Alleged Operators of $722M Crypto Scheme Seek Jail Release Amid COVID-19 Fears

Two alleged crypto Ponzi scheme operators have requested that a New Jersey federal court grant their release from jail over concerns that the facility will soon host a COVID-19 outbreak.

Matthew Goettsche and Jobadiah Weeks submitted separate motions petitioning the Essex County Correctional Facility in Newark, New Jersey for their release on March 20 and 23, respectively.

Goettsche’s attorney, Rodney Villazor, said, “it is not a matter of ‘if’, but ‘when’” the corrections facility hosts a coronavirus outbreak. He argues that once the virus reaches the jail, “it will be nearly impossible to stop its spread,” adding that “the risk to Mr. Goettsche’s health and safety grows with each day that he remains incarcerated” at the facility.

New Jersey jail under fire for widespread health and safety issues

According to Weeks’ representation, the county jas has “an exceptionally poor record of maintaining detainee health.”

He cited the findings of the United States Department of Homeland Security’s Office of Inspector General, who last year reported that the facility poses “significant threats to detainee health and safety.”

The inspector general identified “leaks causing mold and mildew growth 'in every housing unit holding detainees,” and food safety issues including “'raw, spoiled, or expired' meat, 'raw chicken,' 'expired and moldy bread,' and 'hamburgers that were foul smelling and unrecognizable’.” Weeks’ lawyer argued:

“Given the noted risks of illness through inadequate food service and environmental safety at the Essex County Correctional Facility, a swift outbreak of COVID-19 at the facility is virtually inevitable.”

The lawyers also argued that a lock-down at the facility would make it impossible for the suspects to comply with discovery requests in their ongoing proceedings.

BitClub Network accused of scamming $722 million

Goettsche, Weeks, and two other defendants are accused of operating a $722 million Ponzi scheme from 2014 until December 2019 under the guise of running the cryptocurrency mining pool BitClub Network. 

The group allegedly solicited funds from investors in exchange for purported shares in their mining pools, also offering referral bonuses to those who recruited new members. The prosecution accused BitClub of distributing false and misleading documentation to investors that claimed to demonstrate profits generated by the mining pool.

Goettsche and Weeks are charged with conspiracy to commit wire fraud, while all four of the scheme’s operators face charges of conspiracy to sell unregistered securities.