Northern California couple indicted for drug trafficking in Silk Road 2.0 probe

SACRAMENTO, Calif. — A federal grand jury returned an 11-count indictment Thursday against a northern California couple for drug trafficking in connection with a probe targeting Silk Road 2.0, an illicit network of websites dismantled earlier this month following a multi-agency probe spearheaded by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the FBI. 

David Schell, 54, and Teri Schell, 59, both of Durham, Calif., are charged in the indictment with conspiracy to manufacture, distribute and possess with intent to distribute marijuana. Additionally, David Schell is charged with nine counts of distribution of marijuana. Special Assistant United States Attorney Josh F. Sigal is prosecuting the case.

According to court documents, law enforcement agents discovered an Internet Protocol (IP) address that was accessing “Silk Road 2.0,” an illicit network of websites that facilitated the trafficking of contraband, particularly controlled substances, until its worldwide dismantlement on Nov. 6. That same day, agents executed a search warrant at the Schells’ residence and found more than 450 marijuana plants and quantities of processed marijuana and marijuana wax, a highly potent marijuana-based substance made from extracting THC from marijuana leaves. Agents also found more than $12,000 in cash and packaging and shipping materials. According to court documents, David Schell mailed more than 100 packages overseas between January and September of this year, using a variety of different return addresses.

The defendants are currently out of custody. Their arraignment is set for Nov. 26 in Sacramento.

If convicted, the defendants face a maximum statutory penalty of 20 years in prison and a $1 million fine.

The Nov. 6 seizure operation targeted dozens of dark market website addresses and computer servers operating on what is known as “The Onion Router” or Tor network, part of the Internet designed to make it practically impossible to physically locate the computers hosting or accessing websites on the dark market sites. These sites were all operating online black markets, openly advertising on their home pages and offering to sell a variety of illicit goods and services to customers in the United States and elsewhere. The advertised goods and services included, among other things: illegal narcotics; firearms; stolen credit card data and personal identification information; counterfeit currency; fake passports and other identification documents; and computer-hacking tools and services.

The dark market websites were designed to facilitate illicit commerce by providing anonymity to users, in at least two ways. First, the dark market sites were only accessible to users of the Tor anonymizing network. Second, the dark market sites accepted payments for their illicit goods and services in Bitcoin or similar electronic currency designed to be as anonymous as cash. The operation involved the seizure of over 400 Tor website addresses – known as “.onion” addresses – as well as the servers hosting them.