NJ Corrections Officer Arrested for Alleged Cryptocurrency Fraud Targeting Law Enforcement and First Responders
Former New Jersey corrections officer, John DeSalvo, has been arrested for orchestrating two separate fraud schemes, including a cryptocurrency scheme that led to losses of over $600,000, according to U.S. Attorney Philip R. Sellinger. DeSalvo is facing charges of wire fraud, securities fraud, and money laundering in relation to the two fraud schemes. He is set to appear in court this afternoon before U.S. Magistrate Judge André M. Espinosa in Newark federal court.
Sellinger states that DeSalvo, who was once a New Jersey corrections officer, committed two brazen investment fraud schemes in which he 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, urging them to invest in a digital token called “Blazar Token.” DeSalvo falsely claimed that the token was SEC-approved and listed on cryptocurrency exchanges. In the other scheme, DeSalvo promised extraordinary rates of return, which turned out to be too good to be true. He is accused of using the investors’ money for personal expenses and funding his own investments.
FBI – Newark Special Agent in Charge James E. Dennehy revealed that DeSalvo marketed the “Blazar Token” as a “crypto pension” that could supplement the existing pensions of first responders. However, investigation findings indicate that DeSalvo used the funds invested by firefighters, police officers, EMTs, and other public servants for personal purposes and treated it as his personal bank account. Dennehy has urged potential victims of DeSalvo to contact the FBI if they believe they have been impacted.
Court documents and statements allege that DeSalvo raised more than $620,000 from over 200 investors in the Blazar Token scheme. However, instead of using the funds as promised, DeSalvo reportedly used them for personal expenses, day-trading in volatile cryptocurrencies, and payments to previous investors in a manner resembling a Ponzi scheme. DeSalvo’s actions led to the token’s value plummeting, resulting in most investors losing their entire investments.
In addition, between January 2021 and May 2021, DeSalvo managed and solicited investments in an investment group through Brokerage-1, an online trading platform. DeSalvo falsely touted his own success as an investor on social media, claiming to have achieved returns of close to 1200 percent over the last two years. He managed to raise approximately $100,000 from about 20 individuals for the investment group. However, DeSalvo quickly transferred all the funds out of the group’s account and used them for non-investment purposes.
If convicted, DeSalvo faces a maximum potential penalty of 20 years in prison and fines ranging from $250,000 to $5 million, depending on the charges. The U.S. Securities and Exchange Commission (SEC) has also filed a civil complaint against DeSalvo regarding the same conduct.
The investigation leading to the charges was conducted by special agents of the FBI – Newark Atlantic City Resident Agency, under the direction of Special Agent in Charge Dennehy, and detectives from the New Jersey Division of Criminal Justice, Cyber Crimes Bureau, under the direction of Acting Director Derek Nececkas. Assistant U.S. Attorney Anthony Torntore, Chief of the U.S. Attorney’s Cybercrime Unit in Newark, is representing the government in this case.
It is important to note that the charges and allegations against DeSalvo are merely accusations, and he is presumed innocent unless proven guilty in a court of law.
