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According to a Release from the Department of Justice (DOJ), three men were arrested today in connection with a cryptocurrency mining scheme that defrauded investors of $722 million, U.S. Attorney Craig Carpenito announced. The following information is quoted from the Release.
Brent Goettsche, 37, of Lafayette, Colorado, and Jobadiah Sinclair Weeks, 38,
of Arvada, Colorado, are charged by indictment with conspiracy to commit wire
fraud and Goettsche, Weeks, and Joseph Frank Abel, 49, of Camarillo,
California, are charged by indictment with conspiracy to offer and sell
unregistered securities. Goettsche was arrested in Colorado, Weeks in Florida,
and Abel in California. All three are scheduled to have their initial
appearances in the districts of their arrests. Two defendants remain at large
and their identities remain under seal.
indictment describes the defendants’ use of the complex world of cryptocurrency
to take advantage of unsuspecting investors,” U.S. Attorney Carpenito said.
“What they allegedly did amounts to little more than a modern, high-tech Ponzi
scheme that defrauded victims of hundreds of millions of dollars. Working with
our law enforcement partners here and across the country, we will ensure that
these scammers are held to account for their crimes.”
arrested today are accused of deploying elaborate tactics to lure thousands of
victims with promises of large returns on their investments in a bitcoin mining
pool, an advanced method of profiting on cryptocurrency,” Paul Delacourt, the
Assistant Director in Charge of the FBI’s Los Angeles Field Office said. “The
defendants allegedly made hundreds of millions of dollars by continuing to
recruit new investors over several years while spending victims’ money
indictment alleges the defendants were involved in a sophisticated Ponzi scheme
involving hundreds of millions of dollars that preyed upon investors all over
the world,” John R. Tafur, Special Agent in Charge, IRS Criminal Investigation,
Newark Field Office, said. “This was a classic con game with a virtual
twist; false promises of large returns for investing in the mining of Bitcoin.
IRS Criminal Investigation will continue to work with our law enforcement
partners, including the Joint Chiefs of Global Tax Enforcement, to investigate
and bring to justice cyber criminals.”
to documents filed
in this case and statements made in United States District Court, District of
April 2014 through December 2019, the defendants operated BitClub Network, a
fraudulent scheme that solicited money from investors in exchange for shares of
purported cryptocurrency mining pools and rewarded investors for recruiting new
investors. Goettsche, Weeks, and others conspired to solicit investments in
BitClub Network by providing false and misleading figures that BitClub
investors were told were “bitcoin mining earnings,” purportedly generated by
BitClub Network’s bitcoin mining pool. Goettsche discussed with his
conspirators that their target audience would be “dumb” investors, referred to
them as “sheep,” and said he was “building this whole model on the backs of
idiots.” Goettsche directed others to manipulate the figures displayed as
“mining earnings” during the course of the conspiracy.
example, in February 2015, Goettsche directed another conspirator to “bump up
the daily mining earnings starting today by 60%,” to which his conspirator
warned “that is not sustainable, that is ponzi teritori [sic] and fast cash-out
ponzi . . . but sure.” In September 2017, Goettsche sent an email to another
conspirator in which he suggested that Bitclub Network “[d]rop mining earnings
significantly starting now” so that he could “retire RAF!!! (rich as fuck).”
Weeks sent an email in June 2017 to Goettsche and another conspirator in which
he remarked that BitClub selling shares in BitClub and then not using the money
to purchase mining equipment was “not right.” Goettsche, Weeks, and others
obtained the equivalent of at least $722 million from BitClub Network
Weeks, Abel, and others also conspired to sell BitClub Network shares – which
were securities – notwithstanding that BitClub Network did not register the
shares with the U.S. Securities and Exchange Commission. Weeks and Abel created
videos and traveled around the United States and the world to promote BitClub
Network. In one video, a conspirator espoused that BitClub Network was “the
most transparent company in the history of the world that I’ve ever seen.” In
another video, Abel assured investors that BitClub Network was “too big to
wire fraud conspiracy charge carries a maximum potential penalty of 20 years in
prison, and a fine of up to $250,000. The conspiracy to sell unregistered
securities charge carries a maximum penalty of five years in prison and a fine
up to $250,000.
Attorney Carpenito credited special agents and task force officers of the FBI’s
Los Angeles Division’s West Covina Resident Agency, under the direction of
Acting Assistant Director in Charge Delacourt; special agents of IRS-Criminal
Investigation, under the direction of Special Agent in Charge John R. Tafur in
Newark; and the IRS Los Angeles Field Office, under the direction of Special
Agent in Charge Ryan L. Korner, with the investigation leading to today’s
who believes they may be a victim may visit www.justice.gov/usao-nj/bitclub or
the Department of Justice’s large case website www.justice.gov/largecases.
There, victims can find more information about the case, including a
questionnaire for victims to fill out and submit.
government is represented by Unit Chief David W. Feder and Assistant U.S.
Attorneys Anthony P. Torntore and Jamie L. Hoxie, of the Cybercrime Unit, and
Unit Chief Sarah Devlin of the Asset Recovery and Money Laundering Unit of the
U.S. Attorney’s Office in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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