The Silk Road trial limped into its fourth day of proceedings on Tuesday, with the prosecution and defense stumbling over Judge Katherine Forrest's rulings on what evidence is admissible in the case against Ross Ulbricht, a 30-year-old programmer accused of creating and running underground market Silk Road.
On Thursday, Ulbricht's lawyer Joshua Dratel blindsided government prosecutors with his cross examination of homeland security special investigation agent Jared Der-Yeghiayan. In questioning Der-Yeghiayan about a past investigation into Silk Road, Dratel implicated Mark Karpeles, former CEO of Bitcoin exchange Mt. Gox, as the true Dread Pirate Roberts, the pseudonymous mastermind behind the site. (Karpeles has vehemently denied this accusation).
The prosecution filed a motion on Monday asking Forrest to strike all mention of Karpeles from the record, saying use of beliefs based on a previous investigation in the trial constitutes hearsay.
"The line of questioning is improper insofar as it is focused on SA DerYeghiayan's state of mind during his investigation," the letter from the prosecution said. "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."
Forrest sided, in part, with the prosecution, ruling Der-Yeghiayan's past beliefs cannot be used as evidence. However, she declined to strike mention of Karpeles entirely, saying the defense is allowed to use an "alternative perpetrator" theory to prove Ulbricht's innocence, a ruling the prosecution objected to.
"If the defense argues there was another Dread Pirate Roberts, it could exculpate Ross Ulbricht," Forrest said. "But that is up to the jury to decide."
She said all questions regarding the past beliefs of Der-Yeghiayan will be struck from the court record, explaining that direct evidence and circumstantial evidence are competent evidence and therefore admissible, but conjecture or speculation from the witness are not.
"What Der-Yeghiayan thought and believed are irrelevant," she said. "What is relevant is direct knowledge."
She said, for example, the defense's admission that Der-Yeghiayan once thought a Forbes interview with someone purporting to be the Dread Pirate Roberts "sounded like Karpeles" would be stricken.
"Whether the witness believed it sounded like Mark Karpeles or the man on the Moon, it is hearsay and not admissible," she said.
She was specific about the lines of questioning that can be used going forward. For example, she said, the question "Did you suspect Mark Karpeles?" is not admissible, but questions like "Did you investigate Mark Karpeles?" and "Did you see X, did you do Y?" are allowed.
Forrest also said hard evidence, such as chats or other records that show Ulbricht was turning over the website to someone else can be used. However, Der-Yeghiayan's assertion that it seemed like the Dread Pirate Roberts was acting differently, leading him to believe the site had been turned over, is conjecture and is not admissible.
Forrest said after reviewing the transcript Thursday's questioning, she thought "the government should have objected earlier." This prompted the government to object more frequently on Tuesday, or as Dratel put it, "to every question [he] asked." This made for particularly choppy proceedings, with the defense being forced to rephrase nearly every question for the remainder of the cross-examination.
At one point, the defense seemed to begin to implicate someone named Anand Athavale as another potential Dread Pirate Roberts, but as Dratel approached that line of questioning, the cross-examination got so caught up in the whiplash of objections the argument became unclear.
When it was the prosecution's turn to talk to Der-Yeghiayan again, Dratel retaliated, objecting to every question asked and slowing down the case once again. Ultimately, Forrest asked both the prosecution and the defense to "take a look at the way things are going" and work to rephrase their questions accordingly for the coming proceedings.