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The founder of an alleged digital currency Ponzi scheme alleged to have scammed $9 million from unsuspecting investors has been denied a reprieve from custody, after citing health concerns over COVID-19.

Judge John Tuchi rejected an emergency motion for release from prison submitted on behalf of alleged digital currency scammer John Caruso of Zima Digital Assets, as he awaits trial on charges that could result in a five-year prison sentence.

Caruso said that the risks of COVID-19 meant that there was a health risk to his ongoing detention, in a motion considered by the court this week. Judge Tuchi denied the motion on the grounds that Caruso poses a significant flight risk, as well as highlighting the potentially larger risks of contracting COVID-19 in the outside world.

The denial is the second time the argument has been heard by a judge. Previously, Judge Michelle Burns pointed out that 28-year-old Caruso was healthy and unlikely to suffer adverse effects from coronavirus in any event.

The COVID-19 defense has been brought forward by a number of high profile prisoners in recent weeks, with legal representatives arguing over the risks to health for those detained in prisons.

However, in the Caruso case, both judges have independently opted to retain the accused in custody, pointing to his significant criminal history among other factors.

Caruso is accused of establishing the Ponzi scheme with his business partner Zachary Salter, offering investors the chance to secure market-beating returns from investing in digital currency.

While the scheme paid out an initial $1.9 million of the $9 million total taken in, the pair are accused of then using client money for personal gain, including racking up gambling debts $830,000, private jet and vehicle rentals of $540,000 and $670,000 in credit card bills.

Caruso is now awaiting trial, scheduled for July 2020.  

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