US DOJ Charges Duo For Running Illegal Crypto Mining Farm At School

The U.S. Department of Justice (DOJ) has two men for running an illegal cryptocurrency mining farm at the Patterson Joint Unified School District in California.

According to a Thursday announcement, Jeffrey Menge, 43 and Eric Drabert, 44, pleaded guilty on Thursday to using high-end graphics cards owned by the school and electricity to operate an illegal cryptocurrency mining farm within the school. 

As per the DOJ, the mined cryptocurrency was then transferred to the duo’s personal wallets. And while court documents disclosed that Menge agreed to forfeit 3.85 ETH ($8,876) presently contained in his wallet, it was not clear if the duo had mined other proof-of-work cryptocurrencies like Bitcoin, DOGE or Monero.

The duo was further charged with embezzling funds from the school through double billing, overbilling, and billing for undelivered items, resulting in more than $1.2 million in fraudulent transactions. Further, Menge was accused of embezzling between $1 million and $1.5 million, which he used for personal luxury purchases, including a Ferrari sports car. On the other hand, Drabert stole between $250,000 and $300,000, using the funds to renovate his vacation cabin and other personal expenditures.

Notably, the duo is set to be sentenced in May, with each facing a maximum statutory penalty of 10 years in prison and a $250,000 fine. This development coincides with the recent crackdown by the U.S. energy regulator on crypto miners as part of a broader initiative to curb electric grid strains in the country.

On Thursday last week, the United States Department of Energy (DOE) mandated that cryptocurrency miners must disclose their energy consumption over the next six months. 

Simultaneously, the U.S. Energy Information Administration (EIA) unveiled plans to scrutinize the electricity usage of local cryptocurrency mining entities, demanding comprehensive insights into their energy consumption. 

That said, although cryptocurrency mining is generally permitted in the USA through the acquisition of specific permits, particularly for extensive operations, the prevalence of illicit crypto-mining farms remains a notable concern. 

In February 2023, another individual faced charges for purportedly operating a covert cryptocurrency mining facility within a Massachusetts school. According to court documents, the accused was alleged to have illicitly siphoned electricity amounting to nearly $18,000 to sustain his cryptocurrency mining activities. This unauthorized use of power was reported to have occurred over an extensive period, from April 28 to December 14, 2021.