By Chris Sheldon
nj.com
NEWARK, N.J. — A former corrections officer admitted Monday that he orchestrated two different scams, including a cryptocurrency scam, that targeted first responders and cost his victims more than $600,000, federal prosecutors announced Tuesday.
John DeSalvo, 47, of Linwood, pleaded guilty in Newark federal court to two counts of securities fraud, according to a statement from the U.S. Attorney’s Office District of New Jersey.
DeSalvo created a digital token he called Blazar Token in 2021 and marketed it on social media to police, fire personnel, EMTs, and other first responders with the promise that it would supplement their pension plans, the office said.
He promised investors that Blazar would offer “more stability than any other token” and that the value of Blazar would “continue to rise over time similar to any investment fund, only at a much higher rate of success,” authorities said.
He told potential investors 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, investigators said.
DeSalvo received about $620,000 from investors and frequently transferred the funds into his personal accounts, officials said.
In May 2022, he sold off more than 41 billion tokens, which caused the price of the currency to plummet, leaving someone who made an initial investment worth $1,000 left with a dwindling value of about $1.15, according to a previously-released criminal complaint. The value of Blazar never recovered, causing most investors to lose their entire investments.
In the second scheme, which happened around the same time as the crypto scheme, DeSalvo created an online investment group that he touted on social media, the office said.
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, investigators said.
He received about $100,000 from members of the group before he transferred the funds to his personal accounts and notified investors that their losses were due to poor market conditions, according to the release.
The funds that DeSalvo withdrew in the two scams were 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, the criminal complaint stated.
DeSalvo is scheduled to be sentenced on Aug. 6 . He faces a maximum potential penalty of 20 years in prison and a fine of $5 million, the office said.
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.
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