BitClub Network Was A Worldwide Fraudulent Scam

Back in March of 2018 I reported on the BitClub Network scam. The United States Government has now taken action against BitClub Network and the people behind it.

Here was my opinion of the scam:

In my opinion, BitClub Network is another recruiting scam that uses low paying mining packages to get people to recruit for them. They provide a vague statement about who is running this company on their website.  This is done so it is difficult for you to look into the history of the people behind this company. They provide no address for where the company is located at. The founders of this scam have a long history with other MLM schemes. None of the founders I was able to find are cryptocurrency experts. The BitClub Network is blocked from access for U.S. investors, but promoters are still pushing it here. Their compensation plan offers 8 levels or more for commissions.  The excessive levels in their downline make it an exploitative money transfer scheme. I would avoid the BitClub Network crypto mining recruiting scam.

Here is what was said about them in their indictment:

BitClub Network (“BCN”) was a worldwide fraudulent scheme that solicited money from investors in exchange for shares of pooled investments in cryptocurrency mining and that rewarded existing investors for recruiting new investors.

The Conspiracy

From at least in or around April 2014 through in or about December 2019, in Passaic County, in the District of New Jersey, and elsewhere, defendants Matthew Brent Goettsche and Jobadiah Sinclair Weeks knowingly and intentionally conspired and agreed with each other and others to devise a scheme and artifice to defraud, and to obtain money and property from victims by means of false and fraudulent pretenses, representations, and promises, and, for the purpose of executing such scheme and artifice to defraud, to transmit and cause to be transmitted by means of wire communications in interstate and foreign commerce certain writings, signs, signals, pictures, and sounds, contrary to Title 18, United States Code, Section 1343.

The Goal of the Conspiracy

It was the goal of the conspiracy for GOETTSCHE, WEEKS, and others (the “Fraud Co-Conspirators”) to enrich themselves by soliciting and causing others to solicit investments in BCN through materially false and fraudulent pretenses, representations, promises, and omissions.

Manner and Means of the Conspiracy

It was part of the conspiracy that:

GOETTSCHE, WEEKS, and others promoted and caused to be promoted investments in BCN shares as a pooled investment of bitcoin mining proceeds.

GOETTSCHE and others discussed and understood that BCN’s purported cryptocurrency mining would not be profitable, but would serve to induce investors to purchase BCN memberships and shares in BCN’s purported mining pools.

The Fraud Co-Conspirators made and caused others to make materially false and fraudulent pretenses, representations, and promises to, and to conceal material facts from, investors regarding aspects of BCN’s investment products, including the information that was displayed to BCN’s investors as proof of “bitcoin mining earnings” that purportedly were generated through BCN’s bitcoin mining pool.

GOETTSCHE manipulated the numbers that were displayed to BCN investors as “mining earnings” to promote the sale of bitcoin mining shares in BCN and to convince BCN members to invest additional funds in other BCN cryptocurrency-related products.

Based on the materially false and fraudulent pretenses, representations, promises, and omissions that the Fraud Co-Conspirators made and caused to be made to investors, the Fraud Co-Conspirators, both individually and through BCN, received funds from investors, including through cash, check, wire transmissions, and cryptocurrency transfers.

The Fraud Co-Conspirators, through BCN, obtained at least $722 million from investors.

The Fraud Co-Conspirators and others discussed the fraudulent scheme over email and Internet chat, posted videos encouraging investment in BCN, and used the BCN website to promote the fraudulent scheme, including, for example, the following:

In or around June 2014, GOETTSCHE and [Unlisted] exchanged emails to discuss the formation of BCN. During this exchange, [Unlisted] mailed GOETTSCHE: “The margins from the MLM [multi-level marketing] will also be insane cause I have seen your skill at constructing attractive matrixes that have almost O chance of paying more than 50% of max for 99% of the people :D.”

In or around July 2014, as part of an online chat exchange, [Unlisted] told GOETTSCHE that BCN’s target audience would be “the typical dumb MLM investor.”

In or around October 2014, GOETTSCHE and [Unlisted] discussed how to calculate fake mining earnings for investors.-stated, “I guess most people do not know only 40% is used for mining and the rest for
commissions,” to which GOETTSCHE replied, “the leaders know … its the sheep that dont.”

In or around January 2015, GOETTSCHE told [Unlisted] “we are building this whole model on the backs of idiots” and to “prove the mining … just means convincing the morons 😉.”

BCN held itself out as a profit-seeking business venture. Investors paid a $99 membership fee to be a part of BCN and then were provided the option to pay additional money for shares in what BCN purported
were three mining pools. According to BCN’s website, investors could “earn passive income” through investment in the pools.

BCN represented to investors that BCN would pool investor money together to sustain, among other things, bitcoin mining pools, including by purchasing mining equipment and computer power and by engaging in cryptocurrency mining. On its website, BCN further stated that BCN “use[s] our leverage and massive purchasing power to strategically buy mining hardware at the lowest prices and share in all the profits produced.”

BCN represented to investors that investors’ mining returns would be calculated based on the mining success of the collective operations for each of the pools. BCN represented that purchases of shares in the mining pools would determine a BCN member’s allocation of mining pool profits, with more shares leading to a greater allocation of the mining pool profits. BCN’s website displayed the following illustration of how BCN investors would earn profit from their investments in shares of the purported bitcoin mining pools.

BCN represented that its “team” would control, manage, and operate the bitcoin mining, while investors would share in the pro-rata distribution of profits derived from the bitcoin mining pools.

Shares in BCN were “securities” as that term is defined by Title 15, United States Code, Section 77b(a)(l).

BCN did not file a registration statement to register shares of BCN with the U.S. Securities and Exchange Commission (the “SEC”).

BCN promoted and sold shares of its mining pools both in the United States, including in New Jersey, and abroad.

In or around August 201 7, BCN admitted in an investor update that “Bitcoin might be a security regulated by the SEC, [and] Bitcoin mining could potentially be a security[,)” yet did not register with the SEC.

From in or about 2014 through in or about December 2019, in Passaic County, in the District of New Jersey, and elsewhere, defendants MATTHEW BRENT GOETTSCHE, JOSEPH FRANK ABEL, JOBADIAH SINCLAIR WEEKS knowingly and intentionally conspired and agreed with each other and others to directly and indirectly willfully offer and sell unregistered securities, contrary to Title 15, United States Code, Sections 77e and 77x.

FORFEITURE ALLEGATION

As the result of committing the offense constituting specified unlawful activity as defined in 18 U.S.C. § 1956(c)(7), as alleged in Count One of this Indictment, defendants MATTHEW BRENT GOETTSCHE, JOBADIAH SINCLAIR WEEKS shall forfeit to the United States, pursuant to Title 18, United States Code,
Section 98l(a)(l)(C), and Title 28, United States Code, Section 246l(c), all property, real and personal, that constitutes or is derived from proceeds traceable to the commission of the wire fraud conspiracy offense, and all property traceable thereto, including, but not limited to the Specific Property listed in Attachment A to this Indictment.

– Source justice.gov

This time it looks like the government want’s it all for this scam.