A complaint filed in Arizona federal court last week shows two cryptocurrency scammers allegedly lured “numerous” Major League Baseball players and their families into a Ponzi scheme.
According to a report by Quartz, the U.S. Secret Service arrested John Michael Caruso, the founder of Zima Digital Assets, and Zachary Salter, an aspiring R&B singer, who co-founded the firm in connection to the scam.
The report details that the scam didn’t just lure in Major League Baseball players and their families, but also senior citizens, including a 76-year-old who gave the two men $200,000 to invest in cryptocurrency. The total amount they allegedly took from their victims was of over $7.5 million, as authorities believe they’ve stashed some of the funds “in an unknown location.”
Caruso, who declared income of $22,800 in 2018, convinced the victims that Zima was successfully trading cryptocurrency. In a press release published with Business Insider, Caruso wrote he wasn’t “in the business of guessing” but instead made “calculated trades using tested principles and algorithms.”
Both Caruso and Salter claim to be investing in cryptocurrencies since 2012, while Zima’s website claims it operates multiple private funds “focusing on investments in cutting-edge technologies.” The reality, according to court filings, is that the pair was using victims’ funds to pay other investors, effectively running a Ponzi scheme.
[The] pattern of investor payments against investor payouts with no investment of funds is consistent with…a Ponzi scheme.
The documents add there’s no evidence the funds even entered the cryptocurrency space, or were invested in any other way. Instead, an investigation that began after an anonymous complaint was sent to the Federal Trade Commission uncovered the pair was using the funds to live a lavish lifestyle.
Caruso was the registered owner of a 2019 Lamborghini Urus and lived in a mansion valued at $9 million, despite his declared income. Salter, who reported no income in 2018, lived in a similarly priced mansion, had give cars, and was seen on social media giving luxury vehicles to family members.
As reported, cryptocurrency scammers duped victims out of $4.3 billion last year, with cryptocurrency Ponzi schemes being the number one source of revenue for scammers. Per Chainalysis, the schemes have been successful as a lot of people that have heard about crypto and “believe it has “get rich quick” potential.”
Featured image via Pixabay.