNER: In on the top third of the page. Q. All right. so this is bitcoin forum and here is the thread; is that right? A. Yes, sir. Q. And it's titled "The Heroin Store". And where do you find a mention of Silk Road in this thread? A. Further down, approximately -- MR. TURNER: Crop page 6. Page 1257 A. Yes, page six. MR. TURNER: All right. Could you zoom in in this area. *(Pause)* Q. So tell us what we're looking at here. A. It appears that Altoid had made a posting on the bitcoin form on January 29, 2011 and this member "shadow of" is cut off had quoted it. And it mentions what appears to be a URL for Silk Road. MR. TURNER: All right. I think if you scroll down AL little bit more you can see the full name, "Shadow of Harbinger"? A. Yes, that is the-- MR. TURNER: Can you scroll back up. All right. So first all there's in this part of the post right here? Put the name there. *(Pause)* Q. Just to be clear, the person who posted this overall post or the user is what? A. Shadow Harbinger. Q. The post includes a post from Altoid? A. Correct. Q. And what does that mean, a quote from another user like that? A. Well, when you first on post on the bitcoin forum another person say if they're responding to something you specifically said they will often quote your statement in their response that people can follow along with the conversation. Page 1258 Q. So this is a quote from a previous post that appeared on the forum? A. Yes. Q. And what was the time of that previous post on the forum? A. January 29, 2011 at approximately 7:44. Q. And the user who posted that post was named "Altoid"? A. Correct. Q. All right. And it says: What an awesome thread. You guys have a ton of great ideas. Has anyone seen Silk Road yet? It's kind of like an anonymous Amazon.com. I don't think they have heroin on there but they are selling other stuff. They basically use bitcoin and TOR to broker anonymous transactions. It's at -- and then there's that long onion address. Those not familiar with TOR can go to SilkRoad420.wordpress.com for instructions on how to access the dot onion site. Let me know what you guys think. And then there's Shadow Harbinger's comments? A. Yes. Q. So here we go first bitcoin drug store response. All right. So in the post Altoid mentions this SilkRoad420.wordpress.com site. Did that web page still exist by the time you were doing your Google searches in June 2013? Page 1259 A. No. It had been taken down. Q. Were you able to obtain an archived version of the site? A. Yes. Q. Where did you get that from? A. Archive.org. Q. Could you take a look at what's been marked as 303 in your binder. A. I have it. Q. Do you recognize this document? A. Yes. Q. How do you recognize it? A. That's a screen shot of the archive.org capture of the SilkRoad420.wordpress.com site. MR. TURNER: The government offers 303 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 303 received in evidence)* MR. TURNER: Can you put it up on the screen. *(Pause)* MR. TURNER: Before you read it let me just read in a stipulation, your Honor. It is hereby stipulated and agreed by and between the United States of America by Preet Bharara, United States Attorney for the Southern District of New York, Serrin Turner and Timothy C. Howard, Assistant United States Attorneys, of counsel, and Ross Ulbricht, by and through his counsel Joshua Dratel, Esquire, Government's Exhibit 303 is a screen shot of an archived web page that was once success at http://SilkRoad420.wordpress.com. Page 1260 Government Exhibit 303 fairly and accurately depicts the contents of the http://SilkRoad420.wordpress.com web page as it appeared on February 4, 2011 when the web page was archived on the website http:web?. OK. So could we zoom into this part of the screen? *(Pause)* Q. So what did you find on SilkRoad420.wordpress.com? A. It was a website that it gave you the instruction of how to access the Silk Road hidden site. Q. And it says: This is not the Silk Road but you are close. Silk Road is a TOR hidden service that allows you to buy and sell anonymously online using bitcoins. To access the Silk Road site you must use a TOR enabled browser. If you use Firefox you can simply install the TOR button plug-in. And then jumping to the next paragraph, the third paragraph. It says: At Silk Road every precaution is made to ensure your anonymity and security while connecting to the site from making your transactions to receiving your items, current offerings include marijuana, shrooms and MDMA. You may also sell items anonymously on Silk Road as an independent seller. So what are you waiting for. Install TOR and go to Silk Road now. Silk Road staff. Page 1261 So after finding this web page did you do any further searches on Google? A. I did. Q. What did you search for next? A. The SilkRoad420workpress.com. Q. Could you look at Government Exhibit 304. And do you recognize that exhibit? A. Yes. Q. How do you recognize it? A. It's a representation of the Google search that I performed. MR. TURNER: Your Honor, the government offers Exhibit 304 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 304 received in evidence)* Q. So when you searched for SilkRoad420wordpress.com what new thing did you find? A. I found that there was another posting. Q. And where was this posting that you found? A. It was at shroomery.org. Q. What was the date of posting? Page 1262 A. January 27, 2011. Q. The one we looked at from Altoid@bitcointalktor when was that? A. Two days later January 29, 2011. Q. Could you take a look at Government Exhibit 305. A. I have it. Q. Do you recognize this exhibit? A. Yes. Q. How do you recognize this? A. This is a screen shot I took during my investigation of the shroomery.org website. MR. TURNER: The government offers 305 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 305 received in evidence)* MR. TURNER: Could you zoom in here. *(Pause)* Q. OK. So what was the shroomery website? A. It's also a discussion forum for a discussion of illegal mushrooms. Q. And what did you find? What post did you find when you clicked on the Google link that you found as a result of your search? A. I found this posting from Altoid and it also directed the reader to the Word Press site. Page 1263 Q. All right. And the user who posted it is reflected to the left? A. Yes. Q. And when it says registered 1/27/11 what does that reflect? A. That reelects when the user registered the account on shroomery.org. Q. The Altoid user? A. Yes. Q. When was this message posted? A. That same day. Q. It also directed you to go to SilkRoad420.wordpress.com? A. Yes, it did. Q. So after finding these two posts about the Silk Road by the user Altoid what did you do to try to find out who the person was behind the Altoid user name? A. Well, I wanted to see all the posts that those users made on the relevant discussion forum. Q. And so what did you do to look into that? A. Well, the user -- you could click on the user and see posts for that specific user. Q. Did you do that at shroomery.org? A. Yes. Q. Did you find any more posts? A. No. Q. What about bitcointalk.org? Page 1264 A. There were other numerous posts. Q. Could you take at look at Government Exhibit 306. A. I have it. Q. Do you recognize this exhibit? A. Yes. Q. And how do you recognize it? A. It's a screen shot I took during my investigation of the post of Altoid on the bitcoin forum. MR. TURNER: The government offers 306 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 306 received in evidence)* MR. TURNER: Top left. *(Pause)* Q. OK. So this page is all the posts of Altoid that you were able to pull up on bitcointalk.org? A. Yes. MR. TURNER: Exit out. *(Pause)* Q. Did you find the Altoid post on bitcointalk.org that you looked at earlier, the one that is quoted? A. No, I did not. Q. Can a bitcointalk user delete a post of theirs if they want, do you know? A. Yes,they can. Page 1265 Q. Can the site itself choose to delete a post -- MR. DRATEL: Objection. THE COURT: Sustained. Q. Have you visited bitcointalk forum? A. Yes I have. Q. Have you seen any rules of the site, any moderator actions on the site? A. Yes. Q. And from that review of the site do you know whether moderators on the site can delete content on the site? MR. DRATEL: Objection. THE COURT: Rephrase it. Q. Sure. From familiarizing yourself with the site, the rules of the site, do you know whether moderators on the forum can delete forum posts if they think inappropriate? MR. DRATEL: Objection. THE COURT: I will allow it. It's not a perfectly formed question but it's fine. You may answer it. A. Yes, they can delete and a user can delete. Q. Do you know if the user post is deleted can any quotes from those users posts still show up in other user messages? MR. DRATEL: Objection. THE COURT: Sustained. You need to build -- MR. TURNER: I was asking if he knows, your Honor. Q. Have you yourself tested the features of bitcointalk.org forum? Page 1266 A. I have. Q. Have you tried -- can you explain from that testing that you've done of the site, do you know that if a user's post is deleted can a quote of that post still show up on the site? A. Yes, I can. I went to the site and I tested it. I went to the site and registered an account and I put a test post up. Subsequent to that post I then quoted that same post so I can see that it quoted my original post. I then went and deleted the original post and see if the second post remained, which it did. So I know that if someone can't post on a site someone can delete it. But if one quotes a post it'll remain on the discussion forum. Q. What were you able to find in the posts of Altoid that you were able to pull up on the bitcoin.org forum? A. I found a post and I found the user had left an e-mail address. MR. TURNER: Can you zoom-in on the full post here. *(Pause)* Q. Is this a post you are referring to? A. Yes, sir. Q. And what's the date of the post? A. October 11, 2011. Q. And it's titled bitcoin project development IT pro needed for venture back bitcoin start-up? Page 1267 A. Yes. Q. Hello. Sorry if there is another thread for this kind of post but I couldn't find one. I am looking for the best and brightest IT pro in the bitcoin community to be the lead developer in a venture backed bitcoin start-up company. The ideal candidate would have at least several years of web application development experience having built applications from the ground up. A solid understanding of OOP and software architecture is a must. Experience start-up environment is a plus or just being super hardworking, self-motivating and creative. Compensation can be in the form of equity or a salary or somewhere in between. If interested, please, send your answer to the following questions to RossUlbricht@G mail.com. What are your qualifications for this position? What interests you about bitcoin? From there we can talk about things like compensation and references and I can answer your questions as well. Thanks for in advance to any interested parties. If anyone knows another good place to recruit, I am all ears. So at some point in the investigation did you obtain a search warrant on the Ross Ulbricht@Gmail.com e-mail account? A. I did. Q. And when did you obtain that search warrant? Page 1268 A. Approximately, October 78, 2013. Q. So this was after the defendant's arrest in this case? A. Approximately, a week after. Q. And how does that work? When you obtain a search warrant on an e-mail account how do you get records? A. Well, in this case you get a search warrant to swear out in front of a judge. Once it's sworn out then Google usually requires -- MR. DRATEL: Objection, your Honor. THE COURT: I'll allow it. You may continue. A. Google allows you to scan it and then send via e-mail a search warrant to them and then they produce the records and they usually produce the records in the form of a thumb drive. Q. Objection. So did you get the records from Google? A. Yes. Q. When, approximately, did you get the records? A. I will have to refresh my memory. It wasn't too long after. MR. TURNER: I have a stipulation. Let's now read the stipulation, your Honor, if I may. THE COURT: All right. Ladies and gentlemen, you recall from an earlier stipulation, not the one earlier today but last week or perhaps even at the end of the first week, that stipulations are agreements between the parties as to certain facts and you can take those facts as established. Page 1269 You may proceed. MR. TURNER: It is hereby stipulated and agreed by and between the United States of America, by Preet Bharara, United States Attorney for the Southern District of New York, Serrin Turner and Timothy Howard Assistant United States Attorneys, of counsel, and Ross Ulbricht by and through his counsel, Joshua Dratel, Government Exhibits 307, 308-A, 308-B, 309, 311, 312, 312-C, 314, 315-A, 315-B, 316, 317, 320, 321, 322, 324, 325, 329, 330, 1000, 1001, 1002, 1003, 1004, 1006, 1007, 1008 are true an accurate copies of e-mails contained in e-mail account RossUlbricht@Gmail.com as of December 3, 2013. All of the e-mail were maintained on computer servers controlled by Google Inc. and were produced to Internal Revenue Service Special Agent Gary Alford pursuant to a court order served on Google on or about October 22, 2013. Government Exhibit 1000, 1001, 1002, 1003, 1004, 1006, 1007 and 1008 and particular are logs on the record chats conducted through Google Talk, an online chat service operated by Google Inc. Google also provided the option to conduct chats off the record, OTR, which are not stored at Google Chat Talk either parties communicating through the chat. I'll read the remainder later. OK. So you didn't receive these records until after the defendant was arrested; is that right? A. Correct. Page 1270 Q. First of all, in reviewing the contents of this RossUlbricht@Gmail.com account did you find any evidence that the user of the account was Ross Ulbricht, the defendant in this case? A. Yes. Q. And what kind of evidence did you find along those lines? A. I found communication to and from the defendant. I found pictures representing the defendant. I found e-mails regarding financial accounts of the defendant. THE COURT: Mr. Turner, did you mean to offer the documents that you'd read, the exhibit numbers of. MR. TURNER: I can just do it now or when I go through them. THE COURT: All right. So long as you haven't forgotten if that was your intent. You can do it whenever. MR. TURNER: The stipulation is Government Exhibit 803. Q. Take a look at Government Exhibit 307. A. Got it. Q. Do you recognize that document? A. Yes. Q. This is one of the e-mails you found in the account? A. It is. Q. What is it of? A. It's a e-mail that, from the defendant to an individual named Crystal with an attachment and it states: I cut hair today. What do you think? Page 1271 MR. TURNER: The government offers 307 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 307 received in evidence)* MR. TURNER: Zoom in quickly. Q. So the bottom of the message is: I cut my hair today. What do you think? Which is an attachment to the e-mail? A. Yes. Q. Page two, the attachment? A. Yes. Q. You find our other e-mails, photos of the defendant like this in the account? A. Yes. Q. So going back to the posts from Altoid. Did you find any e-mail messages in the defendant's e-mail account that were addressed to Altoid? A. Yes. Q. Take a look at Government Exhibit 306-A -- excuse me -- 308-A. *(Pause)* A. I have it. Q. What is this document? A. It's an e-mail from shroomery.org website to Altoid with the address RossUlbricht@Gmail.com. Page 1272 MR. TURNER: Government Exhibit 308-A into evidence. MR. DRATEL: Previous objection, your Honor. THE COURT: All right. Those objections are overruled 308 A is received. Q. So this message is from the shroomery. Do not reply at shroomery.org? A. Yes. Q. To Altoid. And then the user's e-mail address is indicated as RossUlbricht@Gmail.com? A. Yes. Q. Subject is shroomery message board account has been created. Date is 1/27/2011, 6:22 p.m. When we look back at shroomery post of Altoid, when did that indicate the account had been registered? A. January 27, 2011, same date. Q. It says: Dear Altoid, you have successfully created an account on the shroomery message board. Thanks for signing up. Before you can use your account it must be activated. To complete the process, please, click on the following link or paste it into your browser. Did you find any other e-mails in defendant's e-mail account addressed to Altoid? A. Yes. Q. Could you take a look at Government Exhibit 308-B? Page 1273 A. I have it. Q. Do you recognize this document? A. Yes. Q. What is it? A. It is answer e-mail I found in the Defendant's G mail account. Q. And what is it about? A. It is an e-mail from Drugs Forum to the defendant addressed to Altoid. MR. TURNER: Government offers 308-B into evidence. MR. DRATEL: Same. THE COURT: Those objections are overruled. 308 B is received. *(Government's Exhibit 308-B received in evidence)* Q. OK. This is from February 9, 2011? A. Correct. Q. About two weeks later, the e-mail we just looked at? A. Yes. Q. It said private message, the Drugs Forum, have you been to Drugs Forum, by the way? A. I have. Q. What kind of website is it? A. Also a discussion forum about illegal substances. Q. It's from Drugs Forum, date February 9, 2011 to RossUlbricht@Gmail.com. Page 1274 *(Pause)* Q. It says do not reply to this e-mail. Dear Altoid, have you received a new private message at Drugs Forum from Fungus Head entitled "you have received an infraction at Drugs Forum". To read the original version, respond to or delete this message you must log-in here. This is the message that was sent. Dear Altoid, you've received an infraction at Drugs Forum. Reason: Spamming. This infraction is worth 100 points and may result in restricted access until it expires. Zoom out. *(Pause)* Q. Original post. URL attach user received. No action required. Has anyone heard of Silk Road? They claim to be an anonymous market place that uses TOR and bitcoin to broker anonymous transactions. They seem legit but wanted to see if anyone here has any experience on the site. The hidden URL is -- and then there's a link -- or you can go through http://SilkRoad420.wordpress.com. Would be interested to hear any feedback. All the best, Drugs Forum. So you say you have been to Drugs Forum? A. Yes. Q. And you've been to a number of other discussion forums as well as part of your research? Page 1275 A. Yes. Q. Based on that experience can you explain what an infraction is on that discussion forum? MR. DRATEL: Objection. THE COURT: Why don't you do a little bit more in terms of building a foundation. Q. Do you know what an infraction is on a discussion forum? A. Yes. Q. How do you know? A. It's usually a violation. MR. DRATEL: Objection. Q. How do you know? THE COURT: I'll allow it. A. When you go to discussion forum there's a term of service. An infraction is when you violate the terms of service on that discussion forum. Q. What was the reason according to this e-mail that Altoid was being notified that he gotten an infraction? MR. DRATEL: Objection. THE COURT: Overruled. A. Spamming. Q. Where is the spam located? A. In that box where the message was sent. MR. TURNER: OK. Could you put up Government Exhibit 240-A which has already been admitted into evidence. This is journal file labeled 2010. The jury's already heard. Could you put it in top panel. Page 1276 MR. DRATEL: I am going to object, your Honor. THE COURT: Overruled. MR. TURNER: Could you go to page two. *(Pause)* MR. TURNER: Could you pull it up so we can get part of the top panel. *(Pause)* MR. TURNER Q. It says: While all of this was happening I began working on a project that had been in my mind for over a year. 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. I had been studying the technology for a while but needed a business model and strategy. I finally decided that I would produce mushrooms and I could list them on the site for cheap. I worked my ass off setting up a lab in a cabin out near Bastrop off the grid. Did you find the e-mail notice Defendant's E mail account about renting a place in Bastrop Texas? A. Yes, I did. MR. DRATEL: I am objecting to the reading before with no question. Page 1277 THE COURT: Overruled. You may proceed. Q. I should just make clear, have you reviewed the contents of the defendant's laptop as part of your investigation? A. Yes. Q. That evidence was given to you by the FBI? A. Yes. Q. All right. So could I take a look at Government's Exhibit 314, please. Do you recognize this document? A. Yes. Q. How do you recognize it? A. It's an e-mail in the Defendant's G Mail account. Q. What's it about? A. It's a e-mail regarding Craig's List about renting a country home in Bastrop. MR. TURNER: The government offers 314 into evidence. MR. DRATEL: Previous objection, your Honor. THE COURT: All right. Those objections are overruled. GX314 is received. *(Government's Exhibit 314 received in evidence)* MR. TURNER: Put that in the bottom panel, please. *(Pause)* Q. Subject $825/two bedroom country home (Bastrop) from Ross Ulbricht date July 6, 2010, 6:37 p.m. Is your house still available, Ross? And then there's a Craig's List listing. Page 1278 Jump down to page two. *(Pause)* Yes, it is. Give me a number to call you back. Reply? A. Yes. Q. Did you also review something on the defendant's commuter labeled SR accounting? A. Yes, I did. Q. What was the nature of that document? A. That was a spreadsheet of expenses. MR. TURNER: Could you publish Government Exhibit 250? *(Pause)* Q. The dates of these entries are all from July 2010. The first one is "start", then it's "lab clothes", "carryover from fall 2009", "petri dishes", "Hepa filter", carryover from fall 2009. Did you find anything in the government's -- excuse me -- in the defendant's e-mail account about any items like this? A. Yes, I did. Q. What sort of things did you find? A. I found e-mails related to the purchase of the Hepa filter. Q. Can you take a look at Government Exhibit 315-A, please. *(Pause)* A. Got it. Q. And what is this document? Page 1279 A. It is an e-mail from Sac sells or Sac distributors to the defendant regarding the purchase of a pure clean room Hepa filter. MR. TURNER: The government offers Exhibit 315-A into evidence. MR. DRATEL: Same objections. THE COURT: Those objections are overruled. Government Exhibit 315-A is received. *(Government's Exhibit 315-A received in evidence)* Q. Subject orders shipped from SAC sales, date October 1, 2009 to RossUlbricht@Gmail.com. Then it says: Thank you for your purchase to SAC sales. Your order has been shipped. The description a precision air pure flow clean room Hepa filter and the total cost is $88.94. What was the cost of the expense reflected in the spreadsheet? A. $89. MR. TURNER: Could you put go back to the top panel and scroll down some. THE COURT: Mr. Turner, we are going to take a short one break before we end, so you don't have to do it right now but at some point when you reach a logical breaking point. MR. TURNER: Sure. Q. OK. There's some more entries here. Now we're in August of 2010. We have containers, jars, hose, glue guns, plastic sheet, one for gas, one for humidifier. Again, did you find any e-mail receipts in the Defendant's e-mail account reflecting any of these items? Page 1280 A. Yes, I did. Q. Take a look at Government Exhibit 315-B. A. I have it. Q. What is this document? A. It's an e-mail from Amazon.com to the defendant regarding a purchase he made. MR. TURNER: The government afters 315-B into evidence. MR. DRATEL: Same objection. THE COURT: All right. Those objections are overruled. Government Exhibit 315-B is received. *(Government's Exhibit 315-B received in evidence)* Q. Header information, subject, your order with Amazon.com. The date 8/16-201, Ross Ulbricht. Thank you for your order, Ross Ulbricht. Scroll down, please. *(Pause)* Q. OK. So the delivery estimate is given for a cool mist humidifier, $33.42? A. Yes. Q. How does that compare to the spreadsheet entry that you saw? A. It's within 42 cents of the 33 dollar entry. Page 1281 Q. So were these the only items you found like this that matched -- excuse me. Were these the only e-mails you found on the defendant's e-mail account that matched items on the spreadsheet or were there others? A. There were numerous others. MR. TURNER: Government Exhibit -- actually I'll stop there, your Honor. THE COURT: All right. So ladies and gentlemen, let just take a short break and then we'll come back and we'll sit until noon. I want to remind you not to talk to each other or anybody else about this case. Thanks. *(Jury not present)* THE COURT: All right. *(Continued on next page)* Page 1282 *(In open court; jury not present)* *(Witness temporarily excused)* THE COURT: All right. Let's all be seated. It's just going to be a short break. I just wanted to make sure that the jury had some break this morning. I think in terms of the objections, the documentary objections are in the nature of Vayner and hearsay. And the Vayner objections we have gone over before for this particular witness, the documents that he is getting in to, which there's been an objection on Vayner grounds, have been appropriately authenticated. In terms of hearsay, they are not for the truth. But I do want, Mr. Dratel, to give you an opportunity to make the objection relating to the reading of the document because that's one that we haven't yet encountered. MR. DRATEL: Right. THE COURT: You and I are familiar with another trial with a similar objection, but I wanted you to make your record and have the government respond. MR. DRATEL: Thank you, your Honor. First on the issue of initial exhibits, I didn't object because they were authenticated. He was just saying what he did on the Internet, but they shouldn't come in for the truth either because it's really just about his process, so therefore they were -- in other words, he said I took the screenshot, so it was the screenshot, but, in fact, it shouldn't come in for the truth either. Page 1283 But with respect to the reading, the government shouldn't get a chance to sum up periodically throughout the case. There wasn't a question or an answer. I understand the linkage between one exhibit and another exhibit if a question is posed to the witness to do it, but not with the wholesale reading of a post that has already been read in at the time that it was put in evidence. I think through Mr. Kiernan, that Mr. Howard read the same part. So, in that context, it's got to be narrow in the sense of not exploiting the fact that it's in evidence for the government to just simply reiterate its evidence and get a midterm summation. THE COURT: Mr. Howard. MR. TURNER: This is evidence already admitted into evidence. This is evidence that this agent reviewed and it's important to give context -- it is part of the question. The question is you reviewed this, did you find any evidence that links to it in some way in the defendant's email account. Without that context, the question doesn't make much sense and there's no reason why the jury needs to be confused as to the relevance of the questioning going on. THE COURT: I allowed the question. And so long as it's tied in a manner that you've suggested or otherwise not cumulative, in other words, the government is not just slapping up a document time after time without needing it for purposes of context, I will continue to allow it but will be mindful of if there's a point when it becomes cumulative. Page 1284 MR. TURNER: I note a couple of things. First of all, most of the exhibits that we're going to be fronting in this manner the jury has either not seen before or have not seen the portions from which I'll be reading. But can I make a record on the hearsay point? THE COURT: Yes. MR. TURNER: These statements are not human statements and the law is very clear under the federal rules that the hearsay rules only apply to human statements. We have some automatically-generated statement by Amazon or by a forum, a discussion forum software, those are machine statements. I can give your Honor law from several circuits. THE COURT: How are you going to get in that it was done by a machine as opposed to a human being sitting there cutting and pasting his rules and slapping it onto an infraction? MR. TURNER: That's a different matter. I'm talking about, for example, just the fact of the post, I think the fact that the Altoid post shows up there and we can have the agent testify that he tested out the discussion forum software, and the post automatically flashes up on the screen, you don't need a human being to type it up there. Page 1285 THE COURT: I thought you were referring to the infraction language from drug forum. MR. TURNER: No. I'm just speaking generally when we are talking about these computer-generated the statements. THE COURT: Let me be clear: Your point is that the word Altoid as a username when it is appearing on a forum post is, according to the testimony, automatically generated? MR. TURNER: Right. THE COURT: Therefore, because it's automatically generated, it's not a, quote, statement or a declarative statement for hearsay purposes and, therefore, the hearsay rules don't apply? MR. TURNER: Right. The hearsay rules exist to protect against problems of witness credibility, witness memory, out-of-court declarant's memory, perception. Those sort of issues, those sort of concerns do not apply to statements automatically generated by computer. All I'm saying is I'm not focusing on one exhibit we talked about in particular, but when we're looking at these emails things like Amazon receipts, etc., those are documents that are automatically generated by computer. THE COURT: How do we know that? MR. TURNER: We can have the agent testify that he shopped at Amazon before and it automatically pops up. We can have a custodian from Amazon actually testify to that, but I think it's common knowledge. Page 1286 THE COURT: We'll see whether it's contested, but I just want to note that if you're going to assert that something falls within an exception or there's not even the need to go to that exception, that it falls outside of a rule, while I might intuitively think it or somebody else might intuitively think it, I want to make sure that we either have a legal or evidentiary basis. If it's been established in prior cases that such kinds of messages are automatically generated, then so be it. It would strike me as the kind of thing where potentially it could become a question of fact. So I just want to make sure that you understand that I hear your legal proposition; whether you've got a sufficient factual basis for that proposition I think is a second question. MR. TURNER: Okay. Just to be clear, we do fully agree with your Honor that these things are not coming in for the truth in any event, but we just wanted to note that even if it were, these are not human statements. And if we need to make more of a record on that, we can. But these are the sorts of things that are generated when you do things on the computer automatically by the system of the company you're using. THE COURT: Mr. Dratel, first, and then I'll let you say whatever you would like, but I want to make sure that I understand your position on whether there's a factual dispute as to whether certain of the Amazon messages, for instance, are made by a machine or made by a human, similarly with respect to Altoid. Page 1287 MR. DRATEL: Right. There's no evidence that they're computer-generated. I don't even know what that means in this context; that unless we are in a world of artificial intelligence that I don't believe we have reached yet, there are no spontaneous computer-generated pieces of information. They're all programmed by human beings. If I cut and paste something and then hit a keystroke, is that automated? THE COURT: I think that's a legal question. MR. DRATEL: Yes, but even as a factual question, it's not in evidence, so it's not established, so I'm not conceding anything on that point. THE COURT: Here's what I think the government should do for this point just so we're clear -- there's plenty of time for the government to do if it chooses to, it's up to you folks -- one, I'd like to see some of the cases. I don't doubt that if you say they exist, there are cases. I don't know whether there are cases on both sides. I have not investigated this issue, so I would appreciate whatever cases there are, that you folks would like to make me aware of on either side of this issue to understand the legal landscape; but, secondly, as a factual matter, I think that even if the legal landscape says automatic population of text on a page is not a declarative statement for hearsay purposes, I think it must be, not having read these cases, that the analytical background to that is there's a certain amount of reliability in the coding of the statement into the program, and so that, therefore, you get the reliability of the declarative statement through the computer program. If that's the case, then you need to demonstrate factually that, in fact, you can rely upon that analytical framework. That's my guess. You guys will look at the cases and decide whether or not you're within striking distance of the parameters, but I would think that would be close to the analytical foundation. Page 1288 Let's take a short break. Mr. Dratel, was there anything else you wanted to say? We were only dealing with that one issue. MR. DRATEL: I think that's it. THE COURT: Thank you. Let's take a short break and come right back out. *(Recess)* *(Continued on next page)* Page 1289 *(In open court; jury present)* THE COURT: Will you all be seated, please. Mr. Turner, you may proceed. MR. TURNER: Thank you, your Honor. MR. TURNER Q. Agent Alford, you testified that you reviewed the contents of the defendant's computer as part of your investigation? A. Yes, I did. Q. And you reviewed the contents of the defendant's email account? A. Yes, I did. Q. And did you do any comparison between the two? A. Yes, I did. Q. And what were you looking for? A. I was looking for things that matched information on the defendant's computer versus information in the Google account or Facebook account. Q. Okay. We'll get to Facebook in a minute. Let's go to Government Exhibit 240B. This has already been admitted into evidence. This is another journal entry on the defendant's computer. This one is dated 2011. Can you zoom in on the first eight lines or so. It says "Still working on good wagon books and Silk Road at the same time. Programming now. Patchwork php mysql. Don't know how to host my own site. Didn't know how to run bitcoind. Got the basics of my site written. Launched it on freedomhosting." Page 1290 Do you know what freedom-hosting is? A. Yes. Q. What is it? A. It was a site where you can host websites. Q. Websites where? A. Usually on the dark web. MR. DRATEL: Objection. Q. You mean Tor? A. Tor. THE COURT: Sustained, but you can repeat that last Q and A so it's clear. MR. TURNER: Sure. Q. Just to be clear, where were websites on freedomhosting, where did they exist? On Tor or the ordinary Internet? A. Tor. Q. So can you see any reference in the defendant's email address, in the defendant's email account about freedomhosting? A. Yes, I did. Q. Can you take a look at Government Exhibit 309. Do you recognize this document? A. Yes. Q. What is it? What is it from? Page 1291 A. It's an email from miller@roothosts to the defendant regarding freedomhosting. MR. TURNER: Government offers Exhibit 309 into evidence, your Honor. MR. DRATEL: Hearsay and Vayner, your Honor. THE COURT: Those objections are overruled and Government Exhibit 309 is received. *(Government's Exhibit 309 received in evidence)* MR. TURNER: Can you zoom in at the top third there, please. That's good. Q. So this is an email, the subject is "Re: Tor hidden service." And I think the chain actually starts down at the bottom, so if you can go down there. On September 24, 2010 at 12:36 a.m. Ross Ulbricht wrote "Hi, is it possible to set up a tor hidden service on your servers?" Go up. This person is writing back from someone at roothosts.com? A. Yes. Q. And the reply is "Hello Ross. No, sorry. I suggest you look at Freedom Hosting or KOGEOX," and several dot-onion addresses are provided below that. As part of your review of the defendant's computer, did you also look at some of the Tor chat logs on the defendant's computer? Page 1292 A. I did. Q. Did those include Tor chats with the username h7? A. Yes. MR. TURNER: Could you please publish GX 224, which has already been admitted into evidence. Okay. And could you go to the bottom of page two, please, and zoom in on that. This is page 17 of an 88-page chat log. The date is October 30, 2011. H7 says "How was your week? Myself: Not bad. I will be traveling soon, so I have much to do before I go and I didn't get as much done as I wanted, but this week I will focus on getting out of town. H7: Okay." Go down to the next page. "h7: Is it just you over there? Myself: I have people to take care of, but I'll be traveling alone. Is that what you mean? H7: No, when you leave town will anyone be looking after the servers? Myself: Oh, yes indeed. H7: Because I see "The Silk Road Staff" written in messages but I don't know if it's just you or not. Myself: It's basically just me, but more and more I am trying to spread the responsibility around. You are a big part of that." Page 1293 Can you go back to page two again, please, the bottom. MR. DRATEL: Objection, your Honor. THE COURT: Overruled. MR. TURNER Q. It says "myself: I will be traveling soon." And the date of that is October 30th, 2011. A. Yes. Q. In the defendant's email account, did you see any evidence of travel plans around this time? A. Yes, I did. Q. Can you take a look at Government Exhibit 329, please. Do you recognize this document when you get to it. A. Yes. Q. What is it? A. It's an email from CheapAir to rossulbricht@gmail.com regarding airline tickets. MR. TURNER: The government offers Government Exhibit 329 into evidence. MR. DRATEL: Hearsay and Vayner, your Honor. THE COURT: Those objections are overruled. GX 329 is received. *(Government's Exhibit 329 received in evidence)* MR. TURNER: Could you scroll down. Let's see. Let's do the header information first, please. Q. This is dated October 18, 2011; is that right? Page 1294 A. Yes. Q. It says "Confirmation for Ross Ulbricht." Could you scroll down, please. Can you zoom in on the flights. It's hard to read here but can you describe what flights were shown? A. There's an itinerary. One leg is dated Tuesday November 15, '11, for Austin, Texas to Denver, Colorado; then there's a second leg from Denver, Colorado to Los Angeles, California; then there's a third leg from Los Angeles, California to Sidney, Australia. Q. Does the itinerary include a return trip on the second page? A. Yes, it does. Q. And what is that return trip? A. The first leg is Tuesday, April 3rd, 2012. Q. About six months later? A. Yes, sir. And it's departing from Sidney, Australia to San Francisco, California; and then the final leg is April 3rd, 2012, from San Francisco, California to Austin, Texas. Q. Could we take a look -- could we go back to Government Exhibit 224, please, up at the top. MR. DRATEL: Objection. This is the fourth time it's going to be read. THE COURT: Overruled. Overruled. MR. TURNER: It wasn't read before. Page 1295 THE COURT: You can proceed. MR. TURNER: Could you go to page four, please and zoom in to the conversation at the bottom. Can you actually bring it into the center panel. Pages 52 through 53 of the 88-page chat log. December 15, 2011 is the date of the chat starts. "myself: By the way, I'm going to be unavailable from about 4 am UTC Friday to about the same time on Sunday, so I'll send you your pay tomorrow. h7: k, you forgot me last week h7: and can u send 100USD to Silk Road HR for this weeks bounties? myself: you are right, so sorry about that. sending $3k now for last week and this week." Q. So, did you find any emails in the defendant's Gmail account about any travel plans the weekend of December 15, 2011? A. Yes, I did. Q. And what did you find? Take a look at Government Exhibit 330. A. I found an email from Cally Ulbricht to the defendant regarding a houseboating trip. Q. Is that a Government Exhibit 330? A. Yes, it is. MR. TURNER: Government offers 330 into evidence, your Honor. Page 1296 MR. DRATEL: Objection, your Honor; hearsay and Vayner. THE COURT: Overruled. Government Exhibit 330 is received. *(Government's Exhibit 330 received in evidence)* MR. TURNER: Could you zoom in on the message headers? That's good. Subject: Houseboating final checklist from Cally Ulbricht date December 15, 2011 to Ross Ulbricht. "Seafarers, if you remember nothing else for our trip tonight remember these important points: We'll be setting off at 7:00 p.m." and it goes on to offer various instructions. And actually, if you could go down, Mr. Evert, to page three. Listing for Boat 2 and person number ten is listed as Ross Ulbricht for both days? A. That's correct. Q. Take a look at Government Exhibit 226I, please. Zoom in. So who is this chat with? A. VJ. Q. And what's the date of the chat? A. January 26, 2012. Q. So this is page 383 to 384 of a 1,096-page chat log and it says: "myself: also, there is no sr user called smedley, I guess he hasn't make him yet Page 1297 myself: pretty great. speaking of spliffs, they are abundant here, so I may just have to partake." Emoticon. "vj: Ah, I'll send him a note about that - when he said he was on at both sites, I guess he meant the private forums and the SRForums vj: Yeah, had zero sleep last night due to leg/muscle cramps, and there was in the mail today a 1oz. time of Tangerine pheno AOrange from ~s, that's taken about a month to wend it's way to me. Kismet, I say. vj: 1oz. tin., oops. vj: Are you managing to relax? myself: yea, for sure. friendly folks everywhere. very relaxing environment. vj: Sounds very Thai myself: haha, I didn't expect you to start guessing vj: Heh - was a comment, not a guess. I love thailand for the weather, the people, and the weed ain't bad either." Can you pull back up. Can you go down to the bottom of this chat. This is from a few days later, February 1, 2012, is that right? A. Yes. Q. It starts out: "myself: ok, yea I keep all of my income/expenses from the site on a spreadsheet Page 1298 vj: how many concurrent users does the site have? myself: I'm actually not sure myself: I think I have 24 hrs, lemme see vj: k vj: <-- making a coffee, back in 3 myself: unique users logged in: Day: 6073 Week: 17589 Month: 38021 Quarter: 72830 vj: interesting numbers - the big question is how many concurrent." You can skip down to the next page, Mr. Evert. The chat ends -- I'll start here: "vj: So yeah, that's my things for today then. Don't need coin from you for a while, and we'll let utah/smed interact a bit more before we make any decisions there. Anything on your mind today? myself: took the day off. ran around beaches and jungles with some girls, very little on my mind." Emoticon. "vj: girls and jungles, life dont' get any better for o'l Dread Pirate Roberts, eh. vj: But we'll hear no more of your fancy agorist beaches and babes talk!" Now, you mentioned earlier that you also looked at Facebook records? Page 1299 A. Yes, I did. Q. Whose Facebook account did you review? A. The defendant's. MR. TURNER: Just a moment, your Honor. I'd like to read in another stipulation. This is stipulation 810. It's Government Exhibit 810. It is hereby stipulated and agreed by and between the United States of America by Preet Bharara, United States Attorney for the Southern District of New York, Serrin Turner and Timothy Howard, Assistant United States Attorneys, Counsel, and Ross Ulbricht, by and through his counsel Joshua Dratel, Esquire, as follows: One, Government Exhibits 318, 319 and 331 are true and accurate copies of records obtained in the Facebook account Ross Ulbricht registered to the name Ross Ulbricht and to the email accounts rossulbricht@gmail.com and rwu103ftsu.com. All of the records were maintained on computer servers controlled by Facebook, Inc. and they were produced through the Internal Revenue Service Special Agent Gary Alford pursuant to Court order served on the days of on or about October 22, 2013. Government Exhibit 318 in particular is a status update that was posted by the user to the Facebook account to the user's Facebook wall. The Facebook user's wall is a space on the user's Facebook profile where the user can post messages, attachments and links that are visible to anyone who can view the user's profile. Page 1300 Government Exhibit 319 in particular is a photograph stored in the Facebook account and user-created album entitled "Thailand, February 2012" and uploaded by the user to the account on or about March 29, 2012. Q. So, can you take a look at Government Exhibit 319, please, actually, 318. A. I have it. Q. And what is this that you're looking at? A. It's a Facebook post. Q. Is this from the Facebook records you received for the defendant's Facebook account? A. It is. MR. TURNER: The government offers Exhibit 318 into evidence, your Honor. MR. DRATEL: The same objection. THE COURT: The objection is overruled. GX 318 is received. *(Government's Exhibit 318 received in evidence)* Q. So we saw the January 26 chat earlier. This is dated what? A. January 27, 2012. Q. It says "Surprise, I'm in Thailand now. Hanoi was way too cold and allure of a warm beach was too much." Can you take a look at Government Exhibit 319. Page 1301 A. I have it. MR. TURNER: Mr. Evert, can you put the last page of the chat back up on the top panel. Q. So we saw the reference before to beaches and jungles. What does Exhibit 319 reflect? A. It's a picture of the defendant in front of what appears to be jungles and beaches. Q. And is this from the Facebook account again? A. Yes. MR. TURNER: The government offers Exhibit 319 into evidence. MR. DRATEL: Same objection. THE COURT: The objection is overruled. GX 319 is received. *(Government's Exhibit 319 received in evidence)* MR. TURNER: There's the picture and down below, could you zoom in, Mr. Evert, here. Q. What was the name of the album that was found in? A. "Thailand, February 2012." Q. Look at 226H. These have already been admitted into evidence. MR. TURNER: Can you pull it up, Mr. Evert. Q. This is another chat with VJ that you reviewed? A. Yes. Q. And the date of the chat is what? Page 1302 A. February 7, 2012. Q. It starts out "vj: tumbling is the key, and we need to set up a frickin' HUGE series of small servers running transactions all over the fucking place to the point that regression analysis is impossilbe because the error level progresively compounds until it could branch anywhere, and everywhere, at once. Think millions of transactions per portion of coin rec'd. We need a statistician, as I've said before, keep on the lookout for one. myself: I know a good statistician vj: World class? vj: know - or know of? myself: I'll check up on her latest publications myself: I know her and her husband well vj: dude, no vj: but you can ask her who are the top 5 folks in the world in her field myself: ok." Q. Go to the next part of the chart. This is February 13. A. Yes. Q. It starts off: "myself: here is my convo with my stats friend: Myself: who are the top 5 statisticians in the world? Myself: Wow, good question. In terms of lifetime achievement or current "hotness"? Page 1303 myself: Someone you could take a life or death stats problem to and be confident in their answer. myself: So this is a request for consultation, not an evaluation of the field? For business I take it," and it continues on. Q. Did you find anything in the Defendant's Gmail account about statisticians like this? A. Yes, I did. Q. Would you take a look at 322, please. What did you find? A. I found an email from Ross Ulbricht; and in the email, the same language that is in the Tor chat is contained within the email. MR. TURNER: The government offers Exhibit 322 into evidence. Q. That's what you were looking at when you just described that email -- A. Yes, sir. Q. -- just for the record? MR. DRATEL: Objection; hearsay and Vayner. THE COURT: All right. Those objections are overruled. GX 322 is received. *(Government's Exhibit 322 received in evidence)* MR. TURNER: So can you zoom into the header information, please. That's fine. You can start at the bottom. From Ross Ulbricht to someone named Joseph: "Subject, statistician: Who are the top five statisticians in the world besides Heather?" Page 1304 Can you scroll up. Next chain, "Wow, good question. In terms of lifetime achievement or current "hotness"?" Reply: "Someone you could take a life or death stats problem to and be confident in their answer." Can we take a look at Government Exhibit 232C. It's another Tor chat. A. Yes. Q. And who are the -- who is the other person on the Tor chat this time? A. DA. Q. Could you zoom into the top half. The date of this chat is what? A. March 3, 2012. Q. It starts out "da: Hey I'm curious about something myself: what's up man da: When you first started SR it must have been hard to get the words aorund, it being a .onion There was a mod KindBud who was part of GreenCo, who was here from week one. Which means they most liekly heard it form the place you first advertised. But then they dissapeared, and ever since I have wondered what happened (we were in the middle of a conversation and had been doing allot of buissness). Page 1305 myself: Ya know I almost forgot about KindBud and GreenCo. I honestly don't know what happened to them. da: How did you get the word out there? It would almost seem you owuld have had to all ready know email vendors, etc. Or else you advertised at other forums, which means I might be able to find them else where. myself: It's gotten back to me on more than one occasion that a vendor has been busted, but whenever I ask further, it's always from deals irl gone bad da: (If you can;t tell that's cool) myself: you know what I did myself: I made one thread on the forums at bitcointalk.org myself: and made a blog at wordpress.com with instructions myself: both go taken down pretty quickly myself: the rest was word of mouth myself: and pr" So, where did we see the first quote we looked at from Altoid? A. It was from the bitcointalk forum. Q. Let's go back to the SR account and spreadsheet please, Government Exhibit 250, page five. And zoom in a few lines down here. Scroll up, please. That's fine. Okay. Page 1306 Q. So, we're looking at late April 2012 in the spreadsheet and there's an entry here for a laptop. A. Yes. Q. And what was the purchase price indicated on the spreadsheet for it? A. $1,150. Q. And did you see in the defendant's email account any record of a laptop purchased around this time? A. Yes, I did. Q. Can you take a look at Government Exhibit 312, please. A. I have it. Q. And what are you looking at? A. I'm look at an email from Amazon.com to the defendant's Gmail account regarding a purchase of a Samsung series laptop. MR. TURNER: The government offers Exhibit 312 into evidence. MR. DRATEL: Same objection, your Honor, hearsay and Vayner. THE COURT: The objections are overruled. Government Exhibit 312 is received. *(Government's Exhibit 312 received in evidence)* MR. TURNER: Can you scroll in ton header information and zoom in on the header information first. Q. The date of this email is April 26, 2012? A. Yes, it is. Page 1307 Q. From Amazon.com to rossulbricht@gmail.com? A. Yes, it is. Q. And the subject is "Your order with Amazon.com"? A. Correct. MR. TURNER: And zoom out, and could you zoom into this area. Q. The item at the bottom is Samsung series 7NP700Z5A, silver 15.6-inch laptop, and what's the price indicated for the item? A. $1,153.98. Q. How does that compare to the spreadsheet? A. It's only within $4 of the amount listed on the spreadsheet. Q. Could you tell from the defendant's email address how this laptop purchase was paid for? A. Yes. Q. How could you tell? A. I saw purchases of Amazon gift cards through the use of bitcoins. Q. Would you take a look at Government Exhibit 312C, please. A. I have it. Q. Are these the emails you were just referring to? A. Yes, it is. MR. TURNER: The government offers 312C into evidence. MR. DRATEL: Same objection. THE COURT: GX 312C is received. The objection is overruled. Page 1308 *(Government's Exhibit 312C received in evidence)* Q. What do these documents reflect? A. It reflects that they received payment of a certain amount of bitcoins for a $500 Amazon gift card. Q. When you say "they," who are you referring to? A. BTC Buy. Q. You've been to that website? A. That specific website? No, I have not. Q. Have you been to other websites that offer gift cards for bitcoins? A. Me personally? No, I have not. Q. Withdrawn. How many emails like this did you see in the account here? A. From BTC Buy? Q. Yes. A. Approximately four. Q. How many are reflected in 312C? A. Three. Q. How much are they each for? A. They are for each $500. Q. And what are the dates of those purchases? A. They are all April 25, 2012. Q. And how does that compare to the purchase of the laptop? Page 1309 A. It's approximately for the same amount as the purchase price of the laptop. Q. And the date? How does the date of those gift card purchases compare to the purchase of the laptop? A. I believe it's the day before. Q. Did you find any emails in the defendant's email account referencing the name Frosty? A. Yes, I did. Q. Would you take a look at Government Exhibit 311. A. I have it. Q. And what does it reflect? A. It's an email from Peter to Ross Ulbricht where he addresses the defendant as Rossty Frosty. MR. TURNER: If government offers Exhibit 311 into evidence. MR. DRATEL: Same objections, hearsay and Vayner. THE COURT: GX 311 is received. The objections are overruled. *(Government's Exhibit 311 received in evidence)* Q. This is from someone named Peter to Ross Ulbricht who referred to him as Rossty Frosty? A. Yes. Q. Is that the only email you found like that in the defendant's email account or were there others? A. There were others. Page 1310 MR. TURNER: I'm at a natural stopping point. THE COURT: Thank you. Ladies and gentlemen, we're now going to break until what I hope is Wednesday morning at 10:00. Make sure that you follow Joe's instructions in terms of getting the court auto line to call into to see whether the court is open, and then Joe will otherwise communicate with you. And I'm hoping that we all plan on being here ready to go Wednesday at 10:00. I want to remind you not to talk to each other or anybody else about this case and, again, to stay away from any media reports about the case. And if you run across any articles of any kind, whether on the Internet or in hard copy or on the television, do make sure that you turn away from them and that you do not read them or listen to them at all, all right? Thanks very much. Get home safe. Mr. Alford, you may step down, as well. We'll resume Wednesday at 10 a.m. we hope. *(Jury excused)* *(Witness temporarily excused)* *(Continued on next page)* Page 1311 *(In open court; jury not present)* THE COURT: Ladies and gentlemen, let's be seated and see if there is anything that we need to go over. One thing that I wanted to note is that we had had a discussion about whether or not the hard drive had been properly authenticated in advance of Mr. Beeson's testimony and the Court's ruling at that time, and I made myself a note to this effect, was that it was received subject to further -- any further authentication. And the Court believes that there is now fully a sufficient foundation for the receipt of the hard drive, so that connection has been made. Are there things which you folks would like to raise in advance of our break until Wednesday morning? MR. TURNER: No, your Honor. Thank you. MR. DRATEL: Nothing, your Honor. Thank you. THE COURT: I look forward to receiving the jury instruction materials from you folks with track changes in Word tomorrow, late afternoon, if you can you can email it to my chambers email box. Thank you. *(Adjourned to January 28, 2015 at 10:00 a.m.)* Page 1312 INDEX OF EXAMINATION Examination of: Page Cross By Mr. Dratel . . . . . . . . . . . . .1242 Redirect By Mr. Turner . . . . . . . . . . . .1250 Recross By Mr. Dratel . . . . . . . . . . . .1252 Redirect By Mr. Turner . . . . . . . . . . . .1252 Recross By Mr. Dratel . . . . . . . . . . . .1253 GARY LUIS ALFORD Direct By Mr. Turner . . . . . . . . . . . . .1253 GOVERNMENT EXHIBITS Exhibit No. Received 301 . . . . . . . . . . . . . . . . . . . .1256 302 . . . . . . . . . . . . . . . . . . . .1258 303 . . . . . . . . . . . . . . . . . . . .1261 304 . . . . . . . . . . . . . . . . . . . .1263 305 . . . . . . . . . . . . . . . . . . . .1264 306 . . . . . . . . . . . . . . . . . . . .1266 307 . . . . . . . . . . . . . . . . . . . .1273 308-B . . . . . . . . . . . . . . . . . . .1275 314 . . . . . . . . . . . . . . . . . . . .1279 315-A . . . . . . . . . . . . . . . . . . .1281 315-B . . . . . . . . . . . . . . . . . . .1282 309 . . . . . . . . . . . . . . . . . . . .1293 329 . . . . . . . . . . . . . . . . . . . .1295 330 . . . . . . . . . . . . . . . . . . . .1298 Page 1313 318 . . . . . . . . . . . . . . . . . . . .1302 319 . . . . . . . . . . . . . . . . . . . .1303 322 . . . . . . . . . . . . . . . . . . . .1305 312 . . . . . . . . . . . . . . . . . . . .1308 312C . . . . . . . . . . . . . . . . . . .1310 311 . . . . . . . . . . . . . . . . . . . .1311 Page 1314 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 28, 2015 9:35 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Page 1315 *(Jury not present)* THE CLERK: Continuation of the matter now on trial, the United States of America v. Ross William Ulbricht, 14 Cr. 68. Counsel, please state your names for the record. MR. TURNER: Good morning, your Honor, Serrin Turner for the government. With me is Timothy Howard from my office, Special Agent Vincent D'Agostino from the FBI and Chris Evert and Molly Rosen. THE COURT: All right. Good morning to you all. MR. DRATEL: Good morning, your Honor. Joshua Dratel. Mr. Ulbricht is standing beside me. Lindsay Lewis from my office and Joshua Horowitz. THE COURT: All right. Good morning to all of you. All right. We've got some jury instruction matters to deal with. But before we do that let me see whether or not you folks have additional items that you would like to cover first and that relate more directly to what's going to happen as soon as the jury comes in because we'll deal with those first. MR. TURNER: Your Honor, we would like to take a brief detour and have a witness testify out of order -- Alex Miller, from Stack Overflow. He is just a document custodian. He has a board meeting at noon. So we were hoping to have him testify the first thing -- he should on the stand for 10 minutes as far as the government is concerned -- so that he could get back in time to get back for his afternoon meeting today. Page 1316 THE COURT: All right. Have you spoken about that with Mr. Dratel? MR. TURNER: I have advised him. THE COURT: Mr. Dratel, do you have a view on that? MR. DRATEL: No, your Honor. THE COURT: All right. Well, then I don't see any reason why a short document custodian witness should cause any undue issues. I will tell the jury, as I do when witnesses are taken out of order, that we're going to take a witness out of order and interrupt the examination of Mr. Alford in order to accommodate some scheduling issues and then we'll continue with Mr. Alford after that. Any objection to me previewing it in that manner to the jury? MR. TURNER: No, your Honor. Thank you. MR. DRATEL: No, your Honor. THE COURT: All right. Thank you. Is there anything else that we should deal with before we turn to some of the jury instruction matters? MR. TURNER: Not from the government. MR. DRATEL: No, your Honor. THE COURT: All right. Let me just make sure that I write down that Mr. Miller -- is it Mister? MR. TURNER: Yes. Page 1317 THE COURT: Alex Miller is a fellow? MR. TURNER: Yes. THE COURT: All right. Here. The Court now has a letter from the government, dated January 28, 2015. I think it came in relatively -- I mean, when I say "late" or "early," it depends on your definition, but it's fine. But I'm not sure Mr. Dratel has had an opportunity to fully review it yet. It came in about, I think, 8:15 or 8:20, something like that. So let me -- we'll talk about some of these matters, but we're going to leave open the possibility that upon reviewing the cases the defense may have additional thoughts that they would like to expression other than what's raised this morning. The Court has also received -- and I want to thank you folks for this -- a set of jury instructions with draft changes which very helpfully indicate, in terms of the Court's reading of what you've done, where there are changes that no one objects to, there are just changes, and where there is an objection by one side or the other, there is a comment. That's very helpful to have you folks have combined it in that manner. Am I reading things correctly that you both, if there is a change and a deletion or an addition of language where there is no comment, that I am to take that as an agreed change? MR. TURNER: I don't think so, your Honor. I think we tried our best. I think defense counsel in particular didn't get a sufficient chance to note any objections to our language. I think we should go through them one by one. Page 1318 THE COURT: All right. Thank you. We'll do that. That's fine. In any event, I think that it is probably useful to go through them individually. Let's turn to -- is there anything before page 4? The first change that you folks have is page 4. MR. TURNER: No. And the government is fine with that change. THE COURT: All right. Mr. Dratel, that was your change? MR. DRATEL: Yes, your Honor. THE COURT: All right. So the Court will accept that change. The next change that I saw was on page 8. Anybody have any additional comments on that? I'm fine with that change if people are in agreement. MR. TURNER: No objection from the government. MR. DRATEL: Yes. Right. That is our change. THE COURT: All right. So that is accepted. The next change is on page 12. I'm fine taking out the desert island example. I'm just curious as to why you folks don't like it. It is an example that does appear in certain standard instructions. Judge Sand had at one point used it. But is it redundant or cumulative, or did somebody have a substantive issue? Page 1319 MR. TURNER: That was the defendant's proposal, your Honor. We have no objection to that. MR. DRATEL: I think it is a little redundant because you give an example beforehand. Also, to me that one is somewhat conclusive. You know, if you are on a desert island and you see footprints, there is really only one conclusion you can draw. I think circumstantial evidence as a matter of just inference is something that there are multiple inferences one could draw, and that one sort of suggests that the predominant one is the one that should be accepted. And I would think that in the context of inferences that we are going to be asking the jury to draw, there are different inferences. THE COURT: That is fine. Just in my future use of that charge, I know you would be thoughtful about it. Let's turn to page 19, which is the next change. It is not a change. It is just that with respect to defendant's testimony, depending upon how that plays out, we'll modify that charge, as necessary. That's true for anything that occurs during this trial. If there is something which occurs which requires a modification not currently anticipated, you folks should raise that with me and not take our session now as the only opportunity, by any means. In fact, we won't get through all of this today, but we'll, of course, revisit what's necessary. Page 1320 Page 20, I'm fine with that change, the law enforcement witnesses. Anyone want to comment? *(Pause)* MR. DRATEL: Well, I think that state of mind of a witness is relevant. It is also relevant in terms of the investigation and prejudice and bias and other issues that are appropriate and relevant. So I would object to that. THE COURT: We struck it from the record pursuant to the Court's instruction of whatever day that was last week. The question is whether or not we need to reiterate it. I don't think it would be appropriate for the jurors to consider that evidence at this point in light of the Court's previous instruction. So let me then think about it. I take it that you are objecting, then, to this additional language? MR. DRATEL: Yes. THE COURT: Let me then take that as an additional objection. We'll come back to that of. Page 21. This is for accomplice cooperating witness testimony, and it is the insertion of a nonprosecution agreement as among those agreements to be considered. MR. DRATEL: And that's fine with us, your Honor. That is more accurate. THE COURT: Those changes are fine. Then page 22. This is I think reflecting that there is only one cooperating witness and that it was only drug dealing, as opposed to other criminal charges that may be at issue in this particular case being tried. Page 1321 MR. TURNER: That is correct, your Honor. That is more accurate. MR. DRATEL: Are you talking about page 22? THE COURT: Correct. MR. DRATEL: I have no problem with the first part, but the second part I would say that should remain as similar rather than related. MR. TURNER: I have no objection. I made that change for defendant's benefit. THE COURT: So it will stay as similar, not related. So there are three sets of changes on that page. We'll take the first two and not the third. We'll leave similar as similar and not accept the word related. All right. The next change I have seen is on page 26 relating to investigative techniques. I'm fine taking that sentence out about not speculating. Would anyone like to comment? MR. TURNER: I think we're fine with it, your Honor. We'll think a little bit on whether we want any additional language to substitute for that but I think I'm fine with it. THE COURT: All right. Thank you. Now, let me just do a couple of more of these and I would like to do at least one of the more substantive comments and then circle back. Page 1322 Expert testimony. At this point are we able to say that there is a planned single expert or are there more than one expert planned? MR. DRATEL: At least one. THE COURT: At least one, OK. MR. DRATEL: And perhaps one additional. THE COURT: All right. So there may be two. We'll keep, then, the plural language here. If it turns out that only one testifies, my intention would be to modify the gender appropriately and make it singular. We'll come back to that, as necessary. Use of charts and tables. This was some grammatical changes and I was fine with those changes. This is on page 30. MR. DRATEL: Yes, your Honor. THE COURT: Mr. Turner? MR. TURNER: Yes. Thank you, your Honor. THE COURT: All right. Then in terms of excerpts and redactions, I was also fine with the inclusion of that instruction. It is a relatively standard instruction. MR. DRATEL: OK. That's fine, your Honor. THE COURT: All right. So page 31, we'll accept that. In terms of uncalled witnesses equally available, I understand the defense's reservation of rights, and let's revisit this one as things go on. This is one of those which will depend on how the evidence comes in. Page 1323 Now, let's start talking about some of the substantive counts. In terms of the distribution definition, which is on page 36, it strikes me that the difference between these two is the breadth of the types of acts which could be considered an act of distribution and the defense assertion being a narrower view. That's the way I interpret this. I went back to the cases cited by the government. Their version is supported by the Sepulveda case, but that is a First Circuit case which talks about brokering. I don't know that brokering has been picked up in the Second Circuit. It may have been. It may not have been. The defense charge is based on the Sand's Model Jury Instructions. Now, that's not the only instruction that can be used. Indeed, I modified Sand's a lot. In fact, this is Sand's old courtroom, so I probably sit in the same place where he wrote a lot of these and modified a few of them. But it is important to stay within the confines of the law when doing so. Sometimes my modifications are simply to make them more comprehensible to the jury, and as idiom changes sometimes it is useful to change them. With that said, does the government have any additional support for its position? Let me just in particular focus the government on the phrase "act in furtherance of." So part of the distribution phrasing that adds breadth to what the government is suggesting is an act in furtherance of a sale. That's different from saying a sale. So while I agree, and I think the law would agree certainly that a sale, delivery, transfer of narcotics would be a distribution, brokering may be analytically within that ballpark. You'll tell me if the Second Circuit has adopted that. An act in furtherance of expands the breadth of that. Page 1324 MR. TURNER: Your Honor, it's actually in Sand's as well, activity in furtherance of the ultimate sale, such as vouching for the quality of drugs, negotiating for it, receiving a price, which is akin to brokering. So I'm very confident there is support in the law. The language we requested is tailored to the theory that we want to present. If we have a theory that's supported in the case law, we are entitled to an instruction along those lines. So we would like to keep the existing language. If your Honor would like for me to provide more examples of the case law that we are relying on, I am happy to do so but I am very confident that there is support. THE COURT: All right. If you could find something other than Sand's for activities in furtherance of, some act in furtherance of, just because of the potential breadth of that and because that does seem to be the main issue and I understand why. Now, in terms of page 37 -- Page 1325 MR. TURNER: Your Honor, there is an edit on 35. THE COURT: I'm sorry, 35? Did I miss that? *(Pause)* Oh, OK. Yes, you wanted to take out the particular controlled substances. They are not necessary for the 841 charge. Mr. Dratel, do you have a comment? MR. DRATEL: I have no objection to that, your Honor, but there is also one additional change that we had requested on the same page, the next element, that it be knowingly and intentionally. THE COURT: I was actually going to get to that on page 37. So that appears in several places. Now, the statute, 841 actually is written in terms of "or." 841(a) states: "Except as authorized by this subchapter, it shall be unlawful for any person knowingly or intentionally." There are, it's true, certain cases, particularly district court cases, where the "and" finds its way in there, and I think, frankly, that is a misstatement of the law and it should be "or." But what were you basing your position on, Mr. Dratel, and does the government have a view? Mr. Dratel. MR. DRATEL: Well, that it is a specific intent offense and that going back and looking at charges in other narcotics cases that I have tried, they are all "and." It is all knowingly and intentionally. Page 1326 THE COURT: I think that certainly intent is a specific intent element as well as knowing. So the idea that there is a particular kind of mens rea I think is captured by either. Whether there is a difference between knowingly and intentionally I think a lot of people would debate. But why don't you see whether or not you folks can find a Second Circuit case which looks at the difference in particular between the statutory language of 841 and the elements as described, in other words, notwithstanding, etc., etc.? MR. DRATEL: I've seen it go the other way, where the indictment charges as and -- not just this statute but other statutes -- and then somehow it gets charged as an "or," but I will go look for that, your Honor. THE COURT: Yes. I would imagine if the indictment charged it as an "and" and that was the charge in the indictment, you could have a variance situation. I don't know that there could be a case as to whether or not there is such a thing. Does the government have a view? Mr. Turner. MR. DRATEL: Candidly, your Honor, I wouldn't care one way or the other. We could prove knowingly and intentionally. So I don't think it is a problem. THE COURT: Let me just see whether or not -- I just want to make sure that we get a correct statement of the law, but it is helpful to know the positions. That is also the change on 37. So we'll revisit that as well. Page 1327 And then 37 has an additional change as well, which is the additional language "and distributed the narcotics intentionally." I have not printed out whose changes these except when there is comments in the area so I don't really know whose -- I know that the metadata tells me but I haven't looked to see in particular -- MR. TURNER: That is the defendant's change, your Honor. THE COURT: It is the defendant's? MR. DRATEL: Yes. I'm sorry. Yes. THE COURT: Does the government have a view? MR. TURNER: We're fine with the change. THE COURT: All right. Fine. So we'll revisit the "or" at the top of that page, but otherwise we will accept the additional language on page 37. By the way, I've mentioned this to you before but just so it's clear, I will be posting to docket all of the jury instructions with your revisions as they came in to me at the end of the case so there is a complete record as to precisely who asked for what and it will be in electronic form as well on ECF so that it can be -- the metadata can be accessed. OK. We are on page 38, aiding and abetting. There was a typographical error I believe is the only changes on page 38. Page 1328 MR. DRATEL: Yes, your Honor. THE COURT: We are OK with this? MR. TURNER: Yes, your Honor. THE COURT: All right. Moving right along. Page 39, the defendant has asked to maintain the language that is the "to determine" language, and the government has said that they find that it is cumulative and unnecessary. If the government does not have a substantive objection to it and the defendant would like to keep it, I will keep it. MR. TURNER: No objection. Thank you. THE COURT: All right. So we'll keep that. Court change on page 41, "methamphetamine." Do the parties agree that ecstasy and MMDA are shorthands for methamphetamine? MR. TURNER: I don't think it is -- yes, I don't think it is the same drug, your Honor. THE COURT: It is not, OK. MR. TURNER: Because it is like crystal meth. THE COURT: Crystal meth, OK. An uncaffeinated judge. Can I put in -- what I am trying to do is put in something that is more colloquial. Page 1329 MR. TURNER: We would have no objection to noting that that would include substances commonly known as crystal meth and maybe we can think of a few others. THE COURT: Mr. Dratel? MR. DRATEL: That's fine. THE COURT: All right. OK. Now, this is where we have a deletion suggested by -- it is page 41 -- the defendant about whether or not the defendant is required to have awareness of the types and quantities of drugs distributed. The government had cited the U.S. v. King case in its original instructions, which is where we picked this up. So that case, which is a Second Circuit case 2003, states: "We find no basis for disturbing the settled principle that drug dealers convicted under Section 841(a) need not know the type and quantity of drugs in their possession in order to be subject to sentencing enhancements contained in 841(b). In so holding we join all of the courts of appeal who have considered this issue." Mr. Dratel. MR. DRATEL: That is no longer good law because of Booker. And, also, that also doesn't affect the threshold question of the elements of the offense. Sentencing enhancements is a very different question than the elements of the offense, and I think it is clear, from Thomas and all the cases since then that I think we cited in our initial comments on the jury charge, that type and quantity are, have been recognized as elements of the offense. Page 1330 THE COURT: All right. Certainly for purposes of minimums, they are at issue. The other place where it becomes at issue is when, for instance, the statutory maximum can change with respect to a particular charge. And the statutory maximum can change -- for instance, there is a Second Circuit case where there were a variety of drugs at issue, one of which was marijuana, which carried a different statutory maximum penalty than other drugs, there was a question as to whether or not the Court should have at least mentioned the type of drugs and if there was marijuana included, broken out the verdict form in some manner. Mr. Turner, do you have anything to add other than what you have said in your prior -- the first submission the government made? MR. TURNER: No. I don't think Booker has anything to do with it. To the extent -- THE COURT: I agree with Booker not having anything to do with it. MR. TURNER: To the extent that facts need to be proven to the jury that affect the mandatory minimum here, the only facts the statute require are that the violation involved these weights. It doesn't say that the defendant knew that the violation involved these weights. So I don't think Booker or all of those related cases affects the holding in U.S. v. King. Page 1331 THE COURT: All right. And remind me, does the 841(b) charge carry a statutory max of is it 40? MR. TURNER: Life. (b)(1)(A) is life. THE COURT: (b)(1)(A) is life. That's with certain quantities proven? MR. TURNER: Correct. THE COURT: But in the absence of quantities proven -- MR. TURNER: It would be a (b)(1)(C). THE COURT: It is a (b)(1)(C). MR. TURNER: That section starts off -- THE COURT: Right. MR. TURNER: -- "In the case of a violation of Subsection (a) of this section involving" -- and then it lists weights -- "the defendant should be sentenced to a term of imprisonment not less than ten years," and it goes on to the mandatory statutory maximum. So the only fact that needs be proven to trigger those changes is does the violation involve those drugs. Nothing about the defendant's knowledge. MR. DRATEL: Well, if it is an element of the offense, which it is, it would have to be knowing or intentional or knowing and intentional. But whatever the instruction of that particular scienter requirement is, it requires consciousness by the defendant of an amount and a type. It just can't be that he -- you know, the defendant can't just have one drug deal and then all of a sudden have a situation in which they are now accountable for an amount of which they had no knowledge or intent. Page 1332 MR. TURNER: That's what the statute provides for, your Honor. And if that were the case, it would obviously be case law reporting it in these kinds of drugs cases where the statutory maximum and minimums apply, and U.S. v. King remains good law. It has not been reversed. THE COURT: Here's what I'll do. Let me go back and just reread the cases on this. I do believe that you can show a drug -- narcotics distribution offense just by showing that any narcotic has been distributed. The verdict form has to have a special verdict form in terms of getting the (b)(1)(A) quantities. I think that it is useful -- well, and so -- but that's for the verdict form and not for the violation. But we'll come back to this. If anybody has anything else other than what you have already given me or recited in today's session, let me know. But I think it's pretty straightforward in terms of how the law grapples with this issue. I think we are waiting to find out from Joe if the jury is here. If they are here we will start. Page 44 -- actually, I'm sorry, page 42. This is the inclusion of unanimity for the specific drug. Joe, how are we doing? We're waiting on one? All right. That is pretty good with the subway conditions. Page 1333 Who was the proponent of this change? MR. DRATEL: Your Honor, I was. THE COURT: All right. MR. DRATEL: And it's basically that you can't aggregate amounts from different jurors to get to any mandatory minimum quantity. So, in other words, if three jurors think it is more than a kilogram of heroin and another couple of jurors think the amount is cocaine, that won't be sufficient. I think that you can't have that kind of combination of votes on a jury or get to a mandatory minimum. THE COURT: Yes. And I think that the verdict form would require unanimity on the answers to the interrogatories, the special interrogatory, as to weight. Mr. Turner, do you disagree? MR. TURNER: I don't disagree with the sort of spirit behind the change. I'm not sure that it comes across in the language. As your Honor points out, it is already reflected in the verdict form, which requires "yes" or "no" answers to specific drug weights and quantities. THE COURT: When you say you are not sure that the spirit of it comes across, what do you mean? Do you object to this language? MR. TURNER: It already says: "Your determination regarding drug type and quantity must be unanimous." And then it says "as to the specific drug." It is not clear what that means beyond what has already been said, that drug type and quantity, you have to be unanimous. Page 1334 THE COURT: So you're basically saying it is redundant and only includes half? MR. TURNER: Right. THE COURT: Because it would need to say you must be unanimous as to the specific drug and quantity? MR. TURNER: And which would be repetitive. THE COURT: Which would be repetitive. MR. TURNER: I think that the verdict form will take care of the concerns. THE COURT: I think we all agree on fundamental principle, but there has to be unanimity as to the specific type of drug and the specific -- whether the threshold on the special verdict form has been met or exceeded, and then how that gets conveyed I think will be some wordsmithing. All right. Page 44, dispensing. The term "dispense" is not relevant here. I don't know whose change that is. Do you both agree? MR. TURNER: I think we both agree. MR. DRATEL: Yes, your Honor. THE COURT: All right. Fine. Knowingly or intentionally appears again on 46, and we'll deal with that in a similar manner. Page 1335 Now, page 48, this is now in the conspiracy to violate the narcotics laws. It has been my practice in the past to preview that the conspiracy charge is separate and apart from a substantive charge. I don't mind taking it out here because it is dealt with later and the charge is already so long that deletions of things for redundancy are all to the good, but I'm curious if there is a substantive reason behind this. MR. TURNER: Not really, your Honor. I thought it just sort of broke up the charge here, and you get to it in the next instruction. And, also, this isn't a case where there is failure to complete the conspiracy at issue so I didn't think that it was necessary to dwell on it. THE COURT: Mr. Dratel. MR. DRATEL: No problem. THE COURT: All right. I will take that language out. Page 49, the insertion of the word "general instructions regarding conspiracy." I'm fine with that language change. Anybody disagree? MR. TURNER: No, your Honor. MR. DRATEL: No. THE COURT: All right. Now, the single conspiracy versus multiple conspiracies and also whether or not -- well, let's just start there. I did read -- this is one of the topics dealt with in the government's letter of today, and I pulled out and reread Sir Kue Chin and some of the other cases, the one that it relies on, was it Romney? What is it called? Corey. Page 1336 I don't disagree that in most cases -- and, in fact, I don't know of a case where there has been a single defendant, the failure to include a single versus multiple conspiracy charge has been found to be error. Mr. Dratel, I don't know if you have had a chance to see that first part of the governments letter yet, or if you want to respond at a different time. MR. DRATEL: I think I will have to respond at a different time. I didn't see it until I got here. THE COURT: All right. And what I would need is if you are going to continue to object, if there is any legal basis in a single defendant case or whether analytically you believe this case is sufficiently different that it merits a difference here. All right. That is, I think, really what was at issue for 52 and 53. I am still waiting to hear from Joe on this last juror. We get to the objects of the conspiracy, and there are two changes on page 54. One is the inclusion of the language "beyond a reasonable doubt" on at least one specific object. I don't have any problem including that. It is a correct statement of law. Anybody disagree? Page 1337 MR. TURNER: I am fine with it, your Honor. THE COURT: All right. And so it was a defense change? MR. TURNER: Yes. THE COURT: All right, Mr. Dratel. So we'll take that. All right. The next one is the deletion -- and I take it from the comment this is a deletion by the government -- I'm sorry, by the defense -- of the language "or aid and abet such activity." Are we all set? THE CLERK: Yes. THE COURT: All right. We have been sitting for half an hour. Do people need a break before we begin? OK. So let's just take a short break. We let's get the witness -- we are going to start with Mr. Miller. MR. TURNER: Mr. Miller, yes. THE COURT: Let's go ahead and get the witness on the stand so we don't have to have any delays due to that. We will start up in just three minutes, as soon as we can get ourselves out and back. THE CLERK: All rise. *(Recess)* THE COURT: All right. Let's bring out the jury. We will continue with the jury instructions tomorrow morning, if we have time. Page 1338 *(Continued on next page)* Page 1339 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right, ladies and gentlemen. Let's all be seated. And we've got here Mr. Miller on the witness stand. Due to some scheduling issues, we are going to take a brief segue -- a brief detour and hear some testimony from Mr. Miller and then we will go back to Mr. Alford. So Mr. Alford's direct testimony will continue but we're going to take Mr. Miller in between. All right? I hope you all made it through the storm that kind of wasn't, kind of wasn't. All right. I had a lot of pasta in my cabinet as a result of this. All right. Let's go ahead and swear in this witness. THE CLERK: Please raise your right hand. ALEX MILLER, called as a witness by the government, having been duly sworn, testified as follows: THE CLERK: Please state your full name for the record. THE WITNESS: Alex Miller. THE CLERK: Thank you. THE COURT: All right. Mr. Miller, please be seated, sir. And it will be important for you to speak directly and clearly into the mic. So adjust yourself how it is best for you. Page 1340 Mr. Turner, you may proceed. MR. TURNER: Thank you. DIRECT EXAMINATION MR. TURNER Q. Good morning, Mr. Miller. A. Good morning. Q. Where do you work? A. Stack Exchange. Q. And what is Stack Exchange? A. We're a network of Q and A websites broken up into different groups. Q. What are Q and A websites? A. It is question and answer. So anyone on one of the topics can go online and ask a question, get answers. Q. Is one of the Q and A websites your company operates called Stack Overflow? A. Yes. *(Continued on next page)* Page 1341 MR. TURNER Q. And what is Stack Overflow about? A. It's focused on computer programming. Q. So what can people do there? A. They can ask questions about anything directly related to software development or computer programming and get answers from the rest of the community or seek questions that have already been asked. Q. And can any Internet user post on Stack Overflow? A. Yes. Q. And anybody can answer those posts? A. Yes. Q. Can a user register an account on Stack Overflow? A. Yes, they can. Q. And in registering, what information are they required to provide? A. They provide an account name and email address and then a password. Q. And when you say account name, what do you mean? A. A display name that is shown to identify them to the rest of the community and whenever they ask or answer a question or for their profile, to show what they have done on the site. Q. Is that their screen name? A. Yes. Q. Does Stack Overflow maintain records of a user's registration information? Page 1342 A. Yes. Q. Are those records entered by hand or are they automatically generated? A. It's all automatically handled by the computer. Q. At or near the time the registration information is provided? A. Yes, as it happens. Q. And can a user change his registration information after initially registering? A. Yes. They can change any account information. Q. And Stack Overflow keeps records of those changes? A. Yes. Q. Does Stack Overflow keep records of all the posts by that user? A. Yes. Q. And responses to those posts? A. Yes. Q. Do you have access to those records? A. Yes. Q. Are you familiar with the records maintained by your company? A. Yes. Q. Do you have a binder in front of you? A. I do. Page 1343 Q. Can you take a look at what's been marked as GX or Government Exhibit 1200. A. Yes. Q. Tell me if you recognize it. A. I do. Q. How do you recognize it? A. It's a question from Stack Overflow. Q. A question posted on Stack -- A. Sorry. A question that was posted on Stack Overflow. Q. And what was the date of the post? A. March 16, 2013. Q. And the username? A. Frosty. MR. TURNER: Your Honor, the government offers Exhibit 1200 into evidence. MR. DRATEL: Just hearsay, your Honor, and Vayner. THE COURT: All right. That objection is overruled and Government Exhibit 1200 is received. *(Government's Exhibit 1200 received in evidence)* MR. TURNER: Mr. Evert, can you zoom in this area first. Q. You said the date was? A. Yes, the date is March 16, 2013. Q. And this is the username? A. Yes. Page 1344 MR. TURNER: Can you back up, Mr. Evert. Q. And the title of the post, where is that shown? A. Directly right -- right there. MR. TURNER: Mr. Evert, maybe you can zoom in here. So the title, before you do that, include the title. The title is "How can I connect to a Tor hidden service using curl in php." It says "I'm trying to connect to a Tor hidden service using the following php," and there's a bunch of computer code under that. Then it says "When I run it I get the following error, couldn't resolve host name. However when I run the following command from my command line in the ubuntu," and there's more computer language, "I get a response as expected, the php curl documentations says this," and there's some more computer language, and then it says "I believe the reason it works from the command line is because Tor (the proxy) is resolving the dot onion host name, which it recognizes. When running the php above, my guess is that curl or php is trying to resolve the dot onion host name and doesn't recognize it. I've searched for a way to tell curl/php to let the proxy resolve the host name, but can't find a way." Q. Based on Stack Exchange records, are you familiar with the account information for the Stack Exchange user that made this post? A. Yes. Q. You reviewed those account records? Page 1345 A. Yes. Q. And when was the account originally registered? A. I believe that was in March of 2012. Q. About a year before this post? A. Yes. Q. Up to this point, how many posts had the user made? A. One other post. Q. After this post was put up on Stack Overflow, were any changes made to the account information for the user? A. Yes. The publicly displayed username was changed. Q. And what was the account -- what was the account name or display name originally associated to the account? A. Ross Ulbricht. Q. And what was it changed to after this post? A. Frosty. Q. And how soon after this post was made was that change made? A. Less than a minute. Q. Now, based on Stack Exchange records, do you know whether any responses to this post were made by other users? A. Yes. Q. Were there? A. Yes. He received -- the post received several answers. Q. Could you take a look at Government Exhibit 1205. A. Yes. Q. Do you recognize this exhibit? Page 1346 A. I do. Q. What is it? A. It's one of the answers that the post received. MR. TURNER: The government offers Exhibit 1205 into evidence. MR. DRATEL: The same objection, your Honor. THE COURT: Government Exhibit 1205 is received. The objection is overruled. *(Government's Exhibit 1205 received in evidence)* Q. So, somebody posted this. This is the username of the user who posted it? A. Yes. Q. It says "Wanted to help until I checked the URL and found out it is the hidden wiki. Sorry, I'm not helping that kind of people." And down below it says "Please don't jump to conclusions. I only used that as an example. I've changed the address to TorMail's hidden service." Who posted that response there? A. The response came from the original poster of the question. Q. Frosty? A. Yes. Q. And after this -- it says here "I've changed the address to TorMail's hidden service." Was any change to the original post made around this time? Page 1347 A. Yes. Q. Take a look at Government Exhibit 1204. A. Yes. Q. Do you recognize this exhibit? A. I do. Q. What is it? A. It's a revision history of the question showing the original question and then a change that was made to it. MR. TURNER: The government offers 1204 into evidence, your Honor. MR. DRATEL: Same objection. THE COURT: Government Exhibit 1204 is received. The objection is overruled. *(Government's Exhibit 1204 received in evidence)* MR. TURNER: Can you zoom in on this part, Mr. Evert. Q. So the URL and the code provided by the user in the original post was changed. A. Yes. MR. TURNER: Can you back out, Mr. Evert. Q. And can you see from the exhibit when that change was made, directing your attention to the top? A. Yes. That was made on April 4th, 2013. Q. And was any change to the account user information made around this time? Page 1348 A. Yes. Q. What change was that? A. The email address on the account was changed. Q. From what to what? A. From, I believe, rossulbricht@gmail.com to frosty@frosty.com. Q. And how soon after this amendment to the post was made was that change made to the registration? A. Within a minute or two. MR. TURNER: No further questions. THE COURT: Mr. Dratel. MR. DRATEL: Thank you. CROSS-EXAMINATION MR. DRATEL Q. Good morning, Mr. Miller. A. Good morning. Q. You just testified on direct about that March 16th post at 3:39, I think it's Exhibit 1200. A. Yes. Q. Right? A. Yes. Q. I want to go back about 20 minutes earlier in the timeline and ask you a few questions about the process of logging on in which you -- this user account logged onto the Stack Overflow. A. Okay. Page 1349 Q. So, Stack Overflow accepted a method of logging on called OpenID, is that correct? A. That's correct. Q. And OpenID is a system that essentially allows people to log in to multiple websites without having to enter the username and the password for each website, right? A. Correct. Q. And it works by establishing -- and establishing the person operating a web browser is who they claim to be, right? A. Yes. Q. And we're talking about any web browser, whether it be Internet Explorer, Mozilla, Firefox, Google, right? A. Yes. Q. Now, as vice-president of operations, right -- A. Correct. Q. -- at Stack Exchange -- A. Yes. Q. -- you're aware that there are security flaws with the OpenID system, correct? A. I'm not familiar with the technical details of them. Q. Are you familiar with literature with respect to security researches from Microsoft and computer scientists from the University of Indiana at Bloomington about OpenID? MR. TURNER: Objection; foundation, hearsay. THE COURT: If the answer is "no," then it's straightforward. We'll take it one question at a time. I'll allow this. Page 1350 A. I am not, at least not having actually read it. Q. Are you familiar with a term called covert redirect? A. Yes. Q. And that's when someone steals personal data from a user, right? A. Yes. Q. And OpenID is something that can be vulnerable to covert redirect, right? A. My understanding is that it could. Q. Also you said that all you really need to register is an email address and a username, right? A. Correct. Q. So if I had your email, I could register as you and just put a different username, right, with your email? A. Yes. Q. So all I have to do is know an email address for someone else to sign onto Stack Overflow, use that email address with whatever username I chose, right? A. Yes. Q. And there's no way from the records that we've seen or the records that you have to determine who the actual person is who is using that email account to register, correct? A. No. We -- if I'm understanding your question correctly, all we do is basically look at the email account. We don't try and look into who the actual person is. Page 1351 Q. Right. So you wouldn't know from your records who is using that email account to register on Stack Exchange or Stack Overflow? A. Correct. Q. And there's nothing in your records that would help us determine whether or not the use of the OpenID system to get into that account was the subject of some covert redirect attack, right? A. Correct. Q. Now, just looking at the sequence of events that you testified to earlier, so the first thing that the person who registered did was use the email rossulbricht@gmail.com, right? A. The account was originally created using Facebook Connect, so the email address would have been passed automatically by Facebook as part of that authentication. Q. But that's the email that was on the account? A. That's the email that Facebook tells us who is on the account and, therefore, the email that we added to the account. THE COURT: What is Facebook Connect? THE WITNESS: It's a service that allows a website such as ours to allow someone to use a Facebook account to establish their account on our website. THE COURT: All right. Page 1352 THE WITNESS: It's their version of the OpenID. Q. So it's a version of OpenID essentially? A. Yes. Q. And subject to the same vulnerabilities that we just talked about with respect to OpenID? A. I'm not familiar with the technical implementation details on it, but in theory, yeah, I would suppose. Q. And then 30 seconds later, the username changes to frosty, correct? A. No. The username frosty wasn't changed until the following year. Q. Following year? A. Sorry. Can you repeat the question? Q. Yes. On March 16, 2013, at 3:39:25 a.m. the user posted a question "How can I connect to a Tor hidden service using curl and php," correct? A. Yes. Q. And put specific lines of code in the message, correct? A. Yes. Q. And available essentially for the world to see, correct? A. Correct. Q. And you keep all of those records, right? A. Yes. We make them -- Q. And even if someone changes their screen name or their username, you would still have all the original records, right? Page 1353 A. Yes. Q. And they would be available by subpoena, right? A. Yes. Q. But we have that first entry, March 16, and that's Exhibit 1200, right, 3:39:25 a.m.? A. Yes. Q. And that's UTC time, by the way? A. That's correct. Q. So, at approximately 30 seconds later March 16, 2013, the user changes the screen name to frosty, right? A. Yes. Q. So thereby establishing without any question for anyone subpoenaing those records that frosty and Ross Ulbricht are connected, right? MR. TURNER: Objection, form. THE COURT: Sustained. Q. So it doesn't change the fact that you still have all the original records available by subpoena, right? A. Correct. Q. Kind of a blinking neon arrow, isn't it? MR. TURNER: Objection. THE COURT: Sustained. MR. DRATEL: Nothing further, your Honor. Thank you. THE COURT: Redirect? MR. TURNER: Very briefly. Page 1354 THE COURT: All right. REDIRECT EXAMINATION MR. TURNER Q. You said when the account was originally registered, it was registered using a Facebook account? A. Yes. Q. Would the user of that Facebook account had to have been logged into his Facebook account in order to register with Stack Overflow in that manner? A. Yes. MR. DRATEL: Objection; foundation. THE COURT: Overruled. Q. And just to make sure the timeline is clear, the account was registered in March 2012, right? A. Correct. Q. And from 2012 until March 2013, the display name for this user was Ross Ulbricht, correct? A. Correct. Q. And the registered email address was rossulbricht@gmail.com, right? A. Correct. Q. Not until the post we saw in 2013 did that information change, right? A. Correct. MR. TURNER: No further questions. Page 1355 MR. DRATEL: Just a couple, your Honor. RECROSS EXAMINATION MR. DRATEL Q. Now, you don't know how the person logged in, though, to make that post, correct? A. In -- sorry. In which case? Q. In 2013? In other words, to log into Stack Overflow in 2013, they used the OpenID system? A. Correct. They used the OpenID through Google. Q. Right. So it didn't necessarily have to come through a Facebook account? A. No. In this case, if I'm understanding your question correctly, we key -- we do what's called keying on the email address. So any OpenID-type system that you use if it returns the same email address because that trusted third party trusts -- says that that is the email address of this person, we trust that it is the email address of the user at the time. Q. Right. So in March of 2013 when that post was made, I could have typed in "rossulbricht@gmail.com" and had the right -- and that would be it, right? I would be in there? A. Google would have to tell us that the person on the computer -- if you were to do that, we would be trusting Google to tell us that you had control over that Gmail address at that time. Q. But that's what essentially the OpenID system does, right? Page 1356 A. Yes. Q. With respect to the register of an account that you say is on Facebook, but obviously you don't know who is on the Facebook account when they're registering, right? A. Correct, correct. MR. DRATEL: Can I have one moment, your Honor. THE COURT: Yes. MR. DRATEL: Nothing further. Thank you. THE COURT: Thank you, Mr. Miller. You may step down, sir. *(Witness excused)* THE COURT: Let's get Mr. Alford back on the stand. Mr. Alford, you're reminded that you remain under oath from our prior session. THE WITNESS: Thank you. GARY ALFORD, resumed. DIRECT EXAMINATION CONTINUED MR. TURNER Q. Agent Alford, when we last left off, we were going through documents from the defendant's laptop and you were explaining some of the links you found with evidence in the defendant's Gmail account. Do you remember that? A. Yes, I do, Facebook account. Q. Facebook account. And we left off with an April 2012 entry in the SR accounting spreadsheet for a laptop that you saw corresponding receipt for in the defendant's Gmail account. Do you remember that? Page 1357 A. Yes. Q. Let me keep going chronologically through that evidence with you and look at Government Exhibit 226E, which has already been admitted into evidence. Pull up the first part of the chat. Here we're at pages 507-08 of the chat log with vj and it's dated March 9, 2012. It starts out: "Myself: I've been researching offshore stuff Myself: well, I think I have my citizenship/banking/living plan worked out, but I am feeling around for advisors to make sure I'm not missing anythign Vj: Make sure your plan includes at least two backup locales Myself: ok, don't have that but will work it in." Can you go down to the next part. March 26, 2012: "Vj: One of the things I've learned in the last 10 days, how to run several offshore corps/trusts, and safely transfer funds tween them. Vj: It's as simple as going to the cayman islands, taking out a cashiers cheque, or cash, and walking it down the street, and depositing it in a trust account. Myself: great. My top priority right now is getting a new citizenship. Page 1358 Myself: you aren't looking into that much are you? Vj: interbank transfers always leave some trace. Vj: Dominican Republic, 24 months, 10 grand gets you a citizenship. Bahamas, 4 months, 280grand. Myself: dominica 60k 2 months or so Myself: didn't know about the bahamas, will look into that. Vj: Dominca kinda worries me, from what I've seen of the process, I'm not sure it's all kosher." Next page. "vj: But remember, you can never have too many passports. Myself: yea, but I need to get rid of one first if you know what I mean. THen the more the merrier" Keep going. "Myself: the citizenship I am applying for requires a personal financial audit going back years Vj: Look for other ones as well. You can never have too many passports. Myself: I will for sure. it's my new hobby." Emoticon. "Myself: but this is the fastest one I can get." May 3, 2012 it starts out "myself: sorry, I got distracted reading about what a terrible idea it is to renounce my citizenship. Page 1359 Vj: one word - taxes Vj: Is there a terrible downside to renouncing your citizenship? Vj: can't be president Vj: can't be vice-president Vj: erm... anything else? Myself: it is much harder to get back in the country and you can't stay as long Myself: I grew up here, I have an emotional attachment Myself: my family is here Vj: I used to feel that way. Now, I fly my family to a nice place twice a year to meet. Myself: wah wah boo hoo Vj: they much prefer that to me visiting Vj: naw, it's a valid point. Vj: Having money eases the transition greatly Myself: I'm sure it'll be fine. Have you looked at the few tax havens in the world? Myself: where you can live permanently w/o income tax Myself: monte carlo, andorra Vj: Yeah, my clever plan is to travel all the time, be vague about permanent residence. Myself: could get tiresome Vj: and pick up some land in interesting places. Myself: it brings up tough questions Page 1360 Myself: like if I want kids Vj: But being DPR and having a family are mutually exclusive, at least for a few years. Myself: I'm ok with that Vj: That said, rich playboy types can have a lot of fun. Myself: im ok with that too, but I do want a family someday. Vj: That's where careful creation and nurturing of a public personae, business, etc., becomes so important. Vj: So you can slip into it seamlessly when you want. Myself: I'm not complaining about any of this, great fucking problem to have. Vj: heh, it is, isn't it! Vj: also, we can buy citizenships/work/living visa's, etc., no problem Vj: cause it never hurts to have an extra country to live in. Vj: I plan on collecting passports like Pokemon's. Gotta get 'em all! Myself: well, that's what I'm getting into atm. I need a different passport when I renounce Myself: you could really screw yourself if you didn't line something up. oops, renounced my citizenship, now I'm stuck here." Page 1361 Q. In the defendant's Gmail account, did you find any evidence about seeking foreign citizenship? A. Yes, I did. Q. What did you find? A. I found emails from the defendant to various friends asking for, how do you say, when someone says -- like a reference for citizenship. Q. And where specifically? Citizenship where? A. Dominica. Q. Can you take a look at Government Exhibit 316. MR. TURNER: Mr. Evert, could you pop up that last page of the chat? Q. Do you recognize Government Exhibit 316? A. Yes. MR. TURNER: Mr. Evert, can you zoom in on the last. Q. All right. So what's Government Exhibit 316? A. It is three emails: One from Ross Ulbricht to an individual named Alden on May 1 2012; there's a second email from the defendant to an individual named Mirza also on May 1, 2012; and there's a third email on that same date from the defendant to an individual named Rene. MR. TURNER: Your Honor, the government offers 316 into evidence. MR. DRATEL: Just the same objection. THE COURT: All right. Those objections are overruled. Government Exhibit 316 is received. Page 1362 *(Government's Exhibit 316 received in evidence)* Q. The date of the email is May 1, 2012. How does that compare to the last chat we saw up on the screen? A. It's within two days. Q. And subject is "reference letter." It says "Hey Alden, Ever do a patent search on that dog collar idea? Could be a winner! I'm applying for a second citizenship to an island nation in the caribbean called Dominica and they need a few non-family character references. There are few people that have known me as long as you have. Would you be willing to one of them for me? All you would need to do is write a half page testifying to my outstanding character, should be easy." Emoticon. "You may wonder why I am doing this crazy thing. Well, it's part of a plan of mine to diversify myself internationally. There are opportunites available to people with non-us citizenship, such as ETF trading, and there could also be substantial tax advantages in the future. It's also a bit of a political hedge if things ever get dicey here in the US." Q. Are the other two letters in this email, collection of emails -- excuse me -- are the other two emails in this exhibit of a similar nature? A. Yes. Q. And they're from the same date? Page 1363 A. Yes. Q. Okay. Let me go on to Government Exhibit 251. The jury has already seen this exhibit. It's a spreadsheet from the defendant's computer entitled "networth calculator." MR. TURNER: And can you zoom in on the first column, Mr. Evert. So the entries in the spreadsheet, go down to June 2012. Q. Do you see that? A. Yes. MR. TURNER: Back out. Could you zoom in on this area here. Q. So under hard assets, there's SR Inc. listed as $104 million in value and then there's a Samsung 700Z laptop listed for $800. Earlier we saw a laptop purchased for $1,150 in April? A. Yes. Q. There may have been some depreciation value? MR. DRATEL: Objection. THE COURT: Sustained. Q. So looking at the right-hand column, under liquid assets inventory, there's an entry for USAA $1,400. In the course of your investigation, did you obtain any records from USAA? A. Yes, I did. Q. And from whom -- for whom -- who are they for? A. The defendant. Page 1364 Q. Could you take a look at Government Exhibit I think it's 806. A. I had a spreadsheet in this book. Q. 806, do you have 806 in your book? A. Yes, I do. Q. Okay. Do you recognize that document? A. Yes, I do. Q. How do you recognize it? A. It's a bank statement from USAA Federal Savings Bank which was subpoenaed through the investigation. MR. TURNER: The government offers 806 into evidence. We have a stipulation we can read in, your Honor. THE COURT: All right. MR. TURNER: We can read in the stipulations at the end of the testimony, if that's okay. THE COURT: All right. MR. TURNER: Apologies for that. The government offers 806 into evidence. THE COURT: Mr. Dratel. MR. DRATEL: Okay. MR. TURNER: Subject to stipulation. THE COURT: Okay. Subject to the stipulation, Government Exhibit 806 is received. *(Government's Exhibit 806 received in evidence)* Q. Now, we saw the last entry for the spreadsheet was in June 2012. And what was the balance in the defendant's USAA account as of June 2012? Mr. Evert, can you blow that up? Page 1365 A. It is $1,347.24. Q. How does that compare to the entry in the spreadsheet? A. It's within $60 of that entry. Q. There's also a line in here for PayPal, $50. Did you obtain any PayPal records in the course of your investigation? A. I obtained PayPal records relative to the defendant. Q. Can you take a look at Exhibit 808. A. I have it. Q. Do you recognize this document? A. Yes. Q. What is it? A. It is the document from PayPal relative to the transactions of the defendant. MR. TURNER: Your Honor, we have a stipulation on this and we can read it in after the defendant's (sic) testimony. THE COURT: All right. MR. TURNER: So the government offers 808 into evidence. Excuse me, it's the witness' testimony. THE COURT: Any objection? MR. DRATEL: No. THE COURT: Government Exhibit 808 is received. *(Government's Exhibit 808 received in evidence)* Q. So what do the records from PayPal show was the balance in the account? And look up here so we can see what these columns are. Over here, can you zoom in. From the side, there's a date in this column and then zoom out, please, and then over here, and then there's a balance remaining after the transaction in each column in each row? Page 1366 A. Yes. Q. So, could we go down to the bottom, please, the bottom two. Zoom in here first. That's good. June 7, 2012, there's a transaction involving a checkout payment system, and then if you go to the other side in the balance column, second from the right, what was the balance as of June 7, 2012 in the account? A. $46.89. Q. How does that compare to the entry in the spreadsheet? A. It's within $4 of the entry on the spreadsheet. MR. TURNER: Let me now move to September 2012. Put up Government Exhibit 227F on the screen. Blow this up, please. This is page 63 of a 337-page chat with Cimon, and it's from 9/26/2012. "Cimon: Hey, it's 0700 here, and here I am!!! OK, it's 715 Yeah, it's 0730, and we must have got our wires crossed. I'm going to go grab some breakfast, back in a bit Gotta assume ya' forgot our meet, I'm gonna go for my morning walk, will check back later back, will be here for another 2 hours or so, then I have a local meeting for lunch. It's noon, and I'm off for a lunch meeting, will check back later in the day." Page 1367 Then it says "Myself: hey, sorry about that. I changed timezones today and I think I got confused last night with my flight schedule Myself: it's actually getting late here, so I'll go to sleep soon. I should be around during your morning tomorrow, but the next 2-3 days after I'll be fairly busy. If you don't find me on here but have something to say, feel free to message me on Silk Road, or the dev forum Myself: had a good chat with smed, don't worry about getting me up to speed on the current state of things. He says he'll have a demo of the exchange deployed on tuesday, so let's all touch base then. I'll be posting a couple of things on the dev forums tomorrow that you should look at when you get a chance as well." Q. All right. So the chat -- in the chat "myself" says "I changed timezones today." Did you see any records in the defendant's Gmail account from this date indicating that the defendant was traveling? A. Yes, I did. Q. What did you see? A. I saw an email regarding flight records. Page 1368 Q. Can you take a look at Government Exhibit 320. A. I had a spreadsheet in this book that's not here today. Q. Okay. We won't use it for now, but do you see 320 in front of you? A. Yes. Q. And do you recognize it? What is it? A. It's an email from priceline.com to the defendant about flights. MR. TURNER: The government offers Exhibit 320 into evidence, your Honor. MR. DRATEL: One moment, your Honor, please. Vayner and hearsay, your Honor. THE COURT: All right. Those objections are overruled. Government Exhibit 320 is received. *(Government's Exhibit 320 received in evidence)* Q. First, let's focus on the header information. The date is 9/3/2012 from priceline.com to rossulbricht@gmail.com, itinerary for Austin, Texas, September 26, 2012. Can you take a scroll down to the flights. What are the flights here? A. Okay. There's a departing flight and it's from San Francisco to Austin, Texas. Q. On what date? A. It's leaving on Wednesday, September 26, 2012. Page 1369 Q. And are you aware whether San Francisco is in a different timezone from Austin, Texas? A. Yes, it is. It's in the Pacific Standard Time and Austin is in I believe the Central Standard Time. Q. Okay. Let me move on to November 2012. Could you pull up 227G, please. MR. TURNER: Can you scroll up a little bit. Q. This is page 157 of a 337-page chat with Cimon. It starts out November 15, 2012, "Myself: just got this Myself: I'm not sure if tormail is not receiving emails atm, but funds are coming in. I was able to exploit a vulnerability in one of the pages on silk road in a way that will cause a DOS attack and SQLi attack. Send 5k to..." then there's a long string "if you are satisfied with WHAT I am doing. Send 15k to the same address to know HOW I am doing it. -JE Myself: had to swollow my pride there Cimon: I know, but fuck it, let's keep our eye on the ball, and the ball is keeping the site open Cimon: heh, yer still way richer than he!" Emoticon. "Myself: can't wait to put this behind me." Can we go back to GX 250, please. Could we go to page seven, middle of the page, the SR accounting spreadsheet the jury has seen earlier, and there's an entry here, 11/18/2012, "pay off hacker." Page 1370 See that? A. Yes. MR. TURNER: Go back to 227G, please. I'm sorry. 227G. You can get rid of the top panel. Okay. "Myself: can't wait to put this behind me Cimon: Has this fucked up your travel plans Cimon: And have you slept recently Myself: just stressed me out Myself: I am rested Myself: and I am done travelling Myself: for a little while anyway." Q. Can you take a look at Government Exhibit 321. Do you recognize this exhibit? A. Yes, I do. Q. What is it? A. It is an email from Delta Airlines to the defendant on November 13, 2012 regarding a flight itinerary. Q. And whose flight itinerary? A. The defendant. MR. TURNER: The government offers Exhibit 321 into evidence, your Honor. MR. DRATEL: Vayner and hearsay. THE COURT: All right. The objections are overruled. GX 321 is received. Page 1371 *(Government's Exhibit 321 received in evidence)* MR. TURNER: Can you zoom in on the header again. From Delta Airlines to Ross Ulbricht subject, "It's time to check-in." The date is 11/13/2012. And then could you zoom in to the last half of the message, just the first three trips there. Q. So what are the flights indicated in the message? A. There's a trip one and it is departing on Wednesday, November 14, 2012, it's departing San Francisco, California and it's arriving at Atlanta, Georgia. There's a second leg, which leaves on that same day, which departs 7:37 p.m. from Atlanta, Georgia to San Juan. And then there's a third leg on the next day, Thursday, November 15, which departs San Juan and arrives in Dominica. And then there's a second trip, which is dated for Tuesday, December 4th, which departs Dominica and arrives in San Juan. The day after on Wednesday December 5, it departs -- the flight departs from San Juan and arrives in Atlanta, Georgia. And on that same day, another leg from Atlanta, Georgia, to San Francisco, California. Q. So let me go on to February 2013, can we take a look at what's marked in your binder as 227I. A. Yes. Page 1372 Q. Do you recognize this exhibit? A. 227I? Yes. Q. How do you recognize it? A. 227I is a Tor chat. Q. Is this one of the Tor chats you reviewed from the defendant's computer? A. Yes. MR. TURNER: The government offers 227I into evidence. MR. DRATEL: Vayner and hearsay, your Honor. THE COURT: 227I is received. *(Government's Exhibit 227I received in evidence)* MR. TURNER: Can you publish that, Mr. Evert. This is page 308-10 of a 337-page chat log with Cimon dated February 5, 2013, and it starts off "Cimon: I will tell you I've been boning up on both Tor and bitcoind source code and I've had the Tor thing figured for a while, just the bootstrapping step I'm having problems with and I'll be back home on Friday to work with smed, he's further along on quite a few things than it appears, eh. Myself: Okay. I'll be away sat/sun, so maybe we can catch up next Monday. Cimon: Take care. Myself: You too." February 10. "Cimon: Hey, how was your weekend. Page 1373 Myself: One of the best I've had in a while. How was yours." You looked to see in the defendant's Facebook account any records from around this time period? A. Yes, I did. Q. And what did you find? A. I found a Facebook status update which corresponds with this time frame. Q. Did you find any Facebook messages as well? A. Yes. Q. Can you take a look at Government Exhibit 331. What are you looking at there? A. It is records from the defendant's Facebook account and it is messages to and from the defendant. MR. TURNER: The government offers Exhibit 331 into evidence. MR. DRATEL: The same objection. THE COURT: All right. That objection is overruled. Government Exhibit 331 is received. *(Government's Exhibit 331 received in evidence)* MR. TURNER: Can you zoom into here. Q. And the date of this message is February 8, 2013? A. Correct. Q. And could you explain what the messages say? A. The ones you have highlighted, February 8, 2013 it says "Going camping this weekend," and the author is the defendant and his recipient is an individual named Allison. Page 1374 Q. Okay. And then the messages under that are an exchange following that message? A. Yes, it is. Yes, they are. Excuse me. Q. Now, let me show you Government Exhibit 241, jumping to May 2013. A. I have it. MR. TURNER: Could you go to page three of the document. It's a file that was recovered from the defendant's laptop that's already been shown to the jury named log.txt. And zoom in on actually 4/21. That's fine. Down at the bottom. Okay. The first entry up at the top of the screen, 4/21 to 4/30/2013, it says "Market and forums under sever DoS attack. Gave 10k btc ransom but attack continued. Gave smed server access." Then on 5/3/2013, "Helping smed fight off attacker, site is mostly down. I'm sick." 5/6/2013, "Working with smed to put up more defenses against attack." Did you find any emails in the defendant's Gmail account referencing a smed? A. Yes, I did. Q. What did you find? A. I found an email in May of 2013 from the defendant to an individual with a screen capture contained in it. Page 1375 Q. Let's take a look at that, can you take a look at Government Exhibit 312, please. A. Which exhibit? Q. 312. A. Yes, but this is not the exhibit. Q. 317. Sorry. A. Yes, I have it. Q. Okay. Is this the email you're referring to? A. Yes. MR. TURNER: The government offers Exhibit 317 into evidence. MR. DRATEL: Same objection; Vayner and hearsay, your Honor. THE COURT: All right. Government Exhibit 317 is received. Those objections are overruled. *(Government's Exhibit 317 received in evidence)* MR. TURNER: Let's take a look at the message itself first. Blow that up. Q. The subject is IMG from Ross Ulbricht, dated May 2, 2013, and then it's to someone named Curtis. Was there any body in the message? A. No. Q. And then it says attachment screenshot from 2013, May first, and a timestamp there. Page 1376 A. That's correct. Q. Is page two the attachment? A. Yes, it is. Q. Let's take a look at that. All right. Are you familiar with the print screen feature in a computer? A. Yes, I am. Q. Did you ever personally use that feature before? A. Yes, I have. Q. Have you ever used it in a computer attached to two computer monitors? A. Yes. That's my setup at work. Q. And what's happened when you used the print screen feature on your computer with two monitors hooked up to it? A. I get a result similar to this where you have both screens on the image that is produced. MR. TURNER: So let's zoom in on the top corner of the right-hand image. So the username frosty is there, the date, May 1, 10:31 p.m. Can you back out, please. Do the same thing for this image. Q. The same thing, right? A. Yes, it is. MR. TURNER: Could you zoom into the bottom-left corner of the left-hand image, right here. Q. The PDF link here named hidden server.PDF. Do you see that? Page 1377 A. Yes. Q. Now, let's zoom into the window in the middle of the screen. What do you see? A. That is a Pidgin instant messenger box with the box open and a discussion with an individual named smed and mg in the background. Q. Okay. So the open window has the tab labeled "smed"? A. Yes. Q. It says "private conversation with smed...started," and then there's a long string of text starting: "Smed: Morning. Me: Hey, good morning." And then there's a tab here labeled "mg," is that right? A. Yes, it is. Q. Go back to Government Exhibit 241. Go to the top of page two. Do you see a reference to mg in here? A. Yes, in the April 3, 2013 entry. Q. "got pidgin chat working with inigo and mg"? A. Correct. Q. And just to be clear, the date of that email, 317, what was it again? A. The email with the screenshot was dated May 2, 2013. MR. TURNER: Mr. Evert, can you back out of that. Q. And the date of the entries we saw before with smed are what? Page 1378 A. It is within a couple days prior. And it was within one entry, the day after; and the other entry, approximately five days after. Q. Let's take a look at Government Exhibit 264. This is a spreadsheet the jury has already seen from the defendant's computer labeled servers.ods. MR. TURNER: Can you zoom into the columns, please, up at the top. That's good. Q. Specifically to this one, is there one column in the spreadsheet labeled IP address? A. Yes, there is a column. MR. TURNER: Back out, please, and then could you go here. Q. And one column labeled "notes"? A. Yes. MR. TURNER: Can you back out. Can you zoom in down here. Can you highlight this entry right here to here. Q. See this entry on the spreadsheet? A. Yes. Q. There's an IP address, 64.31.48.51, and then the notes are "Connected to my real ID maxmind Ubuntu 12.10." Did you receive any records from Google indicating the IP addresses used by the defendant to log into his Gmail account? Page 1379 A. I did. Q. Can you take a look at Government Exhibit 809. I'm sorry. Government Exhibit 333A. Sorry about that. A. 333A? Q. Yes. MR. TURNER: Your Honor, I have a stipulation to read, a paragraph from the stipulation that's been marked as Government Exhibit 803. THE COURT: All right. MR. TURNER: "Government Exhibit 333A is a true and accurate copy of subscriber information associated with the email account rossulbricht@gmail.com. These records were produced by Google to Agent Alford pursuant to subpoena on or about July 17, 2013. Among other things, Government Exhibit 333A contains a chart reflecting user logins to the email account rossulbricht@gmail.com between January 13, 2013 and June 20, 2013. The chart indicates the date and time of each login, as well as the Internet protocol IP address of the user logging into the account. These records were automatically generated from Google's computer systems at or near the time the logins occurred." Your Honor, the government offers 333A into evidence. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 333A received in evidence)* Page 1380 MR. TURNER: Mr. Evert, can you log into this part here. Q. So, do you see the IP address 64.31.48.51 anywhere in the logins of the defendant's Gmail account? A. I do. Q. Where are they? A. They are in -- under the column "IP addresses" and 64.31.48.51 appears starting June 17th, 2013 and it continues -- it continues to be listed as the documents until June 20, 2013 in this sheet. MR. TURNER: Let me fast-forward to September 2013. Can you pull up Government Exhibit 241, please, Mr. Evert. This is the log.txt file we have seen before. Can you go down to the page five and highlight this one right here. Q. So this entry is dated 9/11 to 9/18/2013, "Could not confirm ST bust. Got covered in poison oak trying to get a piece of trash out of a tree in a park nearby and have been moping. Went on a first date with amelia from okc." Do you see any messages in the defendant's Gmail account about poison oak? A. Yes, I did. *(Continued on next page)* Page 1381 Q. Take a look at Government Exhibit 325. A. I have it. Q. What is that? A. It is an email from the defendant to an individual named Julio in which he references that he has poison oak rash from head to toe. MR. TURNER: Your Honor, the government offers 325 into evidence. MR. DRATEL: Objection. Vayner and hearsay, your Honor. THE COURT: The objection is overruled. GX325 is received. *(Government's Exhibit 325 received in evidence)* THE COURT: At 11:30 we will take a break. Is that all right with everybody? MR. TURNER: OK, your Honor. THE COURT: Thanks. MR. TURNER: Could you zoom in, please, great. Q. The date of the email is 9/19/2013? A. Yes. Q. "I have poison oak rash from head to toe. I wish you were here to comfort me." A. Correct. Q. How about "first date with Amelia from OKC," did you find anything in the defendant's Gmail account about that? Page 1382 A. Yes. I found an e-mail related to an okcupid! related to Amelia. Q. Take a look at Government Exhibit 324. A. Yes. Q. Is that the email you are referring to? A. Yes. It is an email from okcupid! to the defendant. MR. TURNER: The government offers Government Exhibit 325 into evidence. MR. DRATEL: Objection as to Vayner and hearsay, your Honor. THE COURT: You mean 324? MR. TURNER: I'm sorry. 324. THE COURT: Mr. Dratel, was that the exhibit you were referring to? MR. DRATEL: Yes. THE COURT: The objections are overruled. Government Exhibit 324 is received. *(Government's Exhibit 324 received in evidence)* MR. TURNER Q. How many emails are included in this exhibit? A. Two. MR. TURNER: Can you zoom in on the header, please, Mr. Evert. The date is 9/18/2013. "From: Okcupid! Page 1383 "To: Ross Ulbricht at Gmail.com. "Subject: Ross-0, You have a new message from amaliam." Could you go down, please. Amaliam says: "Be there in a few. I'm wearing a khaki jacket and white shirt." A. Correct. Q. What does the next message say? A. The next message says "Nice meeting you," and a phone number is reflected. Q. Take a look at Government Exhibit 130. It has already been admitted into evidence as the notes recovered from the defendant's trashcan in his bedroom. Could you zoom in here, Mr. Evert. The phone number written on the piece of paper "Danielle," the area code has been redacted, and it says "5791503." Did you receive any records from Google for a Google Voice account associated with the defendant? A. Yes, I did. MR. TURNER: Your Honor, I have a stipulation to read. "Government Exhibit 333B is a true and accurate copy of records from the Google Voice account associated with the email account rossulbricht@gmail.com (the Google Voice account). These records were produced by Google to Agent Alford pursuant to subpoena on or about November 15, 2013. Google Voice is a service offered by Google that enables a user, among other things, to send and receive cell phone text messages ("SMS" messages) over the Internet. Page 1384 "Government Exhibit 333B contains a chart reflecting the SMS messages as well as other types of communications sent to or from the Google Voice account from August 1, 2013 to September 19, 2013. For each of these SMS messages the chart indicates the date and time of the message, whether the message was incoming ("SMS in") or outgoing ("SMS out") and the phone number of the other party to the message. "These records were automatically generated from Google's computer system at or near the time of each communication." Q. Could you take a look at 333B, please. MR. TURNER: Your Honor, the government offers 333B into evidence. THE COURT: All right. Mr. Dratel. MR. DRATEL: No objection. THE COURT: All right. Received. *(Government's Exhibit 333B received in evidence)* THE WITNESS: I have it. MR. TURNER: Would you publish it, Mr. Evert. Could you put 130 back on the screen with that number up top. Q. Can you find the records on the spreadsheet, Mr. Alford, Agent Alford, that have -- well, I'm asking you, did you find this phone number anywhere in these records? Page 1385 A. Yes, I did. MR. TURNER: Mr. Evert, could you zoom in on one of those entries. A. I believe they are on page 4. Q. OK. Page 4. And where are they? A. Towards the top of page 4. Q. OK. Right there. A. Yes. *(Pause)* MR. TURNER: Your Honor, we are at a good stopping place. THE COURT: All right. Ladies and gentlemen, let's take our mid-morning break and we will come back and then we will go until lunchtime. And the same reminders as you have been hearing not to talk to each other about this case or anyone else. Thank you. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1386 *(Jury not present)* THE COURT: You can step down for a few minutes and we will resume in about ten minutes. THE WITNESS: Thank you. *(Witness not present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. I have one matter and it relates to 227I, the chat log page. And I want to understand, since you'd gotten the other chat log pages in through a different witness, whether or not 227I the government can represent is from the same group as to which the other Simon, Cimon chats relate and it just happens to be a different page. MR. TURNER: Yes, your Honor. And you can see that in the name of the file that's at the top of the header of the document. It is from the same file as the other ones. THE COURT: All right. MR. TURNER: All the other ones with that same individual. THE COURT: So this was out of all of the others for the Cimon, or Simon, log that were previously admitted, this is jury another excerpt of the same group, is that right? MR. TURNER: Correct. THE COURT: OK. All right. Thank you. Was there anything else which you folks wanted to raise before we take our own mid-morning break? Page 1387 MR. TURNER: No, your Honor. THE COURT: Mr. Dratel? MR. DRATEL: No, your Honor. THE COURT: All right. Thank you. Let's take a short break and we'll come back. THE CLERK: All rise. *(Recess)* THE COURT: Let bring out the jury. *(Continued on next page)* Page 1388 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. When you get to your seats, please be seated. Thank you. And, Joe, there is something that is buzzing. Mr. Turner, you may proceed, sir. MR. TURNER: Thank you. MR. TURNER Q. Agent Alford, did any agents in your group ever make any uncover purchases of drugs from Silk Road? A. Yes. MR. TURNER: Your Honor, I have a stipulation to read. It has been marked as Government Exhibit 802A. THE COURT: All right. MR. TURNER: And while I am reading, may I publish Government Exhibit 802 for the jury, which is what it corresponds to? THE COURT: Yes. Any objection to -- well, 802, is it already in or are you offering it? MR. TURNER: I am offering it based on the stipulation. THE COURT: On the stipulation. Mr. Dratel? MR. DRATEL: No objection. Page 1389 *(Government's Exhibit 802 received in evidence)* THE COURT: All right. Proceed. MR. TURNER: Thank you. "It is hereby stipulated and agreed by and between the United States of America, by Preet Bharara, United States Attorney for Southern District of New York, Serrin Turner and Timothy Howard, Assistant United States Attorneys, of counsel, and Ross Ulbricht, by and through his counsel Joshua Dratel, Esq., as follows: "1. If called to testify, Shelby Richardson, a Special Agent with the Drug Enforcement Administration ("DEA") would testify that from September 2011 to May 2013, Special Agent Richardson attempted a total of eight undercover purchases from the Silk Road website using the Silk Road username 'downersforyou.' Government Exhibit 802 is a spreadsheet reflecting the results of the undercover purchases. The column labeled 'Purchase Date' indicates the date the order was placed on the website. The column labeled 'Vendor' indicates the username of the vendor with whom the order was placed. The column labeled 'drug Ordered' indicates the type of drug ordered. The column labeled 'Delivery Date' indicates the date that the order was retrieved from the mailing address designated by Special Agent Richardson and placing the order. "All of the orders reflected in the spreadsheet were placed by Special Agent Richardson using a computer located in the Southern District of New York and were shipped to an undercover mailing address located in the Southern District of New York. All of the substances received were submitted to the DEA Northeast Laboratory for testing. Page 1390 "2. If called to testify Russell J. Gallis, a forensic chemist with the DEA, would testify that on the dates indicated in the column of Government Exhibit 802 labeled 'Lab Test Date' Mr. Gallis tested each of the substances Special Agent Richardson transferred to the DEA Northeast Laboratory. The column of the spreadsheet labeled 'Net Weight' reflects the weight of each substance submitted for testing after removal of any packaging. The column of the spreadsheet labeled 'Drug Detected' indicates any illegal drugs the substance was found to contain through testing a sample of the substance using reliable laboratory procedures. As reflected in the spreadsheet, all substances submitted by Special Agent Richardson tested positive for illegal drugs." Your Honor, the government offers Government Exhibit 802 and the stipulation 802A into evidence. THE COURT: 802 has been received and 802A is received as a stipulation. *(Government's Exhibit 802A received in evidence)* MR. TURNER: Thank you. MR. TURNER Q. Agent Alford, did you yourself participate in any undercover purchases from Silk Road? Page 1391 A. Yes. Q. What did you purchase? A. I purchased a hacking pack. Q. And by "hacking pack," what do you mean? A. It is -- it was a listing for tools for someone to acquire, computer programs or tools to perform computer hacking. MR. TURNER: Could we actually publish Government Exhibit 116B, which has already been admitted into evidence. Q. The jury saw this earlier. Is this the listing for what you purchased? A. Yes. Q. And the advertisement is for "HUGE hacking pack, 150+ hacking tools & programs, "is that right? A. Yes. Q. And would you take a look at Government Exhibit 340B in your binder. Do you recognize this document? A. Yes. Q. What is it? A. It is a screenshot of the order that we placed for the previously mentioned listing. Q. And what is the date of that screenshot? A. September 20, 2013. Q. Is that around the same time that you -- that your group made the purchase? Page 1392 A. Yes. MR. TURNER: The government offers Exhibit 340B into evidence. THE COURT: My 340B is different from what you have just described. I think that corresponds with what I have marked as 340A. Am I wrong about this? MR. TURNER: There should be a verified order section at the bottom. THE COURT: 340A relates to the hacking tools. Is that what you are attempting to -- MR. TURNER: Both should, your Honor, 340A and 340B. THE COURT: B relates to something else that I've got in my binder unless you have changed the exhibit numbers. I just want to make sure that I understand what we are receiving into evidence. *(Pause)* MR. TURNER: Your Honor, maybe if you look at the bottom portion of 340B. THE COURT: Yes. MR. TURNER: That is what I am going to be referring to. THE COURT: Oh, I'm sorry. OK. I was looking at the top portion of 340B. All right. MR. TURNER: OK. Page 1393 THE COURT: 340B, Mr. Dratel? MR. DRATEL: Objection with respect to hearsay and Vayner. Hearsay certainly. THE COURT: I'm sorry. It is a hearsay objection? MR. DRATEL: Yes. THE COURT: Hearsay and Vayner? MR. DRATEL: Yes. THE COURT: All right. Overruled. Government Exhibit 340B is received. *(Government's Exhibit 340B received in evidence)* MR. TURNER: Could you zoom in to the "Verified Orders," Mr. Evert. Q. So this is -- could you explain what is shown here, Agent Alford? A. It is the record that we received from the Silk Road marketplace about our completed -- we as soon as we completed the order, we added it to cart so that is what is represented in the account. Q. All right. You said you placed this order around September 20, 2013? A. Yes. Q. And what was the result of the order? A. We received a response with links to click on. Q. And where did you receive that response? A. Into the same account on the Silk Road marketplace. Page 1394 Q. What feature of the Silk Road system? A. The messaging system. Q. Could you take a look at 340A, and do you recognize this exhibit in your binder? A. Yes. It is a screenshot of the response we got back on the Silk Road marketplace for the order we placed. Q. And the response you got back from who? A. The Silk Road marketplace and the vendor. Q. From the vendor? A. Yes. Q. OK. MR. TURNER: Your Honor, we offer 340A into evidence. MR. DRATEL: The same objection, your Honor. THE COURT: All right. 340A is received. *(Government's Exhibit 340A received in evidence)* MR. TURNER: Zoom into the -- actually, could you go up top, Mr. Evert, to the title there, the "Huge." From: Sniffsniff5.0. Subject Line: HUGE hacking pack, 150-hacking tools & programs. And then could you go down, Mr. Evert, to the body of the message. All right. It says "hello," and then there are a bunch of links, or three links specifically. And then it says "Freebies." There are a series of other links. Then it says, "Please keep in mind that not all program will work in each folder, but that's why I'm sending you extra working programs. Thank you for purchasing my listing. If you have any questions, feel free to send me a message." Page 1395 Did you yourself click on any of the links you got back in response to this message? A. No. Q. What did you do with this information? A. Provided it over to the FBI. MR. TURNER: No further questions, your Honor. THE COURT: All right. Thank you. Mr. Dratel. CROSS-EXAMINATION MR. DRATEL Q. Well, just about good afternoon, Agent Alford. A. Good afternoon. Q. I want to go back to something you testified about this morning, government Exhibit 317. A. Yes. Q. That is an image attached to an email, correct? A. Correct. Q. If we can go to the image. Now, if we go to the box there in the image on the left. And that is a chat window, correct? A. Yes. It appears so. Page 1396 Q. It is a Pidgin chat window? A. That is reflected in the screen? Q. Yes. A. Yes. Q. So if you look at the screen that's behind the first screen -- do you see -- and that would be the one that Mr. Ulbricht is operating on, right? A. I can't say. Q. Well, there is a different avatar at the bottom right there, correct? There is an avatar at the bottom right there, correct? A. That -- what you are pointing at? Q. Yes. A. Yes, that's an avatar. Q. And I want to go back to Government Exhibit 201 and show it to you on the screen: A. Just 201? Q. F. 201F. *(Pause)* I'm sorry. 201G. A. 201G? Q. It is already in evidence. A. All right. Got it. Q. If you look on the bottom right, this is from the day of Mr. Ulbricht's arrest, correct? Page 1397 A. I was not at his arrest. Q. But you are familiar with the photographs taken of his laptop? A. Yes. Q. This is one of them, correct? It is already in evidence. A. OK. Yes. Q. That avatar on the bottom right is someone with a sword essentially, right? A. Yes. Q. And a mask? A. It is pretty blurred, but, yes, I've seen that avatar. Q. That is Dread Pirate Roberts' avatar? A. Yes. Q. I want to go back to yesterday -- Monday, I guess -- your testimony with respect to those original Altoid posts that you testified about, correct? Do you understand what I am talking about, with bitcoin talk forum and shroomery.org? A. Yes. Q. All of those, with one exception which I will talk about, were in the first half of 2011, right? A. 2011? Q. Yes. A. The time indicated on the screenshot was 2011. I did not take them in 2011. Q. No, I'm not saying you took them in 2011, but the dates of those posts were 2011? Page 1398 A. Yes. Q. In your first half. Then there was one from October of 2011. MR. DRATEL: If we can go to government 306, please. Q. So just look at the date first. That is October 11 -- I'm sorry, October 11, 2011, right? A. Yes. Q. And that is about -- that is from Altoid, right? A. Correct. Q. "Looking for an IT person for a bitcoin startup company," right? A. Yes. Q. And then as contact information, it leaves the address rossulbricht@Gmail.org -- @gmail.com, right? A. Correct. Q. And this is eight months after those other posts -- at least eight months from the other posts that you talked about in Government Exhibit 301, 302, 303, 304 -- if you want to -- A. Are you talking about the Altoid posts? Q. Yes. A. Yes. Approximately eight months after. Q. Now, as you mentioned just before, you didn't do that at the time that those were posted, when you took those screenshots down, right? Page 1399 MR. TURNER: Objection to form. Q. When you took those screenshots down, it was not at the time that the posts were made back in 2011? A. No, I wasn't on the case. Q. So what you did was historical research on the Internet, right? A. Yes. Q. And so what you showed us with those Altoid posts and that information was from clicking -- well, first, putting in search terms, right? A. Yes. Q. Restricting the dates, right, that you told us Monday, right? A. Yes. Q. And putting in those search terms. And then when you had results, you would click on links and that took you to those posts, right? A. Yes. Q. And so anyone using Google, or whatever search engine you might use, putting in search terms like that would find the same results, right? A. Yes. Q. Now, you researched everything you could about Mr. Ulbricht in 2013, right, at some point in 2013, correct? A. I don't know about "everything" but a lot. Page 1400 Q. Everything you could find, pretty much, on open records and a lot of subpoenas, as well? MR. TURNER: Objection. Beyond the scope. THE COURT: Well, I think -- rephrase. Why don't you rephrase it, Mr. Dratel. MR. DRATEL: Sure. Q. Did you do a lot of open-source research on the Internet with respect to finding out about Mr. Ulbricht? A. I don't know about your definition about "a lot" but I did do public-source research on Mr. Ulbricht. Q. What kind of public-source research did you do? MR. TURNER: The same objection. Beyond the scope. THE COURT: I will allow it. We'll see where it is going. I will allow a few. A. Well, there is Internet searches. We have a public records search that we use. FinCEN. Q. Can you explain what FinCEN is? A. It's a Financial Crimes Enforcement Network. There is a database where you can go into the database to look for certain financial transactions that would be filed in the database. Q. Were there any results from your FinCEN search? MR. TURNER: Objection. THE COURT: Sustained. Q. You didn't find anything about Mr. Ulbricht from your FinCEN search, correct? Page 1401 MR. TURNER: Objection. THE COURT: Sustained. Q. You looked at his LinkedIn, right? You looked at his LinkedIn -- MR. TURNER: The same objection. Q. -- account? THE COURT: Sustained. MR. DRATEL: Your Honor, may we have a sidebar? THE COURT: Yes. *(Continued on next page)* Page 1402 *(At the sidebar)* THE COURT: I will tell you the basis of my rulings first so you know that they are beyond the scope of the direct examination. MR. DRATEL: The direct examination included things that he found during his research. THE COURT: And you can inquire into any of them. MR. DRATEL: But I should also be able to go into what he didn't find. The scope of his investigation is fair game on the cross. THE COURT: No, it is not, not in the way that you are doing it. What you are trying to do is -- if you want to ask somebody about LinkedIn, you need to find a witness who has talked about linked. MR. DRATEL: I don't think so. I think that if he has done this investigation of him, they can't just narrow it. What the scope is is not what he testified about; it is the subject matter of his testimony. The subject matter of his testimony is he did Internet research on the guy. And they are allowed to put in the things they want to put in, I don't think that is fair for the scope of cross. THE COURT: You can't inadvertently build up his character. MR. DRATEL: I am not trying to. That is not what the question is about. Page 1403 THE COURT: Let me ask the government. MR. TURNER: Your Honor is exactly right. We have been over this territory before. If they want to use evidence in their affirmative case that their LinkedIn page, first of all, is not hearsay and it is properly authenticated and it is somehow relevant to the defendant's case, they can do that. They don't get to do that through this witness. THE COURT: All right. My ruling stands. OK? So stay within the investigation, stay within the areas of search. But if there are things where you are wondering if they are within that you haven't yet covered, you can ask a question and I will sustain an objection but -- MR. DRATEL: Yes. I need to make a record. THE COURT: You can make a record at the break. That we can do at the break. MR. DRATEL: I need to ask the questions. THE COURT: We can make a record as to various things at the break. But if you want to cover certain things which you think are in a gray area right now, I am not going to preclude you from doing that. But if there are things that you can do other than what you know is going to be objectionable, then let's go ahead and do them now. MR. DRATEL: I don't know what is objectionable. In my experience, I have in never been so curtailed with cross-examination of an agent who has done a wholesale investigation of the defendant and then to be only limited to the things that the government wants to put in is just, to me, I will have to get through this and see where we are. Page 1404 THE COURT: I am comfortable with my rulings despite your experience. *(Continued on next page)* Page 1405 *(In open court)* *(Pause)* MR. DRATEL Q. Now, with respect to the hacking tools that you talked about just before you completed your direct testimony, you did not click on any of those links, correct? A. No, I did not click on any of the links. Q. So when you were assigned to the Silk Road case, you obviously examined a significant amount about the site, correct? A. Yes. I researched the site. Q. Would you -- is it fair to say, it was the most sophisticated and extensive criminal marketplace on the Internet today? MR. TURNER: Objection. Foundation. THE COURT: I think you need to lay more of a foundation -- Q. Well -- THE COURT: -- for this witness for comparison. MR. DRATEL: Yes. Q. Had you ever seen an Internet site as sophisticated as Silk Road in terms of a place where you could buy drugs on the Internet? MR. TURNER: Objection to form. Foundation. 403. THE COURT: I will allow it. You may answer. Page 1406 A. I can't really say. It was my first case, so it was the one and only so. Q. Well, didn't you write that it was the most sophisticated and extensive criminal marketplace on the Internet today? A. At the time of the investigation? At which time are you talking about? Q. September 30, 2013, in the civil forfeiture complaint that you signed. A. Yes. Q. And Silk Road in its current form at the time as of September 30, 2013 was created on or about June 18, 2011, right? MR. TURNER: Objection to form. Foundation. THE COURT: Do you mean to say -- why don't you rephrase the question. So I think that you want to compare the June 2011 to September 2013. MR. DRATEL Q. Well, the Silk Road that existed in September of 2013 was in that form created on or about June 18, 2011, right? MR. TURNER: Objection. Foundation. THE COURT: If you know. A. I don't know if it was created at that time. I came by the case in 2013. Q. Did you write "Silk Road in its current form was created on or about June 18, 2011," did you write that September 30, 2013 in the civil forfeiture complaint that you signed under oath? Page 1407 MR. TURNER: Objection to the foundation of the claim. THE COURT: I will allow the question. A. I would have to refresh my memory. I would have to see the document. MR. DRATEL: I show you what's marked 3501-207 through -263. *(Pause)* MR. TURNER: Your Honor, the government objects. The complaint says, "Upon information and belief." THE COURT: Hold on. Hold on. Let me just -- MR. DRATEL: He said -- THE COURT: I understand. Can I just take a look at it? I don't have that series handy. Sorry. *(Continued on next page)* Page 1408 THE COURT: Mr. Dratel, can you point me to a page? MR. DRATEL: Sure. 245, your Honor. THE COURT: 245. With the signature? MR. DRATEL: Is that the signature page? I thought that was -- THE COURT: 245 is not a signature page. MR. DRATEL: Oh, the signature page. There's -- THE COURT: You said he signed something. MR. DRATEL: 238. THE COURT: 238? MR. DRATEL: Wait. THE COURT: The only signature I have is on the last page, but there may be another one. MR. DRATEL: No. There's another page, your Honor. THE COURT: All right. Hold on. Hold on. It's pages 208 through I think it's 238 or 228. I can't tell. It's cut off. Let me just take a look. I'll allow it. Mr. Dratel. MR. DRATEL: Thank you. THE COURT: The government can bring out what it wants to bring out in cross or redirect. MR. DRATEL: Thank you, your Honor. THE COURT: I'm sorry. There are some pages. MR. DRATEL: Thanks. A. May I see it. Page 1409 Q. Yes. Certainly. I'm just going to caddycorner it for you here. A. Thank you. Q. I ask you to look at 245, if you want to look at the document, but I'm directing you to 245. THE COURT: There are two different documents in the pile that I had. MR. DRATEL: Right. THE COURT: The first pile on the right was the one with the signature that I was referencing. MR. DRATEL: Right. THE COURT: That's Exhibit A to the same document, Mr. Dratel? MR. DRATEL: Yes. A. My signature page -- Q. Your signature page is here. THE COURT: To be clear, that's not his statement in Exhibit A. You'll rephrase that. MR. DRATEL: I'll get to that. THE COURT: Thank you. A. Can you point to my signature page? Q. Sure. It's on the back of that first document. A. This one? Q. Let me go up there and make sure we're looking at the right one. This document. Page 1410 A. Okay. All right. Thank you. Q. And let me show you one other thing and draw your attention to this and make sure I have the right page. Okay. So, look at page 215 which is your -- which is the civil forfeiture complaint. A. Okay. This one. Yes. Q. That incorporates by reference the other document, correct? A. Yes. Q. So when you do that, you're incorporating by reference meaning you're adopting everything in there, right? MR. TURNER: Your Honor, the government objects on hearsay grounds. The witness should not be permitted to testify -- THE COURT: If it's an adopted statement, let me just ask, apart from a legal definition of incorporation by reference, Mr. Dratel, why don't you ask him what he meant he intended to do. Q. What did you intend to do by incorporating by reference that other document? A. This document? Q. Yes. A. I was incorporating it into the civil forfeiture so we can seize the -- Q. Right -- A. -- the servers. Page 1411 Q. But the purpose of putting that in there was to include all the facts that were in there in the -- withdrawn. The purpose of incorporating the complaint, the criminal complaint by reference, was to incorporate all of those facts into the civil forfeiture complaint, correct? A. Correct. Q. So if you look at page 245, -- A. Yes. Q. -- does that refresh your recollection? A. Yes, it does. Q. That the current form Silk Road was created on or about June 18, 2011? MR. TURNER: The government objects on hearsay grounds and beyond the scope. THE COURT: It's not beyond the scope. It's for a different purpose. Mr. Dratel, why don't you, just so we have a clear Q and A, though the prior question may have gotten so far lost with the back and forth. MR. DRATEL: Thank you, your Honor. Q. So, does that refresh your recollection that you had stated that in its current form, Silk Road was created on or about June 18, 2011? A. Can you repeat the question. Q. Sure. That you had stated that Silk Road in its current form was created on or about June 18, 2011? Page 1412 A. It was my belief at that time. Q. But you stated it under oath in that document, right? A. Yes. It was my belief. Q. And that was based on your looking at all of the evidence available to you from the Internet and from other pieces of your investigation as well, right? THE COURT: I think we need to be clear. The statement was admitted for the limited purpose of impeachment and refreshing recollection, not for the truth of the statement, just so that it's clear. I think you should proceed accordingly. Q. On October 19, 2011, there was an outage on the Silk Road that was reported, right, on the site? A. I don't know. October 19? Q. 2011, did you see posts indicating an outage on the Silk Road October 19, 2011? MR. TURNER: Objection; beyond the scope. He's already testified. THE COURT: I don't know yet. MR. TURNER: He testified his investigation did not begin until 2013. THE COURT: Hold on. Does this tie in directly to one of the posts the government has showed him? Page 1413 MR. DRATEL: Well, it's the same time as that October 11 post that they showed, the Altoid post. THE COURT: All right. Why don't you go ahead and proceed. Q. October 19, 2011, you're aware of posts on Silk Road that there was an outage on the site at that time, correct? A. I'd have to see those posts. Q. Okay. Look at 247. See if that -- A. I see it. Q. Okay. The October 19, 2011 posts reported an outage on the site at Silk Road? MR. TURNER: Your Honor, hearsay and beyond the scope. We'd like a side bar. THE COURT: Hold on. Let me take a look. 247? MR. DRATEL: Yes. THE COURT: I don't have that in my binder. Can I look at yours? THE WITNESS: Yes, ma'am. THE COURT: You're in the same document. MR. DRATEL: Yes. THE COURT: I'm sorry. I was looking at Exhibit 247. It's page 247. MR. DRATEL: No. I'm sorry. THE COURT: Let's have a side bar. Thanks. You know, I'll tell you what? How do you folks feel about returning at 1:30 as opposed to 2:00? Or do you have problems? No, we can't do that. We can't do that. Page 1414 We'll take an extra few minutes and try to start five or ten minutes early. I don't want you sitting through this. We'll probably have a couple of things to work out and I want to make sure that it's smooth for you folks. So does it work if we started at ten to 2:00 for people or do you have problems with that? I know some people do things during the break. All right. Let's start at ten minutes to 2:00. That way, it's only a five-minute difference, all right. Thanks very much. And I want to remind you not to talk to each other or anybody else about the case. Thank you. *(Jury excused)* THE COURT: Agent Alford, you may step down and have your lunch as well. *(Witness temporarily excused)* *(Continued on next page)* Page 1415 *(In open court; jury not present)* THE COURT: Ladies and gentlemen, let's all be seated. We have a couple of things that I think are worth doing now. Let's start from the beginning of the things that we were going to do at the lunch break and then we'll pick up, Mr. Turner, with where you are, and I think that these logically fit together. First, Mr. Dratel, I had indicated to you at the side bar that we had that at the break, you'd be able to make a more of a record to the extent that you hadn't made the record that you wanted to fully at side bar, so if there's anything else you want to say, otherwise, we'll go straight to the issue that is currently tee'd up. MR. DRATEL: Your Honor, to preclude me from going through this witness' investigation when he did so much research and looked at so many things and to -- I think is just an improper curtailment of my cross-examination, and just to put out some of the things that I was going to do is about him researching Mr. Ulbricht, one is the LinkedIn, another is about phone records, another is about posts with respect to certain dates, TECS search that he did, and that puts us in the current posture. THE COURT: All right. As for the phone records and the posts of certain dates, of course, if they relate to any of the matters that were opened on the direct examination of this witness, you're certainly welcome to go into them. The investigation that this witness conducted to the extent that he testified about it or is logically related to the scope as scope is defined under the case law, you can go into it. But what you've been doing for the questions on LinkedIn and FinCEN search or whatever it's called -- Page 1416 MR. TURNER: FinCEN. THE COURT: -- FinCEN was beyond the scope, and I suspect that TECS search is the same, although I don't know what TECS search is, it wasn't opened up on direct. It's certainly the case that there are a variety of instances when people are allowed, and I know you referred to in your experience, being allowed to do more things along the lines of what you were suggesting where judges will allow some amount of leeway, particularly in the absence of an objection. But in the face of an objection, it is perfectly appropriate under the case law to -- indeed, some would argue that it's not only appropriate, but it's important under the case law so that the jury does not have its time wasted or misled or brought down alleys and byways it shouldn't otherwise be brought down to limit the scope of cross-examination to the scope of the direct. You have made your record in terms of the fact that you believe this is within the scope of the direct and somebody probably other than myself certainly will ultimately decide that if you choose, if there is any appeal in this matter, if there's even a conviction. I don't know where this matter will go, but that's my ruling on that issue. Page 1417 Mr. Turner, was there anything else the government wanted to say on that particular issue? Let's go on to the one that is currently -- that we have tee'd up. MR. TURNER: I think this is endemic of a larger pattern. The LinkedIn, for example, if the defense wants to use a LinkedIn page, they have to have a valid basis. First of all, they have to get authenticated LinkedIn records, either by stipulation or authentication by a document custodian, but then it would have to clear the hearsay bar. And if they're introducing it -- for example, if the LinkedIn page says I, Ross Ulbricht, was running Good Wagon Books and now I'm doing an economic experiment, that is hearsay. They cannot get that in. They can't get it in through this witness. They can't get it in through another witness. And the fact that this witness may have looked at the LinkedIn page does not change that in any way. It's hearsay, and it should not come in. And it's the same for the documents we're talking about now. What we're talking about is a forfeiture complaint that this witness signed that is based on hearsay in part. Agents can sign complaints based on all sorts of things: Information they get from other agents. THE COURT: The issue that you segued into now, which is the verified complaint, which this witness did sign the first whatever number of pages it is under oath is a sworn statement. Page 1418 MR. TURNER: Right. THE COURT: And it does incorporate the second document sworn under oath by a different agent. MR. TURNER: Right. THE COURT: That, though, I think raises a Ramirez issue if I have the name of the case correct. I have actually forgotten. It's the case. In any event, we were looking at, that set of case law not too long ago in connection with a different issue, which is, confronting the witness with a statement or an admission if it's something that's material to the case. Now, there's a difference, and the reason that I allowed it in for this witness was not for that purpose but was because it was potentially impeachment purposes to show that he said he didn't recall making the statement and then he then recalled making the statement, so they can use a lot of different statements for that. But to the extent that Mr. Dratel was going into the truth, I think we get into a debate about admissions of a party opponent. MR. TURNER: I think that's exactly where we're headed, your Honor, because that's why the defense keeps on wanting to pull these documents out. They want to pull from a criminal complaint that somebody else signed. All the forfeiture complaint says is, you know, on this date, a complaint was signed and it's attached hereto as Exhibit A, incorporated by reference. Page 1419 So this is an example where all the agent knows is that some other agent said this about a post on Silk Road. THE COURT: Why couldn't Mr. Dratel, under that line of cases that we discussed and I recited, just stand up and recite facts which he believes are material and remain in dispute? MR. TURNER: Because, first of all, we don't accept that a criminal complaint sworn out by an agent is an admission on the part of the government that can be just admitted through an Agent Alford's testimony. THE COURT: I'm remembering the cases. It's the GAF case and the line of cases around the GAF case that I had in my robing room, so I'll read it again. MR. TURNER: GAF was a bill of particulars signed by an attorney and Ramirez specifically reserved decision on whether an agent affidavit should be treated the same way. There is no case law that specifically holds that an agent affidavit should be treated the same way. But if the defense wants to show there was some post at some time, they have a copy of the servers. They can do this in the defense case. They can say we looked at the servers, there was a forum post on this date and make whatever point they want to make, which I don't think honestly is relevant in any event; but this is the wrong way to do things through this agent which it's beyond the scope, he didn't testify about posts that he saw on Silk Road, no testimony at all about anything this agent saw on Silk Road, except the hacking offer that he bought from, it is beyond the scope. And for them to try to insert their defense case in this circuitous way is confusing to the witness, it violates the hearsay rules and it's not proper. Page 1420 MR. DRATEL: It can't be confusing to the witness. He swore to all of that. He wrote out that complaint. Not only that, he wrote the other complaint, but Agent Tarbell signed it, and that's the way this case went down. The other thing is, it is astonishing, contrary to case law, contrary to due process, contrary to every rule there could possibly be that they could have an agent swear to facts to take to a judge to get a result and then come in here and disavow it, and that's exactly what the Second Circuit says. MR. TURNER: To be clear -- MR. DRATEL: They cannot do that. MR. TURNER: I'm not disavowing any facts. What I'm saying is, this is the wrong way to go about getting the defense case in. It's beyond the scope. It relies on hearsay. If they want to introduce those posts, they can do it by having their computer person explain that these posts were pulled off the server, the screenshots were taken at a particular time, make whatever points they want. We're not saying at all anything in the complaint is inaccurate. The point is, this is the wrong way to go about proving the defense case. We already went through this to some extent. Page 1421 MR. DRATEL: Then I would move to strike all of Agent Alford's testimony with the exception of what he actually did on the Internet, because everything else is hearsay, everything else is beyond his knowledge, everything else is fed to him so he can testify to that and then not be cross-examined. That's what's happening here. MR. TURNER: The records he testified about were properly authenticated with stipulations. THE COURT: Anyway -- MR. DRATEL: That's not the issue, he's not the proper witness. THE COURT: Special Agent Alford or Agent Alford -- is he a special agent or an agent? MR. TURNER: Special Agent. THE COURT: Special Agent Alford, the testimony that he gave on direct, the Court had rulings. To the extent there were objections, the Court dealt with them at the time. In terms of the particular issue, which we're dealing with right now, which is the verified complaint, there are two analytically distinct issues that I want to separate: One is the extent to which it can be used with this witness right now on cross, and separately the extent to which the defendant may use it in connection with a defense case. Page 1422 The second and latter use is a use that will come when we -- and a ruling on that will come logically once the defense case commences if the defendant chooses to put one on. The former issue is first and foremost dealt with in terms of the scope of the direct examination and not going beyond the scope. Here, however, what I'm going to do is, I want to reread, which I can do with my LiveNote, some of Special Agent Alford's direct. I've got a little bit of time before I have a matter coming up where I can do that so that I can refresh myself as to the scope of the direct. I encourage you folks to do that as well so we don't end up with either examination that goes where it shouldn't go or objections that go where they should not go because he did start on Monday. Being refreshed on it I think is useful. Then in terms of impeachment, if there's something on direct and there is a statement that this witness made that was contrary to that anywhere, then that obviously can be used for impeachment purposes and the origin of that statement is not particularly relevant. Mr. Turner. MR. TURNER: Understood, your Honor. I don't think the witness was impeached with respect to any statement he made on direct. I think what the pattern is, you made this -- isn't this true that there was this post, okay, that the agent had actually never seen before himself, has no personal foundation at all; then the agent says I don't know, and then he says, well, didn't you say this, he shows him the affidavit of another agent to impeach him on that statement. And then it's using that to try to get in the fact that there was this post actually made that this agent actually has no foundation himself to testify about. Again, this is not the proper way to get it in there and it's for the truth. Page 1423 THE COURT: I understand the arguments. Mr. Dratel, do you have something you wanted to add? MR. DRATEL: No. THE COURT: I understand the arguments. Let's take our lunch break now. Unless there's something else that you folks would like to raise, why don't we come back at quarter of. We'll talk about the resolution of this issue. I would like you back at a quarter of. The jury actually will back hopefully at ten of. They're scheduled to be back then and then we can resume. Let me ask the government who is next. MR. TURNER: After this, it will be HSI Special Agent Dylan Critten. THE COURT: Let's take our own lunch break. Thank you. I have a matter at 1:30, but I don't think I need to have you folks. I can do it in the robing room. Page 1424 *(Luncheon recess)* *(Continued on next page)* Page 1425 AFTERNOON SESSION 1:45 p.m. *(In open court; jury not present)* THE COURT: Let's all be seated for a moment before we start again with the jury. I had an opportunity to go back over the transcripts and have a fairly good and refreshed sense now of what was in the scope of the direct. And I also have a list of points that were raised, but also just generally I can recall now much better. I also went back to Second Circuit case law on limitations of cross-examination and am satisfied that the scope of direct of course, under both the Federal Rules of Evidence as well as Second Circuit case law defines the scope of cross-examination. Cross-examination, as we all know, is limited to things like showing that the witness who testified is wrong about a fact, is biased, is prejudiced, has self-interest, you know, general motivations to testify in a manner that's either for the government or suggests untruthfulness. Things which go into entirely new areas would be beyond the scope of the direct. Now, that of course, begs the question as to what the phrase "entirely new areas" means, but I am convinced and comfortable that things like LinkedIn, etc., TECS search and FinCEN are beyond the scope of the direct. Page 1426 Now, in terms of the affidavit, that, I haven't read every paragraph to know whether or not there's something in the affidavit that goes to the points of whether the witness' testimony is wrong, the testimony given on direct was wrong or otherwise demonstrates bias, prejudice, motivation to testify untruthfully, something like that. If it does, then obviously it would be appropriate, first, to set up that point and then, second, to go into it. Let me just give you some cases. There are oodles of Second Circuit case law on the points I have just stated: U.S. v. Figueroa, 548 F.3d 222, Second Circuit; U.S. v. Lanza, 790 F.2d 1015; U.S. v. Pedroza, 750 F.2d 187; U.S. v. James, 712 F.3d 79, and there are many other cases supportive of the propositions that I've just stated. So, the scope of the cross-examination for the witness currently on the stand, Mr. Alford, will be limited to the scope of the direct. The scope of the direct will not include things like, as we said before and I had already ruled before, the LinkedIn, FinCEN, TECS search, or other matters which were not raised and reasonably related to what was within the scope of the direct. In terms of the use of the declaration or affidavit or complaint, the sworn statement, it will depend on whether or not there are particular statements in there which go to one of the areas that I've just suggested, but it has not been proffered for that use at this point. Page 1427 Mr. Turner. MR. TURNER: Yes. Several points, if I may. THE COURT: Yes. MR. TURNER: In terms of the affidavit, I just want to be very clear on what's going on: There are two possible uses the defendant could use it for and I think both of them are improper here: First is impeaching a prior inconsistent statement. On that point, all the affidavit says, this agent's affidavit -- it's not even this agent's affidavit -- all the civil forfeiture complaint says that the agent signed is that on or about September 27th, 2013, the Honorable Frank Maas signed this criminal complaint and this criminal complaint alleges, among other things, and then it specifies what it alleges, and then it attaches a copy. It does not say "I know all these things to be true." It just says there's another complaint out there that was sworn on this date that alleges these things. The agent has to say something contradictory to those statements in order for that criminal complaint to be used as impeachment material. For example, if the agent were to testify on this complaint, the criminal complaint was sworn July 2013 when in the civil forfeiture complaint it says on or about September 2013 it was signed, that would be inconsistent. And then you could say, well, didn't you say here that it was signed September -- Page 1428 THE COURT: I'm not sure if we're going to get to -- because I don't know whether or not there is a statement in that complaint which is inconsistent with what this witness said on direct. MR. TURNER: Right. THE COURT: If there isn't, then we don't need to go up that tree right now. MR. TURNER: I just want to get clear ahead of time what the scope of the statements are in the agent's own civil complaint. THE COURT: I hear your point, but before we have to cross that bridge, let's find out whether that bridge needs to be crossed in terms of that. MR. TURNER: Absolutely. THE COURT: I'm not ruling one way or the other on that point because we may differ slightly. MR. TURNER: In the interest of avoiding side bars, I wanted to front our concerns. THE COURT: I understand. It would be helpful if you had a copy of that. MR. TURNER: I do. THE COURT: Terrific. You said you had other points to make? MR. TURNER: Right. The only thing that this complaint can be used to impeach the witness on is if he makes some statement that contradicts his own statement in this complaint. But what the defense is trying to do is use this prior statement and the reference it makes to a prior statement of another agent is to get that information in for its truth, but what they really want to do is to rely on GAF, and that's wrong here for several reasons. Page 1429 THE COURT: But I don't think we need to get to GAF because at this point that would come in, if at all, in the defendant's affirmative case -- MR. TURNER: Absolutely. THE COURT: -- should he choose to put one on. So that's the analytical second part that I spoke about before lunch. MR. TURNER: That is absolutely our position. THE COURT: You don't need to argue it right now. MR. TURNER: That's fine. THE COURT: Hold your fire on that. There may come a time, but we're not going to get to the affirmative utilization of any admissions or potential admissions or whether they're not admissions until we get to the defendant's case. MR. TURNER: Thank you. THE COURT: Mr. Dratel, is there anything further you would like to add? MR. DRATEL: Yes. I don't think that those are the only -- even though they're examples, they're certainly not exhaustive as to what you can ask on cross-examination. And "entirely new areas" is a term that is ambiguous and vague, and my point is that you can't have a witness testify about a jigsaw puzzle, have him put one piece of the puzzle in evidence and then be constrained from cross-examining about the other pieces of the puzzle, and that's what I'm attempting to do. Page 1430 THE COURT: I hear your point. I disagree with it. Is there anything else you'd like to say in terms of making your record? MR. DRATEL: Yes. In the context of the investigation as a whole, all of these issues are relevant and they go to questions of bias and other issues with respect to that and I'm going to develop that further in the rest of my cross-examination. THE COURT: Let's just talk about all of these issues. What issues are relevant to bias that you want to go into that you say are these issues because if there are, for instance, the LinkedIn account goes to bias -- MR. DRATEL: The LinkedIn account goes to the fact that it was made, the fact that the statement was made. THE COURT: So what goes to bias that you think is captured within my ruling, because if so, and it truly goes to bias, it should not be captured within my ruling and it's not. I said bias is fair game and regular, run-of-the-mill impeachment is certainly fair game. Page 1431 MR. DRATEL: The entire scope of the investigation is a question of bias in the sense that what was done when and how it evolved so that once this digital trail led to Mr. Ulbricht, that was it, and everything else was dispensed with. THE COURT: That, in the Court's view, that's not about bias. You can go into any portion of the investigation that this particular witness has testified about on cross and if you need other things and he's an appropriate witness for you to call on direct, you can cross that bridge when you come to it, but the full investigation is not about bias or impeachment or anything else. He's here to testify about, on cross-examination, matters within the scope of what he testified about on direct. MR. DRATEL: But that doesn't insulate him from things that he leaves out from things that are implicated and contextural. Cross-examination is about context. It's not about being limited to the questions that the prosecutor asked and he's asking him in a leading fashion. THE COURT: If the context that you're talking about is that you want to add in LinkedIn in the context of showing what he did with Gmail, the answer is that's not appropriate context. If the context for Gmail is something relating to the Gmail testimony that he gave, you're certainly welcome to build up that area, but we're not going into the linked in area or FinCEN or TECS search. Page 1432 MR. DRATEL: He does a thousand searches and all he's got is what he puts here, and what about all the things they don't have? THE COURT: That's the scope of your cross. If you want to call him in your case, you can list him as a witness and make your decision and then you can proffer him and we can determine if he's a relevant witness for you, but the scope of his cross is what I've said. Is there anything else, a new point that you would like to add? MR. DRATEL: No. With respect to cross-examining with respect to the civil forfeiture complaint and the criminal complaint, I only used it when he failed to recollect. THE COURT: He did, although I allowed you to go beyond the scope. When I was rereading that piece, I allowed you to go beyond the scope to get to that statement, so you were already beyond the scope. MR. DRATEL: This is someone who investigated the history of Silk Road from the start and has accessed all of these -- you know, it can't be that he looks at all of the emails and he looks at all of the chats and he looks at the laptop and looks at the servers -- THE COURT: You can call him in your case, but for the government's case, and they bear the burden of proof, they can constrain the scope of their direct as they deem appropriate. You can then cross them on the scope. And then if you want to put on another case, if you chose to do so, you have no obligation to do so, you may do so. And if he's relevant for that and you have things to bring out where he's a precipient witness, so be it. Page 1433 Let's bring the jury out. I want to know, is there any new point: These are the points we have already gone over. MR. DRATEL: No. THE COURT: All right. Thank you. *(Continued on next page)* Page 1434 *(In open court; jury present)* THE COURT: I want to apologize to having you folks ready to go at ten of, and I know you were. All I can say is the best laid plans. We are on the cross-examination of Mr. Alford. Mr. Dratel, you may proceed, sir. MR. DRATEL: Thank you, your Honor. GARY ALFORD, CROSS-EXAMINATION CONTINUED MR. DRATEL Q. Now, good afternoon, Agent Alford. A. Good afternoon. Q. You were focused in your investigation on trying to identify Dread Pirate Roberts, correct? A. At one point, yes. Q. And did you come across evidence suggesting that there was more than one Dread Pirate Roberts during the course of the Silk Road? A. I did not. Q. Didn't you refer to Mr. Ulbricht at one point as the original DPR? A. I don't recall that. May I see the document? Q. Sure. I show you what's marked as 3501-0002 and ask you to just read that on top. A. "I received Google" -- The entire thing? Page 1435 Q. Don't read it. Read it to yourself. I apologize. A. Okay. Okay. Q. Does that refresh your recollection that you, in December of 2013, December 30th, 2013, referred to Mr. Ulbricht as the original DPR? MR. TURNER: Objection; agent belief. THE COURT: He's asking whether or not he made that statement. You may answer. A. Yes. I was referring to -- Q. Just "yes" is fine. Thank you. A. Yes. Q. And when you did all the -- when you looked for comparisons of things that were happening online versus returns on subpoenas and other things that you could find online such as Google and other -- withdrawn. When looking at Mr. Ulbricht, you were trying to compare time frames with various things that were going on, either on Google or Facebook -- Gmail, rather, or Facebook and versus other things like chats and things like that, right? A. Information that was found on the laptop versus information we found from outside. Q. And you did that a little bit with respect to Richard Bates as well, correct? MR. TURNER: Objection; beyond the scope. THE COURT: Sustained. Page 1436 Q. Did you at one point find evidence that someone who worked at eBay or PayPal was Dread Pirate Roberts? MR. TURNER: Objection; agent belief. THE COURT: Sustained. Q. One of the other purposes of your investigation was about looking at bitcoins, correct? A. At bitcoins? Q. Trying to find bitcoin wallets and Silk Road bitcoin? MR. TURNER: Objection; form and beyond the scope. THE COURT: Well, I don't understand how it's within the scope. Sustained. Q. You had access to the Silk Road servers at some point, too, correct? MR. TURNER: Objection; beyond the scope. THE COURT: I don't know where this is going. I don't find it within the scope. I can't conceive how it's within the scope. Sustained. Q. Well, you talked about Government Exhibit 241, correct, on your direct? A. Can you refresh. Q. The log? A. The log. Q. Yes. In fact, there were other documents -- withdrawn. You had access to the private messages, right, you reviewed private messages on the Silk Road server? Page 1437 MR. TURNER: Objection; beyond the scope. THE COURT: I'll allow it. Let him develop a few questions on this. A. Can you repeat the question? Q. Sure. By the way, all the things that you looked at and that you went through today, you developed after the fact; meaning that they weren't at the time that those posts were made or those emails were sent or anything like that? You did all of that in the course of preparation for this trial, correct? A. Everything had to be done after the fact. It was -- it happened before. Q. So you had access to private message system, right, that was on -- from Silk Road on the servers, right? MR. TURNER: Same objection, and objection to form. THE COURT: What's the objection? MR. TURNER: Beyond the scope and the form. THE COURT: Sustained as to the scope. If you're going to tie it -- are you going to tie it into 241? MR. DRATEL: Yes. THE COURT: Tie it directly to 241 and then we'll understand it. MR. DRATEL: I'm building a foundation. THE COURT: The parameters. Page 1438 Q. Let me show you what's marked as Defendant's E. Let's go back to 241 for a second. Let's do that first. Government's 241, if we can look at the first page at the bottom? A. 241 at the bottom. Q. Yes. It's in evidence. *(Continued on next page)* Page 1439 Q. Do you see the entry for April 2nd, 2013? MR. TURNER: Your Honor, objection. May we have a sidebar, please? THE COURT: All right. Hold on. This is Exhibit 241 in evidence, right? MR. DRATEL: Yes. THE COURT: All right. All right. Let's have a short sidebar but we won't have a long one. *(Continued on next page)* *(Pages 1440 through 1442 sealed by order of the Court)* Page 1440 Page 1441 Page 1442 Page 1443 *(In open court)* THE COURT: All right. You may proceed. MR. DRATEL Q. Let's look at the entry 3/21/2013, the top of that page of Government Exhibit 241, which is in evidence. It says, "Main server was ddosed and taken offline by host." Do you see that? A. Yes. Q. You know that that refers to a denial of service attack on the Silk Road website, correct? MR. TURNER: Objection. Foundation. THE COURT: Hold on. MR. TURNER: Beyond the scope. THE COURT: Why don't you build up the foundation through his knowledge in that regard, Mr. Dratel. MR. DRATEL Q. You are aware that that refers to an attempted denial of service attack on the Silk Road site at or around that time, right? A. That's what the statement says, yes. Q. And if we go down to 3/25/2013, which is just a few entries later, it says that "Server was ddosed, meaning that someone knew the real IP," right? A. That's what it says. Q. And "real IP" meaning the real Internet protocol address of the server, right? Page 1444 A. That is what IP, Internet protocol, means. Q. Right. So this is March of 2013, right? A. Yes. Q. The same time as the Stack Overflow posts that you -- that we saw this morning, right? You know about the Stack Overflow posts, right? MR. TURNER: Objection, foundation. THE COURT: Sustained. Q. You know about the Stack Overflow posts, correct, by Mr. Ulbricht or Frosty, correct, in March of 2013? A. I am aware of it. Q. You have seen them, right? A. Which exact posts are you talking about? The posts, all of them? Q. I am talking about the posts on March 26, 2013 about code and php and curl? A. I recall it being in March. I'm not exactly certain if that is the date, but I remember there was posts around that time. Q. It is also the same time -- withdrawn. Now, you've seen other posts with respect to the denial of service attack on the defendant's computer? MR. TURNER: Objection. Form. Beyond the scope. THE COURT: I will allow this question and we'll see where it goes. Page 1445 A. Can you repeat question? Q. Sure. You've seen other posts on the defendant's laptop referencing this denial of service, other files, other -- right, referencing this denial of service? A. I recall seeing other files referencing ddosed. *(Pause)* Q. I show you what's marked as Defendant's N, as in Nancy. I just ask you it look at it. Tell me if you recognize it. A. I do recognize it. Q. It is from the defendant's laptop, correct? *(Pause)* A. I don't know if I've seen this statement on the laptop. I've seen it in another. Q. And it's about the denial of service, right, attack? A. Yes. MR. DRATEL: I move it in, your Honor, as Defendant's N. MR. TURNER: We'll stipulate that it was from the computer, your Honor. THE COURT: Any objection? MR. TURNER: We don't think there was a proper foundation laid but we will stipulate to that. THE COURT: Any objection? MR. TURNER: Beyond the scope. Yes. Page 1446 THE COURT: Can I see the document? THE WITNESS: (Handing to the Court) THE COURT: Thank you, sir. *(Pause)* I will allow it. Defendant's Exhibit N is received. *(Defendant's Exhibit N received in evidence)* MR. DRATEL: Thank you, your Honor. MR. DRATEL Q. Now, you testified this morning about Government Exhibit 130, the handwritten notes, correct? A. I provided testimony about it, yes. Q. I show you, this is -- *(Handing to the government)* Q. I show you what's marked as Defendant's M, for Mary, and ask you if you recognize that? *(Pause)* A. I don't -- I don't recall this. Q. You reviewed the files on the defendant's laptop, correct? A. Not all the files. Q. How many? A. What was provided to me. Q. Did you prepare exhibits for purposes of this trial? Did you assist in the preparation of exhibits for this trial with the prosecutors? A. Yes. Page 1447 Q. But that one you don't recognize, right? A. No. Q. You don't recognize that document? A. I don't recognizes it, no. I don't have any -- no. Q. I want to go back to 241. And look at the last page, please. And you talked about the poison oak, right, entry? A. Yes. Q. OK. And it also talked about Amelia from OKC, right? A. Yes. Q. OK. I want you to look through 241 in its entirety and point out to me one entry that has anything personal before that entry. Withdrawn. That entry is in September of 2013, right? That's what it says, right? A. The one with Amelia and the poison oak? Q. Yes. A. Yes. Q. Right? It says September 11th to September 18th, right? A. Yes. Q. So I want you to look at the rest of 241 before then. Tell me if you could find a single entry that had anything personal. I am talking about as opposed to Silk Road business. A. May 3rd, 2013? Q. No. I mean the whole thing, starting with March 20, 2013, when this exhibit starts, to the end. Page 1448 MR. TURNER: Objection. The witness is about to answer. THE COURT: He was answering. MR. DRATEL: Oh, I'm sorry. A. Yes. On May 3rd, 2013 it says, "I'm sick." Q. OK. Any others? You don't think that has to do with business -- withdrawn. Let's look at May 3, 2013. It says, "Helping smed fight off attacker. Site is mostly down. I'm sick." Right? A. Yes. Correct. Q. So is it something that you might tell a coworker, that you are sick? THE COURT: Don't speculate as to the state of mind of the author. The objection is sustained. Q. Any others? A. Let me look through. *(Pause)* Are you saying strictly personal? Q. Yeah. A. What you said before, I guess that's it. Q. Right. That's it, right? A. Yes. Q. Now, you began your investigation -- withdrawn. Page 1449 The Task Force began its investigation as a result of an open letter from two United States senators, Chuck Schumer, and another senator asking that Silk Road be shut down, correct? MR. TURNER: Objection. THE COURT: Sustained. MR. DRATEL: Your Honor, this goes to -- THE COURT: It is beyond the scope of this witness' testimony. MR. DRATEL: It goes to a fundamental part -- THE COURT: It is beyond the scope of this witness' testimony. MR. DRATEL Q. You pulled out all the stops on this investigation, correct? MR. TURNER: Objection. Form and relevance. THE COURT: Overruled. Q. This is a high-priority investigation, correct? A. It was a high-priority investigation, yes. Q. And one of the things you did was to time it so that when the arrest of Mr. Ulbricht occurred you would be able to also, within a very short frame of time, speak to people who you'd identified as people who knew him, correct? MR. TURNER: Objection. Beyond the scope. THE COURT: Sustained. Page 1450 Q. Now, almost every agency of federal law enforcement was involved in this investigation, correct? A. That is correct. Q. And that caused some friction between agencies, right? MR. TURNER: Objection. Relevancy. THE COURT: Sustained. Q. Everybody wanted -- every agency wanted to get credit for this arrest, correct? MR. TURNER: Objection. THE COURT: Sustained. Q. I want to go back to -- so 333A is -- you can put it up for everybody -- that's something that was provided by Google about logins, correct? A. That is correct. Q. Now, that was part of a larger subpoena production by Google, correct? A. This? Q. Yes. A. Yes. Q. And that showed all the login times during a longer period, correct? A. Yes. Q. And so you reviewed that, correct? A. Yes, I did. Q. And, in fact, there are gaps between login times in certain place, right, sometimes as long as four days, right? Page 1451 A. I would have to see it. *(Pause)* *(Mr. Dratel conferred with Mr. Turner off the record)* Q. I show you what we'll mark as Defendant's O for purposes of identification and just ask you to look here and see if that refreshes your recollection that there were gaps of as many as four days in logins by Mr. Ulbricht to his account? THE COURT: And we'll get a paper copy of this at some point? MR. DRATEL: (Indicating affirmatively). THE COURT: Thank you. A. I believe this is a separate subpoena production than the one I'm looking at on this, my exhibit. Q. But does that have Mr. Ulbricht's logins for Google, you know, for his Gmail? A. If that's the logins, yes. MR. DRATEL: Can Mr. Horowitz help him, come up to identify the document, if that helps him? THE COURT: Yes. MR. DRATEL: It is just a MacBook and I don't have a MacBook. *(Mr. Horowitz assisted the witness)* Q. Does that refresh your recollection that it's login times for Mr. Ulbricht's Gmail or Google account? Page 1452 A. Yes, that looks like the -- Q. OK. And there is a four-day -- and does that refresh your recollection that there was a four-day gap, between June 24th and June 28th, just as an example, of logins, according to those records? A. I've never used a Mac. I'm going to have to have someone scroll it down to that particular timeframe. MR. DRATEL: Mr. Horowitz, could you scroll it back to where it was. I'm sorry. The last time I touched the touchscreen the entire document disappeared. *(Mr. Horowitz assisted the witness)* A. OK. Yes. What is represented there are four-day gaps. Q. Did you check the Gmail account to see whether there were any emails sent by Mr. Ulbricht during that four-day period -- A. I can't recall -- Q. -- in Gmail? A. I would have to look through it to see those specific dates. Q. You don't recall just offhand, no? A. Those specific dates off the top of my head? Q. Yes. A. No. Q. Do you recall looking to see whether there were emails from Mr. Ulbricht's account on periods where there is no login from the Google records? Page 1453 MR. TURNER: Objection. Beyond the scope and foundation for this witness. THE COURT: Sustained. MR. DRATEL: I have nothing further, then. THE COURT: All right. Thank you. MR. TURNER: Could I have 241 back on the screen. May I approach, your Honor? THE COURT: You may. REDIRECT EXAMINATION MR. TURNER Q. You were asked during cross whether there were any references to personal matters in this log prior to September 2013, right? A. Yes, I was. Q. And you said there was one in May 3rd, 2013. MR. TURNER: Mr. Evert, could you go there. Q. Could you point to where it is? I forget. A. It's towards the bottom. Q. There it is. Pop that up on the screen, Mr. Evert. "May 13, 2013: Helping smed fight off attacker. Site is mostly down. I'm sick." Did you find anything in the defendant's Gmail account indicating the defendant was sick on that date? A. I did. Q. Could you take a look at Government Exhibit 323. Page 1454 Do you recognize this exhibit? A. Yes. Q. How do you recognize it? A. It's an email that I found in the defendant's Gmail account. MR. TURNER: The government offers Exhibit 323 into evidence. MR. DRATEL: Vayner and hearsay, your Honor. THE COURT: Those two objections are overruled. GX323 is received. *(Government's Exhibit 323 received in evidence)* MR. TURNER: The email says: "Chat with Casa Bambu" is the subject. "From: Casa Bambu. "Date: May 3, 2013. "To: Ross Ulbricht. "Casa: how are you feeling today? "Me: alot better. I took Nyquil last night and got a good night's sleep "Casa: oh good." No further questions, your Honor. THE COURT: Thank you. Mr. Dratel, anything further for this witness? MR. DRATEL: No, your Honor. THE COURT: All right. Thank you. You may step down, sir. Page 1455 THE WITNESS: Thank you. *(Witness excused)* THE COURT: Would the government like to call its next witness, please. MR. HOWARD: Sure. Before the next witness is called, I would like to be read two more core chats that have not yet been read into the record. THE COURT: All right. These are previously received documents? MR. HOWARD: Yes, during Mr. Kiernan's testimony. THE COURT: All right. MR. TURNER: Your Honor, actually, while we are waiting, could I just make sure we've gotten some of the stipulations that were read in into evidence. I'm not sure we ever formally offered them. THE COURT: Yes. You also had two from this morning that you were going to offer now. MR. TURNER: Right, and I have them now. THE COURT: All right. MR. TURNER: I believe I've read all of the Google stipulation, which has been marked as Government Exhibit 803. I want to make sure that is entered in evidence. THE COURT: I don't have 803. Do you have 803, Joe? *(The Court conferred with the Deputy Clerk)* Page 1456 THE COURT: You offered the exhibit contained in 803 but not 803 itself. MR. TURNER: We would like to offer that at this time. THE COURT: All right. Mr. Dratel, received by stipulation? MR. DRATEL: Yes. THE COURT: All right. *(Government's Exhibit 803 received in evidence)* MR. TURNER: On the Facebook stipulation that's been marked as Government's Exhibit 10, there is one paragraph that we had not read into evidence. I could read it now briefly. THE COURT: Government Exhibit 10? MR. TURNER: 810, your Honor. THE COURT: I'm sorry. 810. All right. MR. TURNER: Paragraphs 1 through 3 have already been read. Paragraph 4 is: "Government Exhibit 331, in particular, reflects certain messages between the users and another Facebook user, Allison, on February 8, 2013. Each message reflects the username of the recipient of the message, the username of the author of the message, the date and time the message was sent, whether the message was ever deleted from the Ross Ulbricht account in the body of the message." That is 810, and the government offers that stipulation, as well, into evidence. Page 1457 THE COURT: Is that a stipulation, Mr. Dratel, of yours? MR. DRATEL: Yes. THE COURT: GX810 is received. *(Government's Exhibit 810 received in evidence)* MR. TURNER: Government Exhibit 806A is another stipulation concerning the USAA records. And the parties stipulate there that: If called as a witness, a custodian of records of USAA Federal Savings Bank would testify that I'm employed by USAA Federal Savings Bank as a custodian of records. I am familiar with records created and maintained by USAA Federal Savings Bank. The following records were kept in the course of regularly conducted business activity of USAA Federal Savings Bank, were made at or near the time of occurrence of the matters set forth in the records by, or from information transmitted by, a person with knowledge of those matters, and were records that were made as a regular practice of USAA Federal Savings Bank activity. Government Exhibit 806 consists of a bank statement dated -- excuse me, bank statement from an account maintained at USAA Federal Savings Bank by Ross W. Ulbricht, date of birth March 27, 1984, registered to the address Rossulbricht@gmail.com. And that was a stipulation that goes back to 806. The government stipulation is marked 806A. So we would want to make sure both of those are admitted into evidence. Page 1458 THE COURT: 806 was previously received. 806A was a stipulation, Mr. Dratel? MR. DRATEL: Yes. THE COURT: All right. That is received as well, 806A. *(Government's Exhibit 806A received in evidence)* MR. TURNER: Lastly, the PayPal stipulation reads that: If called as a witness, a custodian of records of PayPal, Incorporated would testify that I'm employed by PayPal, Inc. as a custodian of records. I am familiar with records created and maintained by PayPal, Inc. The following records were kept in the course of regularly conducted business activity of PayPal, Inc., were made at or near the time of occurrence of the matters set forth in the records by, or from information transmitted by, a person with knowledge of those matters, and are records that were made as a regular practice of PayPal in its activities. Government Exhibit 808 consists of records from PayPal account registered to Ross Ulbricht, date of birth March 27, 1984, registered to the email address rossulbricht@gmail.com. Pages 1 and 2 of the exhibit contain subscriber information from the PayPal account maintained by PayPal, Inc., and the remaining pages of the exhibit contain a transaction log of the account indicating, among other things, the date, time and amount of each transaction, and the balance of the account following the transaction reflected in the second-to-last column, labeled "Balance." Page 1459 The government asks that Exhibit 808 be admitted into evidence, your Honor. THE COURT: The stipulation number is what? MR. TURNER: 808A. Excuse me. THE COURT: 808A is received. 808 was previously received. *(Government's Exhibit 808A received in evidence)* MR. TURNER: That is all I have. THE COURT: All right. Thank you. Mr. Howard. MR. HOWARD: Yes. Ms. Rosen, could you please publish Government Exhibit 227E, please. Start with pages 54 to 56 of a 337-page chat log, starting on page number 2012-09-23: "Myself: oh wait it's the middle of the night. I got a request from vice magazing to do an interview, btw. I told them I'd talk to my PR consultant first :) Here's what they've written: "Dear the Dread Pirate Roberts, "I am acting as an intermediary for Hamilton Morris of Vice Magazine. He would like to do an interview with the Dread Pirate Roberts, or the owners of Silk Road. I'm sure he will be amenable to using a secure chat solution, such as OTR, PGP, torchat or CryptoCat. Page 1460 "You can Google Hamilton Morris to see some of his work. He is very smart and respectable and I'm sure he would only have excellent questions." Skipping to the last paragraph. "If you are willing to set up such an interview please let me know. I told him I would do him the favor of trying to get him in contact," and signed "ageis." "cimon: Dude, God is putting on a lightning storm the likes of which I've never seen. Can't even hear myself think over the constant thunder. I'm amazed I've still got power. "myself: sounds awesome. Don't let your computer fry "cimon: I have two spares ;) "Nobody has ever regretted not doing an interview; lots of folks have regretted doing one. "A problem I have with any type of interview is it ties you down, or could, in areas you want to remain loose. Are there one or more of you. Are you the guy who started the site, or the third or forth operator. Problem is areas where we want misdirection are the hardest to do, as pride makes yhou want to say yeah, I started it, nyah, nyah... but security says you should claim otherwise. It get's tough, and guaranteed at least one or more major mistake will be made during the process." Page 1461 Ms. Rosen, could you please publish Government Exhibit 227H, please. From pages 106 to 109 of a 337-page chat log, dated October 29, 2012: "cimon: on btctalk, there are folks who when you just started out save you shroom packs. Coulple that with educatoin and empoloyment I know - yer one of 12 folks in the world. Easy odds. "Sorry, don't mean to worry ya - I'm making a point that I have 10 times more on D A - if needed, I can lay my finger on him in weeks, easy. He leaked more info like a seive than you did. Also, keep in mind I've shipped shit to his prev addy. Not hard to track from there. "and my point is I want to find him, and have a chat - if it's ok with you. "myself: go ahead "cimon: Just make sure he's on side, is all. "myself: I wouldn't think the info you have would narrow me down to 12 "cimon: nothing bad will happen - it's just talk "(04:29:53) Dipper: I wouldn't think the info you have would narrow me down to 12 "Bet? ;) "myself: just don't spook him too bad. I wouldn't want him freaking out and attacking you or something Page 1462 "where are you getting the number 12? do you have a list? "cimon: naw - if anything I'm gonna see if I can help him. I'm sure he's stressted, scared, and just a little bit fucked up in general. "12's an estimate - could be as high - but no higher - than 10, and no less than 8 "myself: I call bs "cimon: Well, unless you lied in the early days, yer right "myself: not sure what the bet would be or how to settle it, but I'd take it "cimon: but if you didn't - and I don't think DA did - then my good memeory serves me well "myself: from what I remember, you know my educational background (sort of), you can infer my gender, age, race, etc. and you know where I was a year and a half ago roughly when I started the site "myself: does that really narrow me down to 12 people? "you could estimate my travels a bit based on timezone "cimon: yeah - I'm not looking for you - but you've left enough hints - where you went to school - when you started to work and left - info from folks on btctalk who posted images of postmarks from shrooms you sent - yeah - I could narrow it down quick. Page 1463 "myself: where i went to school? I don't remember revealing anything like that "cimon: dude, I'm not trying to worry you - I'm making the point that DA slippped way more shit that you. "myself: you are worrying me! won't you ease my mind and tell me what you think you know? "cimon: I mean, yer fine, how many experimantal physicists quit to sell shrooms outta ndl anyways, eh. "myself: shit, you know about the national dodgeball league! "my cover is blown "cimon: goddammit! I was making a point, not trying to worry you. Do I think I could find you quickly - absolutley. Would I - what the fuck would I want to do that for - then I have info folks would kill me for. I'd rather not know - the point is it's easy to let info out, and DA did, and I 'll spend $ to follow it up. Shit, if I really wanted to just see you, I'd just ask. "myself: it's ok man, just never thought you were capable of that "What's ndl? "Cimon: You know - I post up, and give you shitloads of info that could if you tried just a bit (fuck, Plural of Mongoose alone should do it!) that you could determine exactly who I am. I did that to make you feel comfortable. Page 1464 "Myself: i know "Cimon: If you can't find me in 10 days, you've not read my shit. "Myself: it's not like I don't trust you dude "Cimon: That's my way of trying to make you comfy - there ain't much more I can do. "Dude, you so don't trust me - I know you want to, but it's not there yet. I'm doing my best to make it easy for you. "Myself: i guess there are different levels "Cimon: Fuck, I scare you. Shit, I scare me. We gotta work together "Myself: but I beleive you when you say you wouldn't look for me. But there is a difference between willing and able. Thats all "Cimon: The reason I don't look for you is that leaves a trail - but I'm pretty confident if I did, I'd find you. And that's just a fact. "Myself: didn't think you were able before, but I guess you are "Cimon: But, I'd rather some day you came to see me. "Myself: I will. Or I'll invite you somewhere "Shit, now I'm worried you think I'm being, I dunno... "Myself: we'll get to embrace, and shoot the shit, and brainstorm "Cimon: Fuck, do I need to knock on yer door and NOT shoot ya to make you trust me? Tell me. Page 1465 "Myself: lol "Cimon: heh "Myself: yer fine... just me processing info. I guess I revealed too much. Selling was my first mistake "Cimon: Now, back on track - do you have a prob with me having one of my folks tap on DA's door, and having a talk "Myself: nope, go for it "Cimon: yeah - there are records on reddit, and bitcointalk, where folks have scans of your shipments - that was the key. But great shrooms, apparently! "myself: they were fucking awesome "cimon: but postmarks narrow it down. With everything else, yeah, I could find ya\ "but that said, no one else knows, no one else ever will, and I won't do that. "myself: thank you "cimon: and further to that, the DPR thing is great, and we need to make at least one publid set of statements that indicates that the old admin is long gone, and dpr is now in charge. Keep in mind the movie, and how dpr can change from one time to the next. I've got yer back. "myself: yea, I was thinking the same thing "have a back story for him "cimon: I suggested DPR when I first realized I could track you. I don't give a shit who you are, and it's to my and everyone's advantage no one else can. Page 1466 "DPR by it's very nature indicates a rotating command. We'll play that." THE COURT: Mr. Howard, would the government like to call its next witness. MR. HOWARD: Yes, your Honor. We would now like to call Special Agent Dylan Critten. THE COURT: All right. Dylan Critten to the stand, please. THE CLERK: Please raise your right hand. DYLAN CRITTEN, called as a witness by the government, having been duly sworn, testified as follows: THE CLERK: Please state and spell your full name for the record. THE WITNESS: My name is Dylan Critten. D-y-l-a-n, last name Critten, C-r-i-t-t-e-n. THE CLERK: Thank you. THE COURT: All right. Mr. Critten, please be seated, sir, and it will be important for you to pull yourself up and adjust the mic however is most comfortable for you to get a clear and direct sound. Mr. Howard, you may proceed, sir. MR. HOWARD: Thank you, your Honor. Page 1467 DIRECT EXAMINATION MR. HOWARD Q. Good afternoon, Special Agent Critten. A. Good afternoon. Q. Who do you work for? A. I work for Homeland Security Investigations. Q. And how long have you worked there? A. A little over five years. Q. And what is your position there? A. I'm a special agent assigned with Criminal Investigations. Q. And where are you based? A. I'm based in San Francisco, California. Q. Are you assigned to a particular squad? A. I'm assigned to a Document and Benefit Fraud Task Force. Q. And what are your responsibilities and duties on that Task Force? A. We investigate criminal activity related to counterfeit documents, identity theft and other general fraud. MR. HOWARD: Your Honor, may I approach the witness? THE COURT: You may. MR. HOWARD Q. I have just handed you what's been marked for identification purposes as Government Exhibit 400. Do you recognize what this is? A. I do. Page 1468 Q. And what is this? A. These are nine counterfeit driver license identity documents from six different states and three different countries. Q. And how are you familiar with them? A. I'm familiar with these because they were contained in a package that was shipped from Vancouver, Canada, into the United States, and it was intercepted at a mail facility in San Francisco and forwarded to Investigations. Q. Who is depicted on the phase of the IDs? A. There are two different -- what I believe to be two different photos on these, one bearded and one non-bearded, but I believe that individual to be Mr. Ulbricht. MR. HOWARD: The government offers Government Exhibit 400. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 400 received in evidence)* MR. HOWARD: Your Honor, may I approach the witness? THE COURT: You may. MR. HOWARD: May I publish this exhibit to the jury? THE COURT: You may. MR. HOWARD Q. So when, approximately, were these IDs seized by CBP? A. Approximately in the neighborhood of July 10th of 2013. Page 1469 Q. And what, if anything, did you do to investigate these identification documents once you received them? A. I ran basic records checks and a few other checks, and myself and another agent went to the residence where they were postmarked to. Q. What did you discover after running the record checks you just described? A. Each of the at least as far as the six state identification documents were negative. They did not come back to a valid ID that was issued by any of those six states. I ran record checks on each of the individuals, which all came back negative for any kind of identity. Q. Could you please flip in your binder to what has been marked for identification purposes as Government Exhibit 402, please. Do you recognize what this is? A. Yes. This is a photo of those same nine documents. Q. Did you take this photograph? A. I did not. Customs and Border Protection took this photo and forwarded it to us from the mail facility. Q. Does this photograph fairly and accurately depict the front of these identification documents? A. It does. MR. HOWARD: The government offers Government Exhibit 402. Page 1470 MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 402 received in evidence)* MR. HOWARD: Now, Ms. Rosen, could you please publish Government Exhibit 402. Q. Special Agent Critten, could you please indicate where these driver licenses appear to be issued from? A. They're purported to be issued from six different states, including New York State, Colorado, Florida, California, Texas, and South Carolina. Q. And how are the names on these IDs, are they the same name or different names? A. Each of the nine identification documents has nine individual names. So there are nine separate names. Q. Is Ross Ulbricht's name on any of those identification documents? A. Not his name, no. Q. How about the date of birth, how does that compare on these nine documents? A. The date of birth is the exact -- I believe to be the exact same as Mr. Ulbricht. Q. What is the date of birth? A. 3/27 of 1984 on all nine documents. Q. Would you please flip in your binder to what has been marked for identification purposes as Government Exhibit 401. Page 1471 Do you recognize what this is? A. I do. This is a picture of the postal envelope that was postmarked and said to be delivered to a San Francisco, California address. Q. And what was contained in that package? A. The nine counterfeit identity document driver licenses. Q. Did you take this photograph? A. I did not. Customs and Border Protection did. Q. Does this photograph fairly and accurately depict the packaging that contained those IDs? A. It does. MR. HOWARD: The government offers Government Exhibit 401. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 401 received in evidence)* MR. HOWARD: Ms. Rosen, could you please publish it. Q. Special Agent Critten, what is the name of the individual who is listed as to receive the package? A. The package was addressed to Andrew Ford. Q. And where is the address -- what is the address that is listed on the packaging? A. The address for delivery is 2260 15th Avenue in San Francisco, California. Q. Are you familiar with that address in San Francisco? Page 1472 A. I am. Myself and another agent visited that address soon after. Q. And when was that, approximately? A. Approximately July 26th of 2013. Q. And how many -- you said you went with one other agent to that location? A. Yes. Q. What happened after you arrived at the location? A. Myself and another agent arrived at the location. We went directly to the door. As I approached the door to knock on it, I saw an individual in the hallway who I immediately recognized from the photographs on the fake IDs. It was a big -- the front door was a big glass door, and so as I knocked on the door that individual was already approaching the door to answer the door. Q. Do you see that individual in the courtroom today? A. Yes, I do. Q. And could you please point him out and indicate what he's wearing? A. He's wearing a blue collared shirt. Q. And which table is he sitting at? A. At the second table. MR. HOWARD: Could the record please reflect that the witness has identified the defendant, please? THE COURT: So reflected. Page 1473 MR. HOWARD Q. So what happened after you observed the defendant on the other side of the glass door? A. He came to the door. And I immediately, myself and the agent that I was with, we showed Mr. Ulbricht our government-issued credentials and introduced ourselves as government agents who work for Homeland Security Investigations. Q. And what happened after you identified yourselves? A. I asked Mr. Ulbricht if he would be willing to speak to us regarding our investigations. He responded in the affirmative, and he stepped out onto the front porch to speak with us. Q. And what was the first thing that happened after he stepped out onto the front porch? A. So as he stepped out, the first thing I showed him was an 8-by-10 photo of one of the documents. It was a photo of the California driver license document. And -- Q. And how did he react? What could you observe about his demeanor when he observed the documents? MR. DRATEL: Objection. THE COURT: Why don't you restate that so it is one question. Q. What were you able to observe about the defendant after you provided him -- you showed him the photograph of the ID document? Page 1474 A. I observed that he became visibly nervous. MR. DRATEL: Objection. THE COURT: Overruled. MR. DRATEL: I move to strike. THE COURT: Denied. Q. And what happened next? A. So we directly asked him if he had made a purchase of fake identity documents. And we also let him know that we were not there to investigate him but we wanted to solicit his support in our investigation of a fake document vendor which could have sent the documents from Canada. Q. Was that the purpose of your investigation on that day? A. It was. Q. At that time were you familiar with Silk Road? A. No. Q. So what happened after you informed the defendant that you weren't there to investigate him for something? A. After that he was willing to speak to us and he made general statements, but he was unwilling to admit whether or not he had made any sort of purchase of fake identity documents. He didn't want to incriminate himself. Q. So what happened after that? After he indicated that he didn't want to make any statements about himself, what did you do? A. We explained that our purpose was not only to investigate the fraudulent document vendor but also to make sure that the recipient -- in this case the recipient of nine fake IDs -- was not a fugitive. There was nothing else, nothing further. So we asked that we could identify him and make sure he was not a fugitive before we -- before we departed the location. Page 1475 Q. We'll circle back to that later. A. OK. Q. But did you have any discussions about where the IDs could have come from? A. Yes. At a later point in time Mr. Ulbricht made a statement that hypothetically an individual could purchase anything they wanted -- fake IDs, drugs, or generally anything illegal on the Tor browser, using the Tor browser to access the Silk Road website. Q. At the time had you heard of Silk Road before? A. No, I had not. Q. At the time had you heard of the Tor browser before? A. I had not. Q. Now, how did you come to learn the defendant's name? A. Mr. Ulbricht went back into the house and retrieved his -- what I believe to be his legitimate Texas driver license and then returned to the front porch and showed it to me. Q. And did you have any discussions with the defendant about his living arrangements at the time? A. Yes. So the name on the identity document that Mr. Ulbricht gave us was his true name, Ross Ulbricht. And we explained to him that we were going to have to speak to his roommates regarding the situation because we wanted to get a bigger picture of what was going on. Since he was unwilling to answer any questions regarding why he might have purchased the documents, we would need to do further inquiry and speak to the roommates. It was at that time that he informed us that that might be an issue because if we asked his roommates about Ross, they wouldn't know what we were talking about because his roommates only knew him by his name Josh. Page 1476 Q. Did you have any discussions with the defendant about how long he had been living there at that location? A. Maybe not the exact time he had been living there, but he said -- I don't recall the specific amount of time, but he said he had found the place on Craigslist and he had sublet it from two individuals who were traveling musicians. Q. Did he discuss the manner in which he paid for the rental? A. He paid them a thousand dollars each month using cash. Q. And he lived under the fake name Josh? A. Yes. MR. HOWARD: No further questions. THE COURT: All right. Let's take our mid-afternoon break, and then we'll come back and Mr. Dratel can commence his cross-examination of this witness. I want to remind you folks again -- and I know I say this all the time, but as the days go on I want to make sure you don't lapse into it -- not to talk to each other or anybody else about the case. Thank you. Page 1477 THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1478 *(Jury not present)* THE COURT: You can step down and take a break as well. THE WITNESS: Thank you, your Honor. *(Witness not present)* THE COURT: All right. Ladies and gentlemen, let's take our own break. I've got something that I need to do in the other room. Is there anything that we need to do before we resume? Normally, I would ask you folks if there was anything you wanted to raise. If there is, then I will come back out before the jury is ready. MR. TURNER: Not from the government, your Honor. MR. DRATEL: I may, your Honor, with respect to some of the cross. THE COURT: All right. So I will have my deputy check with you, Mr. Dratel, and so we will start a couple of minutes early. We will take a brief break right now. Thank you. THE CLERK: All rise. *(Recess)* *(Continued on next page)* Page 1479 *(In open court; jury not present)* THE COURT: Let's all be seated. Mr. Dratel. MR. DRATEL: Yes, your Honor. With respect to cross-examination of Agent Alford, I'll just start from the end. With respect to the document that I was cross-examining him about, which was a government exhibit and that was put in by the government to suggest that those were accurate reflections of login times, and my cross was designed to show that those are not necessarily accurate reflections of login times and it was directly related to the subject of his direct examination and the objection was sustained. With respect to some other aspects, the question of the letter from Senator Schumer and the whole inception of the investigation and its length and its ultimate conclusion are bias issues, whether it's for this witness or the investigation as a whole, those are clear bias issues. And again, objections were sustained. And there's a whole series of questions that are relevant to that, in addition to the scope of the investigation as well and what was going on with the investigation. The bitcoin aspect of it was part of his investigation of Mr. Ulbricht and it goes hand-in-hand with all of the other aspects of it that we talked about earlier. And the whole point about the Silk Road servers, which was sustained as well, is also related to the question of bias and the way the investigation unfolded and ultimately what happened with it. Page 1480 THE COURT: Thank you. Mr. Turner. MR. TURNER: Your Honor, on the IP logs, so those were admitted pursuant to a stipulation between the parties. It says it's a true and accurate copy of subscriber information and the login times. In terms of whether the methods that Google uses to produce those records are reliable, that's beyond this witness' ken. They can call a witness from Google, I suppose, to call that into question. I think the defendant's mistaken to believe that every time there's a login into an email account there's necessarily going to be an email reflected in that account. You can login and check your email and not actually send an email, and Google can log that information, so I don't think it really shows anything in any event. The bias, I mean, the question is how is this witness biased against the defendant because of the fact that the investigation of Silk Road started by the federal government generally -- I'm not saying this is true, but this was the allegation -- started because of a letter submitted by Chuck Schumer. The connection isn't there. Silk Road servers, the witness testified about nothing related to evidence from the Silk Road servers during his direct and the same with the bitcoins. Page 1481 MR. DRATEL: Also, your Honor, I left out one thing also with respect to the competition among the agencies involved: This is a witness who in his 3500 material said there has been a lot of interagency dust-ups and big case/big problems. He complained about the FBI not sharing information. There was an issue about him not getting to sign the criminal complaint and it had to be explained to him that it was not a slap in the face but that the FBI was taking control; the question of what would happen to the bitcoins; and the question of people getting credit for other people's work. And why is that relevant? It's relevant for the whole reason is this: Senator Schumer and another senator issued a public letter that they want Silk Road investigated and taken down. That puts pressure on law enforcement to do it. It makes it a high priority investigation. It makes it something that they want to do as quickly as possible; yet two and-a-half years later almost, no -- yes, almost two and-a-half years later Silk Road is still operating. It's operating at a time which for three months the government can pull the plug on the server at any moment. There is tremendous motivation and pressure to find a suspect as quickly as possible and arrest them regardless of the merits. THE COURT: I think you folks have made your record. I think, Mr. Dratel, whether you have a theory of the case is a different issue as to whether or not there is something that is within the scope of the direct for a particular witness. Page 1482 What I hear in a lot of what you are attempting to do is a theory of the case, and there are certain witnesses where there may be areas opened up and there may be certain witnesses where it's not opened up, and we will proceed with each witness and each question as it comes. MR. DRATEL: Just one. The only way I can get my theory in is through witnesses. It's in this witness' knowledge and it's biased. THE COURT: You and I disagree. I think that you've got a view of the rules of evidence that is, frankly, rather extraordinary for a person who is I know as intellectual as you. I can't decide whether or not you actually believe that you're right or whether or not you are just taking the position as a zealous advocate. In either event, it is my job to apply the rules. I did, in fact, make an error in one of my rulings in the last session and that was to allow the witness, Mr. Alford, to testify that at one point in time he had thought there had been an original DPR. That was actually an error. I thought it was going to connect up to something. It did not. We'll have to decide what to do with that at the appropriate time. I believe the jury is ready for us so let's go ahead. Page 1483 MR. DRATEL: There's one factual thing I need to correct with respect to what Mr. Turner said about Google. He misses the point entirely, which is not the fact that there is -- it's the fact that there are gaps but there are emails in between those gaps which shows that these records don't necessarily reflect accurately when someone's logged onto their Google account. THE COURT: I think the point about Google being the appropriate witness for that testimony is perhaps apposite to that as well. MR. DRATEL: But it's apparent from the documents themselves. THE COURT: Then you don't need the witness. Go ahead and bring out the jury. Let's get the witness back on the stand. Who does the government have next on-deck? MR. TURNER: Michael Duch. THE COURT: Thank you. *(Continued on next page)* Page 1484 *(In open court; jury present)* THE COURT: Mr. Dratel, you may proceed with cross-examination. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION MR. DRATEL Q. Agent Critten, with respect to Government Exhibit 401, which was the shot of the envelope, right, the photo of the envelope? A. Yes. Q. And that showed that the return address on the package was Vancouver in Canada, is that correct? A. The "from," yes. Q. And you said when you approached Mr. Ulbricht, he agreed to speak to the agent -- to you, right? A. Yes. Q. He didn't have to speak to you, right? You didn't have a subpoena? A. No. It was completely voluntary. Q. And the interview lasted about what? Ten minutes would you say? A. Approximately, yes. Q. Now, he gave you, Mr. Ulbricht produced for you his Texas driver's license, correct? A. Yes. Page 1485 Q. And as far as you could tell, that was an authentic driver's license? A. Yeah, I did a record check before I left the premises and it was verified through both the systems and the photo. Q. And you said that Mr. Ulbricht told you that he had found the apartment that he was in on craigslist, right? A. Yes. It was a house. Q. A house, but his room, or wherever he resided? A. Correct. Q. There were two other tenants aside from him? A. That I learned of; yes. Q. And he told you that they all knew him by the name Josh, right? A. Yes. Q. And he said I think that the rent was paid $1,000 a month in cash? A. Yes. Q. Now, he also told you that he was moving within a couple of weeks, right? A. He did. Q. And he told you he was a currency trader, correct? A. He did. Q. Now, when you explained to Mr. Ulbricht that you weren't there to arrest him but were looking to investigate the sources of and vendors for fake identification documents, you told him that he could speak in a hypothetical, correct? Page 1486 A. I told him if you felt more comfortable, he could speak in a hypothetical; yes. Q. So that's when he told you hypothetically someone can go on to the Tor browser and to the Silk Road site, correct? A. Yes. Q. And you say you hadn't heard of Silk Road before then? A. Not before then, no. Q. So there was nothing from the packaging or anything else that would suggest Silk Road? A. Not at all. Q. Now, Mr. Ulbricht also gave you an email address, correct? A. He did. Q. And it was fractalform@tormail.org, right? A. Correct. Q. And you replied "very anonymous," right? A. I don't recall replying. Q. And you also did a criminal history check, correct? A. I did. Q. And that came back with nothing for Mr. Ulbricht, right? MR. HOWARD: Objection. THE COURT: Sustained. Q. You entered the information in the TECS system from your interview, correct? A. I entered my report into the TECS system, yes. Page 1487 Q. And that would make it accessible to law enforcement around the country if they were looking for something about Mr. Ulbricht? A. Yes. MR. DRATEL: I have nothing further. Thank you. THE COURT: Mr. Howard, anything further from you? MR. HOWARD: Nothing from the government, your Honor. THE COURT: Thank you. You may step down, sir. *(Witness excused)* THE COURT: Would the government like to call its next witness? MR. TURNER: The government calls Michael Duch to the stand. THE COURT: Mr. Duch to the stand, please. *(Witness sworn)* THE COURT: Mr. Duch, it will be important to pull up your chair and adjust the microphone how ever it's comfortable for you so that you can speak clearly into the mic. THE WITNESS: Thank you very much so much. THE COURT: Mr. Turner, you may proceed, sir. MICHAEL DUCH, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. TURNER Page 1488 Q. Good afternoon, Mr. Duch. A. Good afternoon, Mr. Turner. Q. How old are you? A. I'm 40 years old. Q. And where did you grow up? A. I grew up in Orange County, New York. Q. And what's your educational background? A. I graduated high school with a Regents diploma. I also attended three years of college. I went to Orange County Community College, Baruch College here in New York City, as well as Brookdale College out in New Jersey. I also attended or and participated in a variety of technical education courses for computers. Q. And what occupation have you held most of your life? A. I've been a computer consultant. I've worked in networking in security. Q. In 2012, how were you employed? A. I was self-employed. I owned my own business. Q. What kind of business was it? A. It was a computer consulting company, again, focusing on networking and security. Q. The name of the company? A. The name of the company is called COMM-LAN. Q. And what kinds of IT jobs did your company do? A. It was mainly servicing business-to-business type stuff, a variety of different doctor's offices, surgical centers, law firms, sometimes do residential work as well. If some of the clients liked the services that we provided, we also did work for some of their home stuff as well. Page 1489 Q. How much money were you making per year in about 2012? A. Um, about $75,000 a year after all expenses were paid. Q. You're in prisoner's clothing today; is that right? A. That's correct. Q. Are you currently in jail? A. Yes, I am. Q. When were you arrested? A. I was arrested in October of 2013. Q. Where were you arrested? A. Outside of a post office in Monroe, New York. Q. What were you doing at the post office in Monroe, New York? A. I was attempting to deliver at the post office packages of heroin. Q. How many packages were you trying to mail out? A. Somewhere between 20 and 25. Q. Why were you mailing out packages of heroin from the post office? A. Well, I was involved with Silk Road. I was a seller of drugs on Silk Road and that was one of the -- that was the method that I used to deliver those drugs. Q. I'm going to ask you some questions about your activity on Silk Road in a minute, but let me first ask, after you were arrested, did you cooperate with authorities? Page 1490 A. Yes, I did. Q. And the assistance you provided, was that initially about Silk Road or something else? A. It was some about Silk Road, but it also -- but I also helped with a control buy with one of my suppliers. Q. So what specific crime -- did you end up pleading guilty? A. Yes, I did. Q. What specific crime did you plead guilty to? A. Conspiracy to distribute drugs. Q. Have you been sentenced yet on that charge? A. No, I have not. Q. How many years in prison could you get on that charge? A. Up to 40 years in prison. Q. Do you face any mandatory minimum prison term? A. There's a mandatory minimum of five years on that charge. Q. And as a result of the assistance you gave to authorities, did the government give you a cooperation agreement? A. Yes, they did. Q. And what does your cooperation agreement require you to do? A. The cooperation agreement requires that I be truthful, honest and I don't commit anymore crimes. Q. And are you testifying today pursuant to that cooperation agreement? Page 1491 A. Yes, I am. Q. Now, if you satisfy your obligations under your cooperation agreement, what's your understanding of what the government will do for you? A. From my understanding is that the government will submit a 5K letter, and that letter pretty much states that, you know, I've been cooperative. Q. Who does that letter go to? A. That goes to my judge. Q. The judge who will sentence you? A. That's correct. Q. Okay. What do you understand the government will put in that letter? A. That I've been cooperative and I've been truthful, honest, haven't broke any crimes, and my judge will take that into consideration upon sentencing time. Q. And is it your hope that based on that letter to the judge you'll get a lighter sentence than you might otherwise? A. Yes, it is. That's my hope. Q. If the government writes that letter, will you still face that mandatory minimum of five years? A. I can still face that mandatory minimum of five years; that's correct. Q. If the government writes that letter, will you get out from that mandatory minimum? Page 1492 A. I do have the ability to get sentenced below that mandatory minimum of five years; that's correct. Q. So what sentence do you hope to receive as a result of your cooperation? A. I hope to receive time served. Q. Even if the government writes that letter to your sentencing judge, is there any guarantee that the government's given you that you'll get a sentence of time served? A. Absolutely not. It's absolute completely up to my judge. Q. For any particular sentence has the government guaranteed you? A. None whatsoever. Q. Will the jury's verdict in this case have any effect on whether the government writes the sentencing letter to your judge? MR. DRATEL: Objection. Q. Has the government told you that? THE COURT: I'll allow it. A. Can you repeat the question, please. THE COURT: Why don't you rephrase. MR. TURNER: Sure. Q. Is it your understanding that the jury's verdict -- THE COURT: Why don't you say "the outcome of the case." Q. Is it your understanding that the outcome in this case will have any effect on whether the government writes the sentencing letter to your judge? Page 1493 A. It should have no impact on whether the letter is written or not. Q. And what happens to your cooperation agreement if the government learns that you haven't been truthful today? A. From what I understand, the letter won't be written and I can face up to 40 years in jail. Q. Do you have any history of drug addiction? A. Yes, I do. Q. Are you clean today? A. Yes, I am. Q. How long have you been clean? A. About a year and-a-half almost. Q. Were you using drugs at the time of your arrest? A. Yes, I was. Q. Have you ever used drugs since then? A. No, I have not. Q. What drugs were you -- do you -- in terms of your drug addiction history, what drugs have you been addicted to in the past? A. Mainly heroin, as well as opiate painkillers. Q. How often did you use those drugs when you were addicted to them? A. On a daily basis several times a day. Page 1494 Q. And when did you first develop a drug addiction problem? A. I believe it was in about 2007 or '08 when I initially had some battles with addiction. Q. And did you get addicted to painkillers at that time? A. Yes, I did. Q. And where did you get those painkillers? A. From my doctor. I suffered from a few different sporting injuries and those sporting injuries required -- well, didn't require, but you know, it helped that I took those opiate pain relievers, and being that I took those opiate pain relievers for an extended period of time, I developed an addiction. Q. And then what happened? A. Well, the opiate pain relievers didn't really provide the same level of relief. Over a period of time, I developed a tolerance. At that time, I had also got painkillers from other people on the street besides my doctor, and I eventually found out that heroin was a -- was just as effective as the painkillers and it was also cheaper. So, you know, developing a tolerance, not being able to afford my habit to the painkillers, I turned to heroin being a cheaper alternative and it was also much more potent. Q. How much heroin did you start using? A. It was somewhere about 30 bags per day. Q. And by bags, what do you mean? A. Individual little glassine bags that they're sometimes called stamps. Page 1495 Q. How long did your heroin addiction continue? A. To about 2007 up to about 2009. Q. And did your use of heroin increase or decrease over time? A. It increased. Q. Why is that? A. Again, I developed -- I continued to develop a tolerance and was addicted to the heroin, so more of the drug was required to achieve the same effect. Q. Did you run into any trouble with the law during this time? A. Yes, I did. Q. What happened? A. I was arrested on several occasions for failure to turn over a controlled, dangerous substance to law enforcement. Q. And were you arrested for anything else? A. I was also arrested for I believe it was a burglary shoplifting charge. Q. Was that shoplifting charge connected to your drug addiction at all? A. Yes, it was. Q. How was it? A. Well, I wasn't able to afford my addiction, so to pay for my addiction, so I actually wound up shoplifting some items from a Target store. Q. And how much did you start spending on your heroin addiction? Page 1496 A. It was probably about 200- to $300 a day. Q. So at some point, you got clean? A. Yes, I did. Q. When was that initially? A. Initially, it was in October of 2009. Q. And did you ever develop an addiction to drugs again? A. Yes, I did. Q. And when was that? A. That was in about October, maybe September of 2012. Q. And what drug did you become addicted to? A. Painkillers. Q. And did you start using painkillers regularly again? A. Yes, I did. Q. Did you develop a tolerance to them again? A. Yes, I did. Q. Did you start using any other drugs around this time? A. I also began to use heroin. Q. And how much heroin did you start taking? A. Again, about 30 bags a day. Q. How would you ingest it? A. Initially, I snorted the drugs, but over time, I began to inject the drugs. Q. And what would happen if you didn't take it? A. Um, I would start to become ill and go through withdrawal symptoms. Those symptoms included sweating, vomiting, diarrhea, extreme flu-like symptoms. Page 1497 Q. How long did it take for those withdrawal symptoms to start? A. Within a few hours usually. Q. So how often did you have to keep up the use of heroin to stop the withdrawal symptoms? A. Every few hours, several times per day. Q. Did you quit using painkillers after you started using heroin? A. I continued to use the painkillers. Over time, I probably used more heroin than painkillers. Q. Why did you continue using the painkillers? A. So you know, at the time I lived with my girlfriend and I also maintained a job so, you know, it was something that I tried to conceal from my girlfriend, my family member -- my family members, people who I worked with so, during other times when I wasn't able to discreetly use heroin, I would use the painkillers, you know, like on a weekend or if I needed to be at a job or something. Q. So at some point in 2012, did you start buying drugs on the Silk Road website? A. Yes, I did. Q. How had you heard about it? A. Probably through one of the news media outlets. Page 1498 Q. And roughly when did you first visit Silk Road? A. It was in October of 2012. Q. And what drugs were you looking to buy? A. Painkillers. Q. And why were you looking to buy painkillers at that time? A. Well, I -- again, I had become addicted to them and to stave off any withdrawal and/or sickness, I looked to Silk Road to get those painkillers. Q. And had your previous supply -- was it no longer available? A. That's correct. It was no longer available. I was under the care of a doctor at the time who was prescribing those painkillers and that prescription was no longer being filled. Q. So, what about heroin? Were you looking to buy heroin on Silk Road? A. No, I wasn't. Q. Why not? A. Well, I knew of a local supplier that I could go to and it was cheaper for me to get it there. Q. So did you start buying painkillers on the site? A. Yes, I did. Q. And did the site work? A. Yes, it did. Q. You got what you ordered? A. Yes, I did. Q. Besides painkillers, did you ever buy any other drugs on Silk Road? Page 1499 A. On a few occasions, I did, yes. Q. What other drugs? A. I purchased heroin on one occasion, cocaine on a couple of occasions, ecstasy, as well as hash. Q. And why did you order cocaine and ecstasy? Did it have anything to do with your opiate addiction? A. No, it didn't. I think maybe I was under the influence at the time and, you know, it was available. I don't necessarily know anybody who has those things and being that the website that I was on had them, I purchased them through the site at that time. Q. So when did you start dealing drugs on Silk Road? A. I initially started dealing drugs I believe it was in April of 2013. Q. And what led you to decide to do that? A. Well, my prescription painkiller addiction as well as heroin addiction became very expensive, and I could no longer afford it, so I resorted to dealing drugs on Silk Road. Q. How much heroin were you buying off the street for yourself in a given week at that point, April 2013? A. My tolerance increased to the point where I would use anywhere between 60 and 100 bags of heroin a day. Q. And painkillers, too? A. And painkillers as well. Page 1500 Q. So how much were you spending per week back then on drugs? A. At a very minimum of $2,000 all the way up to about $3,500 a week. Q. How much were you making a week from your IT job? A. Well, that decreased over time. I wasn't able to necessarily maintain the level of service that was required for my job to perform adequately, and, you know, the income from my main job, which was computers, decreased. Q. How much were you making compared to the 3500 you were spending a week? A. I wasn't able to afford my habit. Q. So where were you getting the money at the time to buy your drugs? A. Well, being that I was successful for a period of time, I did have some money saved up. So once I used up my savings, I then turned to dealing drugs. Q. And what drugs did you start selling on Silk Road? A. Mainly heroin. Q. You had used drugs before this, right, but had you ever dealt drugs before? A. No, I had not. Q. Had you ever considered selling drugs on the street? A. Never. Q. So why were you willing to deal drugs on Silk Road? A. Well, I think, you know, being successful in purchasing drugs on Silk Road, I saw the relative ease that came with it. There was a certain amount of perceived level of safety as well as anonymity; and as long as you follow the rules of the site, it seemed like something that I could potentially -- to potentially get away with. Page 1501 Q. When you say safety, safety from what? A. Safety from being pursued by law enforcement. Q. Now, you were addicted to drugs at the same time, right? A. That's correct. Q. Didn't you have any misgivings about selling addictive drugs to other people? THE COURT: Can you rephrase. Q. Did you have any misgivings about selling addictive drugs to other people? MR. DRATEL: Objection. THE COURT: I'll allow it. You may answer. A. Yes, I did. It was something that bothered me on a daily basis. Q. So how were you able to bring yourself to do it on Silk Road? MR. DRATEL: Objection. A. Well, I think there were a couple -- MR. DRATEL: Objection. THE COURT: Overruled. Page 1502 MR. TURNER Q. Go ahead. A. I think there were a couple of factors that brought me to that point: One is I had an addiction that I needed to feed. It was something that I didn't enjoy doing. It was something I didn't like doing. But to help ease the -- ease my moral conscience, I believe that my drugs -- my drug use continued to increase. Q. So what did you have to do on Silk Road to become a vendor? A. Essentially, you needed to log onto the site, create a username, log onto the site and agree to the terms and conditions of the site. MR. TURNER: Could we put 121B on the screen. Can you pull it pup. Q. Do you recognize what you see on the screen? A. Yes, I do. Q. How do you recognize it? A. I believe this is the seller's agreement and it requires you, prior to selling drugs on Silk Road, you needed to agree to these terms and conditions of the seller contract. Q. And did you see this when you tried to create a vendor account on Silk Road? A. Yes, I did. Q. It says "Get your products to your customers as quickly easily and anonymously as a Silk Road independent seller. Please read the following contract and the seller's guide carefully by clicking 'I agree' at the bottom. You agree to abide by the guidelines and terms below when selling on Silk Road." Page 1503 Did you read the seller's guide? A. Yes, I did. Q. And what did you understand to be the guidelines and terms you were agreeing to? A. There were a couple of different guidelines that were recommended and that you needed to follow. One was utilizing some stealth shipping methods that were mentioned in the forums. You also needed to agree to the conditions of the site to pay commissions to the Silk Road website for transacting business. Q. So did you click "I agree" at the time? A. Yes, I did. Q. And who did you understand to be the other party to this agreement? A. My understanding is that it was Dread Pirate Roberts. Q. And who did you understand Dread Pirate Roberts to be? MR. DRATEL: Objection. THE COURT: Overruled. A. I did not know the identity of Dread Pirate Roberts. I was just under the impression that this individual had run the Silk Road website. Page 1504 Q. Once you entered into this agreement, did you ever have to communicate with Dread Pirate Roberts or DPR directly as part of being a vendor? A. I didn't have to. No. Q. You said that one of the rules that you had to agree to was to use the site's payment system? A. That's correct. Q. As a buyer on Silk Road, had you had any personal experience with vendors who had gone outside the personal -- had gone outside the Silk Road payment system? A. I had read some things about people going outside of the payment system. Part of the understanding of using Silk Road is to never go outside of their payment system. There was an escrow system that was set up and in place for making payments, and it was recommended to always use that escrow system and to never release funds to any potential seller prior to receiving product. Q. So did you set up a separate account to use as your vendor account on the site as opposed to the buyer account used earlier? A. Yes, I did. Q. What was the username you chose for your account? A. It was called deezletime. Q. How do you spell it? A. D-E-E-Z-L-E-T-I-M-E. Page 1505 Q. Did you have to pay anything to Silk Road to start up that account? A. There was some initial money that was put in escrow. Q. How much money? A. I believe it was about $500. Q. And what was the purpose, as far as you understood, of that payment? A. Once you established yourself and proved yourself as a reliable seller on Silk Road, that money was later returned to you. Q. How were you supposed to prove yourself reliable and dependable? A. By delivering the products, by delivering drugs in my case, to the sellers in a timely and efficient manner. Q. You mean to the buyers? A. To the buyers, that's correct. I'm sorry. Q. And how was that supposed to be -- how was that feedback supposed to be received by the website? A. So, as part of the website, there was also a feedback system. And any time that there was a transaction, a buyer was afforded the opportunity to leave feedback regarding the drug transaction. So as long as the drug transaction went well, you received positive feedback. The more positive feedback that you received, that was realized throughout your experience on the website. Page 1506 Q. So, the $500 was a deposit? A. That's correct. Q. And if the feedback showed that you were actually dealing drugs, you got your $500 back? A. That's correct. Q. Once you made that deposit and set up the account, how did you advertise your heroin on Silk Road? A. Well, I created some listings. There were generally three different listings that I created: One for an individual bag, another one for ten bags, and another one for what's called a brick of heroin, which is equivalent to 50 bags. There was some sellers who -- Q. Let me interrupt you. Would you take a look at Government Exhibit 700, please, in your binder in front of you. Do you recognize that document? A. Yes, I do. Q. How do you recognize it? A. I recognize it because it has my user account mentioned in the top-right corner, and this is essentially a way to update your profile on the Silk Road website. Q. Does this fairly and accurately reflect the contents of your vendor page as of the time you were arrested? Let me make sure you're looking at 700. A or B? A. I think that's what I'm looking at. I think I might be looking at the -- Page 1507 Q. Take your time. A. There we go. Thank you. Yes, this was the -- my vendor page, right before my arrest in 2013. Q. Okay. MR. TURNER: The government offers Exhibit 700 into evidence, your Honor. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 700 received in evidence)* Q. So deezletime, that was your username? A. That's correct. MR. TURNER: Could we go over here. Actually if we can zoom in there. Q. Okay. So it says Featured listings, East Coast Style heroin stamps X10 (3 Free!!!) $98. East Coast Style Heroin Stamps X50 bags (1 Brick) $346. Were these the -- what are we looking at here? A. Those are essentially listings that I created on the Silk Road website. Q. And what do these terms mean? What does East Coast Style Heroin mean? A. The way heroin is packaged and distributed throughout the New York metro area, excuse me, is it's packaged in individual little glassine bags and they're sometimes referred to as stamps because of the stamp that is put on the outside of the bag with ink giving it some type of name. Page 1508 Q. So what stamp -- examples of stamps that would be on your product? A. A few that I recall would be Black Magic, Murder, Hotshot. Q. And what was the approximate weight of each bag? A. They weighed somewhere around ten milligrams each. Q. And the brick you mentioned before, brick is -- what is that again? A. That's equivalent to 50 bags of heroin. Q. The price is displayed in dollars, but how did you receive your payments? A. All payments were received in bitcoins. Q. Did you have the option of displaying your price in dollars? A. Yes, I did. Q. No images on the listings. Was that your choice? A. Yes, it was my choice. Q. Why was that? A. There's something called geo-tagging and any time that you take a digital photo, you can more or less identify where that photo was taken, so I chose not to put any photos in there to try to evade law enforcement. MR. TURNER: Back up, please. Go here. Q. This gray area, by the way, did you control what text appeared here? Page 1509 A. Yes. And I did update that frequently. Q. So here it says: "Update, 9/27/2013. We will not be shipping any product on Saturday 9/28/2013. All orders received after 3:00 p.m. EST on Friday 9/27/2013 will be shipped on Monday 9/30/2013. We repeat...no Saturday shipments on 9/28!!! All orders will be shipped on 9/30. We apologize for any inconvenience and thank you all for your continued support." Can you back out and go to and focus on this for the time being. This is from a little while before. It says "New Stamp...Fire!!!New Stamp. Revised Saturday cutoff time. Cut-off time for Saturday 9/21/2013 is 12:00 p.m. EST. All orders received prior to this time will be shipped same day. All orders received after 12 noon will be shipped on Monday 9/23/2013. We repeat cut-off time for 9/21 is 12 noon." What are you talking about in these updates? A. Essentially I'm mentioning the cut-off times in which I needed to receive orders. So if anything I received before 3:00 p.m. that day would usually get shipped out the same day. If there were any changes to that policy, I tried to make updates to my vendor page letting potential buyers know that, you know, you needed to either change your plans, get the orders to me earlier, change the dates and/or times that, you know, that things would be shipped out. Page 1510 Q. Was fast shipping something that you specifically advertised? A. Yes, it was. Q. Same-day shipping? A. Same-day shipping, that's correct. Q. Why did you think your customers cared so much about fast shipping? A. I think that users of heroin, they want to make -- they want to know that their product is in the mail when they order. I mean, it's something that they need to kind of listen to because they're going to go through withdrawal symptoms. Most people who develop heroin addictions will go through withdrawal symptoms. These buyers wanted to make sure that they put their money in escrow, that their package was in mail. Q. How did you communicate with your customers on the site? A. There was essentially a mail-messaging system that was within the Silk Road website. Q. And would you get messages from your customers about shipping times? A. All the time every day. Q. Take a look at Government Exhibit 704 in your binder. Do you recognize these -- what's in this document? A. Yes, I do. Q. How do you recognize it? A. They are messages from buyers asking about a variety of different things. Mainly, it appears that they're wondering if their products have been shipped out that day. Page 1511 Q. And are these messages that you received in your vendor account in your dealing with Silk Road? A. Yes, they are. MR. TURNER: The government offers Exhibit 704 into evidence. MR. DRATEL: Objection as to hearsay and Vayner. THE COURT: All right. Those objections are overruled. Government Exhibit 704 is received. *(Government's Exhibit 704 received in evidence)* MR. TURNER: Could we take a look at the top one, please. August 9, 2013 from wigglyworm, subject: confirmation. Message: "Hey bud, just need some confirmation on if my package will get to me tomorrow. I made the 3:00pm deadline by at least a few hours so I'm hoping everything will go smoothly. Otherwise I'm gonna be sick for the beautiful weekend we have coming up here in NY... I know I can count on you to be as reliable and professional as possible, so just get back to me as soon as you can. Thanks!" Can we go to the fifth from the top. This is from August 15, 2013 from moderngoose: "hello!! first time customer with you here, just wanted to make sure but as soon as my btc hit my account im going to order ur 10 stamp listing via express and i wanted to make sure that as long as i order them around 12:30pm EST will they ship out today as well? i see ur cutoff time is 3 i just wanna double check because i am EXTREMELY dope sick and NEED something by tomorrow!! :( i am miserable at the moment having not slept all night tossing and turning not to mention getting actually sick :/ but anyways thank you very much for ur time, please respond asap. MG" Page 1512 Can we go to page two, the third from the top here. September 3, 2013. "Hello. Hey deezle, i placed the order on the 31st... I understand there's been a few straggls aside bt is there anyway you could ship it overnight. I am throwing up, the worst of the worst withdrawl symptoms and plus i have life destroying pain." Q. Was it relatively common for you to get messages from your vendors indicating they needed the drugs right away because they were dope sick? A. Yes. I received those messages every day. Q. Could we go back to Government Exhibit 700, please. Let's go to page two. This is also from your vendor page? A. Yes, it is. MR. TURNER: And it says "Shipping/Packaging. We absolutely will go to the greatest lengths possible to provide our clients with the most advanced packaging and shipping methods available. We ship USPS Priority and Express at this time. There is a slight up charge on whatever USPS charges as the cost for our stealth and packaging is not cheap and is time consuming." Page 1513 Jump to the second paragraph. "You will also find that our packaging processes use stealth methods to prevent detection as well as the latest technology in MBB and sealing." Q. What does MBB mean? A. MBB is a -- it stands for moisture barrier bag. Q. "The bottom line is that you know that your package will arrive there" -- excuse me -- "will arrive as there will never be anything that we do that will make your package look suspicious if accidently opened and the vapor transfer transmission rates of our materials are the lowest currently available in the industry." What are you talking about here? A. Moisture barrier bags are something that I use to package the heroin inside of. Inside of each moisture barrier bag, it's engineered to have what's called a vapor transmission rate. That vapor transmission rate can potentially prevent law enforcement or drug-sniffing dogs to potentially not smell the drugs that are inside the package. Q. Take a look at what's been marked in your binder as Government Exhibit 701. *(Continued on next page)* Page 1514 Q. Take a look at what's been marked in your binder as Government Exhibit 701. Would you flip through the pages in the binder, in that exhibit. *(Pause)* Do you recognize what's in these photos? A. Yes, I do. Q. How do you recognize them? A. It's consistent with the name of the stamp that I shipped as well as the shipping method that I used. Q. What is it? What are the photos of in the exhibit? A. Essentially we've got an Express Mail envelope. Inside of the Express Mail envelope is a silver moisture barrier bag. Q. I just asked you is this a package that you yourself shipped? A. Yes, it is. MR. TURNER: The government offers Exhibit 701 into evidence. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 701 received in evidence)* MR. TURNER: Publish the exhibit. OK. Could you zoom in on the address. Q. The return address is "I sold it on eBay in Wayne, New Jersey." How did you choose that return address? Page 1515 A. EBay is obviously a common way for people to resell products that I sold on eBay with an eBay reselling company located out of Wayne, New Jersey. I essentially just Googled eBay resellers and used that legitimate address as a return address to ship my order. Q. You didn't have any actual association with that company? A. None, whatsoever. MR. TURNER: Could we go to the next page. Q. What are we looking at here. A. This is an Express Mail envelope, and inside of the Express Mail envelope is a silver moisture barrier bag. Q. Would you go to the next page. And what are we looking at here? A. Inside of the moisture barrier bag there is a hair towel. It was common for me to purchase cheap items like hair towels, CD holders and try to hide the heroin inside of those products. Q. Could you go to the next page. So what are we looking at here? A. Wrapped up inside of the hair towel there is another moisture barrier bag and that is custom cut to fit the specified order. Q. Would you go to the next page. Could you zoom in. So what are those? A. Those are individual bags of heroin and around them appear to be some rubber bands. Page 1516 Q. Could you go to the next page. Is that a closeup of the heroin? A. Yes, it is. Q. So each one of these is -- what is that? A. Each bag is an individual dose of heroin, or what's called a stamp. Q. And where did you learn all of these packaging techniques? A. I learned most everything through the Silk Road website. On the forums there are a variety of different methods that were recommended in trying to come up with techniques to prevent detection by law enforcement. Q. And how did you package the drugs without leaving fingerprints behind? A. Each time that I would leave the package or anything, I always wore gloves. Q. Where did you base your activity out of? Where did you package the drugs? A. Everything was done from my home. Q. Where was your home? A. In Orange County, New York. Q. And where did you buy the drugs? A. In Passaic County, New Jersey. Q. And where did you ship the drugs from? A. I shipped the drugs from my home but utilized the United States Postal Service for shipping. Page 1517 Q. And what areas were those Post Offices in? A. Mostly in Orange County. Q. Anywhere else? A. I think I may have used a New Jersey Post Office once. Q. If you would go back to Government Exhibit 700. Go to page 3. Let's see. If you could go here. All right. It says: "In the event that SR goes down you can reach us at BMR ("deezletime") and Atlantis ("deezletime"). We will be using these accounts daily as well. What are BMR and Atlantis? A. Atlantis and BMR are other sites that were also -- that I also had accounts at that I also sold drugs at. BMR stands for Black Market Reloaded. Q. Were they similar to Silk Road? A. Yes. Q. Were they similar in size to Silk Road? MR. DRATEL: Objection. THE COURT: You need to lay a foundation. Q. How much of your -- well, from viewing the sites, could you see the number of vendors on those sites compared to Silk Road? A. Yes, you can. Q. So how do the number of vendors on those sites compare to Silk Road? A. Silk Road had a substantially more amount of -- Page 1518 MR. DRATEL: Objection. Hearsay. THE COURT: Hold on. MR. TURNER: Personal observation. *(Pause)* THE COURT: I will allow it. A. Silk Road had a substantially larger amount of sellers that were on there. Q. Let me ask you this. How many of your orders came from BMR and Atlantis as compared to Silk Road? A. Silk Road was probably over 99 percent of all orders I received. Q. By the way, why did you need to deal on any of these websites? You are a tech guy, right? A. Right. Q. So why didn't you just launch a solo drug dealing business yourself on the Tor network? A. Well, yeah, I potentially did have the technical capability, but there was an infrastructure that was already in place and that was known to be Silk Road and it was successful. There was a lot of sellers that were there. I know as a buyer I was successful in obtaining product as well. So there was the, you know, already established infrastructure, the buyers, there were sellers. And there was a fair amount of publicity that the site had already received. So there was constantly new clients or new buyers that were already there. Page 1519 Q. When you say there were already sellers there, how is it helpful for you to have -- to enter into a marketplace that was already full of sellers? A. Well, I mean, without sellers there aren't going to be any buyers. So, I mean, you know, if there aren't any sellers, then there aren't going to be any buyers that are coming to the website. Q. So it is the buyers that ultimately -- MR. DRATEL: Objection. THE COURT: Why don't you rephrase the question. MR. TURNER: Sure. Q. So in terms of what ultimately drew you to Silk Road, was it customer base; is that fair? A. It was the customer base, that's correct. Q. And what was involved technically in setting up a vendor page like we saw on Government Exhibit 700? Is it easy to do? A. It was extremely easy to do. Q. Can we take a look at Government Exhibit 700A? Do you see it in front of you? A. Yes. Q. What is that? A. That is the vendor profile page. This page is used to update your profile on the page that we were looking at previously. Page 1520 MR. TURNER: The government offers Exhibit 700A into evidence. MR. DRATEL: Objection as to hearsay. THE COURT: Government Exhibit 700A is received. The objections are overruled. *(Government's Exhibit 700A received in evidence)* MR. TURNER Q. So explain what we are looking at here. And could we zoom in here. A. Sure. So this is the profile description. When you wanted to make any updates to your vendor page, you would essentially type it in right in that profile description. When you click the update profile button, whatever you typed in that box there would update to your profile page. Q. Could we back out. There are some options at the bottom here. One of them is post-commission pricing, pre-commission pricing. What did that mean to you? A. There were different ways that the money that was taken by the Silk Road website was taken from you as a buyer. You can choose it either pre-commission or post-commission, but it is actually included in the price to the seller or if it was something that you paid after the transaction took place. Q. So, either way, was a commission taken on every sale that you did on Silk Road? A. On every sale, that's correct. Page 1521 Q. Could you take a brief look at 700B. *(Pause)* Do you recognize this exhibit? A. Yes. This is a page used to create a new listing within your vendor profile. MR. TURNER: The government offers Exhibit 700B. MR. DRATEL: Hearsay, your Honor. THE COURT: Why don't you build more of a foundation for that with this witness. Q. Did you yourself use a page like this to create your listings on Silk Road? A. Yes, I did. Q. And does this exhibit fairly and accurately reflect your recollection of what that page looked like? A. Yes, it does. MR. TURNER: The government offers 700B into evidence. MR. DRATEL: It still is hearsay, your Honor. THE COURT: All right. The objection is overruled. Government Exhibit 700B is received. *(Government's Exhibit 700B received in evidence)* THE COURT: Let me ask you if we could go back to 700A for one moment? MR. TURNER: Yes, your Honor. THE COURT: Mr. Duch, did you use each of the setting boxes that are referenced on 700A? Page 1522 THE WITNESS: Yes, I did. THE COURT: And did they perform the functions indicated? In other words, "Change Password" had in fact changed a particular password? THE WITNESS: Yes, it did. THE COURT: Is that true for each of the functions on that page? THE WITNESS: Yes, that's true. THE COURT: Thank you. You may proceed, Mr. Turner. MR. TURNER: Thank you, your Honor. MR. TURNER Q. OK. 700B. So you just put in the title of your listing, the asking price, quantity you had available, and then description down below; is that how it worked? A. Pretty much. You just type in, you know, a title, how much you want to charge, the quantity, maybe how many you had on sale, and a brief description of what it was that you were selling. Q. So where did you get your heroin supply from? A. From a street-level dealer in Passaic County, New Jersey. Q. How often would you pick up heroin from your supplier? A. One to two times per week. Q. How would it be packaged when you picked it up? A. It was packaged in individual little glassine bags. The glassine bags were wrapped into bundles of ten. Each -- Page 1523 Q. The bags were stamped when you picked them up? A. That is correct. The bags were already stamped with some type of brand on them or name. Each -- there were ten bags in each bundle. They were wrapped in individual -- wrapped around with rubber bands, and the rubber bands were then wrapped around a larger set of rubber bands which had 50 bags of heroin in them, and that was equivalent to a brick of heroin. Around the 50 bags of heroin there was some magazine paper, and they were all taped together to contain all of the heroin. Q. And how many bricks would you generally buy at a time? A. Up to 40 bricks of heroin. Q. And how much did your supplier charge you? How much did that cost you? A. Each bag was $3. So it was about $6,000 for each time I picked up heroin. Q. And how did that street price compare to what you were able to sell the drugs for on Silk Road? How much was your markup? A. I generally tried to keep it somewhere around double that. So about 100 percent. Q. So you were just taking the same heroin you were buying off the street and putting it up for sale on Silk Road at a hundred percent markup? A. That's correct. Page 1524 Q. How were you able to sell at such a high markup? MR. DRATEL: Objection. THE COURT: Why don't you rephrase. Q. Why did you think you would be able to sell at such a high markup? MR. DRATEL: Objection. THE COURT: I will allow it. You may answer. A. Well, there were -- being that Silk Road had access to a large geographic region, there was -- some of these areas didn't necessarily have -- MR. DRATEL: Objection. THE COURT: Well, ladies and gentlemen, this answer is for the witness' perception. It is not offered for the truth as to whether particular areas did or did not in fact have access to heroin. You may answer. A. OK. There was a -- from what I understood, there was -- the heroin was not available in the geographic regions all over the United States, and, you know, so somebody out in Utah was now able to gain access to the heroin. So, you know, it wasn't something that was necessarily available to them, but the Silk Road website made that available to them. Q. Did you know where your customers lived, where you were sending the heroin -- not "lived," but did you know where they were receiving the shipments you were sending them? Page 1525 A. Yes. Well, I would get their addresses through the Silk Road website. Q. And did you keep a record of the transactions you did with your customers on Silk Road? A. Yes, I did. Q. What records did you keep? A. Essentially, I created a spreadsheet that tracked all the business that I conducted, all the drugs that I sold on Silk Road. Q. Did you keep your customers' addresses? A. Yes, I did. Q. You weren't supposed to do that under Silk Road's rules, right? A. No, I wasn't. Q. But you did it anyway? A. Yes, I did. Q. Where did you keep that information? A. I kept it on my computer at home. Q. And was your computer seized by law enforcement as part of your arrest? A. Yes, it was. Q. Do you see Government Exhibit 703 in your binder? A. Yes. Q. Do you recognize what's there? Page 1526 A. Yes, I do. Q. What is it? A. It is a CD with my initials on it and a date that I created it. Q. And when did you create it? A. On the 23rd of January. Q. Of this year? A. Of this year, that's correct. Q. And what's on this spreadsheet -- excuse me, what's on the CD? A. This should be a spreadsheet containing a variety of different information, information that I used to track my orders on Silk Road. Q. Did this come from the data that you kept on your computer? A. Yes, it did. MR. TURNER: May I approach, your Honor? THE COURT: You may. MR. TURNER: Your Honor, the government moves Exhibit 703 into evidence and asks that it be published to the jury. MR. DRATEL: No objection. THE COURT: Received. Government Exhibit 703 is received. *(Government's Exhibit 703 received in evidence)* MR. TURNER: OK. Can we zoom in. MR. TURNER Page 1527 Q. Would you walk us through these columns and what each reflects. A. Sure. Column A was the order number. This was generated by the Silk Road website. Column B was the quantity of heroin or the number of bags of heroin that was ordered on the website. Column C was an adjusted quantity that I created. Traditionally with the -- some of my orders, I would give extra bags of heroin. So this adjusted quantity was something that I created later to reflect the actual number of bags of heroin that I distributed. Q. Just to be clear, is that something you created in preparation for testifying today? A. Yes, I did. Q. OK. A. Column D is the postage method used. I essentially used two different ways to ship stuff -- united States Postal Service Express and Priority. Column E would be the address. G is the buyer on Silk Road. That is their -- that is their username. And Column H was the tracking number that I also kept track of for that particular order. MR. TURNER: Ms. Rosen, just to show the jury how far this goes down, could you scroll down slowly. Page 1528 *(Indicating)* MR. TURNER: A little faster. Keep going. Go all the way down to the end, please. *(Indicating)* MR. TURNER: OK. Could we go back up. Q. What time span does this spreadsheet cover? A. Essentially from when I first started selling drugs on Silk Road up to the day I was arrested. Q. Now, the address information from this document has been redacted, but did you prepare any kind of summary of all the places you mailed shipments to? A. Yes, I did. Essentially, I extracted all of the cities and states where heroin was shipped. Q. Can you take a look at Government Exhibit 703B in your binder. *(Pause)* Do you recognize that document? A. Yes, I do. Q. What is it? A. It is the -- it is all the cities and states that were extracted from the spreadsheet. MR. TURNER: The government offers Exhibit 703B into evidence. MR. DRATEL: Objection. Hearsay. THE COURT: That objection is overruled. Government Exhibit 703B is received. Page 1529 *(Government's Exhibit 703B received in evidence)* MR. TURNER Q. Could you zoom in here. It is in alphabetical order? A. Yes, it is. Q. Aberdeen, Mississippi; Agawam, Massachusetts; Aguadilla, Puerto Rico; Akron, Ohio; Alanson, Michigan; Albany, New York; Albemarle, North Carolina, etc. How many pages does this go on for? MR. TURNER: Actually, scroll through the pages, Ms. Rosen. *(Indicating)* A. It is probably about 15 pages here or so. Q. And are the locations concentrated anywhere in particular, or are they spread all over the country? A. They are pretty much spread all over the country. Q. By using this spreadsheet we looked at earlier, were you able to calculate how many drug deals you did on Silk Road? A. Yes, I did. Q. And how many bags or stamps of heroin you sold? A. Yes, I did. Q. How did you calculate that information? A. I pretty much summed up the adjusted quantity that was created in preparation for trial. Page 1530 Q. Would you take a look at Government Exhibit 703A. Is this the summary you created? A. Yes, it is. MR. TURNER: The government offers Government Exhibit 703A into evidence. MR. DRATEL: Hearsay, your Honor. THE COURT: Government Exhibit 703A is received, and the objection is overruled. *(Government's Exhibit 703A received in evidence)* MR. TURNER Q. OK. So how many orders did you do in total? A. 2,414. Q. And how many bags of heroin did you sell? A. 31,827. Q. It is about 10 milligrams per bag? A. That is correct. Q. Was it ever more than that? A. Sometimes. Sometimes more. Sometimes a little less. That is about an average. Q. OK. And total estimated weight, you just multiplied the paper bag times the bags you sold and it is 3.18 kilograms of heroin? A. That's correct. Q. And that's from April to September 2013? A. Yes, it is. Page 1531 Q. How long did it take you to start doing a steady volume of business on Silk Road? How fast did your business grow? A. Sure. It took about -- in all, about six weeks to go from having no status on Silk Road to becoming relatively well known. Q. So after six weeks how many bags of heroin were you shipping out on a given day? A. Anywhere between 400 to 600 bags of heroin per day. Q. How much revenue were you taking in per month? A. About 60 to $70,000 a month. Q. And how many hours were you working per day as a drug dealer on Silk Road? A. At least six to eight hours a day Monday through Saturday and some hours on Sunday as well. Q. How many hours per day were you spending on your IT business at that point? A. Well, it decreased significantly over time. I would probably spend maybe two or three hours doing my computer tech work per day. Q. And what did you do with all the money you were making from the site? A. Most of it was used to either support my habit or to reinvest in my drug selling. Q. So how many bags of heroin were you yourself consuming in a given week by this point, by the time of your arrest? Page 1532 A. Up to 6 to 700 bags of heroin a week. Q. What was happening to your health at this point? A. It did decrease significantly. My social life suffered. My work life obviously suffered. Q. And so the same drug that was impacting your life in that way you were dealing to thousands of people -- MR. DRATEL: Objection. Q. -- on Silk Road? THE COURT: Hold on. A. Yes, I was. THE COURT: Hold on. *(Pause)* The objection is sustained. The answer is struck. MR. TURNER: No further questions, your Honor. THE COURT: All right, Mr. Dratel. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION MR. DRATEL Q. Good afternoon, Mr. Duch. A. Good afternoon. Q. Now, you testified on direct about your deal with the government, correct? A. Yes, I did. Q. And you said that under the charges that have been filed against you by the government you face a penalty possibly of anywhere from 5 to 40 years, right? Page 1533 A. That's correct. Q. And it is a mandatory minimum of five years unless you get the letter from the government to the Judge about your assistance, your substantial assistance, correct? A. That is correct. Q. Substantial assistance to the government, right? A. That is correct. Q. Now, you have a prior felony conviction, correct? A. Yes, I do. Q. Before the one that you pleaded guilty to regarding the conduct you have talked about today, right? A. Yes, I do. Q. And you were aware that if the government chose to file what's called a prior felony information against you, that would double the mandatory minimum and make the maximum penalty life in prison, right? A. I don't know whether it would be life in prison or not. I don't know about that. Q. Well, you were informed that it would double the mandatory minimum, correct? A. Correct. Q. And that it would increase the maximum, correct? A. I'm not aware whether it would increase the maximum or not. Q. And part of your agreement with the government is that they are not going to file that prior felony information against you, right? Page 1534 A. There is no agreement on whether they'll file a prior felony information or not. Q. You understand they're not going to do that, correct? A. I -- Q. Whether it is in writing or not, you are not expecting them to go and file a prior felony information if they give you a 5K letter and then increase your mandatory minimum to possibly 10 years, right? You don't expect them to do that? A. My expectation is that they wouldn't do that but there is no agreement stating that. Q. It is something they are holding over your head, correct? A. It's never been mentioned. Q. It's never been mentioned. Well, I want to show you what's been marked as 3514-2. Let me start. You've met with the government in preparation, right, for your testimony, correct? A. Yes, I did. Q. That goes all the way back to even -- withdrawn. When you first got arrested you agreed to cooperate, correct? A. That's correct. Q. You signed a consent form for searches, right? A. Yes, I did. Page 1535 Q. You made tapes of your supplier, right, trying to incriminate him, correct? A. I believe there was an audio recording made. Q. Well, you made it, right? A. I was a participant in making the recording, that's correct. Q. By the way, when you're doing -- by October 2013, you are doing 6 to 700 bags of heroin a week, right? That's what you said. A. Not in October of 2013, no. Q. So when were you doing that? A. It would probably be in -- around April of 2013. Q. Then you cut back? A. And I was arrested around October of 2013. Q. Right. It is six months later, right? A. Right. Q. You say you cut back in your heroin use in those six months? A. I didn't cut back, no. Q. So you were high all the time, right? A. I used heroin on a daily basis. Q. You were high all the time, right? A. I used heroin on a daily basis. Q. That's not the question. How many times did you use heroin a day to get those -- that is about a hundred bags a day? Page 1536 A. That's correct, up to a hundred bags a day. Q. So you can't do them all at once, right; you'll kill yourself, right? A. I used heroin four to five times a day. Q. And how long did it last? A. Anywhere between six hours or so. Q. So if you did that four or five times a day, you're high 24 hours a day, right? A. I think there's a difference between being high on heroin and having enough heroin so you don't actually become ill. Q. So you did it so you won't become ill, right? A. Part of the time, yes. Other times I used -- Q. You started to because you were in pain, right? You didn't go from pain killers to heroin because you wanted -- withdrawn. You went from pain killers to heroin back at the beginning of your problem because you wanted to get high, right, not because of pain? A. I did it essentially for financial reasons. I mean, to continue to sustain a pain killer addiction is quite expensive. Heroin is a cheaper alternative. Q. Are you saying that the getting high had no appeal to you? A. I -- I -- I'm not saying it didn't have any appeal to me. Q. Of course. You wanted to get high, right? A. That wasn't the sole reason but it was a factor. Page 1537 Q. It was a huge factor, wasn't it? A. It was a factor. Q. So getting back to your agreement with the government. So you started cooperating immediately, right? And then -- right? Immediately upon your arrest, you began cooperating? A. Yes, I did. Q. And then that involved meeting with the government, correct, to discuss your life history, your variety of things, including your conduct with respect to selling heroin, right? A. Yes, it did. Q. OK. So one of those meetings was February 11, 2014, right? I'm sorry. February 6, 2014, right? A. I don't know if that was the date or not but it was sometime in February, that's correct. Q. You met in White Plains, right? A. I did meet in White Plains in February. Q. You met with an assistant United States Attorney, right, and a DEA agent, right? A. That's correct. Q. And a Homeland Security Investigations agent, right? A. That's correct. Q. And your attorney? A. Yes, I did. Q. Now, at the beginning of that meeting, did the prosecutor say to you that your predicate felony information would be considered, right? Page 1538 A. I don't know whether that was mentioned or not. Q. Could it have been mentioned? A. It might have been. Q. Do you recall? A. I don't recall it being mentioned. Q. Let me show you what's marked as 3514-2, and ask you whether the highlighted portion -- read it to yourself. Don't read it out loud. A. Sure. Q. Just you could read the whole paragraph, if you want, for context. Tell me whether that refreshes your recollection as to whether or not the government said -- the Assistant United States Attorney at that meeting said to you that the prior felony information that they could file against you would be considered. *(Pause)* A. No. I'm not sure who created this or what was -- what the point -- Q. I am just asking you whether it refreshes your recollection that at that meeting the Assistant United States Attorney informed you that your prior felony and the prior felony information that could be charged against you would be considered. This is back in February of 2014. Page 1539 A. It essentially states that A.U.S.A. -- Q. I don't want to know what it states. I want to know whether it refreshes your recollection that that was told to you at that meeting. A. I don't recall it being told to me. Q. In fact, you didn't sign a cooperation agreement until December 10, 2014, right? A. That's correct. MR. DRATEL: Let me just get this back. Q. Now, with respect to your agreement, you're charged in this 5-to-40 range that you're charged in in terms of a 5-year mandatory minimum up to a maximum of 40, right? That's based on selling more than 100 grams of heroin, correct? A. That's correct. Q. Now, we just saw that chart that you estimate that you sold 3.1 kilograms of heroin, correct? A. That's correct. Q. Is that 30 times more, right? A. That's correct. Q. So -- and you knew, when you made your deal with the government, that at one kilogram or more it's a mandatory minimum of 10 years and a maximum of life, right? A. That's correct. Q. And you knew that with your prior felony conviction, if they filed a prior felony information, that would be a minimum of 20 years and a maximum of life, correct? Page 1540 A. That's correct. Q. Now, this agreement that you have with the government doesn't just cover any drug dealing you might have done on Silk Road, correct? A. I'm not sure what the question is. Q. The government's not going to prosecute you for other crimes that you've committed, right? A. I'm not aware that that language is in the agreement. MR. DRATEL: If I may approach? THE COURT: Yes. MR. DRATEL: 3514-17. THE COURT: Just for your planning purposes, Mr. Dratel, you've only got a couple of minutes left today and then we will pick up tomorrow. MR. DRATEL: OK. I will just go through this one thing. THE COURT: Yes. Sure. MR. DRATEL: If I may stay up here, your Honor, because this is my copy. THE COURT: As long as you keep your voice up so we all can hear you. MR. DRATEL: I will stand over here so that the reporter can hear me. MR. DRATEL Page 1541 Q. So doesn't the agreement -- I'm trying to refresh your recollection here, that the agreement says that you will not be prosecute, except for criminal tax violations, for, in addition to the Silk Road sales, the theft, purchase and personal use of ecstasy, GBH, cocaine, heroin, and various prescription drugs from 1994 through 2013? A. OK. Q. That's part of your deal, right? *(Pause)* Do you want to look at the whole document? A. Sure. *(Pause)* Right, that I won't be prosecuted for any theft, purchase or personal use of drugs. Q. Right. And those were all illegal drugs that we are talking about, correct, in that -- even though we haven't talked about GBH, right? A. Right. Q. It also includes that you will not be prosecuted for theft of property from your father in various Wal-Mart starts in approximately 2008 and 2009, right? A. That is correct. Q. And that you will not be prosecuted for the throwing of a telephone at your girlfriend in approximately 2008, right? A. I don't see that mentioned there. Page 1542 Q. (Handing) A. I see it now. Q. And the trading of heroin for prescription medications from approximately 2008 through approximately 2009, right? A. That's correct. Q. Now -- by the way, you signed your cooperation agreement, correct? A. Yes, I did. Q. And you read it before you signed it, correct? A. Yes, I did. Q. And, in fact, when you pleaded guilty, the judge asked you -- and you were under oath -- have you read the agreement, correct? A. Yes, I did. Q. But somehow you didn't know today what was in the agreement, right? A. I knew what was in the agreement. I just wasn't -- I don't think that I was exactly clear on the language that was in there. MR. DRATEL: This is a good spot, your Honor. THE COURT: All right. Thank you. Ladies and gentlemen, we'll break for today. We will pick up tomorrow, on Thursday, at 9:30, our usual time. And I'll try to have us start at 9:30. I know you folks are good about being here. Page 1543 I want to remind you still, as usual, the same reminder not to talk to anybody about this case. Thank you. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1544 *(Jury not present)* THE COURT: Mr. Marshal, you may bring the witness back. *(Witness not present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. Is there anything in particular that you folks would like to raise? I just wanted to talk about sort of going forward and the timing and things of that nature so I can get a sense of how these witnesses are progressing. We've only got a few witnesses left in the government's case. And I also wanted to just mention that we'll be picking up with the jury instructions tomorrow morning unless there are other housekeeping matters tomorrow morning that arise and that we should take up first. Those are the only two things that I wanted to sort of go over. So, schedule first. But are there things that you folks would like to address? MR. TURNER: No, not besides the scheduling. THE COURT: Mr. Dratel. MR. DRATEL: Yes, your Honor, in terms of scheduling. THE COURT: In terms of schedule, but other than that? MR. DRATEL: Not other than scheduling. THE COURT: Why don't you give me a sense of, Mr. Turner and Mr. Howard, how things look. Actually, you've got three witnesses left after this witness, and two of them appear to be quite short and one of them a little bit -- one of them longer. Page 1545 MR. TURNER: Right. I think -- well, the next witness will be short, Agent D'Agostino, and then for Ilhwan Yum I think it may be two to three hours is our best guess. And Brian Shaw will be maybe three hours. But there are a number of exhibits to be read in during Mr. Shaw's testimony and it is always hard to gauge that so it could go longer. So we could certainly be done by tomorrow or at the latest by Monday. THE COURT: All right. So sometime Monday. That corresponds with what we had discussed previously even with the snow. All right. If the government rests tomorrow, I will not require the defense to start their case tomorrow. We can pick that up on Monday. It doesn't sound like that is a likely scenario, frankly, anyway. It sounds like the most likely scenario is you are going to have some amount of time going into Monday. Mr. Dratel, in terms of timing from your perspective? MR. DRATEL: It is difficult to determine because I know that the government was trying to look on the outside as to what these times would be, and some of them have been faster for a variety of reasons. But the question with Agent Yum is Agent Yum is the witness after Agent D'Agostino. So Agent D'Agostino is going to be short and come right after Mr. Duch. Page 1546 With respect to Agent Yum, we received Monday night a spreadsheet that he prepared on Bitcoin Wallet and bitcoin transactions that has millions of pieces of information in it without any corresponding 3500. I'm not suggesting that they haven't turned over 3500 that doesn't exist. I am really not in a position to cross-examine him on that tomorrow. I thought I would have until Monday based on the schedule as it was projected. As it looks now, we will probably finish his direct sometime early to mid-afternoon. I would just ask that we break at that point. We could finish the charge conference at that point. As far as our case, I'll let Ms. Lewis talk to the Court about that because she has been coordinating that. But, with respect, I think it is really impossible -- we were trying to get up on it but, you know, at the same time as doing everything else in the case, it's really not in a position to absorb -- and it is really just in many respects numbers. It is a spreadsheet. THE COURT: Do I have this information in my binder that you folks are planning on using with Agent Yum? MR. TURNER: No, not yet, your Honor. The issue here is this is something the defendant announced in their opening, that the bitcoins on the laptop did not come from Silk Road, it came from bitcoin trading or mining or whatever. They opened that door, and we have been doing our best to complete an analysis by looking at the addresses on the wallets at issue in the block chain and looking to see the transfers from the Silk Road wallet to Mr. Ulbricht's laptop and to prepare that as soon as we could. And we have provided Agent Yum's basically draft work as soon as we could. Page 1547 THE COURT: When did you provide it? MR. TURNER: We provided it to them Sunday night. THE COURT: And when was the material underlying -- so on Sunday night. Just so I'm clear, this past Sunday, which would have been January 25? MR. TURNER: I think so, your Honor. THE COURT: All right. MR. DRATEL: Your Honor, I'm not suggesting that it was delayed or -- THE COURT: No. I am just trying to get a sense of timing. You produced the spreadsheet? MR. TURNER: I produced the spreadsheet. The actual underlying information has been produced to the defense months ago. So you have the image of the defendant's laptop. That contains the Bitcoin Wallet files that were on the computer. You have the images of the Silk Road servers. That contains the wallet files that were on the Silk Road servers. It is a very simple matter to look at the addresses in those wallets and see how many addresses sent money from the Silk Road servers to the addresses on Mr. Ulbricht's laptop. So this is certainly an analysis that could have been done by the defense easily long ago. And, you know, this is what we did in response to their statement in their opening that the bitcoins didn't come from Silk Road. Page 1548 MR. DRATEL: All I am asking is to put it over, the cross, until Monday morning. THE COURT: Well, the issue is that right now it looks like there is some chance that we will be into the very last witness tomorrow afternoon -- I think a substantial chance. Now, I don't know what you've got with Mr. Duch and you'll -- I don't want to unduly delay that. But let me get a full picture of where we are with the defense case as well in terms of timing to determine what we're looking at. So, Ms. Lewis, why don't you give me a sense, first, at this point in time how many witnesses do you have and what is the approximate duration? MS. LEWIS: So at this time we put the government on notice of eight witness, including one expert. THE COURT: OK. MS. LEWIS: The majority of those are lay witness. All of the witnesses are out-of-town witnesses, some out of the country -- at least one out of the country. And given that, we have been trying to obviously keep them abreast of the duration of the government case and we have been adjusting that as we have been going, but even with those adjustments the case, obviously, has been moving faster than we had anticipated. Page 1549 So I told the witnesses to this point that they would not be -- could not expect to be called before Tuesday, just because there was no way that we would finish before then. Obviously, with the snowstorm, too, we would not know how that was going to go. THE COURT: Where does the expert in terms of your planning fall generally within your current anticipated order? Is he or she first, middle, last? Just so I can get a sense. MS. LEWIS: I guess in the middle, your Honor. THE COURT: The middle. All right. Are the other seven witnesses, are they short? MS. LEWIS: They are character, fast witnesses. THE COURT: Are they half-hour witnesses on direct, something in that nature, or more? MS. LEWIS: I think so. Again, we are still kind of ironing out exactly what they will testify to, but I believe somewhere -- THE COURT: I am not going to hold you to a timeframe, a certain timeframe. I am trying to get a sense of whether or not they are going to be half a day -- MS. LEWIS: These are short witnesses. Page 1550 THE COURT: All right. So short witnesses. So there is seven of those and then one expert. How long do you expect the expert to be on direct? MR. DRATEL: I would think, at the outside, two hours at the outside. THE COURT: All right. And is the defendant going to testify? At this point in time, I am not having you commit to that but that's obviously a longer witness than any of these. MR. DRATEL: Right. THE COURT: And I told you I would start asking you on Wednesday. MR. DRATEL: True. As of right now, the decision has not been made because, obviously, it is not my decision so. THE COURT: Absolutely. We talked about that at the final pretrial. It is ultimately Mr. Ulbricht's decision as to whether or not he wants to testify. MR. DRATEL: Right. And so -- but we'll try to have an answer as soon as we have an answer. I just, you know -- THE COURT: Well, in terms of timing, I mean, can you give me a sense as to whether or not you're leaning for it or you're really just right in the middle right now? MR. DRATEL: I can't say where we are on that, your Honor. THE COURT: OK. MR. DRATEL: I don't want to -- Page 1551 THE COURT: No. That is fine. I just needed to get a sense of it. You are not in your case yet so you don't have to make a decision. I would think that Mr. Ulbricht is a -- I'm going to say a two-day witness, perhaps more, if he's called. I don't know. It depends on what occurs. MR. DRATEL: I could tell you about the rest of our case. I think the rest of our case would be -- my sense would be that it would not be longer than two days is my estimation. It could be shorter. It could be a day and a half. Obviously, I don't know what the extent of the cross-examination would be, but I am just anticipating just from my -- THE COURT: All right. Let me ask the government. MR. DRATEL: -- perspective. THE COURT: Let me ask the government about Mr. Shaw. Is there any possibility that the government could call Mr. Shaw before Mr. Yum? Is it a "Mr." Yum or "Ms." Yum? MR. TURNER: Yes. Mr. Yum. THE COURT: So that we could swap that order. MR. TURNER: Well, I think the problem from the government's perspective is that Mr. Yum sets the stage for Mr. Shaw because he explains not only about the bitcoins but he participated in the seizure of the servers and could explain how these servers are known to be Silk Road servers. So it would be a little bit out of the left field otherwise for the agent -- for the jury to hear testimony from Mr. Shaw, who looked at the underlying servers, without understanding where the data came from. That is our concern. Page 1552 THE COURT: All right. We are going to then proceed in the ordinary course. Mr. Duch will take however long he is going to take. Mr. D'Agostino will take however long he is going to take. We will then proceed into Mr. Yum. It may or may not be the case that we get into cross-examination of Mr. Yum. It may also be the case that Mr. Yum is held over after his direct for cross until after the weekend. So we'll proceed. If there is an application renewed tomorrow if his direct is finished and he's on cross and there is a renewed application that you haven't been able to get to it, let's see where we are in the afternoon. MR. DRATEL: Yes. THE COURT: And we'll take it as it comes, but I would like to just proceed. But I understand your point, Mr. Dratel. So get prepared for what you know you can do with Mr. Yum on the assumption that if the government gets to Mr. Yum at noon, I don't think it sounds likely but if they did then we would probably finish Mr. Yum tomorrow, but there is a chance that we can be held over the weekend. But I'm not going to make it occur in that manner. Page 1553 MR. DRATEL: All right. You know, I'll do what I can, but like I said, this is an avalanche of material. THE COURT: I understand. The issue arises because of what occurred in the opening, which opens the door to this and -- MR. DRATEL: I don't have any argument with that. THE COURT: I know. But it is possible that you had in your pocket the very same information going the other way. I don't really know which way any of this information goes. MR. DRATEL: But -- THE COURT: So this is -- the topic, once it was introduced, put all of this in play, and you introduced it. MR. DRATEL: We got a list of exhibits in early, you know, in early December that, you know, don't include anything in this, but then we go forward for six or seven weeks and then all of a sudden the defendant -- we're getting a dozen exhibits every day basically that are new. You know, the entire exhibit list has been transformed either through additions, subtractions, modifications. We have been doing this every night. We get exhibits at 8:30 in the morning. I'm not complaining about it, but I'm saying it has an impact on the amount of work I can do on things that come in that involve thousands and thousands of identified information and perhaps millions of transactions. It is just humanly impossible. That's all. Page 1554 THE COURT: Well, then, it was a door that when opened had some difficulties in terms of the amount of evidence that would be responsive to it behind it. In any event, trial is like this. We'll proceed as I've indicated and we'll pick up tomorrow. We'll start with the jury instruction tomorrow after we have dealt with housekeeping. Ms. Lewis. MS. LEWIS: I'm sorry. I just wanted to raise again. With regard to the defendant's case, though, we still have this issue where all our witnesses are prepared to be here by Tuesday but not necessarily by Monday. THE COURT: You need to get somebody here by Monday. MS. LEWIS: I will do my best to get at least one person here by Monday -- THE COURT: Well, get as many as you need -- as you guys know from the final pretrial, get as many as you need to fill up the remainder of the day. I don't know what that is going to be. MS. LEWIS: I only say that because these are lay people coming from across the country. It is difficult to get them. THE COURT: I hear you, but this is not a particularly new issue for anyone. I mean, this is just the way it goes. You will call your witness. You will start your case the moment the government rests, after any motion are made. We'll deal with those. And we'll proceed apace. Page 1555 So you can confer with the government on precise timing. I do understand the potential inconvenience to the witnesses and the logistics and the difficulties with all of it. I'm not suggesting it doesn't exist in the real world where these human beings actually live and have to get onto an airplane and have to know when to get onto an airplane, and if they are in far-flung places, that airplane ride might be quite long and they need to know in advance. I'm not suggesting that I don't understand, but I am stating that we will proceed to use the time. We're going to run into some issues with a couple of the jurors, as you folks know, in terms of their employment. We're close enough that I want to make sure that they don't feel in any way rushed during their deliberations, and I think right now we've got plenty of time. 703B I wanted to just talk about for one moment. That is the list of addresses. I wanted to indicate that I do believe that Mr. Dratel was correct in the sense of it being in for the truth. I don't agree that there is a hearsay problem. While the declaration underlying the actual information is a declaration of a buyer -- in other words, the buyer says to the seller this is the address to which you send the drugs -- the seller, which is Mr. Duch in terms of his testimony, then extracts that information. He has testified he sold product to those individuals. And he then maintains those records as business records of his rather substantial drug dealing business. So the basis of the Court's decision on that was business record. Page 1556 Anybody want to suggest that they had a different -- does the government want to suggest they had a different basis? MR. TURNER: I think, alternatively, your Honor, it is just a record of the addresses where he shipped his shipments to. So it would just come in for that purpose. THE COURT: No. It came in -- I think it depends on what the use is going to be. If the use is going to be related to venue in some way, then it's coming in for the truth and it is not just a record for the fact that it was said. It would be coming in for the fact that it went to these particular locations. I don't know if that is the government's plan or not. MR. TURNER: But in terms of the hearsay, I think it is just a record of his own actions, that he shipped product to these various address. He is just keeping a record. I think it comes in under the business records exception, anyway. But it is also just him recording I shipped 10 bags out to this address, 20 bags out to this address, and that's his own. There was no statement there. It was just his own activities that he recorded. Page 1557 THE COURT: I understand the government's position. All right. That is an additional basis. Mr. Dratel. MR. DRATEL: That chart, those two charts are not business records because -- THE COURT: Not the -- the chart was extracted as in the nature of a demonstrative, as I understand it, from the information contained on the spreadsheet. Did I get that wrong? MR. TURNER: A summary, your Honor. THE COURT: A summary. So it is in as a summary of information. But you still, I think, had your hearsay objection to that. *(Continued on next page)* Page 1558 MR. DRATEL: A witness can't create something and then call it a business record when he's created it for the litigation. MR. TURNER: To be clear, the spreadsheet he kept in the ordinary course of business. Then he can summarize those records for the purposes of trial. THE COURT: That was my understanding as to the way in which things had occurred. Thank you. Let's all resume tomorrow morning at 9:00. Thank you. *(Adjourned to January 29, 2014 at 9:00 a.m.)* * * * Page 1559 INDEX OF EXAMINATION Examination of: Page ALEX MILLER Direct By Mr. Turner . . . . . . . . . . . . .1340 Cross By Mr. Dratel . . . . . . . . . . . . .1348 Redirect By Mr. Turner . . . . . . . . . . . .1354 Recross By Mr. Dratel . . . . . . . . . . . .1355 GARY ALFORD Direct By Mr. Turner . . . . . . . . . . . . .1356 Cross By Mr. Dratel . . . . . . . . . . . . .1434 Redirect By Mr. Turner . . . . . . . . . . . .1453 DYLAN CRITTEN Direct By Mr. Howard . . . . . . . . . . . . .1467 Cross By Mr. Dratel . . . . . . . . . . . . .1484 MICHAEL DUCH Direct By Mr. Turner . . . . . . . . . . . . .1487 Cross By Mr. Dratel . . . . . . . . . . . . .1532 GOVERNMENT EXHIBITS Exhibit No. Received 1200 . . . . . . . . . . . . . . . . . . .1343 1205 . . . . . . . . . . . . . . . . . . .1346 1204 . . . . . . . . . . . . . . . . . . .1347 316 . . . . . . . . . . . . . . . . . . . .1362 806 . . . . . . . . . . . . . . . . . . . .1364 808 . . . . . . . . . . . . . . . . . . . .1365 Page 1560 320 . . . . . . . . . . . . . . . . . . . .1368 321 . . . . . . . . . . . . . . . . . . . .1371 227I . . . . . . . . . . . . . . . . . . .1372 331 . . . . . . . . . . . . . . . . . . . .1373 317 . . . . . . . . . . . . . . . . . . . .1375 333A . . . . . . . . . . . . . . . . . . .1379 325 . . . . . . . . . . . . . . . . . . . .1381 324 . . . . . . . . . . . . . . . . . . . .1382 333B . . . . . . . . . . . . . . . . . . .1384 802 . . . . . . . . . . . . . . . . . . . .1389 802A . . . . . . . . . . . . . . . . . . .1390 340B . . . . . . . . . . . . . . . . . . .1393 340A . . . . . . . . . . . . . . . . . . .1394 323 . . . . . . . . . . . . . . . . . . . .1454 803 . . . . . . . . . . . . . . . . . . . .1456 810 . . . . . . . . . . . . . . . . . . . .1457 806A . . . . . . . . . . . . . . . . . . .1458 808A . . . . . . . . . . . . . . . . . . .1459 400 . . . . . . . . . . . . . . . . . . . .1468 402 . . . . . . . . . . . . . . . . . . . .1470 401 . . . . . . . . . . . . . . . . . . . .1471 700 . . . . . . . . . . . . . . . . . . . .1507 704 . . . . . . . . . . . . . . . . . . . .1511 701 . . . . . . . . . . . . . . . . . . . .1514 700A . . . . . . . . . . . . . . . . . . .1520 Page 1561 700B . . . . . . . . . . . . . . . . . . .1521 703 . . . . . . . . . . . . . . . . . . . .1526 703B . . . . . . . . . . . . . . . . . . .1529 703A . . . . . . . . . . . . . . . . . . .1530 DEFENDANT EXHIBITS Exhibit No. Received N . . . . . . . . . . . . . . . . . . . . .1446 Page 1562 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. January 29, 2015 9:10 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Page 1563 *(In open court; jury not present)* THE DEPUTY CLERK: This is the continuation of the matter now on trial. The United States of America v. Ross William Ulbricht, 14 Cr. 68. Counsel, state your names for the record. MR. TURNER: Good morning, we're down to our skeleton crew, Serrin Turner and Timothy Howard for the government and Molly Rosen, paralegal. THE COURT: Good morning. MR. DRATEL: Joshua Dratel for Mr. Ulbricht who is standing beside me. Joshua Horowitz is here as well. Lindsay Lewis from my office is on her way. THE COURT: Thank you. Good morning to all of you. MR. DRATEL: Good morning. THE COURT: My intention was to proceed through the jury instructions and to pick up where we left off, unless you folks had other things that you would like to deal with first. Are there any housekeeping matters or other matters that we should deal with right now before we start? MR. DRATEL: No, your Honor. THE COURT: Mr. Turner. MR. TURNER: No, your Honor. Thank you. THE COURT: Thank you. We are in the jury instructions. We're working from the same version as yesterday, which is that which you folks have provided to the Court, and we are on objects of the conspiracy, page 54. The single-versus-multiple-conspiracy issue is one that I think we briefed. I think that, unless anybody has anything else they'd like to say in addition to what has been said, I'll go through everything carefully and make a determination as to whether we should have a single versus multiple charge. If there are additional points you'd like to make, go ahead. Page 1564 MR. DRATEL: We would like to do research and perhaps have a letter perhaps by mid-day tomorrow perhaps. THE COURT: I will then hold off on going through that. It's something that I need to give thought to, so having your letter would be very helpful. MR. DRATEL: Okay. Thank you. THE COURT: So that's the changes for 52 and 53. That's pages 52 and 53, so we'll hold on those. In terms of the objects of the conspiracy, on page 54, there are two changes, one of which doesn't appear to be objected to. That's the insertion of the "beyond a reasonable doubt" language which is fine with me. MR. TURNER: No objection. THE COURT: I take it that was then a defense point, so we'll accept that. MR. DRATEL: Yes. THE COURT: The other point was the deletion of "or to aid and abet such activity," and this appears in several places. I wanted to find out from Mr. Dratel the basis of the deletion. Page 1565 MR. DRATEL: I don't think you can aid and abet a conspiracy. Aiding and abetting is the complete -- and while a conspiracy is completed upon agreement, that's different than completing a substantive offense, so I don't see any basis for aiding and abetting a conspiracy. That's a multilevel inchoate crime, which I think is a due process violation. THE COURT: I was just reading, and I think it's a Judge Oakes case, Second Circuit in the 80's, it could be the Perry case -- but I'm not sure if that's the right case I have written down here, actually, I have it in my robing room, I have the pink highlighter on it -- where this exact issue was debated. And Oakes writes the decision for the panel. The panel believes that there is a crime of aiding and abetting a conspiracy. He suggests that he would have reached the same result on a different basis. So it's sort of a funny opinion in some ways because it says my colleagues, my colleagues, my colleagues in the majority opinion as opposed to what sounds almost like a dissent. And that opinion I believe has been cited again, and that's the Orozco-Prada case, which does suggest that this kind of crime exists. I looked that issue because I, like you, didn't know how you would aid and abet something that itself is a conspiracy, but it does appear to be something which the Second Circuit has addressed. Page 1566 Have you found any cases, Mr. Dratel, which have said that it's not a crime? MR. TURNER: Can I clarify for the record, the charge is conspiracy to aid and abet, not to aid and abet a conspiracy. THE COURT: I'm sorry. Correct. Conspiracy to aid and abet. My mistake flows from the fact that I find this a somewhat confusing concept. MR. DRATEL: That, I don't think you can have a conspiracy to aid and abet either because the conspiracy to commit is to the unlawful act, not to aid and abet an unlawful act, and there are cases on that. I don't have them. Maybe we'll put that all in our letter tomorrow, your Honor, okay? We'll include that. THE COURT: Actually, it is the U.S. v. Perry case. If you've got anything, Mr. Dratel, that suggests that U.S. v. Perry and that line is not good law, I would need to see that; otherwise, I would be bound to follow Second Circuit law. MR. DRATEL: I understand. THE COURT: It's 643 F.2d 18, and that was the case that I was referring to. MR. DRATEL: Thank you. Can we address that in our letter tomorrow? THE COURT: Yes. Is there anything that you wanted to say further on that topic, Mr. Turner, other than what's laid in and out your papers? Page 1567 MR. TURNER: On that topic, yes. This has already been briefed. It was in the motions to dismiss. This is the charge in the indictment. It specifically alleges conspiracy to aid and abet. The indictment has been upheld in response to the motion to dismiss, and we're now entitled to present that indictment to the jury. So as far as we're concerned, it's the law of the case. THE COURT: I hear your position. Let's go on to the next change, which really starts on 57, and it's the inclusion of additional language on participation in a conspiracy, and it's that whole page, 57. I didn't know if this was agreed-to language or not agreed-to language. MR. TURNER: This is the government's proposal. I'm not sure whether he agrees to it. THE COURT: Defense. MR. DRATEL: Our defense is not withdrawal, and on its face, the instruction appears not to be objectionable; however, I just want to go back and look to see if we want to add any language. THE COURT: The Court was fine with the language. Page 58, extent of participation, the first change is the insertion of "He need not have been a part of the conspiracy when it ended." And I think that that is a correct statement of the law. Page 1568 MR. DRATEL: Yes. THE COURT: And I think it's a government change. MR. TURNER: Yes, your Honor. THE COURT: I don't have any problem with the inclusion of "participated in" as opposed to "join" in that first paragraph on page 58. Mr. Dratel, do you have any problem with that? MR. DRATEL: No. THE COURT: The next change is also the similar one. We'll just take both of those joining/participating changes. The following one is "before or after he joined" in addition to all that was done, and then the language that follows that and then the other insertion. MR. DRATEL: I know what the state of the law is, but I'm just objecting to "before." THE COURT: You're making a principled objection recognizing the law is against you on that? MR. DRATEL: Right. MR. TURNER: Your Honor, this was actually my language, but can we change "before or after he joined" to "before or after he participated"? It's just a small concern there. If he started the conspiracy, it's a little awkward to say he joined, so if we can make it a little more open. THE COURT: I think the effect of participation or joining is the same. Page 1569 The next page, page 59, without reading it in, it's the first full paragraph, I was fine with these changes. Does anybody have a problem with them? MR. TURNER: No. That was the government's change. MR. DRATEL: Yes. It's the same concept. THE COURT: So I'll take those. Then we are on page 64. There was a typo which was the first change. That's fine. Deletion of the word "to." And then the inclusion of the word specific. MR. DRATEL: I'm sorry, page 60 -- THE COURT: Four. This is continuing criminal enterprise charge, the CCE charge. So the inclusion of the words "specific violations." MR. TURNER: My only concern there, your Honor, is that there's clear circuit law holding that a conspiracy can be one of the predicate violations. So, if the idea here is that it has to consist in, like, one specific act, I don't think that's accurate. I think three or more violations says enough. THE COURT: Well, let's take that as part of some of the -- and this I think is the issue that we should spend the rest of our time talking about this morning, perhaps -- which is, the issues with respect to CCE more generally; and I think that point fits into the extent to which the three or more series of violations need to be laid out someplace. Page 1570 I think the law is clear that they need not be laid out in the indictment. There have been some views expressed by judges that perhaps they should be, but the law has developed that indictments have passed muster without the violations being specified. So, I believe under the law, that ship has sailed. The question is whether or not they need to be spelled out in the instructions or in closing or somewhere. And here, the government does reference "these offenses include," but violations I think are potentially broader than that. Go ahead, Mr. Turner. MR. TURNER: Sure. Your Honor, if it's permissible for the indictment to just have this level of specificity which is reflected in the instruction that it includes violations of these various offenses, that's, again, the charge we're entitled to present to the jury. There's no sort of sudden bill of particulars that can be thrust on the government. I think the language in some of the opinions when they talk about specifying the offenses, all they're really talking about is specifying offenses as reflected in something like page 66. I haven't seen any law suggesting that the government is suddenly required to choose three specific acts and argue only those acts. The jury is free to select whatever acts they want to from the evidence they have heard. THE COURT: I want to separate analytically a couple of things just to make sure that I understand exactly where the issues between the parties join. Page 1571 One is listing the counts on page 66, Count One, Count Two, Count Three and then another Count Three is listing offenses. If the jury convicted the defendant on those counts, they could certainly be predicate counts that would constitute the continuing series. That's one issue. There's a separate issue as to whether or not if the defendant were to be acquitted on one or more of those counts, whether or not there would be sufficient other violations in whatever counts either he was convicted of or there need not be convictions under the CCE case law for violations to be found. In other words, you can have somebody who is acquitted of a particular charge but found to have violated the narcotics law in a continuing series, so without having a conviction on that series. That seems to be clear. So I need to understand if the government's position is that they're only seeking to have the series be Counts One Two, Three and Three, because Three is mentioned twice, or whether it is that there are potentially numerous violations embedded within any one of those counts. MR. TURNER: It's the latter, your Honor. When we reference the counts here, it's just that these offenses are defined in discussing Count One, Count Two, Count Three. For example, the last paragraph there, using a communication facility in committing or in causing or facilitating violations of narcotics laws, that's not charged anywhere in a count. It's one of the objects of Count Three, but it's not something the jury is required to find. They can find that another object was part of the conspiracy. But nonetheless, the point is that that violation is defined in discussing Count Three. Page 1572 So we could argue to the jury there have been numerous electronic communications you've seen where we would argue the defendant is using a communications facility in furtherance of narcotics trafficking or of aiding and abetting narcotics activity. The law is very clear that each time a communications facility is used in that way, that is a separate violation. So the jury can pick three of those and say -- THE COURT: I think the communication facility, agree with you, there is a case on that. I don't think it's the most clear of all of the CCE continuing series of violations. There's been some criticism of using repeated phone calls all in furtherance of the same object, but I don't disagree with you that there is a case on that. Certainly I think there are cases which say if you distributed drugs or participated in the distribution of drugs on three or more occasions, that's enough. MR. TURNER: Right. We'll have thousands of transactions that the defendant participated in to the extent that he facilitated those transactions through the site, got a commission through the site. Each one of those can be taken separately. Page 1573 THE COURT: So your position is that the government does not need to anywhere lay out, for instance, on January 1, 2012, the following happened on December 1, the following happened November 1, the following happened, etc. MR. TURNER: Right. There's no need for us to specify in advance "Here are the ones you are limited to finding." The jury is free to look at the evidence and decide whether the charge in the indictment has been proven. THE COURT: Let me hear from Mr. Dratel as to the basis for deleting these. And I've looked at the cases, by the way, that you folks have cited in your original pieces. Go ahead, Mr. Dratel. MR. DRATEL: If the government doesn't have to specify the series of violations that constitute the crime, then the jury is not tethered to anything legally in the context of what the elements of the offense are and what the charge is. So, for example, we don't know what was in the grand jury. I doubt Mr. Duch's material was in the grand jury. He signed a cooperation agreement in December. So they're going to put in front of the jury a series of violations to establish the CCE that the grand jury never saw. So, this is a variance of significant proportion. Also, essentially what the government wants to do is have the option of a charge that is duplicitous in the sense that it includes many other offenses without defining them, and that's something that's obviously a problem with respect to due process, double jeopardy, all of that. Page 1574 The question of the indictment is very different. If the government's position were correct, all the Court would do on these instructions would read the indictment and not read a series of instructions about what the elements are of an offense and explain them to the jury. Also, you know, with respect to Counts One, Two and Three, I don't think it's necessarily the case that they alone would constitute a series because they may all be based on the same single act. In other words, they can find Count One and Count Two based on the same single transaction. THE COURT: Well, in fact, there's case law about some of the points that you have raised, and let's just take the double jeopardy point, and the way it appears to be dealt with is if there's a conviction on the CCE charge, then you deal with that at sentencing. And you may end up dismissing, for instance, a conviction on a conspiracy charge, but it's a sentencing issue. That's the way I read the case law for the double jeopardy issue. In terms of the violations for the grand jury, let me hear from you, Mr. Turner. It does strike me that certainly there were statements in the indictment as to thousands of transactions and that was part of the indictment and, therefore, the fact that you have put on evidence of one of those vendors and buyers is just proof of that. Page 1575 MR. TURNER: I don't think that has anything to do with what we can prove to the jury. To give your Honor an example from a different context. Overt acts: Where you have to specify an overt act as part of a conspiracy, part of the standard instruction the to the jury is you don't have to find that that specific overt act was the overt act. You're free to find that any other overt act satisfies the overt act requirement. It's the same here. We're not suggesting -- of course we're not suggesting that the elements of the crime should not be instructed to the jury, but that's different from limiting the government to a specific theory or limiting the jury to a specific finding that it has to make when numerous alternative findings would satisfy the elements. THE COURT: How about the point Mr. Turner just made, Mr. Dratel, on the overt act? That does seem to have some traction. MR. DRATEL: I think it's really more like a R.I.C.O. where you have predicate offenses that are the underlying bases for the count and those have to be enumerated, charged and proven separately; otherwise, you have no idea what the jury is doing. If the government has thousands of transactions, it shouldn't be that difficult to list them for the jury or to identify them for the jury in a way that protects Mr. Ulbricht from this moving target that we'll never know what is the basis for this count. Just by saying, well, there's drug-dealing on the site, you won't be able to do that in a R.I.C.O. Well, it's an organized crime operation, so therefore pick -- and those cases initially were like that, they were all reversed or changed to the extent that you couldn't just have predicate acts floating out there that were not specific and identified. Page 1576 THE COURT: I'll let you respond. Let me find out how the jury is doing. We're waiting on five. MR. TURNER: You can say this with respect to any crime, your Honor. You can say wire fraud, unless the government has spelled out in the instructions what were the constituent acts of the wire fraud, then we'll never know what the jury was thinking. It's the jury's business to determine what proof meets the elements. That's the way it works. So here, we have the charge in the indictment. It's up to the jury to decide whether the proof the government has presented meets the elements of the crime and the government doesn't have to again instruct the jury that only if you find the proof is met, that the proof meets the elements in this particular way, can you find the defendant guilty. No. It's up to the jury to figure out on their own whether there is sufficient proof to meet the elements. That's their job. And this charge is no different from any other in that respect. Page 1577 MR. DRATEL: If he's talking about wire fraud, a substantive wire mail fraud count has the actual transmission as the crime. It's identified in the indictment. This is not a conspiracy. THE COURT: Let me consider those arguments against the case law and we'll take it from there. While we're waiting for the jurors, let's just go on. Page 69, there are two changes. I agree that as to the first shaded language, it's unnecessary and confusing actually to the Court, that's the shaded language, the insertion of "but any such person." I assume that the next portion of language is a governmental insertion, and I would like to hear from the defendant whether or not he agrees. Mr. Turner, am I right about that? MR. TURNER: Yes, your Honor. THE COURT: I don't think either of these insertions are frankly necessary. MR. TURNER: I can explain the reason why we thought it was necessary. THE COURT: Why don't you tell me your reason. MR. TURNER: Because the language in the instruction as it exists focuses on employer/employee-like supervision, and we have actually two theories on the organizer supervisor manager relationship, and one is the fact that this individual, this defendant, supervised a number of employees or contractors who were working under him, that's one theory, but he was also an organizer of others. The vendors, he organized all of their activities into essentially one orderly enterprise in the sense there is very specific Second Circuit language approving of that theory. That's a theory we want to argue to the jury and that's why we'd like it reflected in the instructions. Page 1578 THE COURT: Let me understand that argument. Is it the government's position that to focus for a moment on the word "organize" or "organizer" as this element can be read to do, or it has three different parts but focusing on "organizer," is it the government's position that the defendant, if he had no other administrators, would nonetheless have organized whatever number of vendors there are and, in fact, organized whatever buyers there are through the implementation of electronic processes? MR. TURNER: I think we focus on the vendors, but the answer is yes. So if you had a kingpin who, let's say, didn't have anybody who was his employee, not that you would characterize it that way, but he nonetheless had a whole network of vendors and that his activity was crucial into organizing them all into one effective project or one effective enterprise, that would meet the terms of the statute as the Second Circuit has specifically defined organizer in this context. This is verbatim Second Circuit language. MR. DRATEL: Applied in a very, very different context, -- Page 1579 MR. TURNER: I don't think so. MR. DRATEL: -- not in the context that they're talking about, people, buyers and sellers out in the world, completely disconnected from the defendant on a real-world level. MR. TURNER: We're talking about a continuing criminal enterprise. THE COURT: This is a mob case. I forgot which one you cited. What's the name of the case? MR. TURNER: I was just going to check my notes, your Honor. I can pull it up. I believe the circuit is just defining those terms supervisor, organizer, manager generally and that's the way it defines "organizer," but I can pull it up, your Honor. THE COURT: I can look back at your original instruction and see what you cited. MR. TURNER: I think the whole point of the statute is to go after someone who builds an enterprise, and you can do that in a number of ways. THE COURT: Let me throw this out there, but tell me what your view is on how it's different from -- and it's somebody who is a broker and what they do is they send out instructions for everybody to call an automated phone line and push the button "I'd like to buy now," and 15 people call in. So it's one person working out of his own home, he's got a bunch of stray cats wandering around wanting to sell drugs, he says "Fine, if you want drugs, call this number and push the button, press one," he's organized them. Does that constitute organizer? Page 1580 MR. TURNER: I think it could. I think if you're creating an enterprise there that is something different than what existed before. If you are building a substantial enterprise and you are the key organizer of that enterprise, then you can do that in a number of ways. There are other elements of the statute, as well. You have to yourself receive substantial profits from the enterprise. It can't just be some guy in the street who is brokering some deals -- THE COURT: Although $1,400 was found to be substantial in one of the cases. I'm saying the word "substantial" is -- MR. TURNER: That's the flexibility of the statute, I suppose. There are differences between the terms organizer supervisor and manager. Supervisor and manager mean something different than organizer; and the way the Second Circuit has specifically defined it is exactly the way we put it in the instruction. MR. DRATEL: I don't think the Second Circuit ever defined it as customers. MR. TURNER: Again -- Page 1581 THE COURT: He was focusing on vendors. What's your view on the point regarding vendors? MR. TURNER: The vendors are -- the organizational aspect of it in the context of those cases is much more clearly connected in terms of an organization. This is not an organization. There is no way the government can claim this is an organization. So in the context of organize, organize is a root of organization. Vendors are not part of an organization. Even under the government's theory, they avail themselves of a website; it's not an organization. And that's what this statute is about. It's not about a landlord, even if the landlord is liable being the organizer because he rents out space to people who deal drugs, that's not a CCE. It's never been. THE COURT: Let me consider all of that. We have also got on page 72 -- are we still waiting for some folks? THE DEPUTY CLERK: Two more. THE COURT: We have conspiracy to commit or aid and abet computer hacking. Now, the indictment does charge aiding and abetting for computer hacking. MR. DRATEL: That's just the same question, but it says to commit or aid and abet. I know it charges that. I think it's just the same argument as before about the conspiracy to aid and abet. I don't think this is an aid and abet conspiracy. This is a conspiracy to aid and abet. My objection is to the legal concept of a conspiracy to aid and abet. That would not be appropriate. Page 1582 THE COURT: Tell me, Mr. Turner, how you folks read this. Do you read it as a conspiracy to commit or a conspiracy to aid and abet computer hacking, or do you read it as a conspiracy to commit computer hacking and separately potentially aiding and abetting computer hacking? MR. TURNER: It's a conspiracy to commit or to aid and abet computer hacking; that's the way it's charged. So there's an agreement with others to commit computer hacking or to aid and abet others in computer hacking. THE COURT: In other words, the jury could not find conspiracy but could find aiding and abetting computer hacking? MR. TURNER: No. It's a conspiracy charge. THE COURT: I think that's what I'm trying to figure out in terms of how you read it, because one could parse the language in two different ways. MR. TURNER: The object of the conspiracy is to commit or aid and abet computer hacking. THE COURT: So it is exactly the same issue. Then we've got the same issues appear on page 73. I think those are the same issues. MR. DRATEL: Yes. THE COURT: It's the same issue on page 75, so those all flow from that issue. Page 1583 The next change I have is on page 83. It's the deletion of the term "funds." Did anybody disagree with that deletion? MR. TURNER: Your Honor, I'm sorry. Could we go back to 73. I think there was an additional change -- THE COURT: I'm sorry. You're right. MR. TURNER: -- which would include any computer connected to the Internet. THE COURT: Correct. Whose change was that? MR. DRATEL: That was mine. And the reason would be I think that's the equivalent of a directed verdict on that element. It's kind of like with the interstate commerce and some of the other aspects about drugs. I think the current state is not to tell the jury that a specific piece of evidence satisfies that element. It may not be a dispute, but I think it's somewhat of a directed verdict on that issue. THE COURT: Mr. Turner. MR. TURNER: Well, your Honor, I think it's providing an example to the jury of what a protected computer can mean. All it says is "...which would include any computer connected to the Internet." It doesn't say that the computers in this case have been proven to be connected to the Internet or anything like that. THE COURT: I now understand the back and forth on that issue, so let me circle back to it. Then if there is nothing else, let's go to page 83, and that's a deletion by the defendant. Does anybody have a problem with that deletion? Page 1584 MR. TURNER: Yes, your Honor. I think it's an accurate statement of the law. They need to understand that "funds" includes a medium of exchange so that the government can argue that bitcoins are funds under the statute. THE COURT: Mr. Dratel, do you disagree that it's a correct statement of the law? MR. DRATEL: The basis for the objection is consistent with our pretrial motions in respect to the money laundering counts. THE COURT: I will then keep the fund language consistent with my ruling on that motion. Page 85, there is a deletion and insertion. Is it your deletion? MR. DRATEL: It's my deletion. THE COURT: It's Mr. Dratel's deletion. MR. DRATEL: Both are mine. THE COURT: Why don't you tell me the basis. MR. DRATEL: Sure. I'll take the second one first. It just says "each potential conspirator." I think there has to be a conspirator, not a potential conspirator, but the larger one in the first paragraph is -- THE COURT: Let me make sure we're in the same place. Page 85, this is on money laundering? Page 1585 MR. DRATEL: Yes. THE COURT: The third element. MR. DRATEL: Yes. And the first one I mentioned is just that the last word of the second paragraph, the word "potential." THE COURT: I see. There's also the insertion in between. MR. DRATEL: Right. THE COURT: That's not yours? MR. DRATEL: Wait. No. I think they're all mine, but the first sentence that is deleted, with the one that begins with "The government does not have to," it's our position -- and I understand what the state of the law may be -- but it's our position that it would have to be specified because otherwise, again, we'd have the same problem of the jury basically passing on something that is not even in the case. It says -- I take out the word "only," that the government has to prove that the individuals agreeing knew that the defendant knew the transactions involved the proceeds, because I believe that's an element of the offense is the defendant's knowledge. THE COURT: We're waiting on two jurors who have been among those coming in a little bit later on another occasion. One of them number three has said that he's on his way. He has communicated with Joe, but we haven't heard from number six, so he's going to try to find out where she is. Page 1586 Mr. Turner, why don't you respond to what Mr. Dratel just said. MR. TURNER: I think this is a pretty simple one, your Honor. The defendant's view of the law, I mean, basically is an instruction which reflects what the defendant desires the law to be but not what it is. 1956 is very clear that while the government has to prove that the proceeds actually did come from specified unlawful activity, as far as the defendant's state of mind is concerned, the government only has to prove the defendant knew the proceeds came from some form of unlawful activity. The statute is explicit about that. THE COURT: I do agree with you, Mr. Turner, that that is the current state of the law. MR. DRATEL: What about "potential"? THE COURT: The word "potential"? MR. TURNER: No objection. THE COURT: We'll take out the word "potential." The next page, page 86, the first change is simply a typo. "It concerns," and then the insertion of the words "the purpose." And then down at the bottom there's an additional sentence, which I think is a correct statement of the law. MR. DRATEL: I would take out the "again." MR. TURNER: No objection. THE COURT: No objection? Page 1587 MR. TURNER: No. THE COURT: Page 89, variance in dates. This struck me as language changes and not anything particularly substantive. MR. TURNER: I think that's right. We just wanted to make clear that there's case law holding that as long as we prove that conduct occurred within the dates, not even necessarily around the dates. This is basically in response to the defense's argument that oh, well, he was involved, but then he left. We would argue that, if so, that's conduct within the date range and is still leaves him liable. THE COURT: Mr. Dratel, do you have any problem with this? MR. DRATEL: I think the second sentence, the Court instruction was the correct instruction and the traditional instruction. That's what I think it should be as far as the second sentence. THE COURT: In other words, you would not have any conduct alleged, you object to the insertion of that and would keep "These events or transactions occurred." MR. DRATEL: I'm sorry. Third sentence. I'm sorry. THE COURT: Third sentence. As long as there is a substantial similarity between the dates alleged, etc., etc., that was the way it was. MR. DRATEL: Yes. Page 1588 THE COURT: And you prefer that over "the conduct occurred around any dates or within any time periods." MR. DRATEL: Correct. Because that means it could occur without -- that language could have it occur outside the time period of the indictment. MR. TURNER: Which is fine, as long as it's around the time period. MR. DRATEL: I don't think so. MR. TURNER: No. That's what substantially similar means. THE COURT: It's within any time period the indictment alleges. MR. TURNER: That's what we want to make clear. THE COURT: The cases I think talk about substantial similarity. Let me see what you cited, Mr. Turner, as to whether or not the breadth of it supports what you're saying, but I'm more used to substantial similarity language. MR. TURNER: Can we provide that case law later in the day? THE COURT: You may have had it already in your initial instructions. I just didn't think there was a -- MR. TURNER: This is a modification based on the defense's opening, but there is support in the law for the "within" concept. THE COURT: Give me what you have. Page 1589 MR. TURNER: Sure. THE COURT: Fine. Page 90, venue, this is a case in which venue has received more attention than some cases. I think it is worth inserting the following sentence after the first sentence. I think it's implicit, but I think in this case it's perhaps more useful than in some cases to hold this out. The insertion would be "You must make a separate venue determination with respect to each count." Otherwise, I am fine with the changes that have been proposed. MR. TURNER: We have no objection to that change, your Honor. MR. DRATEL: No, your Honor. No objection. THE COURT: Now, that's for that page, page 90. Now, on the next page, it's still in the venue section, but there are debates or disputes between the parties as to the deletions on these pages. So the Rowe case does appear to support the first recitation of the law. Are you folks okay or do we need a very short break before we start? Let's get going. Bring Mr. Duch out. The Remiroyer (ph) case is I think the second case for the second paragraph there that, when I was going over it, it does appear that the law is clear, it's preponderance. I understand your point. Mr. Dratel, I assume for you, it's your argument for reasonable doubt for that for venue, but you understand the law is against you on that -- Page 1590 MR. DRATEL: Yes. THE COURT: -- for just venue, only venue in terms of the reasonable doubt. MR. DRATEL: I'm sorry? THE COURT: The only element which the jury finds by a preponderance is the venue element. Every other element is beyond a reasonable doubt. MR. DRATEL: Right. THE COURT: Let's bring out the jury. *(Continued on next page)* Page 1591 *(In open court; jury present)* THE COURT: Good morning, ladies and gentlemen. Mr. Duch, I remind you that remain under oath from yesterday. THE WITNESS: Yes. THE COURT: Mr. Dratel, you may proceed. MR. DRATEL: Thank you, your Honor. MICHAEL DUCH, CROSS-EXAMINATION CONTINUED MR. DRATEL Q. Good morning Mr. Duch. A. Good morning. Q. Now, going back to your initial meetings with the government back in February of 2014, you were initially told that you would have to plead guilty to everything that you did, right? A. That's correct. Q. But you didn't, right? A. I did not. Q. And with respect to your cooperation agreement with the government, it's required that you provide substantial assistance to the government, right? A. Can you repeat the question, please. Q. Sure. Your cooperation agreement requires you to provide substantial assistance to the government, correct? Page 1592 A. That's correct. Q. And the government is the sole decider as to whether or not you have provided that substantial assistance, correct? A. That's correct. Q. Now, you haven't been asked to testify against anyone with respect to Atlantis, correct? A. That's correct. Q. And Atlantis, just to refresh, is another website that you sold drugs on, right? A. That's correct. Q. And you haven't been asked to testify about anybody with respect to BMR, right, which is another website of that sort? A. That's correct. Q. So the only case you're testifying is this case, right? A. From what I understand, yes. Q. Now, you testified yesterday that you sold drugs on Atlantis, correct? A. Yes, I did. Q. But initially, you denied that you sold anywhere but Silk Road, right? A. No. I did mention that I did have accounts on Atlantis as well as Black Market Reloaded. Q. And that's BMR, right, Black Market Reloaded? A. That's correct, BMR. Q. Let me show you what's marked as 3514-2. I'm sorry. 3514-10. Page two, 3514-10, and just look at the document. I'll show you where to look. Page 1593 But you met with the government on October 14, 2014, correct? A. That's correct. Q. Let me just show you this highlighted portion. Did you not deny -- withdrawn. Did you not at first tell the government that you only sold drugs on Silk Road? A. No, I did not. From what I understand, the government was aware I also had accounts on BMR as well as Atlantis, and it was my testimony yesterday that I did transact drug deals on those sites as well. Q. You testified to that yesterday, but the question is when you first talked to the government or when you talked to them October 14 whether or not you sold only on Silk Road? A. The statement here says that I sold drugs only on Silk Road but -- THE COURT: Don't read it in. He's asking you whether or not that refreshes your recollection. If it doesn't, it doesn't. If it does, it does. THE WITNESS: It does not because, again, I did sell -- THE COURT: That's the answer. THE WITNESS: Okay. Page 1594 Q. So you first saw Silk Road, the website, in October 2012, correct? A. That's correct. Q. And you were already back on heroin as of August of 2012, correct? A. That was the time that I relapsed, yes; that's correct. Q. And yesterday you said you bought heroin once on Silk Road, correct? A. Yes, I did. Q. And didn't you tell the government in your first interview with them that you didn't buy any heroin on Silk Road? A. I don't remember whether I mentioned that I did purchase heroin at that time on Silk Road. Q. That's not my question. My question is, didn't you tell the government that you only bought Oxycontin, Oxycodone and Methadone from Silk Road? MR. TURNER: Objection; asked and answered. THE COURT: Overruled. A. Can you repeat the question. Q. Sure. In your first interview back in February of 2014 with the government, did you not tell the government that you bought only Oxycontin, Oxycodone and Methadone from Silk Road and did you say that twice in that first interview? A. Not that I can recall. Q. Did you -- well, let me show you what's marked as 3514-2. Page 1595 MR. TURNER: The government objects. There's no prior inconsistent statement. THE COURT: Let's see whether or not he can refresh his recollection with it. Q. Does this refresh your recollection that during the first meeting with the government, February 6, 2014, you claimed that you only bought Oxycodone, Oxycontin and Methadone or Methylone? Which is it? A. It was Methadone. Q. Okay. So, did you tell the government that, and then -- and that you did it and that you told the government that twice? Just read that sentence. See if that refreshes your recollection. A. No. I believe I told the government all of the drugs that I purchased on Silk Road. Q. You first started selling drugs on Silk Road April 2013, correct? A. That's correct. Q. That's the first time you were ever involved in the seller's contract or anything like that, correct? A. That's correct. Q. And you never saw the site in 2011 or 2012 until you got on in October, right? A. That's correct. Q. Now, you claim that you didn't sell any drugs before Silk Road, right, before you sold on Silk Road, correct? Page 1596 A. That's correct. Q. But you were arrested in 2008 for possession with intent to distribute drugs, right? A. That was the charge at the time. That's correct. Q. And you pled guilty to a felony in that regard, correct? A. Yes, I did. *(Continued on next page)* Page 1597 Q. So you went to jail ultimately, too, for that, correct? A. Yes, I did. Q. And, in fact, that's where you detoxed, correct? A. That's correct. Q. You also told -- well, this -- you also had a DUI in 1993, right? A. Yes, I did. Q. And was that from sports injury pain? A. The DUI? Q. Yeah. A. No. Q. And then in 1997 you had a misdemeanor conviction for possession of drugs, right? A. I don't recall that. Q. I show you what's marked as 3514-14. Look at the first highlighted one. 1997, right, possession of drugs? A. Ah, yes. Q. You told the government in an interview that you didn't begin using drugs until 2007/2008, right? A. No, that's not correct. Q. Well, do you still have -- do you still have 3514-10? You met with the government, again, in October of 2014, correct? A. Yes, I did. Page 1598 Q. Did you not tell the government that you first became a drug user in approximately 2007 or 2008? Did you not tell the government that? A. My first drug use was at an earlier -- Q. That's not the question. The question is didn't you tell the government in that meeting that you didn't become a drug user until 2007 or 2008? A. I told them that I did become a drug user in 2007/2008 but that was not the first time that I was a drug user. Q. Is that a technicality? MR. TURNER: Objection to form. THE COURT: Why don't you rephrase it. Q. You told the government you became a drug user in 2007, in 2008, correct? A. Yes, I did. Q. So you really became a drug user well before that, right? A. My first drug use is prior to that. Q. So that was a lie you told the government, right? A. No, it wasn't. Q. No, OK. You told them 2007/2008 -- when did you first start as a drug user? A. I probably used alcohol for the first time when I was 16. Q. OK. What about other types of drugs? A. Marijuana probably when I was 18. Page 1599 Q. And what year was that? A. 1992. Q. So then 16 years before 2007 -- it was 15 or 16 years before 2007/2008, right? A. Correct. Q. So when you say you became a drug user, you didn't include the part from 1992 to 2007? A. Sure, I did. I mentioned that at the time. Q. Look at that again. A. Mm-hmm. Q. You told the government it was 2007/2008 is when you became a drug user. A. That's what it says here, that's correct. THE COURT: The question is does that refresh your recollection that you said that? THE WITNESS: It does not because my first drug use was prior to that. MR. DRATEL: That wasn't my question, your Honor. It was not a refresh your recollection. Q. It was: Didn't you tell the government that? A. No, I did not. Q. You just said before that you did, right? A. My first drug use was prior to 2007 -- Q. No, that is the not question. THE COURT: You've got to let him finish and then you can ask him your question. Page 1600 Q. The record will be what the record will be about what you just said five minutes ago, right, where you said, yes, I told the government I became a drug user in 2007, 2008. You said that five minutes ago, right? A. I became a drug user and first became a drug user are different. There are distinctions. Q. Became a drug user and first became, that is the technicality you are going to rely on? A. No. You are asking, you said became a drug user or first became a drug user. Q. You think there is a difference in that question? A. I think there was a period of abstinence in between. Q. Wait. You think there is a difference in that question? THE COURT: Hold on. Let him finish. Do you think there is a difference between those two questions? THE WITNESS: Yes, I do. First becoming a drug user and reengaging in drug use -- Q. No. The word is "become," not "reengage." THE COURT: Hold on. Let him finish and then you are going to ask another question. Go ahead. Mr. Duch, you may finish. A. My first drug use is prior to 2007/2008, as I mentioned, probable about 1992 for marijuana use. There was quite a period of abstinence, and I did reengage in drug use in the years of 2007 and 2008. Page 1601 Q. But you didn't tell them "reengage," you said became a drug user in 2007/2008, right? MR. TURNER: Objection, your Honor. THE COURT: I will allow this last one and -- Q. You didn't use that term, right, "reengage"? A. I'm not sure what term I used at the time. Q. Now, you claimed on direct that you started using pain killers first because of sports injuries, right? A. That's correct. Q. Didn't you tell the government, though, in October of 2014 that it was because of Lyme disease? A. That was the reason why I was represcribed pain killers was because of Lyme's disease, that's correct. Q. And then when the doctor found out that you had used heroin before, he refused to write you any more prescriptions for OxyContin, right? A. I believe that the course of antibiotics, the treatment was successful and I no longer required the pain killers. And I also did reengage in heroin use. Q. OK. That was fine but except it wasn't the actual question. The question was didn't the doctor halt your OxyContin or your oxycodone prescription because he found out you were doing heroin? Page 1602 A. That was one of the reasons, yes. Q. And that was one of the reasons that you went back on heroin more severely, right, because you couldn't get the OxyContin any more, right? A. Because it became too expensive, that's correct. Q. To buy in the street? A. That's correct. Q. Yeah. So it was the doctor's fault that you went back on heroin, right? A. Absolutely not. It's my fault. Q. Now, you took various security measures, correct? A. Regarding what? Q. Regarding Silk Road. A. Yes. Q. Regarding your online drug sales, right? A. Yes. Q. And in that seller's contract that we saw, it says, "Security is of paramount importance," right? A. Of course. Q. And you used a different buyer's account from your seller's -- withdrawn. You created a different seller's account than your buyer's account, correct? A. Yes, I did. Page 1603 Q. And that was a security measure, correct? A. That's one of the security measures that the Silk Road website advised people to do. Q. Right. And you did that? A. Yes, I did. Q. And one of the things that you did that some other people didn't do on Silk Road was you didn't even put up photos, right? A. That's correct. Q. Because you knew from your computer background and your security background that there is metadata in those, right? A. That's correct. Q. And so metadata can be of significant use in terms of tracking, right? A. Yes. Q. And you wanted to eliminate that so you eliminated the metadata, right? A. Yes, I did. Q. And you also down the road instituted limits or conditions for customers, right? A. Over a period of time, yes. Q. And one of those reasons was because you were concerned about who your customers were, right? A. Potentially, yes. Q. By the way, your technical background made it easier for you to operate on Silk Road, correct? Page 1604 A. I don't think it made it easier. I don't think that there was any level of complexity required to engage in Silk Road activity. Q. In that October 14th meeting with the government, didn't you say that your technical background made it easier to operate on Silk Road? A. I did not. Q. You did not tell the government that it was easier to learn and operate on Silk Road due to your familiarity with the technologies associated with it? A. The only technologies that were required is that you use a Google search. Q. That was not my question. My question is -- use a Google search? You can find Silk Road on a Google search? A. Absolutely. Q. You can get to the Silk Road website on a Google search? A. You can find out the URL, that's correct. Q. But don't you have to get on Tor, though, too? A. Sure. Q. And you knew Tor already, right? You were familiar with Tor? A. I was familiar with it, yes. Q. Did you not tell the government October 14, 2014, which is about three-and-a-half months ago, it was easier for you to learn to operate on Silk Road due to your familiarity with the technologies associated with it? Did you not tell the government that? Page 1605 A. Not for the technologies associated with Silk Road. Perhaps things like encryption which helps provide confidentiality of data. Q. So you did tell them that? A. Tell them what? Q. What you just said. I'm asking a question -- THE COURT: Hold on. Let me just say, why don't you rephrase the question. MR. DRATEL Q. You didn't answer the specific question so I will ask it again. Did you not tell the government October 14, 2014 that it was easier for you to learn to operate on Silk Road due to your familiarity with the technologies associated with it? A. Not to operate with the technologies associated with Silk Road but to -- Q. Didn't you tell the government that? A. No, I did not. Q. OK. Now, explain what you say when you say what technologies enabled you to operate -- A. I think to potentially ensure that there were additional security measures, like recommending encryption, as well as helping other users of Silk Road in the implementation of encryption. That was something that my technical background allowed me to at least help other people with and implement it with my use of Silk Road. Page 1606 Q. Now, you talked about your security measures, and you said potentially you were concerned about who your customers might be, right? A. Sure. Q. They might be law enforcement, right? A. It's very possible. Q. And because when you're on the computer, you're never quite sure who is on the other side of a transaction or a conversation, right? A. That's correct. MR. DRATEL: Nothing further, your Honor. Thank you. THE COURT: All right. Thank you. Mr. Turner, anything further from you? MR. TURNER: Yes, your Honor. REDIRECT EXAMINATION MR. TURNER Q. You were asked on cross about an arrest you had in the past for possession with the intent to distribute drugs, is that right? A. That's right. Page 1607 Q. Were you convicted for possession with intent to distribute drugs or were you convicted for something else? A. I was convicted -- I was not convicted of possession with intent to distribute. I was convicted of failure to turn over a controlled dangerous substance to law enforcement. Q. So it was a possession offense, not a distribution offense? A. Essentially a possession offense. Q. Did you ever deal drugs before you dealt drugs on Silk Road? A. I never have. Q. You were asked about encryption. I just want to clarify. At some point while you were dealing on Silk Road, did you start requiring your customers to encrypt their messages to you? A. Yes, I did, all their messages as well as their addresses. Q. Even though they were sending it, the messages to you on Silk Road? A. Yes. Q. You wanted them to encrypt their messages further? A. Within Silk Road, that's correct. Q. Because you were worried about law enforcement? A. Yes, I was. Q. But it wasn't necessary -- that wasn't required to deal on Silk Road, right? A. It was not required. It was something that I implemented. Page 1608 MR. TURNER: That's all, your Honor. THE COURT: All right. Thank you. Mr. Dratel, anything further from you? RECROSS-EXAMINATION MR. DRATEL Q. What were the facts of that arrest? In other words, what drug did you have that you were caught in possession of back in two-thousand and -- in that arrest 2008? A. I believe it was heroin. Q. So you were allowed to plead to a lesser offense, correct, of not turning over heroin to law enforcement authorities, right? A. That was -- the plea agreement was for a possession charge. Q. Right. But how much heroin did you have on you when you were arrested that you were charged with a felony? A. I believe it was about 35 bags of heroin. Q. And you weren't selling any of that? A. None of it. MR. DRATEL: Nothing further, your Honor. THE COURT: All right. Thank you. MR. TURNER: Very briefly, your Honor. THE COURT: All right. REDIRECT EXAMINATION MR. TURNER Q. 35 bags, you mean 35 glassines? Page 1609 A. That's correct. 35 individual glassine bags. Q. How many bags were you using a day, approximately, at that point? A. Probably about that. MR. TURNER: Nothing further. THE COURT: All right. Thank you. You may step down, Mr. Duch. *(Witness excused)* THE COURT: Would the government like to call its next witness? MR. HOWARD: Yes. But before we do that, I want to read one chat log. THE COURT: All right. MR. HOWARD: The witness is actually here. He is the case agent. THE COURT: Right. All right. MR. HOWARD: Ms. Rosen, could you please publish Government Exhibit 226B, please. THE COURT: B, as in boy? MR. HOWARD: That's correct. This is from page 211 of a 1096-page chat log from December 28, 2011. "myself: anyway, this will be a good measure to see how the new policies are affecting things "vj: yeah - gotta get a solid handle on the old metrics so that some real time comparisons can be made. But I think that presented properly the new commish structure will be greeted with open arms. Now - what happens when someone goes ooe in 60 days from now? Page 1610 "myself: account is terminated. There will be a big warning in the seller's guide. Safe goes for getting customers to finalize early. No more working the system "vj: do they get a warning? And do we offer a bounty? Or is that too rat like? "myself: No bounty, don't need it. We can search the pms and listings "vj: then how do you know if there is an ooe going on? "ahh - but you can't say you search the pms, and smart cookies will pgp that shit. About 1/2 my clients use pgp all the time in pm's. Seed buyers are a paranoid bunch. Just food for thought. "myself: ok, yea a bounty is a good idea, why not be part of the scam prevention team :) "vj: doesn't have to be official, just kinda let it be known that if a vendor insists or asks for ooe, let a mod know, we'll tip ya for your efforts - after all, why should the oflks that pay subsidize the freeloaders "yeah - make it so ooe is seen as a scam, through and through." The next part starts on page 273 to 274 of the 1,096 page chat log on January 9, 2012. Page 1611 "myself: added this sellers guide: "NOTICE: Do not create listings that instruct customers to pay outside of escrow, or are used for any purpose other than to list an item to be sold for the listed price using the site checkout system. If you instruct your buyers to pay you in any other way, or to contact you off-site, your seller privileges WILL be revoked without warning. You may provide back up contact methods in case of site failure. "and buyers guide: "NOTICE: If your seller instructs you to pay directly, outside of the escrow system, or with any other method than through the site checkout system, you should report it immediately to our support staff via the "contact us" link along with any evidence you can provide. If you do pay your seller directly, there will be no way for us to protect you from fraud. "vj: pretty fucking clear. Perfect." The government calls FBI Special Agent Vincent D'Agostino. THE COURT: All right. Mr. D'Agostino. THE CLERK: Please raise your right hand. VINCENT D'AGOSTINO, called as a witness by the government, having been duly sworn, testified as follows: Page 1612 THE CLERK: Please state your full name and spell your last name for the record. THE WITNESS: Sure. First name Vincent. Last name is D'Agostino, D-'-A-g-o-s-t-i-n-o. THE CLERK: Thank you. THE COURT: And Special Agent D'Agostino, you've heard me give the instructions to folks. Make sure you adjust the microphone so that you could speak clearly into it. There is water there. Although is that your cup or somebody else's cup? THE WITNESS: That's OK. I'm super hydrated. THE COURT: All right. Mr. Howard, you may proceed, sir. DIRECT EXAMINATION MR. HOWARD Q. Good morning, Special Agent D'Agostino. A. Good morning, Mr. Howard. Q. And who do you work for? A. The FBI. Q. And how long have you worked at the FBI? A. A little over ten years. Q. What is your position? A. Special Agent. Q. Where are you based? A. Manhattan, 26 Federal Plaza. Q. And are you assigned to a particular squad? Page 1613 A. I am. Q. And what squad is that? A. The Cyber Crime Squad, Squad CY2. Q. What are your responsibilities as a cyber special agent? A. Part of my responsibilities are to investigate any violations of federal law as they relate to computer crimes. So you conduct surveillance, interviews, interrogations, forensic analysis, do search warrants, arrests, and testify. Q. In the course of your responsibilities as an FBI agent on the cyber squad, have you analyzed and reviewed malware? A. Yes. Q. What is malware? A. Malware is short for malicious software. What it is, it's basically bad programs that end up on people's computers that are designed to steal sensitive information or give control of your computer to somebody else. Q. What other terms are commonly used to refer to malware? A. Like adware, spyware. Other types of malware -- worms, Trojans, viruses. Those are all types of malware, which is a very generic term. Q. Now, have you reviewed malware purchased from Silk Road as part of your investigation? A. I have. MR. HOWARD: Now, Ms. Rosen, could you please publish Government Exhibit 340A, which is already in evidence. Page 1614 Q. Special Agent D'Agostino, do you recognize what Government Exhibit 340A is? A. Yes, I do. Q. And what is it? A. It's a receipt from a purchase of several packages of malware that was given to me by Special Agent Gary Alford from the IRS. MR. HOWARD: So, Ms. Rosen, could we just zoom in on the top section of this. Right here. Q. Here it says "downers4u." Was that the undercover account that was used to purchase the malware? A. Yes, it was. Q. Here it says: "From: Sniffsniff. HUGE hacking Pack **150+ HACKING TOOLS&PROGRAMS." A. Correct. Q. Is that the listing that was purchased? A. Yes. MR. HOWARD: Will you zoom back out, please, Ms. Rosen? THE COURT: I think -- I'm sorry. Go ahead. I thought something had gotten missed. It didn't. Continue. MR. HOWARD Q. Could we zoom in on this section, please. And so what is this section of this document? Page 1615 A. So since the purchase was made for software, these are links that will give you access to download that software that you purchased. So the top three being the ones you actually paid for and then the lower six or so being the freebies that are thrown in as extras. Q. Now, after this was provided to you by Special Agent Alford, did you test any of the links that were provided by the Silk Road vendor? A. I did. Q. And what did you discover? A. I tested the first three links and all three links were active. So you can take any one of those three and drop them into a browser, like Internet Explorer or Mozilla and it will take you to a page where you can download the associated file, which you can see -- like on the first link, for example, the file name is actually huge underscore hacking underscore pack dot rar, and that's the file that will be delivered to your computer. Q. Special Agent D'Agostino, you said you put these in a browser. Are you referring to a Tor browser or a regular browser? A. Just a regular browser. Q. Could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 1100. A. OK. Page 1616 Q. Do you recognize what this is? A. I do. Q. And what is this? A. It's a screen capture of the download page for one of the files that I downloaded. Q. Did you take this screenshot? A. Yes, I did. MR. HOWARD: The government offers Government Exhibit 1100. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 1100 received in evidence)* MR. HOWARD: So could we just zoom in on the center area here. Q. Special Agent D'Agostino, what is depicted here? A. So this is showing you the file you're about to download, which is called pack pound sign or I guess hash tag number 2.rar, and the file size, which is 2.37 gigabytes. It is a large file. If you click "download to your computer," the download begins. Q. Now, did you in fact download the malware? A. I did. Q. Can you please flip in your binder to what has been marked as Government Exhibit 1101. A. OK. Page 1617 Q. By the way, did you take any precautions before you downloaded this malware? A. Yes. Q. And what did you do? A. I would use a new machine that's disconnected from anything else, not on a network, to avoid infecting that machine and then inadvertently infecting other machines. So it is done in what is called a sandbox. Q. Could you please take a look at 1101, please? A. Sure. Q. Do you recognize this exhibit? A. Yes. Q. And what is this? A. It's a screen capture I took of the contents, or some of the contents of that file that I downloaded. Q. Did you take this screenshot? A. Yes. MR. HOWARD: The government offers Government Exhibit 1101. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 1101 received in evidence)* MR. HOWARD Q. So, Special Agent D'Agostino, can you walk us through what's depicted hire? Page 1618 A. So the file itself comes in a container or a compressed package. So rather than having to download hundreds of separate files, what they do is it is compressed into one file called pack#2.rar. Within that file is all the files that you see below. It is actually -- these are just some of them. This is number 1 through D in alphabetical order. So these files are contained within that file that I downloaded. And they are organized by category. So you'll see different piece of malware that are labeled by their brand name, like Blackshades. You'll see some of these are organized by what they do, like Booters, Botnet, Brute Forcers, Chat Exploits, Anonymity, Admin Page Tools. Q. Can you just be explain a couple of these? Do you know what a brute forcer is? A. Sure. So a brute forcer would be if we're going to obtain someone's file that is password protected and you wanted to gain access to that file, you can brute force attack it with lists of predetermined password combinations. So a program will basically take a file that presumably you are not supposed to have access to and run passwords against it until it figures out what that is. Q. Here's one right above Brute Force that says Botnet. A. Sure. Q. Do you know what a botnet is? A. Yes. A botnet is when your computer gets infected with bot software that turns your computer into essentially a slave, and then a bot master can control that computer and tell it what to do. So it can tell it to attack another computer so that if it were to be investigated all the information would be back to your computer, as opposed to the person who is really behind it who is controlling it from two or three steps removed. Page 1619 Q. Are you familiar with what Blackshades is? A. Yes. Q. What is it? A. Blackshades is a RAT, which depending on who you ask can stand for remote administration tool or remote access tool. What it was was a hugely popular piece of software that people could download from a website that would -- they could customize and deploy on a victim's machine, which would give them access to their Web camera, their hard drive contents. They could open and close a CD-ROM tray. They could move the mouse around. And that was a very, very popular piece of software for a long time. MR. HOWARD: Ms. Rosen, could we please slide down to the bottom half of this screen, please. Q. Here there is one that is he a called DDos, D-D-O-S. A. Right. Q. Do you know what that is? A. Yeah. That stands for distributed denial of service attacks. So what that is is there is software contained within that folder that would allow you to attack an IP address or website, let's say, and flood it with traffic to the point where the site will actually go down and be inaccessible. Page 1620 MR. HOWARD: Now, Ms. Rosen, could we go to the second page of this exhibit, please. And let's zoom in on the bottom half of this screen. Q. Special Agent D'Agostino, this is just more folders in the same package you downloaded, correct? A. Correct. It is the next series in alphabetical order from I guess H to P. Q. So here there is one called password stealers. Do you know what that contains? A. Yes. It is software specifically designed to put on someone's computer so that every time the victim would enter in a username and password, it would collect that data and either send it to a separate file that you would collect later physically, or it could send that file out remotely over the Internet to the owner of the program. Q. And the last one I'll go over is keyloggers up here, which is highlighted in gray. What is that? A. Keyloggers are probably some of the most popular forms of malware. They are what they say they are. They actually record every keystroke on your computer. So as you're operating your machine, you're typing in emails, passwords, business documents, there is a program running in the background that you are unaware of that is copying every letter down and that will send that data to the person who infected your machine to do with what they want. Page 1621 Q. Now, did you test any of the malware that was included in this hacking pack? A. Yes. Q. And generally what did you discover? A. The software did what it promised to do according to category. Almost all the software in here was -- worked very well in a Windows-based operating system. Q. To be clear, did you test all of the software or just did you select some of them? A. No, I did not test all of it. Q. Now, focusing on keyloggers, did you test any keylogger? A. Yes. Q. Was that the program called syslogger? A. Correct. Q. Can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 1102, please? A. OK. Q. Do you recognize what this is? A. Yes. Q. What is this? A. It's a screen capture that I took of the syslogger program, the front page when you run that actual program. Page 1622 Q. Did you take this screenshot? A. Yes. MR. HOWARD: The government offers Government Exhibit 1102. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 1102 received in evidence)* MR. HOWARD: And could we just zoom in on this window here. Q. So Special Agent D'Agostino, this is the window that pops up when you open the program? A. Correct. MR. HOWARD: May I approach the witness, your Honor? THE COURT: You may. Q. I just handed you what's been marked for identification purposes as Government Exhibit 1103. Do you recognize this exhibit? A. I do. Q. And what is this exhibit? A. It's a CD containing a demonstrative video that I created, which also has my initials on the CD. Q. Would this video aid your testimony today? A. Absolutely. MR. HOWARD: The government offers Government Exhibit 1103 for demonstrative purposes. Page 1623 MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 1103 received in evidence)* MR. HOWARD: May I approach the witness, your Honor? THE COURT: You may. Q. Special Agent D'Agostino, can you just please explain what is being depicted in the video as it is being played? A. Sure. So we're starting out on what would be the buyer's machine. It is a clean installation of Windows, and I'm running the keylogger program, which is called "Syslogger Builder." Can you pause it for a second. And so when you run the program, after you were to purchase the software, you download it, you execute the file, and this is the page that comes up. And this is what I would call a build a malware screen. So this screen allows you to design your piece of malware to whatever you want it to do. It is very, very customizable. So on the top right, you can see under "Specifications," the default setting is to send the data over SMTP. What this means is that you are going to put in an email address in here on the top right, and that is where all the stolen data from the victim's machine is going to be sent to. Q. Are you referring to this part of the window? A. That's correct. Page 1624 THE COURT: What does the word "execute" mean? THE WITNESS: Execute is just a fancy word for like running a program. So when you execute that file you are just running it. You just double click on the file. MR. HOWARD Q. Do you mind using your laser pointer to point out there the screen you are talking about? A. So that is where you would enter in the email address of where -- once this software is installed on victim's machine, that's where it is going to send all of the stolen date to. So I created a fictitious account for demonstrative purposes. You could hit play. So that's the Gmail account I created. And what's nice about this interface, it will allow you to test the settings. So you click "test mail," it actually goes through and sends a test email to make sure that you had entered in the password correctly. So now on the left side here, you can go through and select what you want the program to do. And so there's things like Antis is the first option, Stealers, Delete Cookies, Block anti-virus Sites, Melt, Mutex, Startup. You can pause it for a second. And what those allow you to do, like there is also Screen Logger. So you could tell it, for example, you want this software to, once it builds it, to be able to avoid being detected by antivirus software like, you know, Kaspersky or Norton antivirus or BitDefender. So you check that box, which makes the program build in such a way that when it gets sent to the victim's machine, their antivirus will never catch it. Page 1625 You also have stealers so that will look for anytime a password is entered into a browser to log into Gmail or Yahoo!, that will specifically pull that information out for you. Block antivirus sites, that will prevent the victim from going to an online antivirus site to clean their machine. So if they begin to suspect something's up, they can go antivirus.com. They run a scan. Only this will actually block certain sites like that from ever appearing. And then screen loggers. Screen loggers, the program will take an actual screen capture of what your computer's doing at whatever interval you set. So that screen capture will look very much like what you are looking at on that monitor right now. And, finally, where it says "enable error," here you can customize it so that once it's installed successfully, you can make a message pop up on the victim's machine and say anything you want. The default setting is so that it posts a message saying that the program never installed correctly, thereby giving the victim a false sense of comfort that, oh, whatever this was never actually installed. So for the purposes of this demonstration, I just added in a generic message, I believe. Page 1626 You can hit play. So the default error message says the application failed to initialize properly. And I added "please double click and try again," which would cause the person to rerun the malware again to make sure it installed properly. So that's what the message allows you to see, what it would look like. So I clicked "Test Error" and that's what pops up. Then on the bottom right here, I am setting the interval. I set it extremely low as to alert me every minute. So every minute it is going to send me data that it's stealing. Ideally, you probably wouldn't want it that often but for the purposes of the demonstration. So then -- pause it for a second. So once you select the options you want, then you click on build, which is "Build Server," which is that button right there. And then it makes an executable file, a file that's runnable that now does the things that you just set it to do. So I quickly saved the file. I think I called it "badfile" initially. And now the next step is to put it in a package so that I could deliver it to a victim's machine, which you'll see in the next video. You could hit play, please. So there's the "bad file" that I created. That's the actual malware. Page 1627 Q. Special Agent D'Agostino, that was customized with all the features you selected? A. Exactly. It will only do the things that I told it to do and nothing more, nothing less based on those features that I selected. So since nobody would open bad file.exe, I named it cute dogs, because everybody would open cute dogs.exe -- at least I would. What I'm doing now is putting the file in a container much like when I originally downloaded the malware so that it will slip pass Gmail virus scans. There is a lot of different ways to do this. This is the most simple way for purposes of the demonstration. And what this does is this hides what it actually is within a container. So when it's emailed out, most of the time your email will catch simple viruses and malware. By doing it this way it will pass right through. So now I'm sending the attachment to another created email address up here. Q. The name of the account is victimuser2626? A. Yes. Q. You created that account for this demonstration? A. Yes, something to entice the person to open it. Q. So here you're delivering the malware by email. Are there other ways to deliver the malware? A. Yes. The most common is via email or through an actual website. But physical access to the machine we're seeing more and more where people will -- you'll have a friend or family member that's, you know, into computers and you'll have him come over to fix something and they'll actually bring a thumb drive and drop the file onto your machine without you knowing. But, still, the most common is by email. Page 1628 Q. Now you are attaching the malware? A. Yes. You attach the file, and it should get through the scan because it's in a compressed format and now it's sent. So there's the sent email confirming it went out. So now this is the victim's machine. This is another clean installation of Windows 7, 64-bit. The victim then would log on to their Yahoo! Q. Now, to be clear, the video depicts a different computer? A. This is a completely different computer. So there's the email that was sent by the user of the malware with the irresistible attachment, which will be opened now. So I'm saving the file to the desk-top, and I am going to open that container. I am putting in the password that was sent with the file. In a normal circumstance, you wouldn't have password protection on it but. So now the file is being dragged to the desk-top and the user, the victim, will run the file, or execute the file. So it is just a double click. Page 1629 And so you'll see the little busy -- you know, the computer's working. But other than that, there is no indication of what's going on. Then it just sort of, the busy signal, the icon went away, and the user -- the victim is left wondering, you know, what the deal is. So now the error message pops up, and that lets you know that the malware was actually install successfully. So that is the error message I created in an earlier step, which prompts the user to double click the file, which -- if you want to pause it for a second. One of the neat features about this type of keylogger is it has a melt function. So once it is installed, if you guys noticed, the file actually disappeared; it has been deleted. And that's to remove traces of itself on that machine. So in order for me to rerun it, I actually have to open the container again, extract it again, and rerun it, which I think is what I do here. You can hit play, please. Q. Special Agent D'Agostino, melt is of the options that you selected from the control panel, right? A. Yes. So now the user's machine is infected. So from this point forward everything they're doing is being logged. So for the purposes of the video, I attempt to visit several different sites, entering in data, login data, to see if it's actually working. So, again, I'm attempting to log into the victim's Yahoo! account. You'll notice the password was entered in incorrectly the first time and you'll see that in a minute. Spoiler alert. So I'm into the email account. Page 1630 So now I'm just going to other sites. I think eHarmony was the first site I went to. The second site I went to is Gmail.com, and then I went to Facebook. Now I'm just doing a Bing search. Q. What is Bing? A. It's a search engine, believe it or not, just like Google. So just generic photos. So now what I'm going to do is I'm going to switch back over to the malware virus machine. So if things worked well, and I think they did, you're going to see those emails populating the in box with all the data that I preselected to be stolen. So there it is. So you could see initially -- if you want to pause it here -- this is from the moment it was infected, it starts telling you everything that was done. And so since I ran the program -- when you initially run the program, the first thing that comes up is the D'Agostino fake error message. It shows you that there was a Yahoo! message that was being viewed. It tells you what's in the person's -- under their start menu, what programs are installed on their program manager, so WinRAR. And they're right here. The first time I executed -- the second time I opened that file, I had to enter into a password of 1234 and it actually captured that. And it shows you some of the other functions that we are running. Page 1631 You can hit play now. So you can see on the right side that these messages were coming in about every minute. This is the first screen grabber, screen capture. So once it was infected, the first thing it did was it took a screen capture of the desk-top as it appeared. So any icons you would have on your desk-top, now the person who infected your machine would know what folders, what files were there. You can see here it also is showing you I went to Internet Explorer, I was on the MSN site. No logs yet for that. You could see here I went to Yahoo! login. It logged that. I visited that site. This would grab what's in your clipboard when you do a copy and paste. I had nothing in there so there is nothing to report. Here is the second or third screen grab, which is when I went to the Yahoo! site. And so here -- if you want to pause it for a second -- when I went to -- I jumped from Yahoo!, which is the first entry, then I went to eHarmony, and then I entered in my credentials for eHarmony so it was victimuser2626. I hit the tab button, which actually logs the keystroke with the tab button, and then I wrote "this is my" messed up the spelling and I actually hit backspace, which records that, and "password." So I was attempting to write in "this is my password," and it captured not only "this is my password" but me backspacing when I hit the wrong button. Page 1632 Q. To be clear, by "credentials," you mean username and password, correct? A. Yes. Hit play, please. So here's another screen capture of the Yahoo! page after I logged in successfully. So here's when I went to the Gmail site and typed in my username and password, which also captured right over here. What is effective about keyloggers like this is that if the person were to change their password on their machine, no matter how many times they did it, the purchaser of the software would always know the new password because they would receive these updates continuously. Here's the screen grab from the family photos Bing search that I did, which captured everything that was on the screen at the time. I think that's it. Q. Thank you. Page 1633 MR. HOWARD: No further questions. THE COURT: All right. Thank you. Mr. Dratel. MR. DRATEL: One moment, your Honor. CROSS-EXAMINATION MR. DRATEL Q. Special Agent D'Agostino, when did you create the video? A. Within the last week or so. MR. DRATEL: Nothing further, your Honor. THE COURT: All right. Thank you. You may step down, sir. *(Witness excused)* MR. HOWARD: The government calls Mr. Ilhwan Yum. THE COURT: Why don't we get Mr. Yum onto the stand, but why don't we take our mid-morning break just before we have Mr. Yum come in. So even though we've only been going for an hour and then we'll go until lunch. So, ladies and gentlemen, I want to remind you to continue not to talk to each other or anybody else about this case. Thank you very much. And if you are using -- one more thing. If you are using these breaks as an opportunity to check media or read the newspaper or anything like that, I want to make sure I remind you to avoid looking at any media. If you see anything that is an article or otherwise references this case, you are to turn your eyes away. Do not read it. Page 1634 All right. Thank you. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1635 *(Jury not present)* THE COURT: All right. Is there anything that you folks would like to go over before we take our own break? MR. HOWARD: Not from the government, your Honor. MR. DRATEL: No, your Honor. THE COURT: All right. So let's just try to cabin it, Joe, just sort of make it like a 7- or 10-minute break, Joe, if that possible. *(the Court conferred with the Deputy Clerk)* THE COURT: About ten minutes. Thank you. THE CLERK: All rise. *(Recess)* *(Continued on next page)* Page 1636 *(In open court; jury present)* THE COURT: We have called Mr. Yum to come to the stand. Swear the witness. *(Witness sworn)* THE COURT: Mr. Yum. Please be seated, sir. And it will be important for you to adjust your chair and microphone and speak clearly and directly into the mic. Mr. Howard. MR. HOWARD: Thank you. ILHWAN YUM, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. HOWARD Q. Good morning, Mr. Yum. A. Good morning. Q. Where do you work? A. FTI Consulting, that's "T" as in technology. Q. And back in 2013, where did you work? A. FBI, the Federal Bureau of Investigation. Q. And back then, what was your position with the FBI? A. Special agent. Q. And where were you based? A. New York office. Page 1637 Q. Were you assigned to a particular squad at the time? A. Yes. I was assigned to Squad CY2 which handled cybercriminal intrusion matters. Q. And how long were you a member of that cybersquad? A. About five and-a-half years. Q. Now, while you were working as a cyberagent at the FBI, did you have any experience searching computer servers? A. Yes, I did. Q. What is a computer server? A. It's nothing different than a regular computer but it's dedicated to run services online, services like web pages, email servers and anything else that you do online. Q. Approximately how many servers did you search during the course of your career as an FBI agent? A. About 50 or more. Q. Were you involved in the Silk Road investigation? A. Yes, I was. MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 264, which is already in evidence. Q. Now, Mr. Yum, during your involvement in the Silk Road investigation, did you review files recovered from the defendant's laptop? A. Yes, I did. Q. Are you familiar with this file? A. Yes, I am. Page 1638 Q. What is this file generally? A. It appears to be a list of computer servers and details and descriptions about those computer servers. MR. HOWARD: Mr. Evert, can we zoom in on the top here, about halfway through the page. Q. Here we have one that the alias is listed as gala, ggb; the notes column says backup and the IP address says 207.106.6.25. Q. Are you familiar with that server? A. Yes, I am. Q. And how are you familiar with that server? A. I obtained a warrant to search and seize this server back in September 2013. Q. Directing your attention to September 9 of 2013, were you involved in an execution of the search warrant on that server on that date? A. Yes, I was. Q. Now, where was this server physically located? A. The server was physically located at a data center that was about 30 minutes in the suburbs of Philadelphia. Yes, Philadelphia. Q. And did you go to where it was physically located? A. Yes, I did. Q. Now, what was the first thing you did after you arrived at the location where the server was located? A. So, that day, I went to the data center with computer scientist Thomas Kiernan. And when we arrived there, it looks like a warehouse but inside, it's clean. It has security doors. We were greeted by the administrator of the data warehouse, data center, and he -- I had called ahead and prearranged so that he was expecting us. And then upon identifying myself, he took us to the rack space where the server was located. Page 1639 Q. And what do you mean by "rack space"? A. It's a metal frame structure in a data center. It's metal-framed -- rows and rows of metal frames, and each one of those frames contains a bunch of computers that are mounted on to it. Q. And what did you do after you arrived at the location at the rack space where the server was located? A. First thing I did was I looked at the outside of the server to make sure I had the right server, and I noticed a sticker that was attached to it, which had the IP address, same thing here, 207.106.6.25, and I was assured that I had the right server that I was looking for. Q. Could you flip to what's been marked for identification purpose in your binder as Government Exhibit 602. A. I don't have a binder in front of me. MR. HOWARD: May I approach. THE COURT: Mr. Howard will have some binders for you. MR. HOWARD: Sorry about that. Page 1640 THE COURT: That's all right. THE WITNESS: Thank you. Q. Now, that you have the binder, could you please flip to Government Exhibit 602. A. Yes. Q. Do you recognize Government Exhibit 602? A. Yes, I do. Q. What is it? A. It's the picture I took of the server on that date using my FBI Blackberry. MR. HOWARD: The government offers Government Exhibit 602. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 602 received in evidence)* MR. HOWARD: Mr. Evert, could you actually leave 264 on the top half of the screen and zoom into the same line we were looking at, and then put 602 on the bottom of the screen, please. Q. Mr. Yum, this sticker was what you just testified about with the description of the server? A. Yes, it is. Q. The IP address, the address that matched with what was listed on the defendant's -- the spreadsheet on the defendant's computer, correct? Page 1641 A. Correct. Q. And here it says ggb on the sticker. Is that also found on the spreadsheet that was located on the defendant's computer? A. Yes, it is. Q. So after taking the photograph and confirming that this was the right server, what did you do next? A. So, the data center prepared a separate room for us. There's hundreds of computers in there, so with the fan noise is extremely loud to work in there. So we turned the computer off and removed the hard drive from the computer and we took it to that designated work area where we began making a forensic copy of the server. Q. And what did you do to make a forensic copy? A. For this instance, we used a small device that's preconfigured to make the job a lot easier for us, so this device, what it does is, you plug in the hard drive that you want to copy, and it's preconfigured where it's write-protected, it's read-only, so you can't alter anything on the original hard drive. And on the other side, you plug in another hard drive that you want to make the copy onto. Q. By the way, what do you mean by forensic copy? A. Forensic copy is an exact bit-by-bit copy of any data out of a hard drive so that you have a true, accurate image of anything that you want to copy. Q. Now, after you make the forensic copy, do you do anything to verify that it's an identical and accurate copy of the original server? Page 1642 A. Yes, I do. So in the forensic industry, we do hashing. In this case, we did MD5 Hash and a SHA1 hash. And basically it's an algorithm that calculates through a massive set of data and you get a simple -- it's not really simple -- it's a long string but much simpler than the entire data that you're looking at. And it serves as a condensed fingerprint of what you're looking at and it's a one-way algorithm. You can't alter it. The original always gives you the same value. Q. So if one bit of data got changed during the copy process, what would have happened to the hash value? A. So you get a different answer, different hash of the data you calculated. So if you change anything, you get a different hash value. Q. And after you imaged -- made a forensic copy of this server located outside of Philadelphia, did you compare the hash values? A. Yes, I did. Q. What did you discover? A. I noted that the original hard drive hash and the copy that I made had the same hash value and they matched. MR. HOWARD: May I approach. THE COURT: You may. Q. So Mr. Yum, I just handed you what's been marked for identification purposes as Government Exhibit 604. Do you recognize what this is? Page 1643 A. Yes, I do. Q. And what is it? A. It's the copy that I made of that server at the data center. Q. How do you recognize it? A. I recognize it by the labeling that's on the hard drive that we -- I made on the day the copy was made; and it also matches -- the serial number hard drive matches what I wrote down when I checked this batch -- checked this into FBI evidence. MR. HOWARD: The government offers Government Exhibit 604. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 604 received in evidence)* Q. Mr. Yum, can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 604A. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. It's the log file that gets generated when you used the device that makes the forensic copy. Q. Were you involved in generating this log file? Page 1644 A. Yes. Q. And it's the log file for this server, Government Exhibit 604? A. Yes, it is. MR. HOWARD: The government offers government Exhibit 604A. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 604A received in evidence)* MR. HOWARD: Now, Mr. Evert, can we just zoom into this section here. Q. Briefly, Mr. Yum, here it says source hash SHA1 and MD5 and to the right of SHA1 and MD5, there are these long string of characters, numbers and letters. What are those? A. Those are the corresponding hash values. Q. The hash values for what specifically? A. Oh. For the server that came -- for the hard drive that came out of the server. Q. And then right below that, there's a verification hash, SHA1, MD5 and again, long strings of numbers and letters to the right. What does this represent? A. So that's the hash value of the image, the copy that I made. Page 1645 Q. And do they match? A. Yes, they do. Q. What did you do with the forensic copy of the drive, Government Exhibit 604, after you made the copy? A. I brought it back to FBI New York and I checked it into evidence. Q. Now, had you been involved in a review of the contents of the server? A. Yes, I had. Q. And generally, what have you found that server to contain? A. Accurate to the description on the first spreadsheet that was displayed, it contained what appeared to be backup files of Silk Road Marketplace. MR. HOWARD: Now, Mr. Evert, could you please publish Government Exhibit 264 again, the server spreadsheet, and focus a little high real on the lines that begin with the words "BTC" and "bora." Go halfway down. Q. Mr. Yum, here we have the top row says bora and it indicates an IP address of 193.107.86.49. Under the location column it says Iceland. And in the notes column it says market backhand. Is that correct? A. Correct. Q. And on the line under it, it says BTC in the left-most column. The IP address is 193.107.86.34. The location is listed as Iceland. And the notes column says live wallets and in parentheses archive wallets. Correct? Page 1646 A. Correct. Q. Are you familiar with these two servers which are labeled as being located in Iceland? A. Yes, I am. Q. How are you familiar with that? A. Those are the two servers that I searched and seized -- assisted in searching and seizing with the Iceland police back in October of 2013. Q. Was that on or about October 2, 2013? A. Yes. Q. So taking you to October 2, 2013, what initiated the start of your seizure of these servers? A. So, the plan was to wait for the team that's on-ground in San Francisco, the FBI arrest team, and wait for them to give me a confirmation that the defendant has been arrested. The reason why we went with that tactic was we wanted to make sure if I touch -- if I altered anything on these servers prior to defendant being arrested, I was afraid that it was going to tip off that there was some kind of law enforcement action. Q. So where were these servers physically located? THE COURT: Which servers are you talking about? Q. We're both -- were these servers located in different locations or were they in the same facility? A. The same facility. Page 1647 THE COURT: These are the Iceland servers? MR. HOWARD: Yes. Q. And where in Iceland was it located? A. It was, again, hosted or located at a data center in Iceland. Q. Did you go to the facility? A. Yes, I did. Q. What was the first thing you did after you arrived at the facility where these two servers were located? A. So, we arrived at the data center with Icelandic police officers. And, again, we were greeted by the data center administrator and he was notified by the Icelandic police that we were on our way. So when we identified ourselves, he took us to the location, the server rack location where the servers were found in the data center. Q. Which server did you go to first? A. The first one we seized was the market backhand up there. It's listed as IP address 193.107.86.49. Q. Now, once you arrived at where the server was located in the facility, what could you tell about how the server was configured? A. So, again, we examined the computer server first and we noticed that the way the server was set up had two hard drives that were written to -- identically at the same time. So the reason why is anybody runs a server this way is you have two identical hard drives and if one of them fails, the other one could take over and the website would never go down. Page 1648 Noting that, we turned the server off and we took one of the hard drives as the true, best original evidence at that point. Q. Now, were you doing anything to monitor the Silk Road website as this was occurring? A. Yes. So when we went into the data center, I had a separate laptop that was configured to use Tor and I had gone to the Silk Road website on Tor. And prior to turning the server off to seize the hard drive, I was able to view the contents of Silk Road Marketplace on Tor. When I turned the computer off to take the hard drive, the Tor -- the Silk Road website on Tor was no longer accessible. And once removing the second hard drive, I needed to turn the computer -- the server back on; and soon after, I was able to access the Silk Road website again. Q. Now, why did you turn the Silk Road Marketplace back on? A. So there were two phases to the approach that we took that day. The first thing, after seizing the hard drive, the first thing we needed to do -- the next thing we needed to do was to seize the bitcoins on the other server listed there with IP address 193.107.86.34. Q. Now, how did you know the bitcoins were located on that server? Page 1649 A. So, if you recall back, the backup server that I seized in Philadelphia back in September, the month prior, I noticed that there were programs in there that indicated that Marketplace was set up with the bitcoins being at a different location to separate the two; and we knew that there was another server containing all the bitcoins related to the Silk Road Marketplace. Q. Was this code that was located on the backup server itself that referenced the bitcoin server? A. Yes. Q. And did it specify the IP address of the bitcoin server? A. Yes, it did. Q. So how did you withdraw -- why did you have to keep -- THE COURT: Let me ask, when you say that the Philadelphia server specified the IP address of the bitcoin server, is that equivalent to saying that the Philadelphia server specified the IP address of the server located in Iceland? THE WITNESS: Correct. THE COURT: Thank you. You may proceed. Q. You said that you put the Marketplace back online with one -- there were two -- sorry. Let me step back. You said there were two hard drives that operated the server for the Silk Road Marketplace, correct? Page 1650 A. Correct. Q. And you took one of the two hard drives as evidence for the case, correct? A. Yes. Q. And then you turned the server back on with one of the hard drives in place because you said you had to seize bitcoins? A. Right. Q. Can you explain why you needed to turn the Marketplace back on in order to do that. A. So, again, we didn't want to alert the users of Silk Road Marketplace that their bitcoins are being seized, so as I mentioned before, the bitcoins in the Marketplace were separated and the Marketplace had a program that reached out to the bitcoin server to get the current balance and it would update every five minutes or periodically. And in order for me to seize all the bitcoins, I needed to leave the Marketplace remaining online, but I discontinued that update process so the balance was stuck at the last known amount. And as I was seizing the bitcoins, the users wouldn't be aware that the balance of the bitcoins on Silk Road was depleting. Q. And how did you actually seize the bitcoins? What did you do? A. So prior to going over to Iceland, I created a bitcoin address that was dedicated for the government to seize and transfer and receive the bitcoins that came out of Silk Road Marketplace. Page 1651 Q. And how did you move them from the bitcoin server in Iceland to the FBI address? A. I logged onto the Silk Road bitcoin server and executed instructions to move that -- to make that transfer happen. Q. Approximately how much did you move over to the FBI? A. On that day of October 2, it was a little over 20,000 bitcoins. Q. What was the approximate value in U.S. dollars that day? A. There's different bitcoin prices at different indices, so I would say approximately depending on the price that you used before 16- to $18 million. Oh. Wait. I'm sorry. Let me go back and do my math. Q. You said there were 20,000? A. Oh, 2- to $3 million. Q. Now, earlier you said that there were two reasons that you had to turn the Marketplace back up. One reason was to seize the bitcoins, correct? A. Correct. Q. And prevent the balance from being updated so that users wouldn't know the bitcoins were being seized, correct? A. Yes. Q. What was the other reason that you had to turn the Marketplace back on? Page 1652 A. So the last part of seizing these servers, we did want to make a statement that the U.S. Government had seized and taken over Silk Road Marketplace, so using the Marketplace infrastructure, we had replaced the contents of the Silk Road Marketplace and replaced it with a picture showing the government seized Silk Road Marketplace. Q. Could you please look in your binder to what's been marked for identification purposes as Government Exhibit 600, please. What is this? A. It's a picture that I created based on a template that was provided to me to place it on the Silk Road website once the seizure was completed. MR. HOWARD: The government offers Government Exhibit 600. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 600 received in evidence)* Q. Mr. Yum, this was the seizure banner that replaced the contents of the Silk Road homepage. Is that correct? A. That's correct. Another thing that I want to note here is just like when I first turned the computer off, I was monitoring the Silk Road website, and prior to putting this picture up, I needed to turn the web server off. And I noticed on my laptop I was no longer able to access Silk Road Marketplace. And once I swapped the files and put this back on, I turned the web server back on, and on my separate laptop on my Tor browser, the Silk Road Marketplace that wasn't accessible was now showing this page. Page 1653 Q. So instead of the Silk Road homepage, you would get the seizure banner, right? A. Correct. Q. Could users that go to the Silk Road then do transactions on the Silk Road once you'd put that up on the website? A. No. They would be stopped at that screen. Q. Now, did you also seize the bitcoin server? A. Yes, I did. Q. The second server in Iceland? A. Yes. Q. First, let's focus on what you did on the Marketplace server. A. Sure. Q. What did you do with the market -- you said you took one hard drive from there? A. Yes. Q. What did you do with that after you took it? A. I brought it back to New York and then I made a working copy out of that and checked the original hard drive into evidence. MR. HOWARD: Your Honor, may I approach. Page 1654 THE COURT: You may. Q. Mr. Yum, I'm showing you what's been marked for identification purposes as Government Exhibit 603. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. It's the original -- one of the original hard drives that came out of the Silk Road Marketplace server. Q. Is that the server that you had previously identified as having the IP address 193.107.86.49? A. Yes, it is. Q. How do you recognize that? A. I recognize this because the server -- some of the server hard drives they look different than a normal computer hard drive, so it's a little different than what I normally see. So I recognize it just by the physical appearance, but also the serial number that was marked on it matches my form that I filled out when I checked it into evidence. MR. HOWARD: And the government offers Government Exhibit 603. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 603 received in evidence)* Q. Could you please look in your binder to what's been marked for identification purposes as Government Exhibit 603A. Do you recognize this exhibit? Page 1655 A. Yes, I do. Q. What is it? A. It's the log file that was generated after I made a working copy from this original hard drive. Q. Did you make the copy in a similar manner as to the way you copied the server in Philadelphia? A. Yes. I used a similar device. Q. And does this log file -- were you involved in generating this log file? A. Yes, I was. MR. HOWARD: Government offers Government Exhibit 603A. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 603A received in evidence)* MR. HOWARD: Zoom in on the bottom section. Q. Mr. Yum, here is another MD5 and SHA1 hash of the working copy that you made? A. Yes. Q. Now, this log file only has one MD5 and one SHA1. Can you explain that? A. Yes. So I have the original which I can always go back and confirm that what I have is what I took. And any time I'm making a copy of this, that device that I'm using, that is write-protected so it can never be altered. And if it ever gets altered, you could tell right away. Page 1656 So this is the hash value for MD5 and SHA1 that was calculated for the image that I created. So anyone else who is working on this image afterwards, they could be assured that the copy hasn't been altered since it was first made. Q. And does anything in this document indicate whether the copy was an accurate copy of the original? A. Yes. Right above the highlighted section it says total errors which is zero, and the copy was completed without any problem. Q. Now, were you also involved in seizing the bitcoin server in Iceland? A. Yes. Q. How was that server configured? A. I believe that one had a hard drive that was in there and after seizing all the bitcoins, at that time I turned it off and I seized the hard drive that was on the server. Q. What did you do with that hard drive? A. I also brought that back to FBI New York. MR. HOWARD: Your Honor, may I approach the witness. THE COURT: You may. Q. Mr. Yum, I'm showing you now what's been marked for identification purposes as Government Exhibit 605. Do you recognize this exhibit? Page 1657 A. Yes, I do. Q. And what is it? A. It's the original hard drive that came out of the bitcoin server. Q. How do you know that? A. Again, I recognize it by the physical appearance of the hard drive itself. More importantly, the serial number matched -- the serial number on the hard drive matches the form that I used to check it into evidence. Q. You called it the bitcoin server. Is that the server you testified earlier had the IP address of 193.107.86.34? A. Yes, it is. Q. And how did you make a copy of this one? A. I used the similar device that I had used previously with the Marketplace server. Q. Did you also verify that it was an accurate copy based on hash values? A. Yes. Q. Both the MD5 and the SHA1? A. Yes. I generated the MD5 and the SHA1 and verified that there were no errors triggered when the copy was made. Q. Could you please take a look at Government Exhibit 605A, please. Do you recognize what this is? A. Yes, I do. Q. What is this? Page 1658 A. This is the log file that was generated once the bitcoin server hard drive was copied. Q. Were you involved in imaging and creating this log file? A. Yes, I was. MR. HOWARD: The government offers Government Exhibit 605A. MR. DRATEL: No objection. THE COURT: Received. And did you offer 605? MR. HOWARD: If I didn't, I mean to offer it now. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 605, 605A received in evidence)* MR. HOWARD: Mr. Evert, zoom in on the bottom section. Q. Again, is this where the MD5 and SHA1 hash values are located, Mr. Yum? A. Yes, it is. Q. And does this also indicate that there were no errors, it was made successfully and that the copy was a true and accurate copy of the original? A. Yes. Q. What did you do after you made a copy of the bitcoin server? A. I checked it into evidence. Q. Now, earlier you testified that you were involved in putting up the seizure banner on the Silk Road Marketplace server, correct? Page 1659 A. Correct. Q. Are you familiar with setting up websites to run on the Tor network? A. Yes, I am. Q. Mr. Yum, could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 106D. Do you recognize what this is? A. Yes. It appears to be a simplified diagram of how the Tor network operates. Q. Would this aid your testimony today? A. Yes. MR. HOWARD: The government offers 106D for demonstrative purposes. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 106D received in evidence)* THE COURT: For demonstrative purposes. Q. Mr. Yum, here we have a diagram of the Tor network, correct, simplified diagram? A. Yes. Q. And so, what is required to put -- and right here we have a web server hidden service, right? A. Correct. Page 1660 Q. What is required to put a website on the Tor network? A. The first and most important thing is you need to know how to run a website first, how to run a web server. Once you know how to do that, if you also know how to use Tor technology, all you need to do is change a couple of lines of code and it's almost plug and play. Everything is handled by Tor itself and your web server is no longer accessible on the Internet but only through Tor. Q. Mr. Yum, to be clear, do you need to understand anything about what's going on inside the Tor network? A. No. You don't need to understand how exactly Tor works. Q. That's done for Tor for you? A. Right. All the actual transmission back and forth is handled by how Tor is designed. Q. Now, are instructions available for how to set up a Tor hidden service? A. Yes, they are. Q. Where are they located? A. On the main Tor project page, as well as some other users have their own instructions as well. Q. Now, Mr. Yum, do you have any experience with bitcoins? A. Yes, I do. Q. Have you engaged in any bitcoin transactions? A. Yes, I have. Q. And approximately how many? Page 1661 A. I would say hundreds of bitcoin transactions. Q. Including the bitcoin transactions you talked about earlier, you seized bitcoins? A. Correct, for the government seizure of bitcoins as well. Q. What are bitcoins? A. Bitcoins are -- it's digital currency. It's money that works online to buy products online or even in real person or paid-for services. It's kind of like cash for the Internet. It's similar to cash in that when people conduct transactions, you don't really see who is doing the transactions, but it's different than cash that every single transaction, the transaction itself, it gets permanently documented on this thing called the block chain. So even though you don't know who made the transactions, you get to see every single transaction that was performed using bitcoins. Q. Can you explain the block chain a little more fully, please. A. So block chain, in accounting terms it's similar to a public ledger which means, you know, published financial records of everything that's taking place. So block chain, it's a file that's online on the Internet access and shared and used by all the bitcoin users and what it contains is every single transaction of bitcoins ever since the creation of bitcoins. Q. Now, can bitcoins be used for legitimate purposes? Page 1662 A. Yes, they can. Q. Can they also be used for illegitimate purposes? A. Of course. THE COURT: Let me ask about the block chain again. I'm not clear what information is in the block chain. In other words, I understand from your testimony that you can follow that there has been a transaction, then another transaction, then another transaction and you can follow the transaction history of a particular bitcoin -- THE WITNESS: Right. THE COURT: -- or a portion of bitcoin. THE WITNESS: Yes. THE COURT: What is the information in the block chain? THE WITNESS: So the information that's contained in the block chain, first of all, you would have the information about the block chain itself, so the size of the current block and the date and the time that block was added to the block chain, so it's constantly growing. I think the current size of the block chain is over 20 gigabytes I think. So it's a considerable size because it contains all the history of bitcoins. So within the block, there's additional information of every single transaction that was added to that block, so you'll see all the addresses that were used to send the payment and all the addresses that were used to receive a payment in bitcoins. Page 1663 THE COURT: IP addresses? THE WITNESS: There is no direct IP address of who is sending and receiving bitcoins. THE COURT: So what kind of address is it? THE WITNESS: I believe you might be able to obtain the IP address of -- THE COURT: Don't speculate. I'm wondering when you use the word "address," what were you referring to, what kind of address. THE WITNESS: Bitcoin addresses. So it's a long string of alphanumeric value and it works almost like an email address. You need to give somebody your bitcoin address in order for whoever that wants to pay you to make sure they pay you the correct amount of bitcoins to the right person. So if I were to email Tim, I wouldn't know how to send him an email until Tim gave me his email address. So in the same manner, if I need to send Tim ten bitcoins, there's no way for me to deliver those bitcoins to him unless he gives me his bitcoin address first. MR. HOWARD Q. Mr. Yum, let's skip ahead. We'll come back to where we want to go next to show an example of a block chain. Look at Government Exhibit 601, which is in your binder, please. Page 1664 Do you recognize what this is? A. Yes, I do. Q. What is this? A. It's a screenshot of a popular block chain explorer, blockchain.info. You could obtain information about the block chain and transactions. Q. Is that website available to the public? A. Yes. Q. Were you involved in the preparation of this exhibit? A. Yes. Q. Does this exhibit fairly and accurately depict information from the block chain? A. Yes, it does. MR. HOWARD: Government offers Government Exhibit 601. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 601 received in evidence)* Q. Mr. Yum, this is something you could pull up in an ordinary Internet processor, correct? A. Yes. Q. Let's focus on the top section. A. So the top section is a high-level summary about that address. Q. So where is -- do you have your laser pointer up there? A. Yes, I do. Page 1665 Q. Can you point to what a bitcoin address is? A. It would be the first line right there. MR. HOWARD: Mr. Evert, can we zoom in on that for a moment. Q. So it's this long string of numbers and letters, correct? A. Correct. Q. Earlier you gave the example of sending an email. You'd need to know the email address of someone you're sending an email to in order to send the email to them, right? A. Correct. Q. Is this what you would need to know from someone else if you wanted to send them bitcoins? A. Right. That would be the address that I would need to send the bitcoins to if I owed the owner of that address money or bitcoins. Q. It's a long, ugly string of numbers and characters, right? A. Yes. MR. HOWARD: Can we zoom out. Q. What other information is there at the top here? A. On the right side, it has the history of that bitcoin address. So that bitcoin address was used in six different transactions and it received a total of 7,225 bitcoins and the final balance is zero. So all of those bitcoins that were received to that address has afterwards been sent to somewhere else. Page 1666 MR. HOWARD: Can we zoom out, please. Q. What does this section of the report include? A. That would be the detailed transaction of that summary that was mentioned above, the six transactions. Q. Would that be all the transactions that were associated with that address? A. Yes. Q. Let's focus on the bottom one for an example. Can you describe how this depicts information about a bitcoin transaction. A. Yes. So I'll go from the top right first. So that long string of alphanumeric value there, that is a transaction ID. So on the block chain, every transaction is tagged with a unique ID that only represents one unique transaction. So with that transaction ID, you know this transaction happened. On the block, you also get a timestamp over there, which was -- the transaction occurred in March 31, 2013 and below it on the body of this transaction detail, you see the four addresses on the left. Those four addresses together sent 1,670 bitcoins to that address on the right. Q. To be clear, it's 1,670 bitcoins in total across all four of those addresses? A. Yes. Q. To the one address on the right, correct? A. Yes. Page 1667 Q. So if someone has a bitcoin address, like the one on the right, this is information they can just pull up on a public website, correct? A. Correct. Q. If you have the unique transaction number, could you also pull up all these transaction details on a public website? A. Yes. MR. HOWARD: Now, can we zoom out, please. Q. So now if you have the bitcoin address, this is the report you can get that's publicly available, right? A. Right. Q. Does the report include any information about who -- the identity of the person who owns the bitcoin address? A. No, it doesn't. So you would only get the information what you see up there. If you were the actual party in that transaction, you could -- if you know who sent you the money, you could kind of -- you could tie in -- certain addresses might belong to somebody. But other than that, the block chain itself, you can't tell who is sending or receiving bitcoins. Q. You would need information from somewhere else, correct? A. Right. Q. Not from the block chain itself? A. Correct. Q. Could you please flip in your binder to what's been premarked for identification purposes as Government Exhibit 608, please. Are you familiar with how the basics of a bitcoin transaction works? Page 1668 A. Yes. Q. What is Government Exhibit 608? A. It is a simplified illustration to explain how a bitcoin works. Q. Would this aid your testimony today? A. Yes. MR. HOWARD: The government offers government Exhibit 608 for demonstrative purposes. MR. DRATEL: No objection. THE COURT: Received for demonstrative purposes. *(Government's Exhibit 608 received in evidence)* Q. Mr. Yum, could you please explain, what is a bitcoin wallet? A. So a bitcoin wallet, it's a container that holds all the bitcoin addresses relating to a person. So in this picture here, we had Alice. Alice is using bitcoin and she has a bitcoin program on her computer. That program creates a wallet file and inside the wallet file, it contains all the addresses that belong to Alice; as well as you could see the balances that are inside each one of those addresses, but more importantly, the wallet file contains -- and here, it has a red key, but in bitcoin terms, it's called a private key. And what private key allows is the user, Alice, to control and see all of the information about her bitcoins. Page 1669 Q. What else does having the private keys allow you to do with bitcoins? A. So if you own any bitcoins in any one of these addresses, the corresponding key allows you to spend those bitcoins. Q. And the wallet is basically just a computer file, correct? A. Yes. It's a computer file, yeah. Q. Is Alice able to see all of her own addresses? A. Yes. Q. Just to be clear, on this demonstrative that we say BTC Address 1 and down to 5. How many addresses could a wallet contain? A. As many as you want. In here for example purposes there's only five addresses listed, but you could create hundreds, thousands of addresses in one wallet file. Q. Can anyone else other than Alice see all of the addresses in her wallet? A. Only if they know what the address is, but if you don't have the private key, you can't just guess someone else's address. Q. To be clear, each those addresses is one of those long, ugly string of numbers and letters, right? A. Correct. THE COURT: Where do you get an address? THE WITNESS: So, the bitcoin program generates a long string of numbers and that acts as a seed to the private key. And the program again uses that private key to calculate something that is similar to the MD5 hashes and a hash value is represented as a public key which is a lot easier to pass to someone else, although it looks very long and confusing. Page 1670 THE COURT: All right. Q. How easy is it to create a new bitcoin address? A. If you're using a bitcoin program all you have to do is click a button and request the program to create a new bitcoin address. Q. It will assign a new bitcoin address to you? A. Yes. Q. Will it give you the private key necessary to spend the bitcoins in that address? A. Right. In the background of the program, you'll get a private key and then you'll get the public address that you can freely give out to other people if you want to receive bitcoins to that address. Q. Could you explain what is depicted on the second slide, please. A. I'm going to walk you through a simplified demonstration of how a transaction would occur. So, again Alice, she owes Bob ten bitcoins, but just as I said, Alice has no idea where to send the bitcoins to, so she needs to ask Bob for a bitcoin address first. Page 1671 So Alice wants to send ten bitcoins and she's asking where to send it to. And Bob, in his wallet, he only has two addresses, but as stated before, he could have many more if he wants to. So Bob picks his Bitcoin Address 2, and can we go to the next screen, please, and tells Alice to send ten bitcoins to Address 2. Alice doesn't really need to worry about where the bitcoins are coming from her wallet. The program handles that in the most efficient manner it could, so once Alice tells her bitcoin program to send ten bitcoins to Bob's Address 2, Alice's program picks Address 1 and Address 4 in her wallet and sends ten bitcoins to Bob's Address 2. Q. So Alice doesn't have to pick and choose between her own addresses, correct? A. Right. It's very simple to use. THE COURT: It could be five out of one address, five out of another or two out of one address, eight out of another, or some other combination of pieces? THE WITNESS: Correct. THE COURT: All right. Q. So what's depicted on the third slide? A. In our demonstration, there were seven bitcoins in Address 1 that was sent and three bitcoins in Address 4 of Alice's bitcoin that were sent to Bob's Address 2 in the amount of ten bitcoins. Page 1672 Q. And then what's reflected on the bottom of the slide? A. So the bottom would be an example of what would be recorded onto the block chain as we saw in the prior block chain info screenshot. So in here, you would see a unique transaction number that identifies this particular transaction and the date and time this transaction was documented onto the block chain. And in here, again, you see only the two addresses that were used to make this transaction of ten bitcoins that were sent to Bob's Address 2. Q. So now Bob could get this information off the block chain and see what addresses Alice's wallet used to engage in this transaction, correct? A. Correct. Bob, he knows his address, so he could easily search his own address and figure out this transaction and note that Alice used these two bitcoin addresses to send Bob ten bitcoins. Q. Now, would Bob know all of Alice's other bitcoin addresses? A. No. Address 2, 3 or 5, Bob would have no idea what the -- who those addresses belong to. Q. And why couldn't he see those? A. The addresses aren't announced or anything. So unless you directly have a transaction with somebody, you can't really figure out who owns what address. Q. You need the private keys to see all the rest of the wallet? Page 1673 A. Right. The only way Bob may be able to see these addresses is if he had the private key in his wallet allowing him to calculate the same private address -- public address. Q. Now, Mr. Yum, earlier you testified that you seized approximately 20,000 bitcoins from the Iceland bitcoin server, correct? A. Correct. Q. Now, apart from that seizure, were you involved in any other seizures of bitcoins in the Silk Road investigation? A. Yes, I was. Q. Where were those bitcoins located? A. The wallet file for the other bitcoins were obtained from the laptop that was seized from the defendant on the day of his arrest. Q. And how did you get access to that wallet file? A. So, Mr. Kiernan actually analyzed and reviewed the laptop and he had located the wallet file and copied it onto a thumb drive and handed it over to me. Q. And what did you do with that wallet file after it was provided to you by Mr. Kiernan? A. So, I loaded that wallet file onto my bitcoin program instance, and checked the current balance that was contained inside all the addresses inside the wallet file. Q. And what was the balance? A. It was approximately 144,000 bitcoins. Page 1674 Q. And what were those bitcoins worth approximately at the time of the defendant's arrest? A. So at the time of the arrest, which was prior to when I received that wallet file, it was -- again, using the varying bitcoin price of that day, it would have been anywhere between 16- to $18 million. Q. Now, what did you do after you determined the balance of the bitcoins that were in the wallet that was in the defendant's computer? A. I had another bitcoin address that was prepared for the government's seizure, and I transferred all the bitcoins from the defendant's wallet file into the government address. Q. You said it was an FBI bitcoin wallet, correct? A. Correct. Q. Is this the same or different wallet that you used in Iceland to get the bitcoins from the bitcoin server? A. Different address. I wanted to separate the two so the bitcoins didn't mix. Q. Was there any balance in the FBI controlled log when you created it? A. No. It was a newly -- brand new created bitcoin address and since it's never been -- there's never been a transaction conducted using that address, it wouldn't have shown in the block chain, so no one else knew what that address was. Q. Now, did the wallet file that was provided to you by Mr. Kiernan from the defendant's laptop contain the private keys for the bitcoin addresses in that wallet? Page 1675 A. Correct. That would be the most important thing. Without those private keys, I wouldn't have the right to send the bitcoins from the defendant's wallet to the government seizure address. Q. Did those private keys also allow you to see all of the bitcoin addresses that were located in that wallet? A. Yes. Q. Can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 607. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. It's a screenshot of a search engine named duckduckgo, and it's the search result for a bitcoin address starting 1FfmbH, which is the address that I created for the government to seize all of the bitcoins from the defendant's laptop. Q. And had you previously used this website to obtain public information from the block chain? A. Yes, I have. Q. Does this website accurately reflect bitcoin transactions that you've conducted in the past? A. Yes, it does. Q. You took this screenshot? Page 1676 A. Yes. MR. HOWARD: The government offers Government Exhibit 607. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 607 received in evidence)* Q. Mr. Yum, right up here at the top next to the cute little picture of the duck, there's 1Ff and a long string of characters. What is this? A. That's the address created for the government. Q. The bitcoin address? A. The bitcoin address, yes. Q. And you were involved in creating that, correct? A. Yes. MR. HOWARD: Can we zoom out, please. Q. Here it says total received, 144,341 and change. What does that number represent? A. So that's the total amount of bitcoins that was sent to this address above. Q. And where were they sent from? A. So that total number is a little higher than the actual amount, but the majority of those were sent from the defendant's laptop -- the wallet file located in the defendant's laptop. MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 201L, which is already in evidence. Page 1677 Q. Have you seen this before? It's on the screen. A. Yes, I have. Q. And what is this? A. It's a summary sheet. It's a picture screenshot of the defendant's laptop when it was seized on the day of his arrest. Q. So I want to focus here on the fifth line down here. Can we zoom in here. And here it says cold BTC and under that 144,336.4. How does this number that was on the defendant's computer screen compare to the number of bitcoins that you seized? A. It matches almost exact to the amount that was seized. Q. And right above that, there's the word "cold BTC"? A. Yes. Q. Are you familiar with the bitcoin term "cold storage"? A. Yes, I am. It's a term that's commonly used within the bitcoin community and bitcoin users. Q. What is it used to refer to? A. It's a way to store your wallet file. So it's important to secure your wallet file because it has all the keys that allows you to spend your bitcoins. So cold storage is -- the most common example is not having your wallet file attached a bitcoin program. So instead of -- that would be hot, so instead of having a hot wallet, you have a cold storage where if you separate from a computer that's running a bitcoin program, so even if the computer gets comprised or damaged or if it fails, you still have your bitcoins secure and tucked away in your cold storage. Page 1678 Q. What does cold storage refer to with a bitcoin wallet with respect to a website? A. For a website, if you're running a website and if your website crashes or if your website gets compromised, you don't want to lose everything that's in there, so you create a cold storage. And the idea would be to move all the important parts or your bitcoins to cold storage so if anything ever happens to the website, you don't lose your bitcoins. Q. Now, Mr. Yum, earlier you testified that you are currently working at FTI Consulting, correct? A. Correct. Q. What is your position? A. Senior director. Q. Now, in your capacity at FTI, have you recently been involved in an analysis of bitcoin transactions related to the Silk Road investigation? A. Yes, I was. Q. Now, are you being paid for your work with respect to that? A. Yes, I am. Q. And how much are you getting paid for that? A. For this project, not myself directly, but my company is charging an hourly rate of $468. Page 1679 Q. Did you work on this alone or did others at FTI assist you? A. I worked with one other -- one other person in my team. Q. To be clear now, you got paid for the work you did on this analysis, correct? A. Just on analysis. Q. Are you being paid to testify today? A. No, I'm not. Q. Now, what was the overall subject matter of your recent work? A. I'm sorry -- Q. What is the overall matter of your recent work? A. I was asked by the government to see if there's any -- if any at all link between the bitcoin addresses that were found on Silk Road and the bitcoin addresses that were found on the defendant's laptop. Q. So let's break that down. Where were these bitcoin addresses located? A. So, one side, we had the Silk Road bitcoins. I received evidence items from the government and I reviewed the Philadelphia server that was mentioned before, as well as the bitcoin Marketplace -- the Silk Road Marketplace bitcoin servers in Iceland and located -- examined and located, identified all the bitcoin wallet files that were found on those two servers. Page 1680 Q. Those are two servers that you were actually personally involved in seizing, correct? A. Yes, when I was still with the government. Q. Did you find the private keys on those servers for those wallet files? A. Yes. So I obtained the wallet files, so I had all the private keys that are also inside those wallet files. Q. So did that allow you to see all of the bitcoin addresses that were associated with those wallets on the Silk Road servers? A. Yes. Q. Now, how about the defendant's laptop? A. So, I took the same approach. I got a forensic image copy of the defendant's laptop and I examined and analyzed the laptop to locate at least three wallet files and extracted all the bitcoin addresses there because I had the private keys that were contained inside those wallet files. *(Continued on next page)* Page 1681 Q. Now, you testified that you examined -- you received certain pieces of evidence from the FBI to perform this analysis, correct? A. Correct. Q. So what pieces of evidence did you specifically receive? A. I got three forensic images -- one of the Philadelphia server, the backup server, one of the Iceland bitcoin server that was seized over in Iceland, and an image of the defendant's laptop, which was seized at the time of his arrest. Q. So if you could please flip in your binder -- actually, just real fast. After you received copies of those three pieces of evidence, did you do anything to verify that they were true and accurate copies of the original evidence? A. Of course. I calculated my own MD5 and SHA1 hashes. I calculated those two hash files to make sure my starting point is the same as what was originally copied. Q. So did you compare those MD5 and SHA1 hash values to the ones that were originally generated for those pieces of evidence? A. Yes. Q. What did you discovery? A. They all matched. Q. Could you please flip in your binder to what has been marked as Government Exhibit 606, please. How many pages is this exhibit? Page 1682 A. Three pages in total. Q. And what is it? A. Each one of those pages are a screenshot that I made after I calculated the hash values. Q. Those are the hash values of each of the three pieces of evidence that you received from the FBI? A. Correct. MR. HOWARD: The government offers Government Exhibit 606. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 606 received in evidence)* Q. So each contains an MD5 and a SHA1, correct? A. Correct. MR. HOWARD: Just flip through the pages, Mr. Evert. Q. And all of those values match the values on the various log files we've seen today, correct? A. Yes, they do. Q. And also match the log file from the image of the defendant's computer that you received from the FBI? A. Yes. Q. The laptop computer? A. Yes. Q. Could you please look in your binder to what has been marked for identification purposes as Government Exhibit 609. Page 1683 Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. It's a simplified illustration of the work that I did to compare all the addresses that was obtained from Silk Road Marketplace and all the addresses that were obtained from the defendant's laptop. Q. And would this aid your testimony today? A. Yes. MR. HOWARD: The government offers Government Exhibit 609 for demonstrative purposes. MR. DRATEL: No objection for demonstrative purposes. THE COURT: 609 is received for demonstrative purposes. *(Government's Exhibit 609 received in evidence)* MR. HOWARD Q. Could you please explain what your analysis consisted of? A. Sure. So I examined the forensic copy of the defendant's laptop and carefully went through the files and located three Bitcoin Wallet files. Some of those wallet files may be duplicates or used that one time and then switched over to a different wallet, so there were some duplicates. But at the end I sorted the addresses down to 11,135 unique individual bitcoin addresses. And this is possible because the wallet file contains the private key that I was talking about. So without the private key I would not be able to extract all these addresses. Page 1684 Q. The fact that the private keys were located on the defendant's computer, what does that indicate? A. It indicates the defendant's laptop, the wallet file, controlled these bitcoin addresses. So these are the only keys that could spend the bitcoins that are in these wallet files. Q. So the user of the computer could spend the bitcoins in those addresses? A. Correct. And if we could go to the next page. So from the other side, those are the two servers -- images of two servers that I obtained, one from the Philadelphia backup server and one from the Iceland Silk Road bitcoin servers. So from those two images, I carefully went through them, examined it, and identified and located 22 Bitcoin Wallet files. Again, some of these might be backups or an address that was used at one point and moved on to another address. So initially I found over 10 million bitcoin addresses. Some of them are duplicates, but I narrowed it down to a little over 2 million unique bitcoin addresses. Q. Go to the next page, please. A. So now I have two sets of addresses, a set of over 2 million bitcoins that were found on servers that are related to Silk Road Marketplace. And on the other side I had over 11,000 bitcoin addresses that were recovered from the laptop belonging to the defendant that was seized at the time of the arrest. Page 1685 Q. Sorry, how many address? 2,105,527 unique addresses? A. Yes. The exact number would be 2,105,527 addresses from Silk Road Marketplace and 11,135 bitcoin addresses from the defendant's laptop. Q. Go to the next page, please. A. Wait. Actually, can we go back one? So I could explain using this screen and the next screen, but the analysis that I did, I didn't do any complicated analysis. I wanted to look for the most simple direct link between those two sets of addresses. So I had the addresses from the Silk Road Marketplace and I had the addresses from the defendant's laptop, and I went back to the block chain, which is publicly available and agreed by all the bitcoin users, and identified all the transactions where the money was being sent from Silk Road Marketplace and bitcoins were received to the addresses on the defendant's laptop. Q. Are these direct one-to-one transactions? A. Direct one-to-one. It didn't skip over anywhere else. It went straight directly from Silk Road Marketplace directly to the addresses found on the defendant's laptop. So if you could go to the next screen. So just to give you an example of the raw information that I had to work with, this is not the entire list but just a portion of addresses from each side. So on the left you see all the addresses, the public addresses for Silk Road Marketplace, and the unique list had over 2 million bitcoin addresses and I could obtain these because of the private key that was also inside the wallet files. Page 1686 On the right side you have the laptop addresses in there. These are the unique addresses, over 11,000 bitcoin addresses that were found on the defendant's laptop and. I was able to tell these because the wallet file contains the private keys to generate these public addresses, which also allows the owner of those private keys to spend those bitcoins. MR. HOWARD: Your Honor, may I approach? THE COURT: Yes. Q. So I'm handing you what has been marked for identification purposes as Government Exhibits 650 and 651. Do you recognize what these are? A. Yes, I do. Q. And what are they? A. Each one of theses discs contain the text file that you saw a portion of just now. Q. What are in those text files? A. One of the text files contains all the addresses -- all the unique list of addresses from the Silk Road Marketplace, and the other disc contains all the unique addresses found on the defendant's laptop. Q. And just to be clear: I gave you two CDs. Which one is which? Page 1687 A. Exhibit 650 is the Silk Road Marketplace bitcoins, and Exhibit 651 is all the addresses that were found on the defendant's laptop. Q. And how do you recognize these CDs? A. I was involved in the creation of these CDs. Q. And are your initials on them? A. Yes. After I created them, I initialed them and dated the CDs. MR. HOWARD: The government offers Government Exhibits 650 and 651. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 650 and 651 received in evidence)* MR. HOWARD: Your Honor, may I approach? THE COURT: You may. MR. HOWARD: So, Mr. Evert, could you please publish Government Exhibit 650. Just bring it up in the text file itself. Q. So, Mr. Yum, this the list of the two-million-plus unique bitcoin addresses that were recovered from Silk Road-related servers, correct? A. Correct. MR. HOWARD: If you can scroll this to show how large this is. Page 1688 *(Indicating)* I think we get the idea. Can we go to Government Exhibit 651, please. Q. Mr. Yum, this is a list of the 11,000-plus unique bitcoin addresses that were found on the defendant's laptop computer, correct? A. Correct. Q. And the private keys for all these addresses were also located on the laptop? A. Yes, they were. MR. HOWARD: Would you scroll on this one. *(Indicating)* Q. Now, Mr. Yum, could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 610. Do you recognize this exhibit? A. Yes, I do. Q. What is this? A. It's a collection of screenshots that I made to spotcheck and go through the link analysis that I performed. Q. Were you involved in the creation of this exhibit? A. Yes. Q. So what are the screenshots taken from? A. So there is three screenshots. In the center is the -- Page 1689 Q. Mr. Yum, we'll describe them once we -- what are the sources of the information for these screenshots? A. From the block chain and the list of addresses found on Silk Road Marketplace and a list of addresses found on defendant's laptop. Q. Have you verified that this exhibit reflects true and accurate copies of information from the block chain and true and accurate screenshots from each of the lists of bitcoin addresses? A. Yes. MR. HOWARD: The government offers Government Exhibit 610. MR. DRATEL: Just with respect to the screenshots? THE COURT: Just with respect to the screenshots? MR. HOWARD: We're offering the entire exhibit as a summary exhibit under 1006. THE COURT: All right. Mr. Dratel, this is the one that we were talking about? MR. HOWARD: It is Government Exhibit 610. THE COURT: Right. I only have one page in my -- MR. HOWARD: It is just one page, your Honor. THE COURT: It is just a single page. MR. DRATEL: It is one page. THE COURT: All right. Received. *(Government's Exhibit 610 received in evidence)* Page 1690 MR. HOWARD: Could you please publish Government Exhibit 610. Q. So, Mr. Yum, can you please walk us through what this shows? A. Sure. I guess it is best to start from the middle. So that section is, as you've seen before from the example of blockchain.info, the website where you can look up all the bitcoin transactions, this is a transaction that I identified which had bitcoin addresses from the marketplace making 3,900 bitcoin transactions to a bitcoin address that was found on the defendant's laptop. So that's the unique transaction ID. It was -- the transaction was made April 3rd, 2013. Again, you see the address starting on 1GarVY. And up top it has a screen capture of the list of the addresses from the marketplace that you had seen previously and a location where that can be found in that list. On the bottom this has the portion of the list of all the addresses from the defendant's laptop, and you could see that the address found in there, starting "17t6V," matches the received bitcoin address in this transaction. Q. So this exhibit shows 3,900 bitcoins were sent from an address that was located on Silk Road servers to a bitcoin address that was located on the defendant's laptop? A. Yes. Exactly. Page 1691 Q. And that happened on April 3rd, 2013, according to publicly available information on the block chain? A. Yes. Q. Now, was this the only transaction that you found linking the bitcoin addresses on the Silk Road servers to the defendant's -- the addresses on the defendant's laptop, or were there others? A. No. There were almost 4,000 unique transactions from Silk Road Marketplace to the addresses that were found on the defendant's laptop. Q. So could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 620. Do you recognize this exhibit? A. Yes, I do. Q. And what is this exhibit? A. This is a list of all the transactions that I was successfully able to identify. Q. Did you participate in the creation of this exhibit? A. Yes. Q. Does this exhibit accurately summarize information from the bitcoin addresses that you found -- that you reviewed from wallets found on the Silk Road servers and the defendant's computer? A. Yes. Q. Does this exhibit accurately summarize information that you retrieved from the block chain regarding bitcoin transactions? Page 1692 A. Yes. MR. HOWARD: The government offers Government Exhibit 620. MR. DRATEL: Objection, your Honor. Crawford, foundation, hearsay. THE COURT: All right. Those objections are overruled. Government Exhibit 620 is received. *(Government's Exhibit 620 received in evidence)* MR. HOWARD Q. So, Mr. Yum, what was the date range of the transactions that you located? A. The first transaction occurred in September 24th, 2012, and the latest transaction I was able to identify was August 21st, 2013. Q. And were the transactions spread across -- the thousands of transactions were spread across that time period? A. Right. It was spread across almost all of that entire one-year span. MR. HOWARD: So, Mr. Evert, could you just go to the top, please. Just zoom in on the first few rows. Q. Could you just describe what is depicted here? A. So it is a simplified version of all the screenshots that you saw before, prior. So that's -- the first column is there is the time stamp, the time that this transaction was included onto the block chain. The second column there is the unique transaction ID that you could locate, pinpoint to the exact transaction that's happened. So behind those transactions you would actually see the addresses that are used to send bitcoins to another receiving address, but you could easily also refer to those two transactions by that transaction ID. Page 1693 And the last column there, that's all the bitcoins that were involved in that transaction that ended up in the wallets found on bitcoin addresses found on the defendant's laptop. Q. So to be clear, Mr. Yum, you could put that unique transaction number into the block chain on the website to get the addresses that were involved in the transaction? A. Correct. Q. And those addresses matched the addresses that you found on the Silk Road servers and the defendant's laptop? A. Yes. MR. HOWARD: Can we just scroll to the bottom of the chart. *(Indicating)* MR. HOWARD: This is page 64 of the exhibit. Could you zoom in on the bottom. Q. And so the total was 700,253.91 bitcoins, is that correct? A. That's correct. Q. Now, Mr. Yum, can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 620C. Page 1694 What is this? A. It appears to be a price index from a website coindesk.com. It shows the date and the closing price of the bitcoins in U.S. dollar amount. Q. According to coindesk? A. According to coindesk. Q. Is that information available on a public website? A. Yes. Q. Now, is coindesk widely recognized and used by the bitcoin community for bitcoin pricing? A. Yes, not only bitcoin pricing but other data and news and information about bitcoins. Q. Now, based on your knowledge of the bitcoin community, would you agree that the reputation of coindesk carries some weight and is recognized as accurate in the community? A. Yes. Q. Does this exhibit accurately summarize pricing information for bitcoins from coindesk? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 620C. MR. DRATEL: No objection. THE COURT: Received. Page 1695 *(Government's Exhibit 620C received in evidence)* THE COURT: We're going to -- Mr. Howard, in about three minutes we are going to break for lunch. Q. Can you just briefly explain what is depicted here? A. So on the left column it has the date of these records. On the right column it has the end-of-the-day closing price of bitcoins, represented in U.S. dollar amounts, for each corresponding date. Q. Now, could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 620A. What is this exhibit? A. It is a summary spreadsheet of the analysis that I conducted. Q. Did you participate in the creation of this exhibit? A. Yes. Q. Does the exhibit accurately summarize information from the bitcoin addresses you reviewed from bitcoin wallets found on the Silk Road servers and on the defendant's computer? A. Yes, it does. Q. Does the exhibit accurately summarize information from the block chain regarding bitcoin transactions? A. Yes. MR. HOWARD: The government offers Government Exhibit 620A. MR. DRATEL: Objection. The same grounds, your Honor. Hearsay, foundation -- Page 1696 THE COURT: All right. Those objections are overruled. Government Exhibit 620A is received. *(Government's Exhibit 620A received in evidence)* MR. HOWARD: Can we zoom in on the top, please. Q. Mr. Yum, could you please describe what's depicted in this chart? A. Yes. So it's a monthly summary breakdown of all the transactions that took place between addresses found on Silk Road Marketplace sending bitcoins to the addresses found on the defendant's laptop. So the span, again, starts from September 2012 all the way down to August 2013. And for each month the second column shows you the number of transactions that were conducted. The third column shows you how many bitcoins in those transactions were sent from Silk Road Marketplace to the addresses found on the defendant's laptop. And the last column is the, I guess, realtime conversion of U.S. dollar amounts for each one of those dates where the transactions were identified. Q. And did you use the coindesk information to convert to U.S. dollars? A. Yes. Q. What do you mean by "realtime" conversion? A. So I didn't just take one day, let's say -- you were asking me before how much bitcoins were at the time of the arrest. I didn't use one dollar amount. From the prior exhibit, I took each individual day's closing and matched it to each of the individual day's transactions and correctly calculated how much bitcoins were worth at the time of that transaction. Page 1697 Q. So this exhibit reflects that there was a total of $13 million worth of transactions at the time that each transaction took place? A. Yes. Q. And a total of 700,254 bitcoins received -- A. Correct. Q. -- from Silk Road servers to the defendant's laptop wallets? A. Yes. Q. And 3,760 transactions, correct? A. Correct. Q. Could you please take a look at 620B in your binder. Do you recognize what this is. A. Yes, I do. Q. And what is this? A. It's a pie chart that I created also summarizing an analysis that I did. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Does this exhibit accurately summarize information from the bitcoin addresses you reviewed from wallets found on the Silk Road servers and the defendant's computer? Page 1698 A. Yes. Q. And does it accurately summarize information from the block chain regarding bitcoin transactions? A. Yes. MR. HOWARD: The government offers Government Exhibit 620B. MR. DRATEL: The same objections, your Honor. THE COURT: All right. Those objections are overruled. 620B is received. *(Government's Exhibit 620B received in evidence)* Q. Mr. Yum, could you please explain what is depicted here? A. So you see a pie chart in there, and the biggest, red part has the 700,254 bitcoins that I correctly identified coming from Silk Road Marketplace and being transferred to the addresses found on the defendant's laptop. I didn't stop there. I went back and analyzed all the addresses on the defendant's laptop. And I've also found 89,000 other bitcoins that were sent to the addresses that were found on the defendant's laptop. So to, I guess, give you a summary of what I just said, the defendant's -- addresses found on the defendant's laptop received a total of almost 790,000 bitcoins, and out of that 88 -- almost 89 percent were bitcoins that were transferred from the Silk Road Marketplace directly to the defendant's laptop in the amount of 700,254 bitcoins. Page 1699 Q. When you say "directly," you mean one-to-one transfers, correct? A. One-to-one transfers. So that 89,854, it could have came from other sources but it could have also -- MR. DRATEL: Objection. THE COURT: Sustained. MR. HOWARD: This might be a natural breaking point, your Honor. THE COURT: All right. Ladies and gentlemen, we're going to take our lunch break now and come back at 2 o'clock. I want to remind you all not to talk to each other or anybody else about this case. And, also, if you see any news articles about this case, you are to not read those news articles. Turn away your eyes. All right? I instruct you to do so. Thank you. We'll see you after lunch. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1700 *(Jury not present)* THE COURT: You may step down. Have lunch until 2 o'clock. I will see you back on the stand at 2. *(Witness not present)* THE COURT: All right, ladies and gentlemen. Let's all be seated. I wanted to make certain that we addressed the two exhibits and I have one other matter and then whatever else you folks would like to address before we break for lunch ourselves. There were objections by Mr. Dratel to Government Exhibits 620 and 620A on Crawford, which I take it, Mr. Dratel, was because of an argument that we discussed yesterday afternoon of insufficient notice? MR. DRATEL: No. It is really about the underlying -- in other words, you have a couple of preliminary steps in Mr. Yum's analysis. Then you have an intermediate step and then you have a final step, and we don't know how we get from the intermediate step to the final step. THE COURT: You can take him through that on cross-examination. MR. DRATEL: I understand. But there is no foundation for it, and I believe that it is probably something that creates a Crawford confrontation issue, similar to other sort of scientific or computerized issues, where something is done and then someone comes in and presents something that is essentially the work of a computer program and it is not -- you know, it hasn't been verified. You know, I don't know what his relationship is with the program. We don't know any of that. We don't have any underlying stuff as to how it was done. It is not a simple process, and I don't think it was done manually. Page 1701 THE COURT: Was that the nature of your Crawford objection both for 620 and 620A? MR. DRATEL: Yes, your Honor. THE COURT: All right. So at this point I don't find there to be any traction to that objection and so it was overruled before. If after cross-examination you have some basis to renew the application, then you can go ahead and do so. See what you want, what you can develop on cross-examination. You are certainly entitled to go into all aspects of how he performed this exercise. MR. DRATEL: And with respect to the notice, your Honor, my application would be, again, to put off the cross until Monday morning so that we can absorb stuff that we were actually hearing for the first time about a document that has, as you can see now, an extraordinary number of transactions. There is zero backup. Zero anything for it. We have been trying to develop what we can but we still need more time to do that. Page 1702 THE COURT: When you say that there is zero backup, zero anything, my understanding from our conversation yesterday afternoon was that all of this information, which is the very information at the heart of this case, was produced during discovery. Mr. Howard. MR. HOWARD: That's correct. On Sunday night we provided the spreadsheets -- THE COURT: Let's go back first to what was -- MR. DRATEL: The analysis, how the analysis was done. THE COURT: Mr. Dratel, let me just make sure I have got the facts in order. Tell me when and what was produced that underlies this analysis during the discovery. MR. HOWARD: Yes. For almost a year now, the defendant has had access to images of his laptop and the various servers where these log files were contained, including what's been referred to as the Philadelphia backup server and the Iceland bitcoin server. Those images included all of these bitcoin wallets and the private keys for those wallets, which is the same images the witness just talked about. Based on that, all of this information, all of the bitcoin addresses were stored in those wallet files that have been available to the defendant for over a year. THE COURT: All right. And then, as I understand it from our conversation just before we all adjourned last night, the analysis that is at 620 and the summary of that, where the comparison was done, that analysis was performed during the course of this trial and was produced on Sunday; is that right? Page 1703 MR. HOWARD: Yes, you are right, your Honor. And within a couple of hours of actually us receiving the spreadsheets that had all the data in them and, you know, the much more complicated and much more voluminous than the summary charts that we're pushing into evidence, but that was produced promptly to the defense as soon as we had them generated. THE COURT: All right. Mr. Dratel. MR. DRATEL: A couple of things. One is they had it, too. So why are we getting this in week three of trial if they had all of this information before as well? Why did they prepare this analysis -- they've only started once the trial started. THE COURT: Well, as I understand it, this all went back to your opening statement. MR. DRATEL: Yes. But what I'm saying is to say that we had all the wallets and the addresses is immaterial in the sense that they had it too. If they wanted to put together an exhibit that linked all of that, they should have done it in advance of trial, not -- and they've done it during trial, OK, but I should have the opportunity -- this witness, it took more than a hundred hours to prepare this analysis. I've had it for maybe 80, not including the time in court and sleeping and doing all the other stuff that needs to be done in this case. So it's really no time at all. This witness took a hundred hours. They got paid $55,000 for this. Page 1704 THE COURT: Well, the objections are overruled, as I've said. And in terms of timing, we will go into cross-examination right after the government is done with its direct examination with this witness. The materials that underlie the analysis were produced long ago. Based upon the opening statement and based upon one of the theories of the defense, which is that the defendant was a bitcoin trader and that any bitcoins in his possession were from bitcoin trading, it was reasonable to expect that you yourself had done such an analysis and, therefore, that you had some intention of presenting something that would have shown the opposite. In any event, you've opened the door to it, and we're going to proceed. And the fact that the government adjusted and was able to do so is not something that is particularly problematic or unusual. So that's my ruling on that. So we'll proceed with cross-examination with this witness after lunch. MR. DRATEL: Your Honor, what I'm asking for, in functional terms, is a two-and-a-half hour accommodation so that I can prepare a proper cross-examination of this witness. Page 1705 THE COURT: I have heard your application, and we're going to go directly into the cross-examination of this witness. If you -- MR. DRATEL: Then I am making a notice objection to the entirety of that level of his testimony -- THE COURT: The objection is overruled. I think you've got your position well and truly stated on the record. If you have any additional positions you want to state, you can file it in a letter on the docket. In terms of hearsay, there is no hearsay issue with these documents, and certainly the foundation was well established for these. So those objections are similarly overruled. Mr. Howard, would you like to address or fill out the record in any regard yourself? MR. HOWARD: Yes, your Honor. The fact is, as you correctly stated, this door was opened by the defense during their opening statement. They made a claim about the source of the bitcoins that were recovered from the defendant's wallet files. In response to that, we performed an analysis with the help of outside consultants. As soon as that analysis was ready, we produced the underlying data to the defense. We produced some summary charts today in court. It should be noted that there was some time that was required to produce the analysis, but at the end of the day it is all based on public records showing one-to-one connections between bitcoin addresses. It is not anything very complicated. The time was spent on just getting the process to get that together. Page 1706 THE COURT: All right. If either party has any additional positions that they would like to state on this that they want to put in by letter -- obviously, you can't raise new issues -- that you haven't had a full chance to air just now, file something for tomorrow morning. In terms of I had more issue, which is Juror No. 4. We have heard back from Juror No. 4's employer, and they are not -- it is disappointing, they are not willing to accommodate the issue with Juror No. 4. So the issue is as follows: She is required to begin taking vacation time after tomorrow -- after Monday. Am I right? THE CLERK: Yes. THE COURT: Monday is the day, her timing where her company will allow her just the time. Now, she does not know that we have heard back, because I wanted to talk about this with you folks and determine how you believe we should proceed. Obviously, there are a couple of different things that we can do, one of which is just -- I think it is fair to tell her that we've heard back and that we understand that there is not going to be an accommodation. I need to understand from you folks whether that should be done in the robing room or at sidebar, you know, with you folks, or whether or not Joe can just convey that simple message: We've heard back from her employer. We understand that they are not going to alter the manner in which they previously told her they were going to proceed. Page 1707 Separately from that, I don't think we should solicit whether or not she is going to now raise a hardship issue and seek to be dismissed. I think that we should wait and see what she does and then respond step-by-step accordingly. It may be that she is prepared to take vacation time. She did present this issue to us, but I don't have any indication that she -- I don't know one way or the other. So I would just leave that. See what the response is next. One thing that I think would be helpful in that regard would be to give the jury some sense as to where we are with things with lots of room around the edges in case things change. But we've got one government witness left after Mr. Yum, who is expected to take likely less than a day, and then after that we'll be into the next phase. So that's my proposal. So let me just summarize. We would convey to Juror No. 4 that we've heard back -- she may have heard herself, but she may not, and we don't want her taking inadvertently vacation time thinking that maybe there is some accommodation that had been made. So we should tell her that we've heard back. Leave that. And then I would propose at the end of the day to assess with you folks at our afternoon break where we are in terms of timing and schedule and then give the jury just some sense as to where we are going. Page 1708 Mr. Howard. MR. HOWARD: That sounds acceptable to the government. THE COURT: Mr. Dratel. MR. DRATEL: The only thing I have a position on right now is that any communication should be with the Court and the juror. I think that would be the appropriate way to do it in the robing room and that the communication be on that level. THE COURT: And by that you mean, with the Court, you mean without -- MR. DRATEL: When she is informed. I think it is appropriate, based on case law and everything, that the Court informs the juror. THE COURT: Right. My question to you is do you want to be present for that? MR. DRATEL: Yes. THE COURT: Fine. MR. DRATEL: Because she may respond right there. THE COURT: Right. I mean, that's always possible. Obviously, if she did and it were just a communication with me, I would not communicate back without conferring with you. And I would receive the communication, indicate to her that I needed to proceed with counsel. But we would proceed, believe me, very carefully. Page 1709 I'm happy, though, Mr. Dratel to have you folks -- what I would suggest is that we just do it in the robing room just before we resume. And the question then is is the defendant willing to waive his appearance for that session? MR. DRATEL: Yes, your Honor. THE COURT: All right. Thank you. Then that's what we'll do in terms of informing her. What's your view on the rest of it? Sort of take it as it comes? MR. DRATEL: Well, I'm not sure as to whether, if she doesn't respond, whether it is appropriate to have some brief voir dire about impact on her. I'm not sure. Can I think about that? THE COURT: Why don't you think about it. Why don't we then resume ourselves and at least we can resume -- we will need the defendant for this -- as to how you would like to proceed with her at 1:45. So I need the marshals to make sure that Mr. Ulbricht is back at 1:45. Will that be all right? Yes. I'm getting a nod of the head. Thank you. So at 1:45 we'll resume and then we'll figure out if you've got something else you would like us to ask. Page 1710 MR. DRATEL: OK. THE COURT: All right. Thank you. Anything further either of you would like to raise right now? MR. TURNER: No, your Honor. THE COURT: Mr. Dratel? MR. DRATEL: No. THE COURT: We're adjourned. THE CLERK: All rise. *(Luncheon recess)* Page 1711 A F T E R N O O N S E S S I O N 1:51 p.m. *(Jury not present)* THE COURT: All right. Let's all be seated. And the purpose for resuming at this point was to see whether or not, Mr. Dratel, you had any additional questions you would like me to ask of Juror No. 4 basically before she expresses anything, or if she expresses something, you know, if you have any views. MR. DRATEL: Well, I guess if she doesn't express anything, I'm not sure there is any need to go further. But if she does express any anxiety about the time, we should probably ask what the impact would be on her. THE COURT: All right. The way I would word it is would using her vacation time make her unable to be fair in this case. We'll see what she says. It could go in a variety of directions at that point. Mr. Howard, Mr. Turner, do you have anything else that you would like the Court to ask? MR. TURNER: I just think it might be worth noting how much longer the trial is expected to continue. THE COURT: All right. So in that regard, it's I think relatively straightforward for me to say that the government's case is likely to end on Monday and then we're going to get into the defense case. Actually, I can just be vague and say we're -- you know, I don't want to commit to a particular timeframe, but we're far along in this case and I would think that this would be done in a week or shortly thereafter. Page 1712 It's going to take, I think, if, Mr. Dratel, depending on the length of his case, it's going to take at least until Wednesday midday, I think, and that's if the defendant doesn't testify. If the defendant does testify, that could take Wednesday, Thursday -- you know, I want to let that run its natural course. And so I don't want to commit us with a juror. By the way, once we've previewed the timing to the juror, I will need to tell the rest of the panel that as well when they come out. So I don't want to commit. So it's something that's sort of like we'll be done next week because we may well not be done next week. We may be done with the testimony next week but it is hard for me to predict and she can't predict how long deliberations will take. You know, they've got a number of counts. So I would say that we are far -- you know, without committing, we're far along in this case and I hope to be able to give you another update. And then once we know from Mr. Dratel how long his case is going to be, we can maybe on Monday give them a further update. How does that sound, "far along," using that phrase? MR. TURNER: That sounds good to the government. Page 1713 MR. DRATEL: Yes, your Honor. THE COURT: Mr. Turner, is there anything you want me to say more specifically, or Mr. Howard, than "far along"? MR. TURNER: No. Thank you, your Honor. THE COURT: I would love to say that we are likely to have the case go to the jury on Thursday, but I don't want to do that because we may not. MR. TURNER: I understand. The witness may have a question and I just want to make sure -- THE COURT: All right. Well, I would actually preview this to her when I -- if she says anything like, oh, that's really too bad -- if she says something like, oh, that's really too bad, then I think I would say is it going to affect your ability to be fair in this case that you are going to have to use your vacation time and see what she says. And then after that I could say, well, at least I can tell you that, you know, we're very far along in this case. OK? All right. So, Joe, do we know if she is here? THE CLERK: She is not here yet. THE COURT: She is not here yet. All right. So as soon as she gets in, we'll pick up with her in my robing room. So Joe will bring you folks in first. So stay in the vicinity. Don't leave. And with the court reporter. And then we'll pick up as soon as we're done with her. We'll just take a couple of minutes with her. All right? Page 1714 MR. TURNER: Your Honor, I just wanted to note that -- picking up from our conversation this morning about the jury instructions -- THE COURT: Yes. MR. TURNER: -- that I was incorrect about the "organizer" language. That does not come from a Second Circuit case. It comes from multiple other circuits that I can provide the Court with the citations, if you would like, an hour later. THE COURT: Why don't you just state -- don't give me the names, just give me the citations for those. It will make it a little faster. MR. TURNER: Sure. 885 F.2d 195, the Fourth Circuit; 965 F.2d 1390, the Sixth Circuit; 843 F.2d 421, the Tenth Circuit; 734 F.2d 1030, that's Fifth Circuit -- THE COURT: I'm sorry. 734? MR. TURNER: F.2d 1030 is a Fifth Circuit. THE COURT: Right. MR. TURNER: And then there is an NDNY case that cites, as well, 912 F.Supp. 655. There is also a related Seventh Circuit case -- THE COURT: That is not F.Supp.2d, it is F.Supp? MR. TURNER: F.Supp. THE COURT: All right. Let me just ask you whether or not the Second Circuit has had the question presented to them so far as you are aware? Page 1715 MR. TURNER: I just searched for that specific language. THE COURT: OK. MR. TURNER: I think the larger point is that you don't have to actually control the people you are organizing. They could be -- there is also a Seventh Circuit case, 847 F.2d 1233. It doesn't use the exact same language but it was cited along with those other case. THE COURT: Terrific. Now, Juror No. 4 I am informed has arrived. So why don't counsel come with me and the court reporter into the robing room right now. As soon as we are in there, Joe, why don't you bring Juror No. 4 in. All right? THE CLERK: All rise. *(In the robing room)* MR. TURNER: Who is the juror's employer? THE COURT: NYU Medical Center. *(Juror No. 4 present)* THE COURT: Come on in. JUROR NO. 4: How are you? THE COURT: Just have a seat. I'm sorry. JUROR NO. 4: I think I will. I usually stand in the other room. That is OK. THE COURT: I'm sorry for the formality of all of us, but we have to do things on the record all the time. Page 1716 JUROR NO. 4: Yes. THE COURT: And I wanted to let you know that we have heard back from your employer, and they're not willing to change what they've said is the policy that they have about the vacation time. We pushed back and they have just expressed an unwillingness to do it. So I wanted to let you know that. That is the purpose for having you in. JUROR NO. 4: Oh. THE COURT: All right? JUROR NO. 4: OK. THE COURT: And so if -- one thing I can tell you is that we are relatively far in and far along in this case. JUROR NO. 4: It feels that way, yeah. THE COURT: So, you know, if you have any other concerns, you are to let us know. JUROR NO. 4: In terms of relatively, I mean, is anybody able to say -- THE COURT: You know, we'll have I think a better view on this Monday. JUROR NO. 4: Mm-hmm. THE COURT: But the problem is, here's the issue. JUROR NO. 4: Right. THE COURT: Things are pretty uncertain. If I tell you one timeframe, I told you it could be as soon as the end of next week, that could end up being wrong and it could go on for a week beyond that. And if it is going to make a huge difference, then I don't want to have you get your sights set on a particular timeframe because you don't know how long you and your colleagues are going to want to deliberate and it is just going to be -- Page 1717 JUROR NO. 4: Yeah. THE COURT: So there is always with trial a certain amount of uncertainty. JUROR NO. 4: OK. Then I'm just curious, you know, because I did Google that, you know, can your employer actually do this, you know, require that you use vacation time for jury service. And according to the newyorkstate.gov website, no, they can't. So I'm just idly curious to know, you know, all well and good if this is what they put in the employee handbook, but how is that possible or where is the disconnect there? THE COURT: You know, I don't know and I haven't looked at that website. But this is the federal system so I don't know if there is a difference there. But we checked with our jury department when this first came up, and the reaction we got -- and they face questions like this fairly frequently -- is if it's disclosed in the employee handbook and it's there and it's been there and it is not just for you for this case, then -- Page 1718 JUROR NO. 4: It's tough. THE COURT: -- that's the way it is. Now, I haven't done an independent investigation of that. We'll look at it again just to sort of be sure so that I can look underneath it if you've seen something. Let me ask you, are you going to be able to be fair in this case if you have to use vacation time? Is it going to be a problem for you? JUROR NO. 4: No, that wouldn't be a problem. I mean, it just gets to be -- of course, since I went into work on a snow day when the office was technically closed, I get an extra vacation day. It's these little things, but it does obviously come down to like how many more witnesses we have, and I know that there is a wildcard there. So, you know, yes, I wouldn't want to, you know, blow my entire bank. I mean, it is reasonably generous but, still, I've got kids, you know. THE COURT: If at any point in time you believe that you are unable to be fair in this case because of that, you should definitely let us know, and we'll then talk with you at that time about it. And I'll try to give you and the rest of the jury panel an update on timing and give you something a little more concrete. Even if you can't predict length of deliberations, etc., if you have a sense of when the end of the case is going to be, that might help you some in your own mind to gain some comfort. So we need to sort of all talk about that. OK? Page 1719 JUROR NO. 4: Yeah. Then is the only way for me to then get off is to claim that it would cloud my judgment? I mean, even if it wouldn't. I mean, I wouldn't want to -- *(Laughter)* THE COURT: You are speaking like a human being. Let me just say that whenever a juror feels like there is something external that is causing them to be unable to be fair, it's of real concern to us and we need to explore it fully. We would press you hard on it and because, you know, jury selection here, as you know, it was complicated and you guys filled out a questionnaire. You were accepted because of each juror's individual qualifications. We want the jurors that have been selected for this group, but we want you also to be able to be fair. And if something is clouding that, we need to know. JUROR NO. 4: OK. Yeah, I mean, I had no idea -- I mean, while -- the classic thing, you know, like you are handed a wrap of paper, you know, in HR and you sign it, you know, you are giving me the employee handbook, have you read this, you know. So, I mean, I had no idea that that was actually the policy. And, anyway, you know, and having been selected for jury duty two other times, it is like what are the chances that I actually get it this time. So, anyway. THE COURT: Once you have been selected twice, your chances are pretty high. That means there is something about you that makes you -- Page 1720 JUROR NO. 4: Was it just me, though? I mean, how could that be? *(Laughter)* THE COURT: Let the record reflects laughter. JUROR NO. 4: So you're saying I would have to then meet with you all again in order to -- you know -- THE COURT: Yeah. I don't want to make it seem like there is some barrier with you. But what I do want to do is I want to suggest to you that I -- that if you really feel like you cannot be fair, come back to us. JUROR NO. 4: OK. I am nervous. THE COURT: Then come back to us. All right? JUROR NO. 4: OK. THE COURT: We do need to question you. That is just the way the process works. OK? JUROR NO. 4: Right. THE COURT: So everybody will be here. Nobody bites. But if it's that you feel like you can be fair but, you know, you wish this didn't happen like this, that, you know, that you weren't going to have to use your vacation time, then I'm going to ask you just to hang on. JUROR NO. 4: OK. All right. So I think I have one more day, Monday, right? THE COURT: One more day in your -- Page 1721 JUROR NO. 4: In my -- THE COURT: Allotted time. JUROR NO. 4: In my allotted time, right. THE CLERK: Since jury selection, we have had nine trial days. THE COURT: You should count yourself and make sure what your count is. All right? JUROR NO. 4: OK. THE COURT: Then I'll try. We are going to try to assess, as we have been doing as things go along, how much longer and try to give you guys what guidance we can. All right? JUROR NO. 4: Right. THE COURT: Without causing undue expectations in any direction. OK? JUROR NO. 4: All right. THE COURT: Thank you. Thank you for coming in here with this multitude -- JUROR NO. 4: Thank you. *(Juror not present)* THE COURT: We are off the record. Actually, stay on the record a minute in light of that. Anybody have any view as to anything else that we should do at this time? MR. DRATEL: No, your Honor. Page 1722 MR. TURNER: No. I don't think so, your Honor. THE COURT: All right. Then let's go off the record and we will then head on out. *(Continued on next page)* Page 1723 *(In open court; jury present)* THE COURT: Let's all be seated. Thank you. I wanted as a housekeeping matter, to give you folks a sense of where we are in the case. We are what I would characterize as far along in the case. I don't want to be anymore specific than that right now because things can fluctuate some. I'm going to try very hard to give you a better sense of where we are on Monday. Right now, I just wanted to use those words to sort of give you a general sense of where we are in the case, all right. Thank you. Let's continue with Mr. Yum. Mr. Howard. MR. HOWARD: Thank you, your Honor. DIRECT EXAMINATION MR. HOWARD Q. Good afternoon, Mr. Yum. A. Good afternoon. MR. HOWARD: Mr. Evert, can we please go back to page one of Government Exhibit 608 that was admitted for demonstrative purposes. Q. I just want to clarify a couple things about bitcoin log files real briefly. A. Sure. Q. Earlier you testified a bitcoin wallet can contain multiple bitcoin addresses, correct? Page 1724 A. Yes. Q. Can each bitcoin address only contain one bitcoin or can it contain many bitcoins? A. It can contain many bitcoins and you can use it in multiple transactions. Q. In fact, earlier you testified that you moved the 144,000 bitcoins from the defendant's wallet file to one FBI bitcoin address, correct? A. Correct. So in that instance, I had to create a wallet file for the government and in that wallet file create one address, the address that was depicted before starting 1FfmbH. And to that -- to that one single address, I made over 400 transactions in increments of somewhere around 300 bitcoins. So that whole 144,000 bitcoins all went to one single address. So you could reuse the same address over and over or create multiple addresses and spend it or send it how ever you want between all the addresses. MR. HOWARD: Mr. Evert, can we please go to page four of Exhibit 609, which was also admitted for demonstrative purposes. Q. Mr. Yum, earlier you testified that as part of your analysis, you were focusing on simply one-to-one transactions, correct? A. Correct. Q. Can you explain a little bit more what that's about. Page 1725 A. Yes. So perhaps I could use an analogy where your wallet is kind of similar to -- if you put it simply, it's like your own personal bank, so you don't have to work with any financial institution. Your wallet contains the addresses which kind of works like your bank accounts. So wallet is your bank and you can open up as many bank accounts that you want. So in here, all the wallets that were found on Silk Road Marketplace, the Silk Road Marketplace created all these different addresses and each one of these addresses would be similar to a bank account. And on the right side, the defendant's laptop contained wallet files with all these addresses. So his wallet, his bank, contained all these different accounts that could receive bitcoins. So, the analysis that I did, I didn't do any complicated analysis. It was very -- it was a very simple direct one-to-one transfer. So if I have a bank account and I want to wire somebody else money, all I'm doing is wiring -- using my bank to wire-transfer money directly to someone else's bank account. So the analysis that I did was wire transfers that occurred straight from Silk Road Marketplace directly to the bank -- to the accounts that were found on the defendant's laptop. Q. And to be clear, all of that information is publicly available on the block chain, correct? Page 1726 A. Right. So the beauty of bitcoin is the block chain contains every single transaction that's occurred in the history of bitcoin. So if this was actually a bank, we would have to figure out what the bank is and subpoena the bank to get the bank transaction records. In this case, block chain is on the Internet every -- by all the bitcoin users, so I could reliably go to this block chain and get the same results that I would normally have to request the bank to provide the transaction records. Q. So now, let's go back to Government Exhibit 620B, please, which is where we left off before the lunch break. A. Yes. Q. Mr. Yum, what does the entire pie here represent? A. The entire pie is all the transactions that came to the addresses found on the defendant's laptop. Q. And what does the red area depict? A. The red area -- out of all the bitcoins that the defendant's laptop received, the red area came directly -- straight wire transfer from the accounts that are found on the Silk Road Marketplace. Q. And those are the one-to-one transactions you were talking about? A. The one-to-one transactions. Q. What does the blue area represent? A. The blue area is everything that is not a one-to-one transaction. So the defendant's wallet file received those 89,854 bitcoins and I can't link that directly back to Silk Road Marketplace. Page 1727 Q. So if Silk Road wallets were used to send bitcoins to an address that was not in the defendant's laptop file and then it was transferred -- MR. DRATEL: Objection. THE COURT: Sustained. MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 601, which is already in evidence. Q. Mr. Yum, did you do any analysis of transactions that went from the Silk Road servers to Ross Ulbricht's laptop that were not one-to-one transactions? MR. DRATEL: Objection. THE COURT: Hold on. MR. DRATEL: Objection to form. THE COURT: I'll allow it. You may answer. A. I'm sorry. Can you repeat the question. Q. Did you do any analysis of transactions from the Silk Road server bitcoin addresses to the Ross Ulbricht laptop addresses that were not one-to-one transactions? A. No, I did not. Q. So Mr. Yum, Government Exhibit 601 is a screenshot of the block chain we discussed earlier, correct? Page 1728 A. Correct. MR. HOWARD: Could we zoom in on the bottom-two transactions here, Mr. Evert. Q. Did you do any further analysis of these two transactions? A. Yes, I did. Q. And generally what did you do? A. I looked at all the addresses, the accounts that are making this transfer. The one on the bottom is 1,670 bitcoins. The four addresses you see on the left were used to send that 1,670 bitcoins to that address on the right starting 1MwvS1. Similarly, the transaction on top, there are three bitcoin addresses accounts that sent 3,000 bitcoins to that same address starting 1MwvS1. Q. And what specifically did you look into regarding these transactions? A. I checked to see if I could locate any of these addresses on the left, three from the top, four from the bottom, and those addresses were found within the list of addresses, list of accounts that I located on the defendant's laptop. Q. Could you please take a look at what's been marked in your binder as 631 -- 630 and 631 for identification purposes. Do you recognize these exhibits? A. Yes, I do. Q. What are these exhibits? A. It's a series of screenshots that I put together to explain a transaction. Page 1729 Q. Were those the transactions we just described on the block chain? A. Yes. Q. Did you participate in the creation of these exhibits? A. Yes, I did. Q. Are they a true and accurate screenshots of the bitcoin address list taken from the defendant's laptop as well as the bitcoin address list from -- sorry -- just from the laptop, correct? A. Just from the laptop. Q. And does it also include a true and accurate screenshot from the block chain? A. Yes. MR. HOWARD: The government offers Government Exhibit 630 and 631. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 630, 631 received in evidence)* MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 630. Q. Mr. Yum, can you please describe what is depicted here. A. So I want to start with the screenshot up top up here. That is a screenshot segment of this transaction you see appear identify with transaction ID 4a0a5b. Block chain info, if you look at that transaction, it shows on March 31, 2013, these four addresses sent 1,670 bitcoins to this address on the right beginning with 1MwvS1. Page 1730 So my interest was the addresses on the left. I took each one of those addresses and compared it against the list of addresses that I got from the defendant's laptop and every single one of those were found within the addresses acquired from the defendant's laptop. Q. Were the private keys for those four addresses on the defendant's laptop found on the defendant's laptop? A. Right. I'm able to get this list of addresses because I have access to the entire wallet, which includes the private keys. So private keys are essentially -- it's like a password or a key allowing you to access the bitcoins that are linked to these public addresses. It allows me to figure out what this public address is and also the keys allow the user to spend the bitcoins in those addresses the way they want, how ever they want. Q. So to be clear, the addresses on the left-hand side of the column, you identified as being addresses on the defendant's laptop, correct? A. Correct. Q. So what does this show overall about this transaction? A. It shows that the defendant's lap -- that the wallet file on the defendant's laptop made the transaction that's shown up top. So this 1,670 bitcoins came from the wallet files of the defendant's laptop and it was sent to this address. Page 1731 MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 631. Q. Is this a diagram depicting the other transaction in the block chain? A. Yes. Q. Can you please describe what is depicted here. A. Again, to start from the top, this is the detail of this transaction ID e7db524, which was documented on the block chain on March -- 2013, April 8. And again, there's three addresses, three accounts that made the transaction the amount of 3,000 bitcoins to the address on the right which starts with 1MwvS1. Q. So all these three of those addresses were also found, on the left, were also found on the defendant's laptop? A. Right. I took each one of those addresses and I compared it against the list of bitcoin addresses, bitcoin accounts that were located on the defendant's laptop and I was able to successfully find all three of them. Q. So like Government Exhibit 630, does this demonstrate that this transaction occurred out of the wallet found on the defendant's laptop? A. Right. The wallet file, the important thing is it holds the private key that allows the user to be able to send these bitcoins. So all three of the addresses were found on the defendant's' laptop and the wallet file had the private keys allowing this transfer to happen from the bitcoins that are contained in the wallet. Page 1732 MR. HOWARD: I think I'm concluding. Let me just check with cocounsel and I'm done. Two more questions. Q. So this is separate from the analysis we were looking at before that was comparing bitcoins sent from the Silk Road servers to the defendant's laptop, correct? A. Correct. Q. And so these are transfers that occurred from the defendant's laptop, not to the defendant's laptop, correct? A. Correct. MR. HOWARD: No further questions. THE COURT: Thank you. Mr. Dratel. MR. DRATEL: Thank you, your Honor. CROSS-EXAMINATION MR. DRATEL Q. Mr. Yum, the analysis that you spent on the bitcoin wallet analysis that you've been talking about for the latter part of your testimony, you began that within the last two weeks? A. A little less than two weeks. Q. And you said you worked with one other person on it? A. Yes. Page 1733 Q. Who was that? A. It's a colleague of mine. Q. And what is his name? A. Mathew Edmond. Q. And what's his -- what are his credentials? A. He has a doctorate in cryptology. Q. What did he do as part of this project? A. He worked with me to identify the wallets, extract the bitcoin addresses, and compare that to the block chain. Q. Did he do that actual work? A. We both did. Q. So he did some of that work? A. Yes. Q. Correct? How many hours did he put into that? A. We both worked on it for about a week together, so I think we're a little short of 100 hours. He put in about 60. I put in about 40. Q. And what were his contributions to Government Exhibit 620 which is the spreadsheet, the large spreadsheet with all of the transactions. Right, isn't that the -- A. Yes. Q. So what's his contribution to that? A. He assisted me in obtaining the underlying raw information for that summary. Page 1734 Q. And how was that exhibit created? A. That one? I believe I just summarized the Excel file, so that's an Excel spreadsheet. I took all of the raw data and created a summary chart on Excel. Q. But in terms of the matching, did you use any software to match the transactions? A. Oh, the actual analysis? Q. Yes. A. Yeah, we loaded all the information onto a table and did a query on that table to find the matching transactions. Q. And what program? A. I believe the actual matching was done through Python. Q. And what is Python? A. Python. It's a scripting language. Q. Did you have any participation in writing the code for that program? A. Actual hands-on typing was done by Mr. Edmond, but we both sat down to work out the logic. Q. But I mean in terms of the program itself, did you create that program? A. Oh, no. So the reason why we use Python is there's available software called Pie Wallet, which was also found on the defendant's laptop, it's a common Python application that's used to manage bitcoins. So we used commands that are commonly used by all the bitcoin users. Page 1735 Q. And you don't have any notes of the work that you did? A. It's back in my office. Q. You do have notes? A. Well, the program itself. Q. So you have notes of what you went through to accomplish this, right? A. It would be the logic within the matching. Q. And it was important for you to have help in this project, right? A. In the amount of time that we needed to do the analysis, yes. Q. Well, could a layperson have done it just running off the top of their head? A. It may be time-consuming, but every information that we used, well, we had the public addresses for all of the defendant's laptop, so that's not available to the public but we have it because the private keys were found in his laptop. Q. But we had someone with a doctorate, correct, in cryptology working on this project with you, right? A. Right, it's easy as going to blockchain.info and typing those addresses to see if you could locate a transaction that you see -- Q. And how long would it take you to type in all of the addresses? A. It's time-consuming. That's why we had two people working on it. Page 1736 Q. Figure with two people, you would have done it in a week without any of the computer work that you did, without any of your knowledge and experience that you bring to the project? A. As a manual process, no. You can't do that as a manual process. Q. So then my question is -- withdrawn. So you do have notes and a progression of what you did, right? A. Well, the notes would be the files on the computer where this analysis was done. Q. Now, when you seized the bitcoins from the servers, right, in fact, the FBI didn't even have a protocol for establishing a wallet where to put seized bitcoins, right? A. Correct. Q. You had to create that? A. Yes. Q. You talked about the concept of a wallet, right, multiple wallets, multiple wallets and multiple addresses within wallets, right? A. Right. Q. You know what I'm talking about. So, you can't tell where a particular wallet was created, correct? A. Correct. Q. It can move from computer to computer, correct? A. Yes, it can. Page 1737 Q. And you can also move an address from one wallet to another wallet, correct? A. Yes, you can. Q. So you can't say how long any of the addresses of the wallets were on Mr. Ulbricht's computer other than the day he was arrested, right? A. Can you repeat the question. Q. Sure. You can't say when other than the day that Mr. Ulbricht was arrested or if those wallets or those addresses were on that laptop, other than the day he was arrested? A. Yes, but there -- the wallet files are computer files in itself. So there is a last-access date of that file. And some of them dated prior to the day of the arrest. Some, months prior; some, weeks prior. Q. Now, also the wallet that the bitcoins were in on Mr. Ulbricht's laptop, the 144,000 bitcoins, right -- A. Right. Q. -- that was a hot wallet, right, as opposed to a cold storage wallet, right? It had the bitcoin program in it. It was a hot wallet by definition, right? A. It's only hot if it's online. And the wallet that contained the most number of keys on the defendant's laptop, I don't believe that was synchronized to the block chain until August. Page 1738 Q. I'm not talking about keys. I'm talking about bitcoins themselves. Bitcoins themselves, the wallets -- the addresses within the wallets that the bitcoin were in, they were basically in one wallet, correct? A. The majority came from one wallet. Q. Right. And that wallet had a bitcoin program running in it, right? A. Yes, but the program hasn't run since August of 2013, so -- it will be a cold wallet at that point. Q. But isn't a cold wallet where it's not connected to a program where you can actually take the wallet, put it in a file or in a folder or somewhere else on the computer and extract the program -- extract it from the program so that it can't execute any functions, right? A. Well, a cold wallet is something that's not online. So if the wallet's last access date was August 2013, it hasn't been online since August 2013; therefore, from August until October, it's a cold wallet because it never went online. Q. But it still has a program in it, right, and it's still capable of execution? A. Right, but it didn't execute because it would have updated that last-access date on the wallet. Q. But if someone doesn't use their wallet, it doesn't mean it's a cold wallet; it can still be a hot wallet. You're just not using it, right? Page 1739 A. No, not correct. MR. TURNER: Objection; asked and answered. THE COURT: I'll allow it. A. A hot wallet is a wallet that is currently connected to the Internet. Q. At that time? At the very time? A. At the very time. Q. That's your definition? A. Yes, it is. Q. Okay. And how many bitcoin cases did you have before this one? A. This was a second case I believe. Q. Now, you talked about identifying servers and identifying bitcoin server, right, and identifying the servers from the Philadelphia servers, right? A. Right. Q. You testified about that. What you saw from the code was only an onion address, right? In other words, looking back to find the servers, correct, it wasn't an IP address. It was -- A. I'm sorry. Which address and which server are you referring to? Q. The server to which the backup data was exported to the jtan -- the Philadelphia server, right? A. Correct. Page 1740 Q. From the Iceland server, right? A. Yes. Q. Now, what you saw there when you're looking to find that is an onion address, right, an onion url, dot-onion url, correct? A. I was brought onto the case around that time, and I received an IP address. And my -- the investigative team, before I joined, they were the ones who did the analysis, so I can't speak to what allowed me to receive that IP address, but I received that IP address. Nothing else. Q. Now, the servers were first -- you went in October to Iceland, correct? A. Correct. Q. And to be there at the time of the arrest to shut down the servers, correct? A. Yes. Q. And to put the seizure banner up, we saw at Exhibit 600, right? A. Right. Q. The government had access to the servers -- the U.S. government had access to the servers in July of 2013, correct? A. That's what I've been told -- MR. TURNER: Objection; foundation. THE COURT: Sustained. Q. Now, isn't it true that a Silk Road user would have communications -- withdrawn. Page 1741 A Silk Road user would have transactions with the Silk Road wallet, correct, and their own wallets, right? MR. HOWARD: Objection; beyond the scope. THE COURT: Overruled. A. I'm sorry. Can you clarify. THE COURT: Let's not make a hypothetical. Why don't you ask him about actual things he may have seen. MR. DRATEL: Sure. Q. Silk Road users, in the context of how the bitcoin server worked on Silk Road, -- A. Okay. Q. -- Silk Road users, a purchaser of a product off of Silk Road, would have a wallet on the Silk Road server, correct? MR. TURNER: Objection to foundation. THE COURT: Overruled. A. I don't believe they have a wallet, but they're given an address where they could deposit the bitcoins that they personally own. Q. Right. And then they could withdraw those bitcoins, correct? A. I believe so; yes. Q. And those bitcoins being withdrawn would show up as a transaction on the block chain from the Silk Road server to one of their addresses in a bitcoin wallet, correct? A. Can you repeat that, please. Page 1742 Q. Sure. That if a Silk Road user puts -- THE COURT: Ask it in terms of what he's observed. Q. From what you know about the operation of the server with respect to bitcoins on Silk Road, that a user would fund his address, right, on Silk Road, correct? A. Correct. Q. And then if they decided to withdraw those bitcoins rather than using them to purchase at some point if they had a balance left, they could withdraw those bitcoins and that would show up as a transaction on the block chain from Silk Road wallets, correct? A. Correct. Q. In fact, someone could use Silk Road as a wallet itself in that forum, right? A. I guess you could, but it's kind of dangerous to trust your bitcoins in someone else's wallet management. Q. But it could be done? A. It could be done, but when we seize government -- when the government seized the Silk Road server, anyone who left their bitcoins in their Silk Road address for the purchase of buying drugs, they lost all their bitcoins, so I wouldn't maintain my bitcoins that way. MR. DRATEL: One moment. THE COURT: Yes. Q. Now, part of your investigation, part of what you were doing is looking at the movement of bitcoins back and forth, correct, from Silk Road servers, right? Page 1743 A. Not back and forth. Just one direction from Silk Road to the Ross' laptop. Q. And you mentioned -- THE COURT: I want to make sure that you don't speak over the witness. MR. DRATEL: I'm sorry. Q. But you mentioned that the amount that was in the FBI wallet was actually larger than the amount that was in -- that was transferred from the laptop, right? A. Yes. So once the transaction -- once the seizure happened, FBI address made it onto the block chain and transaction of that size normally gets noticed by a lot of bitcoin users. So once that happened, the government seizure address was publicly known at that point. And just like -- just like an email, someone could send you an email and you send end up receiving it, whether it's spam or not. So we received a lot of small transactions that also came into the government wallet -- government address. Q. Bitcoin? A. Small -- fractions of bitcoins. Q. But you don't know where they were from necessarily, right, you didn't track them all down? A. I'm sorry. What was that? Page 1744 Q. You didn't track down where they all came from? A. No, I did not. Q. So when you say spam or something, that's just your speculation, right? A. Right. Q. That's just a theory. You don't know where those -- those bitcoins came from after Mr. Ulbricht's arrest, right? A. Right. Q. And in fact, when you talked about large amounts being noticed on the block chain by the public, in fact, you -- six weeks after Mr. Ulbricht was arrested, you noticed 195,000 bitcoins being moved, right? A. 195,000 bitcoins? Q. Yes. A. I don't recollect that. Q. I'll show you what's marked as 3511-38 and ask you if that refreshes your recollection. That November 22nd, 2013, there was a 195,000 bitcoin transaction that was then broken down quickly into three different transactions, right? A. I'm sorry. I was reading this. Could you give me just one second. Q. I'm sorry. A. Yes. You may proceed. Q. I'm sorry. It was 35, not 38. Thank you. It's the wrong one. I'm giving you 35 instead to read. Page 1745 A. Sure. Q. No wonder you're confused. Does that refresh your recollection: November 22nd, 2013, that there was a transaction of 195,000 bitcoin that that was then quickly broken up into three smaller transactions? A. It looks familiar; yes. Q. Now, you you're at something called FTI Consulting, right? A. Yes. Q. And you left the government to join that organization, right? A. Yes. Q. The amount of money that the company's been paid already for this work is $55,000, right? A. We haven't been paid yet. I'm not sure what the bill is going to -- Q. Is that the bill you've run up, $55,000, right? A. I'm not sure of the exact amount, but I think it's somewhere around there. Q. And this was an important case, right, for you and your career? MR. HOWARD: Objection. THE COURT: You mean in his career with the government or at FTI? MR. DRATEL: Well, both, your Honor. THE COURT: All right. Page 1746 Has it been important in your career in both jobs? You may answer. A. It was a significant case considering that bitcoin was never involved in a criminal case like this, but I've worked on many other cases that were very interesting as well. Q. And it's also true that another agent closely involved in this case, Christopher Tarbell, also went to FTI after the arrest in this case, correct? A. Yes. MR. HOWARD: Objection; beyond the scope. THE COURT: Overruled. MR. DRATEL Q. The answer is yes, right? A. Yes. Q. And you left during this -- after the arrest and before the trial, right, and you went to FTI? A. Yes. MR. DRATEL: I have nothing further. THE COURT: Thank you. Anything further from you, Mr. Howard? MR. HOWARD: No, your Honor. THE COURT: Thank you. You may step down, Mr. Yum. THE WITNESS: Thank you. *(Witness excused)* THE COURT: Would the government like to call their next witness, please. Page 1747 MR. HOWARD: The government calls Brian Shaw. THE COURT: Mr. Shaw to the stand, please. THE DEPUTY CLERK: Raise your right hand. *(Witness sworn)* THE COURT: Mr. Howard, you may proceed, sir. BRIAN SHAW, called as a witness by the Government, having been duly sworn, testified as follows: DIRECT EXAMINATION MR. HOWARD Q. Good afternoon, Mr. Shaw. A. Good afternoon. Q. What do you do for a living? A. I am an info sec engineer. Q. In your work, do you have any relationship with the FBI? A. Yes, I do. Q. What is that relationship? A. I am a government contractor to the FBI. Q. How long have you been a government contractor to the FBI? A. Since 2001. Q. And what are your roles and responsibilities as a contractor? A. My roles and responsibilities include collecting, processing and analyzing computer data. Page 1748 Q. What is your educational background? A. I have a Bachelor's degree in Electrical Engineering from Northwestern and a Master's degree in Computer Engineering from Virginia Tech. Q. Are you familiar with computer databases? A. Yes, I am. Q. We'll talk more about databases in detail later, but can you provide a short description of what that is. A. Sure. Computer database is a way to store structured data in a format that is easy to retrieve it later. Q. Do you have any specialized training in reviewing and analyzing computer databases? A. Yes, I do. Q. And what is that? A. Request I have completed a training class in SQL, which is structured query language, which is the language used to interact with databases. Q. Now, in your role as a contractor with the FBI, do you have any role in FBI investigations? A. Yes, I do. Q. What is that role? A. I assist in analyzing and collecting and processing data in support of investigations. Q. And in the course of your career as a consultant to the FBI, approximately how many computers have you examined? Page 1749 A. I have supported over 100 investigations with digital evidence. Q. Have you been involved in the review of computer evidence collected during the Silk Road investigation? A. Yes, I have. Q. And, what your -- what is your involvement been specifically? A. I've had two different roles: One was fairly early on where I was given copies of the databases collected from the investigation. And taking those copies of the databases, I assisted in creating intelligence packages to help support field investigations. Those intelligence packages, for example, with the DEA came to us and asked could we have information on user Joe X, Y, Z. We would create an intelligence product to then send back to the field investigator so that they could work on their investigation. More recently, I was asked to take a look at two of the servers that were seized as a part of the investigation. MR. HOWARD: Your Honor, may I approach. THE COURT: You may. Q. I have just handed you Government Exhibit 603 and 604, which have already been admitted into evidence. A. Yes. Q. Do you recognize those exhibits? A. Yes, I do. Page 1750 Q. What are they? A. These are the copies of the servers that I received copies of to analyze. Q. And how do you recognize them? A. They have my initials on them. Q. Did you review the files on the servers themselves or did you review copies of those servers? A. I reviewed from a copy of these images here. Q. Now, what, if anything, did you do to confirm that the copies you reviewed were true and accurate copies of the original servers? A. I verified the hash values of -- from the original servers to the copies that I was analyzing. Q. And what kind of hash values did you run? A. The MD5 and the SHA1 hash values. Q. And real briefly, what a hash value? A. A hash value is, in essence, a fingerprint of a file so it helps you to uniquely identify a file and also to detect if any changes have occurred. Q. Mr. Shaw, can you please flip in your binder to what has been premarked as Government Exhibits 900A and 900B. A. Yes. Q. Do you recognize these exhibits? A. Yes, I do. Q. What are they? Page 1751 A. These are screenshots of the MD5 and the SHA1 values of the images that I analyzed. Q. Did you take these screenshots? A. Yes, I did. MR. HOWARD: The government offers Government Exhibits 900A and 900B. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibits 900A, 900B received in evidence)* MR. HOWARD: Mr. Evert, could you publish 900A. Q. Mr. Shaw, is this the screenshot of the hash values for one ever those two servers? A. Yes, it is. Q. Do you know which server it was? A. I believe this was the server that hosted the web server and the Marketplace. MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 900B. Q. And what is this? A. This is the hash values from the second server that hosted backup copies of data from the Marketplace. Q. And do you -- you compared these values with the copies in the original log files for these servers? A. That is correct. Page 1752 Q. Did they match? A. Yes, they did. Q. And what does that indicate? A. That indicates that there was no change between the original and the copy that I was given. Q. Can you please flip in your binder to what has been premarked for identification purposes as Government Exhibit 901. A. Okay. Q. Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. This is a screenshot from a tool called FTK Imager and it's -- it shows information about a file called authorized_keys. Q. Did you take the screenshot? A. Yes, I did. Q. And where was this file extracted from? A. This was extracted from the primary server that hosted the Marketplace. MR. HOWARD: The government offers Government Exhibit 901. MR. DRATEL: No objection, your Honor. THE COURT: Received. *(Government's Exhibit 901 received in evidence)* Page 1753 Q. Mr. Shaw, what is depicted in the top right-hand corner of this exhibit? A. That is the file name of the file being reviewed. Q. It's called authorized_keys? A. Correct. MR. HOWARD: Could we zoom out. Q. What's depicted on the bottom right-hand corner of the screen? A. That is the content of the file or at least part of the content. Q. Now, are you familiar with this kind of file? A. Yes, I am. Q. And what is it? A. It's part of an SSH key. Q. And, what an SSH key? A. An SSH keys are used for automatic mated authentications. Normally, when you connect to a server you have to type in your username and password. System administrators don't like to have to remember all of their usernames and passwords for all of the systems that they work on, so they like to set up an automated process for handling this authentication. So what you do is you put a copy of your SSH key on the remote server that you're administering. And when you go to connect to the remote server, it does a comparison, three-part comparison to see if you're authorized to access the system. Page 1754 Q. And so what is this first part -- let's look at the first line. There's a long series of characters here, letters and numbers. A. Yes. Q. What is that? A. That's the tail end of the key that is used as part of the authentication. Q. And what is frosty@frosty to the right of that? A. That is -- the first "frosty" denotes the username and the second "frosty" denotes the computer name, and those are taken from the system you are coming from. Q. So what is required for this key to work? A. In order for this work, you must be coming from a computer -- let's see if I can use this -- you must be coming from a computer with a computer name frosty, that's the second part there. And the username that you are, again, coming from must be the first frosty here. And then the comparison -- once those two match, a comparison is done to see if the keys are also a pair, and if so, then you're automatically authenticated and allowed into the server. Q. If any of those parts are not correct, then what happens? A. You get a login error. Q. And here there is a second line here. What does it indicate? Page 1755 A. That indicates that there was a second key that was authorized access to this server. Again, the username in this case would be "root" and the computer name would be "BCW." MR. HOWARD: Now, Mr. Evert, could you please publish Government Exhibit 241, a file that was recovered from the defendant's computer and zoom in on the entries from March 25 through March 27, 2013. "03/25/2013. Server was ddosed, meaning someone knew the real IP. I assumed they obtained it by becoming a guard node. So, I migrated to a new server and set up private guard nodes. There was significant downtime and someone has mentioned that they discovered the IP via a leak from lighttpd. 03/26/2013: Private guard nodes are working ok. still buying more servers so I can set up a more modular and redundant server cluster. redid login page. 03/27/2013: Set up servers" Q. Mr. Shaw, from that FTK Imager, does it indicate the last date that that file was changed? A. Yes. It has a "date modified" date of March 26, 2013. Q. Now, focusing on what you reviewed the Marketplace server did you review the contents of that computer server? A. Yes, I did. Q. Did you discover if any website was running from that server? Page 1756 A. Yes, I did. Q. What website did the server appear to be running? A. The Silk Road Marketplace. Q. Now, based on your review of the files on that server, were you able to observe what the website looked like at around the time that it was seized? A. Yes, I was. I was able to recreate the web server. I took database files, the files that contained images and along with some of the code that was used to run the web server and I copied those, that data, moved it to a clean computer image that I created and I was able to re-instantiate, recreate what the web server would have looked like on my own local computer completely isolated from any networks. Q. So no one else could access -- A. Correct. Q. -- the simulation of the Silk Road website? A. Correct. Q. Now, if you can please flip in your binder to what has been marked for identification purposes as Government Exhibit 910. A. Yes. Q. Do you recognize what this is? A. Yes, I do. Q. What is this? A. It's a screenshot from my recreated web server. Q. Did you take this screenshot? Page 1757 A. Yes, I did. MR. HOWARD: Government offers Government Exhibit 910. MR. DRATEL: No objection. THE COURT: Received. *(Government's Exhibit 910 received in evidence)* Q. Mr. Shaw, what page of the Silk Road website does this depict as you recreated it? A. This is the page that loads after you log in. Q. So here in the upper left-hand corner we see Silk Road Anonymous Market. If we can zoom out, Mr. Evert and maybe zoom into the top two rows here. We have various photographs and words underneath, for example, front seller cocaine 0.5 grams, 500 milligrams, .7216 bitcoins. Another example, we have a picture and a tilde, 100 percent pure MDMA capsules X4 and a bitcoin price underneath, correct? A. Correct. MR. HOWARD: Can we zoom out, please. Can we zoom in on the top right-hand corner of the screen. Here we have the words "A few words from the Dread Pirate Roberts," and an avatar to the right? A. Correct. Q. And here it says "Hi, FBINY." What is FBINY? A. In order to get into the recreated server, I had to create a login account. I chose the name FBINY. Q. That was a new user you created for the purpose of making these screenshots? Page 1758 A. That is correct. That user did not exist prior to me recreating the website. MR. HOWARD: Could you zoom out, please. Could you zoom in on the bottom right-hand corner here. Q. You see the word "support" here? A. Yes, I do. Q. What is that? A. That is a hyperlink to a new page. Q. Did you try clicking on the link? A. Yes, I did. Q. What happened? A. A new page loaded with support information. Q. Would you please flip in your binder to what's been marked for identification purposes as Government Exhibit 918. A. Okay. Q. Do you recognize this exhibit? A. Yes, I do. Q. And what is it? A. This is a screenshot that I took of the support page. Q. This is the page that happened after you clicked on the support link? A. Correct. MR. HOWARD: The government offers Government Exhibit 918. Page 1759 MR. DRATEL: Your Honor, hearsay in terms of for the truth. THE COURT: Is it offered for the truth? MR. HOWARD: No, your Honor. THE COURT: Then that objection is overruled. Government Exhibit 918 is received. *(Government's Exhibit 918 received in evidence)* THE COURT: You may proceed. MR. HOWARD: Here it says "Follow the steps below to get the help you need." Reading the titles: Step one, look for your question in the FAQ. Step two, search the forum. Step three, post your question in the customer support section of the forum. Step four, open a support ticket. Underneath that it says "If all else fails, you can message support as a last resort and an administrator will take care of you personally. Support tickets should only be used when absolutely necessary." And then there's a link -- the words there "Contact customer support." Mr. Evert, can you please publish 910 again. Can you zoom in on the top of the list right here. Q. You see here where it says "drugs"? A. Yes. Q. Is that also a link? A. Yes, it is. Page 1760 Q. Did you click on the link? A. Yes, I did. Q. And what happened when you clicked on the link? A. It took me to a page with products being offered for sale labeled drugs. Q. Now, Mr. Shaw, could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 911. A. Okay. Q. Do you recognize this exhibit? A. Yes, I do. Q. What is that? A. This is a screenshot of the page that loaded when you clicked on the link "drugs." Q. Did you take this screenshot? A. Yes, I did. MR. HOWARD: The government offers Government Exhibit 911. MR. DRATEL: Same objection. THE COURT: Overruled. Received. *(Government's Exhibit 911 received in evidence)* MR. HOWARD: Can we zoom in real fast on this little area here, right here. It says "sort by bestselling." Q. Can you explain that? A. Yes. You had at least two options for sorting the information. In this case, it was sorted by bestselling. Page 1761 Q. What is the other option? A. I believe it was "recent." MR. HOWARD: Can you zoom out, Mr. Evert. And zoom in on the first few listings. Q. Heroin China White, 1 gram, U.S. only, 10X, 140mg pure 84 percent MDMA capsules, high quality number four heroin all rock directly from Key. 100 grams, 72 percent pure speed. East Coast Style Heroin Stamps x10, and then in parentheses three free. And the seller is listed as deezletime, correct? A. Correct. MR. HOWARD: Now, can we zoom out and look on the upper left-hand corner of the page. Q. There's various -- are these all links on the left-hand side of the page by the way? A. Yes. They're all hyperlinks. Q. There are various links: Cannabis, Ecstasy, opioids and others. Did you try to click on all of these links? A. Yes, I did. Q. Did they take you to other pages on the Silk Road website? A. Yes, they did. Q. Please take a moment and look in your binder to what's been marked for identification purposes as Government Exhibits 911A through 911B, and let me know when you're done. A. Okay. Page 1762 Q. Do you recognize what these are? A. Yes, I do. Q. And what are they? A. These are screenshots taken from pages that loaded after clicking on some of these links on the left side. Q. Did you take these screenshots? A. Yes, I did. MR. HOWARD: The government offers Government Exhibits 911A through 911D. MR. DRATEL: The same objection. THE COURT: Okay. The objections are overruled. Those are received. *(Government's Exhibits 911A-911D received in evidence)* MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 911A. Q. Mr. Shaw, do you recognize what this is? A. Yes, I do. Q. What is this? A. This is the page that loads when you click on the link "cocaine." Q. There are a bunch of cocaine listed on this page, correct? A. That's correct. Q. And is this a subcategory of drugs? A. It's a subcategory of "drugs" and further a subcategory of "stimulants," yes. Page 1763 Q. Please publish Government Exhibit 911B, please. And what does Government Exhibit 911B depict? A. This is the page that loads when you click on the link "heroin." Q. Is this another subcategory of drugs? A. Yes, it is. Q. Can you please publish Government Exhibit 911C, please. THE COURT: We haven't got to C yet. THE DEPUTY CLERK: A through D. MR. HOWARD: A through D. Then A through D are received. Q. What is this page, Mr. Shaw? A. This is the page that loaded when you clicked on the link "LSD." Q. Will you please publish Government Exhibit 911D as in dog, please. And, what this page, Mr. Shaw? A. This is the page that loaded when you clicked on the link "meth." MR. HOWARD: Mr. Evert, can we zoom in on the top listing here. Q. It says 3.5 grams ball in parentheses, pure crystal methamphetamine; is that correct? A. Correct. MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 910 again. Could we zoom in on this part of the page down to here. Page 1764 Q. Mr. Shaw, do you see the link called "forgeries" here? A. Yes, I do. Q. Did you try clicking on that link? A. Yes, I did. Q. And what happened when you clicked on that link? A. It took me to a page of listings of various forgery items to include passports and fake IDs. Q. Mr. Shaw, can you please flip to Government Exhibits 913 and 914 in your binder. A. Okay. Q. Do you recognize what these exhibits are? A. Yes, I do. Q. And what are they? A. These are the pages that loaded when I went to the category "fake IDs" and "passports," both under the category "forgeries." Q. Did you take these screenshots? A. Yes, I did. MR. HOWARD: The government offers 913 and 914. MR. DRATEL: The same objection; for the truth. THE COURT: What was the other word? MR. DRATEL: That if it's coming in for the truth, it's hearsay. THE COURT: The objection is overruled. GX 913 is received and 914. Page 1765 *(Government's Exhibits 913, 914 received in evidence)* Q. Mr. Shaw, what is this? A. This is the page that loaded when you clicked on the link "Fake IDs." MR. HOWARD: Could we zoom in on the first few rows, please, Mr. Evert. Q. Here we see IDs from Ohio, Illinois and I guess two from Illinois, correct? A. Correct. MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 914. Q. And what does this page depict? A. This is the page that loaded when you clicked on the link "passports." MR. HOWARD: Let's zoom in on the two -- the top two listings, please. Q. Here we have an E.U. passport listing, a USA passport listing and a UK passport listing, correct? A. Correct. Q. And Mr. Shaw, did you review some of the individual listings within the forgeries category? A. Yes, I did. Q. Could you please flip through what's been premarked as 915A through 915G as in George. Page 1766 A. Okay. Q. Do you recognize what these are? A. Yes, I do. Q. What are they? A. These are screenshots of items that were offered for sale under the category of "fake IDs" and "fake passports." Q. Did you take these screenshots? A. Yes, I did. MR. HOWARD: The government offers 915A through 915G as in George. MR. DRATEL: Same objection, your Honor, with respect to the truth of the matter. THE COURT: All right. Those objections are overruled. GX 915A through G received. *(Government's Exhibits 915A-G received in evidence)* MR. HOWARD: Mr. Evert, can you please publish 915A. Q. Here the title is listed "Real passport and new identity in 30 days, rush service." Zoom in on the second paragraph there. Actually, go down a little further to the next paragraph right here. It says here "The real ID we provide is a Dominican Republic passport and citizenship. It will have your picture and the details of another real person which is your real new identity. We need to know (1) your approximate age, (2) natural hair color, (4) natural eye color, (5) height and (6) weight, (7) country you are from. This is used to access the info of a real person for your new identity, with info as close to you as possible." Page 1767 Mr. Evert, can you please publish Government Exhibit 915B, please. The title here is "Europe, fake documents passports ID, DL, Diplomas! Passports Denmark Latvia, Poland, Sweden, Holland, Lithuania." Down here it says "USA, DL (PA, FL IL, NJ) all security UV, helograms, barcode, magnetic line," correct? A. Correct. MR. HOWARD: Mr. Evert, can you please publish 915C, please. Zoom in on the top. Q. This says here "New York driver's license hologram plus scannable," and the seller is KingOfClubs, correct? A. Correct. Q. Look at the instructions. MR. HOWARD: Mr. Evert, would you please publish Government's Exhibit 915D as in dog, please. Q. This is a similar listing for a Pennsylvania driver's license, Mr. Shaw? A. Correct. MR. HOWARD: Can you please publish Government Exhibit 915E. Q. And what is this a listing for, Mr. Shaw? A. This is a listing for a Tennessee driver's license. MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 915F. Page 1768 Q. Mr. Shaw, what is this a listing for? A. It's a listing for a New south wales driving license. Q. Would you publish 915G, please. And what is this a listing for? A. A forged Social Security card. MR. HOWARD: Zoom out, please. Zoom this. This is a listing for a forged social security card. At the end the last sentence it says "In addition if you assume another identity and all you have in your wallet is a fake ID and some cash it looks a little empty and suspicious. Having more forms of ID and having more cards to pull it up makes it look real so buy this and more of my forged items will build a solid cover identity. Below is the order form." Q. Mr. Shaw, during your review of the contents of the Silk Road website as it existed when it was seized, did you find any listings for computer hacking tools and service? A. Yes, I did. Q. Mr. Shaw, could you please take a moment and flip through the binder to what's been marked as Government Exhibits 916A through Z for identification purposes. A. Okay. Q. What are these? A. These are listings for various hacking tools and services that were offered for sale on the Silk Road Marketplace. Page 1769 Q. Were you involved in taking these screenshots? A. Yes, I was. MR. HOWARD: The government offers 916A through 916Z. MR. DRATEL: Same objection. THE COURT: All right. Those objections are overruled. GX 916A through Z are received. *(Government's Exhibits 916A-Z received in evidence)* Q. We won't go through all of them. Let's look through a selection of them, Mr. Shaw. A. Okay. Q. Can we look at 916E, please. Here the title is "Android RAT plus tutorial"? A. Correct. MR. HOWARD: Zoom down to description, that far. "The description of this listing will be for an Android RAT and setup tutorial. Please only purchase if you have previous experience with RATS. Here are some of the media it's capable of stealing: Contacts, personal information, phone call logs, pictures, SMS messages (sent & received) WhatsApp messages." A. Correct. (Continued on next page) Page 1770 MR. HOWARD: Mr. Evert, could you please publish Government Exhibit 916F, please. MR. HOWARD Q. This is for a remote administration tool, correct? A. Correct. Q. Let's look at the first line. The description is: "This is a remote administration tool. Used for hacking computers. You send a file to a computer and then you control it." Correct? A. Correct. Q. Look at 916I, please. It is called an "Email account cracker - best price on SR." A. Correct. Q. Let's look at the description. "This tool will allow you to crack nearly any email account. All you need to know is the smtp server and port (a quick Google search can solve that). It's extremely easy to use and I'll even throw in a little .gif image showing you how to use it. This can crack gmail, hotmail, yahoo email and any others you need." A. Correct. Q. Let's at one last one, 916K. It says: "I will crack any username+password." A. Correct. Q. And the description: "This listing will be for a list of contacts that can crack random accounts on any website that has a login page. Please note that I will not crack any finance-related website accounts. If you are interested in having a specific account cracked, get in touch with me and we can make a deal. If you have any questions, feel free to send me a message. Sniffsniff." Page 1771 A. Correct. MR. HOWARD: Mr. Evert, could we just go back to Government Exhibit 910, please, and let's zoom in to the bottom of the list. Q. Do you see the money link, Mr. Shaw? A. Yes. Q. Did you try clicking on that one? A. Yes, I did. Q. What happened after you clicked on that one? A. It took me to a page with various money listings. Q. Would you flip in your binder at what has been marked for identification purposes as Government Exhibit 917. A. OK. Q. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. This is the page that loaded after clicking on the link "money." Q. Did you take this screenshot? Page 1772 A. Yes, I did. MR. HOWARD: The government offers 917. MR. DRATEL: The same objection, your Honor. THE COURT: All right. The objection is overruled. Government Exhibit 917 is received. *(Government's Exhibit 917 received in evidence)* Q. Mr. Shaw, if you could please flip in your exhibit binder to what has been marked for identification purposes as 917A through 917F. A. OK. Q. Do you recognize these exhibits? A. Yes, I do. Q. And what are they? A. These are screenshots of items that were offered for sale related to money, separate transactions. Q. Did you participate in the creation of these screenshots? A. Yes, I did. MR. HOWARD: The government offers 917A through 917F. MR. DRATEL: The same objection. Hearsay. THE COURT: All right. Those objections are overruled. 917A through F are received. *(Government's Exhibits 917A through F received in evidence)* MR. HOWARD: Mr. Evert, could you please publish 917A, please. Page 1773 Q. Here it says "$10,000 delivered," correct? A. Correct. Q. And photos of cash? A. Correct. Q. The description says: "$10,000 delivered to your doorstep in the form of 100 $100 bills (or U.S. bills of your choosing). You will be mailed genuine U.S. currency that has not been altered or linked to criminal activity." A. Correct. Q. Can we look at 917B, please. The title is "Vendors cash in UR coins 4 packs (3% fee)," correct? A. Correct. Q. Let's look at the description. "Hello my good friends! This is a listing for anyone to cash in their coins for moneypaks, REloadits, Vanilla Reloads, and netspends." Now, here we have: "The rates are the same all the way up no matter what, 3%. "$500 pack costs $515 coins. $100 pack costs $103 in coins. You get the picture." A. Correct. Q. Look at 917C, please. The listing is called "Anonymous Visa ATM Card EUR USD PLN + Bank ACC." Page 1774 A. Correct. Q. Let look at the first line here: "Get your own anonymous reloadable ATM physical plastic VISA debit card, with sealed PIN code, shipped by me from EU, bank will never know your name." Skip to 917E, please. The title is "$100 Green Dot Moneypak," correct? A. Correct. Q. The description: "Optimal: Contact me on TorChat to receive your code," and there are some letters and numbers. "I need up to 24 hours to buy these at the store, then I'll just PM you the card code and you can load it onto PayPal, credit cards, online bank, or whatever as if you had bought it yourself." And, finally, let's look at 916F -- sorry, 917F. The listing is "[BTC] Bicion Laundry (Highly Anonymous, Impossibl," correct? A. Correct. Q. Let's look at the first paragraph here. "Ever worried & paranoid about your unaccounted dirty money to be painful for you at some point? Then right now you are in the right listing, buy this listing and PM me... I will provide you fresh, washed, clean bitcoins in your BTC wallet in just 24 hours, making it completely anonymous and never be able to trace by using my own methods of mixing algorithm." Page 1775 Mr. Shaw, can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 919. A. OK. Q. And what is this? A. This is a screenshot that I created of a page called "Mastermind." Q. Did you take this screenshot? A. Yes, I did. MR. HOWARD: The government offers Government Exhibit 919. MR. DRATEL: The same objection. THE COURT: Overruled. Received. *(Government's Exhibit 919 received in evidence)* MR. HOWARD Q. Mr. Shaw, you testified that the name of this page was "Mastermind"? A. Correct. Q. Now, earlier you said that you had created the FBI NY account to access the Web pages, correct? A. That is correct. Q. Were you able to access this page using the FBI NY account? A. No, I was not. Q. Would you please explain? A. Sure. We were testing only one account that was able to get to this page and that account was the Dread Pirate Roberts' account. So I was unable to get to this page using my FBI NY account, and I also tried a few of the other user accounts in addition. I tried to use -- can you zoom in on the top, please? Also, I tried to use the account Inigo, Libertas and Cirrus, and none of those accounts were able to access this page. Page 1776 THE COURT: When you reach a logical stopping point, we are going to take our break. MR. HOWARD: This is absolutely perfect right now. THE COURT: All right. Had you finished your answer? THE WITNESS: Yes. THE COURT: All right. Thank you. Ladies and gentlemen, let's take our mid-afternoon break, and when we come back we'll sit for the remainder of the day. I want to remind you about the usual, not to talk to each other or anybody else about this case. Thank you. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 1777 *(Jury not present)* THE COURT: Mr. Shaw, you can step down as well. *(Witness not present)* THE COURT: All right. Let's all be seated just for one second. How much more do you have of this witness? I am just curious. I am not rushing you at all. I'm just wondering, do you feel like you are moving fast? Do you feel like you are moving at the pace that you had expected? MR. HOWARD: I'm sorry. I'm sorry to interrupt you for a second there. It is moving faster than I expected. However, there will be a lot of reading towards the end so I think we have a couple of hours left. THE COURT: All right. So you are likely to go the remainder of the day? MR. HOWARD: I think that is very likely. THE COURT: All right. Fine. Is there anything else that we should go over before we take our own break? MR. DRATEL: No, your Honor. THE COURT: All right. We'll resume then -- MR. DRATEL: Oh, yes. Wait. I do, your Honor. Just one thing. Sorry. The testimony of Mr. Yum, we would object to it as expert testimony without proper notice. We'd also object to it on the basis of hearsay and Crawford based on the fact that 60 percent of the work was done by someone who is not here as a witness, and we don't have notes, we don't have anything, or know what was done with respect to these processes, which are very technical. So on that ground I move to strike his testimony. Page 1778 THE COURT: All right. Mr. Howard. I'm sorry, Mr. Turner. MR. TURNER: Your Honor, so we don't think it is expert testimony. It does not require some sort of specialized opinion. As the agent himself explained, this is akin to looking at a bunch of bank records from -- you know, controlled by one entity or coming from one place and seeing if there are transfers going to another place, another account. It was done in an automated way, but it's still in essence just looking at basically the equivalent of bank records in the bitcoin context. It doesn't require expert knowledge. So we don't think it is expert testimony. And in terms of Crawford, the agent testified, he was personally involved in the analysis and even writing the code that was referred to. There is no hearsay issue. THE COURT: I think it was a Crawford issue that he was raising. MR. DRATEL: Yes. That is right. Page 1779 THE COURT: Not hearsay. MR. DRATEL: Well, the hearsay is the Crawford part. It is a complication issue because, essentially, the work of someone else is just simply being put in through this witness. And, also, he is an expert in the sense that he acknowledged that he couldn't have done it in the time that it would need to be done. Besides, he is a computer consultant for this very purpose; it is not something they assigned to a paralegal or they did themselves. This was farmed out for a reason. THE COURT: Well, this witness was an agent on the case who has extensive firsthand knowledge of the materials with which he was working. And expert testimony can be both opinions or specialized knowledge. But I agree with Mr. Turner that while there are no opinions that he offered, he offered fact evidence. It certainly seems to be precisely the kind of work that he would have done had he been at the agency still. And in terms of there being a confrontation issue, and then implicitly through that -- I now understand you, Mr. Turner -- a hearsay issue, I don't find that that has any traction. The kind of work that he was doing is the kind of work that's typically done, often done with others, and there was nothing that he testified about that indicates that the other person had done something uniquely on his own in which he had no substantive involvement. The only issue was the actual drafting of some of the code, but he had been involved in the logic. So the application is denied. The motion to strike is denied. Page 1780 MR. DRATEL: There is one other element, your Honor, which is the python programs. He used programs in the sense of -- you know, I don't care if they are off the shelf or not, but there is a hearsay problem and a confrontation problem. THE COURT: I disagree with that. As we also heard, that particular program is also on the defendant's laptop. But in any event, the application is denied. Is there anything else that we should do before we take our own break? MR. HOWARD: Not from the government's perspective. MR. DRATEL: No, your Honor. THE CLERK: All rise. *(Recess)* *(Jury not present)* THE COURT: All right. Let's bring out the jury. *(Continued on next page)* Page 1781 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: Ladies and gentlemen, let's all be seated. Mr. Howard. MR. HOWARD: Thank you, Judge. So, Mr. Evert, would you please put Government Exhibit 901 up again. Q. Just real briefly, Mr. Shaw, the date is March 26, 2013, correct. A. Correct. Q. And so what does that mean with respect to this authentication case? A. It that means this file was last modified on March 26, 2013, which means from that point forward this file was valid for authentication. Q. Earlier you testified that an SSH authentication key is used to authenticate access for an administrator into a computer server without a password, correct? A. That is correct. Q. And so does this mean that as of March 26, 2013, a username with Frosty with a computer named Frosty had what was authorized to access the server provided they have a matching key? A. That is correct. Q. Mr. Shaw, earlier we just briefly mentioned computer databases. Could you please provide some more details about what they are and how they work? Page 1782 A. Sure. Computer databases are a great way to store structured information. So by storing it in a nice clean way, you are able to quickly retrieve data back from the database. A good example might be a local mom-and-pop shop like your florist would have information about their vendors, different salespeople that they deal with, and traditionally these shops would have a Rolodex with, you know, a card for every single salesperson that they've ever dealt with over the years and Rolodexes are organized by the salespeople's last names. Each one of these cards would have, you know, like the person's first name, last name, telephone number, an email address, and the name of the company that they work for. By storing information like that in a database, if it ever comes to a time like, oh, I remember there was a salesperson John from company XYZ but I can't -- I don't remember his last name, if you had that data in a database you could easily ask the database please give me all the salespeople from company XYZ whose first name started with the letter J and you would get your results back quickly. Another benefit of databases, on that Rolodex card you could also say all of our contracts are located in the filing cabinet 2, drawer 3. So that way you could easily when you are going through the Rolodex say, OK, for this company I need to pull up some contracts. Go straight to the filing cabinet. Page 1783 The benefit of databases is you can easily do those types of links backwards and forwards to quickly retrieve data. Q. So did you discover any computer databases on the two servers that you analyzed? A. Yes, I did. Q. Did you examine the contents of those servers? A. Yes, I did. Q. And did you compare the databases you found on each of those two servers? A. Yes, I did. Q. And what did you discover? A. There was significant similarities between the structure of the databases and significant overlap in the data within the files that I reviewed. Q. And what did the data in those databases appear to pertain to? A. It pertained to the function of the Silk Road Marketplace. Q. Now, Mr. Shaw, could you please -- so what kinds of information did the databases contain? A. Some examples of what was in the database, there was a table called "Transactions" that stored the transaction information, so purchases of items from the marketplace. Additionally, there was information on messages that were sent between two individuals, two user accounts on the marketplace itself. Page 1784 Q. And this transactional and message information, was it located on both servers you looked at? A. Yes, it was. Q. Would you please flip in your binder to what has been marked for identification purposes as Government Exhibit 920A, please. A. OK. Q. Do you recognize what this is? A. Yes, I do. Q. And what is it? A. It's a technical description of the messages table for the database. Q. And this is where the messages in the databases were stored? A. Correct. Q. Did you take this screenshot? A. Yes, I did. MR. HOWARD: The government offers Government Exhibit 920A. MR. DRATEL: The same objection, your Honor. THE COURT: All right. The objection is overruled. 920A is received. *(Government's Exhibit 920A received in evidence)* MR. HOWARD Page 1785 Q. Would you please -- Mr. Shaw, could you please explain what's located in the first column here? A. Sure. Kind of like the Rolodex where I said you had to have the first name, last name of the company, what you see here are the fields that are stored for each individual record inside of the table. And some of the fields that are stored in this information is data about who the message was sent to, who the message was sent from, and then the subject and the body of the message that was sent. Q. So this is the information that each record in the messaging database contained? A. Yes. Each record would have this type of information in it. Q. Was each message uniquely identified somehow in the databases? A. Yes, they are. Q. How were they identified? A. They were uniquely identified by the index column here. Q. Would you please look in your binder. At the back there should be something that's marked as Government Exhibit 960. A. Yes. Q. And what is this? A. It's a video that I put together to show some examples from the private messages table. Q. Is it on a CD? Page 1786 A. Yes, it is. Q. How do you recognize this exhibit? A. It has my initials on it. MR. HOWARD: The government offers 960 for demonstrative purposes. THE COURT: 960? MR. HOWARD: Yes. MR. DRATEL: No objection for demonstrative purposes. THE COURT: All right. Received for demonstrative purposes. *(Government's Exhibits 960 received in evidence)* MR. HOWARD: My I approach, your Honor? THE COURT: You may. *(Pause)* Q. Could you please describe what's going on in this video? A. Sure. What we're looking at here are messages taken straight from the messages table in the database. You'll notice that the two fields here have some long strings -- and in addition to the front field -- some long strings of semi-random letters and data. So what you do is you resolve that information by looking at the users table. So by doing simple database joins, I was able to resolve that information. Could you hit play, please. Q. Actually, could you hold on one second. So when you say that -- you called this random, are these uniquely identified users in the users table? Page 1787 A. Yes, they are. Q. Please proceed. A. Could you pause, please. So what you see here, I was able to resolve the usernames, who sent the message and who the message was sent to, and I also converted the date to a normal date that you and I would understand. For example, you know, a message here was sent from username "Pacco" to username "Red Bull." The subject, I just typed in "subject." And the body of the message was simply a question mark. Hit play, please. We will scroll through a few messages from the table. *(Indicating)* Could you hit pause, please. One of the benefits of having the data stored in a database is you could quickly retrieve messages sent from a specific user to a specific user. So a very simple query to ask of the database. In this instance what we're looking at are messuages sent from the account Dread Pirate Roberts to the account Inigo. Could you hit play, please. *(Video playing)* I believe that concludes the video. Thank you. Q. So, Mr. Shaw, in the last example there, you showed an example asking the database to return all of the messages between -- from the Dread Pirate Roberts to Inigo, correct? Page 1788 A. Correct. Q. Can you ask other kinds of questions of the messages database? A. Yes, you can. Q. Could you please flip into what is Government Exhibit 930 in your binder, please? A. OK. Q. Do you recognize what this is? A. Yes, I do. Q. What is this? A. This is a message that was recovered from one of the servers. Q. Does the data in this exhibit accurately reflect information about that message in the databases you reviewed? A. Yes, it does. Q. Did you participate in the creation of this exhibit? A. Yes, I did. MR. HOWARD: The government offers 930 into evidence. MR. DRATEL: Just a minute, your Honor. *(Pause)* Objection to hearsay, your Honor. THE COURT: All right. MR. DRATEL: And Vayner. Page 1789 THE COURT: All right. The objections are overruled, and Government Exhibit 930 is received. *(Government's Exhibit 930 received in evidence)* MR. HOWARD: Could we zoom in on the top of the message. Q. So here we have a date and time of December 31, 2012, at 9:19:23, from Dread Pirate Roberts to NorCal420HookUp. Subject: Account status. Mr. Shaw, is that all information that you pulled from the database? A. This information all came from the database, correct. Q. We are going to be looking at all the messages later. Whenever we have this header information, was that taken from the database? A. Yes, it was. Q. And how about the body part of the message, where was that taken from? A. That was stored in the database information. MR. HOWARD: Can you zoom in on this. "NorCal, My representative tells me he's having trouble communicating with you, so I'll be handling your case personally. I reviewed your correspondence so far and I'd like to make a couple of points to clarify why you've lost your selling privileges. From the Seller's Guide: "Do not create listings that instruct customers to pay outside of escrow, or are used for any purpose other than to list an item to be sold for the listed price using the site checkout system. If you instruct your buyers to pay you in any other way, or to contact you off-site, your seller privileges WILL be revoked." You created a listing called "Listing for "Other" transactions" with a price of zero and proceeded to accept payment directly to your account. Hopefully that clears up why your account was suspended. Normally that would be the end of it and your only option would be to sell your wares elsewhere or start over with a new account. However, we've recently started a second chance program where you can have your account back if you pay for the commissions we lost and of course abide by the Seller's Guide from now on. Regarding your claim that you don't owe this and deserve your account back because Silk Road experienced down-time, defacement, and is operated on the Tor network. This is not the case. You do not have a right to the business I generate for you through Silk Road. Your status as a vendor here is a privileged that is contingent on you following the rules, which you have not. You can either accept my second chance and play by the rules from now on, start over with a new account, or go elsewhere. Regarding your threats, they are unprofessional and do not phase me one bit. I will overlook them as an emotional response to an overwhelming situation and AGAIN, give you a second chance to repair your relationship with me and get your account in good standing. If I get any response from you that isn't cordial and in compliance with what I have told you you need to do to get your vendor privileges back, your account will remain suspended permanently. Hopefully we can put this behind us and have a fresh start in 2013. -DPR" Page 1790 Page 1791 So the private messages table reflected this is a message sent by the user Dread Pirate Roberts, correct? A. Correct. Q. Now, Mr. Shaw, could you please -- now flip through your binder and take a look at what's been marked for identification purposes as Government Exhibits 931, 932, 933 and 935. A. OK. Q. Do you recognize what these exhibits are? A. Yes, I do. Q. Just like Government Exhibit 930, are these also private messages that you located in the databases? A. Yes, they are. Q. Did you also participate in the creation of these exhibits? A. Yes, I did. Q. Have you confirmed that all of the information that is in these exhibits truly and accurately reflect information from the databases? A. Yes, I have. MR. HOWARD: The government offers 931, 932, 933 and 935. Page 1792 MR. DRATEL: The same objections, your Honor. THE COURT: All right. The objections are overruled. Those documents are received. *(Government's Exhibits 931, 932, 933 and 935 received in evidence)* MR. HOWARD: Please publish 931, please. Q. It's dated February 25, 2013, from Dread Pirate Roberts to SweFarmacy. Subject: Withdrawals. "SweFarmaci, what happened!!! "I help you out and repay me by exploiting a bug in my system? That's not cool man, you should have told me about it. I want to give you a chance to do the right thing and put the money back. If you don't, I'll get your mailing address from one of the two vendors who your ordered from from your laksam account and hunt you down, understand? Don't think I don't have people in Sweden. "Doesn't matter, I know you'll do the right thing, right? "-DPR" Would you please publish 932, Mr. Evert. It is dated April 11, 2013, from Dread Pirate Roberts to supercanna. Subject: Expurdue. "Hi supercanna, "Do you remember a user you may have worked with named expurdue? He managed to exploit a hole in the site and ripped me off for a good chunk of change. I am hoping you can help me track him down and recover my funds. Let me know if you have any info on him at all. Page 1793 "Thanks, "DPR." Mr. Evert, would you please publish Government Exhibit 933. The message is dated July 12, 2013, from Dread Pirate Roberts to gold. Subject: Money exchange. "Hey, if you have a problem you should come to me instead of posting bad numbers on the forum. It's really not cool and you should take them down and apologize. Silk Road isn't some bureaucracy. I consider us business partners. Yes I made a mistake and the message I had intended for you and the other vendors to read giving you a heads up about the changes was not delivered, that was my fault. I apologized for that publicly and I apologize for it to you now. "I'm surprised that commission increase on your $10k listing has hurt your business so much, but I recognize that running an exchange business has much tighter margins and should therefore be treated differently. I had actually hoped to help you specifically by making it possible for you to peg your gold bullion listings the the price of gold, but it looks like I've done more harm than good. I'm in the process of developing a separate section of the site for money exchanges and have a couple of questions for you if you don't mind. Page 1794 "1) Are you willing to accept cash in the mail? "2) What is the smallest denomination you could work with? $5? $10? "Silk Road was never set up to facilitate money exchanges. I'm pleased that you've been able to run a good business up to this point here, but until I get a system in place that caters to your needs, it will be a challenge to fit you in with the rest of the vendors. I don't want to say too much without hearing your side of things first, so I'll stop here and hopefully we can have a rational dialogue about this. "DPR." Mr. Evert, could you please publish Government Exhibit 935, please. The first message is June 10, 2013, from shefoundme to KingOfClubs. Subject: Group buy. "Hi, I need a few of your highest quality IDs. I notice several attributes you list: hologram UV scannable raised lettering. Can you give me a rundown of the importance of these attributes and what they are needed for? For example, which are needed to pass airport security for a domestic flight? Which are needed to get through being pulled over by a cop? Are any of your IDs suitable for this purpose or are they useful when scrutinized superficially? However you respond, I would like about half a dozen of your best USA IDs and one of the best from each of the international locations (Australia, UK, Canada). Thank you for your assistance, I'll be checking for a reply daily." Page 1795 June 20, 2013, from KingOfClubs to shefoundme. Subject: Group buy. "If you are using them for those purposes, I would go for the cards with all the features" -- Sorry, this is June 10, 2013. I think I misread the dates. "If you are using them for those purposes I would go for the cards with all the features, are you interested in any specific states/provinces? Please narrow it down a bit for me as I offer a lot of different cards, thanks." June 10, 2013, at 20:53, from shefoundme to KingOfClubs. Subject: Group buy. "You have Illinois, South Carolina, New Jersey, Florida, and Colorado listed as having (Holograms+UV+Scannable), so I'd like one of each of these. Then I'd like the New South Wales ID and the UK ID. For Canada, you have: 1. Quebec Driver's License (Scannable Magstripe1,2,3) 2. Alberta Driver's License (Holo, Raised LTR, Scans) 3. Ontario Driver's License (Raised Lettering, Scans) I guess Alberta is better than Ontario because it has Holo. Is there a difference between "Scans" and "Scannable Magstripe1,2,3"? If there isn't, then I'd like the Alberta ID as well. You also have the following listing: New Texas Drivers License(Raised LTR, Holo, Scans) This is your only US ID with "Raised LTR", but it doesn't have "UV". Can you comment on it's quality compared to the US IDs listed above? Can you comment on the suitability of using any of these IDs to board a domestic USA flight? Can you please comment on what the various attributes mean? For example, does "UV" mean if it is held under a UV light, then some pattern appears that makes it look legit? If it doesn't have "UV" does that mean if it is held under UV light it will be exposed as a fake? In general, how much scrutiny can these cards hold up against? Sorry for all of the questions, but I hope you can spare a moment to inform me." Page 1796 It continues here on the next page. June 10, 2013, at 10:12 p.m., from KingOfClubs to shefoundme. Subject: Group buy. "Alberta doesn't have a magnetic stripe, it has a 2d barcode on the back that is scannable. I provide UV on my DL's for +$50 US if its not included in the listing, the New TX DL is very good and has worked great for my past buyers. I can't say for sure as no past buyer has told me if it has/has not worked for this purpose. If you choose UV (which I suggest), the same UV features that are on the real card will be on yours as well. They can hold up against a high amount of scrutiny, if you have any other questions let me know, Regards." 6/11/2013 at 2:17 a.m., from shefoundme to KingOfClubs. Subject: Group buy. "Ok, how much for the following: California, New York, Texas, Florida, Colorado, South Carolina, UK, New South Wales, Alberta. All newest and at the highest quality and most security features you can do." Page 1797 Mr. Evert, can you put this on one side of the screen, please. Could you publish -- put that on the left side, please. That's fine. On the top is fine. Can you publish Government Exhibit 402 on the bottom, please, which has already been admitted into evidence. Mr. Shaw, do you see the picture on the bottom? A. Yes, I do. Q. Have you seen this picture before? A. Yes, I have. Q. And how do the photographs, the nine IDs depicted in 402, compare to the jurisdictions in the private messages? A. They are a match. MR. HOWARD: Mr. Evert, can you go back to the message, please. June 11, 2013, at 2:26 p.m., from shefoundme to KingOfClubs. Subject: Group buy. "Also, I'd like them to have a motorcycle designation if possible." 6/11/2013, at 2:48 p.m., to KingOfClubs, from shefoundme: "I can add the motorcycle designation no problem, I can do all those for $1650 US total. If you want me to put up a custom listing for you let me know. Regards." Page 1798 Then on June 11, 2013, at 3:06 p.m., shefoundme to KingOfClubs: "I'm ready to buy, just send me the link to the custom listing. I'd like them processed, shipped and delivered asap. If you need to tack on a little extra for that, please do." 6/12/2013, at 3:49 p.m., from KingOfClubs to shefoundme: "Custom for S" and then there is a URL there that includes "silkroadvb5piz3r.onion/silkroad" and more text. "As soon as you purchase the listing and send the ID forms and pics i'll get started asap. Regards." Then on June 12th at 10:01 p.m., from shefoundme to KingOfClubs: "Thank you kindly. There was a delay and I won't have the address for another couple of days it looks like. Sorry about that. I'll go ahead and buy the listing and then send you all the info soon. I just put 'address in pm' in the address box, so I'll message it to you along with everything else." *(Continued on next page)* Page 1799 Q. 6/12/2013 from KingOfClubs to shefoundme at 11:05 p.m. Okay sounds good, looking forward to doing business with you, Regards. 6/16, 11:36 a.m. from shefoundme to KingOfClubs: "Sorry for the continued delay. I am try to arrange an address to have the order sent to. To better help me plan, how long from when I give you the information for the IDs (name, DOB, picture, etc) until you are ready to ship?" 6/17/2013, 8:32 p.m. from shefoundme to KingOfClubs: "I've sent along the info for my order to kingofclubs@tormail.org from shefoundme@tormail.org. I used that so I could attach the photos, but I'd like to continue communicating here please." 6/18/2013, 3:41 a.m. from KingOfClubs to shefoundme: "Okay sounds good, starting on it asap. Regards." 6/21/2013 at 2:57 p.m. from shefoundme to KingOfClubs: 'Begin PGP message," and I will not try to read that part of it. 6/22/2013 at 12:26 a.m. from KingOfClubs to shefoundme: "Okay we'll send there. Providing sample picks in the next couple days, regards." Then June 22nd, 2013 at 3:16 p.m. from shefoundme to KingOfClubs: "Thanks can you confirm that I put Avenue and not Street? Where will you send the samples? I think I'd rather just have them sent than have pictures of them out on the web. Can you do encrypted.rar over tormail as I did? That would be acceptable I think." Page 1800 June 25, 2013, 2:35 a.m. from KingOfClubs to shefoundme: "You put Avenue, I'll send the sample pics in a couple days, if you provide your public key i'll encrypt it for you, what's the password for the rar file you provided? I can't find it. Regards." Skip the next page, please. June 25, 2013, 5:44 p.m. from KingOfClubs to shefoundme: "Okay. Getting started asap. Regards." June 28, 2013 at 3:29 a.m. from KingOfClubs to shefoundme: "Done, sample pics." Q. There's number one, number two, number three number four and under each of them there are two links provided, correct? A. Correct. MR. HOWARD: I do not require that you finalize early as you have less than ten transactions in your buyer history, as soon as you finalize I'll send it out asap. Regards. Let's go to the next page, Mr. Evert. 7/29/2013 at 11:13 a.m. from shefoundme to KingOfClubs: "Okay I have finalized. Please let me know when it has shipped and when to expect it." 7/1/2013 at 9:40 p.m. shefoundme to KingOfClubs: "Any idea when this will ship out?" 7/1/2013 from KingOfClubs to shefoundme: "Sent, will be arriving midnext week, regards." Page 1801 7/11/2013, 6:42 p.m. from shefoundme to KingOfClubs: "The order did not arrive in today's mail. When did it go out." 7/12/2013, 1:52 a.m. from KingOfClubs to shefoundme: "It went out over the weekend, should be arriving any day now. Regards." 7/17/2013 at 2:38 p.m. from shefoundme to KingOfClubs: "Week and-a-half and still nothing. I paid nearly $30 for express shipping. Did you send it express? What is the tracking #?" KingOfClubs: "Tracking number EG014226242 CA, track at USPS.com regards." KingOfClubs: "Yes it was sent Express." Shefoundme on 7/18: "Looks like it got stuck in customs. The last step is "inbound out of customs" on the 10th. Have you ever had something seized or any of your customers get in trouble?" 7/20/2013 from KingOfClubs: "Seizures rarely happen, maybe twice in 2 years. You will not get in trouble for this if it is seized, in the worst case scenario they may send a letter to you saying they have it and that if you want to come pick it up you can. DO NOT go pick it up, obviously, if this happens, remember that anyone can send anyone anything. I can get them redone for you but it will take about a week and I would need to sent it to another address, interested?" Page 1802 7/21 from shefoundme: "Let's give this a little more time to see if they come through. If not I'll hit you up for another batch. Thank you for your help." Finally, 7/21 KingOfClubs: "Okay sounds good. Regards." Q. Mr. Shaw, could you please turn in your binder to what's been marked as Government Exhibit 936. A. Okay. Q. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. It is a list of selected messages to and from the user account Dread Pirate Roberts. Q. And did you also participate in the preparation of this exhibit? A. Yes, I did. Q. Did you confirm that all of the messages depicted in this exhibit truly and accurately reflect information from the databases located on the servers? A. Yes, I did. MR. HOWARD: The government offers Government Exhibit 936. MR. DRATEL: A number of hearsay Vayner, 403 previous objections. Page 1803 THE COURT: All right. Those objections are overruled for the previous reasons and this exhibit is received. MR. HOWARD: Mr. Evert, can you please publish 936 and can I have a bottle of water, please. Q. Mr. Shaw, can you please explain what is depicted here? A. Sure. This is a compilation of messages sent to and from the user account Dread Pirate Roberts with one exception that we'll talk about in a minute. The way that it is laid out is there is a column here that will tell you who the message is from or who the message is sent to. And implied in all of these, again with one exception, is the other participant is the user account Dread Pirate Roberts. MR. HOWARD: So Mr. Evert, could you zoom in on the top two lines for a second. Q. For example, the first row in the to from column it says "from FriendlyChemist," what does that mean? A. That means this message was sent from the account FriendlyChemist to the account Dread Pirate Roberts. Q. And on the next line it says "to FriendlyChemist." What does that mean? A. That means it was a message sent from the Dread Pirate Roberts to the FriendlyChemist. MR. HOWARD: Zoom out. Could we go forward to page eight, please. Q. So what is this message right here, can you zoom into that location? Page 1804 A. This is the one exception I was referring to. This is actually from a forum post posted to -- it was from a backup copy from the web forum associated with the Silk Road Marketplace so this was available for others to read. It was not a one-to-one message. Q. And are there other messages that are marked in blue? A. There are other messages marked in blue, yes. Q. What do those indicate? A. Anything marked in blue indicates that it came from the backup of the forum, the web forum; however, all of the other messages are still one-to-one between the user account and the Dread Pirate Roberts. Q. By one-to-one, do you mean private messages to and from Dread Pirate Roberts? A. Yes, the forum supported private messages also. Q. Let's go to the first page, please. March 13, 2013 from FriendlyChemist: "Can u please get dread pirate roberts to message me RIGHT away ? its very serious... a matter of life and death. also has to do with the identities of a dozen top vendors and thousands of silk road customers its very important so please get him me right away. i will not talk to anyone but dread pirate roberts so please do not ask me what it is conserning." From Dread Pirate Roberts to FriendlyChemist, March 14: "What can I do for you." Page 1805 March 14, 2013 from FriendlyChemist to Dread Pirate Roberts: "What is going on? when are u payin lucydrop? i have been waiting and waiting and he keeps saying hes waitin for u to pay u dont know me but i am lucydrops supplier. the only reason i lent lucydrop so much product is bcuz he showed me the chat logs of u and him talking and how u made him the #1 seller on silkroad. i lent him 900k of product and he paid me 200k and then started avoiding me. i see u and him still have listings up when i kno for a fact he does not have ne product. why are u guys scamming people for there hard earned money? i stopped by lucydrops house and he doesnt live there ne more and his phone goes straight to voicemail but i kno he has been on sr.. and he says wait for u what is the deal? where is my money? why is lucydrop still selling when i kno for fact he has no product because i supplyd him im freaking out here! that was not my money! im getting scared. my wife said she saw people at my kids school and im getting really worried i put a keylogger on lucydrops computer when he left the room one day when i was their so i could see what he was doing and i see he has been selling still when i kno he doesnt have product. are u guys pulling a scam? why!? i also have the indentities of 9 top vendors and 15 smaller vendors and thousands of customers of lucydrops. i dont want any trouble but i want my money! if u havnt paid lucydrop drop pay him! if u have pay him then tell him to pay me! im scared for my family! if u dont believe me here is lucy password info login lucydrop passyworld lucedad withdraw password lucedadhi5. i will not do anything tilll u message me and tell me whats going on. please get him to pay me asap or pay him asap if u havnt! this is my life here and im scared for my family bcuz of the money i owe" Page 1806 From Dread Pirate Roberts to FriendlyChemist: "I'm really sorry for your situation. I've never had such a conversation with Lucydrop. He/she must have made it up to trick you. We have no special deal whatsoever." From FriendlyChemist to Dread Pirate Roberts: "I find it verry hard to believe. he showed the chat loggs talking to u about u making him number 1 seller and being his partner on the product i gave him. i would not have give him that much product otherwise- especially because u made him the 1 seller please dont screw me like this! my life is in danger because of this money i owe! i also kno about the other vendor accounts his friends are using. i have access to those customer lists too from when lucydrop was dropshipping for them im not this kind of person but the only card i hav left to play is dropping 2 dozen vendor identities and thousands of customer details on the web and the forums. what do u and lucydrop think will happen if thousands of usernames, ordr amounts, addresses get leaked? all those people will leave sr and be scared to use it again.. those vendors will all be busted and all there customers will be exposed too and never go back to sr i dont want to do that! i just want my money for my product! my life is in danger and maybe my family. the people i borrowed that from are not regular people!! i cant believe i was so stupid and trustng! jus get lucydrop to pay me my money asap or if u havent paid him yet then pay so he pays me the money he owes! please! im freaking out here!" Page 1807 March 15, 2013 from Dread Pirate Roberts to FriendlyChemist: "I will get in touch with Lucydrop and get back to you. Send me all the information you've harvested so I can verify it." From Dread Pirate Roberts to Lucydrop, subject FriendlyChemist: "Hi Lucydrop. I've been contacted by a member named FriendlyChemist. He claims to know you and have done business with you in real life. He is making wild accusation and threats against you me and other members of the community. If indeed you know him, could you please provide me with his name and address. I'd like to stop him in his tracks by revealing that I know who he is and will retaliate if he does anything stupid. Any other info you can provide is also welcome. Thanks and sorry for the trouble. DPR. PS-please don't contact him if possible, I'd like to handle it myself." From FriendlyChemist to Dread Pirate Roberts: "I didnt have to harvest anything - lucydrop kept a log of every single transaction he made on silkroad like a idiot there r thousands and thousands of orders there are over 20 vendor identities from when he did biz with them - some with phone numbers to - and over 5 thousand customer identities he also ran more then 1 account on here nd seems to be still vending on those accts too and did evrything from 1 computers so i have all theyre info too u alrdy kno that i have access to his acct and u can see most of his order r not encrypt so i dont kno why u are asking for me to send all the info to u now. unless u want to warn all those people so you and lucy dont have to pay me his username - lucydrop his pw - lucedad his wd pw - lucedadhi5 u say u are not working wit him but u still havn closed his acct when u kno he is scamming but i will give u a address to some customers and u can see he kept logs the whole time. Here are some of his very first sales when he was sending 3tab samples when he first started vending. u can cantact them and see it is true. 3tabs Elwin B, Wellington New Zealand three tabs, Michael S; Beverly Hill, Happy Valley, Hong Kong six tabs; Mayan R Tel-Aviv 63457, Israel, six tabs, Amir N; Technion 32000, Haifa Israel three tabs; Mr. N JB, NS W-2 234 Australia, three tabs, Abraham S." Page 1808 And let's go to the next message: Zoom in on the bottom. "And the log goes like that up til today every day. nd that it just 1 of his accts.. he has 3 total of his own he use for different thing But im sure u kno this. or else why u let that accunt stay open. I dont want to do anything with this and i wont i just want my money! i am scared for my life and you and him are not giving me answer. maybe if i post all the vendor identity publicly and nobody sell on silkroad lucydrop will have no more sales to scam ppl on his other account. i just want what is owe to me and i will go away! i dont kno why you ppl scam like this! ppl work hard for there money and u are playing with ppl lives! I will wait ur reply from lucydrop - but i dont kno how much longer i can wait.. how can i explain to these ppl i dont have there money when i said i will have it a certain day and now im late? these are not normal ppl and they are getting angry with me Jsut get lucydrop to resolve this, or pay him so he can pay me! i did a favor and this is not fair to play with my life like this!" Page 1809 From Dread Pirate Roberts to FriendlyChemist: "I'll let you know when I hear from Lucydrop." From FriendlyChemist to Dread Pirate Roberts: "When will that be? i dont think u guys understand how serious this is have u not payed lucydrop the 700k he is supposed to give me yet? these people i borrowed from have been asking for me to meet them and said they dont want to have to come and find me im scared and u dont seem to even care that u guys are scamming me and putting me life in danger! do i need to release some of list so u take it more serious? i just want what is owed to me! when will u guys make it rite?" Page 1810 March 16, 2013, forum post by RealLucyDrop, title "IMPORTANT, please post this thread in the rumor mill - I am the RealLucyDrop. I can't post in rumormill because I don't have 50 posts. Please post this thread in rumormill for me DO NOT BUY FROM LUCYDROP ON SR I can't talk about specifics for security reasons, but i was in jail for more than 2 months but less than 7. I got released very recently. LucyDrop on SilkRoad is NOT ME. DO NOT BUY FROM THAT ACCOUNT. My partner completely fucked me over. I went to our spot.. there is nothing there and he wont answer my phone calls. He took the work computer and everything else. He took my entire savings with him that was being used to keep supply up. He took my entire life. Somebody PLEASE get in contact with DPR or Vendor Support and have the account shut down immediately and freeze all the funds in the account. How can I contact DPR? I can't find a link to message him. I can prove to him that I am the real lucydrop as I do not have access to my pgp or any of my logins. If you ordered from me in the past (namely a couple of top vendors, i can give you details and you can verify/vouch that I am indeed the real LucyDrop) Do not trust anything that is said from that LucyDrop account! Do not send ANY FUNDS. Do NOT FINALIZE ANYTHING." "Somebody please get DPR to see this thread. Someone please post this in Rumor mill. My entire life was taken from me and I don't know what to do." March 16, 2013 from Dread Pirate Roberts to RealLucyDrop: "Hi there. How did the new person gain access to your account"? Page 1811 From RealLucyDrop to Dread Pirate Roberts: "It's not a new person who took over the account. It was my partner in real life that I started Lucydrop with. I was the one that actually handled the Lucydrop account until I got arrested. I was picked up on previous drug offense warrants and spent some time in jail. My partner took absolutely everything from me in that time. He took all the work computers, the bitcoin wallets, all the work product and nearly my entire life savings and scammed a bunch of people in the process." "FriendlyChemist was our middleman to one of our LSD distributers. I called him also after I got released and he is demanding I pay him for some deal he had with my partner when I was in jail and telling me he will do something very stupid if he doesn't get paid. How do you know FriendlyChemist?" March 17, 2013 from Dread Pirate Roberts to RealLucyDrop: "I'm so glad you know him! He has gathered the personal information of many of the customers who worked with LucyDrop (not sure if you were in control of the account at the time or not) and also some of the vendors on SR. Now he's trying to blackmail me by saying he will release all of this info. If this happened it will be terrible. I need his real world identity so I can threaten him with violence if he were to release any names (name, address, anything you have.) It sound like he's in a tough spot that your former partner put him in, but I can't get involved and I can't let him release those IDs. Thank you for any help you can provide." Page 1812 From RealLucyDrop to Dread Pirate Roberts: "I don't know how I feel about that solution. Remember that he also knows my real world identity and has evidence on me as well. I'm sure you are well aware of what would happen to me if my information was to be released. If he had access to that computer there is a lot more damaging stuff on there than just the identities of a bunch of vendors and a bunch of customers of mine. There is enough on that computer to put me away for a very long time. He's acting erratic now (understandably, given his situation), but I will set up a meeting with him and try to reason with him. It is also in my best interest that he does not release anything as well as in the best interest of this movement we are a part of..putting power in the peoples hands. I fucking hate what money does to people. I am in contact with him, and I told him that I am talking to you and I'm going to have a meeting with him and try to resolve this problem of ours." March 18, 2013, from Dread Pirate Roberts to RealLucyDrop: "Okay. Lucy, do me proud." Emoticon. From RealLucyDrop to Dread Pirate Roberts: "Will do. Obviously I won't ask you what timezone you are in, but can you give me certain hours that are the best to reach you at? The delay in messages back and forth make it hard to communicate effectively. I'm in the Pacific time zone.. Can you tell me what time in PST are the best times to reach you at? I don't mind having to wake up in the middle of the night to hop on the forums so just tell me whatever works best for you. I will be meeting him today in the morning." Page 1813 From Dread Pirate Roberts to RealLucyDrop: "I will check in as much as possible. Let me know if you need anything." March 19, 2013 from RealLucyDrop to Dread Pirate Roberts: "I went to the meeting with him and he is extremely frightened. He told me who he owes money to and I understand his concern for his safety, because they are not people you want to owe money to. He is freaking out and truly believes that his life and his families life is in serious danger. He thinks that you don't take him seriously and said he was planning on releasing part of the information to show he is serious. I convinced him not to and reassured him that things would be okay. If that information gets leaked and those vendors get busted, I would get busted too. I tried to not show him that I was too concerned with his threats but I'm not sure how to deal with him. He said he has been doing his research and he says he has discovered the flaw with SR that the buyers have never thought about (I'm assuming he is referring to the fact the vendors all have peoples addresses and you can use it against SR or the buyers themselves to extort money or what have you). He also kept talking about the shitstorm that would be caused by that much information being leaked and media/police picking up on it and starting a mass panic. He said if we don't pay him that he will release the information, and if that does not work he will go straight to the police with all the information and get into the witness protection program. The people he borrowed the product from are a big criminal organization in Canada (Hells Angels-not sure if you are familiar with them) and the police have been known to treat witnesses against them very well." Page 1814 "This is saddening because this guy is really not like this, but I guess with the threat to his and his families life he is under extreme stress and acting out of character. I calmed him down a bit and told him I would find a way to help him. That was somewhat of a lie on my part because I really don't know how I can help him but I wanted to reassure him so he didn't do anything drastic in the meantime until we find a solution." "I asked him that you would never fully trust him to not use the information against him even if you got paid and he said the following. I'm recalling this all from memory so excuse me if it's not completely accurate." "He said regardless of anything, he needs to pay the people asap or he's he is in grave danger. He offered me a deal because as you know selling on SR was my income and he was my connection for LSD. He said he wants to be paid and that he would then give me product at his cost, so I could pay you back by selling and giving you the percentage of what he would normally put on top when he was selling it to me. He was putting 50 percent on top of his cost when he gave it to me, so he suggested I start vending again and you take 50 percent of all sales. That way you would be paid back in full, I would be able to sell again on SR and that people he borrowed the product from would be paid back and he would be safe. I said that was a bad deal because you still have all the vendors information and customers information. He said that he would be willing to give you his identity, talk to someone on the phone to verify, or give any other identifying information that could be confirmed as collateral so he would never be able to use that information again, and that you would feel confident that the information would never be exposed." Page 1815 "I don't know what you think, but that is what he said to me. What should I say to him." March 20, 2013 from RealLucyDrop to Dread Pirate Roberts. The subject this guy is calling me nonstop: "Can you tell me what to tell him, please? I've been stalling him and told him I would get back to him ASAP. Can you just tell me what to tell him so I can make arrangements protect myself in this situation also if he goes through with this threat, I will need to protect myself." Page 1816 From Dread Pirate Roberts to RealLucyDrop: "You know his real-world identity don't you? There is no way I will be handing cash over to a person who is threatening me and my community. Give me his ID so I can have some leverage in dealing with them. You said you don't know what to do now, so let me take over and give me all the info you have so I have the best chance at defusing this situation." From RealLucyDrop to Dread Pirate Roberts: "Yes, I do know his identity, but you threatening him back will not help this situation. He is deathly afraid of the people he owes money to and they already know where he lives and where his kids go to school etc. That will just expedite him going to the police, thus the information being given to them including my identity because they police will want all the information he has if they will protect him and put him in witness protection. Obviously you don't want to be blackmailed and let some fuck take money but this situation is extremely sensitive and I'm getting increasingly worried about my own safety regarding the police or my information being leaked too." "If I can get some money together would you be willing to help me pay him and then taking 50 percent off of each of my sales to repay you what you have lent? I was the number one vendor with three best selling items on SR so it would not take long. That way I also get to keep my connection for LSD and be able to keep vending. I can probably get 300K together or maybe more if I try to borrow some money from friends. I just don't see how you threatening him is going to help the situation at all and will probably just make him go to the police even faster/releasing the information faster since he will know he will not be able to pay them off and will have no choice but to go to the police after releasing the information since he will be in serious trouble." Page 1817 "Please try and check your messages more often, because whenever I don't have anything to tell him he starts acting more erratic since the people he owes are on him hard about getting paid." From Dread Pirate Roberts to RealLucyDrop: "Don't bother messaging me again if the message doesn't contain his personal information. I'm not fronting money to anyone and I won't be blackmailed. I would also like the contact info/ID of the other Lucydrop that ripped him off and of his suppliers if possible. You don't know how to handle this situation, but I do. Stop showing this guy compassion. He is threatening our life/freedom and my livelyhood." March 21, 2013 from RealLucyDrop to Dread Pirate Roberts: "If you really think that you have a good idea to deal with him, I will give you the information you want about his identity. Please understand why I'm hesitant as it is my freedom we're dealing with." Page 1818 "I will have no income since he was my connection for LSD. Are there any positions open on SR? Support or otherwise? I could really use some sort of job as my partner completely fucked me over." "Let me know how to send the information to you..plain text or you can give me a PGP key to use." From Dread Pirate Roberts to FriendlyChemist re, Very important: "Have your suppliers contact me here so I can work out something with them. Do not tell them I owe you money. That is not true and will only complicate matters. Tell them the truth, the person who stole your money sold their product on my site and that you are now blackmailing me to get them their money. You should copy/paste this message to them." March 21 from Dread Pirate Roberts to RealLucyDrop: "Thank you for your understanding. Please encrypt the information with the key below and send it to me here." Go to the next page. "Hate to even ask this but any job operation? I've always been loyal to you and believe in the movement. I was the number one vendor with the number one selling products so I am I am very familiar with how things work..I just am in a bad spot after my partner fucked me and could use any sort of income while I get back on my feet." March 21, 2013 from Dread Pirate Roberts to RealLucyDrop: "Please send the exact address of FC. I might be able to take you in as a part-time mod. I'll run it by the staff." Page 1819 March 24, 2013 from RealLucyDrop to Dread Pirate Roberts: "That's not a problem. I will go out there in a couple days and get the exact address for you. Did you consult the staff about the part-time job." March 25, 2013 from Dread Pirate Roberts to RealLucyDrop: "Not yet. Is he still in contact with you?" March 25, 2013 from redandwhite to Dread Pirate Roberts subject FriendlyChemist: "I was asked to contact you. We are the people FriendlyChemist owes money to. He tells us that you owe him money and a long boring story about some of this and some of that. As far as we are concerned-we gave him the product. Where it went and how it does not matter. We hold him and him only responsible for the missing product/money. We don't care if you stole it from him/borrowed it from him or anything. It was his responsibility to pay for it. He asked me to contact you anyways. What would you like to talk to us about?" 3/26/2013 from RealLucyDrop to Dread Pirate Roberts: "He answers though sporadically...I have heard via the grapevine that he is in contact with the people he owes money to but he is refusing to meet up with them like they have told him to." March 26, 2013 from Dread Pirate Roberts to redandwhite: "Sorry for the delayed response and thank you for getting in touch. We've had some technical difficulties in the past 24 hours I've had to deal with. Just to be clear, I do not owe him any money but he has told me his situation and wants my help. I'm not entirely sure what the best action to take is, but I want to be in communication with you to see if we can come to a conclusion that works for everyone." Page 1820 "FriendlyChemist aside, we should talk about how we can do business. Obviously you have access to illicit substances in quantity and are having issues with bad distributers. If you don't already sell here on Silk Road I'd like you to consider becoming a vendor. Many people here purchase in bulk as well as retail quantities. Being a vendor, you'll have the protection that dealing anonymously in bitcoin provides, and you'll have protection against people like FriendlyChemist ripping you off because all the transactions are conducted through my escrow. I encourage you to read the Wiki and forum (links in the footer) and consider becoming a vendor here." "So if there is anything I can do as the admin here to help you get involved in Silk Road, or anything I can do to help with your situation with friendlychemist, please just let me know. DPR." March 26, 2013 from redandwhite to Dread Pirate Roberts: "That is interesting. How much is it possible to sell on here if we listed every product far cheaper than everyone else? We have a majority hold over most of the movement of products in western Canada, one of the main drug ports in North America. I have researched your site and the concept seems interesting to me (as long as it is as anonymous as everyone makes it out t to be) We produce LSD/nBome/Ketamine/MDMA/Meth/GHB and import cocaine and heroin in massive bulk amounts. We have a lot of workers who run their own sub distribution networks for the streets, but if it is lucrative we are always looking to expand." Page 1821 "In my partners eyes all they will see is that because of online dealing we are out out 700k so I'm not sure they will go for it. FriendlyChemist refuses to meet up with us because of what he fears will happen. People are starting to suspect that he will go to the police, which is not a problem because he would never be able to give up anyone of importance since he only has ever had contact with low level people in our group and they always take precautions so that even if someone were to turn informant, they would not be able to get any charges to stick. It's a shame because he moved a fair amount of product. If you can get FriendlyChemist to meet up with us, or pay us his debt then I'm sure I would be able to get people in our group to give this online side of the business a try. As it stands right now, there are people looking for him and since he has avoided our group, I'm not sure what will happen since he owes us money and is avoiding us. I've looked around your site, and the prices are absolutely absurd. I'm assuming most people on here selling are three or four tiers before the actual producers or distributers?" Page 1822 From Dread Pirate Roberts to RealLucyDrop on March 27, 2013: "Why haven't you gotten the address yet. Bring me the address and $1,000 in BTC is yours." March 27, 2013 from Dread Pirate Roberts to read and white re FriendlyChemist: "In my eyes FriendlyChemist is a liability and I wouldn't mind if he was executed but then you'd be out your 700K. I don't think he is going to come up with the money because he seems very desperate. I'm not sure how much you already know about the guy, but I have the following info and am waiting on getting his address. "Blake Krokoff off lives in an apartment near White Rock Beach, age 34, City of White Rock, Province, British Columbia, wife plus three kids. Let me know if it would be helpful to have his full address. "Let me know if it would be helpful to have his full address. In those categories, I think you could be doing over $1M in sales a week within a few months. It is hard to estimate because it depends on how much market share you get and also the site as a whole is constantly growing. You will need to become very proficient at stealth shipping and packaging if you aren't already. Think vacuum sealers and leaving no forensic evidence on your packages. You will also want to ship from multiple drop points so you can't be traced back via your (fake) return address. If you go through with this, I would contact some of the top vendors and hire them to consult you. Ask the weed vendors because you won't be competing with them and their product is smelly and looked for by USPS, so they have to be on top of their game. I would also start out listing smaller amounts so you can get the hang of it before putting up a substantial inventory. You will also need to market yourself on the forums a little bit at first, maybe send out some samples to critics. That is one price of anonymity, no one knows you, but if your customer service is good and your product is good and cheap people will quickly catch on and you won't have to do much hustling. Page 1823 "Regarding prices, there are some costs here you don't otherwise see. I take three to ten percent depending on the sides of the transaction. If you hedge your escrow balance) and you should (that can cost up to five percent per transaction and then if you need to convert your bitcoins into another currency there are fees associated with that, though not that much. There are only occasional losses due to packages lost in the mail. The rest of the markup is due I think as you say to the fact that most vendors are pretty far down the distribution chain. "Regarding the safety and anonymity, we've been operating for over two years now in the open as a high profile target and are still going strong. If you take the necessary precautions and use technology I think you can operate very securely and efficiently here, maybe more so than some of your current operations." Page 1824 THE COURT: Mr. Howard, I think we're going to need to stop there. MR. HOWARD: Can I show one exhibit with this last message and we can stop. THE COURT: Yes. MR. HOWARD: Can we go over to the last page, please, the previous page. Can you zoom in where it starts Blake, where the name is through the next line. Can you move that to the top of the screen. Can you please publish Government Exhibit 275E on the bottom of the screen, which has already been admitted into evidence. It's a file that's been recovered from the defendant's computer. THE COURT: What are you turning us to? MR. HOWARD: It's the log file. THE COURT: 275D? MR. HOWARD: 275. The E was a typo in my notes. 275 on the bottom, Mr. Evert. Q. Mr. Shaw, does that information match? A. Yes, it does. MR. HOWARD: Could we go to the metadata on that file, the 275, the last page and zoom in on the bottom left-hand corner and give me the full top name. "home/frosty/backup/reference/by me/ops.txt." Page 1825 This would be a good time to stop. THE COURT: Ladies and gentlemen, we are going to end for the day. We're going to pick up on Monday, but I want to let you know that if -- it's very likely that we're going to be sitting on Friday next week so you should make sure -- we haven't been sitting on Fridays so far, but I said that if there was a possibility that you'd be in the midst of deliberations, I would have you continue to sit on Friday. This is from way back during jury selection. So just bear that in mind. We'll see how things progress and I'll try to give you some updates, but I just wanted to give you some advance notice so that you have your calendars appropriately organized. Now, I want to remind you for this weekend, again, you've heard an awful lot of evidence. There's more to come. And you've been here for a while. So I know my voice is probably becoming sort of -- it gets like a lull. But I really do want to make sure that you folks know how important it is that you don't talk to anybody, including each other about this case. You avoid all media relating to this case and you don't try to go off and start searching any of the websites that you hear about. You hear about an awful lot. You're probably yourself on the computers a lot. You need to not engage in any temptation to run a few searches yourself, don't do that all right. Page 1826 I hope you have a terrific weekend and we'll see you Monday morning the usual time. We'll start at 9:30. Thank you. *(Jury excused)* THE COURT: Sir, you may step down. You should be in your chair at 9:30. Thank you. THE WITNESS: Thanks. *(Witness temporarily excused)* *(Continued on next page)* Page 1827 *(In open court; jury not present)* THE COURT: Let's all be seated, ladies and gentlemen. It's Thursday afternoon. Give me a sense, Mr. Howard, so we can figure out when the defense case is going to start, when approximately you're going to end with this witness. And mr. Dratel will have a sense as to how long he might take. MR. HOWARD: This is the last lengthy portion ready reading. I think there are another couple Tor chats. There's not much more after this very long piece. I would guess an hour and-a-half to two hours max. THE COURT: So if we start anywhere in the vicinity of 9:30 on Monday, hope springs eternal, then that would be 11:30-ish. MR. HOWARD: I think that's right. I think we're definitely going to finish before lunch. THE COURT: Then Mr. Dratel will have whatever cross he's going to have. How much does the government have after that in terms of stipulations or anything else that you'll need to do, if anything? MR. HOWARD: I think there's a very few things that we'd want to read into the record. THE COURT: Ten minutes, five minutes, 20 minutes. MR. HOWARD: Five to ten minutes max. THE COURT: Mr. Dratel and Ms. Lewis, we're likely to get to your case then Monday after -- in fact, it sounds like we will get to your case Monday after lunch-ish. In that regard, we'll need to talk about the logistics of when you're going to give the notice if you're -- if Mr. Ulbricht is going to testify. One of the options is if he's going to testify and the other folks I realize are not going to be in town, then obviously he could since he's sitting here, he can testify then. That's one possibility. Page 1828 But I think it would be fair to give the government some notice of that at some point prior to that, but that's an option in terms of getting your folks here. Otherwise, I don't know how -- if your expert is local, let me hear from you, Mr. Dratel. MR. DRATEL: We'll coordinate so we'll be ready to go at that point on Monday. I mean, if obviously we'll have as many people here as we need to. People are booking their travel. That's what we're trying to do. THE COURT: When will you have an answer on whether Mr. Ulbricht will testify? MR. DRATEL: I don't know. THE COURT: Is it possible over the weekend? MR. DRATEL: It's possible, but I don't know. You know, he gets the right to make that decision; even if he told me today, he gets the right to change his mind. THE COURT: I certainly understand that. It's also the case that the Court is entitled to ensure that we have an orderly trial and that he makes a decision in a reasonable time. There are many judges who would have required it before now. It's not my style to require for the defense that they say it one way or the other for sure before the end of the government's case. However, if you're leaning one way or the other, then it's fair to get notice because he would be a substantial witness to prepare for cross-examination for. Page 1829 MR. DRATEL: I assume that they would be prepared for him no matter what because this has been going on for a long time. So I can't make him decide it before he is ready to decide it. THE COURT: What I'm saying is, first of all, and I'll be clear to Mr. Ulbricht because I can see him and we see each other all day long, and you need to decide by the end of the government's case and convey that to Mr. Dratel in consultation with Mr. Dratel and after -- when the government rests, at that point, we're into the defense case and we need to know. So, if you folks have decided that earlier, then I ask you to notify me and the government that you have made a determination one way or the other. If that occurs, tomorrow, tonight, over the weekend, if you haven't, so be it. We'll break at the end of the government's case and I'll ask you then but it will also give me a sense in terms of timing, it will give me a pretty much better sense than I have right now to how long the case will last. Page 1830 MR. DRATEL: I object for this reason. He has a right to see -- he has a right to determine after the defense witnesses testify whether he likes it or not, whether he thinks he should testify. THE COURT: You can look at the case law on that. There's ample case law on precisely this issue. I'm sure you're aware of it. Now, let's talk about closings. It is my practice always to go directly into closings. There will not be an overnight if there's time left in the day unless there's not enough file to get to a closing. Let's take an example. If, for example, the defense case is over by 11:00 a.m. on Tuesday or 2:00 p.m. on Tuesday, you will do your closings on Tuesday. So you should prepare for closings shortly thereafter. If it's Wednesday, it will be Wednesday. If it's Thursday, it will be Thursday. If it's the following week because the case is still going and we're not in deliberations in which case I will not make the jury sit on Friday, but just bear that in mind because sometimes people get an overnight. You might, if we end at 3:00 one day or 3:30 and it seems like a logical thing to do, but you may not. Now, the last item I have is for jury instructions. For jury instructions, we got through all but the last couple and I've got some decisions to make and you folks have letters that you were going to send me if you wanted to on any remaining issues. Page 1831 I'll take those tomorrow any time during the day tomorrow any additional last comments; otherwise, my intention is to finalize them and to send you folks another draft and we'll then talk about -- I'll go through with you on Monday morning or I'll issue something written shortly thereafter which gives you the results of my determinations, but I know I'm waiting for a couple of things from Mr. Dratel in particular. MR. DRATEL: And also a defense theory which we will have at the appropriate time. THE COURT: Obviously, if you have an instruction to add that corresponds with the evidence, but what we're going to be doing, we'll need to get that, but I will instruct the jury as soon as you rest because it's possible that if, for instance -- I have to be prepared to. If, for instance, it's 3:00 in the afternoon, I want to play out the timing, and we're not going to close because it's too late in the day to get you both in, then I may give at least give some of the instructions at the close of all evidence. So I want to make sure that I have it if you want something built in early on. MR. DRATEL: We would have that Monday. It's just when the government rests. THE COURT: Terrific. MR. DRATEL: It's purely just not to have a defense theory and then respond to while they still have their case. Page 1832 THE COURT: That's fine. That's fine. And if there's anything else that has gotten modified as we have gone along, because of the evidence that comes in obviously, we said that we would revisit that and we will. Are there things which you folks would like to address apart from that? MR. TURNER: There are several, your Honor. First of all, in terms of defense 3500 in the exhibits, we'd like to get a sense -- we'd like to set a deadline for that. We have consulted with defense counsel and defense counsel has told us they will try to give us that information tomorrow. I would just like for some date to be set on the record. THE COURT: When is the last that you need it by given your resources which are greater than the defense's? MR. TURNER: Well, we would like it, since we're going to start with the defense case on Monday, I think we'd like it at least by Saturday morning, 48 hours. THE COURT: Why don't we split these into two groups. There are, as I understand it, I don't know if the composition has changed, but there is the expert witness and then there are the somewhere, half a dozen to seven or so character witnesses. As I understand it, Ms. Lewis, those are the two groups that you described yesterday? MS. LEWIS: That's correct. Page 1833 THE COURT: Is it easier to get one set versus the other at one point in time and let me get a sense from the defense as to what you folks are thinking. MR. DRATEL: 3500 we were planning on getting to the government probably by tomorrow evening I think is viable. Exhibits is a little different for a couple of reasons: One of which is the government is still on its case. Everything we turn over to the government becomes part of their case, so I'm really not inclined to start giving them exhibits so that they can then call another witness or do something else with it or have this witness talk about it if it's something from there. We'll give them the exhibits as soon as they rest and they're not going to be voluminous. It's all stuff they're familiar with. This is all stuff from the discovery for the post part. If it's not, if it's stuff having to do with an expert, we'll get that so that everybody has notice. We have been getting exhibits every morning, every night. THE COURT: On the 3500 material, Friday evening is fine. And we'll just make it at any point in time on Friday since the government said Saturday morning for the 3500 material. MR. DRATEL: All right. THE COURT: So get it to the government how ever logistically you folks arrange that. In terms of the exhibits, when you say "not voluminous," again can you split them between the two groups? Are these really for the expert or are they other? Are they for the seven? Page 1834 MR. DRATEL: I don't think the character/fact witnesses have exhibits necessarily. Maybe one, maybe a couple of things -- it's possible one or two pieces. THE COURT: In terms of the expert, I take it that you have to have given the proper disclosure in any event to the government and that's all done. MR. DRATEL: Yes. We have one expert that we're going to disclose probably later tonight based on what happened today. MR. TURNER: On the expert, we're actually going to move to preclude. We don't believe the notice is sufficient. THE COURT: Preview for me, is it because you don't think the notice is sufficiently detailed or for some other reason? MR. TURNER: Three reasons: We don't think that the subject matters of the testimony requires specialized knowledge, we don't think they're relevant to the case and in any event, the expert disclosure does not even provide the opinions that this expert is going to provide. It just lists subject matters, very general topics of discussion and there's very clear law it's not sufficient under Rule 16, so we prepared a submission. We were going to file it with the Court shortly after we get back. Page 1835 THE COURT: I'll wait to see it. And that will increase the workload of the defense in terms of needing to respond to it because I'll need to rule on that very quickly on Monday morning. It will be an initial order of business at 9:00 a.m. So let me see when yours comes in. And if you can confer with the defense as to timing on when they can respond and recite that, that would be helpful. If you can't, then Mr. Dratel, if you can let me, as soon as it's filed, have a sense Tuesday the soonest you can get it. MR. DRATEL: Yes. THE COURT: Because I don't want to give you a deadline -- MR. DRATEL: Understand. I understand. THE COURT: But I'd like to be able to read both. What's the topic of the expert? MR. DRATEL: Bitcoin.And the other expert is the Computers, these computer issues. THE COURT: Let's deal with these as they come in. I take the heads-up Mr. Turner now. Now, in terms of numbers of -- in terms of exhibits, let's assume for the moment because I want to work on the logistics as well and I just don't know how any of this is going to come out: When is the time frame that you need the exhibits by? MR. TURNER: I think any expert witness we would need them sooner rather than later. The fact witnesses, the character witnesses are less of a concern. Page 1836 I would add this is extremely late for disclosure of another expert witness so we would hope that that disclosure is made very promptly. THE COURT: Well, if it's coming out of today with Mr. Yum in terms of his analysis, that's one thing and we'll deal with it when we see what the notice is; and you folks, if you've got an issue, you'll raise the issue and the defense will respond. MR. TURNER: I was speaking of the second expert, the computer issues expert. THE COURT: He said it was coming out of -- MR. DRATEL: I'm sorry. I may have misspoke. It is coming out of a series of witnesses, some of whom testified I think as late as yesterday, but it also has to do with some of the limitations on cross that have occurred in the last couple of days. So you say we have to call a witness, we'll call a witness. THE COURT: Well, I said we would take up the application if you're going to call a witness. So if you need to call a witness and you're going to attempt it, it doesn't mean you get around the Rule 16 disclosure requirement. So you'll work with the government, make your disclosures. If the government has a problem with it, they'll raise it with me and we'll take it from there, all right? Page 1837 MR. DRATEL: Just so we're clear: Again, every day we get new exhibits. It is not something that's out of the realm of a trial. They're going to get something in sufficient time to work with it much more time than we have had to work with much of what they have done. THE COURT: I hear your frustration and your point. MR. DRATEL: Thank you. THE COURT: And we'll take it one step at a time. What I'd like to do right now is the 3500 material is going to go over. Let me get a sense of what this expert is about. And you folks talk about whether or not you can get some timing. I mean, if plenty of time means you're not going to get the exhibits to them before the fellow or woman -- I don't know who it is -- testifies, the expert, that's one thing. That's one set of issues. If it's going to be Sunday at midday, that's something else. I just need to have a sense. Let me let you think about it because it's Thursday evening, so rather than imposing something, but if I don't hear from you folks generally, then I'll make some decisions. *(Continued on next page)* Page 1838 MR. DRATEL: Many of these things were denominated as government exhibits in the first exhibit list that they pulled. So this is no surprise. It is not. THE COURT: If it is relatively straightforward to do that, then perhaps it is not, you know -- for some of them at least, you can have the government start working on some of them. MR. DRATEL: I don't want to keep coming back and then some other way that the government then -- they made the decision as to what they want to do. Then I want to make the decision as to what we want to do and not have them compromise -- THE COURT: The one thing I have to say is have you tried a lot of case where the defense shows nothing until the government rests? MR. DRATEL: Sometimes, yes. THE COURT: Sometimes. Not very often. It is a rather -- it is not very often. Not in federal court. It's a unique view as to what the defense can do. Now, I am attempting to have as much patience as is, I think, possible with this, but your view as to things is sometimes beyond my comprehension. MR. DRATEL: OK. I would just say the predominant number of cases that I have been in, even when the defense puts on a case, that the government doesn't get the kind of advance notice that the government is seeking here of any of this material. Page 1839 THE COURT: All right. MR. DRATEL: Maybe 3500. THE COURT: All right. We're adjourned. We'll pick up on Monday morning at 9. You folks, if you have lost track of what you owe me in terms of jury instructions or anything else, make sure you look at the transcript because I will hold you to it. We're adjourned. THE CLERK: All rise. *(Adjourned to 9 a.m., Monday, February 2, 2015)* Page 1840 INDEX OF EXAMINATION Examination of: Page MICHAEL DUCH Cross By Mr. Dratel . . . . . . . . . . . . .1591 Redirect By Mr. Turner . . . . . . . . . . . .1606 Recross By Mr. Dratel . . . . . . . . . . . .1608 Redirect By Mr. Turner . . . . . . . . . . . .1608 VINCENT D'AGOSTINO Direct By Mr. Howard . . . . . . . . . . . . .1612 Cross By Mr. Dratel . . . . . . . . . . . . .1633 ILHWAN YUM Direct By Mr. Howard . . . . . . . . . . . . .1636 Cross By Mr. Dratel . . . . . . . . . . . . .1732 BRIAN SHAW Direct By Mr. Howard . . . . . . . . . . . . .1747 GOVERNMENT EXHIBITS Exhibit No. Received 1100 . . . . . . . . . . . . . . . . . . .1616 1101 . . . . . . . . . . . . . . . . . . .1617 1102 . . . . . . . . . . . . . . . . . . .1622 1103 . . . . . . . . . . . . . . . . . . .1623 602 . . . . . . . . . . . . . . . . . . . .1640 604 . . . . . . . . . . . . . . . . . . . .1643 604A . . . . . . . . . . . . . . . . . . .1644 600 . . . . . . . . . . . . . . . . . . . .1652 Page 1841 603 . . . . . . . . . . . . . . . . . . . .1654 603A . . . . . . . . . . . . . . . . . . .1655 605, 605A . . . . . . . . . . . . . . . . .1658 106D . . . . . . . . . . . . . . . . . . .1659 601 . . . . . . . . . . . . . . . . . . . .1664 608 . . . . . . . . . . . . . . . . . . . .1668 607 . . . . . . . . . . . . . . . . . . . .1676 606 . . . . . . . . . . . . . . . . . . . .1682 609 . . . . . . . . . . . . . . . . . . . .1683 650 and 651 . . . . . . . . . . . . . . . .1687 610 . . . . . . . . . . . . . . . . . . . .1689 620 . . . . . . . . . . . . . . . . . . . .1692 620C . . . . . . . . . . . . . . . . . . .1695 620A . . . . . . . . . . . . . . . . . . .1696 620B . . . . . . . . . . . . . . . . . . .1698 630, 631 . . . . . . . . . . . . . . . . . .1729 900A, 900B . . . . . . . . . . . . . . . . .1751 901 . . . . . . . . . . . . . . . . . . . .1752 910 . . . . . . . . . . . . . . . . . . . .1757 918 . . . . . . . . . . . . . . . . . . . .1759 911 . . . . . . . . . . . . . . . . . . . .1760 911A-911D . . . . . . . . . . . . . . . . .1762 913, 914 . . . . . . . . . . . . . . . . . .1765 915A-G . . . . . . . . . . . . . . . . . . .1766 916A-Z . . . . . . . . . . . . . . . . . . .1769 Page 1842 917 . . . . . . . . . . . . . . . . . . .1772 917A through F . . . . . . . . . . . . . . .1772 919 . . . . . . . . . . . . . . . . . . . .1775 920A . . . . . . . . . . . . . . . . . . .1784 960 . . . . . . . . . . . . . . . . . . . .1786 930 . . . . . . . . . . . . . . . . . . . .1789 931, 932, 933 and 935 . . . . . . . . . . .1792 Page 1843 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. February 2, 2015 9:10 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Page 1844 *(In open court; jury not present)* THE DEPUTY CLERK: Continuation of the trial of United States of America v. Ross William Ulbricht. Counsel, state your names for the record. MR. TURNER: Good morning. Serrin Turner for the government, along with Timothy Howard, Agent D'Agostino, Nicholas Evert and Molly Rosen. THE COURT: Good morning all of you. MR. DRATEL: Good morning. Joshua Dratel with Mr. Ulbricht standing beside me, Lindsay Lewis from my office and Joshua Horowitz. THE COURT: Good morning. We have seven jurors here and have not heard from any that they will not be here. Several asked whether or not we were going to hold court today and we indicated yes, and they should just try to get in as soon as possible. We have not heard any specific time as to delay. So I am hopeful that they'll be in without too much delay. There is one pending application before the Court which was a letter that I received from the government relating to Defense Exhibit E. Before we go to that, let me find out what the entire agenda is. Are there additional matters which need to be raised? MR. DRATEL: Yes, your Honor. With respect to the Court's opinion yesterday precluding the two proposed defense experts, I would just object to the time frame in which we were compelled to answer. I don't think it was reasonable or fair. I think Mr. Ulbricht's Sixth Amendment right to counsel and in turn his Fifth Amendment right to counsel -- I mean his Fifth Amendment right to due process were denied by that. There was no deadline set before the weekend. We had reached out to the government to ask for a schedule. We did not hear back from them. And in addition, there were -- we just did not get a confirmation. Page 1845 Ms. Lewis talked with the government about Sunday and they were going to get back to us with a confirmation. They agreed to Sunday. I guess Ms. Lewis -- we didn't get to the Court the schedule. That was a miscommunication. I did not have any opportunity to contribute to the Antonopoulus letter and there are significant aspects of that issue that were not addressed in that letter because we did not have access to Mr. Antonopoulus during the period of time. And we were able to speak to him yesterday after the Court had already issued its order and he would have been able to provide significant evidence rebutting material and testimony by Mr. Yum from last Thursday for which we had virtually no notice. I just want to go through some of the issues that he would have been able to address. One is that the impact of a significant movement of bitcoin on the market, in other words, what the volatility, what the volume was in trading at certain periods of time and what the movement of the amount of bitcoins that Mr. Yum talked about and what that would have involved and what the movement of certain amounts of bitcoin would have involved on the market. Page 1846 In fact, the FBI auction of the bitcoins that they seized from the laptop of Mr. Ulbricht was the largest single trade I think in the history of bitcoin, was the largest single transaction at that point. Also with respect to the keys that Mr. Yum testified to about bitcoin keys on the wallet and on the laptop and addresses, Mr. Antonopoulus would have been able to testify that it does not indicate ownership, that there are three aspects of this process: One is access, one is control and one is ownership. Access, which is all having the key suggests is the weakest form of ownership or control. It doesn't have either. And then control is weaker and then there's ownership. The keys on the laptop do not mean that someone owns or controls the bitcoins. It also does not mean it's exclusive. More than one person can have access through possession of the keys. He analogized this concept to storage lockers to having a pin number, where anyone with a pin number with the storage locker could go to the storage locker, could get access and also make deposits with a cash slot, that all that would mean was access. Page 1847 Also with respect to the laptop, he would be able to opine that Mr. Yum's testimony and analysis would not be conclusive as to how these bitcoins got into the wallet on the laptop. Who else could have had access? And not even know that the keys that the person whose laptop it was might not even know that the keys were there or that the bitcoins were there, that there is knowledge of public addresses and people can deposit and get returns. He has set up accounts where people have put in money who he doesn't know. We had evidence here about the FBI -- even when the FBI took the bitcoins, the account continued to grow because people were putting money in. And there's a whole range of reasons why that occurs in the bitcoin market. He also said that storing keys on a laptop is terrible security. It is not recommended. You should never have it on a laptop. It should never be on any computer connected to the Internet. And he assumes that everything connected to the Internet is compromised. He also confirmed my cross-examination of Mr. Yum which is that a cold wallet is one that has never been online and is on a computer that's disabled to preclude Internet access; that once a wallet has been online, it is a hot wallet, which is something that Mr. Yum disputed me on and he was wrong. He would only use a hot wallet for a single transaction, which would be to withdraw bitcoins from a wallet. He would never use it for any other purpose. He also talked about the 700,000 number that the government had in Mr. Yum's testimony and report, that there is a chance for a significant double-counting because things can go from Silk Road to the wallet back to Silk Road back to the wallet and these round trips, which we establish have occurred in that -- in the time that now we've had to do this and talk to Mr.Ant no louse about it and others, that there's no indication that it's actually 700,000 bitcoins, that it could be many of the same bitcoins going back and forth. Page 1848 There are a number of explanations that he would have had for that. One is that many merchants and customers on Silk Road in his experience as an expert used Silk Road as a hot wallet and as a result they have a running balance moving back and forth from Silk Road to their own wallet from Silk Road to their own wallet back and forth, deposits and withdrawals, deposits and withdrawals. He said a lot of merchants do that. And there's a lot of literature out there and posts and all of that. He said there are legal traders on Silk Road who do that often, people who trade T-shirts, coffee, key chains. He said, in fact, when the government froze the wallets, a lot of vendors with legitimate merchandise were out their money because the bitcoins were seized. He also pointed out that Silk Road is not a one-to-one type of bitcoin wallet in the sense that if you were to put a bitcoin in the Silk Road wallet, you would not get that wallet -- you would not get that bitcoin back when you withdrew. It all goes to a single pot. Very much like cash at a bank or an ATM, if you put in five 20s in a deposit and then you withdraw, you don't get the same five 20s back. So that could also account for these transactions, double-counting, because you can't assume that it's not the same bitcoin going back and forth and back and forth. Page 1849 Also, Silk Road, according to his experience, was used to trade currencies for bitcoin and as a primitive currency exchange and that bitcoin speculators would use Silk Road in and out as a means of speculation in bitcoin, and, of course, that is what the defense theory is with respect to what Mr. Ulbricht was doing at the time in terms of his business. Also, he also said that in the early days because Silk Road was a primary or the primary vehicle for using bitcoin in commerce, that many ordinary bitcoin transactions or ordinary bitcoin issues were treated on Silk Road where they weren't available anywhere else, such as bitcoin mining and other wallet issues and all of that as far as merchandise and people using Silk Road in the context of bitcoin as a wallet and as a means of exchange. Also, he pointed out how bitcoins are traded in the sense that -- not so much traded but how payment works for bitcoins and that bitcoins are -- and this has to do also with bitcoin mining and what's called block reward meaning if you mine bitcoin successfully, you get block reward. Let's say you have 50.135 bitcoins would be a block award, so that goes to the American who mined it. And if that person wanted to purchase something for one bitcoin, they don't take one bitcoin and pay; they have to pay with the entire block of bitcoin that they received, the 50.135 bitcoin. So then you have to spend all of it. And what that means is essentially not dissimilar to, let's say, if I wanted to buy a pack of gum for a dollar and all I had was a $20 bill, I would have to use the 20 to pay for the dollar. Page 1850 The difference with the bitcoin situation is this: When you get change from a bitcoin, in other words, if you pay for a single bitcoin item with a 50-bitcoin piece, you're going to get 49 bitcoins back in change. The difference in the cash situation, and I'll try to analogize it further, which is that the bitcoind wallet, which was used on Silk Road, that was the system used on Silk Road, it automatically puts the change in a new wallet. So that if I were to analogize it again to cash is that if I were to pay for a pack of gum worth a dollar with a $20 bill, if I take the 20 from my right pocket, when I get the change of $19, I put it in my left pocket. It's a different wallet because of this bitcoind program. That can also lead to overcounting. Page 1851 And he pointed out that these blocks are indivisible, they are of arbitrary size and there are algorithms for sorting these bitcoin amounts for efficient means of payment. It's something that Mr. Yum only touched on very, very generally that is important in a more specific sense because it accounts for the numbers of wallets, it accounts for the fractionalized nature of the bitcoin that's in the wallets, and we believe that that is relevant, that is important to our case. We did not have sufficient notice to provide that before. Mr. Antonopoulus was on a plane Saturday returning from overseas. And the government knew he was away based on Ms. Lewis' conversation with them. We had told the government that we would be providing his opinions to them Sunday when he arrived back in the United States. Let me just review my notes for one moment. So we're clear, I did not speak or otherwise communicate with Ms. Lewis Saturday until later in the evening, and based on the Court's ruling before we had a reasonable and sufficient opportunity to respond, I move for mistrial or for the remedy of giving us a chance to put Mr. Antonopoulus on the stand. THE COURT: Well, the application is denied for the reasons substantially stated in my opinion. Still the Court has no idea what Mr. Antonopoulus' qualifications are and whether he is in fact qualified to present any of the opinions that you've suggested. The Court received simply a very bare bones CV, a generic reference to 200 articles with none of the articles listed or named. Many of the topics are those which would have naturally arisen based upon the opening statements of counsel and therefore should have been anticipated rendering much of the Antonopoulus proposed testimony as information which should have been anticipated, therefore disclosed, therefore the methodology disclosed. Page 1852 The particular aspects which are responsive to Yum I think ignore the fact that Yum was responsive to your opening. In fact, it was the minimum kind of exercise one would have expected the government to have undertaken in response to that opening. It would have been I think deficient for someone not to have done that kind of exercise. So for all of the reasons set forth in my opinion, the preclusion order as to Mr. Antonopoulus remains. Ms. Lewis. MS. LEWIS: I wanted to add, obviously since Mr. Antonopoulus was traveling, we also anticipated we would be able to get a more complete sense of specifically what his credentials were. I had an idea, but I wanted to confirm them before putting them in a letter to the Court; and that was also the purpose of speaking with him on Sunday. I had told the government that we were intending to speak with him at 3:15 that day when he returned and that I would let them know as soon as we did have that conversation what his positions were because, obviously, I would not want to misrepresent to them something, have them agree to it, and then have it be something else. Page 1853 He was in Germany. He had almost limited to no access to Wi-Fi, so we were not able to get these things before, though we did endeavor to do so. We were in communication with him. It's in the 3500 material. You can see we were communicating with him to try to get this information and we have this call set. I did want to add, though, that he has been qualified as an expert on bitcoin in Canadian court. Obviously this is not an issue that has been in American courts practically at all, but it has been there. He's also spoken, I believe, in Europe as an expert on this topic. And he has also written a leading book in this area, "Mastering Bitcoin," as well as a host of articles on this topic. He's a security expert. All of this would have been in a subsequent submission had I had the opportunity to speak with him as planned on Sunday. THE COURT: Well, I think bitcoin issues here have been evident since this case was first charged, and the idea that you would not have located or disclosed Mr. Antonopoulus until when you did, let alone trying to get in touch with him the day before he's supposed to go on the stand potentially is a choice you folks made. Page 1854 Does the government want to add anything to the record? MR. HOWARD: To be clear on one thing: We did speak with Ms. Lewis on Friday evening. It was requested whether or not the government would agree to allow certain parts of Mr. Antonopoulus' testimony in so they won't have to be litigated. At that time we expressed we filed our motion to preclude and we were in no position to evaluate any kind of compromise given we had no idea what his opinion would be because the notes were so deficient. We were told by Ms. Lewis that we would not receive any more detail before Sunday and we did confirm the fact that our position was that Mr. Antonopoulus' testimony should be excluded and it was up to them to oppose it if that was their choice. MS. LEWIS: That's correct. MR. TURNER: Could I add one brief point: All of the opinions that Mr. Dratel expressed, we would have objected to as irrelevant and improper if we had had proper notice. So I don't want the record to be left unclear that, in the government's view, we would have accepted the relevancy prior to his opinions. THE COURT: That's the Antonopoulus issue. Is there anything else before we get to Defendant's Exhibit E? MR. DRATEL: Yes. Page 1855 THE COURT: All right. MR. DRATEL: As the Court is aware, the government's initial exhibit list and throughout the first half of the trial included Andrew Jones, who has pleaded guilty to his involvement in Silk Road as an administrator under the name of inigo. At some point midway through the trial, the government said they may not call him and then just last week conclusively told us that they would not call him. When it initially became -- when I was initially informed that he would not be called by the government, I spoke with Mr. Turner about a specific piece of Brady material that the government provided. The government doesn't call it Brady because they don't call anything Brady. Mr. Turner in a telephone conversation with me and Ms. Lewis said there is no Brady material in this case because he believes the defendant is guilty, so that's his view of Brady. So the notion that the government understands its Brady obligations is not reliable in this case. So I asked him if he would stipulate to the piece that he knew we were interested in and he said yes, just a matter of language. Then I asked him again when he said that -- when they concluded they would not call Mr. Jones and he agreed again to stipulate. And then over the weekend yesterday I gave them the language of the stipulation which is only what is in their letter with the exception of one sentence which was removed; it's only what's in their letter. And I got back -- and then I spoke to Mr. Turner at 7:00 last night and he at first resisted unless I met one of his conditions on something completely unrelated that he would not stipulate unless I made met a condition that was completely unrelated. I agreed because this stipulation is that important to his condition. And then at 11:00, he writes me an email saying they're not stipulating. Page 1856 THE COURT: Why don't you describe to me what the substance of the issue is. MR. DRATEL: Yes. THE COURT: Because it sounds like the alternative would be to call Mr. -- MR. DRATEL: Can't call him. He's going to take the Fifth Amendment. I spoke to his lawyer. He's unavailable. So I would move it, by the way, either as a statement against penal interest, 807, defense witness immunity. I'd ask for all those things. This is a case where if ever there was an appropriate case for it, this is it. So on December 29, 2014, we received a letter from the government and on the second page of the letter it says that in a recent witness interview, Andrew Jones a/k/a inigo said the following, and this is the quote. This is not necessarily a quote from Mr. Jones but this is the government's characterization of what he said. Page 1857 THE COURT: It's a 302? MR. DRATEL: No. It's not a 302, but this is a letter from Mr. Turner, signed by MR. TURNER: At some point in or about August or September 2013, Jones tried to authenticate that the Silk Road user "Dread Pirate Roberts" whom he was talking to at the time (via Pidgin chat) was the same person with whom he had been communicating in the past with this username. Previously in or about October 2012, Jones and "Dread Pirate Roberts" had agreed upon a "handshake" to use for authentication in which Jones would provide a certain prompt and "Dread Pirate Roberts" would provide a certain response. When during the 2013 chat in question Jones provided what he believed to be the designated prompt, "Dread Pirate Roberts" was unable to provide the response Jones thought they had agreed on; however, later in the chat, Jones asked "Dread Pirate Roberts" to validate himself by specifying the first job that "Dread Pirate Roberts" assigned to him (running the 'DPR book club') which "Dread Pirate Roberts" was able to do. And then that's the block quote, and then the last paragraph is: The government is unaware of any extant record of the 2013 chat described by Jones. There is a record of an October 2012 chat between the defendant and Jones discussing a "handshake" in the file labeled MBSOBZVKHWX4HMJT on the defendant's computer, which has already been provided to the defense in discovery, and our stipulation would have included that specific chat, which is very short -- I think it's one page basically-- as part of the stipulation. Page 1858 THE COURT: Mr. Turner, why has the government taken the position it has on the stipulation? MR. TURNER: First of all, your Honor, I just want to be clear, I never said that we would stipulate. What I said is that we would consider stipulating. And what happened was this disclosure was made over a week and-a-half ago and the defendant did not get proposed language to the government until last night when the government was very, very busy with other things. The language that the defendant proposed for one thing omitted the very last sentence the defense counsel just read, which is, in the government's view, clearly important because the point is that inigo, Mr. Jones, tried a prompt that didn't work but then he tried another prompt that did. THE COURT: Then you could add that in. That would be the product of a negotiation over the language of the stipulation. MR. TURNER: The problem that I had is that, like I said, this came at the 11th hour. THE COURT: Can you look at it this morning as we're proceeding? MR. TURNER: I can, although it's not my job to draft appropriate language. Page 1859 THE COURT: No. Mr. Dratel, it sounds like, has done that job. He's drafted language. Why don't you take a look at it and see whether or not there are additions that you could make to it or changes you could suggest that would then make it acceptable to the government. Only at that point when I've got the two of you having truly joined issue do I want to have to then make a ruling. If you folks are able to agree, then that's obviously the best course. Will you do that? MR. TURNER: We will. To make it clear -- THE COURT: I understand you don't want to. MR. TURNER: No, I just think just quoting what we put in a letter does not provide necessarily sufficient context by itself. THE COURT: Go back and figure out what the context is that's fair. You folks then negotiate over this. We still have the government's witness on direct and I think Mr. Howard said he's got an hour or two left with that. Then there's cross. So you have some time while you're sitting there maybe to take a look at this. Mr. Dratel, do you have it in a form written or otherwise that he could look at and fiddle with? MR. DRATEL: I sent him the stip. I have it here. THE COURT: In paper copy. Page 1860 MR. DRATEL: I can give it to him. I can give him my copy. I know what it says. And so we're clear, Mr. Turner's response to me last night was he couldn't consider alternative language and it was too late to do so and he never made a plan or proposal. The reason I took that sentence out -- so we know where we're going, the reason I took that sentence out is because they could have called him to get that. It's a confrontation issue with respect to that. There is a confrontation issue. If there's a completeness issue, that's a different issue, but they never came back with a single sentence that's not in there. Everything else is from the government's letter. This has never been a mystery. We're talking about preparation time. This has never been a mystery as to what we want to do. THE COURT: I hear your position. So I'm going to ask the government to look at that and see if there are additions or changes which would make it acceptable. If the answer is after further considering the matter there are not, then we will deal with it in that posture. But if there are further changes or modifications that would make it acceptable, I'd like to know that. Are there any other matters, Mr. Dratel? MR. DRATEL: I prepared some supplemental requests to charge, they're very short, based on evidentiary issues. If I have a representation from the government that this is the government's last witness, I'll be happy to share them now. Page 1861 THE COURT: Is this the last -- MR. DRATEL: It's not going to result in something coming into evidence that was not already -- THE COURT: Is Mr. Shaw the last witness? MR. TURNER: Yes, your Honor. THE COURT: Mr. Dratel, you can proceed. MR. DRATEL: Thank you, your Honor. I'll give the government a copy here and I'll hand one up to the Court. First, one, that law enforcement officers cannot qualify as coconspirators. The second is that even if you conclude beyond a reasonable doubt that Mr. Ulbricht was involved in the sale of mushrooms on the Silk Road site or otherwise in 2011, that alone would not be sufficient to establish his guilt -- it says "guilty," a typo -- on Counts One, Two or Four or his participation in any of the conspiracies charged in Counts Three and Seven, and the reason for that is venue. This is number three, the undercover purchases by Homeland Security Investigations in Chicago and any seizures made by Homeland Security Investigations in Chicago are not by themselves sufficient to find Mr. Ulbricht guilty on any count, again because of venue. Number four, even if you find that Mr. Ulbricht ordered fake identification documents, that is not evidence you can consider with respect to Count Six. One is venue and the second is it's not what's charged. It's not charged conspiracy, even if it is a conspiracy. Page 1862 Supplemental defense instruction number five would be in order to find Mr. Ulbricht guilty beyond a reasonable doubt, there must be evidence beyond the uncorroborated admission of the accused. It is necessary for the government to introduce substantial independent evidence which would tend to establish the trustiworthiness of any such statement sufficient. It is sufficient if the corroboration supports the essential facts admitted sufficiently to justify an inference of their truth. Any independent facts plus the other evidence besides the admission must, of course, be sufficient to find guilt beyond a reasonable doubt. And the reason for that last instruction is rather arcane and archaic but still the viable principle of corpus delicti, which is that the uncorroborated admission or confession of an accused is not sufficient evidence and there must be some independent corroboration. In the context of what I assume the government will be arguing with respect to journals is that Mr. Ulbricht acknowledged his participation in the defense even as early as 2011, even if we don't contest some of that. THE COURT: I see that you have some case cites here. I'm going to have my clerks pull the cases. I'll hand this to them. Let's take this up at the break or at the lunch and we'll see how we're progressing through the witness so that the government can determine what its response is to any of the particular requests. Page 1863 MR. DRATEL: Okay. The only other charge, if obviously this stipulation issue doesn't work out or that is not admitted the Jones statement is not admitted in some form, then I would ask for a missing witness charge because he is completely within the government's control. He has pled guilty months ago. The only reason he has a Fifth Amendment privilege is because he has not been sentenced yet and it is completely within the government's control pursuant to the provisions of the cooperation agreement. THE COURT: We'll have the government respond to that when they respond to the stipulation. It may or may not be necessary if the government and the defense are able to agree on language in the stipulation. Are there any other matters which we need to raise before we go to Defense Exhibit E? MR. TURNER: Your Honor, the government would like clarification on what the witness list of the defense is at this point, the experts have now been precluded. The defense last week indicated they were having trouble arranging arrangements for their character witnesses, so we'd like some sense of where we're headed for the rest of the day and who we need to prepare for. Page 1864 THE COURT: We'll have Ms. Lewis give us the list of who you expect to call. MS. LEWIS: The first witness will be Karen Steib Arnold, she's a character witness; followed by Thomas Haney, the same, also character witness; and then Daniel Davis, who is also a character witness. MR. DRATEL: We have one who could not make it today because of travel. His plane was canceled. MS. LEWIS: He's arriving this evening. There's also another witness that could only arrive today and wasn't able to get here earlier. Obviously, we thought we would have a number of other witnesses here. And then we also have another witness, Bridget Prince, who is on-hand, but we do hope to be able to get these other people. THE COURT: There's a possibility if some of the others get here or if the testimony of Mr. Shaw goes long enough that it would be tomorrow morning, it would be two or three others? MS. LEWIS: Yes, your Honor. That's correct. THE COURT: Of a similar nature? MS. LEWIS: There may actually be fact witnesses instead -- one fact witness. THE COURT: Who would that be? MS. LEWIS: Alden Schiller and Chris Kincade. THE COURT: And what's their timing? Page 1865 MS. LEWIS: They're both arriving by this evening and I believe both will be fairly short witnesses and we'll be able to go on first thing tomorrow if we need them to be here. THE COURT: Let's see where we are today, but if they're going to be available first thing in the morning and they're fact witnesses, then tell them to continue to keep their flight plans in place and to try to get here just as soon as they can. MS. LEWIS: We have. Obviously with the weather it's possible things could be delayed further, but as far as I know, they'll both be here tonight and are planning to come and testify tomorrow. MR. DRATEL: Mr. Schiller was actually supposed to arrive yesterday. His flight was canceled. THE COURT: The record should reflect -- MR. DRATEL: I'm sorry, that's not correct. THE COURT: There have been about six- to eight inches of snow overnight which now has turned to rain, which makes us able to be here but has caused some difficulties with travel I'm sure. It certainly has caused difficulties with folks getting in just from Manhattan. That's that. Is there anything else we need to raise before we go to Defense Exhibit E? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. Page 1866 THE COURT: Mr. Dratel, do you want to respond to the government's letter on Defense Exhibit E? MR. DRATEL: The letter is filed under seal, your Honor. THE COURT: The issue I think can be described as follows. It's I think number one, whether or not the purpose of the document is for the truth and if it's not for the truth, then what other purpose does it serve? And then there's certainly an issue which we can talk about in open court, in fact, I think we can talk about all of it in open court, except for the one issue that has been under seal throughout the entire case, but everything I think can be referred to other than that. The second point, if it's not offered for the truth, goes to the issue of the Wade, what I'll call the Wade issue about other perpetrator evidence. MR. DRATEL: It doesn't go for the truth in the sense of the information in it; it goes for the truth the fact that it was communicated to DPR, which is indisputable in that this particular piece of evidence communicates to DPR the name and profile of the person deathfromabove believes is DPR, and that's what he says the information is. Now, I don't know if I can go further or not go further in open court, but the fact is, the government has created a situation and now they want to profit from it by precluding evidence and also saying that the other parts we redacted, we redacted because they won't let us use it. They redacted. They took that part out of the case, so I don't understand how they can possibly have it both ways. Page 1867 THE COURT: Let's forget about the redactions for a moment. Let's just focus on if the information between these two declarants is offered for the truth, in other words, if you want to offer it for the truth that Anand is the perpetrator -- MR. DRATEL: It's not offered for the truth. It's offered for the fact that DPR was getting information about people who were supposed to be DPR and that these things were coming in. There's a whole law enforcement file that's part and parcel of the whole thing. And one of these people is one of the people who the agent was investigating. I think it's a fair inference. I think it's a completely fair inference for anyone to draw. THE COURT: The first part that I want to take is just sort of the hearsay part whether it's for the truth or not for the truth. So if it's not for the truth, in other words, if the defense doesn't intend to say Anand did it, the real DPR was Anand -- if the defense is intending to say the real DPR was Anand, then this is obviously for the truth. MR. DRATEL: No. THE COURT: Tell me whether or not you're planning on making -- MR. DRATEL: It's not that; it's that if you're DPR and you get a name, a specific name, this Anand Athavale and a profile and details, if it's Anand Athavale, if it is, and you're put on notice that it's you, you're going to take steps, so that's not saying that it's him. Page 1868 THE COURT: That's used for the truth. MR. DRATEL: No, it's not for the truth; it's the fact that he was informed, it's the fact that DPR was informed. That's indisputable. It's not for the truth of whether it is or not. It's for an inference for the point is that if DPR is informed that it's him, then he's going to take action. And that's not for the truth of the matter of whether it is or not; it's for the purpose of drawing an inference that anyone who -- and also the fact that if DPR is getting information from law enforcement about specific people, he knows the walls are closing in, he's going to take action to implement an escape plan. That is just a fair inference from all of that. THE COURT: So the theory would be that Anand Athavale understands by virtue of his exchange that investigative sites are trained on him and he takes evasive actions in response thereto. MR. DRATEL: If it's him. And I'm not going to say it's him. I'm going to say anyone in that situation and even DPR even, if it's not Anand Athavale, DPR is very interested and clued in as to what is going on in the law enforcement community and he is actively security-conscious in a very substantial way and that's an inference that we're -- it's not even an inference. It's a fact from this. Page 1869 THE COURT: So what evidentiary basis is there that there was another DPR? And what evidentiary basis is there that the defendant ever handed off Silk Road and then took back Silk Road as a setup that would then demonstrate the existence, by inference at least, of an additional perpetrator? MR. DRATEL: Well, the evidence that he gave it up is that Richard Bates testified to that. The government's own witness testified to that. THE COURT: That he told that he had given it up? MR. DRATEL: Yeah. THE COURT: What is the evidentiary basis that there was a handoff to anyone else? MR. DRATEL: Well, that's a series of pieces of evidence. THE COURT: Such as? MR. DRATEL: I don't want to sum up before they sum up. THE COURT: Under the Wade case and other case law for the Court, as you know, the Court must undertake an analysis as to whether or not other perpetrator evidence is going to result in inviting jury speculation and there must be a substantial connection between some other potential perpetrator and the facts before the Court. You can't just throw up names and other possibilities. The courts have long said that that's an inappropriate way to proceed. There's just lots of case law on this point. Page 1870 We're waiting for two more jurors. MR. DRATEL: The government -- on Thursday, Agent Shaw showed that there is a second administrative key, the SSH key, that gives someone completely separate from even frosty, assuming that that's Mr. Ulbricht, access to the server. I believe that the Government Exhibit 130 and the thumb drive also are -- THE COURT: The thumb drive found on his night table? MR. DRATEL: Right. THE COURT: Why would that possibly result in anything other than incriminating him? MR. DRATEL: Because why would it be on the thumb drive if it's on a laptop? It's on a thumb drive because that's what was given to him, and that's an inference that the jury is entitled to draw. THE COURT: That sounds like the difference between an inference and speculation. Let me gather what you believe the evidentiary basis is for another perpetrator. It's Bates that he was told that Ulbricht had given up Silk Road, and it was the second administration key, which is not tied to somebody who was calling themselves -- well -- MR. DRATEL: There were changes in the site throughout that would indicate that there was a change. You have the origin of DPR in general, the changes in October of 2011, the changes in June of 2011, the changes in January 2012. Page 1871 THE COURT: You need to come up with something that is a handoff to another person by inference; otherwise -- MR. DRATEL: But Bates said he sold the site and that it was no longer his problem as of 2013. The standard is not that I have to prove it's someone else. The standard -- THE COURT: The standard is you have to show a substantial connection that there is another perpetrator. MR. DRATEL: No. I think I have to show a substantial connection to this case, not to another perpetrator specifically. That's a burden on the defense that doesn't exist. THE COURT: It's a substantial connection that that other person is, in fact, the true perpetrator of the crimes charged here. MR. DRATEL: Well, that's what I was trying to get to in my cross-examination of Agent Der-Yeghiayan. I would have gotten to it also with other witnesses, but I was precluded from cross-examining them on this. THE COURT: For instance, is there evidence -- MR. DRATEL: The Jones handshake in September 2013, August or September of 2013, the handshake evidence is critical in this. It's not in yet, but it's critical. You talk about handoff at the end, that's an inference that we're entitled to have. Page 1872 THE COURT: Let me hear from the government. MR. HOWARD: I believe the Wade case requires more of a substantial connection between the actual alternative perpetrator that they're trying to depict, not just someone else generally. Here the issue is that to the limited extent -- to the extent this has any probative value, it is if exactly as if Mr. Athavale is the alternative perpetrator. There is no evidence which substantially connects him to a theory that he's an alternative perpetrator in this case for the reason we set forth in the letter. THE COURT: Defense Exhibit E is precluded on the basis that it's hearsay. It is offered for the truth that Anand is the DPR or that Anand is one of potential other DPRs, which makes it for the truth, and I can't find any reason that it would be offered other than for the truth. The Harwood case, 998 F.2d 91 deals with a situation where information which comes in that's irrelevant, unless it's for the truth, is applicable as well as other cases. Let me give you another one. There are legions of cases that are supportive of keeping things out which are coming in for the truth. And based upon everything I have heard, the use of this would be for the truth. Therefore, it makes the statements as between two out-of-court declarants, and you can't just have two out-of-court declarants, offered for the truth. Page 1873 Also even if it wasn't offered for truth, you then get into the secondary analysis of the Wade standard. The Wade standard relies upon the McVeigh standard, and it says "In the course of weighing probative value and adverse dangers, courts must be sensitive to the special problems presented by alternative perpetrator evidence. Although there is no doubt that the defendant has a right to attempt to establish his innocence by showing that someone else did the crime, a defendant still must show that his proffer evidence on the alleged alternative perpetrator is sufficient on its own or in combination with other evidence in the record to show a nexus between the crime charged and the asserted alternative perpetrator. It is not sufficient for a defendant merely to offer up unsupported speculation that another person may have done the crime. Such speculative blaming intensifies the grave risk of jury confusion and invites the jury to render its findings based on emotion or prejudice." That's cited in the Wade case, Second Circuit, binding on this Court, 333 F.3d 51, pin cite at 61. So that issue is resolved. How are we doing with the jurors? Still waiting on two. *(Continued on next page)* Page 1874 MR. DRATEL: And, your Honor, just since the entire government's case is two declarants not in court, I would move that the jury be instructed that nothing that came in in any piece of evidence that the government put in except for perhaps Bates' testimony, which is the only first-hand testimony in the entire case, is not for the truth. THE COURT: Now, Mr. Dratel you understand, and the Court spent a great deal of time on this both in pretrial -- and in the initial evidentiary rulings -- that there is an exception to the hearsay rules for co-conspirator testimony. Co-conspirator testimony can come in a variety of forms including web shots and other things. I went through that extensively, did make the factual findings necessary to support by a preponderance of the evidence the existence of the necessary elements for a co-conspirator exception. There were also a couple of other exceptions which applied here and there, we have dealt with them all to the extent that they were unique. So, those situations were independent and different. All right. Let's take a break until we get the jury assembled. We are close. We are close and so I would hope that they would be out shortly. Let's get Mr. Shaw back so he is not delayed in getting on the stand. *(Recess)* THE COURT: We are waiting for one juror, juror no. 3. He has communicated with Joe, by text, indicating that he is just getting on the no. 5 train, wherever that is occurring; he said it will be about an hour. That was about seven minutes ago -- five, seven minutes ago, and so I don't know, maybe it will take less than that but I can't imagine that we are going to be starting before 11:00. In light of the fact that he is on his way and has shown up each day, I don't think we should take any other action at this time. So, I wanted to give you folks an update. Page 1875 Anyone disagree and think we should proceed without this juror? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: So, we will give you folks an update, but plan an being back somewhere in the vicinity of 11:00, 11:05 and we will start then. Thank you. *(Recess)* THE COURT: Let's bring out the jury. *(Continued on next page)* Page 1876 *(Jury present)* THE COURT: All right, ladies and gentlemen. Let's all be seated. Mr. Howard, you may continue, sir. And Mr. Shaw, you are under oath from last week. THE WITNESS: Okay. BRIAN SHAW, resumed. DIRECT EXAMINATION (Continued) MR. HOWARD Q. Good morning, Mr. Shaw. A. Good morning. Q. Mr. Evert, can you please publish Government Exhibit 936, please? If we can go to where we left off on page 18, please? Now, Mr. Shaw, you testified on last Thursday that this was a compilation of private messages that were sent to and from the Dread Pirate Roberts, correct? A. That's correct; with one exception. Q. And that exception being the one post from the Silk Road forum, correct? A. Correct. Q. And that the other side of the party in each message is the Dread Pirate Roberts other than the forum post, correct? A. That's correct. Q. Mr. Evert, can we zoom in on the post in blue there? March 28, 2013, from redandwhite to Dread Pirate Roberts: Page 1877 "I already have that information but thank you. 1M a week sounds like it would be worth selling on here, once we know exactly how everything works. Even if commission was 15% it would not matter, as we lose more than 15% doing it on the streets with street level guys getting robbed or arrest and losing product etc. Also, we have kidnapped friendlychemists partner Xin already and are on the hunt for friendlychemist. I will keep you updated on the developments. So far though we are liking what we see with this site and this could be a good partnership for both of us. As far as I can see, this site lacks any big time suppliers. It appears it is mostly it is street level independents that are buying small amounts (1oz - 1 kilo at a time) and selling on here. We have the product and the man power to do big things here. Forgive me, but it all seems a little too good to be true right now so I will need some time to really research this before I make any sort of commitment." From Dread Pirate Roberts to redandwhite: "I understand, and that is great news about Xin. If I understand the situation, he is the one responsible for your loss. You should definitely take your time and start slowly. I would hate for you to make a mistake and be left with a bad experience. Just let me know if you need anything. Also, you should look into PGP. Many customers like to encrypt their receiving address so you should know how to decrypt it." Page 1878 From redandwhite to Dread Pirate Roberts -- sorry, the end of the last message was: "When you are ready, let me know what account you want to sell with and I'll cover the $500 security deposit for you." The next is from redandwhite to Dread Pirate Roberts: "We are all familiar with PGP as we have been using it for years via email linked to our smartphones. It's the only way we communicate with each other aside from in person, since phone calls are not secure. There is no loss anymore, also. We were able to recover all of our missing product when we grabbed Xin. After some "questioning" he admitted he was intending on moving to a different country and setting up a new seller account on this site. We don't take too kindly to thieves. He's gone. I appreciate your offer to waive the fee, but If we were to sell on here I would like to pay the same as everyone else. Very kind of you though. I will be in touch." March 29, 2013, from friendlychemist to Dread Pirate Roberts: "u leave me no choice i want 500k usd withn 72hrs or i am going to post all the info i have. i cant go back to my home and i had to move my kids and wife somewhere and i need the money so i can move my family and start a new life. i hate to do this but i need the money or im going to release it all. over 5000 user details and about 2 dozen vender identities wats it going to be?" Page 1879 From Dread Pirate Roberts to friendlychemist: "Don't do anything foolish. The people that you owe money to have caught up with Xin and reclaimed their loss. I spoke to them and calmed them down. They are likely going to become vendors here on SR. Now you can calm down too. Go back to your normal life and don't get involved in this stuff any more." From friendlychemist to Dread Pirate Roberts: "u dont think i kno what they did to xin? u think i can just go on with my life? u dont know these ppl. i owed them money and i ran away from them. its over for me. i need that money to start over somewhere else with my family. i need it! i dont want to do this but if u dont give it to me i have no choice they are still telling me that i hav to meet them and i kno what will happen. i cant let that happen! even if they say it is ok i kno they will do the same thing to me. they say everything is ok but i kno what they will do! 63 hours.. please.. dont force me to post everything. 500k is nothing to u but its life and death for me they told me that i have a free pass and that they dealt with it with xin but i kno that they are doing that to make me think its ok and then get me! thats how these ppl operate!" From Dread Pirate Roberts to friendlychemist: "Do me a favor and make it 96 hours. I will get back to you on Monday. I want to work this out, but I have big plans for this weekend and don't want to have to deal with this." Page 1880 From Dread Pirate Roberts to redandwhite: "Hi again R&W, I hate to come to you with a problem when we are just starting to get to know one another, but Blake (FriendlyChemist) is causing me problems. Are you still looking for him or now that you've found Xin have you given up? I would like to put a bounty on his head if it's not too much trouble for you. What would be an adequate amount to motivate you to find him? Necessities like this do happen from time to time for a person in my position. I have others I can turn to, but it is always good to have options and you are close to the case right now. Hopefully this is something you are open to and can be another aspect of our business relationship. Regards, DPR" Now, Mr. Evert, could you put that message on the top of the screen, please? On the bottom of the screen can you please publish Government Exhibit 241 -- this is already in evidence, a file that was recovered from the defendant's computer -- and zoom in on the entry from March 28, 2013 from March 29, 2013? 3/28/2013: Being blackmailed with user info. Talking with large distributor (hell's angels). 3/29/2013: Commissioned hit on blackmailer with angels. Now go back to the message, Mr. Evert? Page 1881 March 30th, 2013 from redandwhite to Dread Pirate Roberts: "What is the problem? We usually tend to stay away from hits as they are bad for business and bring a lot of heat. Is it a problem that can be resolved or does it need to be dealt with sternly? As of right now, we don't care about him because we retrieved more from Xin than what he took from us, and he also paid for it with his life. Debt paid in our books. As far as rates go, we don't have a flat rate for things like that. It's on a case by case basis. Usually we pay our hitters a percentage of what the person owes +/- how much they can retrieve. If it's strictly a hit because they don't want the person around anymore it's also different. Does he owe you money or do you just not want him around anymore? I can send a couple of my guys to do recon to find out exactly where he is right now in the meantime until I hear back from you." From Dread Pirate Roberts to redandwhite: "If you can find his location, that may be enough for me to scare him off. He is trying to blackmail me. Just let me know what you need to make this worth your while." From redandwhite to Dread Pirate Roberts: "If I find his location, and you use it against him to scare him, there is a chance he will switch locations again. Speaking from experience, it will become a lot more difficult to find him again after that once he knows there are people capable of finding, him looking for him." Page 1882 "Further, the people we use to do the recon are the hitter themselves. I don't think they will be interested in continuing looking for him if there will be a small sum to be split between them just to find his address. If you have your mind set on just finding his location, I can talk to them and get them to get it for you for a fee (not sure what amount as usually when we hunt someone, there is more involved after we find them). If you want to deal with him the other way, we can talk about that too, but price varies on the situation. If you want it to look like an accident, it would cost a lot more. It wouldn't be suspicious. He would just leave home one day and not return. If you don't care what it looks like, it would be cheaper than the accident. We use professionals and not street level hoodlums who always end up fucking things up. How much does he owe you and how much are you willing to pay? If there are funds retrieved, how much would we keep from what he has when we get him(if he has anything) ?" From Dread Pirate Roberts to redandwhite: "He doesn't owe me anything, but he is threatening to expose the identities of thousands of my clients that he was able to acquire working with Xin if I don't pay him off. As you don't take kindly to thieves, this kind of behavior is unforgivable to me. Especially here on Silk Road, anonymity is sacrosanct. It doesn't have to be clean, and I don't think there are any funds to be retrieved." Page 1883 From redandwhite to Dread Pirate Roberts: "Price for clean is 300k+ USD. Price for non-clean is 150-200k USD depending on how you want it done. These prices pay for 2 professional hitters including their travel expenses and work they put in. We can use out of town hitters if you want as well, but I would not suggest them because they come with an extra cost and you don't seem to care how he is taken care of. When would you like this done?" March 31st, 2013 from Dread Pirate Roberts to redandwhite: "Don't want to be a pain here, but the price seems high. Not long ago, I had a clean hit done for $80k. Are the prices you quoted the best you can do? I would like this done asap as he is talking about releasing the info on Monday." From redandwhite to Dread Pirate Roberts: "I'm sorry, but we can't do anything for that price. Best I can do is 150 and even that is pushing it. Since you need a rush job done, usually we would charge even more. In the interest of business relationship to be, I could do 150. No lower. If 150 does not work for you, we are going to have to pass. We use professionals, and we pay them a good price. Always send them out in a team of 2+.. 75k each for expenses and the job is a fair amount I think. We have one of his associates, and we're paying him to set him up for us. We'll pay for that ourselves on our end. I'm guessing you will not be able to pay by cash, so how would payment work since you need it done before monday?" Page 1884 From redandwhite to Dread Pirate Roberts: "If you want it done by Monday that only leaves today. It's Sunday morning here. We always seem to miss each other online, so I will leave a bitcoin address in case you want to pay that way. Probably best so we can get used to dealing with bitcoins anyways since we will be selling here more than likely in the next week or two. I will check the computer in about 10 hours and If I see that you do want to go ahead with this, and payment has been sent we'll do it today." So then there is 1MWCS1ID and a lot of other characters. "If you want picture confirmation of the job afterwards, give me random numbers and I will have them write them beside him and take a picture for you." From Dread Pirate Roberts to redandwhite: "Thank you R&W. I've only ever commissioned the one other hit, so I'm still learning this market. I have no problem putting my faith in you and I am sure you will do a good job. The exchange rate is above 90 right now, so at $90/btc, $150k is about 1670 btc. If the market tanks in the next few days, I will send more. Here are some random numbers for a picture: 83746102 Here is the transaction # for 1670 btc to" -- Page 1885 And then there is long strings of characters: "Good luck and be safe, DPR" Before we move on, Mr. Shaw, let me direct your attention to this here. Do you recognize what that is? A. Yes. Q. What is that? A. It appears to be a bitcoin address. Q. Mr. Evert, can we publish the top of the page, please? Can we put up Government Exhibit 630 on the bottom of the screen that has already been admitted into evidence? And just zoom in on the top portion, here. So, Mr. Shaw, do you recognize what this depicts? A. Yes. Q. And what does it depict? A. A bitcoin transaction, a log from the block chain. Q. Is there any information from this message reflected in this message from the block chain? A. Yes, there are two pieces. The bitcoin address, the 1MWV on the top matches the 1MWV on the bottom. Additionally, the transaction number listed here 4A0A is match on the bottom, 4A0A. Q. What does the block chain indicate about this transaction? A. This indicates that a bitcoin transaction occurred with 1670 bitcoins being spent from these four addresses and the destination was to this address with the 1MWV. Page 1886 Q. And what is the date of the transaction? A. It is March 31st, 2013. Q. Is that consistent with the date in the private message? A. Yes, it is. Q. Mr. Evert, can we continue on to the next message, please? March 31st, 2013 from redandwhite to Dread Pirate Roberts: "I received the payment. I appreciate the offer if bitcoins lower in value. We know where he is. He'll be grabbed tonight. I'll update you." April 1, 2013 from redandwhite to Dread Pirate Roberts: "Your problem has been taken care of. They seized a bunch of stuff he had with him at the time as well. They said he had a couple laptops and a bunch of usb sticks. Is there anything of that, that belongs to you? They questioned him and he spilled everything he knew. He said that he and Xin were actually working together on this scheme to blackmail you and that they were brought in by a 3rd guy who has been selling on here for a couple years who is a scam artist. Apparently he makes selling accounts, sells for a while and then pulls a big scam and he just keeps creating new accounts after he does his scams. They got that guys name also , I will give that to you free of charge when I meet them to get the picture and computer hardware they got. Rest easy though, because he won't be blackmailing anyone again. Ever." Page 1887 Can you put that on the top of the page, please? And Mr. Evert on the bottom can you please put Government Exhibit 241 which has already been admitted into evidence which is the same file from the defendant's computer and go to April 1st, 2013? 4/1/2013: Got word that the blackmailer was executed. We will continue on with the next message. April 2, 2013: From Dread Pirate Roberts to redandwhite: "Excellent work. Please send any info you can get on this third party along with the picture. The picture can be uploaded here: http://silkroadvb5piz3r.onion/silkroad/upload I have no need for any of his possessions, so you can do what you want with that stuff. Thank you again for your assistance, DPR" From redandwhite to Dread Pirate Roberts: "Okay my guys are here now and here is the information they extracted from FriendlyChemist before the deed. They were working with a guy - real name of Andrew Lawsry of Surrey. Apparently this is the guy that turned them on to frauding people on here. He said that he started selling on silkroad a couple of years ago and since then he has made a career of making new seller profiles to sell and then rip people off. He told them how to start on here and how to rip people off and asked for a percentage in return. He said that he showed them everything about how to sell and how to pull it off and all that stuff. He didn't remember all of the account names he uses or used but he said that tony76 and nipplesuckcanuck were two of his names and that he has other seller accounts for people he set up or is running himself. I also went and looked at all of the possessions they seized from him. The laptops were empty besides Tor and a couple other programs. The USB sticks he had were packed full of text files with thousands of addresses from all around the world. We destroyed everything we seized from him, but I kept a text file that was named "blackmail.txt" that had a ton of addresses in it like the other text files. Since you mentioned that he was trying to blackmail you with that information, I kept that text file in case you needed it. If you don't need it, let me know and I will destroy it. I also have the picture with me. A question before I send it to you. I am not extremely good with all this anonymity computer operations, but I know that pictures store GPS information and the likes that police can use in evidence. Is it safe to send it over here like that? We took care of him at one of our safehouses so that worries me a little. I trust your judgement, so I was wondering if there was a way to delete the GPS information from a picture before I send it over the internet. Another quick question regarding bitcoins. How do we withdraw them? I paid the hitters with my own money until I figure out how bitcoins work exactly. As I understand it, mtgox is the main exchange. Is it safe to make an account there to withdraw? Can they link it back to SilkRoad? They require verification which bothers me a little so I figured you would know the best way." Page 1888 Page 1889 Mr. Evert, can you go back to the first part of that message and zoom in on the first paragraph here with Andrew Lawsry in Surrey? Can we publish Government Exhibit 275 on the bottom which is the .txt file recovered from the computer and zoom in on bottom section starting here? Why don't you zoom in there. Rogue partner details: Xin Cho Tuay Address: It was our shared apartment where we worked out of... he moved out when he robbed me. Age: 31. Surrey, British Columbia. Girlfriend's name: Suzy Ngyuen. redandwhite his suppliers. tony76/nipplesuckcanuck personal info. Andrew Lawsry of Surrey. Mr. Evert, can we just continue with the conversation on the next page, please? *(Continued on next page)* Page 1890 MR. HOWARD: April 2, 2013 from Dread Pirate Roberts to redandwhite: "Yes, you can destroy the info. Thanks for taking a look first. Regarding image metadata you can strip all that out and it is a good practice. The upload page is secure, but I would still have access to that metadata. Of course, you can trust me but what if I was compromised. Do a search of 'remove image metadata' a decent one for windows can be found here. Regarding bitcoin withdrawal I would avoid Mt.Gox if at all possible, especially if you're withdrawing to a USA account. There are many other exchanges that don't have so much attention on them. You can find a list here." And then provides a link. "I am reluctant to give you a specific recommendation, but look for ones offshore on that list that will do an international wire transfer for a direct bitcoin payment. "tony76 and nipplesuchcanuck were both blights on an otherwise great track record. What do you think about going after Andrew Lawsry? This guy has probably ripped off millions of dollars at this point from me and the rest of the Silk Road community." April 4, 2013, from Dread Pirate Roberts to redandwhite: "Are you sure the name isn't Andrew Lawry? Or some other variant? I can't find a surname anywhere of Lawsry. And do you have any other info at all on this person." April 5, 2013 from redandwhite to Dread Pirate Roberts: "I have sent the file. I had to make sure I did the information removal properly before I sent it so that it did not send GPS information with the picture in case it was intercepted somehow. Please delete the picture as soon as you take a look at it. As for the name, it's Andrew Lawsry, aka Tony76 aka nipplesuckcanuck aka some other names I do not know. From what I got from FriendlyChemist, he has other names on here as well or is working with other vendors on here like I mentioned before. Page 1891 "As for your question about going after him, I would need to do some asking around to see what kind of information my guys can get on him. Would you like me to look into it." From Dread Pirate Roberts to redandwhite: "Yes, please. If you can find him, I would like to know." April 5, 2013 from redandwhite to Dread Pirate Roberts: Did you get the picture? Let me know so I can delete the rest of the one I have. Finding him would be possible. I can almost guarantee it, but I stop short of guaranteeing anything unless I am 100 percent certain I can get the job done. I do that so I don't look like an idiot. If I can't accomplish something I have said I can. We have a huge stake in the trafficking on this side of the country, so if he is grabbing product from anyone, we would be able to find out who and get to him. Would you want him dealt with if possible? I ask because I don't want to send people to hunt for him and then nothing come of it once they find him. Please don't forget to delete that picture." Page 1892 From Dread Pirate Roberts to redandwhite: "I've received the picture and deleted it. Thank you again for your swift action. I would like to go after Andrew, though it is important to me to make sure he is who Blake said he is. I would rather miss the chance to take him out, than hit an innocent person. If he is our man then he likely has substantial assets to be recovered. Perhaps we can hold him and question him. "I'd like to connect with you in real-time chat to discuss this with you further. I have a secure system set up that we can connect through. It requires downloading the chat client pidgin and the plugin off the record OTR and some basic configuration to connect. If you're open to the idea, I'll send you the instructions. This is how I communicate with my closest people. If not, we can keep it here, but it is much slower." From redandwhite to Dread Pirate Roberts: It was my pleasure. I hate thieves almost as much as I hate informants. About holding and questioning someone. It adds to the risk somewhat the longer we have a target/transport a target. The safest way is to get in, do it, and get out as soon as possible. Are there any way to verify he is the intended target? Making him speak would not be a problem and of course, we would not have him done in if he was not right person we were looking for. Page 1893 "Since you said you'd like to go after him, I will send two of my guys to do some recon right now and find out what I can about him and get back to you immediately. We can discuss price later once we know more. "As for the real time chat, send the information over and I will have my tech guy look at it. He handles all my security with phones and pgp blackberries so he would probably know better than me how to set everything up." April 6, 2013 from Dread Pirate Roberts to redandwhite: "My gut tells me he's our man, but I would hate to be wrong. Your men were able to get info from Blake, maybe they can do the same with Andrew. He is likely sitting on many thousands of stolen bitcoin perhaps tens of thousands, so I would think we'd want to "work him over" to get those funds back. They could be on an encrypted drive only he can unlock. Taking him out would erase those coins forever. In the process of getting him to return the funds, I hope we could confirm that he is indeed the one Blake says he is. Here are the instructions for accessing the chat server from a windows computer. Download and install pidgin," and a link. There are a number of instructions. The last instruction says "No. 13 add buddy 'dread.'" Go to the next message: From redandwhite to Dread Pirate Roberts: "I got all the information correct, but when I try to connect it is stuck on 'connecting.' I have the correct port that Tor is listing on." Page 1894 From redandwhite to Dread Pirate Roberts: "I have found out who Andrew is exactly and who he was picking up his supply from. I talked to his supplier and he said he mainly grabbed heroin, coke, MDMA and LSD. He said he always goes through phases where he grabs a ton of product and then stops for a couple of weeks and then starts again. Sounds consistent with what FriendlyChemist said about how they run the stealing from the buyers on here. He said last he heard from Andrew (a couple of days ago), he said he was planning on moving out of the province because things were too hot down here. That might be because he has found out Xin and FriendlyChemist and is now scared. "I also had a chance to actually sit down and talk to my hitters about exactly what happened and how everything went down in detail. They said that FriendlyChemist was pleading with them and offering to give up Andrew, and that Andrew was a seller here by the name of tony and a bunch of other names (nipplesuckcanuck amongst others). He said that when he first turned them on to the idea of doing this big scheme that he would often talk about how he stole so much money, and that he once stole 15,000 online currency coins from one person on the site and how easy stealing money was on here. Does that ring a bell? Did he steal 15,000 bitcoins from a buyer here? That would be an easy way to find out if this Andrew person is the same person you think it is. Do you have his transaction history to see if he did actually steal 15,000 bitcoins from someone? I trust my hitters to do a good job and they are excellent at what they do. Which is take people out or interrogate/scare people, and they told me that they didn't think he was lying. Page 1895 "The info I have on him right now, is that he works/lives with three other people and they all sell product together. They are planning on leaving the province soon (I don't know when). He is in contact with his supplier who actually through a line of middlemen gets his product from us a the end of the food chain. "Do you want to deal with this Andrew guy, or do you want me to put the team on standby." From Dread Pirate Roberts to Redandwhite: "I am confident enough that it is him to move forward. Can we round up all four of them, separate them, and get them to out each other and give up their stolen money? Recovering the funds is going to be tricky if you aren't in direct contact with your team, or if your team doesn't know how bitcoins work. "If you have the other users names FC mentioned, that will help me piece together things on my end. Regarding Chat, there should be a certificate you have to accept when it connects. Does that show up." Page 1896 From Redandwhite to Dread Pirate Roberts: "It won't even connect. It just is stuck on connecting nl copy and pasted all the information for the login and password, etc. So it should be Good. I also checked Tor to see what port to use. Won't connect for some reason. Do I have to fill in anymore of the details, local Alias or anything like that. "As for getting all four, it would be possible but they would have to get them all at once so that one does not get away. I would send four hitters instead of two to make sure there With were no fuck ups. I'm not sure when they are planning on leaving the province though. The guy that has been feeding me information on him says the guy is a degenerate gambler so I don't know how much funds he will have on hand. He says he owes a ton of people money too. My guess is that he is pulling these scams to fuel his gambling problem like a degenerate. It would make sense why he is also teaching other people how to scam as well when it has been so profitable for him to keep to himself. Probably because he owes them money and offers to show them how to do it, as a way of paying them back. I will have them take whatever they have on hand, but I don't want my hitters to be hanging around with them for too long since they are doing four people. "Unfortunately, there are no bulk discounts for jobs like this. Usually the price goes up the more difficult it is. Since you are easy to work with, I would be able to offer you the same rate as last time x4. If that works for you, let me know. If it doesn't, please also let me know as soon as you can so I can call my guys off. They have been doing info gathering this whole time on Andrew and his crew." Page 1897 From Dread Pirate Roberts to redandwhite: "OK, let's just hit Andrew and leave it at that. Try to recover the funds, but if not, then not. How much do you need for this? I'm not sure what the problem could be with chat. Please upload some screenshots of the settings you are using and the main pidgin window." April 8, 2013 from Redandwhite to Dread Pirate Roberts: "If you want to hit Andrew only, I can have it done for 150 just like last time. We wouldn't be able to do it at their place though because there are always at least a few of them there from what I'm told since it is their home/office. So we wouldn't be able to recover any of his things. It's up to you what you want done, but we can't send hitters into their house/office if they are only doing one of them. Do you not need the people he is working with dealt with also? If they are all working with him, it means they are doing the same thing as him. It would also be easier for the hitters to get them in there so that they would have a chance of recovering anything if he has anything there. It would also be better because it wouldn't be a public hit. If we take just Andrew, there's nothing to say that the other three won't start up somewhere else with new selling IDs. It is of course up to you what you want done and how, since you are they client. Page 1898 "I was pretty certain you would want them all taken care, so I had an associate send me a couple of his out of town hitters to accompany our local hitters. It's not a problem as I can just send them back and cover their travel expenses, but I obviously would like for them to not go back empty handed. My mistake for not confirming what you wanted before I had the extra hitters sent down, but it's not really a problem if you don't want the others dealt with. I had a hard time connecting to Silk Road for the last 24 hours or I would have asked before having them sent down. So if you would like to do the others as well, I would be able to have it done for 500k USD. If you do not want all of them, and just Andrew it would be 150k. I would prefer to do all four as it would be better than having to get Andrew somewhere else and have no chance of recovering any potential product/money he may have. Anything recovered would be split 50/50 with you. If you are certain that he has that much product/money I think it would make sense to do it at their home/officer. It's up to you though, just let me know what do do as soon as you can since I do not know when they are leaving the province and if they do leave the province the price would go up exponentially. "If you would like Andrew done send 150k USD to the same address you sent the other funds to. Page 1899 "If you would like all four of them done and product/money recovered from there send 500k USD to the same address you sent the other funds to." To the next page, please. Let's go down to this message. April 8, 2013, from Dread Pirate Roberts to Redandwhite: "I see your problem, you need port 9150, not 9151. 9151 is the control port, 9150 is the socks port. Hmmm, ok, I'll defer to your better judgment and hope we can recover some assets From them, 500k in btc 3000 at $166/btc has been sent to," and then there's a long string of characters, numbers and then transaction number and a long string of characters and numbers. Q. Mr. Shaw, do you recognize what these numbers are? A. Yes. Q. And what are they? A. The number beginning with 1Mwv is a bitcoin address and the long string beginning with e7db is a block chain transaction number. MR. HOWARD: So Mr. Evert, could you please publish this to the top of the screen, please. And please publish Government Exhibit 631, which has already been admitted into evidence on the bottom. And can you zoom in on the top part here. Q. Mr. Shaw, do you recognize what this depicts? Page 1900 A. Yes, I do. Q. What does this depict? A. This is a record from the block chain, the bitcoin block chain. Q. Can you tell me what's reported here on this part of the block chain? A. Yes. On the top left Beginning with the e7db52, that is the transaction number associated with this bitcoin transfer. And on the right side here, the string beginning with 1Mwv, that is the bitcoin address that the funds were transferred to. And in this transaction, there were 3,000 bitcoins transferred from these three bitcoin addresses on the date of April 8, 2013. Q. Mr. Shaw, how does that information in the block chain compare to the information in the private message we just read? A. It is a match. MR. HOWARD: Can we continue with the chats, Mr. Evert -- Sorry. One more thing. Can we publish 241 from the defendant's computer. Can we go to page two, please. And zoom in on the entries from April 6, 2013 to April 8, 2013. So April 6, 2013, the second line here says "Gave angels go ahead to find tony76." April 8, 2013, "Sent payment to angels for hit on tony76 and his three associates." Mr. Evert, can we please go back to the chat, please. Page 1901 April 9, 2013 from Redandwhite to Dread Pirate Roberts: "I was finally able to connect but it seems you are offline. I will have them go take care of that thing asap. I will update you as soon as I hear more." From Dread Pirate Roberts to Redandwhite: "Glad to hear you could connect. I am connected quite a bit so keep trying and I'm sure we'll cross paths." April 11, 2013 from Redandwhite to Dread Pirate Roberts: "Hey there. Still haven't been able to catch you on pidgin. I added you as a buddy but you don't show up in my buddies list. When adding a buddy, I leave everything blank and just put the use name as dread, correct? Our hitters have been watching their house and we have a one week window to do it but I wanted to ask you a couple questions before giving them the green light. "The price of bitcoin's trading at 61USD right now. How is this going to work, because you mentioned that you would take care of the price fluctuations. We haven't withdrawn any of the bitcoins. "Can you also give me some insight on this price business? I have been rallying our people to get involved will selling on here, and they seem very interested but they are saying we would lose money because of the price going up and down so much and not being able to withdrawal fast enough to not lose money." Page 1902 April 12, 2013 from Dread Pirate Roberts to Redandwhite: "Check out this link." And there's a dot-onion address provided ending in "Seller'S Guide." "Pay special attention to the Part about escrow hedging. I don't think this place would be possible without it, at least not in the form it's in now. "Regarding the 3k coins I sent, get the best price you can for them and let me know if you are short and I will send more to cover it. "Regarding Chat I made a mistake, you should add me as dread@pi5mmjtronhutyxv.onion. I'm going to connect us manually so that may not be necessary." April 15, 2013 from Redandwhite to Dread Pirate Roberts: "The problem was dealt with. I'll try to catch you online to give you details. Just wanted to let you know right away so you have one less thing to worry about." From Dread Pirate Roberts to Redandwhite: "Thanks, See you on chat." From redandwhite to Dread Pirate Roberts: "3:30 PST tried to catch you online but no luck. Want to link up at the same time tomorrow." And Then Dread Pirate Roberts Responds: "Sure, I'll make sure I am online at 3:30 p.m. PST." April 18, 2013 from Dread Pirate Roberts to redandwhite: "It's nearly 4:00 P.M. PST. I need to run some errands. I will probably be back on later though." Page 1903 April 21, 2013 from Redandwhite to Dread Pirate Roberts: "Sorry I wasn't able to make it on. I've had some problems I've been dealing with, I came online today to see if I could catch you but no luck. I will wait online until 6:00 p.m. PST. I've give you a brief rundown here just to let you know what happened. My crew did their job. As far as money/product/bitcoins/seller accounts. Money: They had $15,000 Canadian dollars on site. Product: They had a quarter kilo of cocaine and two ounces of heroin. Bitcoins: They have been giving a third party bitcoins who cashes out for them. The guy has roughly 350 bitcoins of theirs currently owing to them. The exchange guy is not in on the scam and is just some exchanger who sends them funds via Western Union and they have been using him from the start apparently. I don't know what to do about that. Seller accounts: They were in the process of setting up another account to sell heroin and cocaine. They said a few of their friends know about this, so be on the lookout if anyone from Canada starts to sell heroin and cocaine. "I also took a big loss. After you sent me the extra coins to cover the price going down when it was at 90, it started to crash again. It was at 65 and people were talking about how it's going to go down even more, so I made a deal with an exchanger to take them all at 50 and sell them for me in case it went down even lower. Of course, after I made that deal it has now started to rebound again but I'm out 250k. I'm not telling you this because I think you should cover it. In fact I don't want you to cover it. You already did more than you needed to do when you covered the price crashing the first time. I am just letting you know because this will cause a delay in us starting here because I was planning on covering the mens wages of 1,000 a day of street money to start selling on here until it gets busy enough for them to be paid via a percentage of what they sell here. It was my mistake for not arranging someone to take the entire bitcoin amount as soon as I had received it, instead of letting it sit and have the price crash. Page 1904 "Hope to catch you online soon, as I have started on that reading material and I love what I am reading so far. "Talk soon." Dread Pirate Roberts Responds: "Okay. I'll look for you as well, but probably won't be online for the whole day again until Tuesday." June 1, 2013 from redandwhite to Dread Pirate Roberts titled update: "I have some news regarding our organization selling on here. A bunch of chapter leaders flew into town for a meeting and the main topic of discussion was actually silk road. Would you be able to meet on pidgin at 3:00 p.m. PST on Sunday to discuss? There was quite a bit of stuff covered on the topic." Page 1905 Mr. Evert, can you please publish 227D as a dog, it's a chat log that we have not yet read in. This is from page 332 to 333 of a 337 page chat log. April 3, 2013: "myself: I get blackmailed by a guy saying he's in deep shit with hell's angels Myself: he says he was fronted $700k in LSD from them Myself: he gave it to lucydrop to sell on sr Myself: he said lucy took off with the product Myself: i said, have the hells angels contact me so i can work something out Cimon: ha! Myself: very foolishly he did Myself: they said they caught up with lucy, got the product back and killed him Myself: I didn't hear from the blackmailer agian so i thought the case was closed Cimon: wait-- I'm missing something here Myself: go ahead Cimon: how was he blackmailing? Myself: oh yea Myself: he had thousands of addresses from customers and vendors Myself: he said he installed a keylogger on lucys comp Page 1906 Myself: he was threatening to release all of the user addresses Myself: make sense Myself: ? Cimon: yeppers. Cimon: now it does Myself: ok, so this last friday he says I have 72 hours to send him half a mil or he's releasing the info Myself: by this time I've sold the hell's angels on becoming vendors themselves Myself: so I ask them if they are still after the guy Myself: they say no, debt was paid when they caught up to lucydrop, so I pay them to hunt down the blackmailer. Myself: he's gone on the run by this time fyi Myself: they catch up to him within a day and he sings Cimon: well, I bet ya he won't use the HA as a reference again any time soon Myself: says he was in cahoots with lucy all along and ripping the angels off and black mailing me was part of the plan Myself: he also said a 3rd party, our man tony76 orchestrated the whole thing Myself: gave up his id Cimon: ahhh, and that's how you got tony, fucking excellent Page 1907 Myself: he's a brit Cimon: how very convenient, where's he located Cimon: more or less, of course Myself: lemme look it up. I have the town Myself: gotta look up the message on SR Myself: helluva story eh? Cimon: Man, I still can't believe tony fell into yer lap. Wonder if DA is hanging around the edge of that mix. Myself: somehow I doubt it Myself: have you tried connecting on pidgin? Cimon: So how does tony 'train' other folks to rip you off? Cimon: installing it on my other laptop Myself: not sure, prolly just shows them how to use SR in general, how to get good feedback, and then how to maximize the rip off at the end Myself: the guy is from Surrey apparently Cimon: I thoujght he was cali-based, or am I completely confused Myself: why did you think that? Cimon: I thought that was the conclusion when he did the rip off Myself: I don't remember that Cimon: yeah, I must be mis-remembering that Myself: nipplesuckcanuck sounds canada based Page 1908 Myself: vancouver Cimon: How old is the info on tony, and does he know or suspect you have his info? Myself: it is less than 2 days old, and the only thing he should know is that his two guys aren't getting back to him Cimon: ok, installed pidgin here, adding the xmpp server account... Cimon: Gotta mess about here with proxy tor will likely drop off for a few minutes while I configure it Myself: ok." MR. HOWARD: Your Honor, at this time I'd Like to read a stipulation into the record, Government Exhibit 805. THE COURT: All Right. MR. HOWARD: It Is hereby stipulated and agreed by and between the United States of America by Preet Bharara, the United States Attorney for the Southern District of New York, Serrin Turner and Timothy Howard, Assistant United States Attorneys of counsel and Ross Ulbricht, by and through his counsel Joshua Dratel, Esq. as follows: *(1) Canadian Law Enforcement Authorities have no record of any Canadian residents named Blake Krokoff or Andrew Lawsry or any name associated with "FriendlyChemist."* *(2) Canadian Law Enforcement Authorities do not have any record of any homicide occurring in the area of white rock, British Columbia on or about March 31, 2013 or any record of any homicides occurring in the area of Surrey, British Columbia on or about April 15, 2013 or any other evidence that anyone was physically harmed as a result of the plans discussed by "Dread Pirate Roberts" and "redandwhite."* Page 1909 We further stipulate and agree that the above-referenced exhibits and this stipulation, Government Exhibit 805, are admissible as Government exhibits at trial, except that the Defendant reserves the right to object to these exhibits under Federal Rules of Evidence. MR. DRATEL: So stipulated, your Honor. THE COURT: Received. Government Exhibit 805 is received. *(Government's Exhibit 805 received in evidence)* Q. Now, Mr. Shaw, did you discover any transactional data in the databases that you reviewed? A. Yes, I did. Q. Could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 920B as in boy. A. Okay. Q. Do you recognize what this is? A. Yes, I do. Q. And what is that? A. It's a technical description of the transactions table from the Silk Road Marketplace. Page 1910 Q. Did you take this screenshot? A. Yes, I did. MR. HOWARD: The Government offers Government Exhibit 920B. MR. DRATEL: Objection as to hearsay and Vayner, your Honor. THE COURT: The Objections are overruled. Government Exhibit 920B is received. *(Government's Exhibit 920B received in evidence)* MR. HOWARD: Could we zoom in on the first column here. Q. Mr. Shaw, what is depicted in this column. Can you describe it. A. Sure. These are the fields that are present in the table transactions, this means that each record stored inside of that table will have information for each of these fields, though they could be blank or null. Some of the information that the fields here includes information as to who the buyer account was, that was part of the transaction, as well as the seller account that was a party to this transaction, as well as payment information and commission information all stored in the database. Q. So each record is a separate transaction in the database? A. That is correct. Q. Does each record of each transaction include information about the product that was sold? Page 1911 A. Yes, it does. There is information about the item ID which ties to the items table in the database. Q. Now, you pointed out the payment and commission fields. A. Yes. Q. And that information is stored for each transaction? A. That is correct. Q. Is that in bitcoins or dollars? A. The fields that are highlighted there, 8 and 9, were in bitcoins. Q. And is there any information stored in each transaction record about the equivalent U.S. dollars for each transaction? A. Yes. There were multiple fields containing information about U.S. dollars. Q. Is each record in the database uniquely identified? A. Yes, it is. Q. And how so? A. The first field is the index field, which is the auto-incrementing field. Q. What do you mean by auto-incremented? A. That means it starts with one and then the next one would be two and then three and then four. Q. So the first transaction put in the database gets a number one? A. Correct. Page 1912 Q. And they sequentially add up as they go forward? A. Correct. MR. HOWARD: May I approach the witness. THE COURT: You may. Q. I just handed you what's been marked for identification purposes as Government Exhibit 961. Do you recognize what this is? A. Yes, I do. Q. What is this? A. This is a video compiled showing some sample transaction information. Q. Would this aid your testimony today? A. Yes, it would. MR. HOWARD: The government offers 961 for demonstrative purposes. MR. DRATEL: No objection for demonstrative purposes. THE COURT: Received for demonstrative purposes. *(Government's Exhibit 961 received in evidence)* MR. HOWARD: May I approach. THE COURT: You may. Q. How did you recognize this exhibit by the way? A. It has my initials on it. Hold it right here -- it's not to be big screen, sorry. What we're looking at right here is information extracted from the transactions table. And I've already resolved information such as the buyer ID and the seller ID from the appropriate table as well as resolving the item description -- title and description, and the category that that item fell into was categorized as well as the stored value of the U.S. dollars of the transaction. Page 1913 Could you hit play, please. Could you hit pause, please. For example, down here in row 15, we see a buyer with the name. That doesn't line up with my screen. Sorry. Okay. There we go. The buyer name sluggo318 sold product to aceedee1080, the product was categorized in the "cocaine" category and that was selected by the person who was who set up the product for sale. So the seller selected the category of that item and chose to put that item under the "cocaine" category. Q. Mr. Shaw, to be clear, is this all of the information for each transaction or is there more information? A. There's more information. Q. This is only what's captured on the screen? A. This is just a summary of the information; correct. The description of that item was 1 gram of pure uncut cocaine, and the transaction amount stored in the database in U.S. dollars was $156.50. Could you hit play, please and pause, please. Page 1914 What we're looking at here is a screenshot of information that was in the categories table of the Silk Road Marketplace database. One example of what we're looking at here, if you look at row four, it's kind of hard to see, but it has an ID of seven. And each item, as you can tell, has a unique number in this first column and associated with that is a name of that category. Now, there's also information about the parent ID, so there was a concept of grouping, so you could say, you know, I am selling in this case an item, LSD, and it is in group -- it is group seven, but it is also -- has a parent ID of 41, which when you look further down on the table at group 41 is the category of psychedelics. So the idea was, you could nest different categories so you could have a parent category or you could have a child category, so that's what's represented here. Q. So it's organizing different products into categories? A. Exactly. Hit play, please and pause, please. And you'll notice a category of 70 below the items that we were looking at in the first page fell under the item of category parent ID 78, which in this case is drugs. Q. What do you mean by "parent category"? A. That meant that the parent ID was drugs; however, the subcategory could have been, you know, psychedelics. If you can hit play, please. Page 1915 Because all of this data is stored in a database, you're able to quickly and easily ask it questions. What I have shown here -- hit pause, please -- was a selection of transactions that all fell under the "heroin" category. You can read some of these. For example on line nine there, there was a transaction from the buyer Philbetter333 and the seller Marlostanfield for, again, all of the items we're looking at fell under the category of "heroin," and the U.S. dollar amount stored in the database was $183.01 and the item title was number four heroin for $150. Could you hit play, please. Q. So Mr. Shaw, the items in the database, were they organized by categories and subcategories? A. Yes, they were. Q. And you just showed an example of how you were able to query or ask a question of the database to pull up a sample of heroin transactions, correct? A. Correct. Q. Could you pull up a sample of any category you'd like? A. Yes. Q. Could you ask the database questions to extract only certain users, what their transactions are? A. Yes. Q. So now earlier you testified that you located multiple copies of the databases, correct? Page 1916 A. That's correct. Q. Where were they located? A. They were located on both of the server images that I received copies of. Q. Now, Mr. Shaw, you testified a second ago that one of the fields -- one of the pieces of information that each transaction record contains is commission, correct? A. That is correct. Q. Now based on your review of the transaction data, approximately when did transaction data start to include information about commissions? A. The first recorded commission that I saw in the database was in the middle of 2011. I believe it was May. Q. Could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 950. Do you recognize what this is? A. Yes, I do. Q. And what is that? A. These are some of the first transactions that had a recorded commission. Q. Did you take this screenshot? A. Yes, I did. MR. HOWARD: The government offers Government Exhibit 950. Page 1917 MR. DRATEL: Objection as to hearsay and Vayner, your Honor. THE COURT: All right. Those objections are overruled. Government Exhibit 950 is received. *(Government's Exhibit 950 received in evidence)* Q. Mr. Shaw, could you please describe what is depicted here. A. Sure. These are some of the transactions that occurred. Again, these all had recorded commissions and these were some of the earliest ones with recorded commissions. For example, the one that is highlighted in orange there was a transaction for -- recorded as 14 grams of MDMA; the sales price was $337.06 in U.S. dollars recorded in the database; and as recorded in the database, the commission in U.S. dollars was $16.74. MR. HOWARD: Mr. Evert, would you please publish Government Exhibit 226A, which is a chat log recovered from the defendant's computer that we have not yet read in. This is from pages 41 to 42 of a 1,096 page chat log. December 7, 2011: "Vj: OK - can't go without asking - whats the weekly gross sales Vj: save me scraping all the feedback pages and doin the math Myself: wanna take a guess? Vj: nope - but 450 trans a day... Vj: average say $55? Page 1918 Vj: comes to 25 grand a week, and seems low to me Vj: but that's the current guesses on the board Myself: yea, 450 a day is high because saturday is like 350 and sunday is like 250 Myself: but the avg is more like $75 Vj: Don't forget that xmas - end of jan is gonna slow down, but growth might keep it from slowing too bad Vj: but lots of folks are gonna be broke come xmas morning Myself: I track the monthly sales volume and it's around $500k right now Myself: so, $125k/wk or so Vj: not bad for a guy that started selling shrooms, eh Myself: haha Myself: yep, pretty happy Vj: so, why'd you stop vending, ha Myself: too risky. I figured I'd be a target Myself: and it was really time consuming. I grew my own." Pages 522 to 523 of the 1,096 page chat log, March 11, 2012: "Vj: [. . .] Sometime, we have to have a discussion about what to do in the event of arrest or incarceration, thought about that a fair bit during the last two weeks. Vj: For instance, if you were arrested Vj: a decision would have to be made at what point in time do I come get you out Page 1919 Vj: and I would come and get you out Vj: Myself, that time would be a lot longer - scary, but jail doesn't scare me a whit anymore. I treat it like being in a 3rd world country with poor communications infrastructure Myself: I've been thinking a bit about that as well. like I could put instructions for transferring control in an encrypted file and give it to a family member. then I can give them the password if I get put in jail. Vj: and remember that one day when your in the exercise yard, I'll be the dude in the helicopter coming in low and fast, I promise. Myself: ok Vj: seriously, with the amount of $ we're generating, I could hire a small country to come get you." On page 549 of the 1,096 page chat log March 14, 2012: "Vj: One of the things i'd like us to look at investing in is a helicopter tour company. Vj: Cause you never know when one of us is gonna need a helicopter! Vj: Be pretty handy to have it leased already. Myself: I made a declaration about 8 years ago that I'd be a billionaire by my birthday in 2014. If you cound the discounted future revenues of the enterprise, it could happen. Vj: When yer keeping your eye on the ball, that's the big one. Page 1920 Myself: yep, all that money won't be worth much if we're behind bars." March 22, 2012: "Vj: how much was the total for the last sale. Vj: ? Myself: $321,802.06 from 4197 orders Vj: how many vendors do we have now? Vj: and what are weekly sales? Vj: hould do well over double weekly sales for the sale, I'd think, quite easily moe. Myself: weekly peaked out at ner $600k, but have fallen this past week to $475k or so Vj: So we'll easily break a mil for the sale - not bad for a bit over a year old, eh. Myself: # vendors is about 200 decent sized and active vendors, and about 150 more small or new ones." Mr. Evert, can you please publish 227C, another chat log that was recovered from the defendant's computer that has not yet been read. From pages 44 to 47 of a 337-page chat log: "Myself: The site is still growing on its own. Not quite exponential, but more than linear. Cimon: What are weekly's now? Myself: Up to 1.3M. Page 1921 Myself: Try handling the entire escrow and account balances of Silk Road sometime." Emoticon. Page 73, October 8, 2012: "Myself: We have over 700 unique sellers each week. It's getting competitive on the supply side. Myself: Volume go up to 1.4M about a week ago. Cimon: Mebbe it's time for sale, no trips this time, eh" January 29, 2013, "myself: We crossed a cool milestone today. Cimon: <pants> Cimon. What what what. Myself: 10k unique customers in the last week." Q. Now, Mr. Shaw, were you able to run queries from the database, ask questions to get total transaction amounts for all the goods and services that were sold on the Silk Road website? A. Yes, I was. Q. Could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 940. A. Okay. Q. Do you recognize what this is? A. Yes. This is a summary of transactions by category. Q. And were you involved in the preparation of this exhibit? A. Yes, I was. Page 1922 Q. Does this chart accurately reflect the summary of the transactions that were in the Silk Road Market databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940. MR. DRATEL: Hearsay. THE COURT: That objection is overruled. Government Exhibit 940 is received. *(Government's Exhibit 940 received in evidence)* THE COURT: Mr. Howard, we're going to end at 1:00 for lunch. Are you able to complete this by then, this document? MR. HOWARD: Yes, by this document, for sure. THE COURT: Thank you. MR. HOWARD: Can we zoom in on the top, please. And give the header as well, Mr. Evert. Q. Can you please, Mr. Shaw, describe what is in this chart and how it works. A. Yes. So I'm taking the information from the transactions table and tieing it to the items and then the categories of those items. We were able to add up the totals for each category. So each item was assigned to one category and one category only. So what we're looking at, for example, the second row here of "drugs," those are items that -- were assigned to the category of drugs, not to any of the subcategories. And this first -- all of these groupings up here are kind of parent categories, top-level categories. They don't have any parent IDs. So again, everything that we're looking at for this row was assigned solely to the category of drugs and none of it the subcategories. Page 1923 What you can see on the chart here, the total transactions that occurred for an item assigned the category of drugs there were 25,976 transactions for payment in bitcoins recorded in the database as 253,182.08 bitcoins. In the database, the payment amount in U.S. dollars that was recorded was $9,755,333 U.S. dollars. In the database the "total commission for drugs" category recorded in bitcoins was 11,116.70. The recorded commission in the database in U.S. dollars was $392,000,108. Q. To be clear, this wasn't the transaction data for all drugs on the site, correct? A. That is correct. Q. So what would you need to do in order to find the total number amount of drugs sold, all kinds of drugs? A. You would add up this category along with any subcategories that were associated with this group. Q. To be clear, this line item reflects products that were marked as drugs but not marked with any subcategory? A. That is correct. MR. HOWARD: Could we zoom out, Mr. Evert, and please go to page two of this exhibit. Could we zoom in on these two sections here. Page 1924 Q. So Mr. Shaw, could you explain what's depicted here. A. Sure. So the second column here is the parent category. What you see down here in this grouping down here for brown, white and black tar. They all have a parent category of 49 heroin. And on this line we have "category 49 heroin." So in order to understand this chart, everything on this row is something that was tagged as just generic heroin. It didn't have any subcategory. It was just associated with the grouping of the category of heroin; whereas, everything on this row was categorized as brown, which was a subcategory of heroin. And then everything on this row is categorized as white, which is also a subcategory of heroin. And then this row was black tar heroin. So in order to get the total for all heroin transactions, you would actually have to add up all four of these rows, the heroin group, the brown group, the white group and the black tar group. MR. HOWARD: Zoom out, Mr. Evert. Q. Mr. Shaw, what time period of transactions, what time period does this data cover? A. According to the timestamps in the database, it covered February 6, 2011 through October 2, 2013, so the entirety of what was in the database. Page 1925 Q. That's the full date -- range of transactions that are in there, correct? A. Correct. MR. HOWARD: Can we flip to the last page of this, Mr. Evert. Q. Zoom in at the bottom -- to be clear, where we see category names and parent names, those are defined in the database itself, correct? A. That is correct. Q. There's this last line here that says "null" here. The category name is null and parent name is null? A. Right. Q. What does that mean? A. If the database joins between the tables didn't work, so we weren't able to determine the category of the item in that transaction, we assigned it to this group "null." Q. In other words, are those transactions that were reflected in the database but no category -- you could not determine the category that it was assigned to? A. That is correct. Q. And there are approximately, it looks like, $22 million worth of those transactions? A. That is correct. Q. Could you please describe what is depicted on the last line here? Page 1926 A. The last line is the total calculations for all transactions in the database. You see we have 1,530,252 total transactions for a recorded value in bitcoins of 9,912,070.05 bitcoins, for a total U.S. dollar amount recorded in the database of $213,888,103 U.S. dollars. The commission value in bitcoins here is 642,455.36 bitcoins, and the recorded value in U.S. dollars for the commission was 13,174,896 U.S. dollars. Q. Now, Mr. Shaw, in terms of the U.S. dollar equivalencies, is that reflecting the total U.S. value at any one given point in time? A. That was what was recorded in the database at the time of the transaction. Q. So as each transaction occurred, the equivalent U.S. dollars was recorded in the database? A. That's correct. Q. And this number down here is the sum of all those conversions? A. That's correct. MR. HOWARD: We can stop here if you'd like, your Honor. THE COURT: Ladies and gentlemen, we'll take our lunch break and were we able to bring in lunch. We were able to bring in lunch for you folks, so you don't have to deal with the weather again. We'll see you at 2:00 and remind you not to talk to each other or anyone else about the case. Thank you. Sir, you can step down and be back at 2:00. Page 1927 *(Continued on next page)* Page 1928 *(In open court; jury not present)* THE COURT: Is there anything we should raise before we break for lunch? MR. TURNER: No, your Honor. MR. DRATEL: I don't think so. THE COURT: Let's take a break and then we'll come back at 2:00. Now, I do have one criminal matter in this room at 1:00, and so, I am going to need first the first two spots at counsel table. Thank you. *(Luncheon recess)* *(Continued on next page)* Page 1929 AFTERNOON SESSION 2:05 p.m. *(In open court; jury present)* THE COURT: Thank you, ladies and gentlemen. Let's all be seated. Mr. Howard, you may proceed. MR. HOWARD: Thank you, your Honor. Mr. Evert, can we publish Government Exhibit 940 and go to page seven, please. Zoom in on the bottom again. BRIAN SHAW, resumed. DIRECT EXAMINATION CONTINUED MR. HOWARD Q. Mr. Shaw, this is where we left off before the lunch break, correct? A. Yes. Q. And this chart depicts over two -- sorry -- $213 million in sales that were reflected in the transaction data on Silk Road, right? A. That's correct. Q. Did you perform any analysis of what portion of those sales came from the sale of illegal drugs? A. Yes, I did. Q. Would you please flip to what's been marked in your binder as Government Exhibit 940A, please. A. Okay. Page 1930 Q. And what is this? A. It's a breakdown of total categorized Silk Road sales. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Does this exhibit fairly and accurately summarize transaction data from the Silk Road databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940A. MR. DRATEL: Objection with respect to foundation and in terms of hearsay, your Honor, and Vayner. THE COURT: Why don't you lay more of a foundation for what's categorized under what you've described as drugs. Q. Mr. Shaw, what listings from the Silk Road database did you group under the drug category? A. I grouped under the drug category using the categories from the database anything that fell under the drugs parent groupings, so anything from there and below, and in addition pharmaceuticals. Q. So in other words, you looked at the transactional data for everything for drugs and all the subcategories for drugs, correct? A. Correct. Q. And this chart also shows nondrug sales. What are those? A. That would be everything else that had an associated category, so anything -- any category that wasn't under the drugs category or pharmaceuticals. Page 1931 Q. When we were looking at this chart, there was a category called "null," which I believe you testified included transactions which you were not able to categorize based on the information in the database, correct? A. Right. Q. Are those sales factored into this analysis? A. No, they are not. Q. So this is an analysis of only transactional data for which the database reflected a certain category for the item? A. Correct. MR. HOWARD: The government offers Government Exhibit 940A. THE COURT: Let me ask about the pharmaceuticals. Do the pharmaceuticals include any equipment or other nondrug items? THE WITNESS: I believe there are separate categories for equipment but off the top of my head, I'm not sure. I could look at some of the categories. THE COURT: Do you have information there that would tell? THE WITNESS: Going back to the previous chart. THE COURT: All right. What I'm trying to determine is when you used the word "drugs," are we talking about things which are narcotics of some form, whether they be in the pharmaceutical form or in a nonpharmaceutical form, or does it also include things like surgical gloves or something of that nature that might be considered a pharmaceutical? Page 1932 THE WITNESS: So there was a category described as pharmaceuticals and its parent category was electronics and other subcategories under electronics was medical supplies and medical equipment, those were not included in this factor. So it was only items that were listed as pharmaceuticals in the category pharmaceuticals. THE COURT: Thank you. Government Exhibit 940A is received. *(Government's Exhibit 940A received in evidence)* Q. Mr. Shaw, can you please describe what is depicted here in this chart. A. Sure. What we're seeing here is the sum of all of the categories that were categorized under either drugs or that category pharmaceuticals are depicted in blue. Any other transactions that were categorized are depicted in red, which takes up four percent of the chart. Q. So the drugs -- the total drug sales based on this analysis was approximately $182 million, correct? A. That is correct. Q. And how about the other sales, the nondrug sales? A. That amounted to about $8.5 million. Page 1933 Q. Can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 940B. A. Okay. Q. Do you recognize what this is? A. Yes, I do. Q. And, what this? A. It's a summary of sales transaction for fake IDs, forgeries and passports. Q. And where did you get this information from for the sale of these three kinds of products? A. From the database on the Marketplace. Q. And how did you identify which categories would fit in here? A. This is based on information in the database on the assigned category for those items. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Does this exhibit fairly and accurately summarize the data from the Silk Road databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940B as in boy. MR. DRATEL: Same objection as to foundation, hearsay and Vayner. THE COURT: Those objections are overruled and Government Exhibit 940B is received. Page 1934 *(Government's Exhibit 940B received in evidence)* Q. Mr. Shaw, can you please describe what is depicted in this chart. A. Sure. There were three categories that were all related. There was the fake IDs category, it had a total number of sales of 3,642, a recorded sales revenue in U.S. dollars was $699,053. The category of forgeries, there were 3,487 total transactions for a sales revenue of 192,291 -- sorry $197,291. In the passports category, there were 103 sales for a total of 105,292 U.S. dollars. The total for all three of these categories was 7,232 transactions for a total of over a million dollars. Q. Now, Mr. Shaw, could you please flip in your binder to what's been marked for identification purposes as Government Exhibit 940C. A. Okay. Q. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. It's a summary of information on transactions for money-related categories. Q. And how did you select which categories would be included in this chart? A. These all came from categories that were assigned in the database. Page 1935 Q. And did you participate in the creation of this exhibit? A. Yes, I did. Q. Does this exhibit fairly and accurately reflect transaction data from the Silk Road databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940C. MR. DRATEL: Same objection. THE COURT: The objections are overruled. Government Exhibit 940C is received. *(Government's Exhibit 940C received in evidence)* Q. So Mr. Shaw, can you please describe what is depicted in this chart. A. Sure. It's a breakdown of the different money-related categories. The first row for items categorized as money. There were 14,345 total sales for a recorded revenue of 2,846,025 U.S. dollars. And you can see similar numbers for digital currencies, gold, bullion and silver. The total for all these categories was 32,820 transactions for a total sales revenue recorded in the database of 3,273,833 U.S. dollars. Q. Now, Mr. Shaw, can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 940E. A. Okay. Page 1936 Q. Do you recognize what this is? A. Yes, I do. Q. What is this? A. It's a summary of information for selected drug categories. Q. And which drug categories are those? A. Heroin, cocaine, methamphetamine and LSD. Q. Where did you draw the data that is included in this chart from? A. This is the database from the Silk Road Marketplace. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Does the exhibit fairly and accurately summarize data from the Silk Road Marketplace databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940E. THE COURT: My 940E is empty. I do have a 940H which is, I take it, similar but not the same. MR. HOWARD: That is correct. Let me see if we have an extra copy. THE COURT: I can look for a moment on with the witness. Hold on. All right. 940E is different from 940H. Mr. Dratel. MR. DRATEL: The same objection, your Honor. THE COURT: 940E is received over objection. Page 1937 *(Government's Exhibit 940E received in evidence)* Q. Mr. Shaw, can you please describe what is depicted in this chart? A. Sure. This is a total number of sales that fell under the heroin category and its subcategories -- well, for heroin, cocaine, methamphetamine and LSD. Recorded in the database were over 53,000 transactions for heroin products for a total sales revenue of over $8.9 million. In the cocaine categories there were 82,582 total transactions for a total sales revenue of $17,386,917. In the category of meth, there were 34,689 transactions for a total sales revenue recorded at 8,110,453 U.S. dollars. In the category of LSD, there were 54,567 transactions for a recorded value in U.S. dollars of 7,073,838 U.S. dollars. Q. Now, Mr. Shaw, could you please flip to what's been marked in your binder for identification purposes as Government Exhibit 940H. A. Okay. Q. Do you recognize what that is? A. Yes, I do. Q. What is this? A. It's a calculation of total drugs sold at average transaction prices. Q. And how did you determine the average transaction price? Page 1938 A. I selected 100 items at random and read through the description of those items to determine the weight for those items. And from there, I was able to calculate the price per weight for those items if there was a description of the weight. Taking the items that had a good weight description and then averaging the price per weight together, I was able to come up with an average price per weight. Q. And these 100 transactions were taken at random from the Silk Road database? A. That's correct. Q. Are these for the same four drugs that we reviewed on the prior chart? A. Yes. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Does this exhibit fairly and accurately reflect or summarize data from the Silk Road Marketplace databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940H. MR. DRATEL: Objection as to 401, 403, hearsay and Vayner. THE COURT: All right. Let me ask a question, Mr. Shaw. I see that the total -- let me ask you: Were you extrapolating based upon your sample of 100 that the transaction price was approximately the same for all other transactions of the, for instance, the 53,649 transactions for heroin? Page 1939 THE WITNESS: That is correct. THE COURT: Did you do anything to ensure that your distribution over time was a distribution which appropriately weighted the various time periods? THE WITNESS: I didn't do any weighting based on time periods no, but it was a distribution over time. THE COURT: Did you do anything to ensure that, for instance, you were receiving the same number of transactions from each of the time periods that spanned the entire database? THE WITNESS: No. The items were selected at random based -- in the database, there is a column that is considered random, and it was based on selecting items based on that randomized number, so it was purely random. THE COURT: 940E cannot be received -- I'm sorry -- 940H cannot be received on this basis. Let me ask you also, do you have any degree in statistical analysis? THE WITNESS: I do not. THE COURT: It can't be received on this basis. You may proceed. Q. Earlier you discussed the fact that the Silk Road databases included information about Silk Road users, correct? Page 1940 A. That is correct. Q. What kind of -- what, if any, information did the Silk Road database include about the location of users? A. Users were able to self-identify their country, where they were. Q. Can you please flip in your binder to what's been marked for identification purposes as Government Exhibit 940F. A. Okay. THE COURT: Maybe somebody could give me 940F also. Thank you. Q. Do you recognize this exhibit, Mr. Shaw? A. Yes, I do. Q. What is this? A. This is a map representing countries that had ten or more self-identified vendors. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Where did the data for this exhibit come from? A. From the Silk Road Marketplace. Q. Does it fairly and accurately summarize information from that database? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940F. Page 1941 MR. DRATEL: Hearsay and Vayner. THE COURT: Hold on one second. Government Exhibit 940F is received. The objections are overruled. *(Government's Exhibit 940F received in evidence)* Q. Mr. Shaw, can you please describe what is depicted in this chart. A. Sure. Using the information from the database where users identified what country they came from, I checked to see all of the ones that participated in selling items on the Marketplace and those that did, if that country had ten or more confirmed vendors, then they're listed in green on this chart. Q. Can you please flip to what's been marked as Government Exhibit 940G, please. A. Okay. Q. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. This is a map representing countries that had 100 or more buyers. Q. And where did this data come from? A. From the database from the Silk Road Marketplace. Q. Does this fairly and accurately summarize the data from the Silk Road Marketplace databases? A. Yes, it does. MR. HOWARD: The government offers Government Exhibit 940G. Page 1942 MR. DRATEL: Objection. Hearsay, Vayner. THE COURT: All right. Those objections are overruled. Government Exhibit 940G is received. *(Government's Exhibit 940G received in evidence)* Q. Mr. Shaw, can you please describe what is depicted here. A. Yes. This is a world map. We took the information from the database and for each user that self-identified a country, if they participated in purchasing an item on the Marketplace that is calculated by country and if the total number for that country exceeded 100 buyers, they're listed in red on this chart. Q. Mr. Shaw, can you please flip to what's been marked in your binder for identification purposes as Government Exhibit 940D as in dog. A. Okay. Q. Do you recognize this exhibit? A. Yes, I do. Q. And what is this? A. It's a summary of transactions from the Marketplace. Q. Where did the data from this exhibit come? A. It came from the database from the Silk Road Marketplace. Q. Does it fairly and accurately summarize the data from the Silk Road Marketplace databases? Page 1943 A. Yes, it does. Q. Did you participate in the creation of this exhibit? A. Yes, I did. MR. HOWARD: The government offers Exhibit 940D. MR. DRATEL: Hearsay and Vayner objections. THE COURT: 940D? MR. HOWARD: That's correct. THE COURT: The objections are overruled. Government Exhibit 940D is received. *(Government's Exhibit 940D received in evidence)* Q. So Mr. Shaw, can you please describe what's in this chart. A. Yes. So what we have here is the total numbers taken from the database for transactions. The total number of transactions that were recorded in the database were 1,530,252. The total number of buyer accounts that participated in purchasing items on the Silk Road Marketplace was 115,391 user accounts. The number of seller accounts that participated in the Marketplace, there were 3,748 user accounts that sold items on the Marketplace. The recorded value for the total sales revenue in bitcoins was 9,912,070 bitcoins. The U.S. dollar equivalent recorded in the database of these transactions was 213,000 -- sorry -- 213,888,103 U.S. dollars. The total commissions recorded in bitcoins was 642,455 bitcoins. The recorded U.S. dollar equivalent for these commissions was 13,174,896 U.S. dollars. Page 1944 MR. HOWARD: May I have a moment with cocounsel, please. THE COURT: Yes. MR. HOWARD: We're done with the witness but we would like to have a side bar first about one issue before we let Mr. Dratel cross him. THE COURT: All right. Let's have a brief side bar. *(Continued on next page)* Page 1945 *(At the side bar)* MR. TURNER: So in terms of the admissibility of the drug weight evidence, I don't think the issue is admissibility but weight. THE COURT: No. It's admissibility. I'll tell you why, because what you've done is you've extrapolated from a total number of sales. MR. TURNER: Right. THE COURT: And the transaction price, the average weight, these two numbers, the transaction price and the weight are derivative numbers based upon a sample of 100 that this witness may not be competent to have drawn. He did not do a statistical analysis to determine whether or not that's an appropriate one. Clearly, the information in the record is sufficient to add up all of the transaction prices and all of the total weights added to the math so to do 100. You're trying to get it in for -- as if it is a one-to-one-to-one. I don't think you've got a proper foundation for this document. MR. TURNER: You can't add up all the weights because the weights aren't consistently included in the offerings. There are only some offerings that describe the weight. THE COURT: Then you can add up all the transaction prices, but there are fluctuations. There are market fluctuations. And depending upon where the drugs are being sold to, for all I know, there could be differences in time as to where they're going. So 100 random without understanding the market impact seems to me to be -- Page 1946 MR. TURNER: There is another exhibit we'd like to rely on instead which doesn't go into the average transaction price but the highest. THE COURT: I don't know what that is, but if you want to try with this witness on something different, you can try before you end. MR. TURNER: It's the absolute highest. THE COURT: I don't know. Walk him through it. Mr. Dratel. MR. DRATEL: So it's not about this document, it's a separate set of questions. THE COURT: That's fine. MR. DRATEL: While we're up here in terms of cross, I did intend to ask him to authenticate Defense E but the Court has precluded it; rather than go through the -- I figured I'd mention that now so -- just that I would have -- because he had access to all the material and he has gone through it. THE COURT: It's not an authentication issue. MR. DRATEL: No. I understand. THE COURT: It's a relevance issue. MR. DRATEL: I'm saying, I would have done that if the Court had permitted the document. Page 1947 THE COURT: I understand. That's your proffer? MR. DRATEL: Yes. THE COURT: But in light of the Court's ruling, you won't do it because of the Court's rule. MR. DRATEL: Right. I'm saying rather than interrupt the cross. THE COURT: It's on the record. I understand. So you folks, the government can proceed how it wants to proceed and we'll take it one step at a time. *(Continued on next page)* Page 1948 *(In open court; jury present)* MR. HOWARD Q. Mr. Shaw, please look to 940I in your binder, please. A. Okay. Q. Do you recognize what this is? A. Yes, I do. Q. And what is this? A. This is a weight estimate for four different categories of drugs based on a high selling price. Q. Can you describe what you mean by high price? A. I can. I selected 100 items from the database and manually reviewed them and calculated a price per weight for each those items. I then selected the highest price per weight for those items out of that list of 100 items and by using that, came up with what I considered a conservative estimate for the highest price per weight. And by using that high price per weight using the formula of taking the total sales value in U.S. dollars dividing by this high price per weight, it results in a weight estimate, a conservative weight estimate. Q. Can you explain why you believe that to be conservative? A. Because by dividing by a larger number, you're going to end up with a smaller number in weight. Q. And earlier you testified that you also looked at the average price of these same 100 transactions, correct? Page 1949 A. Correct. Q. How do the high prices compare to the average prices? A. They were significantly higher -- multiple, two or three sometimes four times. Q. So this analysis assumes that each sale of drug occurred at the most expensive price you found in your random sample, correct? A. That is correct. Q. Did you participate in the creation of this exhibit? A. Yes, I did. Q. Does it fairly an accurately represent information that you extracted from the Silk Road Marketplace databases? A. Yes, it does. MR. HOWARD: The government offers 940I. MR. DRATEL: I object based on 100 transactions. There's no statistical value to it. THE COURT: Let me ask a few questions so that I understand what you did. You took 100 transactions randomly; is that right? THE WITNESS: 100 items randomly that were used in transactions; yes. THE COURT: 100 items? THE WITNESS: 100 transactions. THE COURT: Which included a heroin sale? THE WITNESS: Correct. Page 1950 THE COURT: Based upon those 100, you determined manually what the highest transaction price was for any one of those 100; is that right? THE WITNESS: I determined -- THE COURT: You took the hundred. THE WITNESS: I took the hundred. THE COURT: And if the highest price was $739 and change, that's the price you used for the heroin analysis, is that right? THE WITNESS: Correct. THE COURT: And then what you did was, you took the total sales revenue and you did some math to come up with the possibility of what the number of -- the volume of drugs, is that right? THE WITNESS: Correct. THE COURT: All right. It's not received. We're going to -- we'll have to talk about it again. It's not received based upon this analysis. Is there anything else that government wanted to do? MR. HOWARD: No, your Honor. THE COURT: Why don't we do this. If you want, I don't want to have the jury have to sit around for this, we can talk about this further. I don't want to talk about the evidentiary issue in front of the jury, but I can explain my basis a little more fully, but I think we need to excuse the jury for that, all right. Unless you folks are ready to move on in light of the rulings but I assume based on the side bar you'd like to take this up? Page 1951 MR. HOWARD: Yes. THE COURT: Ladies and gentlemen of the jury, I'm sorry for the quick break, but we're right at the end of this witness, so I need to resolve this before we go on. Let's take this break a little early. We'll see how things go. Hopefully it will be about ten to 15 minutes. I appreciate your patience with us. Thank you. Don't talk to each other about this case. *(Continued on next page)* Page 1952 *(In open court; jury not present)* THE COURT: I'm going to ask you, Mr. Shaw, to step down, but stay close because we may have some additional questions for you, all right? THE WITNESS: Yes. *(Witness temporarily excused)* THE COURT: I've asked Mr. Shaw to take a break but to stay close in case we have any additional questions for him on what underlies his analysis. Let's all be seated. And let me describe a little bit more fully the Court's view, all right, since I can do that better when we're not at side bar. We all I think understand the importance of this document. There are two ways in which such a document can be used: One is for the jury to answer each of the three questions in connection or four questions in connection with their determination if they reach past the first question on Counts One, Two and Three. The second is if there was a conviction, it would be highly relevant to sentencing. The issues for sentencing are different, the Court has a different standard. It's preponderance of the evidence. We're not anywhere near there, so I'm going to put those to the side for the moment and deal with the evidentiary value and importance of these in terms of the elements of the causes of action that are in Counts One, Two and Three. Page 1953 The concern that I have is with, let's just take 940I, which was the more-recently offered document, for that we don't in fact know whether 739 was the highest possible weight. His analysis assumes that he took -- or the value -- that he took the highest possible value. Now, it would have been relatively easy for him to have done a sort and to have come up with on a database in fact what the highest possible value was. Is that not true? MR. TURNER: No, your Honor. That's not true. The system recorded the price. THE COURT: Right. MR. TURNER: But the weight would just be an attached description -- THE COURT: Not the weight. I'm talking about, as I understand it, the weight is derived by this witness from the overall denominator and the numerator is the price obtained from the random 100 transactions, which in Exhibit I happens to be the highest dollar value attributed in those 100. MR. HOWARD: Let me address that. You couldn't do just a standard sort because the database does not capture for each item what the price is per weight. There's a price value and then -- THE COURT: Let's forget about that. What I'm trying to figure out is, if you wanted to come up with an analysis like the one you've done, and I'm not saying it's not possible to have them done, you need the figure out before you say that out of 100 random, okay, first of all, to do 100 random, you know somebody who knows about statistics, and who knows how to derive what random is and whether random was within the relevant time frame, what random means. And there are a variety of ways in which random is understood in the world of statistics, so that's number one. So picking 100 random is an issue. Page 1954 The second piece is, it is nonetheless possible to come up with the highest transaction price for heroin, but you've got to do that -- to extrapolate that to the entire array of transactions, whatever thousands of heroin transactions there are, if you were going to do it with a statistician, you'd need to do it through some form of figuring out if that number is right. In other words, 739 could in fact be the highest price or it might not be. And if it's not, then it would be, I suppose, understating would be the argument, it would be understating the number of kilos, right? Because you'd have fewer kilos reflected in a higher price. If you had a thousand dollars per kilo, your number per kilo would go down to, say, ten kilos. If you had $1,200, it would go down again. So the problem I have is the statistical piece, which I don't think this witness is competent to do. There is a manual version of this which could be done but hasn't been done. So that's the issue I have, because I have no idea if he's got the right number or not frankly and it's an extraordinarily important derivation that he's doing here. Page 1955 MR. HOWARD: One point is, first of all, I think he did testify that he used the database functions to derive the random selections, the random selection of heroin transaction. So he wasn't -- THE COURT: But not in a statistical way. What he did was sort of like randomize, right? I have no idea if the algorithm that he used to randomize spit out random. For this kind of situation, what you would want in order to get a good price point is you would need to control for geography, time frame, because you might sell it at one price in India and a different price in Timbuktu and a different price on the streets of New York. And you folks have put in now maps showing that kind of global footprint. So I don't have any idea whether or not in his random sampling he got a truly random sampling for all geographies. In other words, you could take 2013, pick each geography, average those prices together, come up with one random sample per geography, go to another time frame, take all the relevant geographies on a date certain, average them, but that's not what was done. MR. HOWARD: I think one of the issues here is with the difficulty of what the data is and the data for each transaction as I mentioned doesn't calculate a price per weight in and of itself. It required manual review of the hundred that were selected to make that calculation for each one individually. Page 1956 Also, in terms of the geography, as Mr. Shaw testified, that only appeared in the database where a user elects to provide that information, and there's no verification of that. So, our ability to do that analysis based on geography is limited by -- it would be highly inaccurate because it would involve a much smaller sample size and also involve users that may or may not be telling the truth about where they're from. THE COURT: The deficiency in the data does not allow us then to assume that the data we do have is the right data; it just means that perhaps the exercise can't be done. Now, it may be that the government, and I don't know, has in evidence the whole list of transactions because that's part of what this fellow has authenticated, and you can go through and for those where you've got actual weights, since it's in evidence, you can manually add up enough to get you where you want to go. That's different. But I don't think this document can come in on this basis. Let me ask Mr. Dratel if you have any other view or do you want to add anything? MR. DRATEL: No. I think the deficiencies in the database don't allow us to manipulate data in a way that is not statistically valid and there's no statistical accuracy in this whatsoever. It's really not a statistic at all. The other thing is, to the extent that the government now says self-ID is not verified, that would be exactly my point to the objection to the maps because you can't have it for one thing to be used in evidence and then try to undermine it for purposes of getting in this other chart. Page 1957 THE COURT: I think that the point, as I understood it, was that there's not self-ID for everybody, but where there was self-ID, that that's what's reflected on the map. Am I wrong about that, or is the map somehow itself deficient? MR. HOWARD: No. And I believe the witness of the witness is he testified about what it actually was. These are the users who have self-reported. That's what that map captured. MR. DRATEL: What I'm saying is the government also said there's no verification, which is the point with respect to those maps. It's just someone's self-ID. It really has no value as true. THE COURT: On the basis that you folks have proffered, this is not the witness to get this document in. MR. TURNER: Your Honor, we have the testimony in the record and we would just ask for an opportunity to brief this tonight and ask your Honor to reserve judgment. Our opinion is this goes to weight, not admissibility. This is an extremely conservative estimate. You have a random sample of 100 heroin transactions. He's taken the absolute highest price. Page 1958 THE COURT: He's taken the highest price of the 100. MR. TURNER: Right. What he did is, he went -- THE COURT: What if he's wrong? What if the highest price is $1,200? MR. TURNER: So what he did is, he took these 100 heroin transactions and then he looked at -- each one has the weight of the product being sold and he looked at the price per weight. So what he did was for those 100, he said here is the highest possible price per weight that's being charged for these heroin transactions. THE COURT: What he could have done is he could have done a chart that had only those 100 on it. And it could have been those 100 had the total price per transactions of X and here is the weight attributable to it. Maybe it would have been 700 grams. I have no idea. But that's one exercise. But that's a different exercise. What happens, though, mathematically if it is $1,200 as opposed to 700? Am I right that it would mean that the number of kilos decreases? MR. TURNER: I'm just not sure what your Honor means, if you're right. If you're talking about a sample of a hundred -- Page 1959 THE COURT: Let's take a sample of 101. The one that gets added in, let's assume is from Timbuktu where they're able to sell heroin at $1,200 -- MR. TURNER: On that point, there's no geography in terms of -- THE COURT: I understand. MR. TURNER: In Silk Road, there's one price for everybody. It's not like you buy from Timbuktu -- and you get one price. THE COURT: I have no idea. There were some things which said ships out of X, so it may ship out of, for all I know, ship out of wherever. Let's put it this way: What if somebody who is desperate for money sells it at $1,200 for their price point. Am I correct that using this methodology, had that been used, that would decrease the number of kilos? MR. TURNER: Yes, but this is why we were arguing it goes to weight. For example, if somebody offers it for 1200 -- THE COURT: It can't go to weight if you're offering it for the fact that there were 12 kilos. That's not weight. That is a mathematical factual calculation. MR. TURNER: It goes to weight in that the jury has received an explanation as to what this is. What it is is the witness took a sample size of 100 and they saw that this is the highest price in that sample and that this is an extrapolation in that sample. Page 1960 If the defense wants to say, well, there could be a larger sample you could have taken that could have yielded a different result, that goes to weight. It still makes it more relevant -- it still makes a fact more probable than it otherwise would be. It clears the 401 bar. THE COURT: It's not a relevance issue. It's a foundation issue. MR. TURNER: In terms of foundation, the witness has fully explained how he arrived at this figure. THE COURT: Let's do this: I really feel like this is one where there's not enough, but you can always put in something else. Right now, my ruling is going to be what my ruling is. And if people want to put in letters that sort of go into it again, so be it. MR. DRATEL: I'm going to be preparing for summation tonight. The Court has ruled this is clear, this is not statistics what they're putting in. It's not statistics. It is cherry picking. That's all it is. It has no value to $8 million worth of transactions. The Court knows. The Court is agreeing, so let's just move on with it. We can't keep these things open all the time. THE COURT: I hear you. The evidentiary record, if it's open, it will be open. I take letters on a variety of topics, but I'm not going to preclude -- I'm not going to change my ruling right now, so if the government gets this in, they're going to have to call the witness back because Mr. Dratel would then be able to cross-examine him on the content of a document that I'm not allowing in right now, so there would be that. So that's how we're going to proceed on this. Page 1961 MR. TURNER: If I can make one more attempt. The one point is if you take the highest price in this sample, you get a weight estimate that is way, way beyond what's required for the (b)(1)(A) weights, which makes it even -- again -- THE COURT: Presumably the government has in evidence all this data underlying this. MR. TURNER: No, your Honor. The actual underlying data is the categories and then the amounts of money that came in associated with this category. So you're going to have black tar heroin, brown heroin and then a money figure. The only way you get to the weight is by going line by line through the data, which you're going to have millions and millions of screens for that. That's why you have to have a sample of some sort. THE COURT: I agree, but it seems like the kind of thing that you should have had a statistical expert do, not this fellow who is like a computer guy. I hear what you're saying, which is, you were facing a difficulty in proof, but you have to understand, this is such an important point that unless all of the I's are dotted and T's are crossed, I am very hesitant to let this in. Page 1962 MR. TURNER: I understand. We would like an opportunity to brief the issue. THE COURT: If the evidentiary record is still open, I'll look at any issues, but as I said, the government would have to be prepared to bring this fellow back because right now, he's not going to be allowed to be cross-examined on this document. MR. TURNER: Thank you. MR. DRATEL: I object to letting them bring him back. I think it should be closed. This is done. We're putting on our case. THE COURT: No. I ruled right now. It would have to be a change of ruling, which has happened in the past. All right. Is there anything else? MR. DRATEL: The 403 aspect of it is also very important. THE COURT: The 403 aspect of it I think actually goes the other way. The 403 aspect of it I believe that it's not -- in terms of its probative value? MR. DRATEL: No. It's confusing. There's nothing statistical about it. Page 1963 THE COURT: If you want to go to that, confusing, that's a weight issue. Then Mr. Turner is -- once we're into 403 -- MR. DRATEL: It's confusing. I mean, I'm just adding to what has already been determined about its admissibility but I'm just saying also it's not statistics. It's made up. THE COURT: I think we're now preaching to the converted. The government will brief if it wants to. Let's take as short a break as we can reasonably make it and then we'll come back. THE DEPUTY CLERK: All rise. *(Recess)* *(Continued on next page)* Page 1964 *(Witness not present)* THE COURT: So, I was looking at a few cases, I have only looked at a couple, and then I spoke to three colleagues -- Judges here -- and I believe that the proper way to proceed, looking at the cases, is as follows. This is now on 940D and I, which is the following: In order for there to be a foundation laid the program would have to be talked about that was used o create the random sample, that all the heroin transactions and the other transactions need to be in so the jury could replicate, if they wanted to, manually, the exercise. And so, since the underlying data is in, the pages will have to be printed out for that to occur or something else. And then the documents can come in subject to cross-examination and I need to look at things much more closely overnight and it is possible that this could be struck. And so, we would go into it with our eyes open. I believe that striking it is a relatively discrete piece and it would relate to these documents themselves, but that that would be the way to proceed and that seems to be the unanimous view of others and the Second Circuit in terms of methodology and it going to reliability of analyses. MR. TURNER: Your Honor, I'm sorry. What would need to be struck? THE COURT: Because I have to look at this more closely. Page 1965 MR. TURNER: If we were to offer the testimony now? THE COURT: You are going to offer it now. MR. TURNER: I see. THE COURT: Mr. Dratel is going to cross-examine it now and then I may strike it after we do further examination on this. MR. HOWARD: I have one question. When you are referring to underlying data do you mean all the data for the transaction tables overall or transactions that occurred? THE COURT: Whichever ones you have in here for heroin, cocaine, methamphetamine and LSD. MR. HOWARD: We do have spreadsheets that are quite voluminous so we would offer it under 1006 as a summary exhibit. That has been produced, the underlying data to defense in discovery. THE COURT: I think you have to produce the underlying data so that the jury can redo the exercise itself, if it wants to. MR. HOWARD: If you give us a minute we can burn the spreadsheets to a disk that can be authenticated by the witness but I would just need to do it with the witness. THE COURT: Look. I know you folks have not had the time that I have had to look at this. This is the kind of thing that I really wished I had been able to look at before being confronted with it just now but perhaps you folks thought it was really straightforward. I don't think it is really straightforward given the testimony of this witness on this issue. Page 1966 Mr. Dratel? MR. DRATEL: A couple things. One is that I don't think they should be given any time to do anything. I think we should move forward and they've had plenty of time to get this stuff together. This is transparent in the sense that this is not a valid statistical analysis. It is not statistics, period. But, the other thing is that I don't think it works -- it is something that the government claims is so important and the Court agrees is very important that the jury should hear it and then it be struck. That's too late. The damage is already done at this stage of the trial on an issue of considerable importance so I don't think that that is the proper way to go about it. The other thing is, and I understand the value of consulting and all of that, but, I mean, the Court ruled. It is not the Court of Appeals that goes to other judges to go overrule. The Court heard the testimony. THE COURT: It is important that I get it. MR. DRATEL: The Court is here. THE COURT: Look. I have consulted on all kinds of issues where people have disagreed with me and I go with what I believe is appropriate, but I do think sometimes when one is pressed for time in dealing with these kinds of issues that it is useful and, indeed, a lot of us call each other. People call me a lot including more senior judges. We utilize the experience and expertise of each other which is, I believe, a useful thing to do. Nevertheless, it is the Second Circuit talking about reliability and talking about methodology as within the ambit of cross-examination, not within the ambit, necessarily, of a foundation. I was characterizing it as a foundational issue. They characterize it as a reliability issue which goes to cross-examination. Page 1967 MR. DRATEL: But the chart is wrong. The chart is wrong. You can't have $8 million worth of heroin transactions and say it is based on 100. The chart is not accurate. The chart cannot come in as a statement of that. It is not -- it is just not -- it is not it. I can put two numbers together that have no bearing on each other and say you can cross-examine on that. The fact is the chart is not a valid chart. MR. TURNER: Your Honor, I just want to make sure that I am clear on what your Honor is imagining. Are you proposing that the government produce the random sample of 100 transactions? THE COURT: I think you have to do that for sure. You have got to produce the random sample of the 100 transactions. You have to explain the program that created that random sample of 100 transactions and you have got to produce the data so that the jury could, itself, if they wanted to, replicate that. I don't know if that is 4,000 pages, 10,000 pages or 2,000 pages but that's, I think, what needs to occur. Page 1968 MR. TURNER: When you say the data, you mean beyond the 100? THE COURT: Yes. MR. TURNER: I think that we are just going to forego that. I don't think we need it. And so, I think we are ready to move on. THE COURT: All right. So, we won't then return to this topic so then I think I take it from Mr. Turner's statement that they won't produce that 940D and I will not come into evidence. MR. HOWARD: I think it is I and J -- sorry, H and I. THE COURT: H and I. MR. HOWARD: D was the last exhibit that we showed. THE COURT: So, H and I will remain excluded from evidence based upon the government's lack of desire to put in the underlying data. Let's then get Mr. Shaw Back out here and we will proceed. Joe, you can go ahead and bring out the jury while Mr. Shaw is coming out. That's all right. Page 1969 So, this issue is closed. Done. No briefing tomorrow. We are done with it. Mr. Dratel, we are done with this issue, it is not going to be reopened tomorrow. MR. DRATEL: Great. Thank you, your Honor. *(Continued on next page)* Page 1970 *(Jury present; witness resumes the stand)* THE COURT: Ladies and gentlemen, let's be seated. Tomorrow we are going to arrange to have afternoon coffee service for you folks. When I say coffee it will be tea, coffee, water, something like that so you have something to look forward to at this hour in the day. I want to thank you all for your patience. We have Mr. Shaw back on the stand. Mr. Howard, you may proceed. MR. HOWARD: The government has no further questions. THE COURT: Mr. Dratel? CROSS EXAMINATION MR. DRATEL Q. Good afternoon, Mr. Shaw. A. Good afternoon. Q. I want to go back to Government Exhibit 901 which you testified about on Thursday with respect to an SSH key. A. Yes. Okay. Q. And that's in evidence and there were two SSH keys on the Silk Road server, correct? A. Correct. Q. And there was one ending in frosty@frosty and one ending in root@bcw, right? A. Correct. Q. And an SSH key essentially allows someone to have remote administrative access to a computer server? Page 1971 A. Correct. Q. And by administrative access that means total control over the site, right? Through those keys? A. Correct. Q. Not just general administrative access but through these SSH keys, correct? A. Correct. In this case, correct. Q. So, an individual gaining access through those SSH keys would be able to review and change any information in the server, correct? A. The database had its own authentication which would be separate, but otherwise, correct. Q. And anyone getting in through that SSH key would be able to obtain information that's logged within the database or on the server, correct? A. Again, the database had its own authentication, but yes, correct. Q. And that would include they could get login and password information for the Dread Pirate Roberts account, right? A. Depends on which -- what you mean by password information. Passwords are typically stored encrypted. Q. Well, but typically, but do you know? A. I'm sorry? Q. Do you know though, with respect to that? With respect to the server? Page 1972 A. It is the default for the ubuntu which the server was. Q. Do you know? A. And then for the -- Q. The question is do you know. A. Can you rephrase your question, please? Q. Sure. You said that typically such information would be encrypted. Do you know for a fact whether that information, DPR's password and login information on the server, was encrypted? A. I have not verified that. Q. Now, so, by the way, with respect to, you had, on Government Exhibit -- the mastermind page for the server, right? A. Yes. Q. And if you log in as Dread Pirate Roberts that automatically comes up, correct? A. No, it does not. It depends which page you come from. There are two login pages. Q. So which login page does it come up on automatically? A. There was a special support admin login page. Q. For the support admin page, right? A. Correct. Q. And you testified Thursday that you used both an MD5 hash value and an SHA 1 -- you call it a SHA 1 or SHA? Page 1973 A. Shah 1. Q. So, MD5 hash and Shah 1 hash value to confirm the copies of the server that you viewed, right? A. Correct. Q. And you did that to ensure that you were looking at the same data that was on the original that you had imaged on a copy? A. Correct. Q. There was a reason -- withdrawn. You used both the MD5 hash and the Shaw 1 hash because you wanted to be thorough and you wanted to be as -- you want to be as reliable as possible, right? A. It was the default setting for the tool that I used so it automatically calculated both for verification. Q. But it calculates both but you matched both, right? A. That's correct. Q. That's not always -- you don't have to match both, you decided to match both, right? A. Yes, I did match both. Q. Not because you wanted to be forensically sound in your analysis, right? A. Sure. Q. That's because MD5 hashes have some vulnerability, correct? A. Depends on the use case. Page 1974 Q. But you use a SHA 1 because that has more reliability, right? A. Again, depends on the use case. Q. But you did it in this case, correct? A. Because it was available to me, yes. Q. Now, going back to Government Exhibit 901 and looking at the key that ends the SSH key which we were just talking about -- let me know when you get there. A. Thanks. Q. Looking at the key that ends in frosty@frosty and you testified Thursday, I think, that the user name frosty and the computer name "frosty" that are found in the SSH key are taken from the system that you are coming from? A. That's correct. Q. Well, the part of the key that contains frosty@frosty is what is called a comment, right? A. I don't know that for sure. Q. Well, you can generate a key ending in frosty@frosty from my computer, right? You can do it at any computer, can't you? A. That is correct. Q. Are you familiar with the program called SSH- -- withdrawn. And you also talked a little bit about on direct on how SSH keys work, right? A. Correct. Q. And you are familiar with how they're generated? Page 1975 A. Yes. Q. And you have a lot of background and training in UNIX and Linux programs, the two computer systems, right? A. I have experience at both, yes. Q. And you are familiar with the manual pages associated with computer programs contained in UNIX-based operating systems like Macrolex or Linux? A. Yes. Q. And these manuals contain documentation for how the software works, right? A. Correct. Q. And they're widely accepted in the community as being reliable authority on how computer programs contained in a UNIX-based operating system work, right? A. As long as updated, yes. Q. And if you look at 901, that's a file called authorized keys, right? A. Correct. Q. And that file is associated with a computer program called SSHD or open SSH Daemon, right? A. I believe that is correct. Q. And are you familiar with the system manager's manual for that computer program SSHD? A. I have not reviewed that manual, no. Q. Isn't the comment field not used for anything other than the convenience of the user to identify the key? Page 1976 A. Again, I don't know if that is referred to as a comment field or not. I have not reviewed the page on that. Q. With respect to the Silk Road market server image that you worked on, right? A. Yes. Q. There was an image of the server captured October 8, 2013; correct? A. Correct. Q. And you received the Silk Road marketplace server by recreating a local copy of the server on your computer, right? A. Correct. Q. And just for purposes of shorthand, that was the server ending in the IP address, last two digits .49, right? A. I don't remember the IP address off the top of my head. Q. Let's look at 603A -- Government Exhibit 603A. This is the image that you used to create a local copy of the Silk Road marketplace on your computer, right? In other words this is the log entry? A. That looks familiar. Correct. Q. And if you look at the created date on the top -- I'm sorry, on the left as you go down it says: Task, status and created date is Tuesday, October 8, 2013, right? A. That's what it says. Yes. Q. And the image that you get is essentially -- not essentially, the image that you get is a snapshot of what exists on the computer at that moment in time, right? Page 1977 A. Correct. Q. Now, I want to direct your attention back to Government Exhibit 936, please. If we look at the third entry in the second paragraph, the one that begins on March 14, 2013 at 11:26, right? A. Okay. Q. If you look at the second paragraph of that and at first it says -- it says it is from friendlychemist: "u dont know me but i am lucydrops supplier. the only reason i lent lucydrop so much product is bcuz he showed me the chat logs of u and him talking and how u made him the #1 seller on silkroad." Now, do you know whether that is accurate or not, that statement? MR. HOWARD: Objection. THE COURT: Overruled. THE WITNESS: I do not know. THE COURT: I take it by that you mean did he see it, a reference to that elsewhere? MR. DRATEL: Right. THE COURT: Was that the question? MR. DRATEL: Yes, your Honor. THE COURT: Is that how you understood the question? Page 1978 THE WITNESS: Yes. THE COURT: Yes? THE WITNESS: Yes. THE COURT: All right. MR. DRATEL Q. Further down that entry do you see the paragraph that begins: "i put a keylogger on lucydrops computer when he left the room one day"... Right? Do you see that? A. Yes. Q. So, when you were looking at hacking software, right, which you showed us on Thursday as well, can you explain what a key logger is? MR. HOWARD: Objection. Beyond the scope. THE COURT: Sustained. MR. DRATEL: Your Honor, the government read this document. THE COURT: No, they can read the document, but whether or not he knows about how to interpret the content is different. So, you can ask him about the matters that he went over in his direct. MR. DRATEL: Your Honor, he also testified about hacking software such as that, key loggers, in his direct. THE COURT: If he talked about it then certainly you can go into that. Don't tie it to the document but go ahead and question him about things he otherwise testified to. Page 1979 MR. DRATEL Q. In terms of hacking software, what does a key logger do? A. Key logger? It is my understanding that it logs your key strokes. Q. When you say logs your key strokes, you mean for someone -- it could be done by someone who is not at the computer, correct? MR. HOWARD: Your Honor, objection. Beyond the scope. THE COURT: You know, Joe, my LiveNote has gone out. I will allow this to the extent -- I can't look and see what he testified to on direct as to this topic because my LiveNote is not currently working. MR. HOWARD: Your Honor, if we can have a side bar we can make a proffer as to that or maybe he could move on to a different issue and come back once you can verify that. THE COURT: We can do it even more easily. Why don't you say do you recall testifying on direct that? And then that will remind me and it will have the benefit of reminding everybody and then we can take it from there. MR. DRATEL Q. Do you recall testifying on direct about hacking tools and reading from the screen pages about what hacking tools were available on Silk Road? Page 1980 MR. HOWARD: Objection. THE COURT: Well, that question he can answer. THE WITNESS: I didn't read out loud any of the hacking tools. I described that there were listings for items referred to as hacking tools. Q. Known as key loggers, right? A. That is correct. Q. So, when you say a key logger logs strokes, it is not by the person who is actually logging them, right? It is someone who wants to know what the person, as a hacking tool -- it is for someone who wants to know what the person is doing on the computer while the person who wants to know is not there, right? MR. HOWARD: Objection to scope and foundation and form. THE COURT: Now it is sustained. MR. DRATEL Q. Now, let's go to page 8, please, of 936. That blue portion, that's not from the chats, right? A. On this page, that is correct, it is not from the chats. Q. And all blue portions for the entire document are not from the chats, right? A. They are not from the marketplace chats, that's correct. Q. They are from the forum, correct? A. From a file -- backup file from the forum, correct. Page 1981 Q. And that forum is available to the entire Silk Road community, correct? A. That is my understanding. Correct. Q. And it is imported into this document, correct? A. Correct. Q. So, when we are looking at the -- so, when this was taken off the server, that blue part wasn't there in that chat, right? A. It was not blue. That is correct. Q. No, but it wasn't there. A. Wasn't where? I'm sorry. Q. In other words, the next entry on the chat is the next white entry, not the next blue entry; correct? In other words let's parse this out. Let's go to the entry right above it, 3/15/2013 at 20:42, right? A. Yes. Q. And that's 8:42 p.m., correct? A. Correct. Q. We are talking military time here, right? 24-hour clock. Okay, so then we have a blue section and then we have another blue section on page 9, right? All blue, right? A. Correct. Q. And then we have 10 which is all blue again, right? A. Correct. Q. And then we have 11 which is all blue, right? Page 1982 A. Correct. Q. And then we have 12 which is all blue? A. Correct. Q. And we have a part of 13 that is all blue? A. Correct. Q. Then we have 3/21/2013 at 1:33, that's the next white entry, correct? A. Correct. Q. And, in fact, that white entry is the next entry on the private message chat, correct? A. On the -- yeah, the Silk Road marketplace, correct. Q. So, all that blue stuff was imported into this document, correct? A. Correct. Q. So, if I were to print out just the part that is white I would not see any blue. This was created for purposes of the trial, right? A. It was the weaving of two different. Q. It was created for the trial, right? A. Correct. Q. Did you do it? A. I participated in the creation of this, yes. Q. It is actually occurring on a public forum -- when I say public I mean for any Silk Road user, anyone with a user account, anyone with a user name, anyone with access to the Silk Road site, right? Page 1983 A. There is the one individual forum post on page 8 and then the rest were one-on-one messages. Q. But on the forum page? A. On the forum site, correct, the separate site. Q. If you go to page 16, 3/26/2013, that second, the third entry, the second white entry at 20:08, right? And it says: "That is interesting." This is from redandwhite, right? A. Correct. Q. And it says: "That is interesting. How much is it possible to sell on here if we listed every product far cheaper than everyone else? We have a majority hold over most of the movement of products in western Canada (one of the main drug ports to North America)." It says that, right? A. Yes, it does. Q. Now, if we go to page 17 at March 27, 2013 at 23:38. Do you see that entry? A. Yes, I do. Q. By the way, that blue one in the middle there again, that belongs on the Silk Road forum, right? A. Right. That is a message on the Silk Road forum, correct. Q. Okay, that paragraph: Page 1984 "In those categories, I think you could be doing over $1M in sales a week within a few months. It is hard to estimate because it depends on how much market share you get and also the site as a whole is constantly growing. You will need to become very proficient at stealth shipping and packaging if you aren't already. Think vacuum sealers and leaving no forensic evidence on your packages. You will also want to ship from multiple drop points so you can't be traced back via your (fake) return address. If you go through with this, I would contact some of the top vendors and hire them to consult you. Ask the weed vendors because you won't be competing with them and their product is smelly and looked for by USPS" -- That would be the United States Postal Service? MR. HOWARD: Objection. THE COURT: Sustained. Q. -- "so they have to be on top of their game." MR. HOWARD: Objection to form. Q. It says that, right? THE COURT: Yeah. What is the objection? MR. HOWARD: I thought that was the question. I didn't realize. THE COURT: Do those words appear on the page? THE WITNESS: Yes, they do. THE COURT: All right. Page 1985 MR. DRATEL Q. That is talking about security, correct? MR. HOWARD: Objection. THE COURT: Sustained. He can't talk about what the content means. He can talk about what the content is on the page but he can't interpret the content. So, move on. MR. DRATEL: Your Honor, this is a witness who put the document in evidence. THE COURT: He did. He did put it in evidence. He can't interpret what the people meant. MR. DRATEL Q. Let's go to April 2nd, 2013 at 20:55, page 24. A. Okay. Q. And that entry which is in the middle of the page, if we can blow that up a little bit it says: "Regarding image metadata, you can strip all of that out and it is a good practice. The upload page is secure, but I would still have access to that metadata." By the way, this is from Dread Pirate Roberts to redandwhite? A. Correct. Q. So: "Regarding image metadata, you can strip all of that out and it is a good practice. The upload page is secure, but I would still have access to that metadata. Of course you can trust me, but what if I was compromised? Do a search of 'remove image metadata.' A decent one for windows can be found here:" Page 1986 And there is a URL, correct? A. Correct. Q. "Regarding bitcoin withdrawal, I would avoid mt gox if at all possible, especially if you are withdrawing to a USA account. There are many other exchanges that don't have so much attention on them." It says that, right? A. Yes, it does. Q. And if you look at the bottom, April 4, 2013, that one it says: "I can't find a surname anywhere of Lawsry." L-A-W-S-R-Y? A. Yes, it says that. Q. In fact, you heard the stipulation, right, that there was no person by that name? MR. HOWARD: Objection. THE COURT: Sustained. MR. DRATEL Q. Now, let's go to 4/6/2013 on page 26 at 57 minutes, so that would be 12:57, right, after midnight? A. Correct. Page 1987 Q. 12:57 a.m., right? A. Correct. Q. And just look at that, we will go to the third sentence: "He is likely sitting on many thousands of stolen bitcoins perhaps tens of thousands, so I would think we'd want to "work him over" to get those funds back. They could be on an encrypted drive only he can unlock." Right? It says that? A. Yes, it does. Q. Now, from your knowledge of the server, having reviewed the server and the private messages, is there any way for you to tell whether or not lucydrop, redandwhite, reallucydrop, friendlychemist, whether they're different people or the same people? A. There is -- no. Not that I can think of. Q. Now, this set of messages occurs from March -- from page 1 is March 13, 2013, right? A. Correct. Q. And goes up to April 18th, 2013 -- actually, April 21st, and then there is one also on June 1st, but the particular string is pretty much through April 21st, right? A. Correct. Q. Going back to the SSH key for a second, that was changed March 26, 2013? Is that right? THE COURT: I'm sorry, could you have the court reporter read back the question? I missed it. Page 1988 MR. DRATEL: I can rephrase it. THE COURT: Either way. My LiveNote is still not up, we are trying to fix it. MR. DRATEL Q. Going back to the SSH keys, you testified, I believe on Thursday, that it was modified -- the frosty@frosty was modified March 26, 2013, right? A. Can you tell me which exhibit that was, please? Q. I think it is 603. A. 900s, hopefully. Q. 901? A. Thanks. That is correct; recorded date modified was March 26, 2013. THE COURT: I am back in business here with LiveNote. Mr. Dratel, I think you got an answer. MR. DRATEL: Thank you, your Honor. MR. DRATEL Q. If we can go to Government Exhibit 1201? MR. HOWARD: Objection, your Honor. This has not been admitted into evidence. THE COURT: Take it down and let's find out if it was. MR. DRATEL: It may not be, your Honor. It was not the one I was looking for. THE COURT: So you are looking for a different exhibit? Page 1989 MR. DRATEL Q. Government Exhibit 1200, that is in evidence; just look at the date on that, does it say March 16th? A. Yes, it does. Q. 2013? A. Yes. MR. HOWARD: Objection, your Honor. This is argumentative. THE COURT: Well, I don't know where it is going yet, so overruled. Let me see where it is going. MR. DRATEL: It is precisely what the government does in all of its examinations. THE COURT: Let's see where it goes. I am overruling the objection. Go ahead. MR. DRATEL Q. I am saying that this is March 16, 2013, right; and there is a post by frosty to stackoverflow, right, about code, correct? A. I'm not familiar with this exhibit but it is what it looks like, yes. Q. Then if we go to the next entry in this exhibit, if we go up further, okay, if we go to -- that's March 16, 2013 and the last modification of the authorized user key for the 16789SH was March 26, 2013, correct? Page 1990 A. Correct. Q. And you don't know what it was before then because you just have what it was changed -- what became of it as of March 26, 2013, right? A. That is correct. Q. With respect to 940A that is in evidence, you said that the null category was not included in your analysis? A. It is included in Exhibit 940 -- or 940A. Q. 940As it included, but when you did the pie chart you didn't include it, correct? A. That is correct. Q. And so, the null transactions account for about 11 or 12 percent of the entirety, right, of the transactions? A. Doing a quick double-check here. That's approximately correct. Q. And the reason they're null, just again, is because you could not categorize them, correct? A. That is correct. Q. Let's talk about 940D and the total number of commissions over the life the Silk Road is 642,455 bitcoin, right? A. That's what it says. Correct. Q. And the dollar value of $13 million is based on the value of bitcoin at the time of the transaction, correct? A. As it was recorded in the database. Q. So, in other words, if the database recorded bitcoin value, let's say, in 2012, bitcoin value might be different in 2013, correct? Page 1991 A. Correct. Q. And that would influence not the value -- not the number of bitcoin but in fact the value of the money, correct, in terms of exchange into dollars, right? Let me pose it a simpler way for everybody's benefit, including mine. If a transaction in October of 2012 is 1 bitcoin is worth $4.50, right, that would look there at 1 bitcoin and at the bottom, U.S. equivalent would be $4.50, right? A. Correct. Q. If that same transaction occurred with bitcoin at a value of $12 a bitcoin, it would still be 1 bitcoin on the commissions but the dollar value -- U.S. dollar equivalent would be $12, right? A. That's what the database would -- should reflect, yes. Q. And so that the database only reflects the value of bitcoin in the transaction, correct? Right? A. Correct. Q. Did you look at the value of bitcoin over time? A. No. I was pulling it from the database. The value recorded in the database. Q. Let me show you what is in evidence as Defendant's Exhibit B. It is in evidence. This is a graph of the value of bitcoin over time and so in the context of your chart which is 940D, it doesn't tell you what the value is of those commission bitcoins at any point in time other than what is in the database at the time of the transaction, correct? Page 1992 A. It tells you what the value was recorded in the database. Q. Right; but it doesn't tell you what happens a month or a year later if those bitcoins are still held and whether the price has appreciated. It is not reflected in that chart? A. Yes. To my understanding that that field does not change, correct, once entered in. Q. So that if you had 100 bitcoins at a dollar, right, and in 2012 and you held on to them until November 2013 as on that graph when it peaks at, and we will say $1,000, just for round numbers, that 100 bitcoins at a dollar each would be worth a thousand times more, correct? MR. HOWARD: Objection. Beyond the scope. THE COURT: Well, no. It is, I think, related to what he was saying before but I think it has been asked and answered. But, I will allow this last question. MR. DRATEL: Thank you, your Honor. THE WITNESS: Yeah, the value of the bitcoin varies wildly. MR. DRATEL Q. And it would be a thousand times more but it wouldn't be reflected on 940B? Page 1993 A. It is my understanding, yeah, that the value in the database did not change. Q. I want to draw your attention to Government Exhibit 935. If you look at that first entry, this is from shefoundme to KingofClubs, June 10th, 2013. Right? A. Correct. *(Continued on next page)* Page 1994 Q. And you testified about this Thursday? A. Correct. Q. And this is about shefoundme ordering fake IDs, right? MR. HOWARD: Objection. THE COURT: Hold on. Well, I think the document says what it says. I don't want the witness to be interpreting it, but if you want to read something into the record, you can do that. MR. DRATEL: Okay. Q. Let's read from the top "Hi I need a few of your highest quality IDs. I notice several attributes you list: Hologram, UV, scannable, raised lettering. Can you give me a rundown of the importance of these attributes and what they are needed for? For example, which are needed to pass airport security for a domestic flight?" Right? A. Yes, it says that. Q. "Which are needed to get through being pulled over by a cop." Right? A. Yes. Q. And if you go to page two, again, from shefoundme to -- June 10, 2013, shefoundme to KingOfClubs, right? A. Correct. Q. And then if you look at the third-to-the-last paragraph down at the bottom, it's a one-line paragraph, "Can you comment on the suitability of using any of these IDs to board a domestic USA flight." Right? Page 1995 A. Yes, it says that. Q. Then it says "Can you please comment on what the various attributes mean. For example, does UV mean if it is held under a UV light then some pattern appears that makes it look legit. If it doesn't have UV, does that mean if it is held under UV light, it will be exposed as a fake? In general, how much scrutiny can these cards hold up against?" Right? A. Yes. Q. Now, if we go to page 11, July 18, 2013, the one right in the middle of page 132606, right? A. Okay. Q. From shefoundme to KingOfClubs: "Looks like it got stuck in customs. The last step is 'inbound out of customs' on the tenth. Have you ever had something seized or any of your customers get in trouble?" Right it says that? A. Yes, it does. MR. DRATEL: May I have a moment, your Honor. THE COURT: Yes. Q. With respect to SSH keys and what we talked about before with respect to a manual, right, the system manager's manual, are you familiar with them? Page 1996 A. I'm familiar with man pages in general. Q. So are you familiar with the SSH-D system manager's manual? A. I have not reviewed that one; no. Q. But you testified here about SSH keys, right? A. That is correct. MR. DRATEL: Nothing further. Thank you. THE COURT: All right. Thank you. Mr. Howard. MR. HOWARD: I'll be very brief. THE COURT: All right. MR. HOWARD: Mr. Evert, can you please publish Government Exhibit 936 again, please. REDIRECT EXAMINATION MR. HOWARD Q. Mr. Shaw, this is a compilation of messages involving the Dread Pirate Roberts, correct, other than the forum posts? A. That's correct. Q. Can we go to page seven, please. And the one that's shaded here on blue on page eight, that's the forum post, right? A. That is correct. Q. A forum post can be seen by many users on Silk Road, right? A. That's correct. Q. Can we go to the next page. Isn't it true that you testified that all of the other messages shaded in blue were private messages taken from the forum database, correct? Page 1997 A. That's correct. Q. Those are one-to-one private messages involving Dread Pirate Roberts, correct? A. Correct. Q. So 936, apart from that forum post, contains private messages taken from the private message database on the Marketplace, correct? A. Correct. Q. And also private messages between Dread Pirate Roberts and other individuals taken from the forum database? A. Correct. Q. And all of these were contained on the servers you reviewed? A. Yes, they were. Q. You testified about MD5s and SHA1s on cross, right? A. Yes, I did. Q. And you testified that whether or not you used one or both comes down to the use case, correct? A. Correct. Q. What do you mean by "use case"? A. For the purposes -- there are multiple use cases for hashing a file. Typically in the forensic world, users will create what's called a white list, you know, known files. And so it's common to create hash values of those files so that way, you know, every Windows computer ever has notepad.exe, so if you create a hash value of that file, whenever you import your new image, you can quickly exclude that image. So it's a process for quickly excluding files. So it's fairly common to use hash values to eliminate files that need review and there was, you know, a few years ago some academic papers and studies on weaknesses in MD5 for that purpose. Page 1998 Q. So for the purpose of creating forensic images, however, are you aware of weaknesses in MD5? A. For comparing whether a file has changed, you know, whether it's been under control and whether it's changed from point A and point B, MD5 is still used; yes. Q. So relying on MD5 alone would be sufficient? MR. DRATEL: Objection. THE COURT: Sustained. You can ask a different way. Q. Is MD5 alone accepted in the community as a way of verifying forensic copies? MR. DRATEL: Objection; form. THE COURT: I'll allow it. A. MD5 is a -- still considered a technique for verifying if a file changed in transit. With hash values, if they're -- that weakness that I discussed, something else will also change in the process. So the size of the file will likely change almost always will get larger. Additionally, if it's, like, a jpeg type image, that the image would get corrupted. So when it comes to verifying whether a file changed in transit, it's still considered a valid process. Page 1999 MR. HOWARD: No further questions, your Honor. THE COURT: Mr. Dratel. RECROSS EXAMINATION MR. DRATEL Q. It's not most valid process, though, is it, right? SHA1 is more reliable than MD5? A. SHA1 is the newer standard that -- Q. I'm sorry -- A. The newer process that doesn't have the same weakness as MD5. Q. And with respect to the 936 of those posts, those were -- the blue sections were imported from a different -- that's a separate conversation going on from the white ones, right -- A. That is correct. Q. -- in terms of where it's occurring? A. Correct. MR. DRATEL: Thank you. Nothing further. THE COURT: All right. Thank you. You may step down, sir. THE WITNESS: Thanks. *(Witness excused)* THE COURT: Mr. Howard. Page 2000 MR. HOWARD: The government would like to read one last chat into evidence. THE COURT: All right. MR. HOWARD: 229D as in dog, please. THE COURT: All right. MR. HOWARD: This is from page 49 of a 139-page chat log, October 24, 2012: "inigo: if you dont mind me asking. what do you tell your family that you do? Myself: opportunity of a lifetime, of many lifetimes Myself: I live a modest life still Myself: security requires it Inigo: absolutely Myself: so I have my little alibi Myself: I'm clever, so I can bs when I need to Myself: but I hate having to lie to people Inigo: nothing raises a red flag more then a nobody becoming a big somebody out of no where Inigo: yeah i hear ya Myself: and friends will tell me shit like, why don't you do this or that Myself: like I have all this free time Myself: I just want to scream at them "because i Myself: 'm running a goddam multi-million dollar criminal enterprise!!!!" The government rests, your Honor. Page 2001 THE COURT: Thank you, Mr. Howard. Defense. MR. DRATEL: I have some applications. THE COURT: Save the applications for the end of the -- we'll hold on until the end of the court day. The defense can proceed. MS. LEWIS: The defense calls Karen Steib Arnold. *(Witness sworn)* THE COURT: Ms. Steib Arnold, please be seated. And it will be important for you to pull the chair up and to adjust the microphone so that you can speak into it clearly. And there will be some water there as soon as we get a new pitcher for you. THE WITNESS: Great. Thank you. THE COURT: Ms. Lewis, you may proceed. KAREN STEIB ARNOLD, called as a witness by the Defendant, having been duly sworn, testified as follows: DIRECT EXAMINATION MS. LEWIS Q. State your name for us again. A. Karen Steib Arnold. Q. How old are you, Mrs. Arnold? A. I'm 72. Q. Where do you live? Page 2002 A. I live in Austin, Texas. Q. Are you a Texas native? A. I lived in Texas since I was three years old. Q. What do you do for work? A. I'm a mental health counselor. Q. What does that job involve? A. I work with people who have problems that can be solved with talk therapy. I also work with some chronic pain sufferers who have both physical therapy and talk therapy. I help people to explore their inner life and to come to see things in ways where they can navigate life comfortably. Q. In what context do you perform these services? A. I've worked in the clinics. I also have a private practice. Right now I'm associated with a chronic pain clinic and I have a private practice. I've also worked in a rape crisis clinic with sufferers of -- survivors of childhood sexual abuse and rape. And I have also worked with grief and dying-type -- people who are dying and those who are surviving them and grieving. And I've worked with other chronic pain patients. Q. Before your private practice, did you have something else that you did? A. I was a social worker for many years. Q. And how long have you done this work collectively, the private practice and the social work? Page 2003 A. About 45 years. Q. What are the ages of the people that you assess? A. Pretty much all ages, not babies, but school-age children to geriatrics. Q. And what is your education background? A. I have a Master's degree and every year I get continuing education. Q. What is your Master's in? A. Counseling psychology. Q. Are you familiar with Ross Ulbricht? A. Yes. Q. And how are you familiar with Ross? A. Ross' family, our family are kind of intertwined. We're like twin families. See, I'm good friends with his mother. My husband is good friends with his dad. And we have two children the same ages as Ross and Cally. So all the time our kids were growing up, we did things together as families and with other families, we'd go to the beach, go sailing. I keep their kids, they keep my kids. We were twins. Q. And how long have you known Ross? A. His whole life. Q. And do you see Ross in the courtroom today? A. Where is Ross? Yes, I do. He has a brown shirt and blue collar. Q. Have you kept in touch with Ross over the years? Page 2004 A. Oh, yes. Q. And is that including after he graduated from college and graduate school? A. Yes. Definitely. Q. And he was back in Austin at that point? A. Yes. Q. And do you have any knowledge of what other people think of Ross? A. Well, sure yes, I do. MR. TURNER: Objection. THE COURT: Why don't you -- depending upon where that's going to go, let's talk about her first, all right. MS. LEWIS: Yes. THE COURT: Thank you. Q. So in what context have you -- do you have knowledge of what people think of Ross? MR. TURNER: Objection to form. A. We have a community of people -- MR. TURNER: Objection to form. THE COURT: We'll just have you talk about -- Q. Do you personally have knowledge of what people think of Ross or what Ross -- what was your personal interaction with Ross over time? A. Well, depending on the age, because as I said, I've known him all his life when he was -- Page 2005 Q. So we'll take it in portions then. Let's say when he was young during his school years. A. Well, he would stay with us at our house. Our kids would stay at his house. We'd all visit together. Because, you know, to have a family that matches like that is pretty special, so we spent a lot of time together. And I was around Ross a lot as he was a little kid and I was an adult when he was little. Q. And through his teen years, high school years, what was the context of those connections with Ross? A. The same thing that we did together, things together as families, but it changes of course, when kids grow up. He began to see me as a friend as well as an adult because he was becoming an adult, so I would say he was my friend and the child of one of my friends. Q. And then later on after he graduated college and was back in Austin, did you see him then, too, and what was the context of that relationship? A. Yes. Similar, except that Ross was older, so sometimes -- I mean, I remember once he lent me his car because mine was in the shop. I would see him either when his parents were there or when they weren't, but we always kept in touch. We were almost like relatives the way our families related. Q. Okay. Do you have knowledge of other people's relationships with Ross? Page 2006 A. Well, sure. Yes, I do. We were -- there are many families with kids that got together and did things and had activities together, so I knew all of them. We were friends. We'd have parties or go to the beach or go sailing, so I knew a lot of people who were in that same group. Q. And was this at all those different stages in his life that you spoke about as a younger and teen years and after college? A. Yes. Yes. Q. Do you have knowledge of what those other people thought of Ross? MR. TURNER: Objection. THE COURT: Sustained. You can ask it in a different way. And I assume that you'll get there. Q. Are you familiar with Ross' reputation in the community? A. Yes. Q. And have you discussed his reputation with other people in the community? A. Yes, I have. Q. And have you talked to them about their impressions of Ross? A. Yes. Q. And have you talked to them about his reputation for peacefulness and nonviolence? A. Yes. Q. And what is Ross' reputation for peacefulness and nonviolence? Page 2007 MR. TURNER: Objection. THE COURT: Sustained. MS. LEWIS: May I lay a foundation, your Honor, the number of people, who they are? THE COURT: I don't think that's the issue. MS. LEWIS: Can we have a side bar, your Honor? THE COURT: Sure. *(Continued on next page)* Page 2008 *(At the side bar)* THE COURT: All right. So that I understand, why don't you tell me what rule that you are thinking you're operating under so we're on the same page? MS. LEWIS: 804 and 805 involving reputation in the community. THE COURT: You mean 608? MS. LEWIS: I'm sorry. It's 404(a) and 405. THE COURT: This is why I wanted to ask you because I was looking at 608. MS. LEWIS: I misspoke. THE COURT: That's all right. Let me take a quick look. MR. TURNER: Where are we? THE COURT: 405. MS. LEWIS: 404(a). THE COURT: Yes. I'll allow the question under 405. Let me ask Mr. Turner. MR. TURNER: Partly it was a leading question. THE COURT: I understand. I'll allow a little bit with the character witness. Thank you, Ms. Lewis. *(Continued on next page)* Page 2009 *(In open court; jury present)* THE COURT: Do you want the question reread or just ask it? MS. LEWIS: I'll reask it. Q. Do you have any knowledge of Ross' reputation in the community for peacefulness and nonviolence? A. Yes, I do. Q. What is that reputation? A. Everyone I know who knows Ross sees him as a very peaceful and nonviolent person. He's compassionate, gentle; he always has been. From the time he was a little child, he's a very gentle and compassionate person. MS. LEWIS: Thank you. THE COURT: Thank you. Mr. Turner, anything from you, sir? MR. TURNER: No questions. THE COURT: Thank you. You may step down, ma'am. Thank you very much. THE WITNESS: Thank you. *(Witness excused)* THE COURT: Would the defense like to call its next witness, please. MS. LEWIS: The defense calls Daniel Davis. THE COURT: Mr. Davis, please to the stand. *(Witness sworn)* Page 2010 THE COURT: Mr. Davis, sir, please be seated and it will be important for you to pull the chair up so you can speak directly into that mic. and there's water there if you want it at any point in time. THE WITNESS: Okay. THE COURT: Ms. Lewis, you may proceed. MS. LEWIS: Okay. DANIEL JEFFERSON DAVIS, called as a witness by the Defendant, having been duly sworn, testified as follows: DIRECT EXAMINATION MS. LEWIS Q. Can you state your name, sir. A. Daniel Davis. Q. How old are you? A. I'm 30 years old. Q. Where do you live? A. Austin, Texas. Q. And are you from Austin originally? A. Yes, I am. Q. Where do you currently work? A. I work for the City of Austin, Watershed Protection Department. Q. What do you do? A. I'm a GIS analyst, which is a -- computer mapping essentially. Page 2011 Q. And how long have you worked in that position? A. I've been there for seven years. Q. And what is your educational background? A. I have a Bachelor of Science in Environmental Science. Q. Are you familiar with Ross Ulbricht? A. Yes, I am. Q. And how are you familiar with him? A. We went to school together, middle school and high school, so I've known Ross for 17 years, 18 years. Q. Do you see Ross in the courtroom today? A. Yes, I do. Q. Can you identify him by an article of clothing that he's wearing? A. He has a gray sweater and a blue collar. Q. Have you kept in touch with Ross over the years? A. Yes, I have. Q. And did you keep in touch with him -- in what context do you know him? Since when? A. I'm sorry? Q. And you know him since when again? A. Since middle school, high school, so the past 17 years or so. Q. And did you keep in touch with him after high school? A. Yes, I did. Page 2012 Q. And what about in college? A. Not so much when we were in college. We went to different schools. I was in Oregon but after college, yes. Q. And when did you resume your friendship after college on a regular basis? A. Probably 2010, 2011, back in Austin. Q. Do you have knowledge of what Ross' reputation is in the community? A. Yes, I do. I'd say Ross has a good reputation. Q. Let me ask in what community do you have that contact? A. I mean, we have a pretty close friend group. So Ross knows my wife and my mother and several of our other friends. Q. And does this also include the community of the people that you knew growing up with him in high school and college? A. Yeah. We have several friends from back then that are still good friends together. Q. Do you have any knowledge about his reputation for peacefulness and nonviolence? A. Yes, I do. Q. And what is his reputation? A. It's very good. I mean, he's one of the most peaceful people I know and his reputation among our friend group is the same as being a very generous, kind, peaceful person. Q. Thank you. MS. LEWIS: No further questions. Page 2013 THE COURT: Thank you. Anything from you, Mr. Turner? MR. TURNER: Briefly. CROSS-EXAMINATION MR. TURNER Q. Good afternoon. A. Good afternoon. Q. So you are friends with Mr. Ulbricht for a long time? A. I'm sorry. Q. You were friends -- you have been friends with Mr. Ulbricht for a long time? A. Yes. Yes, that's true. Q. He never told you that he created the Silk Road website? A. No, he did not. Q. He never told you he grew illegal drugs? A. No. We never discussed that. Q. Never told you he grew them and sold them on Silk Road? A. No. Q. Never told you he lived under a fake name for a while? A. No, he never told me that. Q. He never told you that he ordered nine fake IDs for himself in different states? MS. LEWIS: Objection. Improper and scope. THE COURT: Well, overruled. But you can -- why don't you rephrase the questions. Page 2014 Q. Did he ever tell you that he ordered nine fake IDs for himself? MS. LEWIS: Objection. THE COURT: Overruled. A. No. MS. LEWIS: Can I have a side bar. THE COURT: No. MR. TURNER: No further questions. THE COURT: Ms. Lewis -- MR. DRATEL: Before the next -- THE COURT: But you're all set with this witness? MS. LEWIS: Yes. No further questions. THE COURT: Sir, you may step down. Thank you. THE WITNESS: Thank you. *(Witness excused)* THE COURT: We'll get the witness next. Let's call the next witness and get the witness on the stand, but we'll have a side bar in the meantime so we can use our time efficiently. Who is the next witness? MS. LEWIS: Thomas Haney. *(Continued on next page)* Page 2015 *(At the side bar)* MS. LEWIS: Under Second Circuit case law, United States v. Orshats (ph) this line of questioning is improper of a character witness, a lay character witness, such as friends or a neighbor. That case says that guilt-assuming hypothetical questions when testifying about a defendant's reputation for a character trait or expressing an opinion about such a trait are impermissible. THE COURT: Is that the case or your notes? MS. LEWIS: It's just a note. You are welcome to see it. THE COURT: I'm looking at, in the rules, once you've opened the door to certain kinds of things, then it opens the door to specific instances of conduct. MS. LEWIS: In that regard, the United States v. Danblue, which is also a Second Circuit case, actually says that direct examination does not open the door in that regard to cross-examination that assumes the defendant's guilt with respect to the charged crime, which is what this question does. THE COURT: Double-teamed? That's okay. MR. DRATEL: You haven't disallowed it on the other side. THE COURT: That's all right. MR. DRATEL: They can't ask questions about candor as a trait when the direct exam is about peacefulness and violence. They can ask about peacefulness and violence, but they can't open it up to other traits. Page 2016 THE COURT: I think this is going to go fairly quickly, and it's probably not worth spending a lot of time on. MR. TURNER: In terms of guilt-assuming questions, starting the Silk Road website is something they've opened. MR. DRATEL: That's a different trait. That trait is not at issue. THE COURT: I hear you. Mr. Dratel's point is if they're going to ask about peacefulness, then we should limit it to peacefulness. MR. TURNER: He's not charged with being nonpeaceful. He's charged with -- THE COURT: I know, but you brought in instances of some violent conduct, so I would certainly allow that. This will be quick I assume. MR. TURNER: Yes. THE COURT: The next one is going to be similar? MS. LEWIS: Yes. THE COURT: Then the other two witnesses are going to be here in the morning? MS. LEWIS: I just got a text message from one of them that his flight was waylaid to Cincinnati and won't arrive I believe until late tonight. That's assuming he gets out. THE COURT: We're not expecting to call him right now. We're close enough to 5:00. That's all right. Page 2017 Something else? MR. HOWARD: The only it goes to impeach the witness' actual knowledge of the -- THE COURT: What I'm saying is, let's just take this relatively straightforward for the next witness and just I think we can avoid it. I don't think this is something we need to do. MR. DRATEL: Very good. *(Continued on next page)* Page 2018 *(In open court)* THOMAS HANEY, called as a witness by the Defendant, having been duly sworn, testified as follows: DIRECT EXAMINATION MS. LEWIS Q. State your name, please. A. Thomas Haney. Q. How old are you? A. Thirty-one. Q. And where do you live? A. Cape Charles, Virginia. Q. And have you always lived in Virginia? A. No. I lived out west for the last eight years in different places and I grew up in Austin, Texas. Q. And how long did you live in Austin for? A. From when I was seven until 18. I left in 2002. Q. Do you still have family and friends in Austin? A. Yes. Q. Do you go back to visit them? A. Yes. Q. About how often is that? A. Once or twice a year since 2002. Q. Where do you currently work? A. I work at the West Shelton Smoke Jumping Base in the Summers and I do clam aquaculture in the winters in Virginia. Page 2019 Q. What is your educational background? A. I went to college at Prescott College in Arizona for environmental studies and didn't finish when I went first, but I just reenrolled to finish. Q. Are you familiar with Ross Ulbricht? A. Yes. Q. How are you familiar with him? A. We went to high school together. We played on the soccer team together. And we just not to know each other over the years, more after high school really than when we were in high school. Q. And how long have you known Ross for? A. I guess 15 years since we were about 15 or 16 is when I first met him. Q. And do you see Ross in the courtroom today? A. Yes. Q. Can you identify him by an article of clothing he is wearing? A. He's got a gray sweater and a blue collar sticking out of it. Q. Have you kept in touch with him over the years? A. I've seen him often over the years. We didn't really call or email, but I don't really keep in touch with many people that way and I don't know if Ross does either, but I've seen him many times over the years and spent time with him. Page 2020 Q. In what context did you see him? A. There were a couple of times that I was with him and his parents down in Costa Rica at their home for a fairly extended period of time both times. And in and around Austin, we'd see each other at Christmas and whenever I was in town. And yeah, he'd come over to our parents' house or we'd go out swimming, playing Frisbee, various things. Q. Do you have a group of people in common that you see together when you visit him or when you visit each other? A. Yes. Generally there are a mutual group of friends that we know. Q. Where are those friends from? A. Mostly Austin, actually entirely Austin. Q. They're high school friends? A. Yeah, high school friends. Yeah, I guess high school friends, yeah. None from college. Q. In addition to that or are there other people either way over the years? A. No. I'd say it's all high school friends that we have in common basically. Q. And do you have any knowledge of Ross' reputation amongst those friends in that community? A. Yes. Q. Do you have any knowledge about his reputation for peacefulness and nonviolence? Page 2021 A. Yes. Q. And what is his reputation for peacefulness and nonviolence? A. Just that he is an extremely calm, kind, and loving person and that's something that always impresses everyone that really knows him that I've talked to him about him. MS. LEWIS: Thank you. No further questions. THE COURT: Mr. Turner, anything from you? MR. TURNER: No. THE COURT: Thank you. You may step down. *(Witness excused)* THE COURT: Ladies and gentlemen, I think it makes sense to break for the afternoon. And is there anybody else -- is tomorrow morning a better time to pick up? MR. DRATEL: I think so. THE COURT: We'll pick up tomorrow morning. I want to remind you not to talk to each other or anybody else about this case. I hope to have an update for you tomorrow that will be pretty clear about where we are but you see that we are now into the defense case. I think that I'll have some further information for you tomorrow. Joe is going to order lunch for you now and through the end of trial, so hopefully he'll vary the menus and we'll also get you folks some sort of afternoon snack if there's something in particular in terms of soda or drink that you would like -- no alcoholic beverages -- then let Joe know. We are limited in terms of what the courthouse has but we do want to make you comfortable. Page 2022 Thank you for putting up with the weather this morning and getting in here. I know it may have been a bit of a challenge. And we'll see you folks tomorrow. Goodnight. *(Jury excused)* *(Continued on next page)* Page 2023 *(In open court; jury not present)* THE COURT: Let's all be seated. I think the first order of business is to take up the applications, Mr. Dratel, that I told you we would take up at the break and then we'll go into scheduling after that. MR. DRATEL: Yes, your Honor. Pursuant to Rule 29 of the Federal Rules of Criminal Procedure, I move for -- if I can find my notes for a second -- I move for a judgment of acquittal on all seven counts. And with respect to some of the -- I want to lay out some of them in a little more detail. With respect to the forgeries count, Count Six, there's no venue and there's no evidence of Mr. Ulbricht's involvement or intent or agreement in any respect with respect to conspiracy. With respect to the hacking, the conspiratorial aspect of it, the only purchase that's in evidence is by an undercover, so that would not qualify as a conspiratorial act or at least to make a conspiracy, let's put it that way. And there's no evidence of any intent by Mr. Ulbricht with respect to the usage of these programs, which is something obviously we addressed in the pretrial motions as well. With respect to the other counts, Count Four, there's no evidence that he supervised, managed or organized five different people. There's no evidence as to identity of these people. So, that is insufficient. The government is also, and this obviously goes to a certain sense the legal argument, the government has not identified a series of violations with respect to the 848 count. Page 2024 With respect to the other counts, the other narcotics-related counts the government has not proved that Mr. Ulbricht was a member of any conspiracy and certainly not the conspiracy charged in the indictment. And with respect to the money laundering count I think it falls because the other counts fall and in addition, a lack of sufficiency of evidence with respect to Mr. Ulbricht's involvement in that as a conspirator. Thank you. THE COURT: Thank you. MR. TURNER: In terms of venue, the Second Circuit is clear that projecting a website that is perpetrating a criminal activity, you have cases involving websites that have been fraudulent in nature -- THE COURT: Would you mind speaking up a little bit. MR. TURNER: Sure. THE COURT: Thank you. MR. TURNER: In terms of venue, I think there are several bases here, but I think the fundamental basis for venue all of the counts is a projection of a website and that is a this district in furtherance of the different crimes that that website is facilitating and perpetrating. So with respect to the forgeries issue, you have a website that is advertising false identifications for sale and part of the way it does that is by projecting the website worldwide. Anywhere that website is viewed or anywhere where it's reasonably foreseeable that it would be viewed, that is a district that is an area where Mr. Ulbricht is projecting activity into, and there's very clear Second Circuit case law on that. The Rowe case, the Romi (ph) case. Page 2025 In terms of forgeries, we entered into evidence, for example, a forum post by Dread Pirate Roberts where he says I'm creating a new category for fake IDs and passports. This was on the website for a long time. So, clearly Mr. Ulbricht was involved in the decision to offer those items for sale and he was conspiring with the vendors of those items to traffic in those false identity documents. Hacking: Agent Der-Yeghiayan testified that hacking tools were persistent offerings on the site and hacking services were persistent offerings in the site. We offered evidence from the Silk Road server as it was seized from the FBI with 26 different listings in there that were there just on the day it was seized. So these are a recurrent category of items that were offered under digital goods. They were offered under services. And we offered in evidence that Mr. Ulbricht and his customer support staff, one of the things they did was to police the site. If there were items that did not belong, forget about the cyanide question, that was something they looked for to pull those items off. So those computer hacking services and tools were persistently offered items, something that was tolerated by Mr. Ulbricht. Page 2026 Every vendor on the site Mr. Ulbricht had an agreement with. They had to click I agree to your terms, I have to agree to follow your rules, and in return, Mr. Ulbricht got a cut of their proceeds. It is fundamental; the essence of a conspiracy. Count Four in terms of supervising five different people, there's lots of different people. Agent Der-Yeghiayan testified that besides him at the time that he was working you had libertas, you had inigo, you had samesamebutdifferent, you had the person he took over the account from, scout/cirrus, before he took it over. You have chats with programmers such as h7 and smed. You have other customer support staff that we have chats on the computer. You have DigitalAlchemy. You have people like Variety Jones and Cimon. You don't have to show under the law the true identities of these individuals. There just has to be sufficient evidence for the jury to conclude that they were different individuals and, of course, there would be no reason for the same individual to be contacting Mr. Ulbricht in all these different roles. There is evidence upon which the jury could reasonably conclude that these are more than five different individuals. Page 2027 In addition as we argued to your Honor before, we're not limited to arguing that it was just the employees that he was supervising. He was organizing all of the vendors on this site, and there were hundreds and hundreds of different vendors, different drug dealers. So, the limitation of five different people is not a problem. In terms of the no series of violations, this is a three-year massive drug-dealing enterprise. You have a kingpin of a traditional cartel, the cartel is involved in doing hundreds and thousands and thousands of different drug deals. That's what the statute goes after: Recurrent series of transactions, and that's what you see here. The testimony of Mr. Shaw today was based on transactional data that has thousands and thousands of different drug deals that Mr. Ulbricht abetted, that Mr. Ulbricht participated in as a broker through his site. All of those are part of the continuing series. All of the things he did in terms of the forum posts in furtherance of the site, these are all communications in furtherance of drug trafficking that are in violation of 21 USC 843. So there are many different specific violations the jury could look to in determining whether the defendant committed the continuing series. In terms of Mr. Ulbricht being a member of the conspiracy, again, he conspired with his employees. He conspired with the vendors. He agreed with other people to distribute the drugs, to aid and abet the distribution of drugs and to use communications facilities in furtherance of drug trafficking. So there's a reasonable basis for the jury to find the defendant is guilty on all the counts and therefore this motion should be denied. Page 2028 MR. DRATEL: Just two issues: One is on the venue. Rowe and Romi (ph) I think is more accurately characterized as whether or not the activities of law enforcement agents can create jurisdiction because there was no question there was conduct -- connected conduct, not just projected -- but conduct in the Southern District. And the question was whether, because of the activities of the undercovers, that constituted a jurisdictional nexus. In this case, we don't have that from any of the charges, so I think there's a distinction. If the principle is that anywhere a website is available there is venue, then venue is meaningless in the current age. And I think in a civil case you couldn't even have that level of universal jurisdictional application, so I don't see how it could apply in a criminal case. With respect to the five people, true identity is not really the issue. The issue here is there's no proof these are different people. We have seen that Agent Der-Yeghiayan was 12 people at the same time, so we don't know who was who. There is no proof sufficient beyond a reasonable doubt that these are different people. Page 2029 THE COURT: The standard for a motion under Rule 29 is whether the judge thinks that there is sufficient evidence to sustain a conviction and if the evidence meets that threshold, then the case is to go to the jury. I find that the case should go to the jury. I think that there is evidence to sustain a conviction on each of the counts. Whether the jury will decide to do so or not is ultimately up to the jury as fact finders in this matter. In terms of the venue issues, I have looked extensively at the venue issues in connection with the jury instructions. And the results of my determinations are set forth in the jury instructions that were sent around yesterday in the sense of including an instruction relating to websites. Venue, of course, is a preponderance of the evidence standard. And for certain counts, of course, there's even different and much more direct evidence in terms of venue, but certainly there's enough for a finding of venue here. So the motion is denied. The case will go to the jury at the appropriate time. Let's talk about what's going to happen next to get us to the point where we're going to be having charging and closings. So there are two witnesses, Ms. Lewis, who you expect to be able to land tonight with the weather conditions? MS. LEWIS: Yes. There are two witnesses that I do expect to be able to land tonight. In fact, one of them I actually know has already landed. One is here and the other one I will assume will be able to arrive tonight, but I'll certainly let the Court know. Page 2030 THE COURT: There is an ice condition apparently, but you'll figure it out and hopefully they'll be able to make it. MS. LEWIS: We'll take it as it comes. THE COURT: Get me an ETA if they're on some early morning flight. MR. DRATEL: Then we have the investigator who is probably maybe a half hour on direct. THE COURT: Are there three witnesses tomorrow? MR. DRATEL: Yes. THE COURT: You folks have exchanged whatever there is in terms of 3500 materials and I've got Alden Schiller, Chris Kincade and who is the other one? MR. DRATEL: Bridget Prince is the investigator, your Honor. THE COURT: She'll be available tomorrow? MR. DRATEL: Yes. Either way, even if the other witnesses don't show up, she'll be available. MR. TURNER: As to that witness, we received an exhibit or set of exhibits that it looks like it's nothing more than sort of what you'd present to the jury at closing. It's just a summary of -- or a selection of different facts or assertions that different witnesses have made. And we don't think it's proper under 1006. Page 2031 We don't think it's proper for an investigator to be called just to read in or summarize transcripts from the case if that's what's going to occur. MS. LEWIS: Your Honor, the timeline that we have here is merely just a demonstrative to aid in her testimony so it's not confusing to the jury when she goes into various aspects of the evidence which are all in discovery. There's nothing new or unusual or surprising. It's merely admitted exhibits and just the same way the government would put it on the screen, we merely just have it in a chart to keep it organized for her and the jury. THE COURT: By tomorrow morning, you should confer to figure out if there's some nature of the testimony that is going to be a problem. But if she's done something that's otherwise appropriate and she's going to use a timeline, that is, you know -- MR. TURNER: It sounds like the testimony is going to be about other testimony. THE COURT: Let's put it this way: I assume everybody knows that the testimony can't be simply a factual narrative of the case or somebody getting up and summarizing what has occurred and then drawing an inference from that, right, that would usurp the province of the jury. But if it's not that and it happens to be a timeline of different dates and she's done an investigation and is able to testify firsthand as to certain things and those dates are useful, then that would be a different use. Page 2032 MR. TURNER: It really doesn't appear that way, your Honor, it's things like -- THE COURT: Let's take it as it comes, then. I don't want to have a situation tomorrow though -- here is the tension: I don't want to have a situation tomorrow where we run into 8 million side bars and objectionable things and all of that. The witnesses -- we'll be clear. The witness can't speculate. She can however talk about things that she knows from firsthand knowledge. She's being offered as a percipient witness. And if there is something, a timeline-type document which aids that percipient testimony, she can use it, but she can't summarize in some sort of summation sense. But if you folks think you should give me a heads-up on something -- MR. DRATEL: Here's what we'll do. My suggestion, hearing the Court's instruction on that and direction, we'll go back and look at the timeline and make sure that whatever we put in meets the standards that the Court has laid out. We will send that to the government as early as we can this evening so that if there's an issue, then we can have it to the Court in whatever form it is -- I don't mean whatever form it is. It's in a form, but I mean whatever part that is in contention by tonight. That would be the hope to do that. Page 2033 The other thing that I have that I know I have with me but I can't find the page right now among my papers is, I have about a three-line character testimony jury charge. It's just basic. THE COURT: Get it to me in the morning. MR. DRATEL: I'll get it to you tonight. THE COURT: Now, on this witness, it sounds like this is the kind of thing where I ought to receive a copy of whatever the exhibits are, Mr. Dratel, that you end up giving to the government so that I can look at them in advance and be prepared for any additional positions that the parties may take in this regard. I mean, right now, I don't want to necessarily, since she's being offered as a fact witness, delve too deeply into all of her testimony, but I do want to make sure that she's not going to be sort of just a narrative. MR. DRATEL: No. The timeline is only a portion of the testimony. There are other portions that are not related to the timeline. MR. TURNER: May I have a preview. THE COURT: Why don't you show me the document. Let me see. It may or may not be relevant if the document is going to be changed. Page 2034 MR. TURNER: Sure. Just this one as an example. THE COURT: What you folks can do for this, you can put a few words in and not all of the citations, which she might find helpful, I don't know, in terms of tying herself down to a particular time frame, but if she thinks it's important that at a particular time in February of 2013 he had a communication with Bates, a communication with Bates could be the relevant event. I don't know where this testimony is going, Mr. Turner, but I'm hesitant to do anything until I find out more about it. MS. LEWIS: To be clear, I'm assuming we're moving the citation to the government exhibits into the testimony that relates to the information. THE COURT: Let's just say what she cannot do, okay. We'll be clear so that you folks understand and I am not trying to be exclusive or exhaustive as to what she cannot do because I don't know what she's going to do, so I can't focus this but you can never in a jury trial have a witness who gets on the stand and says I've reviewed all of the documents in the case, I've spent hours on -- or whatever, 20 minutes, whatever the length of time is -- on the evidence. Here is my findings. My findings are the following: I've done an analysis and my findings demonstrate that as of these four days, you know, X couldn't possibly be the case because that's precisely what the jury would do, which is take the evidence and draw inferences from the evidence. Page 2035 So she can't be providing a factual narrative. She needs to have -- let's put it differently. She needs to have done something or have -- she needs to either come to the table with unique evidence that's firsthand like, you know, I, in 2013, ran into Mr. Ulbricht outside of his house and he introduced himself to me as Ross, all right, which wouldn't be in for the truth, it would be in for the fact that it was said. That kind of firsthand knowledge is true, percipient knowledge, you know, what she saw or heard, touched as a percipient witness, not what she read and synthesizes as a convenient narrator of facts, right. This comes up a lot when people want to put on a witness who then sort of gives an overview of their version of the story which you can't use one overview witness for. MR. TURNER: I think the key word is "firsthand." THE COURT: She's being offered as a percipient witness. I assume she has some firsthand knowledge. MR. TURNER: If your Honor looks at the exhibit -- THE COURT: This may not be everything she's going to say. Is she going to have firsthand knowledge? MS. LEWIS: She conducted an investigation. MR. DRATEL: Some stuff. Page 2036 MR. TURNER: Some stuff? For example, the document before your Honor says Special Agent Der-Yeghiayan says who is on first. THE COURT: Let's forget the document and more generally the issue is, does this witness have firsthand knowledge about which she is competent under the rules to testify? If the answer is yes and it's probative of an issue, a material issue in dispute, she can testify. The exhibits she uses may have evidentiary issues, but she can testify to her percipient knowledge. MR. TURNER: My concern is we have no 3500, no meaningful 3500 for this witness, no exhibits except for this thing. THE COURT: Right. MR. TURNER: So there's absolutely no indication that she has firsthand knowledge of the facts. THE COURT: I'll get a proffer from you folks tomorrow morning. I'm not going to make you do it tonight. She's a fact witness, not an expert witness. So the disclosure requirements are entirely different. So the fact that she doesn't have 3500 material is not particularly remarkable for many fact witnesses who are talked to extensively by law enforcement necessarily. Mr. Dratel and Ms. Lewis, you folks as trial lawyers know what to do. As you know, I will hold you to the rules of evidence so don't put us all in an awkward position where you're trying to put somebody on who is going to be a narrative speaker, okay? Page 2037 *(Continued on next page)* Page 2038 MR. DRATEL: That's why I propose let us go back, look at the document, try to make sure that we are not including things in their testimony obviously that the Court has indicated it would preclude. But also I wanted, in terms of -- the firsthand knowledge part is really a little bit of a red herring on the part of the government's position because none of their witnesses have firsthand knowledge. They put in something and then they read it. So, it is not firsthand knowledge and the government, historically -- not here, today, not in this trial -- to a certain extent perhaps, but not really. THE COURT: Well, let's talk about this trial. MR. DRATEL: What I mean by that, and the Second Circuit has permitted it, which is the concept of a summary witness. We would not go beyond what is permitted on that and we will --- THE COURT: That sounds like, okay, so I am getting -- I think of that fellow sniff-sniff and I wonder was it sniffing packets or sniffing packets and other things I know not, but it has stuck with me. So, I am sniffing here that there may be a bit of a summary issue which might bleed into narrative. MR. DRATEL: No question. THE COURT: Then let's head this off at the pass and find out, send me the case cite that you think gives me the parameters you are staying within. Page 2039 MR. DRATEL: Yes. THE COURT: And why don't you, Mr. Turner, give me your case cites on before, number one, whether this kind of summary testimony is allowed, to what extent and where you think it runs afoul of things. I will look at that all before I walk in, we will start at 9:00, that will be our first order of business, and if you folks have gone beyond what the rules allow -- and I don't have in my mind apart from what I have said whether or not there is a particular version that might be allowed, I don't know of one but I hear your point, Mr. Dratel, then I will, in terms of summary, then I will make whatever rulings I need to make. MR. DRATEL: Okay. That's fine. THE COURT: For those three folks they are going to go one, two, three. MR. DRATEL: Yes. THE COURT: Except for the Cincinnati person. MR. DRATEL: Depending, obviously, when they arrive but, yes, the intention would be that. THE COURT: So, I am going to assume that Ms. Prince has done some sort of investigation after the fact, sort of a relatively contemporaneous investigation where she has gone out and she has either looked at things and/or put things together and wants to come in and testify either as to what she has looked at or as to what she has put together. Page 2040 Now, you folks will give me whatever I need in the sense of evaluating that kind of witness, generally, in terms of substance and type, okay? Now, Mr. Ulbricht, is he going to -- has he made a decision as to whether he is going to testify? *(Defendant and counsel conferring)* THE DEFENDANT: I'm not going to testify, your Honor. THE COURT: All right. Now, if you change your mind between now and the end of the case, let Mr. Dratel know and he can make an appropriate application at that time. All right? I do understand that I am asking you now before these other witnesses have testified and if Ms. Prince's testimony gets constrained in some way that you are not expecting then you should let Mr. Dratel know and renew the application, make an application to be able to testify, and I am very unlikely to preclude you, right? What I want to know is I want to know for purposes of figuring out how the trial is going to proceed. But, if you end up with a burning desire to testify or just any desire to testify, you will be allowed to do so. All right? THE DEFENDANT: Okay. THE COURT: I had one more thing on the jury instructions. On page 47, if you folks have it, if you don't -- this is not extensive, I think you can probably just hear it. The word "adage, actions speak louder than words is applicable here," I think "adage" is not as well known as it used to be and I would use the word "phrase" in place of the word "adage." Page 2041 Any opposition? MR. DRATEL: No, your Honor. MR. TURNER: No. I think that is a good idea. THE COURT: Then, in the concluding remarks on page 91 where we are talking about what is being sent and not sent back into the jury room, I think it is useful to strike, "and any narcotics seized" because we haven't presented or handed around, I don't think narcotics seized and put, "for instance, the actual computer hard drives," which we are not intending on sending back, as an example. Any objection? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: The other one, which based upon my more recent review of all these CCE cases -- and I think I may have read every CCE case in this circuit at any level, and others -- is to change the last sentence at page 62 relating to continuing series of violations to the following: However, you must unanimously agree on which, if any, three or more violations committed by the defendant constitute a continuing series of narcotics violations in order to find the defendant guilty on Count Four. They have to agree to unanimously not only that there were three but, as between themselves, they must agree unanimously on which three. Page 2042 MR. TURNER: That's fine, your Honor. MR. DRATEL: Yes, Judge. THE COURT: Those changes will be made and you will be given a copy that will say "as delivered" which is my intent to deliver it in that form. In terms of the use of time tomorrow, we are now at the point where let me ask you, Mr. Dratel, how long do you expect these witnesses to go? Or Ms. Lewis? MR. DRATEL: I think that given the nature of the way, character of the witnesses that went today, I think we are talking about less than an hour of direct. THE COURT: For all three? MR. DRATEL: Yes. THE COURT: Combined? MR. DRATEL: Yes. THE COURT: So, why don't we, if that is the case, is the government planning any rebuttal? MR. TURNER: No, your Honor. THE COURT: Then let's plan on closing tomorrow afternoon. MR. TURNER: Yes. THE COURT: All right? MR. DRATEL: Yes, your Honor. Page 2043 THE COURT: So, we will plan on closing tomorrow afternoon. I would ask that if you folks have any demonstratives that you even have any view -- I couldn't figure out how to put the word sniff in there -- if you have any view at all that there is any kind of issue as between you folks on any demonstratives, please try to talk about it in advance and raise it with me so we don't have any objections during the closings, if at all possible. I would really like to avoid that. If you perceive, as you think about your closing and what the other side is likely to do tonight, issues that might come up where you know you are going to be upset because they've been issues in the trial and believe would be inappropriate, we should flag those before people start so we know what the rules are so that people can try to avoid objections, if possible. Obviously you have to put an objection if you are going to preserve something so they may well occur. I am not suggesting you shouldn't, you have to preserve your record. You understand. MR. TURNER: Just for clarity, your Honor, regardless of how long the direct goes we are going to plan to do the summations at 2:00 tomorrow? THE COURT: I think that if the direct does finish by let's just say -- direct and cross finish by lunchtime, we will close starting at 2:00. Page 2044 MR. TURNER: And if it finishes earlier than that? THE COURT: If it finishes earlier why don't we decide we will take until 2:00. Frankly, we have been starting every day at 10:00, so say we go to 11:00, 11:30, take the hour and 45 minutes rather than having somebody start and hang over lunch. We will just do them in a row. Now, I say that but I'm not anticipating that the total closings are going to be more than three hours with a break. Give me a sense. Because if they are, then we would start before lunch. MR. DRATEL: Right. I would like to know what the government projects as its opening summation. THE COURT: Frankly, I'm not going to cut you off. I'm not suggesting any particular time is not okay. I just want to have a sense. MR. TURNER: We don't plan on going beyond 90 minutes. THE COURT: So an hour and a half. We should start, then, earlier. We may want to start earlier, just in case. MR. TURNER: I am saying that that is certainly our limit. THE COURT: So that would be 2:00 to 3:30, then if we took a 15-minute break, and Mr. Dratel would go how long? Any idea? It would depend on what they say. MR. DRATEL: I really don't like going beyond an hour 15. This is a complicated case, there may be some reading. At the outside it would be an hour and a half but I don't like going more than an hour, but this case may require it because of the density. I would like to come in at an hour and 15. That's my aspirational point. Page 2045 THE COURT: An hour 15 would put us right at 5:00 and we have rebuttal, so let's start them when we need to start tomorrow because I would rather not have the rebuttal in the morning, if we can avoid it. MR. DRATEL: That, to me, would be -- THE COURT: You don't want that? MR. DRATEL: That's the worst case scenario. THE COURT: If we are going to run into issues and it is going to be a 10-minute or 15-minute issue, we will see if the jury tomorrow, for that purpose, can say so that we are done as opposed to starting the next morning with the rebuttal just before the instructions. MR. DRATEL: Okay. THE COURT: So this is sort of, I think, the parameter. The summary of all of this is given the length, I think we have to start as soon as we are done. We will take a break and then we will start. MR. TURNER: I guess if -- I mean, again, if we end by let's say 11:30, perhaps we can start at 1:30 with summations, or 1:00. Page 2046 THE COURT: We might be able to do that. Why don't we do this: Why don't we see where we are tomorrow. You folks will know much better this evening having prepared yourselves how you are going to go, and we will pick something that is going to work. Okay? MR. TURNER: Thank you, your Honor. MR. DRATEL: Thank you, your Honor. THE COURT: One other thing. You folks had the stipulation? MR. DRATEL: Yes. THE COURT: The amigo stipulation. MR. DRATEL: The government has provided me a proposed revision. What I was going to do is give them my emendations right after court by sending it to them and then we will negotiate. If we have an issue for the Court, you will get it tonight. It won't be complicated. THE COURT: Thank you. MR. DRATEL: It will be a phrase here and a phrase there. THE COURT: Thank you. And then I just wanted to say, I am taking my last post-it off of my phone that there have been several rulings that were subject to connection where the connection has been made. We talked about one earlier that was related to the server but there were a couple of others that, as they went through the connections were made so all the subject-to-connection rulings are now complete. Page 2047 We will pick up tomorrow morning at 9:00. Thank you. Send me, please, whatever we need on this Ms. Prince issue. *(Adjourned to 9:00 a.m., February 3, 2015.)* Page 2048 INDEX OF EXAMINATION Examination of: Page BRIAN SHAW Direct By Mr. Howard . . . . . . . . . . . . .1876 Cross By Mr. Dratel . . . . . . . . . . . . .1970 Redirect By Mr. Howard . . . . . . . . . . . .1996 Recross By Mr. Dratel . . . . . . . . . . . .1999 KAREN STEIB ARNOLD Direct By Ms. Lewis . . . . . . . . . . . . .2001 DANIEL JEFFERSON DAVIS Direct By Ms. Lewis . . . . . . . . . . . . .2010 Cross By Mr. Turner . . . . . . . . . . . . .2013 THOMAS HANEY Direct By Ms. Lewis . . . . . . . . . . . . .2018 GOVERNMENT EXHIBITS Exhibit No. Received 805 . . . . . . . . . . . . . . . . . . . .1909 920B . . . . . . . . . . . . . . . . . . .1910 961 . . . . . . . . . . . . . . . . . . . .1912 950 . . . . . . . . . . . . . . . . . . . .1917 940 . . . . . . . . . . . . . . . . . . . .1922 940A . . . . . . . . . . . . . . . . . . .1932 940B . . . . . . . . . . . . . . . . . . .1934 940C . . . . . . . . . . . . . . . . . . .1935 940E . . . . . . . . . . . . . . . . . . .1937 Page 2049 940F . . . . . . . . . . . . . . . . . . .1941 940G . . . . . . . . . . . . . . . . . . .1942 940D . . . . . . . . . . . . . . . . . . .1943 Page 2050 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. February 3, 2015 9:10 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Page 2051 *(In open court; jury not present)* THE DEPUTY CLERK: The continued matter on trial, the United States of America v. Ross William Ulbricht, 14 Cr. 68. Counsel, state your names for the record. MR. TURNER: Good morning. Serrin Turner for the government. With me at counsel table is AUSA Tim Howard and paralegal Molly Rosen. MR. DRATEL: Good morning, your Honor. Joshua Dratel for Mr. Ulbricht who is standing besides me, also Lindsey Lewis from my office and also Joshua Horowitz. THE COURT: Good morning to all of you. We have several housekeeping matters to go over this morning. Let me make sure that the agenda I have corresponds with the matters which you folks agree we should raise. I would like to check in and find out what the status is of the testimony of Bridget Prince. We left that as an open issue last night. Defense was going to think about it some more. I didn't receive any submissions on that, so I just wanted to find out where that stands. MR. DRATEL: Your Honor, we're not going to use the timeline during her testimony. We informed the government of that last night. THE COURT: All right. Then for inigo, we need to go over that and then we need to go over the defense-requested jury instructions, so those two final matters, since I think we have then taken care of the one, are where we are. Page 2052 Are there things which you folks would like to raise? MR. TURNER: No, your Honor. I responded to the inigo issue. THE COURT: Mr. Dratel, anything from your perspective you would like to raise in addition to those items? MR. DRATEL: No. THE COURT: In terms of inigo, I have received the letter from defense counsel. Let me just preview that I think it breaks into analytically into two very separate inquiries though they're related: One is the hearsay issue relating to reading into the record the statement that inigo, a cooperating witness, gave to the government and as recounted in the letter of December 29. So there's the hearsay issue and then there's a separate request for a missing witness charge in the event that the statement is otherwise disallowed. So I think analytically those are related but stand separately. Mr. Turner, I didn't receive a written response from the government. I knows you folks are busy, but why don't you tell me your views. MR. TURNER: Sure. As the government sees it, this is sort of another example of the defense assuming they can get in their case through our witnesses. So the defense has known for approximately two weeks that we were not going to call Mr. Jones. They made no effort to contact or subpoena Mr. Jones until the eve of the defense case. They didn't ask us to immunize him. They made no effort to draft any stipulation even though we told them that we were open to a stipulation until the eve of their case. And now the defense is trying to use the lack of time, which is an issue of their own making, to try to force the government to agree to whatever stipulation language the defense wants, even though it does not include language that is favorable to the government. Page 2053 Defense counsel had no right to assume that he'd be able to rely on a stipulation to get in facts they want from Mr. Jones. You have to have a witness lined up in case a stipulation falls through. That's why for Alex miller with Stack Overflow, we wanted to get that in through stipulation. We weren't able to work that out. We had Alex Miller ready to testify. They were obliged to do the same thing with Mr. Jones. Defense counsel is trying to make it out as we engaged in some sort of tactical maneuver by not calling Mr. Jones. We didn't call Mr. Jones because we felt like we no longer needed it for the case. That was our right. That was our call. And the defense was not entitled to rely on our calling a witness during our case and them getting in some fact from Mr. Jones through his testimony on our case. The confrontation issue that they have tried to raise is ludicrous. This is a stipulation we're talking about. So a stipulation can present any statements that the witness would be able to testify to. And it would be perfectly appropriate if he were to testify about this conversation he had to explain his understanding of the conversation, to explain his state of mind during the conversation. It happens all the time when you have witnesses testifying about conversations they're having with other people and what's going on, the context of those conversations. That's all we were trying to put in this stipulation and the defense didn't want that in. We think it's necessary to be balanced. Page 2054 So if they're not amenable to a stipulation, then it's up to them to call the witness. You can't just get in core hearsay because the government won't stipulate to putting information in a stipulation. You can't just take a letter that the government sends, which is not the declarant's statement, that is the government's disclosure, that is the government's characterization, that's not been adopted by the declarant, so you can't just ignore the hearsay rules and just submit a letter. THE COURT: Let's go to the hearsay rules. As I said, I think this breaks analytically into two pieces, each of which have their own independent evidentiary standards. One is 8043, there's a typo in defense letter but we understood from yesterday what he was referring to, so it's not 803. It's 8043 which is a statement against penal interest, which is an easy juxtaposition to make, that statement against penal interest, as the Court understands it, requires two parts: It requires subpart A and subpart B. Subpart A requires a statement against penal interest, which typically is a statement made under circumstances which indicate that no person would have made it unless they were telling the truth because it was so contrary to their interest under those circumstances to do so. And it also requires B, which is big letter B, B also requires some independent corroborating evidence as to the trustworthiness and/or reliability. Page 2055 Why don't you address whether or not, putting aside the circumstances over not reaching the stipulation, whether or not the hearsay statement otherwise meets the standard under 8043. MR. TURNER: First of all, it's not his statement. It's not like an email that he sent. It's not an affidavit he signed. THE COURT: No. It's your recitation of his statement. MR. TURNER: That is hearsay. THE COURT: I understand we're dealing with hearsay. I'm saying tell me why it doesn't fit within the hearsay exception. MR. TURNER: The point is, it's not just the declarant's statement; it's somebody else's statement about what the declarant said, so it's double hearsay. Page 2056 THE COURT: Lovely. MR. TURNER: And that's part of the problem. That's a characterization of what this declarant said. It's not the statement itself. THE COURT: So we go to both pieces of it, okay. MR. TURNER: Right. THE COURT: Mr. Turner, I'm trying to cut through because let me be perfectly blunt: I don't think this meets the hearsay standard. I don't think under 8043 this is a statement against penal interest. The reason for that is because the witness at the time was already under a cooperation agreement. Under a cooperation agreement, under Second Circuit law, there is clear law that says that you're no longer under criminal penalty for making a particular statement; (B), based upon the representations of the government, there's no corroborating evidence for reliability because there's no chat that ever indicates apparently that this ever happened. There's no indication in the record so far that there is an absence of chats and, therefore, the absence here, there's just nothing to corroborate this as a reliable statement. So I don't think it meets 8043. Do you disagree with my analysis? MR. TURNER: We absolutely disagree, and we just also believe there are further reasons that it doesn't even come under 8043 to start with because it's not this witness' statement. It's the government's statement about what he said. Page 2057 THE COURT: Why don't you go to the missing witness charge, which I think is analytically separate. MR. TURNER: Again, this is an issue of the defendant's own making. If they wanted to call this witness, that's something they should have realized right after they learned we weren't going to call him. If they thought he was that important to their case, they should have asked can we immunize him, can we call him. That could have been worked out two weeks ago. THE COURT: Would you have immunized him or is this sort of an argument that you can make because they didn't ask but you would not in fact have immunized him? MR. TURNER: No. I'm not representing that at all. I think we would have immunized him. He's under our control and we would not have resisted allowing him to testify. The point is, even a stipulation was not proposed until the eve of the defense case when government counsel was busy preparing for closing, preparing for possible cross of the defendant, preparing for the witnesses that were going to be part of the defense case. This was sprung on the government on the last minute. It's an issue of the defense's own making and to say that, oh, now there's an unavailable witness because they don't have time now to scramble and subpoena this witness and work out the immunity issues, it's their fault. Page 2058 THE COURT: Let me ask you, I thought that Mr. Dratel had information that indicated this witness would take the Fifth if called. MR. TURNER: Apparently he called his counsel, he didn't call me, he called -- this is just based on what Mr. Dratel said in court, I didn't even talk to counsel for Mr. Jones since then. But I understand that he called counsel for Mr. Jones and counsel said, well, he'd take the Fifth. But defense counsel can still contact the government and see if we would immunize the witness so that he couldn't claim the Fifth Amendment. We never had that discussion. We were never consulted about that. MR. DRATEL: It's not the government's position to immunize a witness. It's the Court's authority under the statute. The government has never immunized a defense witness, never. THE COURT: They make an application, which is then so ordered by the Court but typically it's within the prosecutorial discretion as to whether to suggest immunization, so they are related. MR. DRATEL: That's the most specious argument, the most disingenuous argument I have heard. This is completely outrageous. By the way, last weekend we were told that Mr. Turner would not agree to anything and would not discuss anything with us, and that's what we were told last week. I'm just -- I want to call Mr. Turner as a witness. We'll eliminate the double hearsay problem. He wrote the letter and signed it. He's disavowing it. This is so disingenuous, so outrageous. A prosecutor has obligations that transcend wanting to win the case at all costs, and this is what we have here. Page 2059 THE COURT: Let's take these two issues analytically separately; one is the hearsay issue whether we think of it as single hearsay or double hearsay, 8043, whether or not those standards are met. MR. DRATEL: Yes. THE COURT: If they're not met, then we are into the world of the missing witness charge. If they are met, then there is some other issues as to whether we can read it in. MR. DRATEL: Two things: One is, it is a statement against penal interest. He is not sentenced. All of these things can be raised at sentencing. That's why he has a Fifth Amendment privilege is because the statement against penal -- even if he's cooperating, and the truthfulness and the trustworthiness aspect of it, there's a chat that substantiates the first part of it, so that indicates the trustworthiness. They went and found the chat. They didn't have the chat beforehand. They went and found the chat which substantiated the first part, and he is under an obligation to tell the truth or else he loses his cooperation agreement. Every jury is told that and argued by the government why would -- they're going to argue it here with respect to Mr. Duch. They're going to argue it here with respect to Mr. Bates. They're going to say this guy has an agreement. He would never lie to you. What more trust -- they can't have it both ways. Page 2060 They continually want it both ways. This is a preposterous argument. I want a page and-a-half stipulation that they don't have time to read. They knew exactly what was in the -- my stipulation is completely what's in the letter. And what I objected to in their stipulation is what they're not entitled to. They could have called the witness if they wanted balance. THE COURT: Hold on. I want us to pull back and take a deep breath and focus on -- MR. DRATEL: It's just an outrage. That's all. It's an outrage. THE COURT: I hear what you're saying. I do want us to focus on the evidentiary rules because -- MR. DRATEL: Part of it is fairness. Part of it is Chambers v. Mississippi. Part of it is due process. Part of it is they can't do a bait and switch. I called the lawyer. He's on trial, by the way. I called him on the weekend and he told me he's taking the Fifth. Page 2061 They never offered -- this immunity is preposterous. You should ask them right now. He's said no, we're not saying we're going to immunize him. Of course not, because they're not going to. This is a bogus argument, bogus, bogus, bogus, and it's coming in a way that is completely disingenuous. He should be a witness, and it's a problem 100 percent of his making because they had him on the witness list. In the middle of trial, they say he's not testifying. He's the best witness; Mr. Turner wrote the letter. He heard the statement. He was there. THE COURT: You folks are sufficiently emotional about it. I have the government's statement. I have your letter. I have read your letter. I have also looked at case law. Let me be sure that I understand the chats which do exist versus the chats which don't exist. As I understand it, the chat which does exist is the October 16, 2012 chat which indicates the "recommend a good book Rothbard" answer, that that chat has been found. MR. DRATEL: Correct. THE COURT: I understand that paragraph C, which is really the heart of what we're discussing here, the chat as to whether the key identifying question was asked, that chat has not been found. MR. DRATEL: Because it was a Pidgin chat, which are not saved. It's different. It's a different type of chat. Page 2062 THE COURT: There are some. MR. DRATEL: Well, not the Pidgin chats, no. THE COURT: Here, let me just tell you my ruling on the 804(3) issue. On the 804(3) issue, putting aside the double level of hearsay, just assuming that this is a faithful representation of what the witness said, it's an out-of-court statement; without a doubt it's being offered for the truth. It has to meet both provisions of 804(3). I do not believe that it was against the declarant's penal interest as the case law interprets it because he was under a cooperation agreement at the time. Moreover, the chat itself independently and in itself doesn't carry any particular penal impact; in other words, it's not the equivalent of a statement saying I sold the drugs or the equivalent of saying I did X, Y or Z. It's simply whether or not a particular communication occurred. So it does not meet some of the circumstances that are anticipated under (A). Under subpart (B), it also needs to be -- and there's an "and" between those subparts -- corroborated by circumstantial evidence clearly indicating its trustworthiness. Its trustworthiness is not whether or not it was said to Mr. Turner. Its trustworthiness is whether or not it ever occurred. There's nothing that I'm aware of that indicates the trustworthiness as to whether or not it ever occurred. Therefore, it is not a hearsay statement which can come in under 8043. Page 2063 Under a missing witness charge, I've received the government's now oral response and I've also looked at the defendant's papers. Important in this regard are several Second Circuit cases, which the Court pulled this morning. One is the Myerson case, 18 F.3d 153 at pin cite 159; the other is the Burgess v. U.S. case, which is a DC circuit case -- the Myerson case is a Second Circuit case -- the Burgess case is a DC circuit case which is quoted at length in the Myerson case favorably. That's at 440 F.2d 226. And then there are a series of other cases. There's the U.S. v. Torres case, Second Circuit, 845 F.2d 1165, pin cite 1169 to 70. In the Myerson case where there's a question about a missing witness, the Court is to look at a series of things: One the relation of the parties, not only physical availability, and I think that there are some questions as to whether or not there was in fact true physical availability which would include the immunity issues and everything else, but the Court does note the special relationship between the parties by virtue of the cooperation agreement and that, therefore, there is some further ability by the government to control this witness. Whether or not that the defense did all that it could have I think is open to question but, frankly, I'm more persuaded that the government does have control over this witness. That does not end the analysis. That just clears us to the point where we're able to ask the substantive question. The substantive question is whether or not -- and by the way, immunity is only given under extraordinary circumstances and I don't think that immunity here would be extraordinary circumstances. Page 2064 But putting that aside, the question really is, and I'm quoting from the Second Circuit, "When the court is asked to give the instruction, then a judgment is to be reached as to whether, from all the circumstances, an inference of unfavorable testimony from an absent witness is a natural and reasonable one." From the Burgess case, I'm going to recite a longer paragraph because it gives really the basis for what all of the circuit courts do in this regard and it's the Burgess case is widely cited for setting this standard. "When the court is asked to give the instruction, then a judgment is to be reached as to whether, from all the circumstances, an inference of unfavorable testimony from an absent witness is a natural and reasonable one. In reaching a decision, the court will have in mind that it is not ruling upon an offer of evidence. The missing witness instruction is not evidence, but is concerned with the absence of evidence. While the context in which the question arises may clothe the missing witness with significance, there is the danger that the instruction permitting an adverse inference may add a fictitious weight to one side or another of the case. When thus an instruction is sought, which, in a sense, creates evidence from the absence of evidence, the court is entitled to reserve to itself the right to reach a judgment as wisely as can be done in all the circumstances." Page 2065 It is the Court's view having looked at the proffered language, and assuming that the witness, if called, would testify to that language, is that this is not reasonably exculpatory when all things are considered. This witness says he asked a first question. There's no indication that it was not answered -- I guess the only implication is it was not answered. There's no implication that it was answered wrongly. There's no implication as to whether or not multiple things were going on at the same time. Eleven months had passed. A second question was then asked to reveal identity, just as Google does to reveal identity of people all the time where you get three or four different questions to figure out what your first dog's name was, that second question was answered correctly; and therefore, the only reasonable inference to be drawn from this is that the DPR identification was completed. Any other inference would be, in this Court's view, an unreasonable inference, so the inigo issue is resolved. There will be no missing witness instruction on that issue. Page 2066 MR. DRATEL: Then I'm signing the stipulation that the government proposed. THE COURT: Go ahead. Do you want to agree to the stipulation? MR. DRATEL: He already did. He proposed it to me. MR. TURNER: Let me just consult, your Honor, over the break. THE COURT: That's fine with me. If you stipulate to facts, that takes it out of the Court's hands, then I have no reason to make an independent evidentiary ruling. Now, on the jury instructions, we will accept the defense jury instruction on the character evidence with the addition of two sentences from the Sands instruction. Sands for character evidence also includes -- I don't have the exact language right here, but it's essentially, here it is, the testimony is not to be taken by you as the witness' opinion as to whether the defendant is guilty or not guilty, that question is for you alone to determine. So it will say an independent -- there will be an independent instruction on character: You have reputation evidence about the defendant's character trait for peacefulness and nonviolence. This testimony is not to be taken by you as the witness' opinion as to whether the defendant is guilty or not guilty. That question is for you alone to determine. You should consider character evidence together with and in the same way as all other evidence in the case. So that will be included. Page 2067 MR. DRATEL: I object to that sentence being added. Sand also has that a character testimony alone can provide a reasonable doubt and I left that out because generally most of the circuits don't have that and they don't have the other sentence. What I took is from the Seventh Circuit. I believe it's the same as the Ninth Circuit. It's a very simple instruction and I object to that additional sentence. THE COURT: Your objection is noted. As to supplemental instructions number two, three and four as well as five, those will not be included for the following reasons: Number two is an incorrect statement of the law. Conduct outside of a district when combined with sufficient jurisdictional conduct within a district is fine. As to three, it's confusing and misleading and, in fact, the undercover purchases becomes argumentive because they're not by themselves. These are combined with a whole variety of other evidence, so that's not an issue. But in any event, by themselves, they would nonetheless be potentially evidence of a variety of things. The Homeland Security seizures could be, for instance, evidence of sales over the Internet. They could be evidence of sales of a narcotics conspiracy or substantive narcotics violations. The venue issue the Court has already discussed at length. Page 2068 In terms of fake identification documents, that's just an incorrect statement of the law. In terms of supplemental defense instruction number five, this is not applicable under the circumstances here. This is not about a law enforcement confession. There are independent indicia of reliability for these statements indeed because they were stated in chats where this individual believed that the communications were quite secure and anonymous; but in any event, the cases cited are inapplicable to this statement. So that's the Court's ruling on those instructions. Are there any other applications we should take up before we bring the jury out? MR. TURNER: Not from the government. MR. DRATEL: Well, I want to know about the stipulation before we start the case. MR. TURNER: I'll need to confer, your Honor. THE COURT: You folks do that outside of the presence of the Court. We're waiting, I think, for everybody else to be gathered for the jurors. We had most of them but not all. We have three witnesses. Who is going to be the first witness? MR. DRATEL: We only have two witnesses. THE COURT: Who is the one who is not going to be testifying? Page 2069 MR. DRATEL: Schiller. THE COURT: Schiller will not be here? MR. DRATEL: Correct. THE COURT: So we'll have Kincade and Prince. And Prince is going to be talking about an investigation which she herself conducted and has firsthand knowledge. MR. DRATEL: Put in some documents mostly. She'll be putting in documents. THE COURT: Let's take it step by step. I assume she's got some independent foundation and basis. She can't be a generalized custodian of records but we'll take it -- MR. DRATEL: She reviewed certain discovery that they provided. It's clearly authentic because it's provided by the government. And you wouldn't let me get it in through the guys who authenticated the actual material, so I'm putting it through my witness. Like you said, put on a witness. So I'm putting on witness who has reviewed the material provided by the government. I'm putting in two documents through her that were government exhibits back in December. These are two documents that were government exhibits, Government Exhibit 242 and Government Exhibit 252. They were government exhibits back in December, and I'm putting them in. THE COURT: What's her basis for firsthand knowledge as to those documents? Page 2070 MR. DRATEL: She has reviewed the image of the laptop that the government provided us. The government is going to back off that then, fine; if they're going to make that argument, that's another argument that is really -- THE COURT: Mr. Dratel, I simply asked you for just what she had looked at. You've answered that. Exhibit 242, I thought this came in. MR. DRATEL: Which? THE COURT: 242. MR. HOWARD: To be clear, some of the exhibits were renumbered, so I think he's referring to what was originally numbered as 242. THE COURT: What is the current number? MR. DRATEL: There is no current number because the government pulled it. It's our exhibit I believe it's D. I have the original government exhibits here, your Honor. THE COURT: And what's the second document? MR. DRATEL: I'm sorry. 243, not 242. 243 and 252 is the original exhibits. THE COURT: Basically what she's going to do is say I reviewed the hard drive. These are documents which I saw on the hard drive. They're true and correct copies of what I saw on the hard drive? MR. DRATEL: Correct. Page 2071 THE COURT: And she's not going to interpret the content? MR. DRATEL: I'm going to read. THE COURT: That's fine. If they're received into evidence, you would read it. Is that going to create any problems? MR. TURNER: We don't have any authenticity objections. I think we're going to have a relevance objection to Exhibit N. I don't know how it's relevant to the defense case. And if I'm guessing why they want to put it in, then I think we're going to object for the basis. THE COURT: Let's see how that goes. If there's no authenticity issue so far as this witness is concerned, she can do what Mr. Dratel is suggesting, which is to say I reviewed the hard drives, these were on the hard drives, I printed them off, here they are. They'll be received into evidence. Mr. Dratel will then -- unless you object on relevance grounds, I'll take a look at it -- but Mr. Dratel will read in whatever he's going to read in. MR. TURNER: Right. I think our objection is going to be in the nature of relevance and hearsay. THE COURT: Why doesn't somebody hand me them so I can look at these while we are waiting for the jury. We're waiting for four. They have gotten used to us. MR. DRATEL: C and N. Page 2072 THE COURT: Is she going to do anything apart from those two documents, Mr. Dratel? MR. DRATEL: Yes, your Honor. She's going to talk about her review of the Google production with respect to emails during periods of time that we have already established. There was a gap in the login. And then she's also going to recite from the complaint about four sections, probably about four sentences. MR. TURNER: We object to that, your Honor. THE COURT: So I understand what their issues are, do you have any issue with the witness saying I reviewed the Google production and there's a gap between X period of time and Y period of time? This is what I have personally observed from my review of these hard copies. There's nothing for X to Y. MR. DRATEL: No. The opposite, that there are emails. THE COURT: Okay, whatever it is. My personal observation of the production is that there are emails covering whatever the period is. MR. TURNER: The issue is whether she has foundation to opine about -- THE COURT: She's presumably looked a the production. MR. TURNER: Right, but there are two issues. We can look at the emails in the email account and then there's the logs, the IP logs which show the defendant log into a Gmail account. I know from having dealt with Google before that those IP logs are not complete; they don't log in every log, for example -- Page 2073 THE COURT: But she won't be speculating as to why. She'll just be saying this is what's here; this is what's not here. So be it. MR. DRATEL: Why did we present a stipulation that those are accurate records if he knows they're not? I don't get it. THE COURT: I don't even follow that one. I'm focused on one very small thing, which is, it sounds like she's reviewed this production. MR. DRATEL: It's simple. THE COURT: And she just wants to say I review it, here's what is here. MR. TURNER: The problem is, your Honor, if she's interpreting -- THE COURT: She can't interpret, right, because she's not a Google witness. MR. TURNER: If that's implicit in the testimony, then she's interpreting what the Google records mean. THE COURT: We'll get to each question as it comes, but in terms of her ability to say I reviewed the Google production, this is what I have observed personally in terms of the Google production in terms of the date ranges are as follows X, Y or Z, that's fine. Page 2074 MR. DRATEL: They can put on a witness to say that the records mean something else. I'll argue that in summation. I'm not going to ask her to argue it. THE COURT: I take it she's not going to draw conclusions from the presence or absence of documents; is that right? MR. TURNER: That's what I'm -- THE COURT: I'm trying to figure out from Mr. Dratel. MR. DRATEL: Yes. THE COURT: She's not going to draw conclusions. She's just going to state the facts. MR. DRATEL: No. THE COURT: That's fine. We'll take it step by step. These are the two documents I understand she'll be doing other than that and reciting from the criminal complaint. MR. TURNER: I just want to be clear on what is being offered because the government is getting conflicting messages. One of the exhibits looks like this. THE COURT: That I have as Defense Exhibit C it looks like. It's the multipage document. MR. DRATEL: No, no. It's D actually. C. THE COURT: I have C. MR. DRATEL: C is the law enforcement file. MS. LEWIS: Here is a copy of C. Page 2075 MR. TURNER: This I think raises problems, your Honor, and I think we need to address it at side bar. This raises significant problems. THE COURT: Let me read this. MR. DRATEL: This was a government exhibit. THE COURT: This was originally a government exhibit? MR. DRATEL: Yes; 243. MR. TURNER: It's different. MR. DRATEL: I printed it this morning from their first disk. I can give the Court the copy that I printed this morning from their disk. MS. LEWIS: Actually, I even have a copy here that I put a sticker on weeks ago. You can see on the back. MR. TURNER: This means nothing. We need a side bar. THE COURT: Hold on. You know what, I'll tell you, I need to read this and I can't do it with you folks because you interrupt my train of thought. Joe, how many are we waiting for? We are still waiting for four. MR. TURNER: I'd also note this was not emailed to us before the Court's deadline for disclosure of exhibits. It was just sprung on us now. THE COURT: All right. Well, we've had issues. We're not going to quibble with timing in light of the back and forth and what short lengths of time people have had for documents. I will look at this and I think we resolved then the Google. production. Page 2076 The reciting from the complaint, are we going to have any issues with that? MR. TURNER: Yes, your Honor. THE COURT: Tell me what your issues are with that so I can think about that, too. MR. TURNER: This goes back to the GAF issue. THE COURT: I understand. MR. TURNER: Great. First of all, GAF has not been held to apply to an affidavit in the complaint. Ramirez specifically reserved decision on that. But in any event, even if it did, the prerequisite for it to apply is a genuine inconsistent statement with some position the government is taking now. THE COURT: Let me find out what the four statements are, Mr. Dratel, that you are considering getting in. MR. TURNER: It was also not provided as a defense exhibit. THE COURT: We were talking about the GAF issues back then. MR. TURNER: The complaint is an exhibit. MR. DRATEL: It's not an exhibit. It's an admission. THE COURT: He wants to put it in as an admission. And actually whether or not it would come through this witness and whether or not Mr. Dratel would stand up and state it as an admission I think is not -- the vehicle is not the issue; it's the content. Page 2077 MR. DRATEL: One is the $79.8 million in commissions. That's one. That's in paragraph 22C. And then paragraph 24A, the Silk Road forum in its current form was created on or about June 18, 2011. At 24CII, the first sentence which is a quote from on or about December 1, 2011, DPR announced that he had changed the onion address for the Silk Road website, stated Silk Road now resides at a new more easily remembered URL address. And III: On or about October 19, 2011, DPR posted a message concerning an outage of the Silk Road website explaining we are having to rebuild the site from a backup. DPR assured the sites users, etc. THE COURT: Let me ask you, in terms of the DPR October 19 posting, is it the case that that posting is somewhere on the hard drives that have been received into evidence? MR. DRATEL: Yes, from the servers. THE COURT: Is it also the case that the quote from on or about December 1, 2011 where DPR announced that he had changed the onion address for the website, stated Silk Road now resides at a new more easily remembered URL address, I actually thought we had gotten that into evidence at one point. Page 2078 MR. DRATEL: We may have, your Honor. I'll withdraw that one. THE COURT: I think that came in early. But in any event, I would assume that would actually be part of a post also that is on the servers. MR. DRATEL: Yes. THE COURT: So I understand the lay of the land, would you state the date of the complaint? MR. DRATEL: Okay. I'll do it how ever the Court wants me to do it. THE COURT: My copy of the complaint, which I used to carry faithfully because this was a big issue, I left downstairs. Does somebody have a copy I can take a look at? MR. DRATEL: I have it, your Honor. THE COURT: It's 22C. MR. DRATEL: May I add one thing. With respect to Ms. Prince, I would have, had the Court not precluded Defendant's E earlier, I would have also moved to introduce that through her. THE COURT: So noted. Are you planning on reading the entire -- it looks like the October 19, 2011 post is just a post. Are you going to read that entire paragraph, or just the top part? You've highlighted just a piece of it. MR. DRATEL: Right. I'll read the whole thing if that's the way the Court wants me to do it. I was trying to be as surgical as possible. Page 2079 THE COURT: The one thing you shouldn't do is talk about based on his training and experience what it means. MR. DRATEL: Right. MR. TURNER: Your Honor, we addressed this issue, you may recall, in our January 22 letter. THE COURT: I remember. MR. TURNER: There's United States v. Purdy. It clearly holds you cannot just introduce a bill of particulars, prior indictment, certainly not a complaint without some showing that is inconsistent with the position the government is taking now. If they want to produce these forum posts, they can introduce the forum posts. There's no need to get them in through the complaint. They have the forum posts. THE COURT: Right, but I have the ability, if there is an easy and efficient way to do something and that these are accurate reflections of forum posts, just to have it done through these, right? This doesn't strike me as something which is particularly earth shattering and you can address the timing and what inference should be drawn from the timing. MR. TURNER: But getting it in through the complaint suggests that the government is taking some different position now. Page 2080 THE COURT: Mr. Dratel, are you amenable to just saying that you're going to read the following into the record -- MR. DRATEL: Sure. THE COURT: -- from posts from Silk Road? MR. DRATEL: Yeah. THE COURT: You can use the complaint's recitation as a faithful representation of what those posts said? MR. DRATEL: That's fine. THE COURT: So you won't cloak it in the ermine cloth, such as it is, of a complaint. MR. DRATEL: No, not of Mr. Turner's complaint. THE COURT: Fine. You can do those. That issue is done. Hand back the complaint. Just don't call it a complaint and please, as a result, you can just say that these come from posts on Silk Road. Now, if those paragraphs don't come from posts on Silk Road, you're going to have to modify that language in some manner. MR. DRATEL: Okay. THE COURT: All right. Okay. MR. TURNER: I'm sorry to belabor the issue, but I'm not clear. There were two posts and then there were two other things from the complaint that the defense wanted to read that were not in the nature of posts. Page 2081 THE COURT: He's going to do 79.8 million -- MR. TURNER: That's not a post. THE COURT: -- in commissions. MR. TURNER: That has been directly addressed in the government's letter. It's not inconsistent in any way with what -- THE COURT: Then it's not going to be a problem for you. I'm allowing it. I'm allowing it. No. Sit down. I'm allowing it. MR. TURNER: It's suggests -- THE COURT: I'm allowing it. The June 18, 2011, the October 19, 2011, the June 18 and the October 19 both come from posts, Mr. Dratel. MR. DRATEL: Correct. THE COURT: The 79.8 does not, so for that one, you can say "information as of" and then give the date of the complaint, all right? MR. DRATEL: Okay. We have December 1. I'm sorry. THE COURT: 22C. MR. DRATEL: Okay. Right. 22C is first. THE COURT: June 18, 2011. MR. DRATEL: Yes. THE COURT: October 19, 2011. MR. DRATEL: Right. Then also on December 1 the page before, 401C, it's another post. Page 2082 THE COURT: It's a post. MR. DRATEL: Yes, December 1, 2011. THE COURT: If it's a post, you can read it as a post. MR. DRATEL: What does the Court want me to say -- THE COURT: About the 79.8, which apparently that may have changed. One can argue an inference that it did or did not change over time, but that is based upon information as of this date. MR. TURNER: We ask that the context of that sentence in the complaint be read in in full, because the complaint is very clear that this was based as of the date of the arrest. THE COURT: Fine. Why don't you pull out that language and make sure you all agree on the highlight on that. MR. TURNER: I'd also like an instruction to the jury that they're not to infer that there is some sort of inconsistency here. This is why it's being put in, because the defendant is trying to confuse the jury that the government said that $80 million in bitcoins were seized or were part of the commissions and now it's only saying that $13 million in commissions. It is apples and oranges, and they're trying to treat it as the same thing. This is being introduced for no other purpose but to confuse the jury and that's why Purdy is important. THE COURT: All right. I will give the instruction. Mr. Dratel, you'll give the entirety of that context, all right? Page 2083 MR. DRATEL: Okay. THE COURT: We're still waiting on three. We'll come back out as soon as they have or I have a resolution of this situation. THE DEPUTY CLERK: All rise. *(Recess)* *(Continued on next page)* Page 2084 Page 2085 Page 2086 Page 2087 Page 2088 Page 2089 Page 2090 Page 2091 Page 2092 Page 2093 Page 2094 Page 2095 Page 2096 Page 2097 Page 2098 *(Pages 2084 through 2097 sealed by order of the Court)* *(In open court; jury not present)* THE CLERK: All rise. THE COURT: Let's bring the jury out. THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. Your witness. We've got a new witness. MS. LEWIS: The defense calls Chris Kincaid. THE COURT: Mr. Kincaid. THE CLERK: Please raise your right hand. CHRISTOPHER KINCAID, called as a witness by the defendant, having been duly sworn, testified as follows: THE CLERK: Please state and spell your full name. THE WITNESS: Christopher Kincaid, C-h-r-i-s-t-o-p-h-e-r K-i-n-c-a-i-d. THE COURT: All right, Mr. Kincaid. You can be seated, sir. And it will be important for you to pull up your chair and to adjust that microphone so that you can speak clearly. And there is water there on your left. THE WITNESS: Thank you. THE COURT: Ms. Lewis, you may proceed. MS. LEWIS: Thank you. Page 2099 DIRECT EXAMINATION MS. LEWIS Q. What is your name? A. Christopher Kincaid. Q. How old are you? A. 31. Q. And where do you live? A. 235 Monterey Boulevard in San Francisco. Q. That's in California? A. Yes. Q. And where do you currently work? A. I work at Room & Board, a furniture store in San Francisco. Q. How long have you worked there? A. It's been about three months at this point. Q. OK. What did you do before that for work? A. I worked for a chi tea company for a short period of time, and then before that I worked for a mattress company and managed their flagship store for seven years. Q. OK. What is your educational background? A. Currently I'm working on my associate's degree and hoping to transfer to State or UC. I am a psyche major. Q. Are you familiar with Ross Ulbricht? A. Yes. Q. OK. And how are you familiar with Ross? A. I was living with Ross for a couple of months roughly 15 or 16 months ago. Page 2100 Q. OK. And that was until his arrest? A. Yes. Q. OK. So from about August to September -- I'm sorry, August to October? A. That sounds right. Q. And that is 2013? A. Yes. Q. And do you see Ross in the courtroom today? A. Oh, yes. Q. And can you identify him by an article of clothing that he is wearing? A. Yeah. He's got a gray sweater on and a white collared shirt. Q. And how did Ross come to live with you? A. A room in our house opened up and we posted a Craigslist ad, and there were several people who came to look at the room. We had a good feeling about Ross from the first conversation that we had with him. He was actually trying to decide between two places to live, and ultimately he decided to move in with us and we were happy to have him. Q. When you say "our house," who is that? A. That was myself, my wife and our other roommate Alex. Q. OK. And so how many people were living at the house at that time? Page 2101 A. Including Ross, there was four of us. Q. How big is the house? A. It is a three-bedroom. Q. Did you ever know him by any other name besides Ross Ulbricht? A. No. Q. Did you socialize with him while he was living with you? A. Oh, yeah, absolutely. Q. And in what ways did you socialize? A. It was common for us to hang out in the living room, and he would play on his djembe, his drum, and I would play my bass guitar and, you know, talk about random life events. And there was a time he had a gathering of people out at the beach and we all just kind of hung out and celebrated. I mean, he accompanied me to a friend's birthday one time, as well. And we ended up leaving and going on this long walk to the city and ended up food shopping and eating some crepes. And it was good times? Q. Did he ever bring people over to the house? A. Oh, yeah. Absolutely. His childhood friend Rene and his girlfriend came by for dinner one night, and Ross and them and my wife and I all sat down in our living room and had dinner together. And we shared childhood stories about Ross, and we all kind of laughed at some of the peculiar things that he shared. Yeah. Page 2102 Q. And did you ever meet anyone else -- anyone else come over to the house? A. Oh, yeah. Absolutely. His family came and stayed with us for a couple of nights. I think they were on a road trip and his parents -- MR. HOWARD: Objection. Relevance. THE COURT: Overruled. Q. You can continue. A. His parents stayed with us for a couple of nights, and I was fortunate to meet his brother during that time as well. Q. OK. So which of his family members did you meet then? A. It was his mother Lynn and his father Kirk and his brother Travis. Q. Around what time was this that they came to visit you or came to -- A. I want to say it was like somewhere between two and three weeks before Ross was arrested. Q. OK. And where exactly did his family stay? A. They slept in his bed and he slept in the couch in the same bedroom even though he was too tall for the couch and his legs were hanging off the side. Q. OK. And if you know, how much time did Ross spend with his family during that visit? A. I don't know exactly because I was working at the time, but every time I was home he was there with his family. I think they stayed for a few days beyond that as well, if I remember correctly. Page 2103 MS. LEWIS: Thank you. No further questions. THE COURT: Thank you. Mr. Howard. MR. HOWARD: Thank you. I will be brief. CROSS-EXAMINATION MR. HOWARD Q. So, Mr. Kincaid, you said on direct examination you only knew the defendant for a couple of months before he was arrested, correct? A. Yes, that's right. Q. And you weren't with him on the day that he was arrested, were you? A. No, sir. I was at work. Q. You sublet a room to him through Craigslist, right? A. I'm sorry. Could you repeat that? Q. You sublet -- you leased a room in your house to him through Craigslist, correct? A. That's right. Q. And he paid for the first month with a money order, isn't that right? A. That sounds right. Q. You had no idea what he was doing for a living at the time, isn't that right? Page 2104 A. I didn't. Q. And now on direct examination you described you had a social relationship while you lived with him, is that right? A. That's right. Q. Do you remember meeting with an FBI agent in late October, a couple of weeks after the defendant's arrest? A. That sounds right. Q. And do you remember telling -- isn't it true that you told him that you barely spoke with the defendant during the two months you lived with him? A. I don't recall. MR. HOWARD: Your Honor, may I approach the witness? THE COURT: You may. Q. Would you just take a look at that document and let me know when you've finished reading it? A. OK. Q. Does that refresh your memory? A. Where would you like me to start, from the top -- Q. I am not asking you to read it. THE COURT: Don't read it out loud. THE WITNESS: Oh, OK. Q. Does that refresh your memory about whether you told that to the FBI agent? A. It doesn't. MR. HOWARD: No further questions. Page 2105 THE COURT: All right. Thank you. Ms. Lewis, anything further from you? MS. LEWIS: Just a couple of questions, your Honor. REDIRECT EXAMINATION MS. LEWIS Q. Just to be clear, the activities you described, did you do all these things with the defendant while you were living together? A. Which activities? Sorry. Q. The ones you spoke about in your direct examination, the parties you went to when you went to eat crepes, you know, hanging out in the house playing the djembe drum, going on that long walk together. A. Yes. And there were times we went out to eat together as well. Q. He lived with you for two months, right? A. That's right. Q. Were you working during that time? A. Yes. Q. OK. About how many hours a week were you working? A. Probably 45 to 50 hours. Q. And was just on weekdays? A. No. I worked weekends and then I'd have two days off during the week. MS. LEWIS: Thank you. No further questions. Page 2106 THE COURT: Thank you. You may step down, sir. *(Witness excused)* THE COURT: All right. Would the defense like to call its next witness, please? MR. DRATEL: Yes. Thank you, your Honor. I call Bridget Prince. THE COURT: All right. Ms. Prince, please. THE CLERK: Please raise your right hand. Stand. Please raise your right hand. BRIDGET PRINCE, called as a witness by the defendant, having been duly sworn, testified as follows: THE CLERK: Please state and spell your full name for the record. THE WITNESS: Bridget Prince, B-R-I-D-G-E-T P-r-i-n-c-e. THE CLERK: Thank you. THE COURT: All right. Ms. Prince, please be seated. And it will be important for you to adjust that microphone so that you can speak into it clearly and directly, and there is water there on your left. THE WITNESS: Great. THE COURT: Mr. Dratel, you may proceed, sir. MR. DRATEL: May I just have a moment, your Honor, because I think there was a miscommunication? Page 2107 *(Pause)* Thank you, your Honor. DIRECT EXAMINATION MR. DRATEL Q. Good morning. A. Good morning. Q. Could you state your name again, please? A. It's Bridget Prince. Q. And how old are you? A. I'm 39. Q. And how are you employed? A. I'm an investigator and researcher. Q. And what kind of investigation and research do you do? A. I run a company called One World Research, and we carry out a variety of investigations primarily for attorneys and NGOs. Q. What are "NGOs"? A. Nongovernmental organizations. Q. Can you give us an example of an NGO that you have worked for? A. Human Rights Watch or the ACLU. Q. And how long have you been doing this job of One World Research? A. I've worked for One World research since 2007. Q. And before that? A. Before that I worked the Habeas Corpus Research Center in San Francisco as an investigator, and before that I worked for a private investigator company called Murphy & Associates in San Francisco. Page 2108 Q. And what is your education? A. I have a master's in human rights from the London School of Economics and a bachelor's in Philosophy from Kings College, London. Q. And you were retained by the defense in this case to be an investigator? A. That's correct. Q. I show you what's -- did you have access to the image of the defendant's laptop, Mr. Ulbricht's laptop? A. Yes, I did. Q. I'm going to approach and show you what's marked as Defendant's M, as in Mary, and ask you if you recognize that document. A. Yes, I do. Q. And can you just explain what it is generally? A. This is a document that was found on the laptop. Q. And is it a file? A. Yes. It is a text file. Q. And what is the name of the text file? A. It's named "market rewrite." MR. DRATEL: I move Defendant's M in evidence, your Honor. Page 2109 MR. TURNER: No objection. THE COURT: Received. *(Defendant's Exhibit M received in evidence)* MR. DRATEL: And could we publish Defendant's M, please. *(Pause)* THE COURT: Mr. Horowitz, will you be able to brighten that a little bit also? MR. HOROWITZ: I believe that once the projector warms up, it will probably be brighter. THE COURT: All right. MR. DRATEL Q. So this document says: "For later. "Use auto focus on pages with form inputs. "reso center message format to make admin message clear. "Minimize cache parameters in silkroad," and then a symbol "users. "Group listings under category tree on vendor pages. "Update placeholders. "Style pagination links. "Flag URLs in discussion posts and reviews. "Cleanup order process. "Cleanup old orders still processing. "Add transaction hash to withdrawal and deposit records. Page 2110 "Restrict item title characters. "Change - one quantity to deleted flag. "Move constants to global config." And it is essentially a list, correct, the rest of it? A. That is right. Q. Now, did you have a chance to review production of Mr. Ulbricht's Google account? A. Yes, I did. Q. And did you review emails associated with that account? A. Yes, I did. Q. And did you review whether there were emails between June 24, 2013 and June 28, 2013? A. Yes, I did. Q. Did you find emails from Mr. Ulbricht -- from Mr. Ulbricht's account for that period of time? A. Yes, there were. Q. And approximately how many emails did you find during that period that you looked? A. Approximately six. MR. DRATEL: May we approach, your Honor? THE COURT: Yes. Do you mean to the sidebar? MR. DRATEL: Yes. I'm sorry. THE COURT: Sorry. I thought you meant the witness. MR. DRATEL: Yes. I have one question. Page 2111 *(At the sidebar)* MR. DRATEL: I just wanted to make sure. I am not going to ask her about the complaint. I am just going to read that in separately. THE COURT: Yes. MR. DRATEL: OK. *(Continued on next page)* Page 2112 *(In open court)* MR. DRATEL: I have nothing further, your Honor. THE COURT: Thank you. Anything from you, Mr. Turner? MR. TURNER: No. Thank you. THE COURT: Thank you. You may step down. *(Witness excused)* THE COURT: Mr. Dratel. MR. DRATEL: Yes. I am just going to read what has been stipulated as coming in. THE COURT: These are posts from the Silk Road forum, is that correct? MR. DRATEL: Yes. THE COURT: All right. MR. DRATEL: DPR's first posting to the forum was June 18, 2011. At that time DPR's username on the forum was simply "SilkRoad." MR. TURNER: Your Honor, may we have one moment? THE COURT: Yes. Hold on one second, Mr. Dratel. MR. TURNER: This document is already in the record your Honor as 125A. THE COURT: All right. So do you want to point out 125A, Mr. -- let me just take a look at it, but it is already in evidence. We can do it either way. You are certainly welcome to point it out now, if you would like. Page 2113 MR. DRATEL: That is a June 18, 2011 post from DPR with the username silkroad -- I'm sorry, it is from username silkroad. It is a June 18, 2011 post -- THE COURT: Do you want to just -- MR. DRATEL: -- by DPR. THE COURT: Do you want to see the version that is in evidence? It might be helpful. MR. DRATEL: OK. THE COURT: Here. I can give you my hardcopy. MR. DRATEL: OK. Thank you, your Honor. THE COURT: (Handing to Mr. Dratel). MR. DRATEL: June 18, 2011, at 1:44 a.m. "Hey, gang, "Really sorry for the dead time there. Hopefully most of you got the message on the bitcoin forum or at silkroadmarket.org. The only major change is this forum. We have it running on a separate server with its own url so if the main site ever goes down again, first check here for updates. Unfortunately this means we have separate logins for the main site and the forum. "As we mentioned before, everything was backed up and totally restored, but if for some reason a deposit didn't make it into your account or something like that, just let us know and we'll track it down and credit you. Also, we're giving everyone a 4 day grace period on taking orders to the resolution center before they are auto-resolved, so sellers, you may see some orders past due for a few days. Page 2114 "Thanks everyone for hanging in there with us. This work is scary and exciting all at the same time, and I'm really very happy to be on this journey with all of you. "Cheers, Silk Road staff." Another post, December 1, 2011, from the Silk Road staff. It says: "Silk Road now resides at a new more easily remembered URL" -- and I'll leave out the URL. "Please update your book marks and memorize it: Silk Road vb5piz3r.onion." October 19, 2011, Silk Road staff posted a message as follows: "We're having to rebuild the site from a backup. There was no security breach or anything to worry about that led to this situation. Release server space in different locations around the globe through unaware third parties. We do this to hide the identities of those that run Silk Road in the event of a security breach in one of the servers. Unfortunately this means we have to deal with some unreliable people." October 21, 2011, Silk Road staff posted: "The light at the end of the tunnel is getting bigger. We have a full capacity server online and are in the process of configuring it." October 22, 2011, Silk Road staff posts: "The site just went live. The new server is more powerful and secure than the one we were on before the outage and at least through a more professional proxy. So I have high hopes that it will last us a long time." Page 2115 MR. TURNER: Your Honor, could I just note for the record that most of that post is contained in 125E. THE COURT: 125D -- MR. TURNER: Yes. THE COURT: -- is also a record of the October 19th, 2011 post. Yes. MR. DRATEL: Your Honor, I'm just going to return your copy. Thank you. THE COURT: All right. Thanks. MR. DRATEL: And there are two additional issues that I don't know that we have resolved yet with respect to defense exhibits. THE COURT: The one that we spoke about? MR. DRATEL: Yes and the other one. THE COURT: We didn't resolve it? MR. DRATEL: Well, we resolved it. I just -- should we have a sidebar? THE COURT: OK. That's OK. Let me just sort of tell the ladies and gentlemen of the jury -- actually, you know what we'll do, we'll take a break. This is what we do, right, when we are within striking distance of a break and we are going to have a sidebar. Page 2116 Let me tell you, ladies and gentlemen, of the jury that we are very close to the end of the evidentiary record. So I don't want you to talk to each other or anybody else about this case. If you use the breaks to look at any kind of news reports or anything else, make sure you do not read anything about this case. Take a break and we'll be back in a few minutes and we'll take it from there. Thank you very much. THE CLERK: All rise as the jury leaves the courtroom. *(Continued on next page)* Page 2117 *(Jury not present)* THE COURT: All right. Let's all be seated. As I understand it, there are the three components that we had talked about. Were there other items which you had identified? MR. DRATEL: Yes, your Honor. Just that -- THE COURT: Do you want to hand me the document? MR. DRATEL: Sure. THE COURT: Or is there language that you are suggesting we add? MR. DRATEL: Yes. Well, let me try to -- I can hand you the document but I also kind of need this. THE COURT: Actually, I realize I have a copy from earlier. MR. DRATEL: OK. THE COURT: Tell me the component that you are thinking of adding. MR. DRATEL: Yes. One is that DPR was informed that the concentration was on the forum and administrators and moderators. THE COURT: The "concentration." What do you mean by concentration? MR. DRATEL: In other words, the investigation was focusing -- I'm taking it from the document directly -- focusing on the forum and your admin and mods. So rather than putting it in slang, administrators and moderators. Page 2118 THE COURT: Let me get the other one and then we will talk about this. MR. DRATEL: OK. There are references to Mr. Wonderful as one of the people who is conducting -- who was one of the undercovers. That Mr. -- I'm sorry, that DPR is paying for the information. THE COURT: All right. What else? Anything else? MR. DRATEL: There have been efforts to DDos, distributed denial of service, the site and the forum. THE COURT: That came in through the law enforcement investigation? Didn't he know about those? There is already evidence in the record about DDos attempts. MR. DRATEL: Not -- he didn't have information that the government may have been responsible for it. I'm not saying that is true or not. THE COURT: I know, but that is coming in for the truth, though. MR. DRATEL: It is not come in for the truth. It is coming in for his state of mind as to what he is going to do after he learned this. THE COURT: All right. Let me get the complete list. MR. DRATEL: OK. There have been attempts to run exit nodes and track traffic across TOR, and that there also is a focus on bitcoin exchanges as part of the investigation. Page 2119 THE COURT: Anything else? MR. DRATEL: That's it, your Honor. I mean, obviously, we would like the whole document but this is -- THE COURT: I understand. Mr. Turner. MR. TURNER: We would have no objection to the first change about administrators and moderators. Everything else we would object to for the reasons stated in camera. MR. DRATEL: That he was paying for it? THE COURT: Let me just tell you what I think is within the scope of what I believe is appropriate and straddles the lines between the hearsay issues and the 403 issues, which are the three statements that we had previously talked about: That DPR learned in the spring of 2013 that law enforcement was investigating Silk Road and attempting to identify DPR. Number two, that on Ross Ulbricht's laptop there was a multipage document entitled "LE Counterintelligence," which the parties agree means "law enforcement counterintelligence." Three. This document contains communications to DPR about a variety of information relating to purported ongoing law enforcement efforts with respect to Silk Road and DPR. Four -- these are new -- DPR learned that the investigation included the forum, administrators and moderators, and bitcoin exchanges. Page 2120 And, five, DPR was providing payment for the information. Full stop. MR. TURNER: We'd object to the mention of bitcoin exchanges, your Honor, for the reasons we've stated. THE COURT: All right. I think that in terms of bitcoin exchanges, let me be clear. That is not to be confused with a reference to Mr. Karpeles, but to the extent that there was investigation as to whether or not the movement of funds could be a focus of the investigation and might give some indication as to anything having to do with Silk Road, I think that that is just part and parcel of what was being investigated. Whether or not it caused a reaction by DPR is, I think, entirely different. So I'm not suggesting that the Karpeles, Mount Gox piece is incorporated in that. MR. TURNER: I understand your Honor is not suggesting that, but I think that is a suggestion that is going to be made to the jury and it is based on hearsay and it is -- THE COURT: Well, I think that the fact that it included bitcoin exchanges is fact, right? MR. DRATEL: Yes. THE COURT: And you can't use from that, Mr. Dratel -- just so that we're clear, you can't extrapolate from that that Mr. Karpeles did it. MR. DRATEL: I will not use it in connection with Mr. Karpeles, your Honor. Page 2121 THE COURT: All right. That's what I am going to allow. All right. Do you have those down? *(Pause)* MR. DRATEL: No. I can read what the Court has written down, if that's OK, but -- your Honor, I took some of the notes -- THE COURT: You have my notes. MR. DRATEL: Yes. THE COURT: But I'm going to -- MR. DRATEL: I'm one of those jurors who don't like to take notes and listen at the same time. THE COURT: Tell me if you can't decide on particularly the placement of the word "purported," and I think it should be introduced with "The parties have agreed to the following." *(Continued on next page)* Page 2122 MR. DRATEL: The only part I can't make out is it says "ongoing law enforcement efforts," I think it says "with respect to ID'ing Silk Road or DPR." Is that -- THE COURT: Silk Road and DPR; yes. MR. DRATEL: Okay. THE COURT: Now, there was a second item. MR. DRATEL: Whether the government is going to stipulate with respect to Mr. Jones the stipulation that they proposed to me that I ultimately am unable to get the statement in -- THE COURT: What's your position? MR. TURNER: No. MR. DRATEL: I move for mistrial, your Honor, on that. THE COURT: That does actually have the benefit of actually evening out the number of times you have moved for a mistrial. Between this trial and the last one we tried, the count makes it five movements, five applications denied. So that application is denied. My ruling is as it was previously and there's no basis to change it. Here's what I'd like to ask you folks to do: We can bring the jury right out now, go through the one final thing and then take another short break before closings, or we can take our own short break right now, do the one final matter and go directly into closings. Preferences? Page 2123 MR. DRATEL: With respect to the last thing: I think that when the party offers a stipulation and the other party accepts it, it's not a question of asking the defendant to accept it and the defendant has to do it because that's a different issue. But when one party offers a stipulation and the other party accepts it, it's a stipulation, and they can't then withdraw it in a fit of pique. THE COURT: These are contract principles in part. And there are lots of things which go into whether or not you have a binding agreement, and there is the old saying that it's not over 'til it's over, etc. You got to see the signature wet on the page, etc. There are some instances, but that's not the case. I'm not going to force the government into a stipulation. In the absence of a stipulation, it's hearsay. MR. DRATEL: The government's email to me last night was take it or leave it, so I'm taking it and now they renege. THE COURT: So be it. Do you folks want to take a break right now and come back, and then we'll go from this last piece, which I think will take a minute or two, into the closings, which I think makes more sense because the jury is already breaking right now. Are you ready? MR. TURNER: Sure. Can we have a 15-minute break just to make sure we have all of the electronics lined up. Page 2124 MR. DRATEL: I object. THE COURT: Yes. The answer is yes. Over objection, the Court grants the application to set up the equipment. Why don't you tell the jury that we'll resume at 11:30. We'll have the remaining matters at 11:30 and then straight into closing statements. Thank you. *(Recess)* *(In open court; jury not present)* THE COURT: Just so you're all aware, we're going to start and go directly into the closings. When we get to 12:45, the closings after Mr. Dratel has completed what he's going to do, I will need to get a signal from you as to whether or not we should try to go 'til 1:00, if that's a more logical place to stop or we can stop at 12:45, but we need to break for lunch between 12:45. I suspect we'll be in the middle of something at that point or not quite done. If you have a preference as to when, just somehow make it clear if you can. MR. TURNER: Okay. THE COURT: If you keep going beyond 12:45, I'm going to let you go to 1:00, but then I'll stop you at 1:00. MR. TURNER: If I have maybe five minutes left at 1:00 -- THE COURT: Then why don't you just tell me that. Say your Honor, I have a few more minutes left. And we have lunch brought in for the jury, so they will be fine with that to have you stop at that point. Page 2125 MR. TURNER: Okay. THE COURT: Let's bring out the jury. *(Continued on next page)* Page 2126 *(In open court; jury present)* THE COURT: Thank you. Let's be seated. Mr. Dratel, you may proceed. MR. DRATEL: Thank you, your Honor. The parties have agreed to the following: DPR learned in the spring of 2013 that law enforcement was investigating Silk Road and attempting to identify DPR. There was a document -- withdrawn. There was a multipage document on the Ross Ulbricht laptop titled "LE Counterintel," which the parties agree means law enforcement counterintelligence. This document contains communications to DPR about a variety of information relating to ongoing law enforcement efforts with respect to Silk Road and DPR. DPR learned that the investigation included the forum administrators and moderators and bitcoin exchanges. DPR was providing payment for the information. Thank you, your Honor. THE COURT: Is there anything further from the defense? MR. DRATEL: No, your Honor. The defense rests. THE COURT: Ladies and gentlemen, the evidentiary record in this matter is now closed. You have now heard all of the evidence in this matter. Let me just describe to you how we're going to proceed from here. We're now going to go directly into closing statements. I told you at the outset that there are two opportunities for the lawyers to address you directly. The first is during the opening statements when they give you an overview as to what they expect the evidence will show; and the second comes at the end of the case when they may argue to you as to what they believe the evidence that's in the record has shown. They will argue to you as to what inferences they think you should draw. Page 2127 What the lawyers say is not evidence. The evidence is that which was received into evidence in this matter through the witnesses, through the documents during the trial. During closings, as at any other point in time, what lawyers say is not evidence, with the sole exception as to when they are reciting a stipulation. But other than that, what lawyers say is not evidence. So your recollection of evidence and ultimately the inferences that you determine should be drawn from the evidence is what controls. The closing statements will not be completed in their entirety before lunch. After all the closing statements are completed, I'll then charge you on the law and I'll be giving you a copy of the jury instructions to follow along with me and then you'll start your deliberations. I don't know that you'll get to your deliberations today. It may be tomorrow morning. We'll have to see how things go and be a little bit fluid. All right. Thank you. Mr. Turner. Page 2128 MR. TURNER: Thank you, your Honor. At the beginning of this case we told you that we would prove beyond a reasonable doubt that the defendant Ross Ulbricht was the creator, the owner and the operator of the digital drug-trafficking enterprise that was Silk Road, and that's exactly what we've shown. The evidence presented by the government comes from multiple independent sources. It's interlocking, it's overwhelming, and to a significant extent, it's undisputed. There is no dispute in this case that the defendant started the Silk Road website. The defense counsel conceded that right off the bat. There's no dispute that it was used to sell drugs from the start. There's no dispute the defendant started it on the Tor network so that the users of the site and the dealers on the site and the site itself would be hidden. And there's no dispute that when the defendant was arrested, he was logged into the Silk Road website as the Dread Pirate Roberts. The dispute in this case isn't even about whether the defendant operated the Silk Road website. The defense has already granted that he did. It's about when and for how long. I'll explain later under the law it doesn't even really matter -- MR. DRATEL: Objection. MR. TURNER: -- but the evidence is clear that he ran it from beginning to end. He started it. It was his baby. And he stayed with it enthusiastically for nearly three years. It was his secret livelihood. It was his passion. He built it he grew it, he operated it from top to bottom until the very end when he was arrested logged into the site as its mastermind. Page 2129 How do you know that it was Ross Ulbricht the whole time behind his computer? Because of the mountain of evidence you've seen that he ran it the whole time. Let's start with the files on his computer, ladies and gentlemen. His computer is filled with evidence related to Silk Road. There are hundreds of files spread across numerous folders. There's an entire copy of the Silk Road website itself. There's an entire copy of transaction records covering the whole duration of the site. There are chats with Silk Road employees. There are Silk Road bookkeeping records. There are lists of Silk Road servers, there's Silk Road to-do lists, Silk Road reports, Silk Road maintenance logs and on and on. These files date from 2013 all the way back to 2010 when the defendant was first starting to work on the site. This is not what you'd expect to see if Silk Road had been just some passing fad and passing interest of the defendant that he pursued for a few months back in 2011. It's what you'd expect to see on a person's computer who had been running the site continuously for years, and the details of so many of these files are damning, so let's start with the personal journal that the defendant kept on his laptop. Page 2130 THE COURT: Can you speak up a little bit. MR. TURNER: Sure. These files go from 2010 to 2012. And it's absolutely clear that the defendant wrote these journal entries. They're filled with personal details about the defendant. So in these entries, the defendant talks very explicitly about starting and running and continuing to run Silk Road. The 2010 journal entry begins "I started the year in the middle of my stint with Good Wagon Books." Remember this is something he did before Silk Road. The journal entry goes on and on about Good Wagon Books for a few paragraphs and the defendant's personal life. And then it says, "While all of this was happening, I began working on a project that had been in my mind for over a year. 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. I had been studying the technology for a while, but needed a business model and strategy. I finally decided that I would produce mushrooms," magic mushrooms, illegal drugs, "so that I could list them on the site for cheap to get people interested. I worked my ass off setting up a lab in a cabin out near Bastrop off the grid. In hindsight, this was a terrible idea and I would never repeat it, but I did it and produced several kilos of high quality shrooms. On the website side, I was struggling to figure out on my own how to set it up." Page 2131 How do you know that's Ross Ulbricht? Well, for one thing in the defendant's Gmail there's an email around the same time showing that he was looking for a place to rent in Bastrop. There's also a copy of the book on the defendant's computer titled "The Construction and Operation of Clandestine Drug Laboratories." It's filled with instructions on how to set up your own laboratory custom built for drug dealing. So from the very beginning the defendant conceives that Silk Road as a website for drug trafficking and he was setting up to be its very first drug dealer. In 2010 journal entry ends with an express of high hope for Silk Road in the coming year. "It says" in 2011, "I am creating a year of prosperity and power beyond what I have ever experienced before. Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator." The same journal entry, the same guy. It's clear from this entry that Silk Road is not some little experiment he's pursuing for a few months. It's an obsession. He wants power. He wants prosperity. He is relishing the thought, the site becoming a phenomenon with him the secret mastermind behind it. Those are long-term ambitions, ladies and gentlemen. Page 2132 We see these ambitions continue in the journal entries into 2011 and beyond. So the 2011 journal starts out, "Still working on Good Wagon Books and Silk Road at the same time. Programming now. Patchwork PHP MySQL. Don't know how to host my own site. Didn't know how to run bitcoind. Got the basics of my site written. Launched it on freedom hosting. Announced it on the bitcointalk forums. Only a few days after launch, I got my first signups, and then my first message. I was so excited I didn't know what to do with myself. Little by little, people signed up, and vendors signed up, and then it happened. My first order. I'll never forget it. The next couple of months, I sold about ten pounds of shrooms through my site." How do you know that's Ross Ulbricht? First of all, he says he launched his site on Freedom Hosting and there's an email in his Gmail account where he's contacting somebody about setting up a Tor hidden service. The person recommends Freedom Hosting. Second, the journal entry says he announced the site on the bitcoin talk forums. And you saw evidence recovered from the bitcointalk.org website showing that that was one of the places where Silk Road was first publicized on the Internet. Remember, that's how IRS Agent Gary Alford caught up to the defendant's trail. He found a message on bitcointalk.org that quoted a message by another user named Altoid from January 2011 publicizing Silk Road. Altoid's original message had been deleted from the forum, but the quotation still remained. The defendant didn't realize that. There's a chat on his computer where the defendant is telling a Silk Road employee about how he first publicized the site. He says he made one thread on the forums at bitcointalk.org but it got taken down pretty quickly. The defendant must have thought that once his original Altoid post had been deleted from the site, there was no longer any link between that Altoid username and Silk Road, because months after that Altoid post, he would use the same Altoid username to post a message on bitcointalk, unrelated to Silk Road, where he mentioned his true email address, rossulbricht@gmail.com. That's how Special Agent Alford was able to tie the Altoid username of the defendant, and that's another way that you know that the defendant was the author of that 2011 journal entry where he's talking about announcing the site on the bitcointalk forums. Page 2133 Now, he also talks about, in that journal entry, the shrooms that he grew. He said those were the first things he sold on Silk Road. And you know that another place the defendant first advertised Silk Road was on a website called the Shroomery and you see that in his Gmail account, too. And you see there was another forum that he advertised on, drugsforum.com where he's actually sort of punished by the forum for spamming. So, these emails show, again, the defendant knew what he was doing. He wasn't starting up some content-neutral economic experiment. He was creating a drug-trafficking website. That's why he's spamming about it in discussion forums relating to illegal drugs. Page 2134 Going back to that 2011 journal entry, there is nothing in there, nothing to indicate that Ross Ulbricht ever walked away from Silk Road a few months after starting it. To the contrary, the journal entry goes on and on about how the site grew bigger and bigger over the course of 2011. He says "For the first several months, I handled all of the transactions by hand." And he rewrites the site. "Rewriting the site was the most stressful couple of months I've ever experienced." Then he perseveres. "When I finally got the site ready, there were several new features including a tumbler and an automated payment processing." He keeps going: "Two U.S. Senators came out against the site..they made a big deal out of it and called for a shutdown of the site. I started getting into a bad state of mind. I was mentally taxed." Then he ends with "Eventually we got through it and entered a more calm and harmonious phase." Later: "Some major advances were price pegging, vendor ranking, a more sophisticated feedback system, buyer stats, transaction logging, building up the admin toolset. More importantly, the market began its path to maturity. After making about 100k and up to a good 20- to 25k monthly, I decided it was time to bring in some hired guns to help me take the site to the next level. For the next three months, SYG," one of those hired guns, "had my full attention." Page 2135 So the journal entry goes through the year. He's continuing to run Silk Road. It's getting big enough to attract the attention of government officials. It doesn't dissuade him. He sticks with it. He grows it bigger. And there's a separate file on the defendant's computer with a journal entry for 2012 which makes it clear again he's still running the site. "Well, I'm choosing to write a journal for 2012," he says. "I imagine that some day I may have a story written about my life, and it would be good to have a detailed account of it."So it's clear at this point the site has only gotten bigger and the defendant's ego has gotten bigger with it. It goes on to talk about his life in Australia where Ross Ulbricht was living at the time. And he talks about personal things like his friends inviting him to hang out but he can't, he says, he's too busy, it's just too much time away from Silk Road. How else do you know that the defendant didn't just run Silk Road for a few months? Because the evidence from these journal entries dovetails with what you heard from a personal friend of the defendant, Richard Bates. Mr. Bates was only one of two people in real life who he confided his secret to. Page 2136 You saw Mr. Bates testify on the stand. He was not happy to tell you about that, ladies and gentlemen. He did not want to be here. You could tell it was painful for him to testify about his former friend. But Mr. Bates' testimony makes clear that the defendant talked with him about running Silk Road for many months in 2011 until the defendant moved to Australia and cut his ties to Mr. Bates. Mr. Bates told you the defendant started acting mysteriously in late 2010 when the defendant kept contacting him with programming questions. He wouldn't say what it was for. Instead the defendant would only say top secret. And again, we saw the journal entries where in 2010 he says "On the website side I was struggling to figure out on my own how to set it up." Eventually at the end of February 2011, Mr. Bates told the defendant he wasn't going to help him until you tell me what your secret is, right? I'm officially forbidding you from mentioning your secret project to me again unless you're going to reveal it. So the defendant gave it and he let him in on his carefully-guarded secret. The defendant showed Mr. Bates the Silk Road website. He was full of pride about it. And Mr. Bates told you he continued to talk with the defendant about Silk Road regularly in the months that followed. Mr. Bates told you he remembered conversations where the defendant mentioned he was making commissions from the site. He told you he remembered a conversation where the defendant said the site was getting too big for himself and he needed to hire admins, and he actually asked Mr. Bates if he wanted to be an admin. Page 2137 All of this lines up with what you saw in the 2011 journal entry. Do you remember how Mr. Bates told you he remembered Senator Chuck Schumer issuing a statement about Silk Road calling it to be shut down by law enforcement. That's also referenced in the 2011 journal entry. And Mr. Bates told you after that happened, he tried to dissuade the defendant from continuing to work on Silk Road, work on something legal, but the defendant didn't drop it; he continued working on Silk Road and talking with Mr. Bates about it. How do you know he's telling you the truth? Because you see references to Silk Road in the communications between Mr. Bates and the defendant all the way through October 2011. Mr. Bates told you that after the defendant told him about Silk Road whenever they'd mention it in chat, they wouldn't say "Silk Road," they talked about "the site," right. "My site had a 40-minute spot on a national radio program." "I might tell people about the site if that's okay." This is from March 2011. April 2011: "All my friends think your site is really cool." Page 2138 October 2011: "You don't have a job besides the site right now, do you?" "Nope." Now, in November 2011, things changed between the defendant and Mr. Bates. The defendant got nervous about how much Mr. Bates knew. You remember that Mr. Bates testified that he invited the defendant to an 11-11-11 party, November 11th party and the defendant shows up early to talk to Mr. Bates in private. He was panicking. He asked Mr. Bates have you told anybody, have you told anybody about my involvement with Silk Road. Mr. Bates says no. The defendant explained that the only other person who knew his secret, his ex-girlfriend, had told someone else, and that person had posted a message on the defendant's Facebook page saying I'm sure the authorities would love to know about your drug-trafficking site. The defendant told Mr. Bates he had deleted that message and unfriended the poster. And Mr. Bates warned the defendant, you've got to shut this thing down. And the defendant responds I can't shut it down, I've already sold it. That was a lie. It was a lie that the defendant told so he could cut his ties to Mr. Bates and eliminate him as a potential source of liability. Chats recovered from the defendant's computer make that crystal clear. You remember those chats. They were read into evidence right after Mr. Bates testified. Page 2139 Those charts were with VJ, Variety Jones, who went later by the name Cimon, and you can tell from the chats he's kind of a mentor to the defendant. The defendant talks about him in that 2011 journal entry. He says around the end of 2011 that Variety Jones shows up. This was the biggest and strongest willed character he had met through the site so far. He quickly proved he had value in pointing out a major security hole I was unaware of. And he says he helped me interact with the community about Silk Road, delivering proclamations, handling troublesome characters, running a sale, changing my name. He's been a real mentor. The idea of "changing my name," changing the defendant's username on Silk Road came from a chat the defendant had with VJ about Bates. It's dated December 9, 2011, about a month after that party where the defendant told Mr. Bates he had sold the site. And VJ asked the defendant: "IRL," in real life, "is there anyone with a clue at all?" "myself: Unfortunately, yes. There are two, but they think I sold the site and got out." "Good for that - when do they think you've sold." "About a month ago," right when he told that lie to Mr. Bates. Page 2140 Then about a month later, VJ comes up with the idea of changing the defendant's name on Silk Road to the Dread Pirate Roberts. And as you heard during the trial, Dread Pirate Roberts is a movie character and part of the legend is that there's not just one Dread Pirate Roberts. When one person gets tired of being Dread Pirate Roberts, he hands off the title to someone else to be the successor. So VJ suggests this to the defendant to clear his trail. "Have you ever seen The Princess Bride? Do you know the history of the Dread Pirate Roberts? You need to change your name from admin to Dread Pirate Roberts, clear your old trail - to be honest, as tight as you play things, you are the weak link from those two previous contacts," those two previous contacts being Mr. Bates and his ex-girlfriend. And that's what happened. So on the site about a month later -- well, about a month later, the defendant changes his name on Silk Road: My new name is Dread Pirate Roberts. That's whole point of the Dread Pirate Roberts nickname, ladies and gentleman. It's a con. It's a bogus cover story designed to fool people into believing there was some sort of rotating command over the site. The defendant and VJ explicitly talked that way about it in other chats. For example, this one from October 2012: The DPR thing is great, and we need to make at least one publid set of statements that indicates that the old admin is long gone, and dpr is now in charge. Page 2141 Myself: yea, I was thinking the same thing. Have a back story for him. Cimon: I suggested DPR when I first realized I could track you. I don't give a shit who you are, and it's to my and everyone's advantage no one else can. DPR by it's very nature indicates a rotating command. We'll play that." Which brings us to the TorChat logs on the defendant's computer, the chat logs you saw so many of between DPR and the Silk Road employees and advisors like VJ. And like the journal entries, they are incredibly damning. There are reams of them. Some of these chat logs are hundreds of pages long. The one with VJ is over 1,000 pages long. And there is no real dispute that the person reflected as "myself" in those chats is DPR, the operator of the Silk Road website. Here is an example. This one is with Squid Shepard, who was a member of the Silk Road support staff labeled here as sSh, and he starts the chat by confirming that he's talking to DPR. "May I ask to whom I'm speaking?" "Myself: DPR, and you are?" And that's consistent with all of the other chat logs you've seen. In each one "myself" is either specifically referred to as DPR or Dread Pirate Roberts or Silk Road admin or the context otherwise makes clear that "myself" is the operator of the Silk Road website. Page 2142 How do you know that the user reflected as "myself" a/k/a DPR is the defendant, Ross Ulbricht? Well, first of all, Mr. Bates communicated with the defendant through TorChat later in 2011. And he told you he recognized who was who. "r," Richard, Richard Bates; "myself" was the defendant. This is the same TorChat program that generated all the other TorChats you see on the computer. So it's true for all the other chats that involve Silk Road employees and coconspirators. The user "myself" is the defendant. But of course, you don't have to rely on Mr. Bates' testimony to infer that because repeatedly and these chats "myself" reveals little details about what's going on in his life that match up perfectly with the details of Ulbricht's life. The details don't pop up regularly, but when they do, it's often a perfect match between what they talked about in the chat and what we see in the email account or Facebook account or other evidence of what's going on in the defendant's life. For example, whenever "myself" talks about traveling or being away in his chats, it matches up with the defendant's travel plans. An example is this chat with h7, who was one of the programmers who worked for Silk Road, and in these chats, "myself" is clearly the boss and h7 -- he gives programming assignments to h7. He tells h7 when he's going to be paid. In other words "myself" is DPR. Page 2143 Now, at one point in these chats between "myself" and h7, "myself" tells him I'm going to be unavailable from 4:00 a.m. UTC Friday to 4:00 a.m. UTC Sunday. At that point, the defendant is living in Australia, which is 12 hours ahead, so that makes him unavailable from Friday to Sunday afternoon, and that's what you see in the defendant's email account. He's going house-boating starting Friday 7:00 p.m. staying two nights. So it's the defendant who is speaking as "myself" in a chat with h7. He is the boss of h7. Here is another example, a chat with VJ, January 26, 2012. He tells VJ he's in a relaxing environment, friendly folks everywhere. VJ says "Sounds very Thai." DPR says "Haha, I didn't expect you to start guessing." Well, where is the defendant at that time? His Facebook account shows that he is in Thailand. A few days later there's more chats with VJ where "myself" says "Took the day off. Ran around beaches and jungles with some girls, very little on my mind." "VJ: Girls and jungles, life don't get any better for 'ol Dread Pirate Roberts." Where is the defendant that day? Beaches and jungles, ladies and gentlemen. This is his Facebook album "Thailand, February 2012." There are many more examples like this. Page 2144 The chat with VJ -- now he's using the name Cimon -- "myself" says "I changed timezones today." There's an itinerary in his Gmail account where he's flying from San Francisco to Austin. November 2012, DPR says "I'm done traveling, at least for a while anyway." What does the defendant's email account show? He was traveling to Dominica that day. He just got done with three flights. February 2013, DPR tells Cimon he's going to be away over the weekend. What does the defendant's Facebook account show? He went camping that weekend. And it's not just travel. It gets a lot more specific than that. Another example relates to a series of chats that DPR has with VJ from March to May 2012 where DPR is talking about how he is applying for foreign citizenship so he can eventually renounce his U.S. citizenship. And they specifically talk about what it takes to buy citizenship in foreign countries, and DPR mentions he is specifically looking at applying for citizenship in the Caribbean island of Dominica. Elsewhere on the defendant's computer there's a brochure about Dominica's Economic Citizenship Program where you can buy citizenship with a cash investment in the form of a donation to the government, to the Dominican government. And there's a filled-out application form signed by -- or with the name "Ross Ulbricht," and the metadata is May 2012. How do you know that it's the defendant who is talking with VJ about these things? Well, in the defendant's Gmail account there are several emails to friends where he says May 1, 2012, lines up with the chat, "I'm applying for a second citizenship to an island in the Caribbean called Dominica." And then he says in the second paragraph, "You may wonder why I'm doing this crazy thing. There are opportunities available, tax opportunities." And he says at the end "It's a bit of a political hedge if things ever get dicey here in the U.S." What does that mean, ladies and gentlemen? Why would things ever get dicey for the defendant here in the U.S.? Because he was still running Silk Road at the time, and that's why he's talking with VJ about getting non-U.S. citizenship. Page 2145 This isn't the only time you see the defendant thinking about things getting dicey for him. You saw on July 2013, he orders nine fake IDs from Silk Road, nine fake IDs with different guises from different states, from different countries. Is this normal, ladies and gentlemen? You saw the messages on the Silk Road where those IDs were ordered. He doesn't use his own DPR account to write those messages because you have to give an address for the order. He uses a sham buyer account, shefoundme account, Government Exhibit 935. And what does he ask the vendor of those IDs in placing the order? He says things like will these IDs get me through airport security; will these IDs work if I get pulled over by a cop? He's not going bar-hopping with these IDs, ladies and gentlemen. He's worried about the possibility of a life on the lam. Page 2146 So back to the Tor chats: There's another chat on the defendant's computer with, again, VJ. And you can see in this chat the defendant actually crosses over chatting with VJ to his Gmail account and then back to the chat with VJ. Here they're talking about improving the bitcoin tumbler on Silk Road, part of the bitcoin payment system. And VJ suggests find me some statistician they can consult somehow about the math involved. And DPR says he knows a statistician, he knows her and her husband well. And VJ tells DPR to ask her who are the top five statisticians in the world. Five days later, we see the defendant emailing someone, apparently the husband, with this very question. "Who are the top five statisticians in the world besides Heather?" An exchange of emails ensues. "Wow. Good question. In terms of lifetime achievement or current hotness?" And then we see after that DPR passes the exact same email exchange to VJ. It says "Here is my convo with my stats friend. Who are the top five statisticians in the world? Wow. Good question." So it's undeniable that these chat logs from the defendant's computer, hundreds of pages of chats, in which DPR is assigning tasks to people, consulting about matters with VJ/Cimon, the person behind those chats reflected as "myself" is the defendant, Ross Ulbricht. Page 2147 The evidence on the laptop does not stop by any means with the journal entries in the chat logs. There's still more. There's a file labeled "sr accounting," Silk Road accounting. It's a bookkeeping record of Silk Road. How do you know that it was created by the defendant? Well, for one thing, it starts all the way back in July 2010, July 17, 2010 start. What sort of expenses does it list to start off? This is the same time when, according to the defendant's journal, he's renting a cabin in Bastrop to grow magic mushrooms, and that's what you see here: Lab clothes, petri dishes, HEPA filter. And in the defendant's Gmail account, you find matching receipts for the same items: HEPA filter, carryover from 2009. 2009, 88.94. $89. The same thing later: Humidifier, August 15, 2010, $33. There's an August 16 receipt from Amazon, $33. And the SR accounting document keeps going for months. It doesn't stop after a few months. It keeps going all the way through July 2013 like the journal entries keep going well after the site is launched. And notably, it contains a number of entries for commissions and that matches up with data found in the Silk Road server. The commissions start on the spreadsheet in May of 2011. As Brian shaw testified, the transaction data from the server starts up in May 2011. And this also matches up with the 2011 journal entry in the defendant's computer. He says there after making about 100k and up to a good 25k monthly, I decided it was time to bring in some hired guns and that's what you see. He starts making 25k or so monthly. There's no break in the document or an indication that someone different starts to maintain it. In fact, there's an entry in that sr accounting spreadsheet for the defendant's laptop, Okay. This is, like, a year later, April 28, 2012, $1,150 for a laptop. What do you see in the defendant's Gmail account? A matching receipt, April 27, 2012, just a day apart, $1,149.99, one cent off, and it's a Samsung silver laptop, Model 700Z, the same laptop that was seized from the defendant at the time of his arrest. He considered it a Silk Road business expense at the time, and it's clear why: Because he planned to use it to run Silk Road, just as he was caught doing on the day he was arrested. Page 2148 There's another spreadsheet on the defendant's computer. This one is labeled "networth calculator," and the entries on it go all the way from August 6 through June 2012 and it lists a bunch of different assets, including one that is astronomically bigger than the rest labeled "SR Inc., $104 million." Now, how do you know it's the defendant who gave SR Inc. that valuation? Look at the other items in the spreadsheet. There's the Samsung 700Z, there's the laptop. There's also entry for USAA and PayPal accounts. And if you look at the USAA records for June 2012 where the last entry was made in the spreadsheet, you see matching balances: 1347 in the USAA account, $1,400; 46.89 in the PayPal account, $50. So, this shows you in June 2012, the defendant counts SR Inc. among his assets. Why? Because he is, of course, still running it. Page 2149 Another document in the defendant's computer worth noticing, it's labeled log.txt, and on its face, it's clearly a log of actions taken in connection with operating Silk Road. So there are entries in there like tried moving forum to multi.onion config, finished rewriting Silk Road.PHP controller, rewrote orders page, paid attacker -- it was a hacker -- 50,000 weekly ransom. And these entries go from March 20, 2013, all the way through September 30, 2013, the day before the defendant's arrest. How do you know that the defendant was the person who maintained this log? Because, again, every now and then there are references to personal details that match up with information known about the defendant. So there's an entry for May 3, 2013, "I'm sick." What do you see in the defendant's Gmail account? Same date, "How are you feeling today?" "A lot better. I took NyQuil last night. Got a good night's sleep." Page 2150 September 11, four months later to 18th says he got covered in poison oak. What does the defendant's email account show? "I have poison oak from head to toe." It also says went on a first date with Amelia from OKC. What do you see in the Gmail account: Okaycupid messages dating services, involving Amalia, "Be there in a few. Nice meeting you." But perhaps the most revealing of the defendant's emails is a May 2, 2013 email. If you look at the log file around this time, you'll see a number of entries relating to smed, smedley, one of the programmers that worked for Silk Road. And these log entries reflect that who ever is keeping the log, DPR, was working closely with smed in early May to deal with attacks on Silk Road: Helping smed to fight off attacker, working with smed to put up more defenses. Well, smed shows up in the defendant's Gmail account at this time. And what appears to be a keyboard accident, this email is sent to -- this is May 2, 2013 -- sent to somebody named Curtis and has a screenshot attachment, no body in the message, just a screenshot. And the screenshot appears to have been taken just a minute earlier before the email was sent if you adjust for Pacific timezones. And there is the photo that was attached, the screenshot. Now, presumably what the defendant was trying to do was just send a screenshot of his desktop with this bizarre-looking lizard on it. But he probably didn't realize that what happened was he had two monitors open and when he hit "print screen," both screens are included in the screenshot because on the other screen at the time was a chat with smed, "smed: Morning, hey, good morning," the same programmer that according to the log DPR was busy working with at the time. And if you look even further at the chat window, you'll see there's another tab indicating the defendant had a chat going with the username MG. MG is also mentioned in the log file, that Pidgin chat working with inigo working with MG. And what's more is that both MG and smed show up on the defendant's computer the day of the arrest on his chat buddy list along with cirrus, libertas and all the other Silk Road employees, and the part of the defendant's chat buddy list where his own username was listed as dread. Page 2151 So in short, there is overwhelming evidence that all of the files on the defendant's computer relating to Silk Road -- the journal entries, spreadsheets, TorChats, the log -- all of them were authored and created by the defendant in the course of operating Silk Road. But there is even more, there's even more on the computer that links the defendant to Silk Road. There's evidence that links him directly to the Silk Road server, the server that hosted the website. Remember that the name of the defendant's computer, the name of his user account on that computer was frosty. And we see from his Gmail account that this is a nickname of the defendant's. The email is referring to him as Rossty Frosty. And you remember that when the defendant was arrested, frosty was the name of his user account on his computer. Page 2152 And you're familiar with this: When you have a computer at home, you log in, you can set up an account where you can name it anything you want. And the name of the defendant's computer itself was frosty. So you know, you have a Windows computer. It might be called "My Computer," but you can rename it anything you want. The defendant's user account was frosty. His computer name is frosty. And Special Agent Chris Beeson told you that's how that's reflected in sort of the computer terminal on the defendant's screen, frosty@frosty. Well, then, let's look at the Silk Road server at the authorized keys file that you heard about. As Mr. Shaw explained, this authorized keys folder defines the computer users -- the computers that can log into the Silk Road server automatically without having to enter a password. So it's a way for a website administrator to log on quickly. The server just recognizes the person's computer so he can automatically log in. And you can see from the top entry in the file that one of the computers that had the special permission was frosty@frosty, the defendant's computer. How long had the defendant's computer had this access to Silk Road, the Silk Road Marketplace server? Since the very time the server had been set up. The last modified date of this file is March 26, 2013. That's the last time it would have been changed. And if you look back at the log file on the defendant's computer, you see that that's exactly when this server was being set up by the defendant. On 3/27, there's an entry, "set up servers." So we have the Silk Road server was set up right around this time, including the authorized keys folder, and from the very beginning, the defendant's computer had automatic access to it. Page 2153 There's another revealing connection, though, between the defendant's computer and the servers used to run Silk Road, and that's the bitcoin wallet on the defendant's laptop. The defendant had simply an enormous trove of bitcoins on his laptop, 144,000 at the time he was arrested, worth $18 million at the time. Those were Silk Road bitcoins. How do you know that? Besides the obvious, besides the obvious fact that no one is going to store $18 million worth of bitcoins on their laptop as opposed to, you know, a bank if you're dealing with proceeds from legitimate activity but you know these are Silk Road bitcoins from the mastermind page for one thing that was on the defendant's laptop at the time he was arrested. There's an entry there for cold BTC, 144,000 bitcoins, the same amount of bitcoins found on the defendant's laptop wallet. Remember Agent Yum explained that cold storage refers to a bitcoin wallet that's offline, not constantly being accessed on the Internet. There are wallets on the Silk Road servers that had a lot smaller amounts of bitcoins on it, and they're used to process the payments on a daily basis. But if the site gets hacked, those bitcoins are vulnerable. So as a result, you want to keep the excess funds offline. Page 2154 Just think of it like a business owner, okay? You have a cash register at a store and you have a safe at home. You don't want to keep too much cash in the store because if it gets robbed, you're going to lose it. So you take your excess cash and you keep it in a safe at home protected. You can always move it back if you need it, but if you have access, you're going to keep it at home, and that's exactly what the defendant did. Mr. Yum, former Special Agent Ilhwan Yum, showed you how there was a long history of bitcoin transfers from the wallets on the Silk Road server to the wallet found on the defendant's laptop from September 2012 to August 2013 totaling over 13 million based on the transfers -- the value of the transfers at the time they were made, and that's because the laptop was being used for cold storage. It's the defendant taking money out of the register for the night and putting it in a safe at home. And the evidence is also clear that the wallet on the defendant's laptop had been on the laptop for months. It didn't suddenly appear on the day of his arrest. Look at the metadata for the wallet file. Date created: 4/7/2013. Computer scientist Tom Kiernan told you the "date created" date means that's the date the file initially hits the computer, either it's created on that computer at that point or it's transferred in from somewhere else. That April 7 date matches up exactly again with an entry on the log file on the defendant's laptop: 4/7/2013, moved storage wallet to local machine. In other words, the defendant must have kept the storage wallet elsewhere before on a server he controlled. On April 7, he decides to move it to his local machine, his laptop, which is exactly where it was found on the date of his arrest. Again, this is just more evidence that the defendant controlled the Silk Road website, including the massive proceeds from the website. Page 2155 There's one more truly damning connection between the defendant's laptop and the Silk Road server, and that's the connection with the murder-for-hire messages found in the Dread Pirate Roberts' account on the Silk Road server. You remember what those messages were about. A Silk Road vendor, FriendlyChemist, was trying to blackmail the defendant threatening to leak the names of thousands of Silk Road customers, as well as a handful of vendors. So Dread Pirate Roberts tries to identify this person. He's told his name is Blake Krokoff and then he gets in touch with the username redandwhite who he is told is involved with Hell's Angels. Page 2156 And Dread Pirate Roberts tells redandwhite FriendlyChemist is causing me problems, that he wants to put a bounty on his head. And he elaborates: "He's threatening to expose the identities of thousands of my clients. This kind of behavior is unforgivable to me. Especially here on Silk Road, anonymity is sacrosanct." And Dread Pirate Roberts contracts with redandwhite to put a hit out on FriendlyChemist for the price of $150,000 for 1,670 bitcoins. Redandwhite answers back a day later, "Your problem has been taken care of." Dread Pirate Roberts says "Excellent work. Send me a picture," which redandwhite apparently does. Well, you see that the log file on the defendant's computer contains entries matching up with the private messages that are recovered from the Silk Road server. So the private messages with redandwhite, they're from the Silk Road server. Here you have the log entries that match up with that precisely: 3/28/2013: "Being blackmailed with user info. Talking with large distributor (Hell's Angels.)" 3/29/2013: "Commissioned hit on blackmailer with angels." 4/01/13: "Got word that blackmailer was excuted. Created file upload script. Started to fix problem with bond refunds over 3 months old." He is doing this as he's fixing server bugs, ladies and gentlemen. Page 2157 Then you saw that the messages between Dread Pirate Roberts and redandwhite didn't stop there. Redandwhite tells DPR that before FriendlyChemist was killed, the hitmen extracted information from him that he was working with another person, Andrew Lawsry. And Dread Pirate Roberts says "I would like to go after Andrew, too." Redandwhite says, "Well, he's living with three other people. You can put a hit out on just Andrew. But redandwhite says "I prefer to do all four because it would be better than having to get Andrew somewhere else and having no chance of recovering any potential product/money he may have." And astoundingly Dread Pirate Roberts says "Hmm, okay, I'll defer to your better judgment and hope we can recover some assets from you." And he agrees to pay redandwhite $500,000 this time for four more murders-for-hire, 3,000 bitcoin. And a week later redandwhite reports back "The problem was dealt with." So again, you see that in the log file, 4/6/2013: "Gave angels go ahead to find tony76." 4/8/2013: "Sent payment to angels for hit on tony76 and his three associates." Again, how do you know that the Dread Pirate Roberts behind these chilling chats was Ross Ulbricht? Because it's the same log file that has the entry "I'm sick" in May. It matches up with the defendant's emails that has the poison oak, the date with Amalia. It's the same person. Page 2158 And there's also a separate file in the defendant's computer labeled ops.txt like black ops, operations, and the file contains information that appears verbatim in the Dread Pirate Roberts messages about the murders-for-hire. Blake Krokoff lives in an apartment near White Rock Beach, tony76, Andrew Lawsry. This is the same information that's discussed in the communications between redandwhite and DPR. And there's a chat with Cimon where "myself" talks about it, again, the same "myself" that we've already matched up with DPR in numerous ways. The same date range, April 3, 2013: "Myself: I get blackmailed by a guy saying he's in deep shit with hell's angels. He says he was fronted $700k in LSD from them. I said, have the hells angels contact me so i can work something out. Cimon: ha! Myself: very foolishly he did. They said they caught up with lucy, got the product back and killed him. Cimon: Well, I bet ya he won't use the HA," the Hell's Angels, "as a reference again any time soon." But beyond that, the most devastating link between the defendant and DPR's murder-for-hire message is the payment trail. The payment trail shows that March 31, 2013 redandwhite is talking with FriendlyChemist about sealing the deal and he's given a bitcoin address to send the money to redandwhite. So he tells redandwhite I paid you, here is the transaction info for 1,670 btc, the bitcoin address that redandwhite gives him, and he even gives him the transaction number so you can look it up on the block chain and make sure the payment is done. And if you look it up on the block chain, as there was testimony, those payments were made. Same thing for the April payment of $500,000 in bitcoins. Page 2159 Here is the text where he says after redandwhite said I prefer to kill all four, DPR: Hmm, okay, I'll defer to your better judgment. 500,000 has been sent to bitcoin address, transaction number. You look it up on the block chain. There is the payment. The payment was made. How do we know that the payments were made by the defendant? Because they were sent directly from the defendant's bitcoin wallet. That's what Special Agent Yum testified to. Those payments came from addresses that were found on the defendant's laptop, the same wallet we were just discussing earlier, the wallet that was moved to the defendant's local machine right around the same time; in fact, it was moved to the defendant's laptop on April 7 and then on April 8th, he's making the payments. So it was the defendant who made these payments. It was the defendant who was trying to murder five people. Now, to be clear, the defendant has not been charged for these attempted murders here. You're not required to make any findings about them. And the government does not contend that those murders actually occurred. The defendant may have fallen for a big con job, which would only go to show that the Dread Pirate Roberts is not a criminal super-genius that the defendant wants to make him out to be, but what the murder-for-hire exchanges do show is how far the defendant was willing to go to protect his criminal enterprise if users got the idea that their anonymity wasn't safe on Silk Road, that their identities could be leaked en masse, they weren't going to use the site, and the defendant was going to lose business, and he was willing to use violence to stop that from happening. Page 2160 For him, it was trivial. The click of a mouse, send $500,000, half a million dollars' worth of bitcoins, wait for the picture of a dead body. Thank goodness it does not look like any murders occurred. Thank goodness that this man's power trip was stopped before he managed to connect with a true hitman through his criminal website. Let's talk about how he was finally stopped. Let's talk about his arrest, which gives you even more evidence, perhaps the clearest evidence of all that Ross Ulbricht and Dread Pirate Roberts were one in the same because he was caught red-handed, okay. You heard from Agent Der-Yeghiayan, the first witness that took the stand and the second witness, computer scientist Tom Kiernan about how the arrest unfolded. The afternoon began with the defendant at home. He was under surveillance by FBI agents. Meanwhile, Agent Der-Yeghiayan was sitting on a bench elsewhere in the neighborhood with Mr. Kiernan keeping DPR under surveillance online by monitoring him on the Silk Road staff chat. Page 2161 And while Mr. Ulbricht was at home, DPR was online and at 2:47 p.m., DPR goes offline. And a few minutes later, the defendant is seen leaving his home heading towards the area where Agent Der-Yeghiayan and Mr. Kiernan are stationed. Just to be clear, you remember it says 9:47 here but Agent Der-Yeghiayan testified it was UTC. It was seven hours ahead of the local time. So what happens? Well, about 15 minutes later, Agent Der-Yeghiayan and Mr. Kiernan see the defendant approach. He crosses the street, pops his head into an Internet cafe, sees it's crowded and then he heads next door to the public library. Mr. Kiernan follows him inside with a number of other FBI agents. And they assemble at the top landing of the stairwell waiting to get a signal for the arrest. Meanwhile, Agent Der-Yeghiayan remains outside waiting for DPR to pop up online, and that's what happens. A few minutes later, after the defendant enters the library at 3:08 p.m. DPR shows up on staff chat. At this point, the defendant's had enough time to open his computer in the library and log on. And Agent Der-Yeghiayan starts chatting with him at that point using his undercover account as a Silk Road staff member, cirrus. He says hi. And DPR responds, and he knows who cirrus is. He's been chatting with him for months. And that's why when Agent Der-Yeghiayan tells DPR "Can you check out one of the flagged messages for me," DPR knows exactly what he's talking about. DPR had trained cirrus, had trained Agent Der-Yeghiayan, on the use of that flagged messages screen a month and-a-half earlier in August, we went over that during Agent Der-Yeghiayan's testimony. DPR doesn't say hmm, you'll have to remind me what the flagged message screen is all about cirrus, I don't remember that. No. He says sure, let me log in. In fact, a couple lines later, DPR says you did bitcoin exchange before you started working for me, right? Agent Der-Yeghiayan told you that was not something he had told DPR before; the person he took over the cirrus account from back in July had operated a bitcoin exchange. She had told DPR that months before the arrest, and the defendant remembered that because he was DPR back then, just as he was on the day of his arrest. Page 2162 A minute later into the chat, when it's clear DPR had logged in where he says "okay, I'm here, which post," Agent Der-Yeghiayan gives the signal to arrest. It's approximately 3:14 p.m. Remember, it's seven hours ahead. So agents quickly move in for the arrest. The defendant is behind his laptop. Two agents distract him by faking a domestic dispute. The defendant turns his head, they grab him, they pull away the laptop and handed it to Tom Kiernan. Page 2163 And Mr. Kiernan immediately starts keeping the computer alive and taking pictures on the screen. This is just a minute or so after Agent Der-Yeghiayan had given the signal to arrest. Remember, Mr. Kiernan had a Blackberry set to Eastern Time because he's from the New York field office. It was from 3:15. And there's the chat right there on the screen where the discussion had left off. Not only that, but they go back in the web browser. They see the defendant had logged in as Dread Pirate Roberts and gone to the Silk Road mastermind page, which Agent Der-Yeghiayan had never seen before. Not only that, but agents follow up by searching the defendant's residence, and what do they find there? They find a couple of crumpled notes in the trash. And what are those notes about? They're about a revamp of the Silk Road buyer rating system -- seller rating system, excuse me, that Dread Pirate Roberts had been posting about on the Silk Road forums since way back in August, August 11. And there's a match of specific terms: Solid, would recommend. It matches a post from September 12 where he's talking about the changes he's thinking about making to the rating system. And agents also find a couple of thumb drives on the defendant's night stand, one of which contains a backup of many of the same Silk Road-related files that were found in his laptop. Page 2164 So the evidence is overwhelming, ladies and gentlemen, that this man Ross Ulbricht is the same person who started Silk Road and kept it running up until the very end, up until the moment he was arrested logged into the Silk Road server as the mastermind of the site under the Dread Pirate username chatting with someone he believed was a Silk Road employee. There is no way he can credibly explain away this evidence, and the defense's attempts to do so throughout this case have been absurd. At the beginning of this case, Mr. Dratel admitted, he had to, admitted that the defendant started Silk Road, but he said the evidence would show that operating the site became too stressful to him, so he handed it off to other people. There's been no evidence to show that. It's just the same bogus cover story that he told to Richard Bates to throw him off his trail. The defendant is trying to dust off the old Dread Pirate Roberts play and try it out one last time on you, ladies and gentlemen. It's not surprising the defendant is used to living a lie at this point. Remember, this chat, he was talking with inigo, one of his customer support representatives. Inigo asks: "If you don't mind me asking, what do you tell your family that you do?" "I live a modest life still. Security requires it. So I have my little alibi. I'm clever, so I can bs when I need to but I hate having to lie to people. And friends will tell me shit like why don't you do this or that, like I have all this free time. I just want to scream at them 'because I'm running a goddam multi-million dollar criminal enterprise!!!!" Page 2165 *(Continued on next page)* Page 2166 MR. TURNER: He still thinks he's clever. He thinks he can pull one over on you. MR. DRATEL: Objection. THE COURT: Sustained. MR. TURNER: And then there is the defendant's attempt to explain await mountains of evidence on his computer. It's a hacker. MR. DRATEL: Objection. MR. TURNER: It's a virus. THE COURT: Overruled. MR. TURNER: It's a Stephen Colbert show he was watching or downloading into his computer. It's ludicrous. There were no little elves that put all of that evidence on the defendant's computer. It was the defendant who put all that evidence on the defendant's computer and in his trashcan, in his nightstand, in the Silk Road server, his Gmail account and his Facebook account, from the bitcoin talk forum and the shroomery, everywhere else you have seen the digital fingerprints. Use your common sense, ladies and gentlemen. But even if there were any reason to believe the defendant's story, which there is not, it wouldn't even make a difference under the law. The government doesn't have to prove that the defendant's criminal activity continued from start to finish, from the beginning of Silk Road to the end. As I expect the Judge will instruct you, it doesn't matter when a person becomes part of a criminal conspiracy, even if it's just at the beginning or just at the end, he is liable for everything that happens as part of the conspiracy as long as it is foreseeable to him, before or after he joins. You don't need to go there because the evidence is absolutely clear. This man ran the site from start to finish. Page 2167 So let me now talk with you about what the defendant is charged with, what he's liable for as a result of masterminding Silk Road. The defendant is charged with seven offenses. The first four relate to drug trafficking. The fifth relates to the computer hacking tools and services sold on the site. The sixth, to the fake passports and IDs that were sold on the site, and the seventh relates to money laundering, the laundering of the proceeds from all the illegal sales conducted on the site. Let's take the drug charges first. Count One charges the defendant with distributing illegal drugs or helping others to do so. Count Two charges the defendant with much the same thing, distributing drugs but over the Internet specifically, or helping others do so. MR. DRATEL: I object to this, your Honor. We were not given this in advance. THE COURT: Overruled. MR. TURNER: And Count Three charges the defendant with conspiring to distribute drugs, which just means agreeing with others to distribute drugs. Page 2168 To be clear, the Judge will instruct you after the addresses about what the law is and her instructions control, but this is what I expect her to instruct you. Now, these charges -- these first three charges, they are not complicated. The basic question is were drugs distributed through Silk Road and did the defendant help distribute them, or agree with others to do so. Now, if you don't believe that drugs were distributed through Silk Road, then you must have been watching the wrong trial because that is what the site was all about. There were thousands of listings on Silk Road every day for drugs -- heroin, cocaine, LSD, methamphetamine, ecstasy, speed, steroids, prescription pain killers, pretty much every possible controlled substance you can imagine; even cyanide the defendant was willing to sell on the site. You heard Agent Der-Yeghiayan explain how Silk Road first came to his attention. Right? Ecstasy and other drugs started showing up in the international mail in O'Hare in ways that had never been seen before. The packaging was stealthy and professional. There was a business model behind it. And those packages started as a trickle and eventually turned into a flood. And he told you how he was able to tie many of those packages back to drug dealers operating on Silk Road. He also told you about the undercover buys he himself did on Silk Road, over 50 of them, from dealers in more than ten different countries, and all of those purchases, except one, tested positive for illegal drugs. Page 2169 You also heard a stipulation that the DEA New York Field Office here, in the Southern District of New York, did undercover buys from Silk Road as well, more than a dozen of them from September 2011 to May 2013 -- heroin, cocaine, oxycodone, and all of them positively tested for drugs. You also heard from Brian Shaw, who told you about the staggering sales figures in the transaction database on the Silk Road server. The silk Road server showed that the site executed over one-and-a-half million transactions during its lifetime, involving over 100,000 unique buyer accounts. Nearly 3700 unique seller accounts. And it took in over $213 million in revenue. Some of those sales were done before Silk Road kept track of the categories being sold. But of the 190 million reflected in the database of categorized sales, sales that had a category of goods associated with them, 96 percent, $182 million of them were for illegal drugs. So there is no doubt that drugs were sold through Silk Road in massive quantities. You also heard from Michael Duch, who once ran his IT business, his own IT business, but started dealing drugs on Silk Road as a way of supporting his own heroin addiction, and he told you how easy it was to become a Silk Road drug dealer. All he had to do was buy heroin off the street in the same New York City area where he bought it, and he was able to sell it at 100 percent markup on Silk Road because the customers he was selling to were located all over the country, where heroin is a lot more scarce. Within six weeks, he told you, he was shipping out around 500 glassine bags of heroin a day, making 60 to $70,000 in revenue per month. Page 2170 So did the defendant help distribute these drugs? Of course he did. The defendant was the one who made this entire enterprise possible. He custom built Silk Road to be an online storefront for drug dealing. He attracted customers by making it easy for them to buy drugs on the site anonymously. He attracted suppliers by making it easy for them to deal drugs on the site. And he manned the cash register to make sure that he got his cut from every sale because it was his store. The site's customers were his customers. The sales from the purchases were his sales, just as much as they were customers and sales of the individual drug dealers on the site. The defendant made no bones about that. Here is a post of his, January 10, 2012, in which he responds to a series of complaints he was getting at the time from drug dealers on the site about the commission rates he was charging. He says: "Whether you like it or not, I am the captain of this ship. You are here voluntarily, and if you don't like the rules of the game, or you don't trust your captain, you can get off the boat." Page 2171 Here is another post, where he's responding to a user who is complaining about getting taxed by the site. The defendant responds: "What you are referring to is more appropriately called a commission or broker's fee. It would be a tax if I tried to take money from you based on a transaction I wasn't involved in. You are free to sell whatever you want to whomever without my interference, but if you are going to use" Silk Road, "the Silk Road platform to meet your customers and advertise your wares, you will need to pay a commission." The defendant was involved in every single sale on Silk Road, and that's why it was so important to him to enforce the rule the site had against vendors selling outside of escrow, or OOE. Right? You heard about this. Collecting payment outside of Silk Road to avoid paying commissions, doing side deals. That rule was prominently posted in the seller's guide. Right? "Do not create listings that instruct customers to pay outside of escrow. If you do your privileges will be revoked." There are chats with VJ where he talks about enforcing the rule by searching through vendors' listings and users' private messages to check to make sure that they are not doing side deals outside of Silk Road's payment system. Here is a private message the defendant sent to one Silk Road seller telling him why he had lost his privileges. The defendant explains, "You do not have a right to the business I generate for you through Silk Road. Your status as a vendor here is a privilege that is contingent on you following the rules." Page 2172 The defendant knew his site was critical to generating business for the drug dealers operating on it. Think back to what Michael Duch told you. Michael Duch had never dealt drugs in his life. He was an IT guy. He had never considered dealing drugs on the street. But with Silk Road, what had once been unthinkable for him became a no-brainer of a business decision. Silk Road supplied everything he needed to become an online drug dealer overnight -- a fully anonymous online sales portal, a huge preexisting customer base, instructions on how to package drugs to evade detection, an escrow system and a support staff to make sure that he would get paid by his customers if he shipped out the drugs as ordered. And as you saw, Duch was able to reach customers all over the country through Silk Road. He would never have been able to do that on his own. That's the legacy of Silk Road. It lowered the barriers to drug dealing by enabling drug dealers to reach customers online they could have never met on the street. That was how the defendant facilitated drug dealing through Silk Road. And because he knew the value of his services, he knew how prized his drug dealing territory was. He required drug dealers to agree to his terms of service. You remember this, the Seller Agreement that you had to click on in order to create a vendor account on the site. Every time a new dealer clicked on that agreement, they were agreeing with the defendant to deal drugs together. The agreement was you get to use my site; I get a piece of your deals. It is a criminal business partnership. Page 2173 Again, that's the defendant's own words. Here is one private message where he tells a user: "Silk Road isn't some bureaucracy. I consider us business partners." So the defendant helped others deal drugs on the site. He distributed drugs. He agreed with others to distribute drugs. And that covers Counts One through Three of the Indictment. And, you know, he himself acknowledges this. Who knew that a softie could lead an international narcotics organization? Thank you for being here. Thank you for being my comrades." THE COURT: Mr. Turner. MR. TURNER: Mm-hmm. THE COURT: Would now be an all right time to stop? MR. TURNER: I've probably got 10 to 15 more minutes, your Honor. THE COURT: Let's stop here and then we'll pick up, ladies and gentlemen, right after lunch, and so we'll pick up at 2 o'clock. Joe has had lunch arranged to be brought in for you. Page 2174 Now, it's very important that while you've heard the government's -- most of the government's closing summation, you haven't yet heard from the defendant. You haven't heard the government's rebuttal, and you haven't been charged on the law. So do not be tempted to talk to each other at this point. All right? Don't talk to each other about this case or anybody else about this case. The time for you to do that is coming soon but it's not yet. Thank you very much and have a nice lunch. THE CLERK: All rise as the jury leaves. *(Continued on next page)* Page 2175 *(Jury not present)* THE COURT: All right, ladies and gentlemen, the reason for taking the break there, Mr. Turner, was one of the jurors I thought was indicating that they needed a break. So when you reached a point where it seemed like I could interrupt, I did. I don't like to interrupt. I would have otherwise let you go 'til 1:05. MR. TURNER: I understand, your Honor. THE COURT: So is there anything we need to raise before we take our lunch bread? No. I will see you folks back promptly at 2 o'clock. Thank you. THE CLERK: All rise. *(Luncheon recess)* Page 2176 A F T E R N O O N S E S S I O N 2:06 p.m. *(Jury not present)* THE CLERK: All rise. THE COURT: All right. Let's bring out the jury. THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right, ladies and gentlemen. Let's all be seated. All right. Mr. Turner, you may proceed, sir. MR. TURNER: Before I go into Count Four, let me touch briefly on drug quantities. Assuming you find the defendant guilty on Count One, Two or Three, you will be asked to make a further finding, whether certain quantities of drugs were involved in the offenses, how much of these substances did the defendant help others distribute, or agree with others to distribute. More than a kilogram of heroin. More than five kilograms of cocaine. At least ten grams of LSD, or at least 500 grams of methamphetamine. So for heroin it's easy. Michael Duch told you he alone distributed over three kilograms of heroin as a dealer on the site, which by itself puts the amount over the threshold and that's just one vendor. So you know the total amount of heroin the defendant helped others distribute or agreed with others to distribute through Silk Road is well beyond that. Page 2177 For other substances, take a look at Government Exhibit 940E. This is data from the Silk Road transaction database. For cocaine, for example, there were 82,582 orders of cocaine on the site. Even if each of those orders was only a tenth of a gram of cocaine, there would still have been 8 kilograms of cocaine distributed through the site to be above the 5-kilogram threshold. If you look at Government Exhibit 911A, pictured under here, all the cocaine -- 1 gram, 3.5 grams, 7 grams, 5 grams -- they are all well above -- well above .1 grams. And you can go through the same sort of calculation for the other drug quantities. The quantities of drugs distributed through Silk Road were massive. So let's go on to Count Four. Count Four charges the defendant with operating a continuing criminal enterprise. Basically what this means, as the Judge, I expect, will instruct you is that the defendant engaged in drug trafficking on a continuing serious basis, and that he oversaw others and made substantial profits in doing so. So to find the defendant guilty on this charge, you have to find that the defendant committed a series of three or more drug crimes, oversaw five or more persons in the process, and received substantial profits from his crime. Now, here the defendant clearly committed a series of three or more drug crimes. He was facilitating drug deals every day. You only have to agree on three such crimes. Just pick a few. Pick three of the thousands of drug sales that Michael Duch did himself over the site, or pick three of the undercover purchases of drugs done by Agent Der-Yeghiayan or DEA New York. All of those were drug deals the defendant was involved in as a middleman. Page 2178 Did the defendant oversee five or more persons as part of his operation? Of course he did. First, he had employees. If you look back -- this is an exhibit with his to-do list. He has employees -- a list of employees that he pays every week. There are chats with the employees on the computer. There are other references to the employees. Look at the government exhibit numbered here, if you want to go back and take a look and see what those individuals did as part of the operation. Basically some were the support staff, the customer support, who would basically make sure everything ran smoothly on the site. If there were disputes between buyers and dealers, they would resolve those disputes. That was partly what Agent Der-Yeghiayan, in operating his undercover account, was involved in, as support staff. Then you have the back-end people, the computer programmers, Smedly, Syg, H7. In one of the chats with H7 they talk about having a team of programmers. So he has people working under him, working for him. He is a boss of the enterprise. Page 2179 Not only that, you don't even have to limit yourself to the employees that the defendant supervised. He was the leader of the whole site. He organized the hundreds of vendors of drug dealers that sold drugs on this site. He harmonized their operations into one essentially orderly business enterprise. And that is acting as an organizer. And that, too, is a basis for finding that he oversaw five or more people as part of his operation. Finally, did he make substantial profit from his enterprise? Of course he did. He earned millions of dollars in commissions. So far at least, he earned the millions of dollars that were recovered from his laptop in bitcoins. Next there is Count Five, conspiring to commit or aid and abet computer hacking. Now, computer hacking tools and services were offered on Silk Road. Agent Der-Yeghiayan told you that he would see those listings in the digital goods section, in the computer equipment sections of the website. And although we didn't look at them in detail during the testimony of Brian Shaw, the government introduced a sampling of the computer hacking listings found on the Silk Road website when the FBI seized it. There were keyloggers. There were email account crackers. There were password stealers. There were DDos services for knocking websites offline. You heard from Agent Alford about how he made an undercover purchase of some of this hacking software and it worked as advertised. Page 2180 And you have seen evidence that the defendant controlled what was sold on the site. Customer support chats about cyanide, for example. The customer support staff part of the role is looking for stuff that is not supposed to be sold on the site. Computer hacking was a feature on the site throughout. So this was something that the defendant allowed to be sold on the site. And then vendors were only allowed to sell on Silk Road at the pleasure of the defendant. He let them sell on the site; they agreed to give him a cut of the proceeds, he's conspiring with them as well. It is the same thing with the trafficking or aiding and abetting trafficking of fraudulent identity documents. You've seen the fake IDs and passports regularly offered on Silk Road. You even saw forum posts where the defendant announced the creation of the forgery section on the site where fake IDs and passports were specifically supposed to be listed. And you saw that the site did over a million dollars in sales in fake IDs and passports, including the ones the defendant bought. Just like the drug dealers on the site, the sellers of these fake IDs and passports all had to enter into an agreement with the defendant to sell their wares on the site. He conspired with them, too. Finally, Count Seven charges the defendant with conspiring to commit money laundering. Now, the Judge will instruct you on the elements of money laundering in more detail. But basically money laundering is taking proceeds of certain crimes, like drug trafficking, and moving the money from one account to another, for example, or exchanging it from one form to another, with the purpose of either promoting illegal activity, where the illegal activity came from, or concealing the money from law enforcement. Through his operation on Silk Road, the defendant agreed to do that for the sellers on the site in basically two ways. Page 2181 First, in operating the Silk Road payment system, he was agreeing to help drug dealers on the site get the funds from their illegal sales and move them off the site anonymously. That was why he chose bitcoins as the coin of Silk Road because it is an anonymous currency. And not only that but Silk Road's payment system included a tumbler built into it. What this means is money didn't go straight from a buyer's bitcoin address to a seller's bitcoin address when a payment was made. Money would be tumbled through a bunch of dummy bitcoin addresses before it hit the seller's account in order to make the payments harder to trace on the block chain. You read about this on the buyer's guide. "Just when you thought Silk Road couldn't be more secure, we went one step further. The tumbler sends all payments through a complex semi-random series of dummy transactions, each one with a new, one-use receiving address making it nearly impossible to link your payment with any coins leaving the site." Page 2182 That feature, all those features of the payment system, were designed to help drug dealers move their dirty money through the site without being tracked. That's money laundering. How else did the defendant agree with others to launder their money? Well, we already had a whole section on the site of money laundering services. That was what the money section of the site was about. And that section allowed drug dealers on the site to take their bitcoins and exchange them for cash or anonymous credit cards or other forms of money that couldn't be traced back to them. Here you have -- you can trade your bitcoins in for $10,000 in cash delivered to your door. This vendor advertises you will be mailed genuine U.S. currency that has not been altered or linked to criminal activity. Here is one for anonymous credit cards and debit cards. It's a normal debit card but hasn't got your personal information. It's totally anonymous. So the defendant agreed with these money laundering service providers to allow them to operate on the site so that they could help the drug dealers on the site anonymously cash out their illegal proceeds. That's another way he conspired, agreed with others to commit money laundering. Let me talk about one more legal requirement and that's venue. You have to find that the defendant, or people he aided or abetted or conspired with, caused something to happen here in the Southern District of New York in furtherance of his crime. For the drug crimes in the case, you can find venue multiple ways. You know, for example, that Michael Duch based his heroin dealing operation here, in Orange County, in the Southern District of New York, where he lived. And as a Silk Road vendor he is a co-conspirator of the defendant. He is someone who is aided and abetted by the defendant, and he performed his drug dealing operation out of this district. Page 2183 You've also got undercover drug buys by DEA New York in which the drugs were ordered from here and delivered here. Again, the drug dealers who were to ship those orders were co-conspirators of the defendant, aided and abetted by him. The defendant is involved in each of those deals as a middleman. But there's also another basis for venue that actually provides venue for all the counts in the Indictment and that's the Silk Road website itself. The Silk Road website was projected across the Web, accessed throughout the world, including here in the Southern District of New York. And as I expect Judge Forrest to instruct you, venue could be based on the transmission of a website into the Southern District of New York where the operation of the website is in furtherance of the criminal activity at issue and where it's reasonably foreseeable to the defendant that the website could be accessed by someone here. Page 2184 Here, the operation of the website was critical for the offense, and it was obviously reasonably foreseeable that people in New York, in this district, could access it. In fact, you know it was accessed here because, for example, it was accessed by DEA New York in conducting their undercover buys. It was accessed by Mr. Duch every time he had to log onto the site in order to do his business. So, for example, for the fake ID charge, it's enough for venue that the defendant ran a website with offerings for fake IDs and broadcast those offerings through the Web into this district. It is as if he put a billboard up here in this district in furtherance of the effect. The same thing with the computer hacking and money laundering charges and the drug charges. And that's where the action was in this case, ladies and gentlemen. The hundreds of thousands of drug deals and other illegal transactions that occurred on Silk Road didn't take place on some street corner; they took place in a dark corner of the Internet. That was the defendant's criminal turf. But just because he operated in cyberspace doesn't make his crimes any less real. Those were real drugs he was selling through his site, just as dangerous and addictive as drugs sold on the street. Think of Michael Duch. All he was doing -- all he was doing was taking drugs off the street and using the defendant's site to redistribute them across the country. Think of the messages he got from his customers that you saw. On a daily basis, anxiously waiting for their shipment to arrive before debilitating withdrawal symptoms set in. I am extremely dope sick and need something by tomorrow. Those are real people, real families, with real addictions. And it was the defendant's website that made it easier than ever before to feed those addictions, for people to get hooked in the first place, and it was the defendant's website that made it easier for drug dealers to get users hooked, users from all over the world. Page 2185 Based on his operation of the website, which the government has proven beyond a reasonable doubt, the defendant is liable for all the crimes charged in the Indictment. His conduct was brazenly illegal. He knew perfectly well what he was doing the whole time, and you should find him guilty on all counts. Thank you. THE COURT: Thank you, Mr. Turner. Mr. Dratel. MR. DRATEL: Could we just have one second just for the technical changeover? THE COURT: Yes. Page 2186 *(Pause)* MR. DRATEL: May it please the Court? Thank you, ladies and gentlemen of the jury, thank you for listening. Thank you for paying attention thank you for being here sometimes in weather that was inclement and difficult. So we really appreciate it, and it is a reflection on your recognition of how important this case is for Mr. Ulbricht. This will be my last chance to speak to you about the case. The government is going to get another opportunity after I'm done, and I'll talk about that towards the end of my closing statement. Obviously, in a trial that's lasted this long with as much testimony and documents as have come in, I am not going to be able to talk to you about everything. I'm going to pick items and concepts that illustrate why Ross Ulbricht is not guilty of each and every count in the Indictment; why the government has failed to prove beyond a reasonable doubt, as it must do, each and every element unanimously to all of you, to each of your satisfaction, and the other counts in the Indictment. Some of this stuff has been technical. Some of it may be a little technical during my summation. But as I told you in opening, the fundamentals, the foundation of all of this is common sense. It's your life experience. It's what you know and what teaches you, from the evidence in this case, that Mr. Ulbricht is not guilty. Page 2187 I talked about this in my opening. It is apparent from everything we've heard in the case. It is that the Internet is not what it seems. The very first witness, a government agent, assumed multiple identities on the Silk Road site. Multiple. As many as a dozen. So he had dozens of accounts that he was controlling. No one realized that the usernames had changed when he assumed an account. No one realized when he created an account that he was law enforcement. He never took a lesson. He didn't know anything about computer technology, necessarily, more than the average person. He was able to do it, just like his colleagues. He said they all had accounts. All of them were operating accounts. The Internet permits, and thrives on, to a certain extent, deception and misdirection. They were never caught as law enforcement operating undercover. In all of the posts that they did and all of their interaction here on Silk Road -- the buyers, sellers, administrators, moderators, all of that. You heard Michael Duch talk about his wariness of customers because he agrees, you never know who precisely is on the other side of that computer screen. Even Agent Der-Yeghiayan, during cross-examination, recalled that there was a period of time where he was so convoluted in his own mind that he didn't quite know who was supposed to be who. He said who's on first. And he was a person who knew the inside of it, that he was playacting, that his colleagues were running accounts. He even knew that and he couldn't keep track. Page 2188 You don't even know if any of the screen names that the government has pointed to, that any of them, is a separate person. They could all be the same person and you wouldn't know. You can't conclude that here, I submit to you. You have no evidence that there are different people. They could all be Agent Der-Yeghiayan -- not that they're Agent Der-Yeghiayan, but just like Agent Der-Yeghiayan, they could all be the same person operating multiple usernames. Where is the proof that they are separate people? Where is the proof from the witness stand, from anyone who came in and said that was me, that was me, that was me? No. We don't know. You don't know. And you can't make a conclusion beyond a reasonable doubt based on that. Reasonable doubt, it is what protects us all. It protects Mr. Ulbricht. It protects us all in this system. It is the bedrock of the system. It requires the government to prove its case, to satisfy you beyond a reasonable doubt. The Judge will instruct you, reasonable doubt is a doubt that appeals to your reason, your judgment, your experience, your common sense. Proof beyond a reasonable doubt must, therefore, be proof of such a convincing character that a reasonable person would not hesitate to rely and act upon it in the most important of his or her own affairs. If you have such a doubt as would reasonably cause a prudent person to hesitate in acting in important matters in his or her own affairs, then you have a reasonable doubt and it's your duty to find the defendant not guilty. Page 2189 One of the fundamental principles in this case is that DPR and Mr. Ulbricht cannot be the same person. That's what the evidence, I submit, shows you. And the government hasn't proved beyond a reasonable doubt -- certainly, that's the burden -- that they're the same person. Let's just look at some of the evidence. DPR starts February 5, 2012, with a post that says I'm announcing my name. By that time the only witness with firsthand knowledge, Richard Bates, has already testified that Mr. Ulbricht is already out of Silk Road by February 2012. They could talk all they want about documents -- and we'll talk about them -- that could be created, edited, moved. But their witness, the only person who actually knew Mr. Ulbricht, told you Mr. Ulbricht said it was sold as of November 2011. I submit to you it was even before that. That's just when they talked about it. There is also just a difference in the way security is handled here so you can tell that Mr. Ulbricht is not DPR, and the evidence hasn't proved that to you beyond a reasonable doubt that they are the same person. First, if you look at Mr. Ulbricht from what we know, you have those posts attributed to him in early 2011. That's even before Silk Road starts, and then where he started he posts as Altoid, which is directly linked back to him. Page 2190 Does that sound like DPR? The day of his arrest he's facing out the window with his back to the people in the library. He's already said in a chat that they've -- DPR has already said in a chat that they put in evidence to someone working for him, he said: The worst that could happen, your only vulnerability is someone coming behind and looking over your shoulder, which is exactly the position that Mr. Ulbricht was in in that library the day he was arrested. Saving those chats, does that sound like DPR? You have to actually enable the chats to be saved. The government witness, Mr. Kiernan, testified to that. You actually have to choose to save all of the incriminating evidence. Does that sound like DPR? Keeping a journal like that and then saving it on your laptop? A little too convenient. Does that sound like DPR? That's Government Exhibit 241. And we'll talk more about that, too. Keeping your PGP keys in a file named "Key," something that's supposed to be secret, something that's supposed to keep -- that's something that is supposed to enable you to communicate in an encrypted fashion. There are a lot of blinking neon signs in this case that have been created to incriminate Mr. Ulbricht, and I submit to you DPR wouldn't do any of that. Page 2191 BitTorrent, a program, a peer-to-peer file sharing program for people on the network, on the Internet. At the time that he was arrested Mr. Ulbricht is on a program that connects him to other people on the Internet. The photos that we put in as Defendant's G and Defendant's H show that he is connected to nine people. That he uploaded the Colbert Report. There were nine peers on his system, nine people connected to an open port on his computer. Think about that from the point of view of Internet security, computer security, when you've seen from government witnesses, one after the other, talk about hacking tools and what can be done when someone gets access to your computer. I will talk more about that, too. They had said he had a thumb drive of the entire site. Why do you have it on your laptop if you have it on a thumb drive if you want to be secure? What's the purpose? Would DPR do that? Let's look at DPR for a second on that issue. You had a long -- first of all, in the seller's contract, which is Government Exhibit 121B, it says -- basically, it is all about security. It is how to keep your -- the vendors had to keep them secure, how to keep their customers secure about destroying addresses and identifying information and all of that packaging and all of these things to make sure that everyone is secure on the site and that this security is paramount for DPR. You had a law enforcement professional, Agent Der-Yeghiayan. You had many of his colleagues -- he doesn't even know how many around the world -- in the United States, and he said, around the world, who were on that site trying to identify DPR. Page 2192 He got on that site first -- the first time he went on that site was October of 2011. Two years. Did DPR give away anything to him? No. He was an administrator. He was inside. By August of 2013, he was inside. He took over an administrator account. He had direct communication and private chats with DPR. Still, this law enforcement professional, who is all over the Silk Road site, thousands of hours on the site, could not get any personal information about DPR. I submit to you -- and I'll talk more about this as I continue, but I submit to you that that in and of itself and the Cirrus chats, which is Agent Der-Yeghiayan, for a three-month period, prove that those other chats, that pretend to have personal information about Mr. Ulbricht, are phonies. Maybe not in the entirety in the sense that they are not Mr. Ulbricht, but they're DPR's, but that they're edited, sprinkled with facts about Mr. Ulbricht's life that are out there and available not only in the public but to anyone who would have access to his computer and his accounts. Page 2193 Look at Government's Exhibit 936, which is the redandwhite friendly chemist, series of chats. I read some of that yesterday. There is one section where DPR gives redandwhite advice. We will put it up there for you. Where he gives redandwhite various concrete detailed advice about how to scrub metadata from a photo image so that it could be sent without revealing incriminating information. Look at Mr. Ulbricht's computer. Look at all the metadata the government showed you. Metadata, of course, that can be edited, as the government witnesses acknowledged. It is not the same person. It is not like a person who has two contrasting character traits that don't seem to go together. It is not something like a virtuoso player who can't boil an egg. It's not a virtuoso piano player who can't play Happy Birthday. That is what this really is when they talk about security, when they talk about DPR, what they are trying to say about Mr. Ulbricht. It doesn't fit. It is a little too convenient. Now, one of these chats -- and the government talked about it in summation earlier -- that said "told two people." Well, in fact, whoever wrote that chat didn't know that there were more than two people involved in this whole thing. Whether all of them had to do with Mr. Ulbricht or not is unclear. But I submit to you, they put one of those people in there because they didn't know about a couple of others that Mr. Ulbricht had been in contact with at the early part. So, for example, they put in someone named Jessica, and that's 240C. Let's show that. Page 2194 Well, he talks in a chat. There is a journal that says "I went out with Jessica and I told her I have secrets and I'm so stupid. I trust people." That's one. Bates would be two. Mr. Ulbricht's real girlfriend, Julie Alan, would be three. A woman with the Facebook post, that's four. That's not two. Just to give you an another example of how easy it is or how convenient it is to say something and then to try to make something of it by putting together facts that don't fit, which make an assumption that doesn't fit beyond a reasonable doubt. If I say to you "beaches," do you think Thailand? So you have to say Thailand in return? That's the first guess? He's in Australia at the time, Mr. Ulbricht. They want to create the person or persons who created those chats, they wanted to create this as if it were somehow connected to Mr. Ulbricht's life. Now, how do we know that DPR was not Mr. Ulbricht? Well, first of all, like I said, Mr. Bates told you. And then Mr. Ulbricht leaves for Australia for six months in October of 2011. Then in April of 2013 there is evidence that DPR has changed again. That's from Agent Der-Yeghiayan. Page 2195 And, by the way, he had been on that site from October 2011. But he doesn't know anything, by the way, about the beginning of the site. No one knows anything about the beginning of the site. There are no witnesses, there are no documents, there is no anything about Silk Road in terms of transactions or anything like that from the beginning of the site. We haven't heard any evidence of that. Now, with respect to a timeline for 2011, I think it's important to look at the timeline for 2011. If you look in March -- February, March and April, there is a lot of conversation between Bates and Mr. Ulbricht about programming. And of course we know that the site was launched around that time. But then that part drops off after June. And there are things that happen in June. You heard this morning, the Silk Road site in its current form, June 18, 2011, with that first post from the Silk Road site that they were down for a little bit, and then they're back up. It sounds like a transition. Now, you know from Mr. Bates also that Mr. Ulbricht had another project going on before Silk Road and in the beginning of it, Good Wagon Books, through the early part of 2011. Also, the government pointed out 240B this morning, but 240B also says no commissions at the beginning. You don't have a single piece of evidence that Mr. Ulbricht was responsible for any commissions. Page 2196 Mr. Ulbricht was never a conspirator, as charged in the Indictment. He is not a conspirator at all. There is no agreement here. There is no evidence when that seller's account contract came into being on the site. Again, we don't have anything from the site until later on in 2011, after he's already gone from it. *(Continued on next page)* Page 2197 MR. DRATEL: No evidence of when an escrow system was set up on the site, no evidence of Mr. Ulbricht set up an escrow system. Now also on that timeline as we get through 2011, we see that it's only in October of 2011 that Agent Der-Yeghiayan starts to monitor the site and that November 11, 2011, Mr. Bates testified that Mr. Ulbricht tells him I've already sold it to someone else. Mr. Ulbricht leaves for Australia four days later for six months. Now, there's a chat in April of 2013 that the government did not discuss in its submissions, Government Exhibit 1004, it's between Mr. Bates and Mr. Ulbricht. Okay. If we can blow up the first part. April 2013, baronsyntax, this is Mr. Bates: Did you see slashdot last week. Mr. Ulbricht: Negative. Mr. Bates: There was something posted on Friday that you might have found interesting. I'll take a look. Thanks. And then it says -- this is Mr. Ulbricht -- in April of 2013: "glad that's not my problem anymore," with a smiley face. It says afterwards: "I have regrets, don't get me wrong...but that shit was stressful." That's the only chat the government doesn't want you to believe, the only one that an actual witness came in and told you that he participated with Mr. Ulbricht. Not a single other chat is verified in any other way that Mr. Ulbricht was a participant. That one we know happened, and that one is the one the government doesn't want to talk about. It's the only government witness that ever met or spoke with Mr. Ulbricht until July of 2013. Won't talk about that interview with Agent Critten who testified. Page 2198 Now, the chat in October of 2011, the government showed that today as well, but the one that says are you doing anything besides the site for a job, well, in fact, we put in the rest of the chat, which is R57, and it's all about the bitcoin exchange site that Mr. Bates and Mr. Ulbricht are working on at that time. Throughout the summer, Mr. Bates' testimony - again, a live witness telling you what happened, not a document created on the Internet, on a computer that anyone can do at any time - he testified that throughout the summer of 2011, they were working together on a bitcoin exchange website that people would go to and be able to synthesize prices and availability in the market. Mr. Bates said he was working on the code. There was a contract that Mr. Ulbricht had sent him that was never signed, but they got as far as a contract to be partners in this. And in R57, it's all about the bitcoin site. It's not about Silk Road he says. Nobody talks about the site. That's a presumption. I submit to you that based on the rest of the chat, it's not a valid presumption. It's not a presumption that permits you to conclude beyond a reasonable doubt that they're talking about Silk Road, but it doesn't come up anywhere in the chat. Page 2199 There's also an Altoid post, posted by Altoid on the bitcoin forum chat, Government Exhibit 306, in which, again, this is a post where Mr. Ulbricht is asking for advice about a bitcoin exchange. That's what the post is about. It's October 2011. It's at the very same time. That's what he's working on at that time. He didn't even change his address from the earlier Altoid post from early 2011. You know why? Because Silk Road -- he wasn't worried about security at that point but Silk Road was in his rear-view mirror. He was already out of it. Now, Mr. Ulbricht's background: Physics degree, Master's of Material Sciences from Penn State University. There was a chat where something about the laws of gravity that was said in a way as if you have to be a physics major to know that gravity is a law of physics. I don't know what the other purpose was to try to make that kind of a leap for you. Agent Shaw, the government's last witness -- not Agent Shaw, Mr. Shaw, I'm sorry -- said the first commission charge was May 16, 2011. There's no proof that Mr. Ulbricht was still involved at that time. He also didn't know -- couldn't tell you -- understand he had access to the entire server, all of these transactions. Look at what he went through to make those charts. He could not say when the first heroin sale was, could not say when the first cocaine sale was. We have no evidence of when any drug sale was made on Silk Road before that date. Talk about proof, not just taking a line and then extending it because it seems like it could have happened that way or it should have happened that way or it might have happened that way; it has to have happened that way beyond a reasonable doubt. Page 2200 The changes in Silk Road over time, again, transitions, changes. We talked before, the site shut down in 2011, it was split from the Marketplace and the forum as two separate sites at that time. Big changes. I submit to you it's part of that transition from Mr. Ulbricht to the person he sold it to. The forgeries don't start until August of 2011. And again, in October of 2011, there's more activity, there's more shutdown, there's more transition. The URL changes at the end of 2011. DPR becomes -- is announced in February of 2012, a new commission schedule in January 2012. Silkroad.org, remember that thing, that advertisement that takes you from the open web to Tor, that's not renewed. That is registered in March of 2011 and in April of 2012, it's not renewed. It's now owned by a guy in China who has nothing to do with it. It was not renewed. It was only up for a year. Page 2201 Didn't make any seizures before -- Agent Der-Yeghiayan did not start making those particular seizures until October of 2011. By the way, as he admitted on cross-examination, what was coming in, he has no idea whether it was from the Silk Road or not specifically. That's like saying I order a book -- I go on Amazon and I see a book, and then I go to another site and I like the price better or the shipping costs or whatever it is or I got points, I'm a member, who knows what it is, I buy it from the other site, but it's advertised on Amazon and when it comes from my house, it means it comes from Amazon? No. You have to prove that. There's no proof. We know there are multiple sites out there. These people can be working directly -- he admitted all of that. Buyer and seller can be working directly. They can be working over email. They can be working over a variety of different ways. There's no proof that that whole room -- there's no proof that anything in that room that is Silk Road. They tell you about assumptions and being careful about assumptions, and they're all after Mr. Ulbricht has left Silk Road even if they could be attributed. The same thing, by the way, with Michael Duch. He was not even on the site as a buyer until October 2012, not as a seller until April 2013, well after Mr. Ulbricht is gone. You know, he has spreadsheets he said he actually worked on for this trial. And I'm sorry, do you believe a thing he said without some real corroboration, without some verification? Could you actually believe a thing he said for several reasons, one of which is at the time this is all happening he is doing, by his own account, a volume of heroin that probably defies reality, he's probably selling most of that that he says he's doing and he's probably selling it on the street. Second is, he's got a deal to get him out from under a life sentence, so I submit you can't take his word for anything without proof and not proof of a spreadsheet that he created. Do you know that what's on this spreadsheet is reliable? Can you trust it beyond a reasonable doubt in a matter of importance in your own affairs? Page 2202 I want to look at the timeline again for the early part of 2013. A lot happens in the early part of 2013, the spring of 2013 in particular. First we have February 5 -- I'm sorry. I had the wrong date. The February 5, 2013 post of the chat where Ross says "Glad that's not my problem anymore, I have regrets, don't get me wrong, that shit was stressful," that's what he says to Bates, that's a chat that's in evidence, Government Exhibit 1004. Then in March on the 16th, there's a Stack Overflow, that site the gentleman came in where you ask computer questions, Stack Overflow, all of a sudden, Ross Ulbricht is on there asking a question and then 30 seconds later he changes his screen name to frosty. I mean, really? Really? Do you think DPR would do that? Get on your own name and then change it to the name that supposedly connects you, absolutely connects you to Silk Road? This is March of 2013. Page 2203 March of 2013 is also when the denial of service attack occurs on the Silk Road site. March of 2013 is also when the FriendlyChemist/redandwhite sets of chats all begin. And by the way, with respect to those, I submit it doesn't really matter because it's not Mr. Ulbricht, but I submit that it's indicative again about the Internet. There are no people of the type they named there. Can you explain what those chats mean since those people never existed? Can you explain it? Can you explain it beyond a reasonable doubt? Money was paid? We don't know where the money went. It could have gone anywhere. Who knows who was on the other side of that wallet. Did we hear evidence of that? No. It could have been a way for DPR to get his money out of Silk Road. Who knows? You can create an entire fiction, an entire fictional episode on the Internet, and you can sit here right now and not know whether it was real or not, much less beyond a reasonable doubt, and that's all the evidence in this case. Let's keep going. In 2013, that's also the date of the first log entry of 241, Government's 241, that journal, that log journal. We have one for 2010, which is one entry of maybe a page; we have one for 2011, which is one entry, maybe a page; we have one at the beginning of 2012, January 1, 2012, "I'm going to start a journal," nothing else for 2012 and then all of a sudden in March of 2013, presto, we have this very detailed piece trying to correspond to things. Page 2204 Also you heard -- March 26, you heard from Mr. Shaw. March 26, 2013, the SSH key, the security key to get into the site was modified to frosty@frosty. We don't know what it was before then. We do know there's another key that allowed someone else access at root@bcw. Any evidence about that, who that could be? No. So Mr. Ulbricht, they want you to believe, on March 16, 2013 outs himself as frosty by affirmatively changing on the Stack Overflow site his name from Ross Ulbricht to frosty, his account name, and then ten days later, puts that as the SSH key for Silk Road. Does that sound like DPR? You know what else happens in the spring of 2013, it's not on the timeline, but you just heard it today? It was the last thing that was read, and this is not a coincidence - that's when DPR learns that the investigations are for real; that's when he's paying for information; that's when he knows they're look at bitcoin exchanges; they're look at moderators; they're trying to turn all of his people against him. He knows the walls are closing in and it's time to implement an escape plan. And what you have is a series of events that no one would do with respect to frosty@frosty -- and by the way, you heard from frosty@frosty with the SSH keys and they made it seem like it was something important when you heard it on direct, but on cross, it turns out you could do that from any computer. I could get on a computer right now and create a frosty@frosty SSH key. It's that simple and that fast. But in terms of speed, when you start it in March and you have until October, there's a lot you can do to frame somebody. Page 2205 And then you have the May 2013 seizure of the accounts from Mr. Karpeles, and you heard that. You heard about Mr. Karpeles. By the way, Mr. Yum was able to do a very detailed bitcoin analysis in a week. Thousands of transactions. What if you had four, five, six months to work on a project like that? It's easy to create or edit chats and computer files and spreadsheets and all of that. You heard that. The prosecutor in summation said there's no break in the documents. How would you know? How would you know? You know you can get on a document, edit it, save it in a way that no one is going to know it was edited. Sophisticated people know how to eliminate, modify, manipulate metadata. You heard that, too: Metadata can be edited just like content and you saw evidence of it. You have a FBI computer scientist standing in San Francisco, California with a phone on Eastern Time. You have an FBI computer forensic examiner whose phone is 40 minutes off the real time. You can do any of this stuff manually. You can manipulate it all. Page 2206 And it was easy to reconstruct Mr. Ulbricht's activities from Facebook pages, from YouTube, from access to his email account. Again, you heard about all the hacking stuff that goes on. It's a bit disturbing, all of them. Think if someone were trying to frame you. Even Agent Alford's searches that got him to the original Altoid posts on bitcoinforum talk and shroomery.org, those are regular Google searches he found those. Anywhere you find those. That was out there. It's easy to reconstruct this in a way that would frame Mr. Ulbricht. Not only can it be edited, it can be moved from computer to computer over the Internet. And Mr. Yum acknowledged that these bitcoin wallets can be moved from computer to computer. The addresses in a bitcoin wallet can be moved from wallet to wallet. It's not as if you know it was created there, it's not as if you know the money went in there when it was there. Also, these text files, all these chats, all these spreadsheets, they are tiny files. They take no time to upload onto someone's computer without them knowing. You know, trying to think of an analogy: If you saw footprints of a shoe in the snow and I said a-ha, here is Mr. Ulbricht's shoe, it fits, I submit to you, not unless you see him walking, you don't know who was wearing those shoes when he was walking. You don't know if they're a different pair of shoes. You don't know if it's someone on his shoes. And on the Internet, it's much worse. Remember, it has to be beyond a reasonable doubt, not a set of circumstances that sounds convenient. There are some metadata anomalies the government didn't even try to explain. Page 2207 Let's look. Now, remember, Mr. Ulbricht was arrested October 1, 2013 at about 3:00 in the afternoon, Pacific Time. Let's look at Government Exhibit 250. There's a file on there called todo.txt and what's the time? 9:45 p.m. on October 1, 2013. How do you explain that? Now, by the way, with respect to Pacific Time, they wanted you to believe that the computer was set to Pacific Time on the conversations with cirrus before, not that day, but before they said what's -- this was during Agent Der-Yeghiayan's testimony: And what does it say? It says Pacific Time. Let's look at 251, it's the same directory, it's the same document, todo.txt, the same time: 9:45 p.m., six hours after Mr. Ulbricht is arrested. Let's look at 212A, again, Government Exhibit, a document called homepage.php, again, October 1, 2013 at 8:46 p.m. on October 1, 2013. How is that explained? Now, let's talk a bit about Mark Karpeles. And as you heard, he was under investigation. You heard he had computer experience. He had computer expertise. He had resources. He ran the primary bitcoin exchange in the world. You heard he had confederates. You heard that his platform for some of his sites was the same as the Silk Road site, and it was a non-updated version that forum hosts don't use very much. It's MediaWiki 1.17. Page 2208 You heard that he was the original -- that his companies were the original hosts for the Silk Road site, his hosting company. We know that also that web host -- there was testimony web hosts know their customers' activity very carefully, just like a GPS in a rental car, the same thing as bitcoin exchange -- bitcoin exchange owners and their customers' accounts. Just like in a bank, they know. I submit to you he also had motivation because Silk Road was a major player in the bitcoin market, and look what happened after Mr. Ulbricht's arrest: The price went from 100 to $1,000 for bitcoin. Who profits by that? And you heard also about someone named Anand Athavale who Agent Der-Yeghiayan investigated, did a whole comparison, pages and pages, a comparison of language between those posts on mises.org that he linked to Mr. Athavale and DPR, the commonality. You can do that with anyone, same here with Mr. Ulbricht - you take pieces of people's lives and you can put them together in a way that makes it look like anything could happen. By the way, with respect to Karpeles and Athavale, the government has never seen their electronic devices. They have never seen their computers or laptops or phones. These are people who don't live in the United States. Agent Der-Yeghiayan also told you that the government was under pressure to make an arrest in this case. They had the servers, the government had access to the Silk Road servers since July 2013. Think about it. They're letting the largest drug operation in the world operate from July 2013 through the end of September. You think there was pressure to make an arrest? All this money flowing out of the country to drug dealers overseas unrecoverable, drugs coming into the country, which they didn't capture, which they didn't seize. Think about those families, Michael Duch's customers. You think the government wasn't concerned about that that they needed to make an arrest? They needed to make an arrest. They wanted to shut it down. They needed to make an arrest. Page 2209 Now, let's talk about computer insecurity, the hacking tools you saw. Slaves, botnets, things that allow you to get inside somebody's computer, keylog, there are all these things. You saw it in other aspects of the evidence, too. It gives you full access to computers. It's interesting that Agent D'Agostino used eharmony.com as a way of stealing passwords and things like that. Well, we saw an okaycupid exhibit from Mr. Ulbricht. I'm not actually saying that things on Gmail are necessarily invented, though they might be, we don't know, but the point is, if you have access to that and you know when someone takes a trip, then you create a chat that says, oh, I'm traveling tomorrow, and you have no way of knowing when that chat was created and whether what's in that chat is real or not. Page 2210 You heard about PGP keys. I don't think the government went into it on summation, but again I won't be able to speak to you again, so I'm trying to anticipate, but there's nothing customized, nothing personal. It's spit out by a computer, you cut and paste. And you see people sending their public keys. Private keys can be sent the same way; they can be shared. That key was created in April of 2011, so Mr. Ulbricht could very easily have that key. THE COURT: Mr. Dratel, we're going to take a break in just a couple of minutes. MR. DRATEL: Five minutes good? THE COURT: Five minutes. Thank you. MR. DRATEL: With respect to computer manipulation, remember this peaceloveharmony discussion I had with Agent Der-Yeghiayan, there was someone named peaceloveharmony, a username at Silk Road, sitting on DPR's profile for hours right around the time that Mr. Ulbricht was arrested, like the day before, someone monitoring that account, not law enforcement because we know because it wasn't anybody on the arrest team because Agent Der-Yeghiayan asked. It wasn't anybody. Someone monitoring what was going on on DPR's account. We don't know who peaceloveharmony is. Can't find that out. Page 2211 By the way, BitTorrent was still open, connected to the Internet, even after Mr. Ulbricht's arrest. If you look at G and H, you'll see that it goes from about nine megs up loaded to 26 megs uploaded by the time Beeson takes the photo later that night. It's uploaded -- it's been uploaded from four to five to six hours depending on how you count Mr. Beeson's clock. And you heard about Live Capture. By the way, you heard also about the belt program, about the hacking stuff, that you can actually embed something that then disappears that destroys itself so that you can't even tell, but we don't even know that because the FBI crashed the laptop. They lost the RAM memory, and they acknowledge it. We'll never know what processes were running on that computer that day at that time. Agent Beeson did not get even an MD5 Hash value, which is not the gold standard, obviously, because we know there are vulnerabilities with respect to that to try to make sure one file is the same file that you're looking at in terms of copying, but he didn't even do that until October 3rd. Mr. Shaw didn't get a hash value on the Silk Road servers for a week after Mr. Ulbricht was arrested, October 8. There is so much to question in this case, and when we come back from the break, I'll continue. Thank you. THE COURT: All right. Ladies and gentlemen, take a short break. Then we'll come back, we'll hear from Mr. Dratel, and then we'll hear once more from the government for their rebuttal. Then after that, I think we'll have time where I'll start instructing you on the law, all right? So let's just take -- again, do not talk to each other, we're not at that point yet, or anybody else about this case but we're close. Thanks very much. Take a short break. Page 2212 THE DEPUTY CLERK: All rise as the jury leaves. *(Continued on next page)* Page 2213 *(In open court; jury not present)* THE COURT: Is there anything we need to raise before we take our own break? MR. TURNER: Not from me, your Honor. THE COURT: The reason I stopped you, Mr. Dratel, is one of the jurors needed a break. MR. DRATEL: I understand. THE COURT: I appreciate your breaking now because I don't know how much leeway we had, and I want them to be able to concentrate. Mr. Howard, are you going to do the rebuttal? MR. HOWARD: Yes, I am. THE COURT: Approximately how long? I'm not trying to constrain you. I just want to get a sense of what kind of timing we've got. MR. HOWARD: It's hard to say. Maybe a half an hour or so. THE COURT: One thing I want to make sure is -- we won't finish, I don't think, charging the jury today, but I want to make sure that you folks have ample time to discuss exactly what exhibits are going to go back into the jury room with the jurors. As soon as they're fully instructed and released to go speak to each other in the jury room, I'll want at that minute the cart with things to go in. And that requires you folks to confer to make sure that you've got the right things and not other things. You folks will take care of that. Page 2214 Here is the indictment, a copy of the indictment. If you folks want to inspect it to make sure that it's the correct version, you are welcome to. And that will go into the jury room with the jurors at the appropriate time. That may not be until tomorrow. Let's take our own short break and come back. I'm hoping for ten minutes, but I always hope for that. Thanks. THE DEPUTY CLERK: All rise. *(Recess)* *(In open court; jury not present)* THE COURT: Let's bring out the defendant and then let's bring out the jury. *(Pause)* Now let's bring out the jury. *(Continued on next page)* Page 2215 *(In open court; jury present)* THE COURT: Let's all be seated. Thank you. Mr. Dratel, you may proceed. MR. DRATEL: Thank you, your Honor. I want to go to October 1, 2013, the date of Mr. Ulbricht's arrest, and recapping again what happened that day in the sense that Agent Der-Yeghiayan, acting as cirrus, saw that Mr. Ulbricht was online, not on the Silk Road site, but on Pidgin chat, separate and completely from Silk Road, engaged him in a conversation and asked him to get on the site. And as you saw during the prosecutor's summation, he said okay, I'll log on. Now, there was a lot made of the mastermind page, but we found out from Mr. Shaw that if you log on as DPR, you automatically go to the mastermind page for the tech support panel, which is where cirrus asked Mr. Ulbricht to go. By the way, we know that more than one person could have access to the Silk Road servers or log on as DPR as long you have the credentials. Now, some other things we know, that during the period of a couple of days before Mr. Ulbricht's arrest, Agent Der-Yeghiayan noted, and Agent Alford, too, that DPR on the Silk Road forums and on the site was unusually quiet during those couple of days. And then you have Mr. Ulbricht out, talk about security, out in a public place using a public Wi-Fi when he could have easily been in his room at 235 Monterey conducting the business of Silk Road if that's what he was doing and he was DPR. Page 2216 Now, want to go back to Government Exhibit 225B because, again, this is DPR in January of 2013 talking to scout, just to demonstrate how complicated it can get about identity, scout becomes cirrus, but it's still the original scout and cirrus, it's not yet Agent Der-Yeghiayan. That doesn't happen until July of 2013. This is January 2013, this is scout, and DPR gives scout some advice and about -- if you go down further -- here, "There is nothing on your laptop for them to use." Nothing on your laptop for them to use; that's what DPR is saying, nothing on your laptop. Think about what was on Mr. Ulbricht's laptop. "And if you obscure your bitcoins properly," another security measure DPR is instructing, then it says "realistically, the only way for them to prove anything would be for them to watch you log in and do your work." And let's go further down, the third one in "Sure, someone could stand behind you without you realizing it." There's Mr. Ulbricht -- that's DPR. And there is Mr. Ulbricht in the library looking out the window with his back to everyone who walks in, including a squad of FBI agents. Now, there was -- in the prosecution's summation this morning, he talked about the exchange between cirrus, who you recall at that time was Agent Der-Yeghiayan, on October 1, 2013 and Mr. Ulbricht about the bitcoin exchange: Did you use to work at a bitcoin exchange? Well, I submit to you that if he had been working with him all that time, he would have know that. He wouldn't have had to have asked that question. If he had been communicating with him for all those months, it indicates someone who is not familiar with cirrus as opposed to someone who is. Page 2217 And then the day of the arrest when the arresting officers go to Mr. Ulbricht's residence, and you heard, by the way, from Mr. Kincade this morning so I'm not going to go into it about Mr. Ulbricht's time there, under his own name living there, and the Government's Exhibit 130, those handwritten notes found in the waste basket. And we heard from Agent Der-Yeghiayan that as early as August of 2013 and then throughout September of 2013, the subject that's on those handwritten notes has already been discussed for six weeks by DPR in great detail. Does DPR sound like a guy who takes pages of handwritten notes? What we put in today may not have looked like anything, but that Exhibit M that we put in this morning through Ms. Prince, it's a to-do list. DPR knows how to make a to-do list on a computer. I submit to you that those handwritten notes are much more likely to have been notes that someone takes during a telephone call. It's also interesting how much in those last ten days shows up in these documents. The Amelia from OKC, who, by the way, has not been identified, poison oak, except for that "I'm sick," which, again, you could go find those emails and then create one in three seconds of typing, "I'm sick," to put it in there to match something that's part of Mr. Ulbricht's life. DPR and his confederates would be able to do that in a matter of seconds. But then it's only at the end when you see that in the last couple of entries, it's gilding the lily, it's a set-up, it's way too convenient, and you cannot rely on it beyond a reasonable doubt. Page 2218 There's an instruction about withdrawal from a conspiracy, we're not relying on that. Mr. Ulbricht was never a conspirator at the beginning or at the end. Remember, that first -- that 240A: I want to establish a site where anyone can sell anything. Not a drug site, not an illegal site. Where anyone can sell anything. It sounds like Amazon. It sound like eBay. And about the thumb drive, why wasn't that updated? It's about ten days old, the date on that one. I submit to you that's not because it's a backup from the computer; it was something that was uploaded into the computer, received by Mr. Ulbricht. Now, a couple of concepts, bitcoin, Tor, I think they were demystified for you enough that you know that they're not synonymous at all with anything illegal. I think that was established to everyone's satisfaction. Page 2219 Mr. Yum acknowledged that the bitcoin wallets and the bitcoin addresses -- excuse me -- that Silk Road was used and could be used as a wallet itself putting money in and out, putting money in and out. And if you look at those amounts of bitcoins, those were small amounts of bitcoins going into those addresses. But the one thing he never did was where the money went, the 700,000 bitcoins going into Mr. Ulbricht's wallet -- in the wallets, the addresses, the ones that are on his computer; by the way, they're not, again, necessarily his. We don't know. We don't know. They're on the laptop the day he's arrested. And they may come back and talk about metadata. We know metadata can be edited. Metadata can be manipulated, but where is the money? 700,254 bitcoins in; 144,000 there. There's no analysis of anything going out. There's no evidence of anything going out. *(Continued on next page)* Page 2220 MR. DRATEL: Where is the money? Now, that 556,000 bitcoins that are unaccounted for, if you look at -- that would be worth at the time of Mr. Ulbricht's arrest about $85 million. By November 22, 2013, six weeks later, they were worth a thousand dollars a bitcoin. Do you know what that comes to? $556 million. Would you spend 13 million -- would you spend 144,000 bitcoins, 19 million, to get 556 million? Would that be a sacrifice worth making, to put that on someone's wallet, if you could get away with the rest of it? And we know that November 22, 2013, from Mr. Yum, that there was a transaction of 195,000 bitcoins that was quickly broken up into three smaller numbers. Whose bitcoins are those? DPR's. Not Mr. Ulbricht's. The government was absolutely correct this morning. They said who stores $19 million of bitcoins on a laptop? Exactly. Also, there were 90,000 bitcoins -- 89,854, almost 90, not attributed to the Silk Road wallet. Some of them may say, well, they were from wallet to wallet, but we didn't hear how much. If there had been a significant amount, I'm sure you would have heard about it from the government. No evidence of Mr. Ulbricht cashing out, ever. He's living with roommates for a thousand dollars a month, three different places. One place he is living with three people. Another place three people -- four people, rather. Page 2221 DPR knew as of April 2013 that the bitcoin exchanges were being monitored. They were under scrutiny. Does Mr. Ulbricht, do we know that Mr. Ulbricht did anything during that time period with respect to his bitcoins? No. And wee know that he was a trader. We know from the Bates chats that he was interested in bitcoins. We know that he wanted to start a bitcoin site. We know that he was an investor and a speculator. And we know that bitcoin in 2010 was infinitesimal pricing, perhaps a dollar, maybe even less. So you could make money and then reinvest and reinvest and continue to make money. Think about even a price that goes from 60 cents to $60, think of what your return on investment is after a year, year-and-a-half period. At one point it went up to $250. So we don't know who DPR is, but we do know who Ross Ulbricht is. You heard from four witnesses, three of them character witnesses. The government says that those redandwhite chats, Government Exhibit 936, demonstrates that DPR would resort to violence to protect this site. Assuming that those are true at all, agreed. That's why, you know, that DPR is not Ross Ulbricht. Because one thing that the people who know him for his whole life know is that his reputation is for peacefulness and nonviolence. Challenge yourself. Look at the credibility of those witnesses. Assess the sincerity of those witnesses as to the honesty of those witnesses and their experience with Ross Ulbricht, which is real corporeal, like you and I speaking here today, not behind a computer screen, where you cannot tell who is who, when is when, or what is what. Page 2222 You also know that Ross is a person who gets stressed out. It is the only evidence we have that's real. You heard that voicemail, Government Exhibit 1005, to Mr. Bates. I'm panicked. You saw 1004. Silk Road was too stressful. You heard Mr. Bates. Again, these are real witnesses, really experiencing things that actually happened. That he thought Ross was stressed out, that he thought Ross was overwhelmed. And then 2012, by the way, what's the message from Ross when Bates reaches out to him? Chillin'. Look at the journal entries in 2010, 2011, full of crises and anxiety. Look at 2013, starting in March, that one that is 241. There is nothing like that in there. There is nothing from Ross except at the very end. They talk about Amelia and poison oak, which is stuff that you could get from his Gmail account in two seconds. What about those IDs? Life on the lam. What did he ask KingOfClubs. Let's assume it is Mr. Ulbricht. It was delivered to his address. Domestic U.S. flights, life on the lam in the U.S. like that? Really. For a guy sitting on 700,000 bitcoins. That's safe? He is asking, if you look at those -- look at Government Exhibit 935. He asks about the details -- and I read it yesterday so I want to go over it today, I spent time on it. But he asks about features of these fake IDs. Does that sound like DPR, or a novice? He asks about being held at customs. Do you have any problems with your customers? Does that sound like DPR, or a novice? Page 2223 He knew about all of that, and yet when Homeland Security, Agent Critten came to him, he spoke to him voluntarily, even though he did not have to. Does that sound like DPR, or a novice? Critten, by the way, had no idea that it was a Silk Road package. Mr. Ulbricht volunteered the information about Silk Road when they said speak hypothetically about -- help us out. Speak hypothetically. Would DPR do that? Does that sound like DPR to you? To say, well, on Silk Road you could order anything. Imagine DPR doing that. Now, Ross gave Agent Critten his valid Texas driver's license. He gave him an email address -- on Tor, no less. Imagine DPR doing that. He said he was a currency trader. That's what Ross told him. And he admitted that he used a false name with his roommates at that time. Later on, when you heard that he moved to Crazy Cape after knowing that homeland security had come to him and he had spoken about Silk Road with them, he goes back to using his real name when he moves. Sound like DPR? You heard about his travel. There is no evidence of anything going on, foreign-to-foreign travel, or anything like that. You saw the passports. Page 2224 By the way, after the visit by Homeland Security, what does Ross do? Does he make travel plans? Does he leave the country? Are there bitcoin movements? Does he go underground? Live under an assumed name? No. The exact opposite. He does nothing. And what did they find when they arrested him? Only -- the only passport was his. That's more than two months after his encounterer with Agent Critten. He didn't run. He didn't go underground. He didn't remove any bitcoins or any money. He doesn't do anything that one would expect someone like DPR to do. Nothing that would indicate the security-savvy, security-conscious DPR. Agent D'Agostino gave you an example of how people get into other people's emails and get into their computer. You send an email that says "cute puppies" and you hope that people click on the link. Well, sometimes it comes from people you know. A pishing email. Would you judge that person you know based on that pishing email? Would you judge a person you know based on an email that says I'm stuck in a foreign country and I just got robbed, please send me a thousand dollars so I can get home? Would you judge that person on that email? I submit to you that you cannot find proof beyond a reasonable doubt in this case -- there is so much at stake for Mr. Ulbricht, his future -- based on evidence that so easily can be fabricated, edited, distorted, moved and manipulated. Page 2225 We experience with our senses. We make decisions based on our perceptions. And we employ our common sense based on facts you can rely on. We reach conclusions based on all of those elements. Yet, the Internet and the impenetrability of the computer screen deprives us of the ability to do that the same way we do "IRL," in real life. There is a reason that's a phrase, that is an acronym on the Internet, because there is a distinction between the Internet and IRL. We are here in IRL, and we have to make judgments based on IRL. The Internet denies us the ability to say for sure what is a masquerade, what is truth, what is fiction, what is transparent, and what is hidden from us. With all this digital evidence of chats and journals and logs and private messages and bitcoin wallets, not a single witness, other than Mr. Bates -- you ought to have a look at that material -- other than Mr. Bates, not a single witness came in and said created by Mr. Ulbricht, that Mr. Ulbricht was the person on the other side of the screen, except, again, that day of the arrest, after he was lured back in, I submit to you, with a phone call about the rating system, with a thumb drive. Again, we don't have to prove anything. It's up to the government to prove beyond a reasonable doubt. Your common sense and your life experience will tell you this kind of evidence we've seen here cannot be trusted beyond a reasonable doubt. Think about yourself. Think about those close to you. Think about the definition of reasonable doubt in important parts of your own affairs, important decisions in your own affairs. Judge that way. Page 2226 This case is not about a specific document here or there, because the entire process lacks integrity in terms of your ability to judge its reliability. That's what reasonable doubt is all about. Again, this is the last time I'll speak to you during the case. And because of that, I would ask you that when the government gets up again and speaks to you, that in your head you challenge the government on these issues. Where is the proof? Where is the reliability? Where is anyone who said that Ross Ulbricht composed those? Where is anyone that said they were composed on that laptop? Where is anyone that says when they were composed that the metadata isn't manipulated somehow. All we know is as easy as a keystroke. Challenge the government in your head. Where is the proof beyond a reasonable doubt that can be relied on in a matter of such importance in your own affairs. I'm confident when you do that, and when you do that in deliberations, you will reach only one conclusion: Ross Ulbricht is not guilty on every count in the Indictment. Thank you very much. Page 2227 THE COURT: All right. Thank you, Mr. Dratel. Mr. Howard. MR. HOWARD: Thank you, your Honor. So I get it. The defense theory appears to be that he was the victim of a complicated conspiracy, a huge setup with many, many layers. He admitted that he started the site, but then he quickly left and was set up at the very end. He was the fall guy. He was just in the wrong place at the wrong time. The defendant's story is absolutely ridiculous and defies all common sense. This is a desperate attempt to create a smokescreen, a distraction from the mountain of evidence that shows that that man created and ran Silk Road. Ladies and gentlemen, his digital fingerprints are on everything, which shows that he ran Silk Road from beginning to end. All the files on his laptop computer, the thumb drive found on his bedside table, the $18 million worth of bitcoins that were found on his laptop computer, his personal email, Facebook account and bank records, the posts on the various Internet forums that he made advertising the site, and on top of all of that evidence, the defendant simply cannot escape the fact that he was caught with his fingers on the keyboard. He was caught redhanded in the middle of a conversation as the Dread Pirate Roberts with an undercover agent who he thought at the time was posing as a member of his support staff. Page 2228 He was right there, logged into Silk Road as the Dread Pirate Roberts. But he claims that he had no control over what he was doing. He was not running Silk Road at the time. He had absolutely nothing to do with the thousands of pages of chat logs on his computer, journal entries, expense reports, all regarding the operation of Silk Road. Those aren't his, even though they were mixed with very intimate personal details about his life, details that match precisely in dates and content with his personal email account, on his Facebook account, and his bank accounts. These documents cover years and years. In the face of actual evidence, his story is absolutely ridiculous. This case is about -- this is about the evidence in this case. It's about the conduct of the defendant in this case. It's what each of the witnesses told you about the evidence against the defendant in this trial. It's about all the evidence that shows through and through that that man was the digital kingpin of the Silk Road underground criminal empire. The defense theory is a complete distraction that is not supported by any actual evidence. He tries to create boogie men and talk about hypothetical computer vulnerabilities. He comes up with an incredible fantasy, that he set up, that all the evidence was planted, all of the evidence was fabricated. Page 2229 He was caught redhanded, with a computer full of incriminating evidence. So what does he do? He pedals the same Dread Pirate Roberts story that he invented after he realized a mistake by telling too many people that were close to him about his secret. The one that came up with VJ -- the one that VJ and him came up with together after he had told VJ that he had told a couple of people in real life and told them that he had sold the site. And VJ said, you remember that chat. VJ said, you know what, you should come up with a new identity on the site. Remember the Princess Bride? You should become the Dread Pirate Roberts. That's exactly what he did in real life, and that's exactly the story he's trying to sell to you now, that he sold the site and someone else was the one running in. He knows he has to carefully craft the defense story right now because there are some things he simply cannot deny. He simply cannot deny that he started the site; the evidence is way too powerful on that point. And he can't deny that he was caught redhanded at the end. So he tells us now that he started and created Silk Road. He may have gotten too stressful, left quickly, and then was set up at the end by some mysterious hacker or little elves that put all of these files on his computer. This story does not add up. It defies all common sense. The defendant is the Dread Pirate Roberts and ran the Silk Road empire the entire time. Page 2230 Now, let's just start with something simple, the money, something that he does get. During opening arguments he didn't claim it was planted on his laptop, the 144,000 in bitcoins, almost worth $18 million at that time. And during open arguments this was legitimate investment income, or something about bitcoin mining. He admitted that they were his back then. But that's not true. You heard the testimony of former Special Agent Ilhwan Yum, which is absolutely devastating to that story that that was investment income. He showed you that he analyzed the bitcoin addresses that were recovered from the servers that were running Silk Road, and he analyzed the bitcoin addresses that were found on the defendant's laptop, the personal laptop that had 144,000 bitcoins, almost $18 million at the time of his arrest. Mr. Yum's analysis was clean and simple. It looked at direct transfers from Silk Road to the defendant, to the defendant's computer. The defendant is trying to cause confusion by trying to make bitcoins sound more complicated than they are. But don't be distracted. As Mr. Yum explained, it's much like bank accounts. You had one set of bank accounts here from Silk Road and another set that was associated with the defendant's laptop. And he found over 700,000 bitcoins and over 4,000 transactions in a year's period that flowed directly from Silk Road to the defendant's computer. He did that by looking at public records, the block chain. This was not legitimate investment income. This was Silk Road money. Page 2231 But now, after hearing Mr. Yum's testimony, there is a suggestion that that was planted, too. Just like the chat logs and the journal entries and the expense report, like all of those things, that was planted, too. But this is just the beginning. Let me just talk about a few of the things the defense also told you that defies common sense, the smokescreens that are designed to take your focus off the actual evidence in this case. Mr. Dratel talked a lot about this theme that the Internet is not what it seems. Multiple people company use different accounts. It thrives under deception and misdirection. Yet, the only deception and misdirection is the story they're trying to push right now. This is not that complicated. Imagine a bank robber in a case where the bank robber is robbed just as he's leaving the bank, holding the bag of cash, the bag with the gun, the getaway plan, and the cell phone with text messages going back for months where he's planning every single detail of the robbery. This is no different just because it happened on the Internet. He was caught red-handed with his hands at the keyboard. Computer crimes can be solved just like any other crime. The investigation showed that that man was the man behind the keyboard, the Dread Pirate Roberts. Page 2232 Now, the defendant makes a whole series of arguments that there's no way that he could have been the Dread Pirate Roberts because there is no way that the Dread Pirate Roberts could have been that sloppy. DPR was so careful and security conscious that he could not be the defendant. He would never have stored his encryption keys in a folder labeled "Keys" or accessed Silk Road from a library. He would have never kept a journal detailing all of the stuff that he did on Silk Road. The defense wants to paint the Dread Pirate Roberts as a perfect cybercriminal. Ladies and gentlemen, criminals make mistakes all the time. That's how they get caught. No one is perfect. And there are plenty of opportunities to make mistakes when you're running a massive online criminal enterprise for a period of years, which is processing hundreds of millions of dollars in illegal transactions. But the fact is he thought he was completely protected. He thought he was completely safe for two reasons. First, he thought he was safe because of the protections that he got from the Tor network. Second, he thought he was safe because he had a fully-encrypted computer. That was what he relied on to preserve his anonymity and protect himself from law enforcement. This was not the first time he had used someone else's wireless connection to access Silk Road. You may remember the testimony of Richard Bates, how when the defendant went over to Bates' house to show him Silk Road after he was forced to do so otherwise he wouldn't get any more help from Mr. Bates. He used the neighbor's Wi-Fi just to be sure in case -- in case he was wrong and something would get traced back to him. That's why he didn't use his house, ladies and gentlemen. That's why he went to a library. In case there was a mistake, it could have been any of the patrons in the library. It wouldn't be traced back to the defendant's home. He did that for his own protection. Page 2233 Tor was his shield. Sure, he told Special Agent Critten, after Critten tried to deliver the nine counterfeit driver's licenses to him, that hypothetically someone could buy these kind of things or drugs from Silk Road. He thought he had no chance of being caught. He thought he was smarter than everyone else. It's his ego, ladies and gentlemen. You see it in the journal entries. He thought he was safe because of Tor. He thought he was completely anonymous. And it didn't matter what Special Agent Critten might have learned about Silk Road based on his statements. He thought he was completely safe from law enforcement because his computer was encrypted. The defense showed you Government Exhibit 225B, the chat with Scout talking about where the Dread Pirate Roberts tells Scout put yourself in the defendant's -- the shoes of a prosecutor. They'd have to get right behind you and see you logon. Ladies and gentlemen, that's exactly what we did here. The FBI did exactly that. They were able to get behind him and catch him redhanded, logged on to the site, before he had a chance to close his computer and protect all the files that were in there through encryption. Page 2234 It doesn't matter what the names of the files were or the folders on the computer, whether the keys were stored in a folder named "Keys" or the aliases that he used, like Richard Page, you might remember, were stored in a folder named -- it didn't matter because no one would get anything so long as the encryption worked. But the FBI made sure that they got the computer before he could engage the encryption. If he had closed the laptop, it would have been, as Mr. Kiernan told you, a brick. He thought he was safe. He thought Tor and the encryption was going to save him. He thought we would never be able to show you all the documents we've shown you in court over the past few weeks. The defendant talks about Mark Karpeles. I am not going to talk about him very long. There is really no real evidence to support that. It is an utter distraction and a red herring. Remember what we learned about the ask any connection, any real connection that Mark Karpeles had to Silk Road. The Silk Road market.org website, not the Silk Road market on Tor but a simple website that was used to advertise the Silk Road, tell people how to get there. But it's even -- Mark Karpeles is even farther away than that. He owned a -- he ran a company that hosted hundreds and hundreds of websites, or servers where people could host their websites, and someone registered -- someone else registered the Silk Road market.org Web page, Web server at his company. And who was that? That was Richard Page. We showed you the registration information. That was Richard Page. There was a phone number. There was an address. And where do we find all of the same information about Richard Page? On the defendant's computer, in the folder labeled "Aliases." Page 2235 Silkroadmarket.org was not -- was tied to the defendant, not Mark Karpeles. Without -- and that's all you have. It's completely, completely smoke. Let's talk a little bit about Mr. Bates, Richard Bates. Mr. Turner told you you could tell he wasn't happy to be here to talk about his friend. They want to use his testimony and he did. He got up there and told you that on November 11, 2011, he had a party, the 11/11/11 party. They were excited that the days were all the same. And at that party the defendant got there early, had a private conversation with Mr. Bates, because he was worried. Mr. Bates told you that he saw that the defendant was nervous. Who else have you told? Who else have you told my secret to? Because he was having a crisis. He was having a crisis because he had also told his girlfriend, who was sloppy with the secret, and someone else posted on his Facebook. He was freaking out. Page 2236 That's not a man who had sold the site six months ago. That's a man who was connected to the site. So Bates got up there and told all of you that he believed the defendant when he told him he sold the site. The defense makes a big deal about Government Exhibit 1004, our exhibit which we showed, the 2013 conversation. Do you remember that conversation where Mr. Bates tells the defendant do you see the article on I think it was slashed out -- some article he was referencing on the Internet. And the defense says, Sheesh, I'm glad that that is not my problem anymore. Those are lies. Those are lies that are part of the story that he invented back then, that he had sold the site. You saw that almost exactly one month later, on December 9, 2011, he talked to VJ. VJ asked him whether he had told anyone else in real life. He told him he had told two people. He claimed that he had sold this story on them. He spun the story on them that he had sold the site and they believed him. Mr. Bates believed the defendant, that's true. But there you have it, a chat log on his computer where he admits that that's a lie. And then one month after that, that's when VJ comes up with the bright idea, let's deal with those loose ends, those people that you shared your secret with. Let's invent this new identity on the site, the Dread Pirate Roberts, as part of this whole scheme from the very beginning to claim that it's someone else. Page 2237 It's the same story from the very beginning. And he's trying to pull it over on you right now. None of this really matters. As Mr. Turner told you, he admitted to starting the site. He was logged in at the end. He had to have known the Dread Pirate Roberts' password. He was running Silk Road. Listen to the Judge's instructions, ladies and gentlemen. Just listen to the instructions. Once you put all the distractions off to the side, there is overwhelming evidence the defendant is guilty -- the laptop and everything on it. The defendant wants you to believe that it was all planted there at the last second, through BitTorrent or something, but this is ridiculous. He wants you to believe that all of those writings weren't his. Those weren't his words. But they absolutely were. He wants you to believe that literally thousands of pages of highly incriminating chats were invented from thin air and planted. That's not all. During the hundreds of files on that computer, all of those files were neatly organized by some boogie man who downloaded them to his personal computer at the last minute -- the Silk Road keys, the list of servers, the Silk Road accounting spreadsheet, the copy of the Silk Road website and the transaction database that was on his computer, the computer filled with documents, and the same documents talk about Silk Road and also talk about his personal life. Remember the spreadsheet in which he listed all of his assets, which had showed that he thought that Silk Road was worth $104 million to him, but then also had references to his job at Good Wagon Books and entries to the exact amount of money that he had in his USAA account and his PayPal account the last time that spreadsheet was updated. It is the same thing with the chats. Page 2238 Those chats, as I've mentioned, and as Mr. Turner mentioned, include details about his personal life that match up exactly with things you saw from his Facebook account and his email account. The trip to Thailand, his travel and his weekend getaways, the poison oak incident, getting sick. Remember the email in 2012 to his friend about statistics? The same email that was found copied almost exactly into the chat that was talking about Silk Road? He wants you to -- he's claiming that the part about his personal life are real but everything else is fabricated and planted. You have got to be kidding me. And how about the evidence seized from his residence? I just want to hold up. This is Government Exhibit 502A. These are the thumb drivers. They are very small, but one of these is very, very important; it is a powerful piece of evidence. It was a thumb drive that the FBI found on that man's bedside table. Page 2239 Now, Mr. Kiernan talked to you about this thumb drive. It contained backup copies of the Silk Road website, the same copies of files that were also found on the computer. It contained backup copies of other files from his computer, many of the incriminating documents you've seen during this trial. And Mr. Kiernan showed you the date that backup was made, September 23, 2013, weeks before he was arrested. So these files were planted on both the laptop and the thumb drive weeks apart? The same mysterious hacker or Mark Karpeles, or whoever you want it to be, broke into his house and planted that thumb drive on his bedside table? This shows that he was running the Silk Road website, ladies and gentlemen. He backed up his files to a thumb drive and he had left it on his table. It was encrypted. But Mr. Kiernan was able to figure out the encryption, and the evidence is very powerful. Mr. Kiernan showed you one of the files, the log file, the one that also contains the references to the murders for hire, when he talks about, you know, getting confirmation that the blackmailer was executed, the same file that had details about his personal life, about getting sick, that's corroborated by his Gmail account about the poison oak, about the date with Amelia. There were two different copies. There was a copy on the thumb drive that was up to date as of the date that the backup was made, September 23rd, and he had a copy on the laptop which had a more recent update about what he had done on Silk Road since the backup was made. It's devastating evidence, ladies and gentlemen. It's devastating. The story does not make sense, his story that has no actual evidence to support it. Page 2240 How about the piece of trash? Was that planted, too? The piece of paper with details about the vending system formula that was on the Silk Road website for weeks. Someone placed a telephone call and he blindly listened and wrote it down on a piece of paper, the exact same formulas that the Dread Pirate Roberts was talking about on Silk Road for changing the vending system? It doesn't make sense. This simply cannot be explained away. And, third, the money trail. The absolutely devastating evidence the bitcoins on his laptop were from Silk Road and not from legitimate investing as, you know, they wanted you to believe in opening statement. That money trail also shows you that he made two payments of hundreds and hundreds of thousands of dollars for those murders for hire. Again, we don't think -- there is no evidence those occurred, and hopefully they did not. But he felt threatened and he made those payments to arrange for a hitman to take out five different people. Thank God that didn't work out. As Mr. Turner explained, it showed he was willing to stop at nothing to protect his illegal empire, his multimillion-dollar empire. Page 2241 Ladies and gentlemen, the evidence is overwhelming that that man, Ross Ulbricht, built and operated Silk Road. At the end of the day, Judge Forrest will tell you that what I say is not evidence, what Mr. Dratel says is not evidence. Reasonable doubt is not about flights of fancy, ridiculous stories of conspiracy theories that do not match up with the actual evidence. It's your job to apply the evidence that you've heard, the actual evidence, to the law as the Judge will instruct you. Use your common sense and don't let the defendant insult your intelligence. You, the jury, are entrusted with finding the facts. Look past all of these distractions and look at the actual evidence. Listen to the Judge's instructions. Use your common sense. If you do these things, I expect that you will see the defendant's wild conspiracy theories do not hold water. There is only one real conspiracy here. That's the conspiracy that was created and run by that man -- to create Silk Road, to control every single aspect of that illegal empire, and for that he took his cut, his piece, of all the drugs and illegal goods that were sold on the site. *(Continued on next page)* Page 2242 MR. HOWARD: The evidence overwhelmingly shows that Ross Ulbricht was the digital kingpin of the underground online illegal marketplace that was Silk Road. We respectfully request that you return the only verdict consistent with the law, the defendant is guilty as charged. Thank you. THE COURT: All right. Thank you, Mr. Howard. Ladies and gentlemen, I don't think we have quite enough time to really get going with the jury instructions this afternoon, so instead, we'll adjourn for the day and then pick them up tomorrow morning. It will take me about, so you have your mind set, it will take me about an hour and 15, 20 minutes to get you the instructions. Now, let me just assure you that you're each going to have a copy of them on with you. We'll hand them out to you tomorrow morning so you can follow along. It will be what I say that's actually the instruction, but the instructions, it's pretty scripted, but every once in a while, I make a change. So it's important that you listen, even if you're following along. But we'll go through that and then and then immediately after that, you'll be allowed to go and deliberate. My expectation is that if we all can get going with our usual hope springs eternal, as soon as we can tomorrow morning, that you'll be deliberating before lunch for sure and then you can deliberate through lunch. One thing that I want to tell you about now which is you all have to be there together in order to deliberate. In other words, if somebody takes a cigarette break, you have to wait, right? Also, you can't in the morning start before everybody is there. So same thing with the instructions: We have to have everybody in our seats to get going. All right. Page 2243 And we'll talk about the role of the alternates also tomorrow as part of that whole discussion. So for tonight, I know that you have now heard all of the evidence in the case. You have now also heard the closing statements. However, you haven't been given the instructions on the law. So it does remain extremely important that you not talk to anybody, including each other or anybody else about this case. We're very close to the point that you'll be able to deliberate, but it's important that you hear my instructions on the law before you even speak with each other about the case. As you read news articles and things, anything that you think might be related to this case, you must turn your eyes and do not read that article. I instruct you that you cannot read any news articles until this case has been fully completed. I'll see you folks tomorrow morning and we'll hopefully start as close to 9:30 as we can. We're always trying. Have a good night. *(Jury excused)* *(Continued on next page)* Page 2244 *(In open court; jury not present)* THE COURT: Is there anything that you think we should go over before we break ourselves, before we break for the evening? MR. TURNER: Not from the government. MR. DRATEL: No, your Honor. THE COURT: Unless there is anything to be raised tomorrow morning, I don't think we need to gather before being all in our places and ready to go at 9:30. MR. DRATEL: Just as long as our previously stated objections are incorporated for purposes of the final charge that the Court has prepared. In other words, that we don't have to go through all of our prior objections that we made during the charge conferences. THE COURT: Yes. So let me just describe how it works because you have received now a final and then you've received an "as delivered." The difference between the two are some of the changes that I had given yesterday. I have given you absolutely every iteration. You're welcome and I encourage you to run a blackline against it if you want to look for any additional typographical errors, things that may have changed in there. Otherwise, I believe I released an opinion yesterday that went through my resolution of most of the substantive objections. To the extent that I didn't have a particular objection expressly pointed out in that written decision, it's relatively obvious after our discussion, I just went with one position or the other based upon the Court's review of the law. So all objections that were lodged, either orally or in the written submissions, there were both letters which the Court, when this is all done, will post on the docket for the jury instructions, as well as the additional defense instructions. Page 2245 My practice is to have 100 percent of that go onto the docket so that if anybody ever chose to do so, they could recreate, between the transcript and those written submissions and the track changes, exactly what's occurred, so I think there will be a complete record. MR. DRATEL: I'm saying it so we don't have to restate again. I prefer not to. Believe me. THE COURT: Your objections as they have been set forth so far are preserved. If there's anything new that you think you needed to raise, then you'd have to do it. But the ship has sort of sailed, but if you did have something, I wouldn't want you not to say something, but the objections you've already made have been made. MR. DRATEL: Thank you, your Honor. THE COURT: If there is anything that you folks want to go over, get ahold of each other and I'll be here in any event and we can deal with things at 9:00; otherwise, let's try to be here as close to 9:30 as possible. Page 2246 MS. LEWIS: One logistical matter. THE COURT: Let's sit down. I thought it would be quick. MS. LEWIS: One logistical matter and we mentioned the exhibits, there are a lot in this case, would you prefer we check the exhibits tonight then? THE COURT: I don't mind, frankly, logistically whether you do it tonight or tomorrow morning before 9:30, but you need to have resolved everything that's going into the jury room in agreement between the parties. And if there's any dispute, I will resolve it. In other words, if there's a demonstrative and somebody thinks they're sending it back into the jury room, right, and there's a dispute, then you folks need to discuss it and then you need to raise it with me if you can't resolve it. The reason I say that is I've actually had cases where after it's gone back into the jury room, a verdict is ready to come out before they have the documents rolled in because it can sometimes -- that, I don't expect to occur in this case, but it has trained me that it needs to get rolled in at the same time because I do want to recite that all the documents were there and available to the jury. Whenever you want to do it, do it, but the moment that I'm done with the charge, I wanted to launch that there. MR. TURNER: So I'm perfectly clear, are you saying that all of the exhibits should go in or that the parties should confer about which selection go in? Page 2247 THE COURT: Here is my view: Anything that has been received into evidence as evidence in this case, in other words, let's put aside things that were just shown marked for identification and potentially depending upon your view of the demonstratives, and that can be how you folks decide, that should go back, right? I'm not saying pick and choose ten exhibits here, ten exhibits there. There's an entire list of exhibits and my view is they should go in order, all of them, into the jury room. MR. TURNER: Okay. Understand. Thank you. THE COURT: Now, the other issue, and I assume that you folks will have this automatically, is to have -- the U.S. Attorney's Office always has this -- is an electronic version of the transcript available in case there are questions which require us to extract testimony so that we can do that relatively quickly. It's a lot easier than the cutting and pasting, so I assume you folks have that capability on this case. MR. TURNER: We have been working on that. THE COURT: Terrific. I told you I'm going to send the indictment back, and I left it up for inspection. It's up here as well. I will send back into the jury room -- the four alternates will be told to go home. They are not going to be dismissed. I'm sure we've all had it, I've had it, where there's been an alternate called upon and the jury deliberations must commence anew, so the alternates remain part of the jury panel until it's done, but they won't, in the initial instance, deliberate with the panel of 12. Page 2248 But I will send 13 copies of the verdict form into the jury room; that's one for each juror and an extra because they tend to mark them up and they need an extra. So, that's why we have the 13 here. If you're wondering what they look like, they're right here. It's what you've seen before. It's what was already circulated. I hadn't made the initial changes apart from adding signature lines. It is my practice to have each of the 12 jurors sign, as well as whoever they choose as the foreperson, the actual verdict form. The one thing I did want to say was in terms of once the jury is charged, I need one lead counsel from each side -- and, of course, the defendant will need to remain available throughout the entire deliberation process all day -- until we get a verdict in how ever many days it takes, so if we have questions, people aren't running over from wherever they're running over from. So we can reach you, it doesn't mean you have to be right here, but Joe needs to know exactly where in the building you are. So if you have gone to the cafeteria or someplace else, Joe needs to know exactly where to find you. And you guys I'm sure your experience is the same: Typically, if you're going to get a question, you often get it in the first hour, hour and-a-half and then there might be a delay when they're talking, but they might have an initial question and then a delay before additional questions. Page 2249 Anything else? MR. DRATEL: No, your Honor. THE COURT: We are adjourned for the evening then until tomorrow morning. THE DEPUTY CLERK: All rise. *(Adjourned to February 4, 2015 at 9:30 a.m.)* * * * Page 2250 INDEX OF EXAMINATION Examination of: Page CHRISTOPHER KINCAID Direct By Ms. Lewis . . . . . . . . . . . . .2099 Cross By Mr. Howard . . . . . . . . . . . . .2103 Redirect By Ms. Lewis . . . . . . . . . . . .2105 BRIDGET PRINCE Direct By Mr. Dratel . . . . . . . . . . . . .2107 DEFENDANT EXHIBITS Exhibit No. Received M . . . . . . . . . . . . . . . . . . . . .2109 Page 2251 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 14 Cr. 68 (KBF) ROSS WILLIAM ULBRICHT, Defendant. ------------------------------x New York, N.Y. February 4, 2015 10:06 a.m. Before: HON. KATHERINE B. FORREST, District Judge APPEARANCES PREET BHARARA, United States Attorney for the Southern District of New York BY: SERRIN A. TURNER TIMOTHY HOWARD Assistant United States Attorneys JOSHUA LEWIS DRATEL LINDSAY LEWIS JOSHUA HOROWITZ Attorneys for Defendant - also present - Special Agent Vincent D'Agostino Molly Rosen, Government Paralegal Nicholas Evert, Government Paralegal Page 2252 *(Trial resumed; jury not present)* THE COURT: Good morning, everyone. Let's all be seated and get appearances and then we'll get the jury out. THE CLERK: Continuation of the matter now on trial, United States of America versus Ross William Ulbricht, 14 Cr. 68. Counsel, please state your names for the record. MR. TURNER: Good morning, your Honor. This is Serrin Turner for the government. With me at counsel's table is Timothy Howard, Nicholas Evert and Molly Rosen. THE COURT: Good morning to all of you. MR. DRATEL: Good morning, your Honor. Joshua Dratel for Ross Ulbricht, who is standing beside me, Lindsay Lewis from my office, and Joshua Horowitz. THE COURT: Good morning to all of you. We're going to get the jury out here in just a moment. I want to confirm that there are no issues that you folks would like to raise with me before we begin the process of instructing the jury. MR. TURNER: Not from the government. MR. DRATEL: No, your Honor. Thank you. THE COURT: All right. Let's go ahead, then, and bring out the jury. *(Continued on next page)* Page 2253 THE CLERK: All rise as the jury enters. *(Jury present)* THE COURT: All right. Ladies and gentlemen, let's all be seated. You all have had left on your chairs two documents, and don't let the size of the thicker of the two scare you. Many pages only have a little bit of text. Some pages are entirely full. But these are the jury instructions that I will be going over with you this morning, and it's sometimes helpful for people to have a copy and to follow along. As I mentioned yesterday, however, what I say is in fact the instructions to you. So I want you to listen to what I'm saying. So don't skip ahead. Follow along with me. You also have there a copy of the verdict form -- Joe is going to give it to you right now -- of the verdict form. There will be one for each of you. There will be an extra blank verdict form -- they will all be blank -- in the jury room. The reason that I give all of you a verdict form now and also have an extra one is sometimes people mark on it or something else and then they find that they need a clean one at the very end of the process. So that I found it's just as easy to go ahead and put an extra one in the room for you. But the verdict form gives you a sense as to the information that you will be needing to make decisions about, and we'll go through it also. Page 2254 Let me tell you first what you're going to have in the jury room with you. You're going to have these two documents. You will be able to take your copy of the instructions back into the jury room with you. You'll have your copy of the verdict form. There will be the extra verdict form. You'll have all of the documents that were admitted into evidence. They will be rolled into the jury room in a cart and they will be there for you. So if you want to look at some of the exhibits, for instance, that were shown on the screen at various times, those are also in hardcopy form and you will be able to then look at them, should you choose to do so. They will be available for you. You will also have a copy, just one, of the Indictment in this matter, which we have been referring to from time to time. It's called a "Superseding Indictment" but it's the charging instrument in this matter. And you're going to have some forms for questions if you want to write questions. The foreperson, whoever you folks decide -- and that will be up to you however you want to decide it, who your foreperson is -- the foreperson will sign the questions on these pieces of paper, but anybody can write the question. In fact, I've gotten questions sometimes that look like they have been passed around. One person writes a question, somebody else writes a question, and then the foreperson signs it. And we'll talk about that process at the very end. Page 2255 And then you'll have some manila envelopes that you'll put the questions into, because nothing will come out of that room unless it's in a sealed envelope, which then I will get directly. It will remain sealed until it reaches the Court. Now, I want to remind you, as I started to say yesterday, that you can't deliberate unless all of you are in the room at the same time. All right? So if you folks have somebody who goes out for a cigarette break, you've got to wait until they come back. In the morning, if you're deliberating tomorrow morning, then you've got to wait until everybody arrives. You can't deliberate without everybody because everybody needs to make decisions unanimously. We're going to have lunch for you. We're going to have snacks this afternoon. So you will be able to work right on through. And you will effectively organize yourselves. I will give you your start and end hours, but when you choose to take a break will be something that you folks decide. You will be able to decide that yourself. All right. And I said I would talk about the alternates at the end. The alternates, I have had instances -- I've actually had several instances where after the panel of 12 is sent into the room -- the alternates are not dismissed from the case but you don't go into the room. But I have had instances where by the next morning I have needed to call one or more alternates. So we'll talk about that. But by no means does the fact that the 12 start deliberations necessarily mean at all that the alternates won't be called on to come join, for any number of reasons. Somebody can get a stomach virus that puts them out of pocket. Things happen. All right? And we'll talk about that more. Page 2256 Now, I'm starting on page 3. You will see that there is a handy table of contents there in the front that will, if you are looking later on about where to go for things, you can see that. The reason that the instructions are written like this is because, as you can imagine, the law is very precise in terms of what courts should instruct juries with respect to when you are dealing with particular causes of action. So these are highly and carefully scripted instructions. So that's why it's written out and I don't just wing it. All right? All right. So, the role of the Court. You have now heard all of the evidence in the case, as well as the final arguments from the lawyers for the parties. My duty at this point is to instruct you as to the law. It is your duty to accept those instructions of law and to apply them to the facts as you, ladies and gentlemen of the jury, determine them. On these legal matters, you must take the law as I give it to you. Regardless of any opinion that you may have as to what the law may be -- or ought to be -- it would violate your sworn duty to base a verdict upon any other view of the law than that which I give to you. If an attorney or anyone else at trial has stated a legal principle different from any that I state to you in my instructions, it is my instructions that you must follow. Page 2257 You should not single out any instruction alone stating the law, but you should consider my instructions as a whole when you retire to deliberate in the jury room. And you may take a copy of these instructions into the jury room with you. Your role is to pass upon and decide the fact issues that are in this case. You, ladies and gentlemen of the jury, are the sole and the exclusive judges of the facts. You pass upon the weight of the evidence or lack of evidence; you determine the credibility of the witnesses; you resolve such conflicts as there may be in the testimony; and you draw whatever reasonable inferences you decide to draw from the facts as you have determined them. The evidence before you consists of the answers given by witnesses and the exhibits and stipulations which were received into evidence. In determining the facts, you must rely upon your own recollection of the evidence. I will instruct you at the end of these charges about your ability to request to have testimony read back and your access to other evidence admitted during the trial, like I have already told you about the cart that will have all of the exhibits in it. Page 2258 Now, what the lawyers have said in their opening statements, in their objections, in their questions, and what they have said in their closing arguments is not evidence. You should bear in mind particularly that a question put to a witness is never evidence. Only the answer is evidence. If a witness affirms a particular fact in a question by answering "yes," you may consider that fact as agreed on by the witness. The weight that you give that fact is up to you. Nor are you to substitute anything that I may have said during the trial or during these instructions with respect to facts for your own independent recollection. It's your recollection which governs. What I say is not evidence. If I have sustained an objection to a question or stricken testimony, any stricken answers given by a witness are no longer part of the evidence in this case, and you may not consider them. You should draw no inference or conclusion for or against any party because of a lawyer's objections. Counsel not only have the right but the duty to make legal objections when they think that those objections are appropriate. Also, do not draw any inferences from any of my rulings. The rulings I have made during the trial are not any indication of my views of what your decision should be as to whether or not the government has proven the defendant guilty of any of the crimes charged beyond a reasonable doubt. You should draw no inference or conclusion of any kind, favorable or unfavorable, with respect to any witness or any party in the case, because of any comment, question, or instruction of mine. Page 2259 Now, your verdict must be based solely upon the evidence or lack of evidence. It would be improper for you to consider any personal feelings that you may have about the defendant's race, ethnicity, or national origin. It would be equally improper for you to allow any feelings that you might have about the nature of the crimes charged to interfere with your decision-making process. I also want to remind you that before each of you was accepted and sworn to act as a juror, you were asked questions concerning competency, qualifications, fairness, and freedom from prejudice and bias. On the faith of those answers, you were accepted as jurors by the parties. Therefore, those answers are as binding on each of you now as they were then, and should remain so, until the jury is discharged from consideration of this case. The fact that the prosecution is brought in the name of the United States of America entitles the government to no greater consideration than that given to any party to a litigation. By the same token, the government is entitled to no less consideration. As you know, the defendant has pled not guilty to the charges in the Indictment. As a result, the burden is on the government to prove the defendant's guilt beyond a reasonable doubt. This burden never shifts to the defendant for the simple reason that the law never imposes upon a defendant in a criminal case the burden or duty of testifying, or calling any witness, or locating or producing any evidence. Page 2260 The law presumes a defendant to be innocent of the charges. This presumption was with the defendant when the trial began and remains with the defendant unless and until you are convinced that the government has proved the defendant's guilt beyond a reasonable doubt. Even though the defendant has called witnesses in this case, the presumption of innocence remains with him, and the government still has the burden of proof beyond a reasonable doubt. The question, therefore, naturally arises: "What is a reasonable doubt?" What does that phrase mean? The words almost define themselves. A reasonable doubt is a doubt based in reason and arising out of the evidence in the case, or the lack of evidence. It is a doubt that a reasonable person has after carefully weighing all of the evidence in the case. Reasonable doubt is a doubt that appeals to your reason, your judgment, your experience, and your common sense. Proof beyond a reasonable doubt must, therefore, be proof of such a convincing character that a reasonable person would not hesitate to rely and act upon it in his or her own important affairs. In other words, if you have such a doubt as would reasonably cause a prudent person to hesitate in acting in important matters in his or her own affairs, then you have a reasonable doubt, and in that circumstance it is your duty to find the defendant not guilty. Page 2261 Reasonable doubt is not whim and it's not speculation. It is not an excuse to avoid the performance of an unpleasant duty. Nor is it sympathy for the defendant that you are considering. "Beyond a reasonable doubt" does not mean a positive certainty, or beyond all possible doubt. After all, it is virtually impossible for a person to be absolutely and completely convinced of any contested fact that by its nature is not subject to mathematical proof and certainty. As a result, the law in a criminal case is that it is sufficient if the guilt of the defendant is established beyond a reasonable doubt, not beyond all possible doubt. The defendant, Ross Ulbricht, has been formally charged in what is called an "Indictment." As you instructed you at the outset the of the trial, the Indictment is simply an accusation. It is no more than the means by which a criminal case is started. It is not evidence. It is not proof of the defendant's guilt. It creates no presumption, and it permits no inference that the defendant is guilty of the crimes charged. Page 2262 You are to give no weight to the fact that an Indictment has been returned against the defendant. I'm not going to read the entire Indictment to you. You are going to have a copy of it in the jury room with you, and you can read it, if you choose to do so, in its entirety. Rather, in a moment I will summarize the charges in the Indictment and then explain in detail the elements of each crime that is charged. Now, before I get to that, I want to talk to you about direct and circumstantial evidence. There are two types of evidence that you can use in reaching your verdict. One type of evidence is "direct evidence." One kind of direct evidence is a witness' testimony about something that he or she knows by virtue of his or her own senses -- something that the witness has smelled, touched, seen or heard. Direct evidence may also be in the form of an exhibit. The other type of evidence is "circumstantial evidence." Circumstantial evidence is evidence that tends to prove one fact by proof of other facts. By way of example, if you wake up in the morning and see that the sidewalk is wet, you may find from that fact that it rained during the night. However, other evidence, such as a turned-on garden hose, may explain the water on the sidewalk. Therefore, before you decide that a fact has been proven by circumstantial evidence, you must consider all of the evidence in light of reason, experience, and common sense. Page 2263 That is all there is to circumstantial evidence. You infer based on reason, experience and common sense from an established fact the existence or the nonexistence of some other fact. Many facts, such as a person's state of mind, can rarely be proven by direct evidence. Circumstantial evidence is of no less value than direct evidence. It is a general rule that the law makes no distinction between direct and circumstantial evidence, but simply requires that, before convicting a defendant, you, the jury, must be satisfied of the defendant's guilt beyond a reasonable doubt from all of the evidence in the case. Now, you have heard reputation evidence about the defendant's character trait for peacefulness and nonviolence. This testimony is not to be taken by you as the witness' opinion as to whether or not the defendant is guilty or not guilty of the crimes charged. That question is for you alone to determine. You should consider character evidence together with and in the same way as all the other evidence in the case. Now, during the trial, and as I give you these instructions, you have heard and will hear the term "inference." For instance, in their closing arguments, the attorneys have asked you to infer, based on your reason, your experience, your common sense, from one or more established facts, the existence of some other facts. I have instructed you on circumstantial evidence just a moment ago and that it involves inferring a fact based on other facts, your reason, and your common sense. Page 2264 So what is an "inference"? What does it mean to "infer" something? An inference is not a suspicion. It is not a guess. It is a reasoned, logical decision to conclude that a disputed fact exists based on another fact that you know exists. There are times when different inferences may be drawn from facts, whether proven by direct or circumstantial evidence. The government asks you to draw one set of inferences, while the defense asks you to draw another. It is for you, and you alone, to decide what inferences you will draw. The process of drawing inferences from facts in evidence is not a matter of the guesswork or speculation. An inference is a deduction or conclusion that you, the jury, are permitted but not required to draw from the facts that have been established by either direct or circumstantial evidence. In drawing inferences, you should use your common sense. Therefore, while you are considering the evidence presented to you, you may draw, from the facts that you have found to be proven, such reasonable inferences as would be justified in light of your experiences. Page 2265 Some inferences, however, are impermissible. You may not infer that the defendant is guilty of participating in criminal conduct merely from the fact that he was present at the time the crime was being committed and had knowledge that it was being committed. Nor may you use evidence that I have instructed you was admitted for a limited purpose for any inference beyond that limited purpose. In addition, you may not infer that the defendant is guilty of participating in criminal conduct merely from the fact that he associated with people who were guilty of wrongdoing or merely because he has or had knowledge of the wrongdoing of others. Here again, let me remind you that, whether based upon direct or circumstantial evidence, or upon the logical, reasonable inferences drawn from such evidence, you must be satisfied of the guilt of the defendant beyond a reasonable doubt before you may convict the defendant on any of the crimes charged. Now for the important subject of evaluating testimony. How do you evaluate the credibility or the believability of witnesses? The answer is that you use your plain common sense. Common sense is your greatest asset as a juror. You should ask yourselves, did the witness impress you as honest, open, and candid? Or did the witness appear evasive, or as though the witness were trying to hide something? How responsive was the witness to the questions asked on direct examination and on cross-examination? Page 2266 If you find that a witness is intentionally telling a falsehood, that is always a matter of importance that you should weigh carefully. If you find that any witness has lied under oath at this trial, you should view the testimony of such a witness cautiously and weigh it with great care. It is, however, for you to decide how much of a witness' testimony, if any, you wish to believe. Few people recall every detail of every event precisely the same way. A witness may be inaccurate, contradictory, or even untruthful in some respects and yet entirely believable and truthful in other respects. It is for you to determine whether such inconsistencies are significant or inconsequential, and whether to accept or reject all or to accept some and reject the balance of the testimony of that witness. On some occasions during this trial, witnesses were asked to explain an apparent inconsistency between testimony offered at this trial and previous statements made by the witness. It is for you to determine whether a prior statement was inconsistent, and, if so, how much, if any, weight to give to an inconsistent statement in assessing the witness' credibility at trial. You may consider evidence of a witness' prior inconsistent statement only insofar as it relates to the witness' credibility. Page 2267 In evaluating credibility of the witnesses, you should take into account any evidence that the witness who testified may benefit in some way from the outcome of the case. Such an interest in the outcome of the case -- Joe, sorry. We are pausing because they are drilling again. I don't want you to feel like you are at the dentist. You will take care of it? THE CLERK: Yes. THE COURT: We got them to take care of it the other day. I'm sure that we will get them to just stand down for a little while. Let my start that paragraph over again. We are on page 17, if you are following along. In evaluating the credibility of the witnesses, you should take into account any evidence that the witness who testified may benefit in some way from the outcome of this case. Such an interest in the outcome creates a motive to testify falsely, and may sway the witness to testify in a way that advances his own interests. Therefore, if you find that any witness whose testimony you are considering may have an interest in the outcome of this trial, then you should bear that factor in mind when evaluating the credibility of his or her testimony and accept it with great care. This is not to suggest that any witness who has an interest in the outcome of this case would testify falsely. It is for you to decide to what extent, if at all, the witness' interest has affected or colored his or her testimony. Page 2268 You are not required to accept testimony even though the testimony is uncontradicted and the witness' testimony is not challenged. You may decide because of the witness' bearing or demeanor, or because of the inherent improbability of the testimony, or for other reasons sufficient to yourselves that the testimony is not worthy of belief. On the other hand, you may find, because of a witness' bearing and demeanor and based upon your consideration of all the other evidence in the case, that the witness is truthful. Thus, there is no magic formula by which you can evaluate testimony. You bring to this courtroom all your experience. You determine for yourselves in many circumstances in your everyday life the reliability of statements that are made to you by others to you and upon which you are asked to rely. You may use the same tests here that you use in your everyday lives. You may consider the interest of any witness in the outcome of this case and any bias or prejudice of any such witness, and this is true regardless of who called or questioned the witness. Now, a defendant in a criminal case does not have a duty to testify or to come forward with any evidence. Under our Constitution, a defendant has no obligation to testify or to present any evidence, because it is the government's burden to prove a defendant guilty beyond a reasonable doubt. That burden remains with the government throughout the entire trial and never shifts to the defendant. The defendant is never required to prove that he is innocent. Page 2269 In this case, the defendant, Ross Ulbricht, chose not to testify. You must not attach any significance to the fact that the defendant did not testify. I instruct you that no adverse inference against the defendant may be drawn by you because he did not take the witness stand, and you may not consider it in any way in your deliberations in the jury room. You have heard the testimony of various members of law enforcement. The fact that a witness may be employed as a law enforcement official or employee by the United States of America or the United States government or by a foreign government does not mean that his testimony deserves more or less consideration or greater or lesser weight than that of an ordinary witness. At the same time, it is legitimate for defense counsel to try to attack the credibility of law enforcement witnesses because his testimony may be colored by a personal or professional interest in the outcome of the case. It is your decision, after reviewing all of the evidence, whether to accept the testimony of law enforcement or government employee witnesses, as it is with every other type of witness, and to give that testimony the weight that you find that it deserves. Page 2270 I note that some of the testimony that you heard from law enforcement agents included testimony concerning what they personally suspected or believed about particular individuals at particular points during their investigations. As I have instructed you previously, such beliefs or suspicions of a law enforcement agent, or any other witness, are not evidence and should be disregarded. You have heard from witnesses who testified that they committed crimes. Let me say a few things that you want to consider during your deliberations on the subject of what we call cooperating witnesses. Cooperating witness testimony should be given such weight as it deserves in light of the facts and circumstances before you, taking into account the witness' demeanor, candor, the strength and accuracy of the witness' recollection, the witness' background, and the extent to which the witness is or is not corroborated by other evidence in the case. Because of the possible interest that a cooperator may have in testifying for the government, you should scrutinize his testimony with special care and caution. You may consider the fact that a witness is a cooperator as bearing upon his credibility. You may consider whether a witness, like any other witness in this case, has an interest in the outcome of the case and, if so, whether it has affected his testimony. It does not follow, however, that simply because a person has admitted to participating in one or more crimes, he is incapable of giving a truthful version of what happened. Page 2271 You also heard testimony about cooperation or nonprosecution agreements between the government and cooperating witnesses. The existence of such an agreement itself and its effect on the witness may be considered by you in determining credibility. Your sole concern is whether a witness has given truthful and accurate testimony here in this courtroom before you. In evaluating the testimony of a cooperating witness, you should ask yourselves whether the witness would benefit more by lying, or by telling the truth. Was his testimony fabricated in any way because he believed or hoped that he would somehow receive favorable treatment by testifying falsely? Or did he believe that his interests would be best served by testifying truthfully? If you believe that the witness was motivated by hopes of personal gain, was the motivation one that would cause him to lie, or was it one which would cause him to tell the truth? Did this motivation color his testimony? If you find that the testimony was false, you should reject it. However, if, after a cautious and careful examination of the cooperating witness' testimony and demeanor upon the witness stand, you are satisfied that the witness told the truth, you should accept it as credible and act upon it accordingly. As with any witness, let me emphasize that the issue of credibility need not be decided in an all-or-nothing fashion. Even if you find that a witness testified falsely in one part, you still may accept his or her testimony in other parts, or may disregard all of it. That is a determination entirely for you, the jury. Page 2272 You have also heard testimony that one of the cooperating witnesses pled guilty to charges arising from drug dealing on Silk Road. You are instructed that you are to draw no conclusions or inferences of any kind about the guilt of the defendant on trial from the fact that a government witness pled guilty to similar charges. The decision of that witness to plead guilty was a personal decision that that witness made about his own guilt. It may not be used by you in any way as evidence against or unfavorable to the defendant on trial here. You may not draw any inference, favorable or unfavorable, towards the government or the defendant on trial, from the fact that certain persons were not named as a defendant in the Indictment. The fact that these persons are not on trial here must play no part in your deliberations. Whether a person should be named as a co-conspirator or indicted as a defendant is a matter within the sole discretion of the United States Attorney and the Grand Jury. Therefore, you may not consider it in any way in reaching your verdict as to the defendant on trial. Page 2273 You have heard evidence during the trial that witnesses have discussed the facts of the case and their testimony with government lawyers, the defense lawyers, or their own lawyers before the witness appeared in court. Although you may consider that fact when you are evaluating a witness' credibility, I instruct you that there is nothing either unusual or inherently improper about a witness meeting with the government lawyers, the defense lawyers, or his or her own lawyers before testifying so that the witness can be aware of the subjects he or she will be questioned about, focus on those subjects, and have the opportunity to review relevant exhibits before being questioned about them. Such consultation helps conserve your time and the Court's time. In fact, it would be unusual for a lawyer to call a witness without such consultations. The weight you give to the fact or the nature of the witness' preparation for his or her testimony and what inferences you draw from such preparation are matters completely within your discretion. You have heard reference throughout the questioning to the fact that certain investigative techniques were used by the government. There is no legal requirement, however, that the government prove its case through any particular means. Page 2274 Your concern is whether or not, on the evidence or lack of evidence, the government has proved the defendant's guilt beyond a reasonable doubt. Some of the evidence in this case has consisted of electronic communications seized from computers or electronic accounts. There is nothing illegal about the government's use of such electronic communications in this case and you may not -- let me start that sentence over again. There is nothing illegal about the government's use of such electronic communications in this case, and you may consider them along with all the other evidence in this case. Whether you approve or disapprove of the seizure of these communications may not enter into your deliberations. You must, therefore, regardless of any personal opinions, consider this evidence along with all the other evidence in the case in determining whether the government has proved beyond a reasonable doubt the guilt of the defendant. However, as with other evidence, it is for you to determine what weight, if any, to give to such evidence. You have also heard some evidence in the form of what are called "stipulations." A stipulation of fact is an agreement among the parties that a certain fact is true. You should regard such agreed facts as true. A stipulation of testimony is an agreement among the parties that, if called to testified, a witness would give certain testimony. You must accept as true the fact that the witness would have given the testimony. However, it is for you to determine the effect or weight to give that testimony. Page 2275 Now, some of the exhibits were charts, tables, or other forms of summary exhibits. These exhibits are not direct evidence. They are graphic representations or other ways of summarizing more voluminous information that was either described in the testimony of a witness or reflected in documents admitted into evidence. It is often easier and more convenient to utilize charts, tables, and summaries as opposed to placing all of the underlying documents or data in front of you. But it is for you to decide whether the summary exhibits fairly and correctly reflect the underlying testimony and documents and data that they purport to summarize. To the extent that the summary exhibits conform with your understanding of the underlying evidence, you may accept them. To the extent they do not, you should set them aside and rely on the underlying evidence instead. But one way or the other, realize that the summary exhibits are not in and of themselves direct evidence. They are merely intended to serve as aids in a party's presentation of the evidence, and they are nothing more. Some of the exhibits admitted into evidence consist of excerpts of longer documents that were not admitted into evidence in their entirety. These excerpts are simply the portions of the underlying documents considered to be most relevant to the case by the party introducing them. There is nothing unusual or improper about the use of such excerpts, and you are not to infer from the use of such excerpts that any relevant portion of a document has been omitted. Page 2276 Similarly, some of the exhibits admitted into evidence include redactions of certain information. Again, there is nothing unusual or improper about such redactions, and you are not to infer from the use of such redactions that any relevant portion of a document has been removed. You have heard the names of several people during the course of the trial who did not appear here to testify, and one or more of the attorneys may have referred to their absence. I instruct you that each party had an equal opportunity or lack of opportunity to call any of these witnesses. However, the government bears the burden of proof; the defendant does not bear the burden of proof. Therefore, you should not draw any inference or reach any conclusions as to what those persons would have testified to had they been called. Their absence should not affect your judgment in any way. You should, however, remember my instruction that the law does not impose on a defendant in a criminal case the burden or duty of calling any witnesses or producing any evidence. Page 2277 Now, I want to get into the specific charges in the Indictment and go through the elements. Are you all doing OK? *(Pause)* We are on page 32. It is entitled "Charge." The defendant, Ross Ulbricht, has been formally charged in a document called an Indictment. As I instructed you at the outset of this case, an indictment is a charge or an accusation. It is not evidence. Here, the Indictment contains seven counts. And your verdict form, by the way, lists each of those counts individually, and you will reach a separate verdict as to each count one by one. You will have a copy of the Indictment in the jury room with you, and you can read each count in its entirety. I am going to provide you just a brief summary now: Count One charges the defendant with distributing narcotics or aiding and abetting the distribution of narcotics. Count Two charges the defendant with distributing narcotics or aiding and abetting the distribution of narcotics by means of the Internet, specifically. Count Three charges the defendant with conspiring with others to violate the narcotics laws of the United States. Count Four charges the defendant with engaging in a "continuing criminal enterprise." Sometimes that's referred to as a "CCE," a continuing criminal enterprise, a term that I'm going to define for you more in a moment. Page 2278 Count Five charges the defendant with conspiring with others to commit or aid and abet computer hacking. Count Six charges the defendant with conspiring with others to traffic in fraudulent identification documents or to aid and abet such activity. Count Seven charges the defendant with conspiring with others to commit money laundering. Now, as I just indicated, the Indictment contains a total of seven counts. Each count constitutes a separate offense, or separate crime. And you must consider each count of the Indictment separately, and you have to return a verdict on each one separately, so you will go through them one by one. Now, let's talk about Count One. As I said, Count One charges the defendant with distributing or aiding and abetting the distribution of narcotics. In order to find the defendant guilty of this count, you must find that the government has proven beyond a reasonable doubt the following two elements: First, that the defendant distributed or aided and abetted the distribution of controlled substances. I will use the terms "controlled substances," "narcotics" and "drugs" interchangeably; and, second, that he did so knowingly and intentionally. Page 2279 So let's talk about some of that. The term "distribute" refers to selling, delivering, or otherwise transferring narcotics from one person to another. One can also be said to "distribute" narcotics by committing an act in furtherance of a sale, delivery, or transfer, such as brokering a sales transaction, receiving purchase money, or arranging for the delivery of narcotics. It is not necessary for you to find that the defendant himself personally possessed any narcotics in order for you to find that he participated in distributing narcotics. However, distribution requires a concrete involvement in the transfer of the drugs. The second element the government must prove as to Count One is that the defendant acted knowingly or intentionally in distributing or aiding and abetting the distribution of narcotics. To satisfy this element, you must find that the defendant had knowledge that what he was distributing consisted of narcotics or that he intended to distribute narcotics. Knowledge is a matter of inference from facts proved. A person acts "intentionally" and "knowingly" if he acts purposefully and deliberately and not because of mistake or accident, mere negligence, or other innocent reason. That is, the acts must be the product of the defendant's conscious objective. Page 2280 So now you've heard me use the word, the phrase, "aiding and abetting," and I want to describe that to you now. In addition to charging the defendant under the federal law that makes it illegal to distribute narcotics, Count One also charges the defendant under a federal law that makes it a crime for anyone to aid and abet a federal offense, including narcotics trafficking. Under this aiding and abetting statute, it is not necessary for the government to show that the defendant himself physically committed the crime with which he is charged in order for you to find him guilty of committing that crime. Thus, even if you do not find beyond a reasonable doubt that the defendant himself committed the substantive crime charged, you may, under certain circumstances that I will describe, still find the defendant guilty of the crime as an aider or abettor. Aiding and abetting means knowingly and intentionally helping or assisting in the commission of a crime. A person who aids or abets another to commit an offense is just as guilty of that offense as if he committed it himself. Therefore, you may find the defendant guilty of a substantive crime if you find that the government has proven beyond a reasonable doubt that another person actually committed the crime, and that the defendant aided and abetted that person in the commission of the crime. As you can see, the first requirement is that another person has committed the crime charged. Obviously, no one can be convicted of aiding and abetting the criminal act of another if no one has committed a crime. If you do find that the government has proven beyond a reasonable doubt that the crime was committed, however, then you must consider whether the defendant aided or abetted the commission of the crime. Page 2281 In order to aid or abet another to commit a crime, it is necessary that the government prove beyond a reasonable doubt that the defendant knowingly and intentionally associated himself in some way with the crime, and that he knowingly and intentionally sought, by some act, to help make the crime succeed. The mere presence of the defendant where a crime is being committed, even coupled with knowledge by the defendant that a crime is being committed, or the mere acquiescence by the defendant in the criminal conduct of others, even with guilty knowledge, is not sufficient to establish aiding and abetting. An aider and abettor must have some interest in the criminal venture. To determine whether the defendant aided or abetted the commission of the crime with which he is charged in Count Four or Count Eight, ask yourself whether the government has proven beyond a reasonable doubt: *(Pause)* I think there is a typo there. I think. Hold on one second. Page 2282 *(Pause)* Strike the words "Four" or "Eight." In any crime as to which the defendant is charged as an aider or abettor, ask yourself the following questions: Did he participate in the crime charged as something he wished to bring about? Did he associate himself with the criminal venture knowingly and intentionally? Did he seek by his actions to make the criminal venture succeed? If the answer to these questions is "yes," then the defendant is an aider and abettor, and therefore guilty of the offense. If the answer to these questions is "no," then the defendant is not an aider and abettor and is not guilty of the offense as such. So you understand that that reference to Count Four and Eight, just take that out. It shouldn't be there. Anywhere that the defendant is charged as an aider and abettor, you ask those questions. You got that? All right. Let's go on to drug quantity for Count One. And I want to point out for you, as you're doing that, that if you look at Count One on the verdict form, only if you find the defendant guilty of Count One do you go to Question 1A, which asks for you to determine quantity. All right? And it's quantity at a certain threshold. You don't have to calculate an exact amount, but it's got to either meet that threshold or exceed that threshold. All right? But beyond that threshold, if the defendant were found to have met that threshold, where beyond that threshold it may be at the end is not the question. It's whether or not that threshold has been met. All right? So let's go into this. Page 2283 If, and only if, you find that the government has proven beyond a reasonable doubt that the defendant is guilty of the offense charged in Count One, then you are required to determine whether or not the government has proven beyond a reasonable doubt that the offense involved the quantity of the particular narcotics alleged in Count One. Specifically, you must determine whether the government has proven beyond a reasonable doubt that the defendant distributed or aided and abetted the distribution of any of the following narcotics in the quantities specified: Heroin in the amount totaling one kilogram or more. Cocaine in amounts totaling five kilograms or more. LSD in amounts totaling 10 grams or more. Methamphetamine in amounts totaling 500 grams or more. The government need not prove that the defendant was specifically aware of, or could foresee, the types and quantities of drugs he was distributing or helping others distribute. As long as the defendant knowingly or intentionally distributed or aided and abetted the distribution of some amount of controlled substance, he is responsible for all the types and quantities of controlled substances distributed regardless of whether he knew or could foresee the types or quantities involved. Page 2284 The government also need not prove the purity of any of the drugs that were distributed. Any mixture or substances containing a detectable amount of the drug is sufficient. Now, as I said, you are going to be provided with a verdict form that will have spaces on it for you to indicate your determinations regarding these questions. As will be reflected on the form, you do not need to determine the precise quantities of drugs involved in the offense in Count One. Rather, you only need to decide whether the drugs included any of the types of drugs I just described in the amounts that, in total, exceed the threshold that I've just described. You need not find the alleged quantities are met in order to convict on Count One, but your determination regarding drug type and quantity, like your determination regarding the defendant's guilt, must be unanimous and must be reached beyond a reasonable doubt. Now let's go into Count Two. Count Two charges the defendant under a federal law that specifically makes it a crime to distribute controlled substances by means of the Internet, or to aid and abet such activity. Page 2285 In order to find the defendant guilty on this count, you have to find that the government has proven beyond a reasonable doubt the following elements: First, that the defendant delivered or distributed a controlled substance, or aided and abetted others in doing so; two, that the delivery or distribution of controlled substances in question was accomplished by means of the Internet; and, three, that the defendant acted knowingly or intentionally. The first element of Count Two requires that you find that the defendant delivered or distributed a controlled substance, or that he aided and abetted others in doing so. Any of these alternatives is sufficient to satisfy this element. I have already defined what it means to "distribute" or "deliver" controlled substances in explaining Count One. Essentially, these terms refer to transferring or dealing out controlled substances to others. I have also defined the concept of aiding and abetting in Count One, and you should apply those same definitions here. Let's talk about use of the Internet. The second element of Count Two requires that you find that the controlled substances at issue were delivered or distributed by means of the Internet. This element is satisfied if you find that the government has proven beyond a reasonable doubt that the defendant served as a intermediary or middleman who caused the Internet to be used to bring together buyers and sellers engaged in distributing controlled substances in a manner not authorized by law. Page 2286 However, it is not sufficient to merely place on the Internet material advocating the use of a controlled substance, or even which includes pricing information, if unaccompanied by an attempt to propose or facilitate an actual transaction involving a controlled substance. Lastly, in order to find the defendant guilty on Count Two, you must find that he acted "knowingly" or "intentionally." I have already defined those terms for you, and you should apply those definitions here. As with Count One, if you find the defendant guilty on Count Two, you have to go on to determine the quantities and types of drugs, and I described that for you in connection with Count One and you should do the same thing with respect to Count Two. Let's go on to page 47, which is Count Three. This charges the defendant with conspiring with others to violate the narcotics laws. In order to find the defendant guilty of this count, you must find that the government has proven the following elements beyond a reasonable doubt: First, the government must prove beyond a reasonable doubt that a conspiracy to violate the narcotics laws existed -- that is, that two or more persons had an agreement or understanding to achieve certain unlawful goals, called the "objects" of the conspiracy, which I will describe for you in a moment. Every conspiracy must have one or more objects or goals. In other words, a conspiracy must be aimed at doing something -- at accomplishing something. Page 2287 Therefore, the question is -- the first question is, Did the conspiracy alleged in Count Three exist? Was there an agreement? Second, the government must prove beyond a reasonable doubt that the defendant intentionally and knowingly was a member of this conspiracy -- that is, that he knowingly participated in the conspiracy to violate the narcotics laws, with knowledge of its objects and an intent to further those objects. Let me now discuss the elements of the conspiracy in greater detail. I also want to note that Count Three -- apart from Count Three, which is a conspiracy count, Counts Five, Six, and Seven, relating to the false identification documents, computer hacking and money laundering, are also conspiracy counts, so some of the same instructions are going to apply there as well. And you'll hear me refer back to some of these instructions as a result. All right. So let's talk about existence of a conspiracy. Page 2288 How do you determine whether a conspiracy "existed"? Simply defined, a conspiracy is an agreement by two or more people to violate the law. A conspiracy has sometimes been called a partnership for criminal purposes in which each partner becomes the agent of every other partner. To establish the existence of a conspiracy, however, the government is not required to show that two or more people sat around a table and entered into a formal contract. From its very nature, a conspiracy is almost always characterized by secrecy and concealment. It is sufficient if two or more persons, in any manner, whether they say so directly or not, come to a common understanding to violate the law. Express language or specific words are not required to indicate agreement or membership in a conspiracy. It is not necessary that a conspiracy actually succeed in its purpose for you to conclude that it existed. If a conspiracy exists, even if it should fail in its purpose, it is still a crime, because it is the agreement itself -- the agreement with others to commit a crime -- that the law forbids and defines as a crime. In determining whether there has been an unlawful agreement, you may judge the acts and conduct of the alleged members of the conspiracy that are done to carry out an apparent criminal purpose. The phrase "Actions speak louder than words" is applicable here. Page 2289 If, upon consideration of all the evidence, direct and circumstantial, you find beyond a reasonable doubt that the minds of two or more of the conspirators met -- we sometimes call this a "meeting of the minds" -- that is, that they agreed, as I have explained a conspiratorial agreement to you, to work together in furtherance of the unlawful scheme alleged in the Indictment, then proof of the existence of the conspiracy has been established. Let's talk about the "objects" of the conspiracy. As I said, in order to find the defendant guilty of the conspiracy charged in Count Three, which is a narcotics conspiracy, you must find that the government has proven beyond a reasonable doubt that the conspiracy had certain "objects," or goals that the conspirators were seeking to achieve. There are three objects alleged as part of the conspiracy charged in Count Three -- three violations of the narcotics laws that the conspirators allegedly agreed to commit. You need not find that the defendant agreed to accomplish each and every one of the objects. An agreement to accomplish any one of these three objects is sufficient. However, you must all agree beyond a reasonable doubt on at least one specific object that the defendant agreed with others to try to accomplish. In other words, you must be unanimous as to the particular object of the conspiracy before you find that the element has been satisfied. Page 2290 As to the first object, Count Three alleges that the defendant agreed with others to distribute controlled substances. I have already explained the elements of this crime in discussing Count One. What is being charged here in Count Three is that the defendant agreed with others to commit this crime. As to the second object, Count Three alleges that the defendant agreed with others to deliver or distribute controlled substances by means of the Internet in a manner not authorized by law, or to aid and abet such activity. I have already explained the elements of this crime in discussing Count Two. Again, what is being charged here in Count Three is that the defendant agreed with others to commit the crime. As to the third object, Count Three alleges that the defendant agreed with others to use a communication facility in committing, causing, or facilitating the commission of acts in violation of the narcotics laws. That crime is not separately charged elsewhere in the Indictment, so let me go over its elements now. To show that the conspiracy alleged in Count Three had this crime as an object, the government must prove the following beyond a reasonable doubt: First, the government must prove beyond a reasonable doubt that the defendant agreed with others to use a communication facility. A communication facility is simply any device or system that can be used to transmit communications, and includes the Internet. Page 2291 The government must prove beyond a reasonable doubt also that the defendant agreed with others to use the communication facility in the process of committing, causing, or facilitating the commission of a narcotics felony, including the distribution of controlled substances or the importation of controlled substances into the United States. Third, the government must prove beyond a reasonable doubt that the defendant acted knowingly or intentionally, and I've already defined those terms for you. If you find the government has proven beyond a reasonable doubt that a conspiracy to commit one or more of the objects alleged in Count Three of the Indictment existed, you must then determine whether the defendant intentionally and knowingly was a member of that conspiracy. That is, did he participate in the conspiracy with knowledge of its unlawful purpose and with the specific intention of furthering the objective of that conspiracy? As I explained earlier, an act is done intentionally and knowingly if it is done purposefully and deliberately and not because of mistake or accident, mere negligence, or other innocent reason. That is, the acts must be the product of the defendant's conscious objective. Page 2292 If you find that the government has proven beyond a reasonable doubt that a conspiracy existed (that is, the element we discussed a few moment ago), and that the defendant participated intentionally and knowingly in it, the extent of the defendant's participation has no bearing on whether or not he is guilty. It does not matter whether a defendant's role in the conspiracy may have been more limited than or different in nature from the roles of other co-conspirators. All that matters is that he intentionally and knowingly participated in the conspiracy, aware of its illegal objectives, and desiring to further those objectives. Also, the defendant's membership in the charged conspiracy can be established only by evidence of his own actions and words and not by others who might be members of the charged conspiracy. Once a person joins a conspiracy, that person remains a member unless and until he withdraws from it completely. In order to withdraw from the conspiracy, a conspirator must show that he took some affirmative act to disavow or defeat the purpose of the conspiracy. He can do so either by informing law enforcement of the criminal activities of the conspiracy or by communicating his abandonment of the conspiracy in a manner reasonably calculated to reach his co-conspirators. Merely ceasing to play a part in the conspiracy is not sufficient by itself to establish withdrawal from the conspiracy. Moreover, if, after initially attempting to withdraw, a conspirator takes any subsequent acts to promote the conspiracy or receives any additional benefits from the conspiracy, he cannot be considered to have withdrawn from the conspiracy. The defendant has the burden of proving that he withdrew from the conspiracy by a preponderance of the evidence. To prove something by a preponderance of the evidence means to prove that it is more likely true than not true. Page 2293 If you find that the defendant has at some point withdrawn from the conspiracy, he is not responsible for the acts of his co-conspirators following his withdrawal. However, the defendant still would have been part of the conspiracy until the point of withdrawal. In other words, even if you conclude that the defendant withdrew from the conspiracy at a particular time, he would remain responsible for the actions of the conspiracy up until that time. Now, as I just said, the extent of the defendant's participation in the conspiracy charged in the Indictment has no bearing on the issue of the defendant's guilt. He need not have joined the conspiracy at the outset. He need not have been a part of the conspiracy when it ended. But he must, at some point during its progress, have participated in the conspiracy with knowledge as to its general scope and purpose. If he did participate with such knowledge at any time while it was in progress, he may still be held responsible for all that was done before or after he participated in addition to all that was done during the conspiracy's existence while he was a member, to the extent the conspiratorial activity of others was reasonably foreseeable to him. Indeed, each member of a conspiracy may perform separate and distinct acts and may perform them at different times. Some conspirators play major roles, while others play minor roles in the scheme. An equal role is not what the law requires. In fact, even a single act may be sufficient to draw the defendant within the ambit of the conspiracy. Page 2294 *(Continued on next page)* Page 2295 THE COURT: I want to caution you, however, that the defendant's mere presence at the scene of an alleged crime does not, by itself, make him a member of a conspiracy. Similarly, mere association with one or more members of the conspiracy, even when coupled with knowledge that such other person is acting unlawfully, does not automatically make the defendant a member. A person may know, be related to, or be friendly with, or communicate with, a conspirator, without being a conspirator himself. Mere similarity of conduct or the fact that the defendant may have assembled together with others, communicated with others, and discussed common aims and interests does not necessarily establish proof of the existence of a conspiracy. I also want to caution you that mere knowledge or acquiescence, without participation, in the unlawful plan is not sufficient. Moreover, merely taking acts that happen to further the purposes or objectives of the conspiracy, without knowledge or intent, is not sufficient to make someone a member of a conspiracy. More is required under the law. What is necessary is that the defendant participated with knowledge of at least some of the purposes or objectives of the conspiracy and with the intention of aiding in the accomplishment of those unusual ends. In sum, you must decide whether the government has proven beyond a reasonable doubt that the defendant knew the unlawful character of the conspiracy and intentionally engaged, advised, or assisted in the conspiracy for the purpose of furthering the illegal undertaking. If so, the defendant became a knowing and willing participant in the unlawful agreement - that is to say, a coconspirator. Page 2296 I now want to talk with you about liability for acts and statements of coconspirators. When people enter into a conspiracy to accomplish an unlawful end, each and every member becomes an agent for the other conspirators in carrying out the conspiracy. Accordingly, the reasonably foreseeable acts, declarations, statements and omissions of any member of the conspiracy and in furtherance of the common purpose of the conspiracy are deemed under the law to be the acts of all of the members and all of the members are responsible for such acts, declarations, statements and omissions. If you find, beyond a reasonable doubt, that the defendant was a member of the conspiracy charged in the indictment, then any acts done or statements made in furtherance of the conspiracy by persons also found by you to have been members of that conspiracy may be considered against the defendant. This is so even if such acts were done and statements were made in the defendant's absence and without his knowledge. However, before you may consider the statements or acts of a coconspirator in deciding the issue of the defendant's guilt, you must first determine that the acts and statements were made during the existence and in furtherance of the unlawful scheme. If the acts were done or the statements made by someone whom you do not find to have been a member of the charged conspiracy or if they were not done or said in furtherance of the conspiracy, they may not be considered by you as evidence against the defendant. Page 2297 Count Three in the indictment contains a section captured "Overt Acts." This section provides several examples of conduct allegedly undertaken by the defendant to further or promote the illegal objectives of the conspiracy charged in Count Three. However, these alleged acts are not elements of the offense, and it is not necessary for the government to prove that any of the acts alleged in this section of the indictment took place. The same is true for the other conspiracy charges in the indictment. None of the conspiracy charges require you to find any specific overt acts were committed in furtherance of the conspiracy. You need only find that a conspiracy of the nature described existed and that the defendant intentionally and knowingly became a member. As with Counts One and Two, if you find the defendant guilty on Count Three, there are going to be spaces on the verdict form for you to fill in related to drug and quantity, and you should make your findings and fill those in. In the case of a conspiracy, as we have discussed, a defendant is only liable for the acts of his coconspirators that are reasonably foreseeable to him. So as to Count Three, the defendant is accountable for the types and quantities of controlled substances distributed by his coconspirators only if those types and quantities were known or reasonably foreseeable to the defendant and were within the scope of the criminal activity that the defendant jointly undertook. Again, you'll be provided with a verdict form that you in fact already have gotten and it will have those blanks. Page 2298 Let's talk about Count Four. Are you guys doing all right? Are you okay? We're getting there. You can see that we are not too far, right, because the conspiracy counts at the end refer back a lot to the earlier conspiracy pieces. Let me move on to Count Four of the indictment. Count Four charges the defendant with engaging in a continuing criminal enterprise. To convict the defendant on this count, the government must prove beyond reasonable doubt that the defendant committed one of the federal narcotics felonies I will describe for you in a moment, as part of a continuing series of federal narcotics offenses -- let me read that sentence over again after I've had a sip of something liquid. To convict the defendant on this count, the government must prove beyond a reasonable doubt that the defendant committed one of the federal narcotics felonies I will describe for you in a moment, as part of a continuing series of federal narcotics offenses undertaken with five or more people whom he organized, supervised, or managed, and from which he received substantial profit. In essence, Count Four charges that the defendant engaged in a business of drug trafficking on a continuing, serious basis, and that he oversaw others and made substantial money in the process. Page 2299 To meet its burden of proof on this offense, the government must prove beyond a reasonable doubt each of the following elements: First, the government must prove that the defendant committed a federal narcotics felony, specifically, one of the narcotics offenses alleged within Counts One through Three, including distributing or aiding and abetting the distribution of controlled substances, distributing or aiding and abetting the distribution of controlled substances by means of the Internet, conspiring to distribute controlled substances, or using a communication facility in connection with the distribution of controlled substances; Second, the government must prove that this offense was part of a series of three or more violations of the federal narcotics laws committed by the defendant; Third, the government must prove that the defendant committed the offenses in this series of violations in concert with five or more persons; Fourth, the government must prove that the defendant acted as an organizer, supervisor, or manager of these five or more persons; and Page 2300 Fifth, and finally, the government must prove that the defendant obtained substantial income or resources from the series of violations of the narcotics laws. The first element the government must prove as to Count Four is that the defendant committed a felony violation of the federal narcotics laws. Specifically, you must find the defendant guilty of one of the charges contained within Counts One through Three of the indictment, including any of the crimes alleged as the objects of the conspiracy charged in Count Three. These offenses include: Distributing or aiding and abetting the distribution of controlled substances, which I defined for you in discussing Count One; Distributing or aiding and abetting the distribution of controlled substances by means of the Internet, which I defined for you in discussing Count Two; Conspiring to distribute controlled substances, which I defined for you in discussing Count Three; or Using a communication facility in committing or in causing or facilitating the commission of acts in violation of the narcotics laws, which I defined for you in discussing the objects of Count Three. Page 2301 Unless you find the government has proved beyond a reasonable doubt that the defendant committed at least one of these offenses, you cannot find the defendant guilty under the continuing criminal enterprise law charged in Count Four. The second element that the government must prove as to Count Four, as you heard me say, is that the defendant committed a federal narcotics felony as part of a continuing series of violations of the federal narcotics laws. A continuing series of violations is three or more violations of the federal narcotics laws committed over a definite period of time and related to each other in some way as distinguished from isolated or disconnected acts. These violations do not have to be alleged as separate counts in the indictment. The indictment need not specify each violation that constitutes the series. Rather, any particular occasion when the defendant distributed certain illegal drugs or aided and abetted the distribution of such illegal drugs could qualify as part of a continuing series of narcotics violations committed by the defendant. Likewise, any particular occasion where the defendant used a communication facility in committing, causing, or facilitating the commission of acts in violation of the narcotics laws could qualify as part of a continuing series of narcotics violations. However, you must unanimously agree on which, if any, three or more felony violations committed by the defendant constituted a continuing series of narcotics violations in order to find the defendant guilty on Count Four. Page 2302 The third element the government must prove as to Count Four is that the defendant committed a continuing series of violations in concert with five or more persons. These persons do not have to be named in the indictment. They could be others who you find, beyond a reasonable doubt, were persons with whom the defendant committed the violations. It is not necessary that you identify each of these persons by their first and last names, but they must be, in fact, five separate persons. You do not have to find that five or more persons acted together at the same time, or that the defendant personally dealt with them together. As long as there were at least five persons who the defendant somehow committed the continuing series of violations along with, that is sufficient. The fourth element the government must prove beyond a reasonable doubt is that the defendant occupied the position of organizer, supervisor, or manager with respect to the five or more persons with whom he acted in concert. In considering whether the defendant occupied such a position, you should give the words "organizer, supervisor or manager" their ordinary everyday meaning. The government need not prove that same type of superior-subordinate relationship existed between the defendant and each of the people he allegedly organized, supervised or managed. Nor is any particular type of organizational, supervisory, or managerial role required. For example, the defendant is not required to have had direct, personal contact with each of the persons he organized, supervised, or managed. Nor are those persons required to have been salaried employees of the defendant, or otherwise akin to paid workers. It is sufficient, for instance, if the defendant arranged the activities of others into one essentially orderly operation or enterprise, even if the persons were otherwise independent of the defendant. The government meets its burden on this element if it proves beyond a reasonable doubt that the defendant exercised organizational or supervisory or managerial responsibilities over five or more persons with whom he acted in concert. Page 2303 Merely selling a controlled substance, without more, however, does not make a defendant an organizer, supervisor, or manager of the person or persons who purchased the substance from him. The final element the government must prove as to Count Four is that the defendant derived substantial income or resources from the continuing series of the federal narcotics violations. The statute does not prescribe the minimum amount of money required to constitute substantial income, but the statute clearly intends to exclude trivial amounts derived from occasional narcotics sales. Page 2304 Let me turn to Count Five, which charges the defendant with conspiring with others to commit or aid and abet computer hacking. In order to find the defendant guilty of this count, you must find that the government has proven the following elements beyond a reasonable doubt: First, that there was an agreement or understanding between two or more persons to commit or aid and abet computer hacking; and Second, that the defendant intentionally and knowingly participated as a member of the conspiracy. The alleged object of the conspiracy in Count Five is to commit or aid and abet computer hacking. In order to establish that a conspiracy with this object existed, the government must prove the following: First, the government must prove that two or more people had an agreement to intentionally access computers without authorization and thereby obtain information from the computers, or to aid and abet others in doing so. Accessing computers without organization and thereby obtaining information from the computers refers to what is commonly called "computer hacking." It means accessing a computer, and viewing or copying data on the computer, without the authorization of the person to whom the computer or data belongs. I've already instructed you on the meaning of "intentionally." I've already instructed you on the concept of aiding and abetting, and you should apply those instructions here. Page 2305 Second, the government must prove that the computers the conspirators agreed to access without authorization, or to help others access without authorization, were "protected computers." The term "protected computer" refers to any computer used in, or affecting interstate or foreign commerce or communication, which would include any computer connected to the Internet. Third, the government must prove that agreeing to access computers without authorization, or to help others to do so, the conspirators were acting for the purpose of commercial advantage or private financial gain, or in furtherance of criminal or tortious acts in violation of the laws of the United States or of any State. "Commercial advantage" is a profit or gain in money or property obtained through business activity, and "private financial gain" is profit or gain in money or property specifically for a particular person or group. "Criminal or tortious acts in violation of the laws of the United States or of any State" are any acts that constitutes either crimes or wrongful acts for which private damages can be obtained in a civil lawsuit under federal law or the law of any state. In short, you must find that the objective of the computer hacking at issue must have been either to obtain some kind of profit or to commit a crime or actionable wrong against another person. Page 2306 If you find beyond a reasonable doubt that a conspiracy to commit or aid and abet computer hacking existed as alleged in Count Five, you must then determine whether the defendant intentionally and knowingly participated as a member of that conspiracy. I have already instructed you as a general matter on what the government is required to show to prove membership in the conspiracy, and you should apply those instructions here. Let's turn to Count Six, which charges the defendant with conspiring with others to traffic in fraudulent identification documents. In order to find the defendant guilty of this count, you must find that the government has proven the following elements beyond a reasonable doubt: First, that there was an agreement between two or more persons to traffic in fraudulent identification documents; and. Second, that the defendant intentionally and knowingly participated as a member in that conspiracy. The alleged object, or goal, of the conspiracy charged in Count Six is to traffic in fraudulent identification documents. In order to establish that a conspiracy with this object existed, the government must prove the following beyond a reasonable doubt: Page 2307 First, the government must prove that two or more people had an agreement to knowingly transfer false identification documents. A "false identification document" means a document of a type intended or commonly accepted for purposes of identification, such as a driver's license or a passport, that appears to be issued by the authority of a governmental entity, but was not actually issued by a governmental entity. A "false identification document" can also include an identification document that was actually issued by a governmental entity but was subsequently altered for the purposes of deceit. To "transfer" a false identification document means simply to turn over possession or control of it to someone else, whether as a result of selling it or otherwise. I have already instructed you on the meaning of "knowingly," and you should apply that instruction here. Second, the government must prove that the conspirators knew that the identification documents were stolen or produced without lawful authority. The term "lawful authority" means the authority to manufacture, prepare or issue identification documents by statute or regulation, or by contract with a governmental entity, which has such authority. Third, the government must prove that the transfer of the false identification documents was in or affecting interstate commerce. Interstate commerce means the movement of goods, services, money and individuals between any two states or between the United States and a foreign country. The government may satisfy this element by proving beyond a reasonable doubt that the transfers affect interstate commerce in any way, no matter how minimal. Transfer of the documents through interstate or international shipments in the mail is sufficient. Page 2308 If you find beyond a reasonable doubt that a conspiracy to traffic in fraudulent identification documents existed as alleged in Count Six, you must then determine whether the government has proven beyond a reasonable doubt that the defendant intentionally and knowingly participated as a member of that conspiracy. Again, I have already instructed you as a general matter on what the government is required to show to prove membership in a conspiracy, and you should apply those same instructions here. Finally, let me move on to the last count, which is Count Seven, which charges the defendant with conspiring to commit money laundering. In order to find the defendant guilty of this count, you must find that the government has proven the following elements beyond a reasonable doubt: First, that an agreement between two or more persons existed with the money laundering objects alleged in Count Seven, which I will discuss shortly; and. Page 2309 Second, that the defendant intentionally and knowingly participated as a member of the conspiracy. So there are two objects of the money laundering conspiracy charged in Count Seven. Count Seven alleges that one object of the conspiracy was to conduct financial transactions with intent to promote specified, unlawful activity, specifically, narcotics trafficking, computer hacking, and identification document fraud. Count Seven alleges that a second object of the conspiracy was to conduct financial transactions knowing that the transactions were designed in whole or in part to conceal or disguise the proceeds of that unlawful activity. Again, you need not find that the defendant agreed to accomplish both of these objects. An agreement to accomplish either one is sufficient. However, you must all agree on the specific object or objects the defendant agreed with others to try to accomplish. In order to establish that a money laundering conspiracy with either of these objects existed, the government must prove the following beyond a reasonable doubt: First, the government must prove that two or more persons entered into an agreement to conduct "financial transactions," a term that I will define for you in a moment; Page 2310 Second, the government must prove that the financial transactions at issue involved the proceeds of specified unlawful activity, namely narcotics trafficking, computer hacking, or identification document fraud; Third, the government must prove that the conspirators knew that the financial transactions involved the proceeds of some form of unlawful activity; and Fourth, the government must prove that the conspirators agreed to conduct the financial transactions with one or both of the following purposes: Either they intended to promote the carrying on of specified unlawful activity, namely narcotics trafficking, computer hacking, or identification document fraud; or they knew that the transactions were designed to conceal or disguise the nature, location, source, ownership, or control of the proceeds of these crimes. The first element the government must prove to establish the existence of a money laundering conspiracy is that two or more persons agreed to conduct financial transactions. The term "financial transaction" includes any transaction which in any way or degree affects interstate or foreign commerce and involves the movement of funds by wire or other means. The term "funds" includes any currency, money, or other medium of exchange that can be used to pay for goods and services. I have already defined the concept of interstate commerce for you. Again, in determining whether the transactions at issue affected interstate commerce or foreign commerce, the affect on interstate or foreign commerce can be minimal. Any movement of funds across state lines or national borders will satisfy this element. Page 2311 The second element the government must prove to establish the existence of a money laundering conspiracy is that the agreed-upon financial transactions involved the proceeds of specified unlawful activity, namely narcotics trafficking, computer hacking, or identification document fraud. The term "proceeds" means any property, or any interest in property, that someone acquires or retains as profits resulting from the commission of the specified unlawful activity. The term "specified unlawful activity" means any one of a variety of offenses defined by the statute. In this case, the government has alleged that the funds in question were the proceeds of drug trafficking, computer hacking, and identification document fraud. I instruct you that, as a matter of law, these crimes all fall within the definition of "specified unlawful activity." However, it is for you to determine whether the funds at issue were the proceeds of any of these crimes. You must unanimously find at least one of these crimes to have been the source of the funds to satisfy this element. Page 2312 The third element the government must prove beyond a reasonable doubt to establish the existence of a money laundering conspiracy is that the members of the conspiracy knew that the financial transactions at issue involved the proceeds of some form of unlawful activity. The government does not have to prove that the conspirators specifically knew that the property involved in the transaction represented the proceeds of drug trafficking, for example, as opposed to any other specific offense. The government only has to prove that the individuals agreeing to conduct the financial transactions knew that the transactions involved the proceeds of some illegal activity that was a felony. Keep in mind that it is not necessary for all conspirators to believe that the proceeds came from the same unlawful activity; it is sufficient that each conspirator believe that the proceeds came from some unlawful activity. Finally, the fourth element that the government must prove beyond a reasonable doubt to establish the existence of a money laundering conspiracy concerns the purpose of the transactions conducted as part of the conspiracy. It is here that the two objects of the conspiracy charged in Count Seven differ. As to the first object, the government must prove beyond a reasonable doubt that the conspirators agreed to conduct financial transactions with the intent to promote the carrying on of drug trafficking, computer hacking, or identification document fraud. Page 2313 As to the second object, the government must prove beyond a reasonable doubt that the conspirators agreed to conduct financial transactions with knowledge that the transactions were designed to conceal or disguise the nature, location, source, ownership, or control of the proceeds of drug trafficking, computer hacking, or identification document fraud. As I've previously instructed, to act intentionally or knowingly means to act purposefully and deliberately and not because of mistake or accident, mere negligence or other innocent reason. That is, the acts must be the product of the defendant's conscious objective. The government is not required to prove both alleged objects of the conspiracy; either is sufficient standing alone. So if you find that the government has proven beyond a reasonable doubt defendant agreed to act with the intention of promoting the carrying on of drug trafficking, computer hacking, or identification fraud, or with the knowledge that the financial transactions were designed to conceal or disguise the nature, location, source, ownership, or control of proceeds of these crimes, this element is satisfied. If you find that a conspiracy to commit money laundering as I've just described to you existed, then you must determine whether the government has shown - and you have to do this beyond a reasonable doubt - that the defendant intentionally and knowingly became a member of that conspiracy. Page 2314 I have already instructed you as a general matter on what the government is required to show in this regard, and you should apply those instructions here. The indictment alleges that certain conduct occurred on or about various dates or during various time periods. It is not necessary, however, for the government to prove that any conduct alleged occurred exactly when the indictment alleges. As long as the conduct occurred around any dates or within any time periods the indictment alleges it occurred, that is sufficient. In addition to all the elements I have described for you with respect to Counts One through Seven, you must also decide whether any part of the offense reached within the Southern District of New York. The Southern District of New York includes only the following counties: Manhattan, the Bronx, Westchester, Dutchess, Putnam, Rockland, Orange, and Sullivan. This is called "venue." Venue means place or location. Venue must be examined separately for each count. Venue on one count does not establish venue for another count. The government need not prove that any crime was completed in this district or that the defendant or any of his coconspirators was physically present here. Rather, venue is proper in this district if the defendant, or anyone whose conduct the defendant aided or abetted, or, for the conspiracy counts, any of the defendant's or his coconspirators, caused any event to occur in this district in furtherance of the offense. Page 2315 The defendant need not have specifically intended to cause something to happen in this district, or known that he was causing something to happen here. As long as it was reasonably foreseeable to the defendant that his conduct (or the conduct of anyone whom he aided or abetted or conspired with) would cause something to happen here in the Southern District in furtherance of the crime, that is sufficient. Among other things, venue can be established if the defendant or his coconspirators caused any communications to be transmitted to or from this district that were in furtherance of the offense. Such communications can include the transmission of the contents of a website to the Southern District of New York, where the operation of the website was in furtherance of the offense and where it was reasonably foreseeable to the defendant that the website could be accessed by someone in the Southern District of New York. On this issue of venue - and this issue alone - the government need not prove venue beyond a reasonable doubt, but only has to prove venue by a mere preponderance of the evidence. A "preponderance of the evidence" means more likely than not. Thus, the government has satisfied its burden of proof as to venue if you conclude that it is more likely than not that some act or communication in furtherance of each alleged offense occurred in this district. If, on the other hand, you find that the government has failed to prove the venue requirement as to a particular offense, then you must acquit the defendant of that offense, even if all of the other elements have been met. Page 2316 Your verdict must be based solely on the evidence developed at trial or the lack of evidence. It would be improper for you to consider, in reaching your decision as to whether the government has sustained its burden of proof, any personal feelings that you may have about the defendant's race, religion, national origin, sex, age, or political views. Similarly, it would be improper for you to consider any personal feelings you may have about the race, religion, national origin, sex, age, or political views of any other witness or anyone else involved in the case. Both the defendant and the government are entitled to a trial free from prejudice and our judicial cannot work unless you reach a verdict through a fair and impartial consideration of the evidence. Under your oath as jurors you are not to be swayed by simply. You are to be guided solely by the evidence in this case, and the crucial question that you must ask yourselves as you sift through the evidence is: Has the government proven the guilt of the defendant beyond a reasonable doubt with respect to each of the elements of each of the offenses charged? Page 2317 It is for you to alone to decide whether the government has proven beyond a reasonable doubt that the defendant is guilty of the crime for which he is charged solely on the basis of the evidence or lack of evidence and subject to the law as I have charged you. It must be clear to you that once you let fear, prejudice, bias, or sympathy interfere with your thinking, there is a risk that you will not arrive at a true and just verdict. If the government has failed to establish the defendant's guilt beyond a reasonable doubt, you must acquit him. But on the other hand, if you should find that the government has met its burden of proving the defendant's guilt beyond a reasonable doubt, you should not hesitate because of sympathy or any other reason to render a verdict of guilty. The question of possible punishment of the defendant is of no concern to you, ladies and gentlemen of the jury, in any sense, and it should not enter into your deliberation in any way. The duty of imposing sentence rests exclusively upon the Court. Page 2318 Your function is to weigh the evidence in the case and to determine whether or not the government has proven that the defendant is guilty beyond a reasonable doubt solely upon the basis of such evidence. Now, some of you took notes during the course of the trial, and you shouldn't show your notes to anybody else or discuss them with anybody else. They are not evidence. They were something which you may have done to assist you yourself in terms of remembering things, but the fact that you may or may not have written something doesn't mean that you can push it across the table and say here, see, it's evidence, because I wrote it down. Your notes should be retained just for your own use. The fact that a particular juror has taken notes entitles that juror's views no greater weight than those of any other juror. Finally, your notes should not substitute for your recollection of the evidence in this case. If you have any doubt as to the testimony, then you can ask to have it read back, and we'll come back to that in just one minute. Ladies and gentlemen, your function in just a moment is to go into the jury room and for the panel of 12 to begin talking to each other about this case. Your function is to weigh the evidence in this case now and to determine the guilt or the nonguilt of the defendant with respect to each of the counts, and you should consider them one by one. Page 2319 You are about to begin your deliberations, and as I told you earlier, many - but not all - of the exhibits will be sent with you into the jury room. We're not going to send, for instance, into the jury room the hard drives that you saw during the trial. If you want to see any of the physical evidence for any reason, then you can ask through a note to have that physical evidence shown to you, and we'll decide what the best manner is: Whether to have you folks come out and we'll show it to you again or something else. But the other exhibits, you'll actually have in the room, and you'll be able to look at them as much as you folks would like. Now, if you have questions about testimony, testimony can be read back to you. We have transcripts of the testimony. Please appreciate that we want to get the testimony to you as quickly as possible when you ask for it, if you ask for any of it to be read back. Sometimes people want to be read back certain pieces; sometimes people don't. It will be up to you whether or not you have questions. If you ask for testimony to be read back, try to be as specific as possible. Can you read me the part of so and so's testimony where he talked about X, or can you read me both the direct and cross. If you want both direct and cross, it's helpful to let us know. If you're just trying to remember one thing, it's helpful to say we don't need X, we just need Y. Just be as specific as you can, because we sit here and we look at these and we interpret them. And it becomes like an interpretation of epic proportions sometimes to figure out exactly what the jury is asking for. Page 2320 Let me describe the process of writing notes. If you have questions, first of all, never ever in your question on a piece of paper say what the vote count is: We're 7-5, we're 11-1. Okay. Don't tell us the vote count, all right, at any point in time. That's going to be for you and you alone to know about because it may or may not change over the course of deliberations as to any particular thing. It's for you and you alone to know about. When you ask a question, you'll have a piece of paper. You'll write the question down. The foreperson, whoever you decide is the foreperson, will sign that question and they will place it into an envelope. Now I want to describe to you the process, not to deter you in any way from asking whatever questions you want to ask, but to explain to you why it sometimes takes a little while to get you answers. You put it in the envelope. You give the envelope to the marshal, who will be at the door because you're going to be turned over shortly to the marshal and Joe will no longer be your interface. The marshal will then find Joe, who will be likely right here. Joe will then find me. I don't go far, but Joe will find me. So the envelope is being passed. Page 2321 I open the envelope. I then read what's in the envelope. I then call everybody together. I get the court reporter to come up from downstairs, so either Vince or Sabrina can sit here and take it down. I then read the note to everybody here without you to make sure that they all have an opportunity to hear the question and then we talk about what the answer should be: If it's a particular document, what particular testimony you need. We then go and get whatever it is. We call you out. We have you sit here. I then, to avoid any questions about a rogue juror having written a note on his or her own, I then will have you all listen and I will say I have a note, I received it at 1:45, it says the following, question. And then I'll give you what we have decided is the appropriate response, either we're going to send something into the jury room with you or we have agreed on the following response or whatever it is, all right? That's the process. So it's not like you ask a question and zip in, you get the answer. But we do have materials that can answer your questions and so if you have a question, please ask. Any communications with the Court from now on are going to have to be in writing, all right, everything in writing through the jury foreperson in this envelope, even things like, you know, post-its, but that will be really quick. We can get you post-its quickly. I don't have a real problem with that. Hopefully, we have post-its back there already. Page 2322 The first task is going to be to pick your foreperson. There's no right and there's no wrong way to do that. Sometimes somebody volunteers. Perfectly fine. Sometimes juror number one does it because that's the way it's done in the movies, but there's no rule that says juror number one has to be the foreperson. And sometimes people draw names out of a hat. It's whatever you decide, okay? That person does not have any voice that is more important than any other voice; it's just the person who will be signing the documents and giving those things to the Court. Now, the most important part of the case, ladies and gentlemen, is about to begin, and that's part where you're going to go off and deliberate about the issues of fact. It is for you and you alone to decide whether the government has proven beyond a reasonable doubt the essential elements of the crimes that have been charged. If the government has failed to do so, your verdict must be not guilty. If it has succeeded, your verdict must be guilty. Again, you must consider each count individually. I know you will try the issues that have been presented to you according to the oath that you took at jurors. In that oath, you promised that you would well and truly try the issues joined in this case and a true verdict render. Your function is to weigh the evidence in this case and determine whether or not the defendant is guilty based solely on the evidence. Page 2323 As you deliberate, please listen carefully to the opinions of your fellow jurors and ask for an opportunity to express your own view. Every juror should be heard. No juror should hold center stage in the jury room and no one juror should control or monopolize the deliberations. If, after listening to your fellow jurors, and if, after stating your own view, you become convinced that your view is wrong, do not hesitate because of stubbornness or pride to change your view. On the other hand, do not surrender your honest convictions and belief solely because of the opinions of your fellow jurors or because you're outnumbered. Your final vote must reflect your conscientious belief as to how the issues should be decided. Your verdict must be unanimous. If at any time you are not in agreement, you are instructed not to reveal the position or the count of the vote, to anyone, including the Court. Finally, I say this not because I think it's necessary but because it's the custom of our court to say this, you should treat each other with courtesy and respect during your deliberations. All litigants stand equal in this room. All litigants stand equal before the bar of justice. All litigants stand equal before you. Your duty is to decide the issues before you fairly and impartially, and to see that justice is done. Under your oath as jurors, you are not to be swayed by sympathy. You should be guided solely by the evidence presented during the trial and the law as I have given it to you, without regard to the consequences of your decision. You have been chosen to try the issues of fact and reach a verdict on the basis of the evidence or lack of evidence. If you let sympathy interfere with your clear thinking, there is a risk that you will not arrive at a just verdict. All parties are entitled to a fair trial. You must make a fair and impartial decision so that you will arrive at a just verdict. Page 2324 Now, ladies and gentlemen, let me just ask for your patience for one more second. I just want to see if there is anything that counsel need to raise with me. Then I'll talk about the alternates and then you're going to go. It will be just a little bit more. *(Continued on next page)* Page 2325 *(At the side bar)* THE COURT: Does anybody have anything to raise? MR. DRATEL: Yes. MR. TURNER: No. MR. DRATEL: Page nine, reasonable doubt, you left out "most important." I don't think you said it. THE COURT: Let me see. MS. LEWIS: I noticed that as well. THE COURT: Fine. There's a difference between the two. Does the government have a view? MR. TURNER: There's a difference between -- THE COURT: We have "important matters" here and "most important matters" there. MR. TURNER: I'm not sure it merits a separate -- THE COURT: What else? Do we have anything else? MR. DRATEL: No. But I think it's the most important instruction in the case. I read from it directly. And since the charge that the Court delivers in court is the charge, I think it has to be done accurately. THE COURT: Are the words "most important" an accurate reflection of the law -- MR. DRATEL: Yes. THE COURT: -- or is it just a rhetorical add-on? MR. DRATEL: It's the instruction. Page 2326 MR. TURNER: I don't know that it's required by the law. I just don't know that it's worth revisiting. THE COURT: I will. Anything else? MR. DRATEL: No. THE COURT: Okay. *(Continued on next page)* Page 2327 *(In open court; jury present)* THE COURT: Ladies and gentlemen, each count will be considered by you individually. And in the verdict form, you're going to fill it out and you'll check the boxes for each count individually, and you'll agree unanimously. You must agree unanimously on each of the items before they can be filled out. The Court will receive one verdict form and it will be one which is unanimous for each of the jurors. And there's a place on the back for you to sign, all right? When you're making your determination, which is has the government proved guilt beyond a reasonable doubt, as it says on page nine, you're to ensure that that is proof of such a convincing character that a reasonable person would rely upon it in the most important matters of their own affairs. So you'll apply the beyond a reasonable doubt standard as we have discussed it throughout the course of this morning. Now, let me talk about the alternates. I think the alternates is one of the most difficult roles to fill. I know that you folks have been here every day. I remember alternate number one's issues with her children, and I certainly appreciate the fact that you have served fully, but I have remembered that. I understand you folks have done what's necessary to be here as jurors. There have been many instances where alternates get called upon to deliberate. When that happens, and it happens for a variety of reasons, essentially we'll call you up and say how soon can you get here? And we go in order. And we start and we move on down, alternate number one, alternate number two, alternate number three, alternate number four. And we'll get you here and then the deliberations effectively start over again so that you're included in the deliberations for each and every count and each and every element. Page 2328 As a result of that, I have to say, for the alternates, you can't talk to anybody about this case, including even each other, because you're not yet part of the full panel of deliberations. Joe will call you the minute we have a verdict because at that point, you will be relieved from your oath of silence, okay. It's very important that you not go home and start talking about the case or talk to each other on the way out about the case because it could be that tomorrow morning we call you up and we get you in here. And so we don't want you going and doing all the Internet research on all the news articles you might have missed. Keep yourself just as you have been, and we'll let you know as soon as possible. As soon as there's a verdict we'll let you know, okay? But I do want to acknowledge that I think your role is one of the hardest because you sat here, you're probably dying to talk about your thoughts, I'm going to have to ask you to be silent still, all right? So you're not dismissed from this jury. You're just dismissed for the moment, okay? And make sure Joe has got your present contact information. Page 2329 The alternates number one, two, three and four can go to the jury room and you can collect your things, and then I'm going have Joe swear in the marshal because we're now going to turn over the jury panel to the marshal. *(Marshal sworn)* THE COURT: I'm going to ask the press not to communicate with any of the alternates until the conclusion of the case because they're still active members of the jury panel and may be called upon for deliberations, and they know they shouldn't speak to you. All right. Thank you. *(Alternates excused)* THE COURT: We're now going to have you folks go into the jury room and you're going to begin talking to each other about this case, and you'll communicate through the marshal. You have, I think, all of the supplies that you need. I just want to remind you if somebody goes out for a smoke break, you need to take a break, too, so you only deliberate when everybody is in the room. Okay. All right. Joe, ready? THE DEPUTY CLERK: All rise as the jury leaves. *(At 11:55 a.m., the jury retired to deliberate)* Page 2330 THE COURT: Let's all be seated, ladies and gentlemen. Is there anything anyone would like to raise with the Court? MR. TURNER: Would you like a list of the exhibits included with the cart? THE COURT: Typically, I think it's very useful for the jury to have a list of the exhibits if you both agree on how things are named. If there are going to be disagreements, then hopefully they'll have written things down and they'll know to turn to GX 107 or whatever the number is that they're going to turn to, but if you have an index that people agree on, then yes. MR. TURNER: We have an index and we'll consult with defense counsel. THE COURT: Let's roll in the cart. MS. LEWIS: For now, your Honor, our list needed to be revised, so we wrote on there. But if they're going to have a physical list for all the jurors, we'd like an opportunity to just get the list in as well. THE COURT: Sure. Is there any way you can add your list onto the U.S. Attorney's list? Can you email over a file? MS. LEWIS: There's just a couple of page numbers that I wanted to -- I don't think we need them. THE COURT: We'll put the cart in, and then you folks get the list together however logistically it works best and get the list over. If there's one list, it ought to include both lists. Page 2331 MS. LEWIS: Yes. THE COURT: I agree. Is there anything else that anybody would like to raise? MR. TURNER: Not from the government. MR. DRATEL: No, your Honor. THE COURT: Let me describe logistics for you again in terms of what we do while we wait for the jury's question and the verdict. You heard me describe the process of questions. My practice is to get the envelope from Joe. Each question will be marked as a Court exhibit. I'll call you all together immediately. And I will then read out the question, and we'll together talk about whatever is in the question. If it's testimony and we have to isolate it, I have you folks confer first to try to reach agreement on the testimony. If you can't reach agreement, quickly identify, very quickly identify what you can't reach in terms of your agreement and I will then make a decision, then I'll have a specific ruling. I'll come out here and I'll make that ruling on the record so people's positions are maintained, and that's the way it goes. We have the cart going? That was my deputy asking if we needed the list first. We'll put the exhibits into the room. So you need to be around the vicinity in order to be able to be around for questions, including the defendant, because each time a question is asked, he'll be brought out and nothing will happen without the defendant being present. Page 2332 Then if there's a verdict, it will be just like the questions coming to me: I'll receive a note. Instead of a question, it will say we have a verdict, but the process will be exactly the same. We'll call you out. I'll tell you there's a verdict. I won't know what it is because the foreperson will have the verdict sheet. We'll call the jury out. My process is to have Joe read out the verdict after the Court has inspected it. And then I have a normal process of polling the jury, that's my normal process, without waiting for a request. We don't wait for people to show up for the reading of the verdict, except, of course, for the defendant. If other people happen to want to be around, they should just be close. There will be a little bit of time, but people should certainly be close. Any questions? Just leave Joe with your information because he will be in the courtroom until a verdict is rendered more or less. He may go into the robing room to have lunch, but he'll be right here so you can get ahold of Joe, and I'll either be here or in my office. Page 2333 Anything on logistics? MR. TURNER: No. Thank you. THE COURT: Is there anything from you, Mr. Dratel? MR. DRATEL: No. Thank you. THE COURT: I have a final pretrial conference and another jury trial starting on Monday. I'll have people coming in for that, but it doesn't matter if you're all in the courtroom. If I get a jury note, the jury note always takes precedence over everything else that I'm doing, so I'll interrupt myself to take care of that. Thank you. We are adjourned until we receive a note. THE DEPUTY CLERK: All rise. *(Recess pending verdict)* *(Continued on next page)* Page 2334 *(Time noted at 3:41 p.m., jury not present)* THE COURT: All right, ladies and gentlemen. I've received a note from the Foreperson at 3:20 -- I received it at 3:23. It will be marked as Court Exhibit 1, and it says, "The jury has reached a verdict." Let's bring out the jury, please. *(Time noted at 3:42 p.m., jury present)* THE CLERK: All rise as the jury enters. THE COURT: All right. Ladies and gentlemen, let's all be seated. Ladies and gentlemen, I received a note from the Foreperson at -- the time was 3:20 and I received it at 3:23, which indicates that the jury has reached a verdict. Would Madam Foreperson please hand the verdict to Mr. Pecorino. *(Pause)* All right. Mr. Pecorino, would you please read the verdict. THE CLERK: The jury's verdict in the matter of the United States of America versus Ross William Ulbricht, 14 Cr. 68: COUNT ONE *(Distribution/Aiding and Abetting the Distribution of Narcotics)* As to Count One, how do you find the defendant? Guilty. Page 2335 Has the government proven beyond a reasonable doubt that the defendant distributed or aided and abetted the distribution of any of the following controlled substances in the quantities indicated? Heroin -- amounts totaling one kilogram or more: Yes. Cocaine -- amounts totaling five kilograms or more: Yes. LSD -- amounts totaling ten grams or more: Yes. Methamphetamine -- amounts totaling 500 grams or more: Yes. COUNT TWO *(Distribution/Aiding and Abetting the Distribution of Narcotics by Means of the Internet)* As to Count Two, how do you find the defendant? Guilty. Has the government proven beyond a reasonable doubt that the defendant distributed or aided and abetted the distribution by means of the Internet of any of the following controlled substances in the quantities indicated? Heroin -- amounts totaling one kilogram or more? Yes. Cocaine -- amounts totaling five kilograms or more? Yes. LSD -- amounts totaling ten kilograms or more? Yes. Methamphetamine -- amounts totaling 500 grams or more? Yes. Page 2336 COUNT THREE *(Conspiracy to Distribute Narcotics)* As to Count Three, how do you find the defendant? Guilty. Has the government proven beyond a reasonable doubt that the defendant conspired to distribute any of the following controlled substances in the quantities indicated? Heroin -- amounts totaling one kilogram or more: Yes. Cocaine -- amounts totaling five kilograms or more: Yes. LSD -- amounts totaling ten grams or more: Yes. Methamphetamine -- amounts totaling 500 grams or more: Yes. COUNT FOUR *(Continuing Criminal Enterprise.* As to Count Four, how do you find the defendant? Guilty. COUNT FIVE *(Conspiracy to Commit or Aid and Abet Computer Hacking)* As to Count Five, how do you find the defendant? Guilty. COUNT SIX *(Conspiracy to Traffic in Fraudulent Identity Documents)* Page 2337 As to Count Six, how do you find the defendant? Guilty. COUNT SEVEN *(Conspiracy to Commit Money Laundering)* As to Count Seven, how do you find the defendant? Guilty. Madam Foreperson, is this the jury's verdict? THE FOREPERSON: Yes. THE COURT: Would you please poll the jury. THE CLERK: Juror No. 1, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 2, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 3 is this your verdict? *(Pause)* THE CLERK: Juror No. 4, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 5, is this your verdict? JUROR: Yes. THE CLERK: Jury No. 6, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 7, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 8, is this your verdict? JUROR: Yes. Page 2338 THE CLERK: Juror No. 9, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 10, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 11, is this your verdict? JUROR: Yes. THE CLERK: Juror No. 12, is this your verdict? JUROR: Yes. THE COURT: Juror No. 3, is this your verdict? JUROR: (Indicating) THE COURT: I need an audible -- JUROR: Yes, your Honor. THE COURT: Thank you, sir. THE CLERK: The jury is polled, your Honor. THE COURT: Thank you, ladies and gentlemen. Counsel, is there any reason not to dismiss the jury at this time? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: Ladies and gentlemen of the jury, I want to thank you for your jury service. I want to thank you for coming each day and listening carefully to the evidence, to doing that under circumstances that I know were difficult day in and day out now over several weeks. As I told you at the outset, having folks like you who will take this role very seriously is an essential part of the American justice system. Without it, without juries, we cannot have the system that we have. So I want to thank you for doing your jury service so responsibly and so carefully. Page 2339 What we're going to do now is Joe is going to -- who could talk to you again -- Joe is going to lead you out and give you some final instructions. You are now also released from your oath of silence and you may now talk to others, should you choose to do so, about this case. However, you need not talk to anyone should you choose not to talk to anybody. Should you choose to be silent, that's entirely up to you. You need give no one your name. You need give no one any information at all. The one thing that I do ask is if you do choose to talk about this case, that when you're talking about your role, that you talk just about yourself, and that you respect the integrity and the secrecy of the jury process and that you not speak for your other fellow jurors who may choose to be silent. Again, I want to thank you. And you are dismissed. The jury may leave. THE CLERK: All rise as the jury leaves. *(Jury not present)* THE COURT: All right, ladies and gentlemen. Let's all be seated. The verdict form has been marked as Court Exhibit 2 and it will be posted to the docket. Page 2340 Are there any applications? MR. TURNER: Sentencing date, your Honor. THE COURT: All right. Let me just get the agenda. Any from you, Mr. Dratel? MR. DRATEL: Yes. Post-trial motions and we will need a considerable period obviously beyond the ordinary 14 days. So -- THE COURT: Well, the information relating to the post-trial motions is well known. We have been briefing these for a long period of time. So -- MR. DRATEL: That's not the issue. THE COURT: What we'll do is why don't you confer with your team and with the government and then write me a letter and give me your proposed dates rather than coming up with them now, because if there are various things in play then, I want to make sure that you've got, you know, the right amount of time, but I want to set a sentencing date as well. MR. DRATEL: The Court could set a sentencing date, but I was not talking about beyond the sentencing date. THE COURT: All right. So the sentencing date that I am thinking of would be April, in late April. MR. TURNER: I have travel plans through that time, your Honor. If we could do either early April or early May? THE COURT: Early May. Then that actually builds in a little bit more time. Page 2341 MR. DRATEL: I think 90 days is the minimum, your Honor, for purposes of a presentence report and an appropriate sentencing investigation by Probation, and I think it is the minimum at this point. THE COURT: I think May is within that period of time. MR. DRATEL: Yes, May is in the neighborhood. THE COURT: I think we can figure out what 90 days is. All right. Let's come up with a timeframe. It is February 4th. All right. Why don't we say, Joe, can you come up with a date around May 15th for me, a sentencing date, May 15th? THE CLERK: Friday, May 15th, at 10 a.m. THE COURT: All right. Friday, May 15th, at 10 a.m. MR. DRATEL: I would just suggest April 4th for motions. THE COURT: To make the motions? MR. DRATEL: Yes. THE COURT: Why don't you talk with the government about when they would then get their response done. I want to make sure I have time to go over them and all of that. If that's the timing that we're talking about, that's going to be fine, but it would be better for me if you could get them in late March but there may be reasons why you want April 4th. All right. So that means that within 14 days, Mr. Turner, you will get the statement of facts to Probation? Page 2342 MR. TURNER: Yes, your Honor. THE COURT: And you will get on the calendar of Probation, Mr. Dratel, within two weeks? MR. DRATEL: They call me and then I will set up the schedule. THE COURT: OK. The way it works is, as you know, that you have to work with them to get on their calendar, and in the two-week period you have to get on their calendar -- you don't have to have the interview within two weeks. All right. Terrific. Is there anything else that we should do right now? MR. TURNER: No, your Honor. MR. DRATEL: No, your Honor. THE COURT: All right. Then we are adjourned. Thank you. MR. DRATEL: One second. *(Pause)* Nothing, your Honor. Thank you. THE COURT: All right. Thank you. We are adjourned. THE LAW CLERK: All rise. - - -