NEWARK, N.J. – U.S. Attorney Philip R. Sellinger announced today that John DeSalvo, 47, of Marmora, New Jersey, a former New Jersey corrections officer, has been arrested for orchestrating two different fraud schemes, including a cryptocurrency scheme that resulted in losses exceeding $600,000.
DeSalvo is charged with two counts of wire fraud, two counts of securities fraud, and two counts of money laundering. He is scheduled to appear this afternoon before U.S. Magistrate Judge André M. Espinosa in Newark federal court.
The defendant is alleged to have committed two brazen investment fraud schemes. In one, DeSalvo is said to have targeted law enforcement and first responders to invest in a digital token he falsely claimed was SEC-approved and listed on cryptocurrency exchanges. In the other, he is accused of obtaining investments by promising extraordinary rates of return.
The Blazar Token Fraud:
DeSalvo, as the creator and promoter of the “Blazar Token,” marketed the token to police, fire personnel, EMTs, and other first responders as a “crypto pension” to supplement their existing pension plans. He promised investors that the token would offer “more stability than any other token” and its value would continue to rise over time.
He allegedly made false statements that Blazar was SEC-approved, could be purchased through payroll deductions, and guaranteed rates of return with zero risks. In total, DeSalvo raised over $620,000 from more than 200 investors, but the value of Blazar dropped precipitously after DeSalvo sold off his own tokens, causing investors to lose their entire investments.
The Brokerage-1 Fraud:
Between January and May 2021, DeSalvo managed and solicited investment through Brokerage-1, an online trading platform. He claimed success as an investor, touting a return of 1200% over two years. DeSalvo solicited around $100,000 from approximately 20 individuals but used the funds for non-investment purposes, including credit card payments and personal trading in cryptocurrencies. He later falsely told investors that their funds were lost due to poor market conditions.
FBI – Newark Special Agent in Charge James E. Dennehy commented that DeSalvo allegedly used the money from first responders as his personal bank account and urged any potential victims to reach out to the FBI at 1-800-CALL-FBI.
The counts of wire fraud, securities fraud, and money laundering carry maximum potential penalties of 20 years in prison and fines ranging from $250,000 to $5 million.