SEC Charges Former New Jersey Corrections Officer with Crypto Fraud Scheme Targeting Law Enforcement Personnel in Securities and Exchange Commission v. John A. DeSalvo, No. 23-cv-8092 (D.N.J. filed Aug. 23, 2023)
(Exclusive to ZENNIEREPORT.COM) The Securities and Exchange Commission today charged former New Jersey State Correctional Police Officer John A. DeSalvo with fraudulently raising funds through the unregistered offering of the Blazar Token, a crypto asset security he created but that collapsed in May 2022. The SEC also charged DeSalvo with misappropriating investor funds, much of which he sent to his personal crypto asset wallets and used to pay for a bathroom renovation.
According to the SEC’s complaint, from the Blazar Token’s launch in November 2021 to its eventual collapse, John A. DeSalvo raised at least $620,000 from approximately 220 investors. As the complaint alleges, DeSalvo claimed that the Blazar Token would replace existing state pension systems and falsely told investors that Blazar Token was registered with the SEC; that he had arranged for Blazar Token to be purchased by automatic payroll deduction; and that investors were guaranteed to receive extraordinary returns. Ultimately, DeSalvo misappropriated and misused investor funds. According to the complaint, John A. DeSalvo targeted law enforcement and first responders with his fraudulent schemes.
Additionally, the SEC’s complaint alleges that, in an earlier fraud scheme, beginning in late January 2021, John A. DeSalvo solicited investors, primarily through social media, to participate in an investment venture where he was to invest their funds in stocks, options, and crypto asset securities. The complaint alleges that, within weeks of depositing the $95,000 he raised from 17 investors into his brokerage account, DeSalvo lost about $17,000 of those funds in speculative investments, misappropriated the remaining $78,000, and told investors that the group’s securities had lost all value due to poor market conditions.
The complaint, filed in the U.S. District Court for the District of New Jersey, charges John A. DeSalvo with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
John A. DeSalvo Charged With Crypto Crime
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against DeSalvo.
The SEC’s investigation was conducted by Brian Higgins and Brian Thomas of the Philadelphia Regional Office and David Snyder of the Crypto Assets and Cyber Unit. It was supervised by Assunta Vivolo, Scott A. Thompson, Nicholas P. Grippo, Jorge G. Tenreiro, and David Hirsch. The SEC’s litigation will be handled by Christopher R. Kelly and supervised by Gregory R. Bockin.