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Former NJ Corrections Officer Pleads Guilty to $600K Crypto Fraud Targeting First Responders
John DeSalvo Admits to Securities Fraud in Schemes Affecting Police, Firefighters, and EMTs
Newark, NJ – In a federal court in Newark, John DeSalvo, 47, of Linwood, New Jersey, has confessed to his involvement in orchestrating fraudulent schemes, including a cryptocurrency scam that defrauded over $600,000 from unsuspecting first responders. U.S. Attorney Philip R. Sellinger announced the guilty plea, which DeSalvo entered before U.S. District Judge Brian R. Martinotti, for two counts of securities fraud.
“This defendant preyed on unwitting public servants to trick them into investing their hard-earned savings in a sham token he dubbed ‘the crypto pension’, which he then stole for his personal use. My office will relentlessly pursue these kinds of scammers so that we can work with our partners to bring fraudsters to justice,” said U.S. Attorney Philip R. Sellinger.
The fraud was centered around the “Blazar Token,” marketed as a stable investment opportunity designed to augment the pensions of police, firefighters, EMTs, and other emergency personnel. DeSalvo promised unrealistic returns and risk-free investment, leveraging the trust and camaraderie within the first responder community to fuel his scheme.
In late 2021, DeSalvo disseminated false claims about Blazar Token's security and potential for profit through social media, misleading over 200 investors into contributing more than $620,000.
The funds were misappropriated for personal gain, speculative trading, and to maintain the façade of a profitable investment through Ponzi-like payments to earlier investors. The scheme collapsed in May 2022 when DeSalvo liquidated his holdings, eradicating the token's value and investors’ financial contributions.
Additionally, DeSalvo solicited around $100,000 through a platform called Brokerage-1, claiming exceptional trading success to entice about 20 investors.
Like the Blazar Token scheme, the invested funds were diverted to personal use, ultimately leading to a total loss for the group attributed falsely to adverse market conditions.
“DeSalvo admits his role in two fraud schemes, one of which involved him creating and marketing a crypto token to first responders that could supplement their existing pensions,” FBI – Newark Special Agent in Charge James E. Dennehy said. “Police officers, firefighters, EMTs, and other first responders show up each day to serve and protect, hoping their hard-earned pensions will allow for a nice retirement one day. Many of his victims ended up losing their entire investments. He's now facing the justice he deserves."
DeSalvo faces a maximum penalty of 20 years in prison and a $5 million fine for each count of securities fraud, with sentencing scheduled for August 6, 2024. This case highlights the ongoing efforts by federal and state agencies to clamp down on financial fraud, especially those schemes leveraging new technologies like cryptocurrency to deceive investors.
The U.S. Securities and Exchange Commission (SEC) has also filed a civil complaint against DeSalvo, reflecting the severity of his actions and the concerted response by law enforcement and regulatory bodies to protect investors and uphold the integrity of financial markets.
The investigation leading to DeSalvo’s guilty plea was a collaborative effort involving the FBI’s Atlantic City Resident Agency and the New Jersey Division of Criminal Justice, Cyber Crimes Bureau.
