UPDATED 3:18 p.m. EST 1/20/2015
NEW YORK (InsideBitcoins) — Last Thursday, Joshua Dratel, the lead attorney defending Ross Ulbricht, dropped a bombshell when he argued that it was Mark Karpeles, the founder of the now defunct Mt. Gox, who was actually the owner and operator of Silk Road.
In a letter filed with US District Judge Katherine Forrest, the government is arguing that the defense’s entire strategy amounts to hearsay and should not be presented to the jury.
“Beliefs are not evidence”
The prosecution begins by saying:
“First, the line of questioning is improper insofar as it is focused on (Special Agent) Der-Yeghiayan’s state of mind during his investigation. That is, the defense seeks to have SA Der-Yeghiayan explain why he believed during an earlier period in time that there was reason to suspect Mr. Karpeles was involved in operating Silk Road. SA Der-Yeghiayan’s beliefs are not evidence.”
In essence, the government doesn’t believe that federal agent Der-Yeghiayan can express what led him to believe that Karpeles was in charge. The letter further explains that Der-Yeghiayan would not be able to offer his opinion on whether Ulbricht is guilty—rather, he can only discuss the facts. “Indeed, an agent’s beliefs often rest on hearsay, hunches, or other information that is not in itself admissible,” the prosecution stated.
Another issue that the prosecution raised was Der-Yeghiayan’s discussion on the Department of Homeland Security’s investigation into Mark Karpeles and the Maryland meeting. The defense argued that Karpeles made a deal with the government to give them Dread Pirate Roberts in exchange for immunity. “SA Der-Yeghiayan was not involved in and has no first-hand knowledge of those discussions; and the residual hearsay exception, which is meant to apply only in exceptional circumstances, does not provide a basis for SA Der-Yeghiayan to testify about them,” the prosecution said.
Additionally, the prosecution argued that:
“… To the extent the defense seeks to elicit testimony from SA Der-Yeghiayan concerning Mr. Karpeles that does not either consist of agent belief or inadmissible hearsay, the Court should allow such testimony only if the defense can show it is more probative than prejudicial.”
The prosecution only wants Karpeles entered into testimony if the defense has actual evidence to support their claim, other than simply an agent’s opinion.
The prosecution then went into detail about the facts that the defense had brought up in its questioning. The first was in regard to the silkroadmarket.org domain name. The defense is arguing that Karpeles owned that domain name and Karpeles’ was only attached to it because it was hosted by his own company. The prosecution has presented the name “Richard Page” as the owner. According to the government, this is one of the aliases found on Ulbricht’s computer.
“The fact that the defendant used Mr. Karpeles’ webhosting service to host the “silkroadmarket.org” website turned out to be the only connection SA Der-Yeghiayan ever found between the website and Mr. Karpeles,” the prosecution argued. “And of course SA Der-Yeghiayan never found that Mr. Karpeles had any connection whatsoever to the servers operating the actual Silk Road website on Tor.”
The defense responds
Only a few hours after the prosecution submitted their letter to the judge, the defense submitted their response. In it, Dratel laid out exactly the precedence that previous court cases had set that allows for this sort of cross-examination.
“It is inconceivable that the government did not anticipate this line of cross-examination.”
Further, Dratel explained how the prosecution opened up the door for this sort of a cross-examination, going so far as to mock the government for not seeing it coming. In his letter, he said:
“In this case, though the government itself, in the person of SA Der-Yeghiayan and others, provided that nexus via an analysis of documentary and other materials, and the defense, via cross-examination, is simply cataloguing the bases for that nexus. Ultimately, the government’s argument is about the weight of the evidence, which of course is for the jury to determine. As a result, the government’s arguments opposing the further questioning of SA Der-Yeghiayan are without merit, and simply an attempt at circumventing Mr. Ulbricht’s proffered defense.
“In addition, the government’s objections are untimely. The government provided 5,000 pages of material pursuant to 18 U.S.C. 3500 for SA Der-Yeghiayan, a substantial portion of which was devoted to government’s investigation of Mr. Karpeles. It is inconceivable that the government did not anticipate this line of cross-examination. Yet it did not make a motion in limine, did not object to defense counsel’s opening, and did not object during a significant portion of the cross-examination of SA Der-Yeghiayan.”
Throughout the rest of the letter, Dratel laid out the precedence for each of his lines of questioning, offering numerous court cases to support it.
UPDATE: Judge Forest ruled with the prosecution, saying that federal agent Der-Yeghiayan’s belief that Mark Karpeles was tied to Silk Road was indeed hearsay, and not “competent evidence.” According to Wired, Forest said, “Whether [Der-Yeghiayan] believed the interview was with the man on the moon or Karpeles doesn’t matter.”