Former Major League Baseball players have been revealed to be among over 90 people scammed by Ponzi scheme operators masquerading as crypto traders. John Michael Caruso, 28, and Zachary Salter, 27, both from Arizona, were arrested last week by United States Secret Service agents after their $7.5 million scheme unravelled, and face years behind bars as a result.
Not Such a Luxury Lifestyle
Caruso and Salter pretended to lead a luxury lifestyle from their crypto earnings, boasting of their ‘gains’ on social media in order to attract new clients to their scheme, called Zima Digital Assets.
Photo: Stephen Denton
Caruso in particular referred to himself as the “Krypto King” in social media posts, claiming he had invested in cryptocurrency since 2012 when in fact he was a convicted felon who had only been released from prison six months prior to the scheme.
Salter even featured in a Forbes article ‘How Blockchain And Crypto Will Benefit The Gig Economy’, in which he explained how the fund operated:
Zima Digital Assets operates various private funds focusing on investments in cutting-edge technologies, including crypto and other blockchain based assets. We manage a high frequency and high liquidity cryptocurrency trading portfolio.
This outright lie is deeply ironic, given that the pair never touched cryptocurrency during the period of the scam.
The Scheme Unravels
Caruso and Salter were rumbled when Caruso sent $4.5 million from the company’s account to his personal account, claiming it came from his crypto trading earnings. Special Agent James Lamerson got wind of the transfer and did some digging into the company, discovering that it was not registered as a provider of securities and that the registrant, Caruso, had previously been arrested and served time for crimes including extortion, fraud, and theft by misrepresentation, among other crimes.
Lamerson looked into the bank accounts of Caruso and Salter, and saw a total of $7.5 million entering the accounts from over 90 individuals and $1.9 million going out, a pattern typical of a Ponzi scheme.
He also found regular payments for private jet, home, and luxury car rentals; casino visits; and jewellery, among other big-ticket purchases. Crucially, Caruso and Salter had stated their earnings to the IRS as only $22,800, further adding to the accusations against them. This information formed the basis for the case against the pair, with further investigations only adding to the agents’ case.
Investors May Get Some Money Back
Caruso and Salter have been charged with conspiracy to commit wire fraud and money laundering, with their victims revealed to include former Major League Baseball players and their families and pensioners. Given that Caruso and Salter weren’t able to spend all the cash, which has been seized by banks, there is a chance that investors may get a percentage of their investment back, although it is not clear when, or if, this will happen.