Crypto token scam targeted police officers, firefighters, EMTs

TRENTON – A former corrections officer from South Jersey is accused of defrauding first responders of more than $620,000 through a purported cryptocurrency investment fund, authorities say.

John DeSalvo, 47, of Linwood allegedly guaranteed sizable profits to about 220 investors who bought a cryptocurrency token he called Blazar.

But the tokens, created by DeSalvo in November 2021, collapsed in value by May 2022. And DeSalvo allegedly diverted his victims’ money for his own purposes, according to state and federal prosecutors.

DeSalvo, a 2010 retiree of the Department of Corrections, faces state and federal criminal charges, as well as a lawsuit filed by the U.S. Securities and Exchange Commission.

His attorney could not be identified.

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“What’s particularly offensive about this case is that DeSalvo used his status as a former corrections officer to gain the trust of fellow law enforcement personnel,” Gurbir Grewal, director of the SEC’s enforcement division and a former New Jersey Attorney General, said in a statement.

Blazar token sold to first responders as 'crypto pension'

A criminal complaint contends DeSalvo was helped in the Blazar fraud by someone identified only as a retired police officer from Williamstown.

The Williamstown resident invested $25,000 in Blazar, then solicited investors and oversaw development of computer code for the token, a criminal complaint says.

According to the U.S. Attorney's Office for New Jersey, DeSalvo allegedly marketed Blazar tokens "to police, fire personnel, EMTs, and other first responders as a “crypto pension” that could be used to supplement investors’ existing pension plans."

He allegedly promised the token's value would offer “more stability than any other token” and over time would outperform any investment fund.

A crypto token is an asset on an existing cryptocurrency's blockchain, according to Investopedia.com. It says tokens "are usually created, distributed, sold, and circulated through an initial coin offering (ICO) process, which involves a crowdfunding round."

Separately, DeSalvo is accused of misusing some $100,000 from about 20 members of an online investment group between January and May 2021, alleged the U.S. Attorney’s Office for New Jersey.

In a sales pitch to potential investors, DeSalvo claimed an average return on his investments of almost 1,200 percent over two years, the federal prosecutor’s office said in a statement.

It said DeSalvo in a social media post had claimed, “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.”

In another post, according to the SEC, DeSalvo told investors they could “sit back and relax and get rich.”

In each case, authorities alleged, DeSalvo spent investors’ money for personal expenses, including credit card payments, home improvements and trading in volatile cryptocurrencies.

He also used victims’ funds to pay some investors “in the manner of a Ponzi scheme,” the statement said.

John DeSalvo faces state, federal charges and SEC lawsuit

When the online investment group’s money was gone, DeSalvo blamed poor market conditions and provided false trading records.

The SEC’s lawsuit says DeSalvo violated investment regulations and contracts with his investors. It contends he caused Blazar to plummet in value after selling off more than 41 billion of his own tokens in May 2022.

But the state Attorney General’s Office, in announcing its own charges against DeSalvo, asserted the tokens “did not have any real value” and that victims “relied upon deceptive representations made by DeSalvo and provided him with money for investment purposes.”

The suit seeks a return of funds for DeSalvo’s victims, among other measures.

State investigators arrested DeSalvo, a former resident of Marmora in Cape May County, on April 23.

In federal court, DeSalvo faces two counts each of security fraud, wire fraud and money laundering, according to the U.S. Attorney’s Office for New Jersey.

He faces state charges of theft by deception and deceptive business practices.

The charges are only aaccusations. DeSalvo has not been convicted in the case.

Investigators urge possible victims to call the state Division of Criminal Justice at 800-396-2310 or federal investigators at 800-CALL-FBI.

Jim Walsh is a senior reporter with the Courier-Post, Burlington County Times and The Daily Journal. Email: jwalsh@cpsj.com.

This article originally appeared on Cherry Hill Courier-Post: Blazar crypto token creator John DeSalvo faces fraud charges