Portland Trial Exposes Vast World of Online Drug Dealing

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Monday, November 17, 2014

Taya Alami, GoLocalPDX Reporter

The Nov. 12 trial of a Portland-area man accused of using a website known as Silk Road — or the “ebay of drugs” to run a methamphetamine trafficking and money laundering ring began in U.S. federal court last week. His case was an example one of an unknown number of Portland-based criminals who used the site to sell drugs to customers around the region and around the world.

Jason Hagen, 40, of Clark County Washington and his three co-defendants earned $607,220 selling a total of 17 pounds of methamphetamine on 3,169 occasions. The group allegedly shipped methamphetamine to buyers around the country and world after connecting with them online, according to court documents.

The site they used, Silk Road, operated behind a wall of encryption. Feds said the site allowed vendors to openly advertise their illegal goods and services, which included listings for drugs, guns, stolen credit card and PIN data, contact lists, hacking services and murder-for-hire. The site was shut down in October 2013 and relaunched a month later as Silk Road 2.0, only to be shut down again earlier this month, according to authorities.

Feds claim that by September 2014, the site was generating approximately $8 million per month in revenue with over 150,000 regular users who believed they were visiting the site anonymously.

Peter Edge, the executive associate director of Homeland Security Investigations, said the site, and 27 other darknet sites that were seized in early November as part of Operation Onymous, created a safe-haven for illegal vices and, “allowed illicit black-market activities to evolve and expand,” meaning regular crimes are riding the cyber-wave.

Hagen obtained an Oregon driver’s license under a fictitious name and later used his fake identity to open a Chase bank account that he used to launder the profits from his business. He under the Silk Road website monicker “hammertime,” selling a gram of methamphetamine for around $1,000, according to court documents.

Hagen’s group deposited money into PayPal accounts in increments of $22,000 and accepted Western Union wires from Cambodia in increments of $2,500, and even accepted over $100,000 in prepaid debit cards, according to the indictment.

Hagen and his cohorts, however, are just a number of Portland-area Portland-area online drug dealers and customers who used a website known as “the eBay of drugs.”

A review of online message boards revealed that a number of people involved in the online drug trade referenced Portland in the screen names they used to visit the site. Some vendors who self-identified as Portlanders achieved reputations as top-level dealers; like a Silk Road vendor known as “Roses Garden,” who allegedly shipped medical grade marijuana-infused foods.

Since the site has gone down, a number of drug dealers and customers have been scrambling for answers, or scrambling for their money.

One vendor wrote that they had lost over $45,000 in the seizure.

"We are almost bankrupted so there's really nothing we can do," the vendor wrote. "We'll be starting all over again here mate."

The SilK Road marketplace was hosted on the “deep web—” a hidden part of the internet where all traffic is encrypted through the Tor network. Tor is an acronym that stands for “the onion router” because its encryption has many layers. The National Security Administration referred to Tor as the most secure way to use the internet, according to slides released by contractor-turned-whistleblower Edward Snowden.

In the wake of the FBI and other agencies seizing the servers that hosted a number of online hidden markets including Silk Road, many Tor users are becoming increasingly concerned that the entire Tor network — which is also used for legal purposes by law enforcement officers, whistleblowers and journalists in danger — may be compromised.

Shortly after Silk Road 2.0 was taken down Nov. 6, another pre-existing drug market rebranded itself as Silk Road 3.0.

With no shortage of people to fill the voids left when drug dealers go down, it may not be long before we see another Silk Road defendant in Portland federal court.

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