Zachary Salter, the co-founder of Zima Digital Assets alongside 28-year-old John Caruso, has pleaded not guilty to charges of money laundering and conspiracy to commit wire fraud in his arraignment in Arizona on March 4.

The criminal indictment alleges that the pair ran a purported cryptocurrency investment scheme that was used to defraud their customers of more than $9 million in a classic Ponzi scheme.

Approximately $1.9 million in deposits were cycled back to early investors as supposed investment returns. The purported profits served to validate the scheme, contributing to a further wave of deposits.

The remaining $7 million was spent lavishly — on vacations, luxury car rentals, private jets, and casino gambling. Despite flaunting their lavish lifestyle on social media, the pair claimed no taxable income.

The pair defrauded more than 90 investors, including elderly citizens and former-professional baseball players. They were arrested on Jan. 30.

Both co-founders plead not guilty

The indictment includes allegations of false statements in investor contracts and misrepresentations in direct messages to clients.

Caruso also pleaded not guilty during his arraignment on Feb. 26. Caruso has a criminal record and was last released from prison during 2017.

Both men will now face a jury trial on July 4, 2020. If convicted of either charge, Salter and Caruso will have to forfeit all property derived through the criminal scheme.

Scammers lose $830,000 in investor funds at casinos

Following a hearing in early February, the prosecution alleged that “there is no evidence any of the investment funds that have been provided to Caruso and Salter have gone to any cryptocurrency/digital asset investment, or to any investment of any kind, as fraudulently misrepresented by both Caruso and Salter.”

It was heard that the pair used investors’ funds to rack up $830,000 in gambling losses, $670,000 in credit card expenses, $540,000 in private jet and luxury vehicle rentals, and $150,000 in rent for a 20,000-square-foot mansion.

At the time of the February hearing, Zima Digital Assets was still actively receiving investor funds.