The Arizona District Attorney (DA) has announced that two men have been charged with fraud and money laundering after allegedly duping victims – including octogenarians and a number of former Major League Baseball (MLB) players – in investments in a bogus crypto investment fund.
Prosecutors said that John Michael Caruso, 28, and Zachary Salter, 27, were arrested and charged with committing fraud through their company Zima Digital Assets. A criminal complaint filed by the American Secret Service with a state judge describes how the duo allegedly embezzled millions of dollars worth of investor funds between June 2018 and January 2020.
The document, made available online by media distributor Quartz, details the social media activities of the two men and describes how they “rode together in private jets”, as well as “photos and videos of two large villas (one worth about $9 million, located in Paradise Valley, and one worth about $8.5 million, located in Scottsdale)”.
The duo appears to have run the company as a Ponzi scheme, promising to reward investors for admitting new members.
The complaint states that Zima’s digital assets were used to accumulate funds for the founders’ extravagant lifestyle.
Data provided by the Arizona Motor Vehicle Division shows that Caruso owns a 2019 Lamborghini Urus, and Salter owns a number of luxury cars, including a Mercedes-Benz and a BMW.
Details of Salter’s credit card spending show that he has spent money on luxury car rentals, designer clothing, firearms, travel and expensive hotels.
The document also contained descriptions of the couple’s alleged victims, including a 76-year-old who transferred a total of $200,000 to Caruso and an 86-year-old who sent him $60,000. The list of victims is allegedly long and includes former MLB players and their families.
According to grand jury subpoenas sent to a number of American financial institutions, the victims invested $7.5 million in Caruso to invest in crypto-currencies, with only about $1.9 million returned.
Forensic accountants say they have found no evidence that any of this money, which they received from about 90 individual and corporate investors, was ever invested in crypto-currency.
The fund’s earnings were in stark contrast to the declared earnings of the men. In 2018, Caruso’s declared income from work was $22,800, while Salter reported that he earned zero dollars in earnings over the same period.
The men went to great lengths to promote their company. An article published on media platforms as recently as August last year stated that Zima Digital Assets was a “first-class crypto currency fund” and claimed it was “one of the fastest growing crypto investment funds in the world”.
The article called Caruso the “Michael Jordan of algorithmic crypto-currency trading”.
The author of the article wrote that Caruso was “one of the top crypto-currency traders among the top tier investors on Wall Street” and even went on to say that he was “the world’s largest crypto-currency trader of all time because of his ability to time markets, spot trends and sort data/key information for trading.