Former NJ Corrections Officer Arrested for $600,000 Cryptocurrency Fraud Scheme Targeting First Responders

John DeSalvo, 47, of Marmora, New Jersey, is charged with orchestrating two fraud schemes, including a "crypto pension" for first responders. The arrest emphasizes the continued crackdown on investment fraud and securities violations.

TLDR - A former New Jersey corrections officer, John DeSalvo, was arrested today on charges of wire fraud, securities fraud, and money laundering, following two different fraud schemes, one of which was a cryptocurrency scheme that defrauded more than 200 investors, mostly first responders, of over $600,000.

Yesterday, U.S. Attorney Philip R. Sellinger announced the arrest of John DeSalvo, a former New Jersey corrections officer, for allegedly organizing two investment fraud schemes. The most notable of these was a cryptocurrency fraud targeting police officers, firefighters, EMTs, and other first responders, resulting in losses exceeding $600,000.

The Blazar Token Fraud

DeSalvo is accused of creating and promoting a digital token called "Blazar Token" as a "crypto pension" that could supplement existing pension plans for first responders. Beginning in late 2021, he fraudulently solicited investments through false claims such as SEC approval and guarantees of more than 20 percent return with "ZERO risk."

More than 200 investors put in over $620,000 into Blazar. DeSalvo allegedly used these funds for personal expenses, volatile cryptocurrency day-trading, and running a Ponzi scheme. In May 2022, he sold off his Blazar tokens, causing the price to plummet and most investors to lose their entire investments.

The Brokerage-1 Fraud

Between January and May 2021, DeSalvo also managed and solicited investments through Brokerage-1, falsely promoting his success as an investor. He collected around $100,000 from approximately 20 individuals, using the funds for non-investment purposes, such as personal trading and credit card payments.

After draining the investment group's account, he misled investors by claiming the loss of funds was due to poor market conditions and providing falsified trading records.

Charges and Legal Action

The wire fraud counts carry a potential penalty of 20 years in prison and a $250,000 fine. Securities fraud counts could result in 20 years in prison and a $5 million fine, while money laundering counts may lead to 20 years in prison and a $500,000 fine.

The U.S. Securities and Exchange Commission (SEC) has also filed a civil complaint against DeSalvo based on the same conduct.

U.S. Attorney Sellinger credited special agents of the FBI and detectives from the New Jersey Division of Criminal Justice, Cyber Crimes Bureau, for the investigation leading to the charges. Assistant U.S. Attorney Anthony Torntore is representing the government.

While these are serious charges, it must be emphasized that the allegations in the complaint are accusations, and DeSalvo is considered innocent unless and until proven guilty.

The arrest of John DeSalvo underscores the continued vigilance and efforts by law enforcement to root out investment and securities fraud, particularly when targeting vulnerable groups like first responders. Authorities urge anyone who believes they are a victim of DeSalvo to reach out to the FBI at 1-800-CALL-FBI. The case reflects a broader trend of increasing scrutiny on cryptocurrency schemes and sends a clear message to would-be fraudsters that such criminal activities will not be tolerated.