A former New Jersey corrections officer sold a ‘crypto pension’ to law enforcement. Prosecutors say it was a scam.

When Joel Schwartz let John DeSalvo move into his Atlantic City apartment, the New Jersey lawyer figured that he was helping a friend get back on his feet.

Instead, Schwartz found himself swindled out of thousands of dollars, pulled into an alleged financial scheme by DeSalvo’s intense personality and charm.

DeSalvo’s pitch, according to Schwartz, convinced the lawyer to invest heavily into a hot new cryptocurrency called blazar token, a bitcoin-like token that DeSalvo, 47, promised would net massive returns in a short amount of time.

“He sucks you in, he’s like the spider to the fly,” Schwartz said. “You want to be involved, you want to trust him. He almost forces you to ignore your instincts.”

Authorities said that Schwartz wasn’t the only victim.

Federal prosecutors in New Jersey said this month that DeSalvo, of Marmora, Cape May County, defrauded hundreds of investors out of more than $620,000 in the blazar scheme over six months between late 2021 and mid-2022.

Following a joint investigation with the U.S. Securities and Exchange Commission, DeSalvo was charged with two counts of wire fraud, two counts of securities fraud, and two counts of money laundering.

Prosecutors also alleged that, months before the blazar scheme, DeSalvo promised a small group of people that he would reinvest more than $100,000 of their funds, but instead used that money to invest in cryptocurrency and pay a contractor to renovate his bathroom.

A spokesperson for the New Jersey Office of the Public Defender, which represents DeSalvo, did not return a request for comment.

Before DeSalvo dumped his stake in blazar in May of last year, victims say, their investments appeared to be worth hundreds of thousands of dollars more than what they’d put in. Then, almost overnight, the coins’ value evaporated.

The blazar scheme was just one of numerous grifts that proliferated during cryptocurrency’s meteoric pandemic-era rise. But DeSalvo’s was unusual in that it specifically targeted law enforcement officers and first responders, drawing them in with the promise that blazar’s returns would supplement their state pension plans.

Blazar, DeSalvo contended, would be the first cryptocurrency that would be purchased through weekly pre-tax payroll deductions, similar to a 401(k) or IRA account.

Using Facebook groups and word-of-mouth advertising, DeSalvo began selling police officers, firefighters, and emergency medical workers in fall 2021 on the idea that blazar could one day be worth 300% of its value, cushioning them through retirement, prosecutors say.

The pitch worked so well, one victim told The Inquirer, because DeSalvo is himself a former lieutenant with the New Jersey Department of Corrections, giving him an insider’s credibility within the tight-knit law enforcement community.

With the proper time and resources, anyone can create a cryptocurrency token. And DeSalvo, who began selling blazar “placeholder tokens” in fall 2021, allegedly used a variety of falsehoods to bolster his claims that his coin would be one of the best.

The only problem was that, at that point, blazar didn’t exist and was never approved by the SEC, prosecutors say.

They allege that DeSalvo told investors they were helping him develop the token and paying for advertising and fees to list it on cryptocurrency exchanges. DeSalvo didn’t bring the token to market until April 2022.

One agent, who requested anonymity because of his background in federal law enforcement, told The Inquirer he invested in blazar that spring, pulled in by the fantasy that outsized returns of more than 20% could help pay for his children’s education.

The agent invested a total of about $50,000, including money withdrawn from the children’s college funds.

DeSalvo would end up selling 41 billion of his own blazar tokens that May, just days after listing them for sale on the trading platform PancakeSwap, depressing the price and wiping out his victims’ investments.

Text messages the agent provided show that up until DeSalvo dumped his coins — worth around $50,000 — he continued to operate in sales mode.

“I just got the biggest news of our lives,” DeSalvo wrote May 8 in a text message with several errors. “Told you don’t even doubt me! Marketing campaign all over NYC, we have partnered witn one of The richest men in the world.”

“Can’t [expletive] wait,” the agent replied. “Would love to be able to put my middle and youngest through college in 4 years.”

DeSalvo responded, “You may buy the college lol.”

DeSalvo’s boasts also included mockups of a supposed NASCAR sponsorship with blazar’s logo branded across a car, the agent said, and talk of a billboard in Times Square.

Those lofty visions went unrealized. Prosecutors say DeSalvo used investors’ funds for a variety of illicit reasons, paying personal expenses, day trading in volatile cryptocurrencies, and paying earlier investors “in the manner of a Ponzi scheme.”

A majority of the $623,000 he raised went into a bank account or crypto wallets controlled by DeSalvo, according to prosecutors, giving him exclusive control of their use.

Schwartz, the lawyer, had DeSalvo move out of his Atlantic City apartment when rumors began to swirl that blazar was a scam. He’s now the administrator of a Facebook group of those targeted by DeSalvo, where victims air grievances and call for their money to be returned.

Schwartz said that when he learned federal prosecutors had charged DeSalvo, he was overcome with relief.

“I’m sure a lot of other people felt the same way,” Schwartz said.