Zachary Salter, the co-founder of Zima Digital Belongings alongside 28-year-old John Caruso, has pleaded not responsible to fees of cash laundering and conspiracy to commit wire fraud in his arraignment in Arizona on March 4.
The prison indictment alleges that the pair ran a purported cryptocurrency funding scheme that was used to defraud their clients of greater than $9 million in a traditional Ponzi scheme.
Roughly $1.9 million in deposits had been cycled again to early buyers as supposed funding returns. The purported income served to validate the scheme, contributing to an additional wave of deposits.
The remaining $7 million was spent lavishly — on holidays, luxurious automobile leases, personal jets, and on line casino playing. Regardless of flaunting their lavish way of life on social media, the pair claimed no taxable revenue.
The pair defrauded greater than 90 buyers, together with aged residents and former-professional baseball gamers. They had been arrested on Jan. 30.
Each co-founders plead not responsible
The indictment contains allegations of false statements in investor contracts and misrepresentations in direct messages to shoppers.
Caruso additionally pleaded not responsible throughout his arraignment on Feb. 26. Caruso has a prison file and was final launched from jail throughout 2017.
Each males will now face a jury trial on July 4, 2020. If convicted of both cost, Salter and Caruso must forfeit all property derived by the prison scheme.
Scammers lose $830,000 in investor funds at casinos
Following a listening to in early February, the prosecution alleged that “there is no such thing as a proof any of the funding funds which were supplied to Caruso and Salter have gone to any cryptocurrency/digital asset funding, or to any funding of any sort, as fraudulently misrepresented by each Caruso and Salter.”
It was heard that the pair used buyers’ funds to rack up $830,000 in playing losses, $670,000 in bank card bills, $540,000 in personal jet and luxurious car leases, and $150,000 in lease for a 20,000-square-foot mansion.
On the time of the February listening to, Zima Digital Belongings was nonetheless actively receiving investor funds.