NEWARK, N.J. – Three men were arrested in connection with a cryptocurrency mining scheme that defrauded investors of $722 million, U.S. Attorney Craig Carpenito said.
Matthew Brent Goettsche, 37, of Lafayette, Colo., and Jobadiah Sinclair Weeks, 38, of Arvada, Colo., have been charged by indictment with conspiracy to commit wire fraud and Goettsche, Weeks, and Joseph Frank Abel, 49, of Camarillo, Calif., have been charged by indictment with conspiracy to offer and sell unregistered securities, the Department of Justice said.
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.
“The indictment describes the defendants’ use of the complex world of cryptocurrency to take advantage of unsuspecting investors,” 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.”
‘Elaborate Tactics’
Added Paul Delacourt, the assistant director in charge of the FBI’s Los Angeles field office, “Those arrested 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. The defendants allegedly made hundreds of millions of dollars by continuing to recruit new investors over several years while spending victims' money lavishly.”
According to documents filed in this case and statements made in court: From 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.
Dumb as Sheep
Goettsche allegedly 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,” according to authorities.
Goettsche directed others to manipulate the figures displayed as “mining earnings” during the course of the conspiracy, the Department of Justice said.
The 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.