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Judge denies bail for alleged Silk Road founder Ulbricht

By Emily Flitter

NEW YORK (Reuters) - A federal judge on Thursday denied a petition to release alleged Silk Road founder Ross Ulbricht from jail before his trial, concluding that the bail proposal his defense team presented was not strong enough to dispel worries that the 29-year-old would try to flee or take violent action.

Following the judge's ruling, disappointed sighs were heard from a few members of Ulbricht's family who attended the hearing. "Oh God," said Ulbricht's mother, Lyn LaCava Ulbricht.

Ulbricht's lawyer had proposed a bail package worth $1 million that restricted Ulbricht's movements and cut off his access to the internet. But a Manhattan federal prosecutor argued there was reason to believe Ulbricht would try to leave the country if released, and that his alleged participation in six murder-for-hire plots rendered him too dangerous to remain outside of jail.

Ulbricht was arrested in San Francisco on October 1 and charged in federal court in Manhattan with counts relating to drug trafficking, money laundering and computer hacking, all stemming from his alleged involvement in the anonymous internet marketplace Silk Road, which sold drugs and criminal services in exchange for the digital currency Bitcoin. After Ulbricht's arrest, the government shut down the website.

Ulbricht is also facing charges in federal court in Maryland relating to a murder-for-hire plot.

At Thursday's hearing, Assistant U.S. Attorney Serrin Turner told Magistrate Judge Kevin Fox that Ulbricht had tried to have a total of six people killed, transacting with at least two hit men, one of whom was an undercover agent. Turner also said federal agents analyzing a laptop seized from Ulbricht at the time of his arrest had found a diary he kept detailing his creation of Silk Road.

"The evidence in the government's view is absolutely overwhelming against the defendant," Turner said.

During the bail hearing, Turner and Ulbricht's lawyer Joshua Dratel, sparred over the meaning of some of Ulbricht's recent behavior, including an effort he made in 2012 to become a citizen of the sparsely populated Caribbean island of Dominica and his attitude during an interview in July with agents from the Department of Homeland Security.

Turner also said Ulbricht had found "a cabin off the grid" where he grew psychedelic mushrooms when he was first starting Silk Road, "so he would have something to sell."

Dratel countered that the government's accusations were not yet proven, and that Ulbricht had a strong network of supportive friends and family members willing to take care of him and attest to his good character. He said the government had not offered any evidence that Ulbricht had committed violence or sold drugs himself.

"Everything the government claims against him is indirect," Dratel said.

Regarding claims of support for Ulbricht from family and friends, Turner said those people only knew Ulbricht's offline persona, not the side of him that was Silk Road's mastermind.

"They do not know the other half of Mr. Ulbricht," he said.

In the end, Fox said he was not convinced Ulbricht would behave himself "given the powerful evidence presented" by the government.

"I am not convinced that there are conditions that could be fashioned to secure his presence in court," Fox said.

After the hearing, Ulbricht's mother, Lyn, said "He deserved bail," adding the decision was "so unfair."

The case is U.S. v. Ulbricht, U.S. District Court, Southern District of New York, No. 13-mj-2328.

(This story has been corrected to change name of presiding magistrate judge to Kevin Fox, not Ronald Ellis, in 6th, 14th and 15th paragraphs)

(Editing by Bob Burgdorfer)

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