A former agent for the Drug Enforcement Administration allegedly overstepped his powers during the investigation of illicit online narcotics marketplace Silk Road by attempting to seize the company bank accounts of popular peer-to-peer payments service Venmo.
On Friday, federal authorities arrested former DEA member Carl Force IV in Baltimore on charges of stealing money from the black market while working as an undercover agent, according to a criminal complaint unsealed Monday in the U.S. District Court in San Francisco. While that affidavit reveals a host of alleged illegal activity, including the extortion of Silk Road's leader for personal gain and the laundering of money through a bank account in Panama, one portion of the document revels that the DEA agent tried to effectively shutdown Venmo for freezing his personal account. Currently, Force, 46, faces charges of money laundering, fraud, theft of government property and conflict of interest.
The Venmo allegations, while a relatively minor part of the fraud Force has been accused of perpetrating, are nonetheless noteworthy as they illustrate the alleged corruption and abuse of power by a federal agent who was extremely close to the Silk Road investigation. Monday's document suggested that Force was using Venmo to transfer ill-gotten gains between his bank accounts, and then threatened the company with a forged subpoena when they froze his account for suspicious activity. Venmo is an online application that allows users to transfer funds between one another and is linked to users' bank accounts and debit cards.
A Venmo spokesperson declined to comment on any specifics on the case because of the current investigation, but noted in a statement that the company's "fraud rates [are] lower than the industry."
It is unclear when Venmo received the faked subpoena. The document noted that Force and Secret Service agent Shaun Bridges, who was also arrested and charged with money laundering and fraud for similar activity, "had significant responsibilities" in 2012 and 2013 in a Silk Road investigation led out of Baltimore.
Click here to read about the shutdown of the illegal bazaar and its tale of online secrecy, murders-for-hire, courtroom drama and corruption.
"Force created certain fictitious personas--that were not officially sanctioned--to communicate with [Silk Road leader 'Dread Pirate Roberts'], the target of Force's investigation," read the affidavit. Last month, Ross Ulbricht was convicted in New York on numerous counts for creating and running the Silk Road as the Dread Pirate Roberts and now awaits sentencing.
With those personas, Force allegedly coerced Ulbricht to send him money, once offering to not provide the government with certain information on the dark web site if he was paid $250,000 in Bitcoin, a cryptocurrency that was the main means of transaction for buyers and sellers on the Silk Road. In another instance, he created a character called "French Maid" to sell information to Ulbricht on the government's Silk Road investigation for $100,000 in Bitcoin.
The document did not state whether or not Force used Venmo to transfer any of that money between his bank accounts, though it would have been likely inefficient to do so. Venmo has a $2,999.99 total limit for all money transfers made in the previous seven days for accounts that are verified with Facebook accounts or associated with the birthdates and last four digits of users' social security numbers. Venmo would not say whether or not Force had multiple accounts on its service and did not disclose why they froze Force's personal account.
Whatever the reason, Force allegedly reacted by using his "superior's signature stamp" to forge a subpoena that demanded that the San Francisco-based company unfreeze his accounts. He then purportedly told Venmo, which is owned by
When the company did not comply with the subpoena sent by Force, he then allegedly asked an Internal Revenue Service member of the Baltimore Silk Road task force to work with him to seize Venmo's bank accounts.
The bizarre association with the Silk Road story and the arrest of Force is just the latest security-related issue for the young peer-to-peer money, which processed $2.4 billion in payments in 2014. Last month, a Slate story exposed potential security shortcomings in the app, which led to authentication changes earlier this month.
"We work hard to keep Venmo a safe place to send and receive money," read a statement from the company.
With reporting from Kate Vinton in San Francisco.
Update on March 31, 2015 at 8:41 a.m. PT: An earlier version of this story noted that Venmo had a monthly limit of $2,999.99 for money transfers on verified accounts. That is actually the weekly limit. The above story has been updated to reflect that.
