A former corrections officer admitted Monday that he orchestrated two different scams, including a cryptocurrency scam, that targeted first responders and cost his victims more than $600,000, federal prosecutors announced Tuesday.
John DiSalvo, 47, of Lynwood, pleaded guilty in Newark federal court to two counts of securities fraud, according to a statement from the U.S. Attorney's Office in New Jersey.
The office said DeSalvo created a digital token called the Blazar Token in 2021 and marketed it on social media to police, fire personnel, EMTs and other first responders with the promise that it would supplement their pension plans.
Authorities said he promised investors that Blazar would provide “greater stability than any other token” and that Blazar’s value would “continue to rise over time similar to any investment fund, but with a much higher success rate.”
He told potential investors they received guaranteed rates of return of more than 20% without risk and deceived them with a series of misrepresentations, including that the currency had been approved by the Securities and Exchange Commission and would be available for purchase on major exchanges, investigators said. He said.
DeSalvo received about $620,000 from investors and repeatedly transferred the money to his personal accounts, officials said.
In May 2022, he sold more than 41 billion tokens, causing the price of the coin to plummet, leaving a person who made an initial investment of $1,000 with a diminished value of about $1.15, according to a previously released criminal complaint. The value of the Blazer never recovered, causing most investors to lose their entire investment.
In the second scheme, which occurred around the same time as the cryptocurrency scheme, DeSalvo created an online investment group that he promoted on social media, the office said.
Investigators said he falsely bragged about his investing skills to potential investors, claiming to have achieved an average return of about 1,200% over two years.
According to the statement, he received about $100,000 from group members before transferring the money to his personal accounts and notifying investors that their losses were due to poor market conditions.
The money DeSalvo withdrew in the two scams was used for personal expenses, high-risk cryptocurrency day trading, credit card bills, payments to a contractor who performed work on his home, and payments to previous investors in a Ponzi-like scheme, a criminal complaint said.
DeSalvo is scheduled to be sentenced on Aug. 6, the office said. He faces a possible maximum penalty of 20 years in prison and a $5 million fine.
DiSalvo worked for the New Jersey Department of Corrections for 13 years before retiring in 2010, according to Amy Z. Quinn, a spokeswoman for the agency.
Please consider supporting NJ.com With voluntary subscription.
Chris Sheldon can be reached at csheldon@njadvancemedia.com.
