A former New Jersey corrections officer admitted to orchestrating two different fraud schemes costing more than $700,000 total.
John DeSalvo, 47, of Linwood, New Jersey, pleaded guilty Monday before U.S. District Judge Brian R. Martinotti in Newark federal court to 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,” U.S. Attorney Philip Sellinger said. “My office will relentlessly pursue these kinds of scammers so that we can work with our partners to bring fraudsters to justice.”
The Blazar Token was marketed as a "crypto pension" to police, fire personnel, EMTs and other first-responders. But instead DeSalvo used the more $620,000 he got from more than 200 investors as his own personal bank account.
DeSalvo, who previously lived in Marmora, Cape May County, was accused of using the funds for personal expenses, day-trading in various volatile cryptocurrencies and payments to prior investors in the manner of a Ponzi scheme.
“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,” said James Dennehy, FBI-Newark special-agent-in-charge. “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."
In May 2022, DeSalvo sold off more than 41 billion of his own Blazar tokens, which caused the price of the token to drop precipitously. The value of Blazar never recovered, causing most investors to lose their entire investments.
DeSalvo's still-public LinkedIN page, where he lists himself as CEO and founder, says: "BLAZAR Token is known as the Crypto Pension of the Future. We remove all of the uncertainty involved with the current system."
Between January 2021 and May 2021, DeSalvo managed and solicited investment in an investment group through Brokerage-1, an online trading platform. DeSalvo marketed the investment group largely through social media posts in which DeSalvo falsely touted his success as an investor. For example, DeSalvo claimed to potential investors, “I have been averaging close to 1200% over the last 2 years. I am in the top 1,000th percent in the world. That’s the truth, the return rates I have been averaging are so high that I have people throwing money at me to invest.”
DeSalvo made another $100,000 from about 20 investors in Brokerage-1, an online trading platform.
“I have been averaging close to 1,200 percent over the last two years," court documents quoted him telling investors. "I am in the top 1,000th percent in the world. That’s the truth, the return rates I have been averaging are so high that I have people throwing money at me to invest.”
DeSalvo then used the funds for various non-investment purposes such as credit card payments, personal trading in volatile cryptocurrencies, and payments to a contractor who performed work on DeSalvo’s personal residence.
After draining the investment group’s account, DeSalvo advised the investors that their funds had been lost due to poor market conditions and provided the investors with false trading records purporting to show the trading activity that DeSalvo engaged in on behalf of the investment group, the charges claim.
The counts of securities fraud carry a maximum potential penalty of 20 years in prison and a fine of $5 million. Sentencing is scheduled for Aug. 6.
The U.S. Securities and Exchange Commission (SEC) also previously filed a civil complaint against DeSalvo based on the same conduct.
