Retired CO charged with running $600K crypto scam
John DeSalvo is accused of creating a crypto token and marketing it to first responders on social media, promising returns to supplement their pension plans
By Nicolas Fernandes
UPPER TOWNSHIP, N.J. — A former corrections officer was arrested Wednesday on charges he ran a cryptocurrency scam that defrauded first responders out of more than $600,000, U.S. Attorney Philip R. Sellinger said.
John DeSalvo, 47, of Upper Township, is also accused of soliciting about $100,000 from members of an online investment group in a similar scam. In both schemes, he withdrew most of the funds to spend on unrelated expenses, officials said.
He was charged by complaint with two counts each of wire fraud, securities fraud and money laundering and was scheduled to appear in Newark federal court Wednesday afternoon.
DeSalvo is accused of creating the Blazar Token in 2021 and marketing it to first responders on social media, promising them that it would supplement their pension plans.
He told potential investors that they were guaranteed rates of return of more than 20% with zero risk and tricked them with a series of misrepresentations, including that the coin was approved by the Securities and Exchange Commission and would be available for purchase on major exchanges, authorities said.
DeSalvo received about $620,000 from investors and frequently transferred the funds into his personal accounts, officials said.
“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,” said FBI – Newark Special Agent in Charge James E. Dennehy.
He is also accused of selling more than 41 billion tokens in May 2022, causing the price of the currency to plummet. Following the selloff, an investment initially worth $1,000 had a value of about $1.15, according to the criminal complaint.
Around the same time of the crypto scheme, DeSalvo created an online investment group that he was also touting on social media, authorities said. Investigators said that he falsely bragged about his investment skills to potential investors, claiming that he had an average return of about 1,200% over a two-year period.
He received about $100,000 from members of the group before transferring the funds to his personal accounts and notifying investors that their losses were due to poor market conditions, officials said.
The funds that DeSalvo withdrew in the two scams were used for used for personal expenses, high-risk cryptocurrency day trading, credit card bills, payments to a contractor who performed work on his home and making payments to previous investors in a Ponzi-like scheme, according to the criminal complaint.
“This defendant, a former New Jersey corrections officer, 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,” Sellinger said. “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.”
DeSalvo worked for the New Jersey Department of Corrections for 13 years before retiring in 2010, according to Amy Z. Quinn, a spokeswoman for the agency.
Authorities have also accused DeSalvo of providing false trading records to the investors.
The U.S. Securities and Exchange Commission also submitted a civil complaint against him on Wednesday.
Our journalism needs your support. Please subscribe today to NJ.com.
Nicolas Fernandes may be reached at firstname.lastname@example.org.
©2023 Advance Local Media LLC. Visit nj.com. Distributed by Tribune Content Agency, LLC.