On August 23, the US Securities and Exchange Commission filed fraud charges against a former New Jersey corrections officer accused of scamming law enforcement personnel with a fake cryptocurrency investment.
John A. DeSalvo allegedly raised over $600,000 selling an unregistered crypto token called Blazar Token. The SEC said DeSalvo falsely claimed the token was registered and approved for payroll deductions. Unsurprisingly, the former New Jersey officer also promised huge returns.
The Former Officer Allegedly Abused His Position of Trust
According to the SEC, DeSalvo targeted the law enforcement community with the scheme. He allegedly misused investor money, sending funds to his crypto wallets and even paying for work on a home.
Per the SEC statement, when Blazar Token collapsed in May 2022, investors were left empty-handed. This followed an earlier stock trading scheme by DeSalvo that also lost investor money.
Regulators say DeSalvo abused his former status as an officer to gain trust and promote the bogus investments. He now faces civil charges for violating securities laws. Prosecutors have also filed criminal charges.
“Our complaint alleges a brazen affinity fraud that preyed on retail investors’ trust and sense of community,” said David Hirsch, chief of the Crypto Assets and Cyber Unit in the SEC’s Division of Enforcement, in a statement.
“Too often in crypto, we see promoters perpetrate familiar frauds in shiny new wrappers by making claims that are difficult for investors to independently verify. Registering the offer and sale of securities enables critical oversight and improves disclosures to investors.
Not DeSalvo’s First Securities Fraud, According to the SEC
Another SEC official called the case “particularly offensive” since DeSalvo exploited first responders who trusted him due to his law enforcement background. The agency said it will continue pursuing crypto scams that fail to properly register securities.
Get an informed view on two different kinds of investment assets: Crypto vs. Stocks: Where To Invest Your Money in 2023
In an earlier scheme in January 2021, DeSalvo used social media to recruit investors for a stock and crypto trading venture. Over the course of the scheme, the officer reportedly took in $95,000 from 17 investors.
Within weeks, DeSalvo put the funds into a brokerage account, but lost $17,000 making risky trades. DeSalvo then misappropriated the remaining $78,000. To cover his tracks, he allegedly told people their assets had become worthless due to market conditions.
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