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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of California

Tuesday, March 29, 2016

Merced Man Arrested for Distributing Marijuana and Cocaine Nationwide Through the Silk Road and Other Dark-Web Marketplace Websites

FRESNO, Calif. — David Ryan Burchard, 38, of Merced, was arrested late Monday, charged in a criminal complaint with distribution of marijuana and cocaine on dark-web marketplaces, including the Silk Road, United States Attorney Benjamin B. Wagner announced. Burchard made his initial appearance on the complaint today before U.S. Magistrate Judge Erica P. Grosjean in Fresno.

According to the criminal complaint, Burchard, using the moniker “Caliconnect,” was a major narcotics vendor on the Silk Road and other dark-web marketplaces, including Agora, Abraxas, and AlphaBay. Dark-web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. In addition, dark-web marketplaces allow for payments to be made only in the form of digital currency, most commonly in Bitcoin. While not inherently illegal, digital currency is used by dark-web marketplaces because online transactions in digital currency can be completed without a third-party payment processor and are therefore perceived to be more anonymous and less vulnerable to law enforcement scrutiny.

According to the complaint, Burchard accepted orders for marijuana and cocaine on dark-web marketplaces and then mailed the narcotics from post offices in Merced and Fresno County to his customers throughout the United States. Burchard was paid primarily in Bitcoin. Federal law enforcement estimates that Burchard, whose sales through the Silk Road were in excess of $1.4 million before that website was closed, was one of the largest vendors on the Silk Road. The complaint alleges that after federal law enforcement shut down the Silk Road website and arrested its founder in October 2013, Burchard transferred his narcotics business to Agora and then to AlphaBay, which are other dark-web marketplaces.

“The Department of Justice and our federal law enforcement partners will continue to investigate and prosecute major interstate narcotics traffickers,” said U.S. Attorney Wagner. “Those traffickers who believe they can escape the scrutiny of law enforcement by conducting their business on the dark-web and receiving payments in digital currency are mistaken.”

“HSI and our partners are at the forefront of combating illicit activities and financial crimes now seen in virtual currency systems,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “Criminals continue to spread their businesses through online black‑markets using digital currency like Bitcoin, however they do not escape the reach of law enforcement who will continue to investigate, disrupt, and dismantle hidden illegal networks that pose a threat in cyberspace.”

“The combined efforts of law enforcement agencies in this type of investigation produce a formidable force against narcotics trafficking,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “With the increase use of the dark-web to facilitate the drug trade and other illicit activities, IRS-CI will continue to trace the complex financial transactions that identify where the money comes from and where it goes.”

 San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated: “Postal Inspectors worked closely with the U.S. Attorney’s Office and our partners in law enforcement on this investigation and will continue to vigorously protect the U.S. Mail against all forms of criminal misuse.”

This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service-Criminal Investigation, the U.S. Postal Inspection Service, and the Fresno Police Department, with assistance from Trial Attorney Anitha Ibrahim of the U.S. Department of Justice’s Computer Crimes and Intellectual Property Section. Assistant United States Attorney Grant Rabenn is prosecuting the case.

This case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.

Drug Trafficking
Updated March 29, 2016