RAF Matthew Goettsche wanted to retire R.A.F.
or Rich As….well, we’re sure you can figure out what the F stands for.
And Goettsche wanted to make his money through a company built on the backs of sheep.
The sheep, in this case, were investors duped into investing their hard-earned money into
a Bitcoin mining scam that was too good to be true.
Silviu Balaci is a Romanian programmer hired by Goettsche to help run BitClub Network,
or BCN.
Goettsche instructed him to cook the numbers and provide fake proof of mining power, making
it seem like their profits were much higher.
This was done in order to entice current investors into investing more and getting friends and
family to jump in on this fast cash scheme.
But at a $600 first level buy-in, very little was actually going to the mining venture.
This was something that most investors didn’t know.
The profits that were being made were forcibly reinvested into the company under the guise
of continued investment and continued growth.
To Balaci, BCN’s dealings sounded like Ponzi scheme fast cash grab- what if investors started
looking closer?
When the well known and very illegal scam was pointed out by a very complicit Balaci
to his unscrupulous boss, Goettsche shrugged it off.
Goettche wanted to build this whole model quote, off of the backs of idiots.
Goettsche then went out and bought a couple islands.
Joby Weeks Jobediah ‘Joby’ Weeks was BCN’s most
visible salesman and ardent recruiter- a true believer in BCN and bitcoin.
Joby began honing his sales technique in his teens after being inspired by his mother.
Joby began with ventures in bartering trading up from a $25 guitar to a $1000 home theater
system, to selling M&M’s be bought from Costco door-to-door, even dabbling in selling
drugs but stopped after he was busted for drug smuggling in Costa Rica.
Joby’s most successful project came from selling for the same company his mother sold
for, Mannatech, which is a durable supplement company, where Joby was clearing $6000 a month
by the age of 19.
In his early 20’s, Joby started venturing into different markets from various other
MLM projects, to dabbling in legalized weed sales to green energy projects.
With all this early success and income, Joby was able to finance an extravagant globetrotting
lifestyle with few restrictions or bounds.
It was this lifestyle that became part of his successful BCN pitch- ‘Here’s me in
the Alps!
Here I am surfing in Australia!
Here I am at the South Pole!
And for a small investment, this can be a possibility for you too!’
For most people, the dream of globetrotting is reserved for the wealthy elite, not the
average Joe and for a reasonably small investment- who would that NOT appeal to?
Weeks was known to describe himself as coming from a long line of proud Americans- his family
fought in the American Revolution, a relative of his was a Major in the War of 1812, his
great-great-grandfather, John W. Weeks, was a U.S. Senator.
His father, Nathaniel ‘Nat’ Weeks, decided to go against the family tradition of going
to Harvard and instead attended Dartmouth- as if going to the less prestigious Ivy League
school was a handicap.
To his family’s credit, however, his dad took a job as a teacher at a private Christian
school where the pay wasn’t particularly great, his mother was a respiratory therapist
who took to various multi-level marketing companies to supplement their modest household
income.
With Joby’s father introducing him to Randian Objectivism, and his mother’s ability to
sell and make money, Joby was set up to become a go-getter self-made millionaire, with albeit
questionable ethics.
Matthew Goettsche Matthew Goettsche was involved with the launch
of BCN in 2014.
After graduating in 2005 from the University of Colorado, Goettsche ended up in MLM, selling
for Waiora, a supplement company similar to Weeks’s Mannetech.
Waiora came under fire from a lawsuit in 2012 for false advertisement claims- the company
had been selling $50 cures to sick and dying people that contained little more than water
and trace amounts of mineral called Zeolite when the bottle claimed 2400mg, a fact Goettsche
was most likely aware of.
It’s little surprise then, that a man who had no problem ripping off people desperate
for a cure, or even just to feel better, would be involved in a Ponzi scheme that showed
remarkable disdain for its investors.
Lifestyle The lifestyle created by BCN’s founders
and top promoters was the major draw of the scheme.
They were living the dream of excessive wealth and the ability to travel anywhere at any
time.
On Joby’s website, WeeksAbroad, he would show off all the places he was going and all
the cool things he did, never staying in the same place for more than a week or two.
His infant daughter, Liberty, visited all 50 states in 42 days becoming the youngest
person ever to do so, and by the time she was a little over a year old, had visited
45 countries.
Joby’s travels were so extensive they attracted documentary filmmaker Korey Rowe, spent a
year following the Weeks family around on their globetrotting adventures.
Rowe also became a BCN investor but seems to be rather happy with the experience and
his relationship with Joby.
Joby also bought a 13-bedroom mansion with an ocean view in Acapulco because he enjoyed
the annual Bitcoin conference held there where he gave presentations.
Matthew Goettsche, with his access to hundreds of millions of dollars, formed about 23 shell
companies that he used to launder his money.
With his wealth, Goettsche was able to buy two islands of the coast of Belize, as well
as real-estate development on the Belize mainland, a condo timeshare in St. Kitts, a beachside
mansion in Costa Rica, properties all over the U.S., a 58-foot yacht, and like Joby,
bought his own airplane.
The demonstration of wealth had shown what these men did with simple investments and
having them tell you that this could be a reality for you as well would sway anyone.
Bitclub Network So how did BCN claim to work?
Potential investors were shown their dreams in presentations made by promoters like Weeks,
and told that for a small $600 investment, they could be on their way too.
The first $100 was a simple membership fee, with $500 going toward funding the Bitcoin
mining operation- the purchase of more equipment, to keep the lights on, and so forth.
Investors were to be paid in commissions from any daily profits created from the mining
operation.
Popular terms like ‘Passive Income’ were often thrown around to show how easy this
was going to be for you, the investor.
To make the deal even sweeter, your earnings from the operation were going to be funneled
back into the system to get you an even larger share, ultimately creating you even more wealth.
The program seemed too good to be true, so to pacify any skeptics, BCN loved claiming
to be quote, “the most transparent company in the world”.
Goettsche was integral in revenue breakdown of BCN and it went something like this.
40% of investment capital on purchasing the mining equipment, 20% for operating expenses,
and 40% was paid out as commissions.
So daily earnings were going to pay for the massive amounts of electricity used to run
the operation, and the commissions weren’t being paid from the profits from mining, but
through new investors- the hallmark of a Ponzi scheme.
Of course, the minute new people stop joining, the whole thing collapses.
BCN preyed upon investors who were unaware of how the business actually operated.
The founders took advantage of investors’ dreams of lavish wealth and travel.
Goettsche, in online conversation with his programmer, Silviu Balaci, at one point bragged
that their clients were the quote, “typical dumb MLM investor.”
Balaci was often told to cook the books, inflating and deflating earnings when convenient- Goettsche
seemed proud of the fact that BCN was able to manipulate the numbers however they pleased
to deceive any potential auditors.
Investors were being told that the entirety of their investment was going towards the
purchase of mining equipment, wholly unaware that it was only 40%, a fact that Balaci pointed
out to Goettsche.
He replied that of course the leaders knew that.
It was the sheep that didn't.
Warning Signs Blogger Ofir Beigel, of 99Bitcoins, started
looking into BCN in 2016, 3 years before the system began to unravel and federal indictments
were handed down.
On 99Bitcoins, Beigel offers in depth analysis of how Bitcoin works, legitimate places to
purchase cryptocurrencies, and advice for the average person so they can get started
in a very accessible way.
So, when Beigel saw a BCN pitch on YouTube, he quickly noticed that the promoter didn’t
seem to really understand how mining pools operate, and greatly downplayed the risks
associated with crypto investments.
Beigel began to take a closer look at BCN and found even more suspicious behavior.
It was difficult to pin down exactly who was running the company.
No names were actually given on their website, the ‘who we are’ section was only a vague
statement about quote, “a team of entrepreneurs, experts, professionals, network marketers,
and programming geeks.”
The owner of the domain was unlisted, and even direct emails to the website asking who
runs the show simply redirected Beigel to the site’s vague ‘About Us’ explanation.
Beigel began looking at fake testimonials about BCN from other websites, amusingly finding
one of the testimonials coming from a phony account with a man whose photo belonged to
a convicted rapist currently serving a life sentence for his crime in Mumbai- the metaphor
was a little on the nose.
The more Beigel looked, the more vague information and false testimonials he found.
Further evidence that BCN is a scam came from Beigel attempting to sign up himself on the
website, but was unable to do so without a sponsor.
To pursue this, Beigel used the initial promoter he found on YouTube, and was quickly directed
to pay $99 to join without any idea as to what the money being paid was for or why.
BCN’s site did offer benefits of signing up, but even these were vague compared to
other honest mining operations.
There were different levels of membership for different levels of fees promising greater
and greater earnings, but as Beigel did the math, the numbers versus the testimonials
found quickly did not add up.
Beigel’s final conclusion, fantastically written up on his website, was that while
there was an actual legitimate mining operation going on, he felt that BCN has too many characteristics
that make it a Ponzi scheme and any potential investor should steer clear.
When BCN learned of Beigel’s write up, he was actually contacted by Joby Weeks himself,
and after either a vigorous point-counterpoint discussion or threats of a lawsuit, Beigel
pulled back from directly calling BCN a scam in the title of his article and rephrased
it to a more political ‘investment warning’.
Investigation In the spring of 2019, Jobediah Weeks contacted
the IRS over some concerns he was having with taxes he hadn’t filed in several years.
And, Uncle Sam being Uncle Sam and very interested in any money he may be owed, latched onto
the fact that this could be much bigger than Weeks was letting on- the discussion got very
serious very quick.
To divert attention from himself and BCN, Joby offered to inform on more serious cases
within the crypto community, suggesting he be a quote, “Jason Bourne of cryptocurrency”.
However, the IRS cared very little for Weeks’s super-spy crypto fantasy pretend game, and
instead wanted to know more about BCN.
A follow-up meeting was scheduled for that December in Florida to further discuss goings
on at BCN, and when Joby showed up, he was promptly arrested.
Once in custody, Weeks refused to cooperate with agents when it came to his finances,
which did him little good.
In spite of his noncompliance, the investigation dug up foreign bank accounts, high-dollar
international wire transfers, and evidence of crypto totaling around $124 million in
cold storage.
While Joby has always maintained his ignorance of any type of fraud committed by BCN, investigators
found evidence that he may have been directing some investors on how to hide their investments,
where to send their money, and what to label it as, as well as being far more aware of
the scam than he let on.
On the very same day Weeks was arrested, Goettsche was also taken into custody.
When agents knocked on his door to serve his warrant no one answered, but they noticed
a figure rush by to a home office through a nearby window.
With probable cause, agents broke down the door and found a panicked Goettsche in the
entrance to his office, unplugging his hard drives in an attempt to make it more difficult
for investigators to access them- apparently, he thought having to plug them back in would
be too complicated and the investigation would just stop.
With Goettsche, agents seized over $9 million in assets, various cold storage wallets had
shown transactions of more than $233 million, with $70 million in just a two-month period.
Aftermath On November 5th, 2020, Joby Weeks pled guilty
to conspiracy to sell unregistered securities and tax evasion in connection with the $722
million cryptocurrency scam committed by BCN.
He also pled guilty to tax evasion from 2015 to 2018.
The conspiracy charge and tax evasion each carry a 5-year maximum prison sentence as
well as restitution to the victims.
Romanian programmer Silviu Balaci was arrested in Germany and on July 9, 2020, pled guilty
to conspiring to engage in wire fraud as well as selling unregistered securities for BCN,
and faces up to 5 years in prison and a fine of $250,000.
Balaci is set to be sentenced March 16th, 2023.
Matthew Goettsche’s case is still ongoing as of October of 2022, and has been granted
four continuances as the DOJ is still investigating his finances.
As per the DOJ, the amount of evidence piling up on the case is massive, including 2 million
electronic records, the examination of website servers and server data both foreign and domestic,
as well as extractions off digital devices.
Goettsche rejected a plea deal in 2020 and maintains his innocence.
Goettsche’s case isn’t looking good as the evidence against him piles up.
On March 24th, 2022 as a 3rd accomplice, Gordon Beckstead pled guilty to laundering money
for Goettsche.
As a BCN investor, former CPA Beckstead created various shell companies used by Goettsche
and others to hide their income.
Beckstead also admitted to controlling accounts that were designed to hide the source of Goettsche’s
income, property, and various assets.
In addition, Beckstead helped Goettsche evade his taxes that allowed Goettsche to avoid
paying upwards of $20 million dollars in taxes.
Beckstead is facing laundering charges that carry up to 20 years in prison and a fine
of $500,000, as well as tax evasion charges that carry a maximum of 3 years in prison
and a $100,000 fine.
He’s still awaiting sentencing as of August 16th, 2022.
Finally, the wizard behind the curtain was arrested.
BCN founder and ring leader Russ Medlin, whose identity was kept under wraps, was arrested
in Jakarta on June 16th, 2020, for unrelated crimes.
Medlin had been on the run since BCN unraveled and indictments were handed down, and his
whereabouts were unknown.
Most recent updates suggest he’s still awaiting trial in Indonesia and is facing up to 15
years in an Indonesian prison.
It’s unclear if the U.S. will seek extradition of Medlin while he’s in Interpol’s custody.
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