In the USA, two men have been accused of allegedly operating a crypto-snowball system. The men are said to have attracted investors, including professional baseball players, with social media reports about their allegedly luxurious lifestyle.
On January 30, the secret service arrested the Arizona-based founders of Zima Digital Assets, John Michael Caruso (28 years old) and Zachary Salter (27 years old).
Caruso commonly refers to himself in social media articles as the “Crypto King” and claims to have been a crypto investor since 2012. He has a criminal record and was last released from prison in late 2017.
Salter is a young R&B singer who releases music under the name “Sweet Talker”.
Their extravagant social media reports about their alleged purchases of luxury goods attracted new investors,
They were charged with conspiracy to commit wire fraud and money laundering.
Unnamed MLB players among the victims
The suit states that Salter and Caruso have defrauded more than 90 investors of at least $7.5 million since June 2018. This figure is said to include an unknown number of former professional baseball players and retirees. Zima is still actively investing, so the total loss is not yet known.
The Zima website claims that the company operates several private funds focused on investments in cutting-edge technologies, including crypto currencies and other block-chain-based investments.
Caruso and Salter were featured as successful crypto investors in Forbes, Entrepreneur and Cigar Aficionado magazines.
In a press release, Caruso is referred to as “Michael Jordan of algorithmic crypto-currency trading”.
No purchase of crypto currencies
Forensic accountants believe that none of the money Zima has taken from its would-be investors has actually been invested in crypto-currency. The couple used the money for a living instead. Among other things, they spent $350,000 on renting luxury cars and another $610,000 on private jets, renting a villa (the so-called crypto-lock), jewelry and designer clothing.
Caruso had a fleet of luxury cars including a Lamborghini. The two lost $830,000 in 134 hours of gambling in Las Vegas casinos.
They displayed their extravagant lifestyle on Instagram and Facebook. In a video it is pointed out that Zima manages a fortune of 1 billion US dollars. They contacted potential investors via direct messages on the platforms.
Among their victims are former Major League baseball players and their families, as well as a 76-year-old man who lost $200,000 to the scammers and an 86-year-old man who lost $60,000.
Investigations revealed that 1.9 million US dollars of the funds were paid out to investors in the form of “returns”.
“The pattern of investor payments against payouts from investors without existing investments… a Ponzi scheme,” the court records say.
Anyone who has invested money in the fraud scheme is urged to contact the U.S. Secret Service Phoenix Field Office at (602) 640-5580.