By Bill Wichert

Law360 (March 30, 2020, 4:41 PM EDT) -- A New Jersey federal judge on Monday refused to let two men accused of taking part in a $722 million cryptocurrency scheme leave a county jail over fears of a COVID-19 outbreak there, saying those concerns were purely speculative and that the men could flee the country if released.

During a hearing via the Zoom videoconferencing service, U.S. Magistrate Judge Michael A. Hammer acknowledged that international travel is more difficult amid the ongoing coronavirus pandemic, but said the risk of flight still warranted detaining Matthew Brent Goettsche and Jobadiah Sinclair Weeks at the Essex County Correctional Facility.

"Is it harder to travel? Of course it is, but I'm satisfied from this record that Mr. Goettsche and Mr. Weeks have the resources in terms of money and associates and experience with international travel that still make international travel possible for them," Judge Hammer said.

Goettsche and Weeks, who are accused of participating in a Ponzi scheme and bilking investors out of $722 million, sought their release based on concerns about their health, noting that two correctional officers and an immigrant detainee at the county jail have tested positive for COVID-19, as well as on related restrictions on meeting with attorneys while behind bars.

In rejecting their health-related arguments, Judge Hammer on Monday pointed out that there have been no positive COVID-19 cases in the building where the two men are housed.

The judge added that the jail has "undertaken extensive measures to address COVID-19," such as quarantining new inmates for 14 days to ensure they don't display related symptoms before they're moved into a housing unit, severely curtailing the flow of people coming into the facility and placing a moratorium on visits from family and friends.

As for each man's particular risk of contracting the virus, Judge Hammer said he could not find that Goettsche is "particularly vulnerable to COVID-19 by virtue of his age or medical conditions," noting that the 37-year-old is not elderly and identified no medical conditions.

The 38-year-old Weeks claimed he has suffered from exercise-induced asthma, but failed to demonstrate that that condition represents a compelling reason to let him out of the jail, the judge said.

Weeks submitted his own declaration and a letter from his mother about the condition, but nothing from a medical provider about the requisite care, the precautions Weeks must take or whether the condition makes him more susceptible to "some disease or illness, whether it be COVID-19 or otherwise," the judge said.

"There's little basis to believe that this is an ongoing medical issue, much less a serious one warranting relief under [federal statute 18 U.S.C. § 3142(i)]," said Judge Hammer, adding that Weeks did not provide medical records about his purported treatment for the condition.

Besides their fears of catching COVID-19, Goettsche and Weeks have asserted that, given the coronavirus-related restrictions in place at the jail, remaining there could impede their ability to meet with their respective attorneys to review discovery and prepare a defense.

Their lawyers have pointed to the voluminous amount of electronic discovery in the case and how the no-contact restrictions prohibit the attorneys from meeting with Goettsche and Weeks in the same room with a laptop.

But Judge Hammer on Monday said he did not agree that such difficulties "rise to the level of a constitutional deprivation so as to warrant relief under section 3142(i)."

"Notwithstanding the limits on their access to their clients for the moment," the judge said the lawyers could "use their time profitably to undertake the labor- and time-intensive tasks of reviewing the documents, categorizing and organizing them for reference and accessibility."

Goettsche, Weeks and co-defendant Joseph Frank Abel have been charged with running purported cryptocurrency mining pool company BitClub Network, soliciting money from investors in exchange for shares of purported cryptocurrency mining pools and offering bonuses for the recruitment of new investors, prosecutors said. A fourth man, Silviu Catalin Balaci, also has been charged in the scheme.

According to the indictment, Goettsche, Weeks and others solicited BitClub investments by showing investors false and misleading figures that purported to show earnings from BitClub's bitcoin mining pool operations. Prosecutors say Goettsche and others manipulated the earnings numbers in order to promote the sale of bitcoin mining shares in BitClub and to convince members to invest additional funds in BitClub's cryptocurrency-related products.

Matthew Reilly, a spokesman for the U.S. Attorney's Office for the District of New Jersey, said Monday the office declined to comment.

Simon Gaugush and Michael L. Yaeger of Carlton Fields, representing Weeks, told Law360 on Monday, "Notwithstanding the court's ruling today, we remain deeply concerned about the health and welfare of Mr. Weeks."

Counsel for Goettsche did not immediately respond to a request for comment Monday.

The government is represented by David W. Feder, Anthony P. Torntore, Jamie L. Hoxie and Sarah Devlin of the U.S. Attorney's Office for the District of New Jersey.

Goettsche is represented by Rodney Villazor of Smith Villazor LLP, and Benjamin Sauter, Andrew Lourie and Hartley M.K. West of Kobre & Kim.

Weeks is represented by Simon Gaugush and Michael L. Yaeger of Carlton Fields.

The case is U.S. v. Goettsche et al., case number 2:19-cr-00877, in the U.S. District Court for the District of New Jersey.

--Additional reporting by Stewart Bishop. Editing by Jack Karp.

Update: This article has been updated with comment from Weeks' attorneys.

For a reprint of this article, please contact reprints@law360.com.