The U.S. Securities and Exchange Commission recently filed charges against John DeSalvo, a former New Jersey corrections officer, for orchestrating a cryptocurrency fraud scheme that primarily targeted law enforcement personnel. Additionally, DeSalvo is facing fraud charges in a distinct investment scheme, according to an Aug. 23 news release.
“We allege that DeSalvo orchestrated several fraudulent investment schemes that targeted law enforcement personnel and promised astronomical returns, including one involving a crypto asset security that would somehow replace traditional state pension systems." Director of the SEC’s Division of Enforcement Gurbir S. Grewal said in the release. "Rather than producing any returns or revolutionary technology, he instead misappropriated and misused investor money.”
The SEC's complaint also accuses DeSalvo of misappropriating investor funds, a portion of which he transferred to his personal crypto asset wallets and used for personal expenses, including a bathroom renovation. During the period from the Blazar Token's inception in November 2021 until its demise, DeSalvo allegedly gathered more than $620,000 from around 220 investors, the release said.
DeSalvo purportedly claimed the Blazar Token would replace existing state pension systems and falsely assured investors it was registered with the SEC. He also misrepresented he had arranged for the Blazar Token to be acquired through automatic payroll deduction and guaranteed investors unusually high returns, the release reported.
The complaint reveals DeSalvo misused and misappropriated investor funds, primarily targeting law enforcement and first responders in his fraudulent schemes. Additionally, the SEC's complaint asserts DeSalvo engaged in a previous fraudulent venture, using social media to attract investors for an investment plan involving stocks, options and crypto asset securities, the release said.
Despite raising $95,000 from 17 investors, DeSalvo allegedly lost a substantial portion of the funds through speculative investments, while also misappropriating the remaining amount, according to the release.
Chief of the Crypto Assets and Cyber Unit in the SEC’s Division of Enforcement David Hirsch commented on the case, highlighting the deceptive practices that impact retail investors and emphasizing the importance of securities laws' registration requirements, the release reported.
The complaint, filed in the U.S. District Court for the District of New Jersey, accuses DeSalvo of violating securities laws' antifraud and offering registration provisions. The SEC seeks various remedies, including injunctive relief, disgorgement and prejudgment interest, as well as civil penalties, according to the release.
The U.S. Attorney’s Office for the District of New Jersey has also announced criminal charges against DeSalvo in parallel with the SEC's actions, the release reported.
