Regulation
COVID-19 Defense Fails Once More for Co-Founder of Alleged $9M Crypto Ponzi
In the case against an alleged crypto Ponzi scheme founder, judges are not convinced that the risk of COVID-19 is enough to allow posting a bail bond for release.
One of the persons behind an alleged cryptocurrency Ponzi scheme has once again been denied bail. The accused, John Caruso, continues to be considered an extreme flight risk despite pleading not guilty earlier in 2020.
As filed by Judge John Tuchi on May 14, Caruso requested another emergency motion asking to be released from prison, after a similar request was denied in April by Judge Michelle Burns.
Caruso’s legal team attempted a COVID-19 defense, arguing that the spread of the virus puts the defendant at risk of infection while he stays in prison.
Both of the judges reviewing the motion did not cede to this tactic, stating that the spread of COVID-19 has no effect on Caruso’s flight risk.
In the earlier denial, Judge Michelle Burns had also noted that the 28-year-old Caruso is in excellent health condition and is unlikely to be strongly affected by the coronavirus. Furthermore, Judge Tuchi argued that Caruso would be potentially more at risk of infection in the outside world, summarizing that the issues of flight risk and personal health “are apples and oranges.”
The judges appear to be adamant in their wish to detain Caruso due to his troubled history, which includes seven prior felony convictions and multiple counts of violated probation. He was released from prison in November 2017, while the alleged Ponzi scheme was launched in June 2018.
A compounding factor is that investigators appear to have been unable to trace the location of all proceeds from the scheme, leading them to believe that he could use the money to disappear.
Previous history
John Caruso is accused, together with his partner Zachary Salter, of creating Zima Digital Assets, a cryptocurrency investment scheme that failed to invest the funds it received into cryptocurrency.
Instead, the pair are believed to have used customer funds, amounting to approximately $9 million, to finance their lavish lifestyle.
The pair was rumored to have racked up $830,000 in gambling losses following 30 trips to Las Vegas, in addition to accumulating $670,000 in credit card expenses, $540,000 in private jet and luxury vehicle rentals, and $150,000 in rent for a 20,000-square-foot mansion.
Of the $9 million collected, about $1.9 million seems to have been paid out to early participants to make the scheme appear more trustworthy.
Caruso’s trial is scheduled for July 2020, facing charges that could result in five years in prison.
