Jason Weld Hagen has been described as the biggest methamphetamine dealer on "Silk Road," the now-defunct darknet site that once served as the Internet's leading criminal drug bazaar. Hagen and his minions shipped small packages of the drug across the globe, raking in bitcoin that put $607,000 in his pockets.
His guilty pleas earlier this year to conspiracy charges of exporting meth and money laundering could have meant a potential life sentence. But by the time he appeared in Portland's U.S. District Court on Wednesday for sentencing, government plans to punish him had hit a substantial snag.
A 25 Bitcoin was photographed in Tokyo in April 2013.
A pair of former federal agents who secretly examined Silk Road as part of a Baltimore-based task force pleaded guilty last summer to stealing bitcoin from the very people they were investigating. The two agents - one with the Secret Service, another with the Drug Enforcement Administration - had made off with more than $1 million, according to a federal criminal complaint filed in Northern California.
The former agents' fleecing of fellow criminals was only peripherally connected to Hagen's troubles, but their crimes would play a major role in his punishment.
As he stood before Senior U.S. District Judge Robert E. Jones in a dark suit, the 40-year-old Vancouver resident, a first-time offender with a doctorate in philosophy from Purdue, scarcely resembled a multinational drug dealer.
Posing behind the Internet handle "Hammertime," Hagen became a prolific meth distributor on Silk Road, where online customers described him as a reliable vendor who from October 2012 to August 2013 shipped high-quality product quickly, confidentially and affordably, according to a government sentencing memo.
"During this time," according to the memo, "Hagen, as Hammertime, engaged in approximately 3,169 transactions on Silk Road, selling roughly 17.6 pounds of methamphetamine." He and his coconspirators sold the drug in small increments, typically a half-gram at a time, often hiding them inside DVD cases labeled, "South Beach Workout."
His customers stretched across the world - Australia, Canada, Czech Republic, Italy, the U.K. - and eventually included a few undercover federal agents who paid $1,400 in bitcoin to buy a little more than 17 grams of meth.
Hagen was scarcely alone in moving misery through Silk Road, believed to be the world's largest online black market, with more than 950,000 registered users and $1.2 billion in transactions, according to the sentencing memo: "A wide variety of goods, mostly illegal, were sold on the site, including false and stolen identities, hacking tools, counterfeit goods, pirated media, criminal guidebooks, money laundering services, and murder for hire contracts."
Two years ago, the FBI arrested Ross William Ulbricht, Silk Road's administrator, and shut down his site. Ulbricht was convicted last February in New York of drug trafficking, computer hacking, money laundering and operating a continuing criminal enterprise.
Federal agents seized six website servers from locations that included Latvia and Romania, giving investigators a digital roadmap to identify several of Silk Road's higher-volume distributors - including Hagen.
That seizure eventually would lead federal agents from Homeland Security Investigations, the U.S. Postal Inspection Service, IRS criminal investigators and the Secret Service - including now-disgraced former Agent Shaun Bridges, of the Secret Service - to Hagen's home in Vancouver, where they seized computers.
Government prosecutors noted before the judge Wednesday that Bridges, whose corruption was not yet known at the time of the raid, played the slimmest of roles in Hagen's undoing. Bridges' only involvement was that he received two encrypted USB storage devices from Hagen's home, but couldn't open them.
When Assistant U.S. Attorneys Jennifer J. Martin and Johnathan S. Haub presented their sentencing recommendations to the judge, they acknowledged that because of the taint of corruption from the Baltimore agents - and in the spirit of fairness and an abundance of caution - they were recommending a reduced punishment.
Prosecutors recommended that Hagen serve three years and one month in prison instead of the roughly six years they ordinarily would have sought under federal sentencing guidelines. Hagen's three codefendants also had gotten reduced sentences because of the agents' corruption.
Judge Jones, looking unhappy, said Hagen hadn't earned the reduction and had peddled meth all over the world.
Hagen's lawyer, Noel Grefenson, told the judge there was no sugar coating his client's crimes. But he pointed out that Hagen had come clean, laid himself bare to government agents and his own family, and took a hard look at the "double life" that put him in such deep trouble.
Now it was Hagen's turn to speak, and he turned to his family.
"I'm sorry that I betrayed you," he said, telling them he's become a better man because of his troubles. "In a way," he concluded, "I have the government to thank."
Jones had the final word.
"Your crimes were egregious," he said. "It's difficult to give you credit because the government messed up."
He sentenced Hagen to the 37 months recommended by prosecutors, followed by five years of court supervision, and ordered him to report to the U.S. Bureau of Prisons on Jan. 5. This means that because Hagen had previously spent about 16 months in jail while awaiting resolution of his case, he could be freed from prison - with time off for good behavior - in the middle of 2017.
-- Bryan Denson
503-294-7614; @Bryan_Denson