Silk Road Methamphetamine Distributors Indicted in Federal Case Involving Four Defendants

PORTLAND, Ore. – U.S. Attorney for the District of Oregon Amanda Marshall announced today that a federal indictment has been returned charging four individuals involved in a conspiracy to distribute methamphetamine over the Internet, conspiracy to export methamphetamine to other countries, and fifteen counts of international and domestic money laundering.

The Oregon indictment is an outgrowth of an investigation which began when, in September 2011, Homeland Security Investigations (HSI) special agents in Baltimore received information regarding an online illegal drug marketplace known as “Silk Road.” Subsequently, the Baltimore Silk Road Task Force, led by HSI, and including U.S. Secret Service, the Drug Enforcement Administration (DEA), the U.S. Postal Inspection Service (USPIS), and the Internal Revenue Service (IRS), was created.  The ensuing investigation revealed the Silk Road website had been in operation since approximately March 2011 and had more than 957,079 registered users who conducted over $1.2 billion in transactions.  Silk Road provided a forum for drug distributors and suppliers to offer their products via the Internet to buyers through an encrypted network known as The Onion Router (TOR) network.  Silk Road also facilitated the sale of weapons and fraudulent ID. This encrypted network used by suppliers and users masked their true IP addresses, thereby providing complete anonymity.

The indictment unsealed today alleges Jason Weld Hagen, 39, and Chelsea Leah Reder, 23, both residents of the Vancouver, Washington area, and Richard Egan Webster, 45, and Donald Ross Bechen, 39, both Washington County residents, conspired to distribute methamphetamine across the globe using the Silk Road website.  The indictment alleges the conspirators used internet anonymizing software, including Pretty Good Privacy and TOR, to distribute methamphetamine in exchange for the virtual currency known as BitCoins. The indictment alleges that the conspirators would then use commercial carriers to deliver the methamphetamine to various buyers throughout the United States and in Australia, Canada, the Czech Republic, Italy, and the United Kingdom. The Silk Road web site was seized in October, 2013, when FBI agents arrested the alleged administrator.

The indictment alleges that Hagen and his three Portland-area conspirators were responsible for the sale of over 17 pounds of methamphetamine to various buyers via Silk Road on approximately 3,169 occasions.  In addition, the indictment alleges that Hagen, using the Silk Road alias “hammertime,” would receive payment in Bitcoins and then convert them to U.S. currency using various electronic money transfer systems including Paypal and Western Union, along with various reloadable and stored value cards.

The matter is scheduled for a seven-day jury trial before Senior U.S. District Judge Robert E. Jones on February 18, 2014. All defendants appeared before U.S. Magistrate Judge John V. Acosta today for arraignment and detention hearings.  Judge Acosta ordered defendants Hagen, Webster, and Bechen held in federal custody pending trial, and released defendant Reder under conditions of pre-trial supervision.

Agencies cooperating in the Portland-area investigation include HSI, IRS—Criminal  Investigations Division, U.S. Postal Inspection Service,  U.S. Marshals Service, U.S. Secret Service, DEA, Portland Police Bureau, Washington County Sheriff’s Office, Westside Interagency Narcotics (WIN) Team, Clark-Vancouver Drug Task Force, the Beaverton Police Department and the Washington County District Attorney’s Office.

A criminal indictment is only an allegation and is not evidence of guilt. All defendants are presumed to be innocent unless and until proven guilty.

This case is being prosecuted by Assistant U.S. Attorney Johnathan S. Haub and Assistant U.S. Attorney AnneMarie Sgarlata.