Feds: Former NJDOC Officer From Marmora Charged in Cryptocurrency Scheme
Federal authorities say a former corrections officer from Marmora has been arrested for orchestrating two different fraud schemes.
U.S. Attorney Philip Sellinger's office says 47-year-old John DeSalvo is facing two counts of wire fraud, two counts of securities fraud, and two counts of money laundering related to two different fraud schemes.
First responders were alleged victims
Sellinger said in a statement,
[DeSalvo] is alleged to have committed two brazen investment fraud schemes in which he falsely promised huge returns to obtain hundreds of thousands of dollars from unsuspecting investors. In one scheme, DeSalvo is alleged to have targeted law enforcement and first responders to invest in a digital token that he falsely claimed was SEC-approved and listed on cryptocurrency exchanges. In the other, he is alleged to have obtained investments by promising extraordinary rates of return that we allege were too good to be true.
Once DeSalvo got his investors’ money, he allegedly spent it on himself, paying personal expenses and funding his own investments.
FBI–Newark Special Agent in Charge James E. Dennehy continued,
We allege DeSalvo created and marketed a cryptocurrency to first responders as a ‘crypto pension’ that could supplement their existing pensions. Our investigation shows instead of actually making the rate of return he boasted about, he allegedly used hard-earned money from firefighters, police officers, EMTs and other public servants as his personal bank account.
According to court documents filed in this case,
DeSalvo was the creator and promoter of a digital token known as “Blazar Token,” (Blazar) which DeSalvo marketed to police, fire personnel, EMTs, and other first responders as a “crypto pension” that could be used to supplement investors’ existing pension plans. . . . Beginning in late 2021, DeSalvo used social media platforms to fraudulently solicit investments in Blazar through a series of misrepresentations including that: Blazar was in the process of becoming, or was already, a securitized token approved by the Securities and Exchange Commission; and Blazar could be purchased through payroll deductions and ACH transactions. DeSalvo additionally falsely told investors that Blazar had been approved for inclusion on several well-known cryptocurrency exchanges and guaranteed investors rates of return of more than 20 percent with 'ZERO risk.'
In total, DeSalvo is said to have raised more than $620,000 from more than 200 investors in Blazar.
Between January 2021 and May 2021, DeSalvo managed and solicited investment in an investment group through Brokerage-1, an online trading platform. DeSalvo marketed the investment group largely through social media posts in which DeSalvo falsely touted his success as an investor. DeSalvo claimed to potential investors, 'I have been averaging close to 1200 % over the last 2 years. I am in the top 1,000th percent in the world. That’s the truth, the return rates I have been averaging are so high that I have people throwing money at me to invest.'
In total, DeSalvo solicited approximately $100,000 in investments from approximately 20 individuals for the investment group.
After draining the investment group’s account, DeSalvo advised the investment group investors that their funds had been lost due to poor market conditions and provided the investors with false trading records purporting to show the trading activity that DeSalvo engaged in on behalf of the investment group.
Potential time behind bars
The counts of wire fraud carry up to 20 years in prison and a $250,000 fine. The counts of securities fraud also carry up to two decades behind bars and a fine of up to $5 million. Another 20 years is possible for the counts of money laundering.
The U.S. Securities and Exchange Commission (SEC) also filed a civil complaint against DeSalvo based on the same conduct.
The public is reminded that charges are accusations and all persons are considered innocent until proven guilty in a court of law.