District of New Jersey

Also Admits Failure to Collect More Than $100,000 in Payroll Taxes

TRENTON, N.J. – The head of an engineering consulting firm in Wall Township, New Jersey, today admitted that in order to reduce his payroll costs, he launched a scheme in which several of his employees fraudulently collected unemployment benefits while he paid the remaining portion of their salaries, U.S. Attorney Paul J. Fishman announced.

Lino DeAlmeida Jr., 68, of Point Pleasant, New Jersey, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with one count of conspiracy to defraud the N.J. State Division of Unemployment Insurance (NJUI) and one count of failing to collect Social Security, Medicare, and income payroll taxes.

According to documents filed in this case and statements made in court:

DeAlmeida operated an engineering consulting firm, Consolidated Construction Management Services (CCMS) in Wall Township. In late 2011, DeAlmeida told his four employees that due to financial difficulties, he could not continue paying their salaries. He proposed a scheme in which the employees would claim to have been terminated from CCMS and seek unemployment benefits from the NJUI. In return, he promised to continue to pay them “under the table” for the remaining portion of their salaries that would not be covered by the benefits. Three of the CCMS employees agreed to the scheme and submitted false applications with the NJUI.

DeAlmeida’s employee conspirators received a total of $130,363 in benefits between July 2011 and January 2013 while receiving CCMS checks from DeAlmeida. In addition, DeAlmeida failed to pay payroll taxes of $109,068 on the undisclosed wages of $790,860 he and his conspirators received during the scheme.

The conspiracy to defraud the NJUI charge to which DeAlmeida pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The failure to collect payroll taxes charge carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Jan. 5, 2016.

U.S. Attorney Fishman credited special agents of the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia, New York Region; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s plea.

The government is represented by V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

Defense counsel: Jeffrey D. Smith Esq., Teaneck, New Jersey

NEWARK, N.J. – U.S. Attorney Paul J. Fishman, in conjunction with the U.S. Office of Community Oriented Policing Services (COPS), today announced federal funding awards to four state and city law enforcement agencies in the District of New Jersey that investigate gang activity and heroin distribution through statewide collaboration.

COPS will award over $18 million nationally through the COPS Anti-Gang Initiative (CAGI), the COPS Anti-Heroin Task Force Program (AHTF), and the COPS Anti-Methamphetamine Program, including $2,107,166 for New Jersey law enforcement agencies. The list of this year’s grantees includes:

CAGI Grants:

Agency Name

Award Amount

Essex County Prosecutor’s Office

$594,023

Jersey City

$750,000

New Jersey Department of Law and Public Safety

$659,916

 

AHTF Grants:

Agency Name

Award Amount

New Jersey Department of Law and Public Safety

$103,227

“These grants provide much-needed funding to several important law enforcement initiatives to battle the ongoing problems of gang violence and illegal drug trafficking. Providing our local law enforcement partners with more than $2 million in federal funding specifically targeted to these areas will give them additional tools to push back against the relentless threat of drugs and gangs. These awards are especially important, as they are being used to target gangs that have a nationwide footprint.”

The CAGI provides funds directly to law enforcement agencies with a multijurisdictional partnership composed of federal, state, and local partners. Primary consideration was given to agencies that target gangs of national significance. The AHTF provides funds to agencies that use statewide collaboration to investigate heroin or unlawful prescriptive opioid distribution.

For the entire list of grantees and additional information about the CAGI, the AHTF, and the COPS Anti-Methamphetamine Program, visit the COPS website at www.cops.usdoj.gov.

NEWARK, N.J. – Newark was chosen one of five cities that will join the Department of Justice’s Violence Reduction Network (VRN), a comprehensive approach to reducing violent crime in communities around the country, U.S. Attorney Paul J. Fishman announced.

Newark was added to the program along with Little Rock, Arkansas; West Memphis, Arkansas; Compton, California; and Flint, Michigan. They join the inaugural sites of Detroit; Chicago; Camden, New Jersey; Wilmington, Delaware; and Oakland and Richmond, California.

“The selection of Newark as a VRN city will enable us to build on the success we’ve already achieved in Camden over the past year,” U.S. Attorney Fishman said, “and I'm pleased that my colleagues in Washington appreciate the strength of our federal, state, county, and local partnerships. This program ensures that federal resources are carefully targeted to the areas where they will provide the greatest benefit, allowing us to work with our local partners in ensuring we continue to create safe, thriving communities for all our citizens.”

Today’s announcement was made by Deputy Attorney General Sally Q. Yates and Assistant Attorney General Karol V. Mason of the Office of Justice Programs (OJP) before an audience of U.S. Attorneys, police chiefs, sheriffs, mayors, local leaders from the 10 sites and Department of Justice representatives at the second annual VRN Summit in Detroit, Michigan.

Through the VRN, the Justice Department enlists tactical and operational expertise available from the Bureau of Justice Assistance, the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the United States Marshals Service (USMS), the Drug Enforcement Administration (DEA), the Executive Office of the United States Attorneys, the Community Oriented Policing Services Office and the Office on Violence Against Women.

Deputy Attorney General Yates cited the progress reported by the current VRN sites in their first year. In Camden, for example, the FBI assisted the local police display wanted felons’ information on digital billboards, resulting in the arrest of two felons The ATF helped the Camden County Police Department acquire National Integrated Ballistic Information Network (NIBIN) equipment and training. NIBIN has allowed the county to initiate eTrace, an Internet-based firearms tracing and analysis tracking process to enhance criminal investigations.

In addition to announcing the five new VRN sites, Deputy Attorney General Yates announced Smart Policing grant awards totaling more than $2 million to law enforcement agencies to develop innovative, data-driven approaches to crime.

For more VRN information visit: www.bja.gov/Programs/VRN.html

NEWARK, N.J. – A native of Romania who was arrested in Spain will make his initial court appearance and be arraigned tomorrow following his extradition to face charges that he participated in a large-scale lucrative ATM skimming scheme targeting New Jersey bank customers, U.S. Attorney Paul J. Fishman announced.

Alin Dumitru Carabus, 41, will appear tomorrow afternoon before U.S. Magistrate Judge Leda D. Wettre in Newark federal court. He is charged by indictment with conspiracy to commit bank fraud, aggravated identity theft, conspiracy to possess 15 or more counterfeit access devices, and possession of 15 or more counterfeit access devices. One of the other individuals charged in the indictment, Robert Mate, was previously apprehended in Spain and extradited to the United States. The third individual charged in the indictment, Ionut Vasile Ciurba-Stana, has been apprehended in Spain, and a request for extradition is pending. 

According to documents filed in this and other cases and statements made in court:

Carabus participated in an extensive scheme to steal bank customer account information, commonly referred to as “ATM skimming,” by installing secret card-reading devices on ATMs throughout New Jersey, New York, Connecticut, Florida, and elsewhere. The scheme was organized by Marius Vintila, 33, who previously pleaded guilty to bank fraud conspiracy and aggravated identity theft charges. The scheme defrauded Citibank, TD Bank, Wells Fargo, and multiple other financial institutions out of at least $5 million and affected thousands of bank customers.

Vintila and Bogdan Radu designed and constructed sophisticated card-reader devices and pinhole camera panels capable of reading and storing customers’ bank account information and personal identification numbers. Carabus and others then secretly installed the card-reader devices and the pinhole cameras panels onto bank ATMs, and removed them a few days later after they had recorded customer bank account information as customers performed routine bank transactions at ATMs. After the account information was stolen, the stolen data was used to create thousands of false and fraudulent ATM cards, which Carabus and others used to withdraw millions of dollars from customers’ bank accounts.

The ATM skimming operation in which Carabus participated is one of the largest ever uncovered by law enforcement. To date, 16 individuals have been charged in connection with this scheme. Twelve have pleaded guilty, and one individual, Dinu Horvat, was convicted after a week-long trial.

Carabus is charged with four counts, as described below, which carry the following maximum penalties and fines:

Count

Offense

Maximum Penalty

Maximum Fine

1

Conspiracy to commit bank fraud

Thirty years in prison

$1 million

2

Aggravated identity theft

Mandatory, consecutive penalty of two years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

5

Conspiracy to possess 15 or more counterfeit access devices

Five years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

6

Possession of 15 or more counterfeit access devices

Ten years in prison

$250,000, or twice the gross pecuniary gain or loss from the offense

U.S. Attorney Fishman credited special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge Carl Agnelli, along with special agents of U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) in Newark, under the direction of Acting Special Agent in Charge Kevin Kelly, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and David M. Eskew of the Criminal Division in Newark.

Defense counsel: Christopher Patella Esq., Bayonne, New Jersey

Settlement Provides Over $27 Million to Ensure Equal Lending Services to Predominantly Black and Hispanic Communities

The Justice Department and Consumer Financial Protection Bureau (CFPB) filed a consent order today to resolve allegations that Hudson City Savings Bank (Hudson City) engaged in a pattern or practice of “redlining” predominantly Black and Hispanic neighborhoods in its residential mortgage lending practices.  “Redlining” is the discriminatory practice by banks or other financial institutions to deny or avoid providing credit services to a consumer because of the racial demographics of the neighborhood in which the consumer lives.  This resolution represents the Justice Department’s largest residential mortgage redlining settlement in its history.  

The settlement, which is subject to court approval, was filed in conjunction with the agencies’ complaint in the U.S. District Court for the District of New Jersey.  The complaint alleges that Hudson City violated the Fair Housing Act and Equal Credit Opportunity Act (ECOA), which prohibit financial institutions from discriminating on the basis of race, color or national origin in their mortgage lending practices.  Specifically, the complaint alleges that from at least 2009 to 2013, Hudson City failed to serve the credit needs of majority-Black-and-Hispanic neighborhoods throughout its major market areas, including in New Jersey, New York City and its surrounding counties, and the Philadelphia and Bridgeport, Connecticut, metropolitan areas.  Hudson City has agreed to settle this matter without contested litigation. 

“This case should send a message to lenders throughout the country that the Justice Department will not tolerate racial discrimination in the extension of credit,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “A lending institution must treat all potential borrowers equally, regardless of their race or the racial composition of their neighborhood, when deciding to offer its loan services.  We encourage all lenders to proactively identify responsible lending opportunities that exist in predominantly minority neighborhoods within their lending areas.”

“Hudson City Savings Bank structured its business operations to systemically avoid providing credit services in predominantly minority neighborhoods,” said U.S. Attorney Paul J. Fishman of the District of New Jersey.  “There is no room for such behavior in our banking system.  In addition to paying $25 million for a loan subsidy program, today’s settlement agreement will require the bank to take a number of concrete steps to ensure that they improve access to responsible and affordable credit to qualified borrowers in Black and Hispanic neighborhoods.”

“We allege that Hudson City's redlining practices illegally cut off opportunities for consumers in predominantly Black and Hispanic neighborhoods to get a mortgage and achieve the dream of homeownership,” said CFPB Director Richard Cordray.  “Without access to affordable credit, neighborhoods deteriorate in the long shadow cast by unfair lending.  Today's action seeks to remove the redline by bringing $27 million in mortgage subsidies and outreach programs, along with new bank branches to the communities who should have had access from the beginning.”

The lawsuit originated from a joint investigation with the CFPB that commenced in March 2015. 

Under the terms of the proposed settlement, Hudson City will invest $25 million in a loan subsidy fund to increase the amount of credit the bank extends to majority-Black-and-Hispanic neighborhoods across its market areas.  In order to make residential mortgage loans available to residents of minority neighborhoods that were not adequately served by Hudson City, the bank will further invest $2.25 million in advertising, outreach, financial education, and community partnership efforts and open two full-service branches in these neighborhoods.  The settlement will require Hudson City to further develop robust internal controls to ensure compliance with fair lending obligations, provide fair lending training to its employees, senior management, and the Board of Directors, and create a comprehensive long-term plan to increase lending in previously redlined areas.  Hudson City will further pay a civil monetary penalty of $5.5 million.

The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division.  Since 2010, the Civil Rights Division has provided approximately $1.3 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA.  The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.

The Civil Rights Division, the U.S. Attorney’s Office for the District of New Jersey, and the Consumer Financial Protection Bureau are members of the Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov.

A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at http://www.justice.gov/fairhousing.

Settlement Provides Over $27 Million to Ensure Equal Lending Services to Predominantly Black and Hispanic Communities

NEWARK, N.J. – The U.S. Attorney’s Office for the District of New Jersey, the U.S. Department of Justice Civil Rights Division, and the Consumer Financial Protection Bureau (CFPB) filed a consent order today to resolve allegations that Hudson City Savings Bank (Hudson City) engaged in a pattern or practice of redlining predominantly Black and Hispanic neighborhoods throughout its major market areas with respect to the extension of residential mortgage credit.  This resolution represents the Justice Department’s largest residential mortgage redlining settlement in its history.

The settlement, which is subject to court approval, was filed in conjunction with the agencies’ complaint in the U.S. District Court for the District of New Jersey.  The complaint alleges that Hudson City violated the Fair Housing Act and Equal Credit Opportunity Act (ECOA), which prohibit financial institutions from discriminating on the basis of race, color, or national origin in their mortgage lending practices.  The complaint alleges that from at least 2009 to 2013, Hudson City failed to serve the credit needs of majority-Black-and-Hispanic neighborhoods throughout its lending footprint, including in New Jersey, New York City and its surrounding counties, the Bridgeport, Connecticut, and Philadelphia, Pennsylvania, metropolitan areas, and the City of Camden.  Hudson City has agreed to settle this matter without contested litigation.

“Hudson City Savings Bank structured its business operations to systemically avoid providing credit services in predominantly minority neighborhoods. There is no room for such behavior in our banking system,” U.S. Attorney Fishman said. “In addition to paying $25 million for a loan subsidy program, today’s settlement agreement will require the bank to take a number of concrete steps to ensure that they improve access to responsible and affordable credit to qualified borrowers in Black and Hispanic neighborhoods.”

“This case should send a message to lenders throughout the country that the Justice Department will not tolerate racial discrimination in the extension of credit,” Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, said.  “A lending institution must treat all potential borrowers equally, regardless of their race or the racial composition of their neighborhood, when deciding to offer its loan services.  We encourage all lenders to proactively identify responsible lending opportunities that exist in predominantly minority neighborhoods within their lending areas.”

“We allege that Hudson City's redlining practices illegally cut off opportunities for consumers in predominantly Black and Hispanic neighborhoods to get a mortgage and achieve the dream of homeownership,’ CFPB Director Richard Cordray said. “Without access to affordable credit, neighborhoods deteriorate in the long shadow cast by unfair lending. Today’s action seeks to remove the redline by bringing $27 million in mortgage subsidies and outreach programs, along with new bank branches to the communities who should have had access from the beginning.”

The lawsuit originated from a joint investigation with the Consumer Financial Protection Bureau that commenced in March 2015.

Under the terms of the proposed settlement, Hudson City will invest $25 million into a loan subsidy fund to increase the amount of credit the bank extends to majority-Black-and-Hispanic areas across its market areas.  To enable the bank to make residential mortgage loans available to residents of minority neighborhoods that were not adequately served by Hudson City, the bank will further invest $2.25 million into advertising, outreach, financial education, and community partnership efforts and open two full-service branches in these neighborhoods.  The settlement will require Hudson City to develop robust internal controls to ensure compliance with fair lending obligations, provide fair lending training to employees, senior management, and the Board of Directors, and create a comprehensive long-term plan to increase lending in previously redlined areas.  Hudson City will pay a civil monetary penalty of $5.5 million.

The Justice Department’s enforcement of fair lending laws and the Servicemembers Civil Relief Act is conducted by the Housing and Civil Enforcement Section in the Civil Rights Division.  Since 2010, the Civil Rights Division has provided approximately $1.3 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the SCRA.  The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.Individuals who believe they may have been victims of discrimination may file a complaint with the U.S Attorney’s Office at http://www.justice.gov/usao-nj/civil-rights-enforcement/complaint or call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.

A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at http://www.justice.gov/fairhousing.

The government is represented by Assistant U.S. Attorneys Michael E. Campion and Svetlana Eisenberg of the District of New Jersey, and Trial Attorney Ronald Lee, U.S. Department of Justice, Civil Rights Division, Housing and Civil Enforcement Section.

The Civil Rights Division, the U.S. Attorney’s Office for the District of New Jersey, and the Consumer Financial Protection Bureau are members of the Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.StopFraud.gov

WASHINGTON – El Departamento de Justicia y la Oficina para la Protección Financiera del Consumidor [Consumer Financial Protection Bureau (CFPB)] radicaron una orden de consentimiento hoy para resolver alegatos de que Hudson City Savings Bank (Hudson City) exhibió un patrón o una práctica de excluir delimitando (“redlining” en inglés) vecindarios predominantemente negros e hispanos en sus prácticas de otorgamiento de préstamos hipotecarios residenciales.  Excluir delimitando es la práctica discriminatoria ejercida por bancos u otras instituciones financieras de negar o evitar brindar servicios de crédito a un consumidor debido a la situación demográfica racial del vecindario en el que vive el consumidor. Esta resolución representa el acuerdo conciliatorio más grande asociado con exclusión delimitada  hipotecaria residencial realizado por el Departamento de Justicia.  

El acuerdo conciliatorio, el que está sujeto a la aprobación del tribunal, fue radicado en conjunto con la demanda de las agencias en el Tribunal Federal de Distrito para el Distrito de Nueva Jersey. La demanda alega que Hudson City violó la Ley de Vivienda Justa y la Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act (ECOA)], que prohíben a las instituciones financieras discriminar debido a raza, color u origen nacional en sus prácticas de otorgamiento de préstamos hipotecarios.  Específicamente, la demanda alega que desde al menos 2009 hasta 2013, Hudson City dejó de atender las necesidades de crédito de vecindarios con mayoría negra e hispana en las principales áreas de su mercado, incluidas Nueva Jersey, la ciudad de Nueva York y los condados que las rodean, y las áreas metropolitanas de Filadelfia y Bridgeport, Connecticut. Hudson City ha aceptado resolver este caso sin litigio controvertido.

“Este caso debe transmitir un mensaje a prestamistas de todo el país de que el Departamento de Justicia no tolerará la discriminación racial en el otorgamiento de crédito”, indicó la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta, líder de la División de Derechos Civiles.  “Una institución de préstamos debe tratar a todos los potenciales prestatarios de manera igualitaria, independientemente de su raza o la composición racial de su vecindario, al decidir ofrecer sus servicios de préstamo.  Instamos a todos los prestamistas a que identifiquen proactivamente oportunidades de otorgamiento de préstamos responsables que existan en vecindarios predominantemente minoritarios en sus áreas de actuación”.

“Hudson City Savings Bank estructuró sus operaciones comerciales de modo a sistemáticamente evitar brindar servicios de crédito en vecindarios predominantemente minoritarios”, señaló el Fiscal Federal Paul J. Fishman del Distrito de Nueva Jersey. “No hay lugar para ese tipo de comportamiento en nuestro sistema bancario.  Además de pagar 25 millones de dólares por un programa de subsidios crediticios, el acuerdo de hoy exigirá que el banco tome una serie de pasos concretos para garantizar que se mejore el acceso a crédito responsable y asequible a prestatarios calificados en vecindarios negros e hispanos”.

“Alegamos que las prácticas de exclusión delimitada discriminatorias de Hudson City recortaron ilegalmente las oportunidades de consumidores de vecindarios predominantemente negros e hispanos de obtener un préstamo hipotecario y cumplir su sueño de la casa propia”, dijo el Director de la CFPB Richard Cordray.  “Sin acceso a crédito de precio razonable, los vecindarios se deterioran bajo la sombra lanzada por el otorgamiento injusto de préstamos.  La acción de hoy busca eliminar este tipo de discriminación al proveerles a estas comunidades que tendrían que haber tenido acceso a hipotecas desde un principio, 27 millones de dólares en subsidios hipotecarios y programas de extensión, junto con nuevas sucursales bancarias”.

La demanda se originó a partir de una investigación conjunta con la CFPB iniciada en marzo de 2015.

Bajo los términos del acuerdo conciliatorio propuesto, Hudson City invertirá 25 millones de dólares en un fondo de subsidios para hipotecas para incrementar la cantidad de crédito que el banco otorga a vecindarios con mayoría negra e hispana en todas las áreas de su mercado. A fin de que los préstamos hipotecarios residenciales estén disponibles a residentes de vecindarios minoritarios que no fueron atendidos adecuadamente por Hudson City, el banco investigará, además, 2,25 millones de dólares en publicidad, extensión, educación financiera e iniciativas e asociación comunitaria, y abrirá dos sucursales de servicios integrales en estos vecindarios.  El acuerdo exigirá que Hudson City desarrolle fuertes controles internos adicionales para garantizar el cumplimiento de sus obligaciones de otorgamiento justo de préstamos, brinde capacitación sobre el otorgamiento justo de préstamos a sus empleados, altos ejecutivos y a la Junta de Directores, y cree un plan integral de largo plazo para incrementar el otorgamiento de préstamos en las áreas anteriormente excluídas por delimitación.  Asimismo, Hudson City pagará una multa civil de 5,5 millones de dólares.

La coacción asociada a las leyes de otorgamiento justo de préstamos y la Ley de Reparación Judicial Civil para los Miembros de las Fuerzas Armadas [Servicemembers Civil Relief Act] por parte del Departamento de Justicia es realizada por la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles. Desde 2010, la División de Derechos Civiles ha proporcionado alrededor de 1,3 mil millones de dólares en reparación monetaria a prestatarios individuales y comunidades afectadas, al hacer valer la Ley de Vivienda Justa, la ECOA y la SCRA. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso sobre la coacción asociada a la ECOA destacan los logros del departamento en el tema del otorgamiento justo de préstamos y están disponibles en www.justice.gov/crt/publications/.

La División de Derechos Civiles, la Fiscalía Federal para el Distrito de Nueva Jersey y la Oficina para la Protección Financiera del Consumidor son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama fundó la Fuerza de Tarea de Coacción contra el Fraude Financiero para generar una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de agencias federales, autoridades regulatorias, inspectores generales y fuerzas del orden público estatales y locales quienes, trabajando juntos, ponen en uso un conjunto poderoso de recursos de coacción penal y civil.  La fuerza de tarea está trabajando para mejorar las iniciativas en todo el poder ejecutivo federal y, junto con asociados estatales y locales, investigar y enjuiciar delitos financieros importantes, garantizar un castigo justo y eficaz para quienes cometen delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar ganancias para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov.

Para obtener una copia de la demanda, así como información adicional sobre la labor del Departamento de Justicia para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia en http://www.justice.gov/fairhousing.

NEWARK, N.J. - A Middlesex County, New Jersey, man was sentenced today to 87 months in prison for his role in two bank robberies, U.S. Attorney Paul J. Fishman announced.

Peter Greer, 41, of New Brunswick, New Jersey, previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with two counts of bank robbery. Judge Hayden imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Greer admitted using intimidation to rob the Valley National Bank in Newark on Sept. 27, 2012. Greer entered the bank, approached the bank teller and provided a note that said “give me the money in hundred dollar bills.” The teller complied and Greer fled the bank with the money. Greer also admitted to using intimidation to rob the rob Sovereign Bank, located in Newark on Oct. 31, 2012.  Greer entered the bank, approached the bank teller and provided a note that said “I have a gun, give me money.” This time the teller did not comply, and Greer fled the bank without any money.

In addition to the prison term, Judge Hayden sentenced Greer to three years of supervised release and ordered him to pay restitution of $18,094.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to charges. He also thanked the Passaic Police Department and the Passaic County Sheriff’s Department for their contribution to the case.

The government is represented by Assistant U.S. Attorney Meredith Williams of the Criminal Division in Newark, N.J.

Defense counsel: Linda Foster Esq., Assistant Federal Public Defender, Newark

NEWARK, N.J. - The former CFO and co-founder of a now-defunct South Carolina public charter operator today admitted using phony documents and inflated revenue figures to defraud a New Jersey bank and other financial institutions out of millions of dollars, U.S. Attorney Paul J. Fishman announced.

Robert Keilman, 70, of Marlboro, New Jersey, pleaded guilty to an information charging him with one count of conspiracy to commit wire fraud affecting a financial institution and to commit bank fraud.

According to documents filed in this case and statements made in court:

Keilman was one of the founding members of Southern Sky Air & Tours d/b/a Myrtle Beach Direct Air & Tours, commonly referred to as Direct Air. From January 2010 through September 2011, Keilman was Direct Air’s chief financial officer. Direct Air offered airline services in a number of cities, including Newark, New Jersey.    

Keilman acknowledged that U.S. Department of Transportation regulations required charter operators like Direct Air to protect passengers financially by posting a security or by keeping passenger payments for future flights in a designated depository or escrow account with an approved bank. Pursuant to this regulation, Direct Air set up an escrow account with a bank headquartered in Wayne, New Jersey. According to Keilman, Direct Air and the bank agreed that money in the escrow account for future flights would not be released to Direct Air until after the flights were completed. Additionally, Direct Air would have to submit a request for payment along with summary reports detailing the flights purportedly flown.

Keilman admitted that, from 2010 through September 2011, he conspired with others, including a pair of Direct Air executives identified in court documents as “Executive 1” and “Executive 2,” to engage in a “double-dipping” scheme wherein they submitted release requests for passenger payments designated as “membership fees” prior to the completion of the flights, and then after the flights were completed, submitted release requests for the same funds.

Keilman admitted that he, Executive 1, Executive 2 and others also submitted release requests containing inflated passenger revenue figures, causing the bank to release millions of dollars in revenues for fictitious passengers. In addition, Keilman stated that he, Executive 1, Executive 2 and others concealed the shortfall in Direct Air’s bank account by sending fraudulent financial statements to creditors.

The conspiracy to commit wire and bank fraud charge to which Keilman pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Jan. 6, 2015.

Fishman credited Special Agents of the U.S. Department of Transportation, Office of the Inspector General, under the direction of Special Agent in Charge Todd Damiani, for the investigation leading to today’s plea.      

The case is being prosecuted by Assistant U.S. Attorney Andrew Kogan and Deputy Chief Scott B. McBride of the U.S. Attorney’s Office’s Economic Crimes Unit, and by Trial Attorneys L. Rush Atkinson and Carol L. Sipperly of the U.S. Department of Justice’s Criminal Division, Fraud Section.

Defense counsel: Gina L. Simms Esq., Washington, D.C.; Michael Baldassare Esq., Newark, N.J.

NEWARK, N.J. – A Hudson County, New Jersey, man today admitted to failing to file federally required currency transaction reports in connection with his check-cashing business, U.S. Attorney Paul J. Fishman announced.

Louis Sclafane, 83, of Bayonne, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with causing a domestic financial institution to fail to file Currency Transaction Reports (CTR), which are required for U.S. currency transactions in excess of $10,000 conducted by or on behalf of a single person on the same day, totaling $381,595 over a year and a half.

According to documents filed in this case and statements made in court:

Sclafane was the owner and sole proprietor of Advance Financial (AF), a check-cashing establishment located in Bayonne. Sclafane oversaw the day-to-day operations of AF, such as cashing checks for its customers and withdrawing currency from bank accounts associated with AF. 

Between Sept. 29, 2010 and April 2012, Sclafane cashed at least 20 checks over $10,000 each without filing CTRs with the U.S. Treasury, despite being required to do so by the Federal Bank Secrecy Act.

The charge of causing a financial institution to fail to file CTRs for the purpose of evading the reporting requirements of the Bank Secrecy Act, to which Sclafane pleaded guilty, carries a maximum potential penalty of 10 years in prison and a maximum fine of $500,000.  Sentencing is scheduled for Jan. 6, 2016.

U.S. Attorney Fishman credited special agents of the IRS Criminal Investigations Division, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark; special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and special agents of the U.S. Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Christina Scaringi, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jacques S. Pierre of the Special Prosecutions Division and Assistant U.S. Attorney Steven G. Sanders of the Appeals Division.

Defense counsel: Perter Carter Esq., Assistant Federal Public Defender, Newark

Also Admits Role in Fraudulent $20,000 Home Rehabilitation Loan Scheme

NEWARK, N.J. – A Hudson County, New Jersey, man today admitted using excessive force during an arrest, falsifying records in an attempt to conceal his conduct and helping a relative fraudulently obtain a home rehabilitation loan, U.S. Attorney Paul J. Fishman announced.

Domenico Lillo, 45, of Bayonne, New Jersey, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an indictment charging him with one count of deprivation of civil rights under color of law and one count of falsifying records to impede a civil rights investigation. Lillo also pleaded guilty to an information charging him with assisting in the filing of a false report to the U.S. Department of Housing and Urban Development (“HUD”) in connection with a federally funded home rehabilitation loan worth $20,000.

According to documents filed in this case and statements made in court:

On the early evening of Dec. 27, 2013, Lillo and other police officers from the Bayonne Police Department went to an address in Bayonne to execute a Sussex County arrest warrant. Lillo admitted that he struck the subject of the warrant in the head with a flashlight while the individual was handcuffed and not resisting arrest, which resulted in bodily injury. Lillo also admitted that he falsified a Bayonne Police Department Use of Force Report related to the arrest with the intent to impede an investigation into the case.

In addition, Lillo admitted that on May 10, 2012, he aided a relative in preparing and submitted a fraudulent HUD application to get a federally funded rehabilitation loan on a home Lillo co-owned.

The excessive force charge to which Lillo pleaded guilty carries a maximum penalty of 10 years in prison. The charge of falsifying records to impede an investigation carries a maximum penalty of 20 years in prison. The charge of making false reports to HUD carries a maximum penalty of one year in prison. Sentencing is scheduled for Jan. 6, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, special agents of the U.S. Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Christina Scaringi, and the Hudson County Prosecutor’s Office, under the direction of Prosecutor Esther Suarez, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney Jacques S. Pierre of the Special Prosecutions Division and Assistant U.S. Attorney Steven G. Sanders of the Appeals Division.

Defense counsel: Frank Arleo Esq. and Thomas Cammarata Esq., West Orange, N.J.

NEWARK, N.J. – The U.S. Department of Justice Office on Violence Against Woman today awarded more than $550,000 in grants to two New Jersey organizations that provide housing assistance to victims of sexual assault, domestic or dating violence and stalking, U.S. Attorney Paul J. Fishman announced.

Jersey Battered Women’s Services (JBWS) Inc. of Morristown, New Jersey, was awarded a $305,576 grant and 180 Turning Lives Around Inc. of Hazlet, New Jersey, was awarded a $255,284 grant. Both grants were made through the Transitional Housing Grant Assistance program.

The primary purpose of the Transitional Housing Assistance Program is to provide aid to victims of sexual assault, domestic violence, dating violence, and stalking who are homeless, or in need of transitional housing, or other housing assistance, including short-term housing assistance and supportive services; and for whom emergency shelter services or other crisis intervention services are unavailable or insufficient. The program also focuses on supporting a holistic, victim-centered approach to provide transitional housing services that move individuals into permanent housing. It is critical that successful transitional housing programs provide a wide range of flexible and optional services that reflect the differences and individual needs of victims and that allow victims to choose the course of action that is best for them.

JBWS will partner with Literacy Volunteers of Morris County for ESL instruction, the Women’s Center for computer classes, the Health Careers Program at the County College of Morris for access to high-earning career tracks, the Northwest New Jersey Community Action Partnership (NORWESCAP) for financial literacy, Child & Family Resources for child care referral as well as parenting education, and the Greater Morristown YMCA for afterschool and summer camp care. These partnerships will provide a broader range of supportive services needed and requested by clients. Housing and supportive services will be co-located in a cluster model facility for 11 families. The project will provide at least 30 victims the tools necessary to become self-sufficient and achieve long-term safety.

180 Turning Lives Around is a non-profit organization located in Monmouth County, New Jersey, a county encompassing both some of the richest and some of the poorest municipalities in the state. Monmouth County, with a population of 629,735, has had either the 2nd or 3rd highest number of domestic violence reports out of New Jersey’s 21 counties during the past five years. 180 will partner with Long Branch Concordance and contracted service providers to support 10 families in the 180 agency owned scattered site townhomes. 180 Turning Lives Around will limit its use of Transitional Housing Assistance Grant Program funds to supportive services. Funds for housing are designated from the U.S. Department of Housing and Urban Development.

For more information about this grant, contact the Office on Violence Against Women,  Outreach and Communications Division, at (202) 307-6026.

NEWARK, N.J. – U.S. Attorney Paul J. Fishman, in conjunction with the U.S. Office of Community Oriented Policing Services (COPS Office), today announced funding awards to four New Jersey cities and counties, aimed at creating and, in some cases, protecting 39 law enforcement positions.

The COPS Hiring Program (CHP) will award over $107 million nationally, including $5,187,015 in New Jersey. The list of this year’s grantees includes:

State and Agency Name

Number of Officers Funded

Award Amount

Camden County Police Department

15

$2,187,015

City of East Orange

12

$1,500,000

Essex County Sheriff’s Office

6

$750,000

Wildwood Police Department

6

$750,000

“There is no doubt that community policing is integral to our crime prevention strategy,” U.S. Attorney Fishman said. “These federal grants help mitigate the effect of diminishing resources on our local law enforcement partners who use face-to-face engagement to build better relationships with their communities.”

“The COPS Office is pleased to assist local law enforcement agencies throughout the country in addressing their most critical public safety issues,” said Ronald L. Davis, Director of the COPS Office. “These grants are not simply about putting more officers on the street, they are about expanding the capacity of law enforcement agencies to engage in community policing.”

CHP provides grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides salaries and benefits for officer and deputy hires for three years.

Priority consideration was given this year to agencies that selected any of the Building Trust focus areas or School Based Policing through School Resource Officers. All applicants were encouraged to refer to the report of the President's Task Force on 21st Century Policing for suggested actions to incorporate into their proposed community policing strategy.

The COPS Office is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has invested over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 127,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.

For the entire list of grantees and additional information about the 2015 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov.

TRENTON, N.J. – A Monmouth County man pleaded guilty and another was sentenced today to prison in connection with their roles in a large-scale drug trafficking organization that distributed heroin in Ocean and Monmouth counties, U.S. Attorney Paul J. Fishman announced.

Tyshon Young, a/k/a “Young Money,” a/k/a “Young Boy,” 29, of Asbury Park, New Jersey, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with one count of conspiracy to distribute heroin. Kenneth Greenhow, a/k/a “Fame,” 41, also of Asbury Park, was sentenced by Judge Sheridan to 120 months in prison. Greenhow pleaded guilty on May 11, 2015, to an information charging him with one count of conspiring to distribute heroin.

In March 2014, 21 alleged members of the “Britt-Young DTO,” a drug trafficking organization named after its leaders, Robert Britt and Rufus Young, were charged by criminal complaint with conspiring to distribute heroin. Nineteen of the defendants have pleaded guilty.

According to documents filed in this case and statements made in court:

Between February 2013 and March 2014, Tyshon Young conspired with Rufus Young and others to distribute heroin in Ocean and Monmouth counties.  Tyshon Young admitted distributing between 40 and 60 grams of heroin in furtherance of the conspiracy.  Greenhow admitted that between October 2013 and March 2014, he also participated in the conspiracy and distributed between 40 and 60 grams of heroin.

The distribution conspiracy charge to which Tyshon Young pleaded guilty carries a maximum potential penalty of 20 years in prison and $1 million fine. Sentencing is scheduled for Dec. 22, 2015.

In addition to the prison term, Judge Sheridan sentenced Greenhow to serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing and guilty plea.

The government is represented by Assistant U.S. Attorney Nicholas Grippo of the U.S. Attorney’s Office Criminal Division in Newark.

The allegations in complaint against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

Defense Counsel:

Young:  James R. Murphy Esq., Princeton, New Jersey

Greenhow:  Mark Davis Esq., Trenton

NEWARK, N.J. – A Hudson County, New Jersey, man was sentenced to 19 months in prison for his roles in conspiring with a criminal enterprise that engaged in illegal online sports betting in New Jersey and elsewhere, U.S. Attorney Paul J. Fishman announced.

Robert J. Scerbo, 57 of Bayonne, New Jersey, previously pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to separate informations charging them with one count of racketeering conspiracy. Judge Cecchi imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Members of the conspiracy, referred to as “agents,” were given access to Beteagle.com, a website located in Costa Rica and used to facilitate illegal online sports betting. Before the advent of computerized betting, these agents would have been referred to as “bookmakers” or “bookies.” The agents had the ability to track the “sub-agents,” under them and the wagers placed by their bettors. The agent or sub-agent maintained a group of bettors (the “package”) and were responsible for those bettors.

To place bets online, the agent or sub-agent issued the bettor a username and password to access Beteagle. This access was not given online and no money or credits were made or transferred through the website. Instead, Scerbo and his conspirators paid out winnings and collected losses in person. Scerbo admitted that he conspired with the criminal enterprise to commit racketeering acts, namely, the illegal sports betting operation, and that he and his conspirators profited through this criminal venture.

In addition to the prison terms, Judge Cecchi sentenced Scerbo to two years of supervised release and fined him $5,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Bayonne Police Department, Special Investigations Unit, under the direction of Chief Drew Niekrasz; IRS-Criminal Investigation under the direction of Acting Special Agent in Charge Jonathan D. Larsen; the N.J. State Police, under the direction of Superintendent Rick Fuentes; and the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, with the investigation leading to today’s sentencings.

The government is represented by Assistant U.S. Attorney Anthony Moscato of the New Jersey U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel:

Scerbo: Thomas J. Cammarata Esq., Jersey City, New Jersey

Bruder: Daniel J. Welsh Esq., Jersey City, New Jersey

TRENTON, N.J. – An Essex County, New Jersey, woman today admitted that she conspired to obtain more than $1 million through fraudulently generated refund checks issued by the U.S. Treasury, U.S. Attorney Paul J. Fishman announced.

Marie Poitevien, 53, of Orange, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging her with conspiring to steal government funds.

Background on Stolen Identify Refund Fraud

Stolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that involves the use of stolen identities to commit tax refund fraud.  SIRF schemes generally share a number of hallmarks:

• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals.
• SIRF perpetrators complete Form 1040 tax returns using the fraudulently obtained information and falsifying wages earned, taxes withheld, and other data, always ensuring that the fraudulent tax return generates a refund.
• They direct the U.S. Treasury Department to mail refund checks to locations that the perpetrators control or can access.
• With the fraudulently obtained refund checks in hand, SIRF perpetrators generate cash proceeds by depositing the checks into bank accounts that they control.

According to documents filed in this case and statements made in court:

From October 2009 through June 2013, Poitevien participated in a scheme by which her conspirators made fraudulent tax refund applications and had the U.S. Treasury send the refund checks to Poitevien’s residence. Poitevien then negotiated the checks by depositing them into her personal bank account and withdrawing the funds. Poitevien admitted cashing 298 tax refund checks, made payable to 139 different victims, and totaling $1,101,689.

The count of conspiracy to steal government funds to which Poitevien pleaded guilty is punishable by a maximum potential penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain or loss from the offense. Sentencing is scheduled for Dec. 17, 2015.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney David W. Feder of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Linda Foster Esq. Assistant Federal Public Defender, Trenton

NEWARK, N.J. – A Somerset County, N.J., man who works as a high school teacher was charged today with soliciting a minor victim online to produce images of sexually explicit conduct in exchange for money, U.S. Attorney Paul J. Fishman announced.

David N. Adams, 29, of Branchburg, New Jersey, was charged by complaint with one count of online enticement of a minor to engage in criminal sexual activity. He appeared this afternoon before U.S. Magistrate Judge Steven C. Mannion in Newark federal court. He was detained without bail; a bail hearing is scheduled for Sept. 16, 2015.

According to documents filed in this case and statements made in court:

From June 2014 through September 2014, Adams was a resident of Morris County and taught at Eisenhower Middle School in Roxbury, Morris County. During this time, he allegedly communicated with a 13-year-old victim who lived outside of New Jersey. Adams met the victim through an online gaming community and they communicated through text and video chats.

Adams allegedly offered to send payment to a child, identified in the complaint as “Minor Victim 1,” in exchange for sexually explicit images of the child, as well as live video chat sessions during which the victim engaged in sexually explicit conduct while defendant Adams watched and directed the victim’s actions. The victim did, in fact, send sexually explicit images to Adams and engage in sexually explicit conduct in live video chat sessions.

Adams is currently a teacher at Bridgewater-Raritan High School in Somerset County, New Jersey.

The charge of online enticement carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents with the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Kevin Kelly in Newark; the Branchburg Police Department; and the Somerset County Prosecutor’s Office with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Svetlana M. Eisenberg and Special Assistant U.S. Attorney Erica D. Liu of the U.S. Attorney’s Office General Crimes Unit in Newark.

 

CAMDEN, N.J. – A Russian national today admitted his role in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised more than 160 million credit card numbers and resulted in hundreds of millions of dollars in losses –  the largest such scheme ever prosecuted in the United States.

The guilty plea was announced by New Jersey U.S. Attorney Paul J. Fishman, U.S. Secret Service Director Joseph P. Clancy and Assistant Attorney General Leslie Caldwell.

Dmitriy Smilianets, 32, of Moscow, pleaded guilty pleaded guilty before U.S. District Judge Jerome B. Simandle to Count Two of the second superseding indictment, charging him with conspiracy to commit wire fraud in a manner affecting a financial institution.      Smilianets was arrested in the Netherlands on June 28, 2012 and was extradited to the District of New Jersey on Sept. 7, 2012.

According to documents filed in this case and statements made in court:

The five defendants each played specific roles in the scheme. Vladimir Drinkman, 34, of Syktyvkar, Russia, and Moscow and Alexandr Kalinin, 28, of St. Petersburg, Russia, specialized in penetrating network security and gaining access to the corporate victims’ systems. Drinkman and Roman Kotov, 34, of Moscow, also a hacker, specialized in mining the networks to steal valuable data. The hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 28, of Odessa, Ukraine. Smilianets, 32, of Moscow, sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, Florida, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Drinkman pleaded guilty Sept. 15, 2015, to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud to Kalinin, Kotov and Rytikov remain at large.

The Attacks

The five defendants penetrated the computer networks of several of the corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired more than 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants placed malicious code, or malware, in the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were able to regain access through persistent attacks.

Instant message chats obtained by law enforcement revealed the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.

The defendants used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

The defendants used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.

Over the course of the conspiracy, the defendants communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.

To protect against detection by the victim companies, the defendants altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.

*          *          *

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges. The charges and allegations contained in indictments against the remaining defendants are merely accusations and they are presumed innocent unless and until proven guilty.

The count of conspiracy to commit wire fraud in a manner affecting a financial institution carries a maximum penalty of 30 years in prison and a fine of the greater of $1 million or twice the gain or loss from the offense. Sentencing is scheduled for Jan. 13, 2016.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations, under the direction of Director Clancy, and the Newark Division, under the direction of Special Agent in Charge Carl Agnelli, for the ongoing investigation leading to today’s guilty plea.

The government is represented by Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorneys Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.

The government is represented by Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorney Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.

U.S. Attorney Fishman also thanked public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.

TRENTON, N.J. – A Passaic County, New Jersey, woman today admitted her involvement in selling documents containing the individually identifiable health information of patients who received services at a New Jersey hospital, U.S. Attorney Paul J. Fishman announced.

Okeisha Carey, 48, of Paterson, New Jersey, pleaded guilty before U.S. District Judge Michael Shipp in Trenton federal court to an information charging her with wrongful disclosure of individually identifiable health information.

According to documents filed in this case and statements made in court:

From July 2010 through April 2011, Carey was employed as a billing supervisor for a hospital in Bergen County, New Jersey. During that time, she obtained patient records containing personally identifiable information, including patients’ names, dates of birth, Social Security numbers, and Medicare and Medicaid insurance information. She later transferred more than 250 patient records to another individual in exchange for cash payments.

The wrongful disclosure of individually identifiable health information charge carries a maximum sentence of 10 years in prison and a fine of up to $250,000 or twice the gross gain or loss from the offense. Sentencing is scheduled for Dec. 11, 2015.

U.S. Attorney Fishman praised special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Carl Agnelli, with the investigation leading to today’s guilty plea.

The government is represented by Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.

NEWARK, N.J. – A Monmouth County, New Jersey, was arrested today for allegedly possessing and distributing sexually suggestive images of children, U.S. Attorney Paul J. Fishman announced.

Donald Haring, 60, of Long Branch, is charged by complaint with two counts of distributing child pornography and one count of possessing child pornography. He is scheduled to make his initial court appearance later today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

According to documents filed in this case and statements made in court:

In June 2014, an undercover agent downloaded files containing child sexual abuse from Haring’s computer via a peer-to-peer file sharing network. Haring was sharing more than 100 files of child sexual abuse.

In October 2014, Haring applied to an online child pornography forum covertly operated by undercover agents from the Department of Homeland Security (DHS) to identify individuals who transmit images of child sexual abuse. The online forum was maintained in a controlled environment in a manner that appeared to the prospective user that it was an exclusive and secure members-only website. The “terms of admission” for the online forum required prospective members to, among other things, upload images of child sexual abuse. Using the same IP address he used to share child pornography in June 2014, Haring uploaded eight images of child sexual abuse to satisfy the criteria for admission to the online forum.

In December 2014, DHS agents executed a federal search warrant at Haring’s home. A forensic examination of one of the devices seized from the home revealed more than 4,600 images and 75 movies of child sexual abuse.

Each count of distribution of child pornography carries a maximum penalty of 20 years in prison, a minimum penalty of five years in prison, and a fine of $250,000. The possession count carries a maximum penalty of 10 years in prison and a fine of $250,000.  

U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Kevin Kelly, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney David W. Feder of the U.S. Attorney’s Office Criminal Division in Newark.

The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

TRENTON, N.J. – A former resident of Colorado today admitted her involvement in a conspiracy to illegally transfer firearms from Colorado to a felon in New Jersey, United States Attorney Paul J. Fishman announced.

Krystel Lopez, 28, of Greeley, Colorado, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to one count of an indictment charging her with conspiracy to illegally transfer firearms interstate.

According to documents filed in this case and statements made in court:

Between February and April 2013, Lopez purchased an assault rifle and a handgun in Colorado. Later in April 2013, she mailed both the assault rifle and the handgun to the business address of a known felon in New Jersey, who was prohibited from possessing such weapons.

The charge of conspiracy to illegally transfer firearms interstate to a known felon carries a maximum sentence five years in prison and a fine of up to $250,000, or twice the gross gain or loss from the offense. Sentencing is scheduled for Jan. 5, 2016.

U.S. Attorney Fishman praised special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Kevin Kelly with the investigation leading to today’s guilty plea.

The government is represented by Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.

A broker-dealer admitted today to participating in a five-year insider trading scheme that relied on information stolen from a prominent, international law firm, yielding net profits of more than $5.6 million, announced U.S. Attorney Paul J. Fishman for the District of New Jersey.

Vladimir Eydelman, 43, formerly of Colts Neck, New Jersey, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him with one count of conspiracy to commit securities and tender offer fraud, one count of securities fraud and one count of tender offer fraud.

According to documents filed in this case and statements made in court:  From 2009 to 2013, Eydelman, a broker-dealer employed first by Oppenheimer & Co. and most recently by Morgan Stanley, repeatedly traded on material nonpublic information provided to him by his brokerage client, Frank Tamayo, 42, of Brooklyn, New York, who, in turn, had obtained the inside information from his friend and former law school classmate, Steven Metro, 41, of Katonah, New York.  Metro was the managing clerk of the New York office of Simpson Thacher & Bartlett LLP, one of the nation’s premier mergers and acquisitions firms.  The inside information divulged by Metro to Tamayo and, in turn, by Tamayo to Eydelman, related to corporate transactions, such as mergers and acquisitions or tender offers, in which the law firm represented a party or financial advisor to the transaction.  As the law firm’s managing clerk, a litigation-related function, Metro did not personally work on most of the corporate transactions at issue.  In most instances, Metro stole the inside information from the firm by scouring its computer system using search terms such as “merger agreement,” “bid letter,” “engagement letter,” “due diligence,” as well as client names and client-matter numbers. 

After obtaining the information, Metro divulged it to Tamayo in person, usually meeting at a bar, coffee shop or other location near their respective workplaces in midtown Manhattan.  During such meetings, Metro provided Tamayo inside information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased, the general timing of the planned deals and information related to how the deals would affect the issuers’ stock price once announced.  Tamayo generally would write the security’s ticker symbol on a small piece of paper or napkin and commit to memory any pricing/timing inside information provided by Metro.

After Tamayo received the inside information from Metro, Tamayo would meet with Eydelman, usually at a location near Eydelman’s workplace, such as under the large clock in New York City’s Grand Central Terminal, where Tamayo would pass it on to Eydelman.  Tamayo would show Eydelman the paper or napkin on which Tamayo had written the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo then would place the paper or napkin into his mouth and chew it until it was destroyed.

After receiving the inside information provided by Metro, whom Eydelman knew as Tamayo’s source at a law firm, Eydelman purchased securities for himself, family members, friends and clients, including Tamayo.  Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose. 

Throughout the course of the five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal and updated Metro on the running balance of his profits from the insider trading scheme.  As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000.  Metro sought to cash out his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014.  Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate his law firm source, Metro, for providing them inside information.

By exploiting the information that Metro had stolen from the law firm, Eydelman and conspirators Metro and Tamayo netted more than $5.6 million in illicit profits.

Eydelman faces a maximum potential penalty of five years in prison and a fine of $250,000 on the conspiracy count and a maximum potential penalty of 20 years in prison and a fine of $5 million on the securities and tender offer fraud counts.  He also must forfeit the proceeds of the criminal offenses.  Sentencing is scheduled for Dec. 21, 2015.

Tamayo pleaded guilty to conspiracy and securities and tender offer fraud on Sept. 19, 2014.  Metro has pleaded not guilty to the charges against him and is scheduled to go to trial before Judge Shipp on Feb. 8, 2016.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, New Jersey, for the investigation leading to today’s guilty plea.  He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Robert Cohen and Joseph Sansone.

The government is represented by Assistant U.S. Attorneys Shirley U. Emehelu of the U.S. Attorney’s Office in Newark and Joseph R. Gribko of the U.S. Attorney’s Office in Trenton, New Jersey, as well as Acting Chief Barbara Ward and Assistant U.S. Attorney Jafer Aftab of the Office’s Asset Forfeiture and Money Laundering Unit.

These charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

TRENTON, N.J. B A broker-dealer admitted today to participating in a five-year insider trading scheme that relied on information stolen from a prominent, international law firm, yielding net profits of more than $5.6 million, U.S. Attorney Paul J. Fishman announced.

Vladimir Eydelman, 43, formerly of Colts Neck, New Jersey, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him with one count of conspiracy to commit securities and tender offer fraud, one count of securities fraud, and one count of tender offer fraud.

According to documents filed in this case and statements made in court:

From 2009 to 2013, Eydelman, a broker-dealer employed first by Oppenheimer & Co. and most recently by Morgan Stanley, repeatedly traded on material nonpublic information provided to him by his brokerage client, Frank Tamayo, 42, of Brooklyn, New York, who, in turn, had obtained the inside information from his friend and former law school classmate, Steven Metro, 41, of Katonah, New York. Metro was the managing clerk of the New York office of Simpson Thacher & Bartlett LLP, one of the nation’s premier mergers and acquisitions firms. The inside information divulged by Metro to Tamayo and, in turn, by Tamayo to Eydelman, related to corporate transactions, such as mergers and acquisitions or tender offers, in which the law firm represented a party or financial advisor to the transaction. As the law firm’s managing clerk, a litigation-related function, Metro did not personally work on most of the corporate transactions at issue. In most instances, Metro stole the inside information from the firm by scouring its computer system using search terms such as “merger agreement,” “bid letter,” “engagement letter,” “due diligence,” as well as client names and client-matter numbers.

After obtaining the information, Metro divulged it to Tamayo in person, usually meeting at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan.  During such meetings, Metro provided Tamayo inside information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased, the general timing of the planned deals, and information related to how the deals would affect the issuers’ stock price once announced. Tamayo generally would write the security’s ticker symbol on a small piece of paper or napkin and commit to memory any pricing/timing inside information provided by Metro.

After Tamayo received the inside information from Metro, Tamayo would meet with Eydelman, usually at a location near Eydelman’s workplace, such as under the large clock in New York City’s Grand Central Terminal, where Tamayo would pass it on to Eydelman. Tamayo would show Eydelman the paper or napkin on which Tamayo had written the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo then would place the paper or napkin into his mouth and chew it until it was destroyed.

After receiving the inside information provided by Metro, whom Eydelman knew as Tamayo’s source at a law firm, Eydelman purchased securities for himself, family members, friends, and clients, including Tamayo. Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose.

Throughout the course of the five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000.  Metro sought to cash out his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014.  Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate his law firm source, Metro, for providing them inside information.

By exploiting the information that Metro had stolen from the law firm, Eydelman and conspirators Metro and Tamayo netted more than $5.6 million in illicit profits.

Eydelman faces a maximum potential penalty of five years in prison and a fine of $250,000 on the conspiracy count and a maximum potential penalty of 20 years in prison and a fine of $5 million on the securities and tender offer fraud counts. He also must forfeit the proceeds of the criminal offenses. Sentencing is scheduled for Dec. 21, 2015.

Tamayo pleaded guilty to conspiracy and securities and tender offer fraud on Sept. 19, 2014.  Metro has pleaded not guilty to the charges against him and is scheduled to go to trial before Judge Shipp on Feb. 8, 2016.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s guilty plea.  He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Robert Cohen and Joseph Sansone.

The government is represented by Assistant U.S. Attorneys Shirley U. Emehelu of the U.S. Attorney’s Office in Newark, and Joseph R. Gribko of the U.S. Attorney’s Office in Trenton, as well as Acting Chief Barbara Ward and Assistant U.S. Attorney Jafer Aftab of the Office’s Asset Forfeiture and Money Laundering Unit.

These charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Hackers Targeted Major Payment Processors, Retailers and Financial Institutions Around the World

A Russian national today admitted his role in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised more than 160 million credit card numbers and resulted in hundreds of millions of dollars in losses –  the largest such scheme ever prosecuted in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Director Joseph P. Clancy of the U.S. Secret Service made the announcement.

Vladimir Drinkman, 34, of Syktyvkar, Russia, and Moscow, pleaded guilty before Chief U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud.  Drinkman was arrested in the Netherlands on June 28, 2012, and was extradited to the District of New Jersey on Feb. 17, 2015.  Sentencing is scheduled for Jan. 15, 2016.

“This hacking ring’s widespread attacks on American companies caused serious harm and more than $300 million in losses to people and businesses in the United States,” said Assistant Attorney General Caldwell.  “As demonstrated by today’s conviction, our close cooperation with our international partners makes it more likely every day that we will find and bring to justice cyber criminals who attack America – wherever in the world they may be.  As law enforcement around the world responds to the cyber threat that affects us all, I am confident that this type of international cooperation that led to this result will be the new normal.”

“Defendants like Vladimir Drinkman, who have the skills to break into our computer networks and the inclination to do so, pose a cutting edge threat to our economic well-being, our privacy and our national security,” said U.S. Attorney Fishman.  “The crimes to which he admitted his guilt have a real, practical cost to our privacy and our pocketbooks.  Today’s guilty plea is a tribute to the skill and perseverance of the agents and prosecutors who brought him to justice.”

“This cyber case highlights the effectiveness of global law enforcement partnerships in the detection and dismantling of criminal enterprises targeting U.S. citizens,” said Director Clancy.  “The support of U.S. Attorney’s offices and the resulting plea enhances the Secret Service’s commitment to vigorously pursue transnational threats to the U.S. financial infrastructure.”

According to documents filed in this case and statements made in court, Drinkman and four co-defendants allegedly hacked into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.

According to the indictment in this case and statements made in court, the five defendants each played specific roles in the scheme.  Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems.  Drinkman and Roman Kotov, 34, of Moscow, allegedly specialized in mining the networks to steal valuable data.  The hackers hid their activities using anonymous web-hosting services allegedly provided by Mikhail Rytikov, 28, of Odessa, Ukraine.  Dmitriy Smilianets, 32, of Moscow, allegedly sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, in connection with five corporate data breaches, including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported.  Gonzalez is currently serving 20 years in federal prison for those offenses.  Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions.  Rytikov was previously charged in the Eastern District of Virginia in an unrelated scheme.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012.  Smilianets was extradited on Sept. 7, 2012, and remains in federal custody.  Kalinin, Kotov and Rytikov remain at large.

The Attacks

According to documents filed in this case and statements made in court, the five defendants penetrated the computer networks of several of the corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders.  The conspirators allegedly acquired more than 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.”  SQL, or Structured Query Language, is a type of programming language designed to manage data held in particular types of databases; the hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network.  Once the network was infiltrated, the defendants allegedly placed malicious code (malware) in the system.  This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.

Instant message chats obtained by law enforcement revealed that the defendants allegedly targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway, sometimes leaving malware implanted in multiple companies’ servers for more than a year.

The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks.  The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

According to documents filed in this case and statements made in court, after acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world.  The buyers then sold the dumps through online forums or directly to individuals and organizations.  Smilianets was allegedly in charge of sales, selling the data only to trusted identity theft wholesalers.  He allegedly charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers.  Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

According to documents filed in this case and statements made in court, the defendants allegedly used a number of methods to conceal the scheme.  Unlike traditional Internet service providers, Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.

Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection.  Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.

To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions.  The defendants also allegedly worked to evade existing protections by security software.

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions of dollars in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.

The charges and allegations contained in indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by the U.S. Secret Service’s Criminal Investigations Division and Newark, New Jersey, Division.  The case is being prosecuted by Trial Attorney Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, Chief Gurbir S. Grewal of the District of New Jersey’s Economic Crimes Unit and Assistant U.S. Attorney Andrew S. Pak of the District of New Jersey.  The Criminal Division’s Office of International Affairs, public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police also provided valuable assistance.

Drinkman Plea Agreement

Hackers Targeted Major Payment Processors, Retailers and Financial Institutions Around the World

CAMDEN, N.J. – A Russian national today admitted his role in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised more than 160 million credit card numbers and resulted in hundreds of millions of dollars in losses –  the largest such scheme ever prosecuted in the United States.

The guilty plea was announced by New Jersey U.S. Attorney Paul J. Fishman, U.S. Secret Service Director Joseph P. Clancy and Assistant Attorney General Leslie Caldwell.

Vladimir Drinkman, 34, of Syktyvkar, Russia, and Moscow, pleaded guilty before Chief U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud.  Drinkman was arrested in the Netherlands on June 28, 2012, and was extradited to the District of New Jersey on Feb. 17, 2015.

“Defendants like Vladimir Drinkman, who have the skills to break into our computer networks and the inclination to do so, pose a cutting edge threat to our economic well-being, our privacy and our national security,” U.S. Attorney Fishman said. “The crimes to which he admitted his guilt have a real, practical cost to our privacy and our pocketbooks. Today’s guilty plea is a tribute to the skill and perseverance of the agents and prosecutors who brought him to justice.”

“This hacking ring’s widespread attacks on American companies caused serious harm and more than $300 million in losses to people and businesses in the U.S.,” said Assistant Attorney General Caldwell.  “As demonstrated by today’s conviction, our close cooperation with our international partners makes it more likely every day that we will find and bring to justice cyber criminals who attack America – wherever in the world they may be.  As law enforcement around the world responds to the cyber threat that affects us all, I am confident that this type of international cooperation that led to this result will be the new normal.”

“This cyber case highlights the effectiveness of global law enforcement partnerships in the detection and dismantling of criminal enterprises targeting United States citizens,” Director Clancy said.  “The support of U.S. Attorney’s offices and the resulting plea enhances the Secret Service’s commitment to vigorously pursue transnational threats to the U.S. financial infrastructure”.

According to documents filed in this case and statements made in court:

Drinkman and four co-defendants hacked into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.

The five defendants each played specific roles in the scheme. Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, specialized in penetrating network security and gaining access to the corporate victims’ systems. Drinkman and Roman Kotov, 34, of Moscow, also a hacker, specialized in mining the networks to steal valuable data. The hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 28, of Odessa, Ukraine. Dmitriy Smilianets, 32, of Moscow, sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, Florida, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012. Smilianets was extradited Sept. 7, 2012, and remains in federal custody. Kalinin, Kotov and Rytikov remain at large.

The Attacks

The five defendants penetrated the computer networks of several of the corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired more than 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants placed malicious code, or malware, in the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were able to regain access through persistent attacks.

Instant message chats obtained by law enforcement revealed the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.

The defendants used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

The defendants used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.

Over the course of the conspiracy, the defendants communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.

To protect against detection by the victim companies, the defendants altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.

*          *          *

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges. The charges and allegations contained in indictments against the remaining defendants are merely accusations and the defendants are presumed innocent unless and until proven guilty.

The count of conspiracy to commit wire fraud in a manner affecting a financial institution to which Drinkman pleaded guilty carries a maximum potential penalty of 30 years in prison and a fine of the greatest of $1 million or twice the gain or loss from the offense. The count of conspiracy to gain unauthorized access to computers to which Drinkman pleaded guilty carries a maximum potential penalty of five years in prison and a fine of the greatest of $250,000 or twice the gain or loss from the offense. Sentencing is scheduled for Jan. 15, 2016.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations, under the direction of Director Clancy, and the Newark Division, under the direction of Special Agent in Charge Carl Agnelli, for the ongoing investigation leading to today’s guilty plea.

The government is represented by Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorneys Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.

U.S. Attorney Fishman also thanked public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.

Defense counsel: Florian Miedel Esq., New York; Bart Stapert Esq., Amsterdam, Netherlands

CAMDEN, N.J. – A settlement was reached today with Healthcare Commons Inc., resolving claims that the South Jersey company failed to re-employ a Delaware woman when she returned from her deployment with the National Guard, New Jersey U.S. Attorney Paul J. Fishman and Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, announced.

The civil lawsuit, filed in Camden federal court, alleged that Healthcare Commons, of Carneys Point, New Jersey, willfully violated the Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA), which protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations, and provides that service members shall not be discriminated against because of their military obligations.

“Cases like this one not only provide financial relief to soldiers returning from overseas but also ensure that employers fully understand their employment obligations to servicemembers,” Acting Associate Attorney General Stuart F. Delery said.  “Through the Servicemembers and Veterans Initiative, the Department of Justice will continue using every tool at our disposal to protect the men and women who serve in our Armed Forces from unjust actions and illegal burdens.”

“The men and women who wear our nation’s uniform need to know that they will be protected from the types of injustice experienced by Ms. Tolliver,” Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division said.  “The Department of Justice, through its enforcement of USERRA, strongly supports the right of service members to retain their rightful positions in the workforce both while they serve and after they complete their military service to our country.”

According to the complaint:                                                    

Megan Toliver, 32, of New Castle, Delaware, is a former employee of Healthcare Commons. She joined the U.S. Army National Guard in September 2004 and, most recently, had served as a sergeant, with honorable service as a mental health specialist. When Toliver returned from her military deployment in May 2014, she notified Healthcare Commons that she was seeking re-employment.  Healthcare Commons willfully violated USERRA by not re-employing her as a mental health screener or in another comparable position.

Under the terms of a consent decree, which was filed today in federal court, Healthcare Commons agreed to pay $18,500 as back pay and liquidated damages to Toliver.  HCI also agreed to adopt a new personnel policy that informs employees of their rights and obligations under USERRA and to provide USERRA training to all supervisory staff.

The case was referred by U.S. Department of Labor following an investigation by the department’s Veterans’ Employment and Training Service.

The plaintiff is represented by Assistant U.S. Attorney Michael E. Campion, U.S. Attorney’s Office, District of New Jersey, and Special Litigation Counsel Andrew Braniff, U.S. Department of Justice, Civil Rights Division, Employment Law Section.

In March 2015, the Attorney General created of the Service Members and Veterans Initiative, which is led by three dedicated career Justice Department attorneys with strong ties to the military community. They will further the Department’s existing efforts by coordinating and expanding enforcement, outreach, and training efforts on behalf of service members, veterans, and their families. The initiative will address the unique challenges that service members face while on active duty, that veterans face upon returning home, and that families face when a loved one is deployed.

Additional information about USERRA can be found on the U.S. Attorney’s Office website at www.justice.gov/usao-nj and the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.

The Department of Justice has reached a settlement today with Healthcare Commons Inc., resolving claims that the South Jersey company failed to re-employ a Delaware woman when she returned from her deployment with the National Guard, announced Principal Deputy Assistant Attorney General Vanita Gupta, head of the Department of Justice’s Civil Rights Division, and U.S. Attorney Paul J. Fishman of the District of New Jersey.

The civil lawsuit, filed in Camden federal court, alleged that Healthcare Commons, of Carneys Point, New Jersey, willfully violated the Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA), which protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations, and provides that service members shall not be discriminated against because of their military obligations.

“Cases like this one not only provide financial relief to soldiers returning from overseas but also ensure that employers fully understand their employment obligations to servicemembers,” said Acting Associate Attorney General Stuart F. Delery.  “Through the Servicemembers and Veterans Initiative, the Department of Justice will continue using every tool at our disposal to protect the men and women who serve in our Armed Forces from unjust actions and illegal burdens.”

“The men and women who wear our nation’s uniform need to know that they will be protected from the types of injustice experienced by Ms. Tolliver,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The Department of Justice, through its enforcement of USERRA, strongly supports the right of service members to retain their rightful positions in the workforce both while they serve and after they complete their military service to our country.”

According to the complaint, Megan Toliver, 32, of New Castle, Delaware, is a former employee of Healthcare Commons.  She joined the U.S. Army National Guard in September 2004 and, most recently, had served as a sergeant, with honorable service as a mental health specialist.  When Toliver returned from her military deployment in May 2014, she notified Healthcare Commons that she was seeking re-employment.  Healthcare Commons willfully violated USERRA by not re-employing her as a mental health screener or in another comparable position.

Under the terms of a consent decree, which was filed today in federal court, Healthcare Commons agreed to pay $18,500 as back pay and liquidated damages to Toliver.  Healthcare Commons also agreed to adopt a new personnel policy that informs employees of their rights and obligations under USERRA and to provide USERRA training to all supervisory staff.

The case was referred by the U.S. Department of Labor following an investigation by the department’s Veterans’ Employment and Training Service.

The plaintiff is represented by Special Litigation Counsel Andrew Braniff of the Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Michael E. Campion of the District of New Jersey.

In March 2015, the Attorney General created the Servicemembers and Veterans Initiative, which is led by three dedicated career Justice Department attorneys with strong ties to the military community.  They will further the department’s existing efforts by coordinating and expanding enforcement, outreach and training efforts on behalf of service members, veterans and their families.  The initiative will address the unique challenges that service members face while on active duty, that veterans face upon returning home, and that families face when a loved one is deployed.

Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as the U.S. Attorney’s Office website at www.justice.gov/usao-nj and on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.

NEWARK, N.J. – A member of the Grape Street Crips street gang today admitted conspiring to distribute heroin in and around Newark, U.S. Attorney Paul J. Fishman announced.

Sharod Brown, 30, of Newark, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court an information charging him with one count of conspiring to distribute heroin.

According to documents filed in this case and statements made in court:

In May 2015, 50 alleged members and associates of the Grape Street Crips were charged over a three-week period in criminal complaints that alleged drug-trafficking, physical assaults, and witness intimidation. In addition to controlling drug-trafficking across large swaths of Newark, the Grape Street Crips allegedly engaged in acts of violence — including murder, shootings, aggravated assaults, and witness intimidation. Over the course of the entire investigation, 71 defendants have been charged with federal and state charges.

Brown admitted that, between November 2014 and May 2015, he conspired with others to distribute 10 bricks of heroin in and around the Pennington Court public-housing complex, located on Pennington Street in Newark, New Jersey.

The count of conspiring to distribute heroin to which Brown pleaded guilty is punishable by a maximum potential penalty of 20 years in prison. Sentencing is scheduled for Dec. 21, 2015.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl J. Kotowski; and special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, for the investigation leading to today’s guilty plea. He also thanked prosecutors and detectives of the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; police officers and detectives of the Newark Police Department, under the direction of Director Eugene Venable and Chief Anthony Campos; and the Essex County Sheriff’s Office under the direction of Armando B. Fontoura, for their work on the investigation.

The government is represented by Assistant U.S. Attorneys Osmar J. Benvenuto, Elizabeth M. Harris, and Barry Kamar of the Criminal Division in Newark.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.

The charges and allegations contained in the federal criminal complaints and indictment against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

Defense counsel: Jason F. Orlando Esq., Jersey City, New Jersey

NEWARK, N.J. – A Bayonne, New Jersey, man was sentenced today to 15 months in prison for conspiring with a criminal enterprise that engaged in illegal sports betting in New Jersey and elsewhere, U.S. Attorney Paul J. Fishman announced.

Mark A. Sanzo, 57, previously pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with one count of racketeering conspiracy. Judge Cecchi imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Members of the conspiracy, referred to as “agents,” were given access to Beteagle.com, a website located in Costa Rica and used to facilitate illegal online sports betting. Before the advent of computerized betting, these agents would have been referred to as “bookmakers” or “bookies.” The agents had the ability to track the “sub-agents,” under them and the wagers placed by their bettors. The agent or sub-agent maintained a group of bettors (the “package”) and were responsible for those bettors. Sanzo was an agent of the gambling enterprise.

To place bets online, the agent or sub-agent issued the bettor a username and password to access Beteagle. This access was not given online and no money or credits were made or transferred through the website. Instead, Sanzo and his conspirators paid out winnings and collected losses in person. During his plea hearing, Sanzo admitted that he conspired to commit racketeering acts in connection with the illegal sports betting operation, and that he and other conspirators profited from the scheme.

In addition to the prison term, Judge Cecchi ordered Sanzo to serve three years of supervised release and pay a $5,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Bayonne Police Department, Special Investigations Unit, under the direction of Chief Drew Niekrasz; IRS-Criminal Investigation under the direction of Special Agent in Charge Jonathan D. Larsen; the N.J. State Police, under the direction of Superintendent Rick Fuentes; the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni; and the Waterfront Commission of New York Harbor, under the direction of Executive Director Walter M. Arsenault, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Christopher L. Patella Esq., Bayonne, New Jersey

CAMDEN, N.J. – A Camden woman was sentenced today to 15 months in prison for buying five firearms in North Carolina for her cousin to sell in New Jersey, U.S. Attorney Paul J. Fishman announced.

Johanna Betty Young, 25, previously pleaded guilty before U.S. District Judge Renée Marie Bumb to an information charging her with one count of conspiring to deal firearms without a license. Judge Bumb imposed the sentence today in Camden federal court.

According to documents filed in this case and statements made in court:

In January 2012, Young’s cousin, Wendelle Ford, 42, also of Camden, gave Young money to apply for firearms purchase permits in North Carolina, where Young lived at the time.  Young admitted she knew that neither she nor Ford were federally licensed firearms dealers. She also knew that Ford had a prior felony conviction and therefore could not legally purchase or possess firearms.

Once Young obtained the purchase permits, Ford traveled to North Carolina and he and Young visited gun shops. After Ford told her which firearms to buy, Young lied on the purchase paperwork, stating that she was the actual buyer. Young bought five handguns and gave them to Ford knowing that he was going to bring them to New Jersey and sell them. Later, Ford gave Young $200 for each firearm.

In addition to the prison term, Judge Bumb sentenced Young to serve two years of supervised release.

The case against Ford is still pending. The charges and allegations against him are merely accusations and he is considered innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the ATF, under the direction of Special Agent in Charge George P. Belsky in Newark, New Jersey, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Matthew Smith of the U.S. Attorney’s Office in Camden.

Defense counsel: Jose Luis Ongay Esq., Camden

NEWARK, N.J. – An Essex County, New Jersey man today admitted he defrauded the Department of Veterans Affairs of over $150,000 in disability benefits over a 13-year period, U.S. Attorney Paul J. Fishman announced.

Paul Tillson, 49, of Bloomfield, New Jersey, pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an indictment charging him with embezzlement of funds from the United States.

According to documents filed in this case and statements made in court:

From July 1991 through January 1992, Tillson served as an administrative clerk in the U.S. Army in Saudi Arabia and Kuwait. From November 2000 through July 2013, Tillson received $150,164 in disability benefits based on his claims of combat related injuries. Through an investigation by the Department of Veterans Affairs, it was determined that Tillson did not serve in a combat function or engage in combat during his tour of duty overseas, which commenced after cease-fire terms had been accepted by Iraq. Tillson also acknowledged that he falsified information related to his alleged combat stressors. 

The charge of embezzlement of funds from the United States carries a maximum sentence of up to 10 years in prison and a fine of up to $250,000 or twice the gross gain or loss from the offense. Sentencing is scheduled for Dec. 16, 2015.

U.S. Attorney Fishman credited special agents of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigation Division, under the direction of Special Agent in Charge Jeffrey G. Hughes, with the investigation leading to today’s guilty plea.

The government is represented by Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.

Defense counsel: Patrick McMahon Esq., Newark

NEWARK, N.J. – The deputy director of the Hudson County Correctional Facility was sentenced today to 21 months in prison for illegally wiretapping his co-workers and another individual, U.S. Attorney Paul J. Fishman announced.

Kirk Eady, 47, of East Brunswick, New Jersey, was previously found guilty of one count of intentionally intercepting the wire, oral or electronic communications of others following a four-day trial before Judge Jose L. Linares, who imposed the sentence today in Newark federal court.

According to the documents filed in this case and the evidence at trial:

From March 8, 2012, to July 8, 2012, while working as the deputy director of the Hudson County Correctional Facility, Eady used the services of a website on more than 10 occasions to intercept the telephone calls of other Hudson County Correctional Facility employees and another individual who were critical of his work performance. Eady was able to conceal the telephone number from which the call originated. He then called two of the employees at the same time and made it appear that one or both of the other individuals initiated the call. Eady also recorded these telephone conversations and never told the other employees he was recording these private communications. These individuals did not consent to their private conversations being monitored and recorded by Eady.

In addition to the prison term, Judge Linares sentenced Eady to three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney David L. Foster of the U.S. Attorney’s Office Special Prosecution Division.

Defense counsel: Peter Willis Esq., Jersey City, New Jersey

NEWARK, N.J. – A Bergen County, New Jersey, man admitted today that he conspired to defraud 15 victims of more than $3 million, U.S. Attorney Paul J. Fishman announced.

Paul Mancuso, 49, of Glen Rock, New Jersey, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to one count of conspiracy to commit wire fraud.

According to documents filed in this case and statements made in court:

On Aug. 21, 2014, a federal grand jury in Newark indicted Mancuso on one count of conspiracy to commit wire fraud and five counts of wire fraud. It also charged Pasquale Stiso, 53, of West Harrison, New York, with one count of conspiracy to commit wire fraud and one count of wire fraud.

Since 2009, Mancuso posed as a real estate investor, broker and developer, as well as a “hard money” lender for other investments. Stiso, a disbarred New York attorney, held himself out as an individual working with Mancuso on various investment projects.

During the plea hearing, Mancuso admitted that he and Stiso fraudulently obtained financing for projects that did not exist or in which they had no actual involvement. Some of the purported projects touted by Mancuso, Stiso, and other conspirators included investments in a phony ticket scam, the development of a pizzeria at a resort in the Bahamas, the development of a casino in Atlantic City, the development of a commercial shopping center, and the “flipping” of a piece of real estate in Matawan.

Victims lost all of their investments in Mancuso’s schemes. Instead of funding the purported projects, Mancuso and Stiso used the money for personal expenses and to finance their involvement in illegal gambling.

The charge of wire fraud conspiracy to which Mancuso pleaded guilty carries a maximum potential penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greater. The indictment also includes a notice of forfeiture of $3,425,750, representing the fraudulent payments Mancuso and Stiso received from the scheme. Sentencing is scheduled for Jan. 12, 2016.

The charges against Stiso are merely accusations, and he is presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, and criminal investigators from the U.S. Attorney’s Office for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Francisco J. Navarro and Anthony Mahajan of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Stacy Ann Biancamano Esq., Newark

NEWARK, N.J. – The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, was sentenced today to 40 months in prison for directing the sale of diluted and adulterated dietary ingredients and supplements sold by his company, U.S. Attorney Paul J. Fishman announced.

Barry Steinlight, 70, of Hackettstown, New Jersey, previously pleaded guilty before U.S. District Judge Esther Salas to a one-count information charging him with conspiring to commit wire fraud. Judge Salas imposed the sentence today in Newark federal court.

“Consumers expect labels that accurately describe the products they ingest,” U.S. Attorney Fishman said. “Steinlight deceived his customers as part of a four-year scheme in which he delivered bogus, mislabeled products. Today he was appropriately punished for his crime.”

“The Justice Department has increased its attention on supplement sellers like Barry Steinlight who sell products that are not what they claim to be,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will investigate and prosecute companies and individuals that sell supplements that threaten the health of the American public and drain their bank accounts with misrepresented products.”

 “Today’s announcement demonstrates that those who sell adulterated dietary supplements and purposely subvert the regulatory functions of the FDA by providing false and misleading information will be held accountable for their actions,” stated Jeffrey J. Ebersole, Acting Special Agent in Charge, FDA Office of Criminal Investigations’ New York Field Office.  “We commend the efforts of the Department of Justice for vigorously pursuing the prosecution of this matter.”

According to documents filed in this case and statements made in court:

Steinlight was the president and owner of Raw Deal Inc., a dietary supplement manufacturing facility. From at least 2009 through November 2013, Steinlight instructed Raw Deal employees to add “fillers,” including maltodextrin, viobin cocoa replacer and rice flours to the dietary ingredients and supplements packaged for, and sold to, Raw Deal’s customers. These “fillers” were added without customer consent or knowledge. Steinlight also directed Raw Deal employees not to list the “fillers” as ingredients on the certificates of analysis (COAs) issued to its customers as proof of the identity of the ingredients contained in the products.

In addition to directing the dilution and adulteration of Raw Deal’s products, Steinlight also directed Raw Deal employees to create COAs that falsely certified that certain of Raw Deal’s products were kosher or organic. Also, during an FDA inspection of Raw Deal in February 2012, Steinlight instructed employees to alter a document before providing it to the FDA.

Raw Deal’s executive vice president, Catherine Palmer, 38, of Budd Lake, New Jersey, admitted that during the 2012 FDA inspection, she ordered a subordinate to falsify an ingredient list of a dietary supplement product before submitting it to the FDA. In addition, she admitted instructing a Raw Deal employee not to run blenders during the 2012 inspection so that the FDA would not see “fillers” being added to customer orders.

In addition to the prison term, Judge Salas sentenced Steinlight to one year of supervised release. During his plea hearing, Steinlight admitted that Raw Deal’s gross profits during the scheme were between $7 million and $20 million. As part of his plea agreement, Steinlight must forfeit $1,036,834 in profits from the scheme.

Palmer pleaded guilty yesterday to a one-count information charging her with obstructing an FDA investigation. The obstruction charge carries a maximum potential sentence of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Her sentencing is scheduled for Dec. 21, 2015.

The government is represented by Assistant U.S. Attorney Joseph Mack, Deputy Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, Special Assistant U.S. Attorney Shannon M. Singleton from the FDA’s Office of Chief Counsel, and Trial Attorneys Patrick Runkle and David Sullivan of the Civil Division’s Consumer Protection Branch.

U.S. Attorney Fishman reorganized the health care fraud practice at the U.S. Attorney’s Office for the District of New Jersey shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug, and Cosmetic Act and other statutes.

A Bergen County, New Jersey, man pleaded guilty today to conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Richard M. Frankel of the FBI’s Newark, New Jersey, Division made the announcement.

Samuel Rahamin Topaz, 21, of Fort Lee, New Jersey, pleaded guilty before U.S. District Judge Susan D. Wigenton of the District of New Jersey to an information charging him with one count of conspiring with others to provide material support to ISIL.  He remains detained without bail.

“Samuel Rahamin Topaz conspired to provide material support to ISIL and sought to travel overseas with others to fight on behalf of the designated foreign terrorist organization,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority, and we remain committed to stemming the flow of foreign fighters abroad and bringing to justice those who attempt to provide material support to terrorists.”

“The crimes Samuel Topaz admitted today threatened the safety of Americans here and abroad,” said U.S. Attorney.  “Our efforts to cut off the flow of fighters and resources to known terrorist organizations will not stop with his guilty plea.  We have charges pending against his conspirators and remain vigilant against these terrorist operations.”

“Samuel Topaz admitted to conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL) today in the U.S. District Court of New Jersey,” said Special Agent in Charge Frankel.  “Now Topaz will face up to 20 years in prison rather than take up arms overseas.  Disrupting recruitment efforts by terrorist organizations and preventing acts of terror remains the FBI’s number one priority, and due to the unflagging efforts of the Newark FBI’s Joint Terrorism Task Force this threat was eliminated. I ask the citizens of New Jersey to remain vigilant and contact the FBI if they see or hear something suspicious.”

According to documents filed in this case and related cases and statements made in court:

Topaz admitted that prior to his arrest by the FBI Joint Terrorism Task Force (JTTF) on June 17, 2015, he planned to travel overseas to join ISIL and had saved money for that purpose.  Topaz discussed plans to join ISIL with Nader Saadeh, Alaa Saadeh and Munther Omar Saleh, and he admitted that at various times, each of them indicated that they wanted to join ISIL.  Topaz also admitted that they all watched ISIL-related videos, some of which depicted the execution of non-Muslims and individuals regarded as apostates from Islam.

On May 5, 2015, Nader Saadeh departed the United States with plans to travel overseas to join ISIL as part of the conspiracy, according to Topaz’s statements in court today.  Topaz further admitted that he and others planned to travel overseas separately, meet up with Nader Saadeh and then travel together to join ISIL.  After Nader Saadeh left the United States, Topaz met with Saleh and contacted Alaa Saadeh to discuss those plans. 

Topaz admitted to knowing that ISIL was a designated foreign terrorist organization taking over territory overseas, expelling non-Muslims from their homes and executing individuals who did not obey ISIL’s commands. 

The count of conspiracy to provide material support to a designated foreign terrorist organization carries a statutory maximum potential penalty of 20 years in prison and a fine of $250,000.  Sentencing is scheduled for Nov. 18, 2015.

Topaz’s alleged co-conspirators are being prosecuted and are currently in federal custody.  Nader and Alaa Saadeh have been charged in separate criminal complaints brought in the District of New Jersey with conspiring to provide material support to ISIL, among other charges.  Saleh has been indicted on terrorism-related charges brought in the Eastern District of New York.  The charges and allegations against them are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by the FBI’s JTTF.  The case is being prosecuted by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta and Francisco J. Navarro of the District of New Jersey, with assistance the assistance of Trial Attorney Robert Sander of the National Security Division’s Counterterrorism Section.

Topaz Plea Agreement

Topaz Information

NEWARK, N.J. – A Newark man was sentenced to 360 months in prison today for inducing a girl to engage in sexually explicit conduct while he took pictures and video, U.S. Attorney Paul J. Fishman announced.

Pedro Rios, 59, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to Counts One through Five and Count Seven of a superseding indictment charging him with sexual exploitation of a child and possession of child pornography. Judge Chesler imposed the sentence today in Newark federal court.

According to documents filed in the case and statements made in court:

Rios admitted that on five separate dates between March 4, 2008 and Nov. 8, 2011, he induced a girl under the age of 12 to engage in sexually explicit conduct for the purpose of taking pictures and videos of the child’s genitals and the sexually explicit conduct. Rios’s also admitted that he possessed images of child sexual abuse on Feb. 5, 2013. Several of the videos charged in the superseding indictment depict Rios’s abuse of the child victim in the cab of a tractor trailer truck.

In addition to the prison term, Judge Chesler sentenced Rios to a lifetime of supervised release.

U.S. Attorney Fishman credited special agents of the FBI Newark Division’s Child Exploitation Task Force, under the direction of Special Agent in Charge Richard M. Frankel; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; and the N.J. Regional Computer Forensics Laboratory with the investigation leading to today’s sentencing.

The government is represented by Assistant United States Attorneys Danielle Alfonzo Walsman and Jonathan W. Romankow of the U.S. Attorney’s Office’s Criminal Division in Newark.

Defense counsel: Brian J. Neary Esq., Hackensack, New Jersey

NEWARK, N.J. – An employee of a New Jersey based-trucking company was arrested today and charged with swindling her employer out of more than $1 million by issuing company checks for her own benefit, U.S. Attorney Paul J. Fishman announced.

Tracey Perrigan, 53, of Sparta, Tennessee, is charged by complaint with two counts of wire fraud. FBI agents arrested Perrigan this afternoon at her place of employment in Branchburg, New Jersey. She appeared late this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

According to the complaint:

Perrigan was an employee of a company identified in the complaint as “Company A,” the corporate parent of several subsidiary trucking, rigging, and transportation companies. Company A was headquartered in Oceanside, New York, and had a Branchburg facility. From September 2012 through August 2015, Perrigan allegedly orchestrated a check scheme through which she diverted funds from her employer to Southern Cross Transport Tow and Recovery (“Southern Cross”), a Tennessee corporation owned and operated by Perrigan and her husband.

Company A used the “Comchek” system, which enables clients to authorize and monitor fuel and repair expenditures by drivers in remote locations. As part of her employment duties, Perrigan was responsible for authorizing Comcheks drawn on Company A’s bank account. Before a Comchek can be presented for payment, the user must obtain a 23-digit code that authorizes the expenditure. The first five digits of the code are the unique number assigned to each Comchek customer.

According to the complaint, Perrigan allegedly issued Comcheks with Company A codes directly to Southern Cross. The Comcheks appeared legitimate and were accepted for payment because Perrigan used her position with Company A to generate seemingly valid Company A codes.  As a result, Perrigan and Southern Cross received more than $1.2 million in Company A funds even though Company A has no actual business with Southern Cross.

Each wire fraud count is punishable by a maximum potential penalty of 30 years in prison and $1 million fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney David W. Feder of the U.S. Attorney’s Office Criminal Division in Newark.

The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

NEWARK, N.J. – A Bergen County, New Jersey, man admitted today that he conspired to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, U.S. Attorney Paul J. Fishman, Assistant Attorney General for National Security John P. Carlin, and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division announced.

Samuel Rahamin Topaz, 21, of Fort Lee, New Jersey, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of conspiring with others to provide services and personnel to ISIL. He remains detained without bail.

“The crimes Samuel Topaz admitted today threatened the safety of Americans here and abroad,” U.S. Attorney Fishman said. “Our efforts to cut off the flow of fighters and resources to known terrorist organizations will not stop with his guilty plea. We have charges pending against his conspirators and remain vigilant against these terrorist operations.”

“Samuel Rahamin Topaz conspired to provide material support to ISIL and sought to travel overseas with others to fight on behalf of the designated foreign terrorist organization,” Assistant Attorney General Carlin said. “Counterterrorism is the National Security Division’s highest priority, and we remain committed to stemming the flow of foreign fighters abroad and bringing to justice those who attempt to provide material support to terrorists.”

“Samuel Topaz admitted to conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL) today in the U.S. District Court of New Jersey,” Special Agent in Charge Frankel said. “Now Topaz will face up to 20 years in prison rather than take up arms overseas. Disrupting recruitment efforts by terrorist organizations and preventing acts of terror remains the FBI’s number one priority, and due to the unflagging efforts of the Newark FBI’s Joint Terrorism Task Force this threat was eliminated. I ask the citizens of New Jersey to remain vigilant and contact the FBI if they see or hear something suspicious.”

According to documents filed in this and related cases and statements made in court:

Topaz admitted that prior to his arrest by the FBI Joint Terrorism Task Force on June 17, 2015, he planned to travel overseas to join ISIL and had saved up money for that purpose.   Topaz discussed plans to join ISIL with Nader Saadeh, Alaa Saadeh, and Munther Omar Saleh, and admitted that at various times each of them indicated that they wanted to join ISIL. Topaz also admitted they all watched ISIL-related videos, some of which depicted the execution of non-Muslims and individuals regarded as apostates from Islam.

On May 5, 2015, Nader Saadeh departed the United States with plans to travel overseas to join ISIL as part of the conspiracy, according to Topaz’s statements in court today. Topaz further admitted that he and others planned to travel overseas separately, meet up with Nader Saadeh, and then travel together to join ISIL. After Nader Saadeh left the United States, Topaz met with Munther Omar Saleh and contacted Alaa Saadeh to discuss those plans.

Topaz admitted knowing that ISIL was a designated terrorist organization and was taking over territory overseas, expelling non-Muslims from their homes, and executing individuals who did not obey ISIL’s commands.

The count of conspiracy to provide material support to a designated foreign terrorist organization carries a maximum potential penalty of 20 years in prison and a fine of $250,000.  Sentencing is scheduled for Nov. 18, 2015.

Topaz’ alleged conspirators are being prosecuted and are currently in federal custody.  Nader Saadeh and Alaa Saadeh have been charged in separate criminal complaints brought by the U.S. Attorney’s Office for the District of New Jersey with conspiring to provide material support to ISIL, among other charges. Munther Omar Saleh has been indicted on terrorism-related charges brought by the U.S. Attorney’s Office for the Eastern District of New York. The charges and allegations against them are merely accusations, and they are presumed innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Frankel in Newark, and the JTTF, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta, and Francisco J. Navarro of the U.S. Attorney’s Office National Security Unit in Newark, with assistance the assistance of Trial Attorney Robert Sander of the National Security Division’s Counterterrorism Section.

Defense counsel: Ian J. Hirsch Esq., Hackensack, New Jersey

NEWARK N.J. – The owner of a Morris County, New Jersey, freight shipping company was sentenced today to 41 months in prison for billing a medical devices and pharmaceutical company more than $3 million for services that were never provided, U.S. Attorney Paul J. Fishman announced.

Courtney P. Shorter, 48, of Roselle, New Jersey, and Memphis, Tennessee, previously pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an information charging him with one count of mail fraud.

According to the documents filed in this case and statements made in court:

Shorter owned Sam Shorter & Son Delivery Service LLC, a freight shipping and trucking company in Long Valley, New Jersey. Company B manufactured and supplied insulated containers to Company A, a medical devices, pharmaceutical and consumer packaged goods manufacturer headquartered in New Brunswick, New Jersey. Company C was a freight invoice processing company headquartered in Fort Myers, Florida, that Company A used to pay trucking companies.

From 2008 through April 2010, Shorter charged Company A for transporting shipments from Company B to Company A when, in fact, those shipments were never made. Shorter admitted that he and others sent Company C more than 1,725 fraudulent invoices for work that was never actually performed. As a result of the invoices, Shorter received $3,039,840 from Company C, which he later deposited into bank accounts he controlled and used for personal expenses, including more than $120,000 in jewelry.

In addition to the prison term, Judge Walls sentenced Shorter to two years of supervised release and ordered to pay $3,039,840 in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to the today’s sentencing.

The government is represented by Assistant U.S. Attorney Lakshmi Srinivasan Herman of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Defense Counsel: Randy P. Davenport Esq. and Steven Brister Esq., Union, New Jersey

NEWARK, N.J. – A New Jersey Transit employee was sentenced today to 36 months in prison for obtaining money from New Jersey Transit vendors to use his official authority and influence to help them get work with New Jersey Transit, U.S. Attorney Paul J. Fishman announced.

William Talerico, 56, of Beachwood, New Jersey, previously pleaded guilty before U.S. District Judge William H. Walls to an information charging one count of affecting commerce by extortion under color of official right. Judge Walls imposed the sentence today in Newark federal court.

According to documents in this case and statements made in court:

From at least around January 2006 to April 2012, Talerico served as a supervisor of stations responsible for overseeing the maintenance and custodial functions for certain New Jersey Transit facilities, including stations on New Jersey Transit’s North Jersey Coast Line and Northeast Corridor.

During this time period, Talerico agreed to accept and accepted corrupt payments in cash from numerous New Jersey Transit vendors. In exchange, Talerico agreed to, and did, exercise official authority and influence to assist the New Jersey Transit vendors with securing work from New Jersey Transit. In addition, Talerico acted as an intermediary through which corrupt payments were given to a New Jersey Transit supervisor. Talerico received more than $70,000, for himself and the supervisor, in corrupt payments of cash and other items of value from these New Jersey Transit vendors.

In addition to the prison term, Judge Walls sentenced Talerico to three years of supervised release and ordered him to pay $54,600 in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and the N.J. State Police, under the direction of Col. Joseph R. Fuentes, for their work in the investigation leading to today’s sentencing. He also thanked the N.J. Attorney General’s Office, under the direction of Acting Attorney General John Hoffman and Elie Honig, Director of the N.J. Division of Criminal Justice, for their work in this investigation.

The government is represented by Assistant U.S. Attorney Mark McCarren of the U.S. Attorney’s Office Special Prosecutions Division in Newark, and Special Assistant U.S. Attorney Michael A. Monahan, the Chief of the Financial and Computer Crimes Bureau, Division of Criminal Justice, in the N.J. Attorney General’s Office.   

Defense counsel: Peter R. Willis Esq., Jersey City, New Jersey

NEWARK, N.J. – The former chief financial officer and chief executive officer of a leading supplier of athletic equipment and reconditioning services were sentenced today for their roles in a conspiracy to defraud schools in New Jersey and elsewhere, U.S. Attorney Paul J. Fishman announced.

Mitchell Kurlander, 57, of Allentown, Pennsylvania, was sentenced to 41 months in prison and his father-in-law, Alan Abeshaus, 83, of Highland Beach, Florida, was sentenced to three years of probation, including nine months of home confinement. Each defendant previously pleaded guilty before U.S. District Judge William H. Walls to one count of mail and wire fraud conspiracy. Judge Walls imposed the sentences today in Newark federal court.

According to documents filed in the case and statements made in court:

Circle System Group Inc. (Circle) sold and reconditioned athletic equipment, uniforms, and apparel. Although its services were marketed nationally, a large portion of Circle’s business focused on middle schools, high schools, colleges, and youth sports programs in New Jersey. Circle’s business depended primarily on a sales force that attempted to maintain relationships with the school officials—including athletic directors, equipment managers, trainers, and coaches—who were responsible for purchasing athletic equipment and reconditioning services on behalf of the schools. Kurlander was the CFO and Abeshaus was the CEO.

From at least 1997 to June 2007, Circle engaged in a number of business practices aimed at defrauding schools, including keeping duplicate payments by schools that should have been returned or credited back to schools, submitting fake quotes to school officials, and submitting fraudulent invoices to schools.

Circle sent invoices and monthly statements of account to schools. Schools often paid both the invoices and statements, paying twice for the same items or services. At the direction of Kurlander and Abeshaus, Circle improperly retained at least $822,000 in overpayments from various schools in New Jersey and elsewhere and converted these overpayments to the personal use and benefit of Abeshaus.  

Circle and its sales staff often would provide multiple price quotes, including some that appeared to come from other companies, to allow schools with requirements to obtain multiple price quotes to justify a contract with Circle. Using quote forms with the letterhead of other companies, Circle administrative staff would prepare fake, higher quotes at the direction of Kurlander and others. Circle submitted numerous such fake quotes to schools in New Jersey and elsewhere during the course of the conspiracy.

As a routine business practice, and to ingratiate Circle with school officials, Kurlander authorized Circle employees to make gifts and donations to schools and school officials, and often would take officials on golf outings and to meals. Kurlander routinely inflated Circle’s invoices for services and goods to those schools to reimburse Circle for these donations and gifts.  Gifts provided by Circle to school officials included computers, digital cameras, flat-screen TVs, golf clubs, leather jackets and other personal apparel.

Circle sometimes also submitted bid packages and price quotations for goods and reconditioning services that were lower than the prices that Circle intended to charge schools. After Circle obtained a school’s business, Circle would, at Kurlander’s direction, garner its desired profits by fraudulently inflating the quantity or nature of the reconditioning work or by fraudulently inflating other invoices to those schools for reconditioning services.

In addition to the prison term, Judge Walls sentenced Kurlander to three years of supervised release, fined him $15,000 and ordered him to pay $1,052,942 in restitution. Abeshaus was fined $250,000, ordered to forfeit $300,000, and pay $1 million in restitution.

Three other individuals previously pleaded guilty to their involvement in the conspiracy.  On Dec. 22, 2008, former Circle president David Drill pleaded guilty to conspiring to defraud, among other Circle customers, various New Jersey schools. Two school officials—former Long Branch High School Athletic Director Charles Ferrara Jr. and former Elizabeth High School official Robert Firestone—pleaded guilty on Nov. 22, 2010, and Jan. 5, 2011, respectively, to participating in the conspiracy. Ferrara and Firestone admitted, among other things, that they received items from Circle for their personal use and directed Circle to fraudulently bill the cost of those items back to their respective schools. Drill is awaiting sentencing before U.S. District Judge Esther Salas. Ferrara was sentenced by U.S. District Judge Jose L. Linares in June 2014 to one year of probation. Firestone was sentenced by U.S. District Judge Claire C. Cecchi in November 2014 to one year of probation.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; and U.S. Department of Education, Office of Inspector General, under the direction of Special Agent in Charge Steven Anderson of the Mid-Atlantic Region and Special Agent in Charge Brian Hickey of the Northeastern Region, with the investigation leading to today’s sentences.

The government is represented by Assistant U.S. Attorney Lee M. Cortes Jr. and Senior Litigation Counsel J Fortier Imbert of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense counsel:

Kurlander: William A. DeStefano Esq., Philadelphia

Abeshaus: Kevin H. Marino Esq., Chatham, New Jersey

CAMDEN, N.J. – A Greeley, South Carolina, woman was sentenced today to seven months in prison for her role in a scheme to traffic multiple firearms into New Jersey, U.S. Attorney Paul J. Fishman announced.

Katelynn Schippnick, 25, previously pleaded guilty before U.S. District Judge Renée Marie Bumb to an information charging her with one count of conspiring to deal firearms without a license. Bumb imposed the sentence today in Camden federal court.

According to documents filed in this case and statements made in court:

Between April 8, 2013, and July 28, 2014, Schippnick conspired with Marcus Rutling, 33, of Camden and Saluda, South Carolina, Anthony Gilmore, 26, of Lawnside, New Jersey, Shawn Tribbett, 33, of Camden, Joseph Rutling, 24, of Camden, and others to illegally sell firearms without a license, including handguns, shotguns and an assault rifle. After other conspirators obtained the firearms from pawn shops, gun stores and other sources in South Carolina, Schippnick brokered and arranged the sale of the firearms and brought them to New Jersey, at times using Amtrak trains to transport the guns. Schippnick assisted in the sale of at least five firearms, including handguns and a shotgun, to a witness cooperating with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

In addition to the prison term, Judge Bumb sentenced Schippnick to serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the ATF, under the direction of Special Agent in Charge George P. Belsky, with the investigation leading to today’s sentencing. He also thanked special agents from the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski, as well as officers from the Winslow Township and Clementon, New Jersey, police departments, for their work in the case.

The government is represented by Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office in Camden.

Defense counsel: Martin Isenberg Esq., Gibbsboro, New Jersey

TRENTON, N.J. - A former New Jersey resident who previously worked for the United States subsidiary of a foreign investment bank was sentenced today to 37 months in prison for orchestrating a scheme to defraud his former employer out of more than $1.5 million, U.S. Attorney Paul J. Fishman announced.

Michael Lieberman, 44, formerly of New Jersey and currently a resident of Huntersville, North Carolina, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of wire fraud for executing a scheme over the course of two years, through which he fraudulently transferred more than $1.5 million from accounts of his former employer to bank accounts he controlled. Judge Cooper imposed the sentenced today in Trenton federal court.

According to documents filed in this case and statements made in court:

Lieberman was employed by “Company A,” a United States-based subsidiary of an international investment bank, in its International Settlements Group in Iselin, New Jersey. Company A engaged in and settled cross-border securities transactions and acted as a settlement agent for similar securities transactions entered into by its broker-dealer clients. Company A’s International Settlements Group was responsible for, among other things, wiring funds to settle various securities transactions.

From June 2012 through May 2014, Lieberman devised a scheme to use his position in the International Settlements Group to initiate more than 50 separate fraudulent wire transfers of Company A’s money, directing the proceeds to bank accounts he either owned or controlled. Lieberman then spent Company A’s money for his own purposes, including purchasing a home in North Carolina, making tens of thousands of dollars in credit card payments and spending hundreds of thousands of dollars on hotels, airplane tickets, home furnishings, restaurant tabs and other expenditures.

Lieberman took various steps to conceal his fraudulent activities, including making fictitious entries in Company A’s bookkeeping system and supplying phony documents to others in order to cause them to make false entries in the company’s books and records reflecting fake profits on non-existent transactions.

In addition to the prison term, Judge Cooper sentenced Lieberman to two years of supervised release, ordered him to pay restitution of $1,640,822 and forfeited his house in North Carolina, which he had purchased with embezzled funds.

U.S. Attorney Fishman credited special agents of the FBI under the direction of Special Agent in Charge Richard M. Frankel in Newark with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Paul Murphy of the U.S. Attorney’s Office’s Economic Crimes Unit, Zach Intrater, Chief of the General Crimes Unit, and Barbara Ward of the Asset Forfeiture and Money Laundering Unit, in Newark.

This arrest is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Defense counsel: Linda Pellegrino Esq., Newton, New Jersey

NEWARK, N.J. – A father and son were arrested this morning for engaging in a scheme that used straw buyers and short sales on two Bergen County properties to defraud mortgage lenders out of hundreds of thousands of dollars, U.S. Attorney Paul J. Fishman announced.

George Bussanich Sr., 56, of Park Ridge, New Jersey, and George Bussanich Jr., 35, of Upper Saddle River, New Jersey, are charged by indictment with one count of conspiracy to commit bank fraud and two counts of bank fraud. They are scheduled to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.  

According to documents filed in this case and statements made in court:

Between 2009 and 2012, Bussanich Sr. and Bussanich Jr. allegedly conspired to defraud mortgage lenders through the sham short sales of two properties located on Jefferson Avenue in Emerson, New Jersey and Lillian Street in Park Ridge.

Bussanich Sr. controlled various purported medical clinics and surgical centers in New Jersey. He recruited his business partner and an employee from a sleep clinic in Cliffside Park, New Jersey, to pose as legitimate, unrelated buyers of the properties. In order to conceal his involvement, Bussanich Sr. used a business entity he controlled to fund each short sale transaction and the subsequent repurchase of those properties. Bussanich Jr., the record owner of both properties, negotiated the short sales with the lenders using materially false information that misrepresented the circumstances of the short sales, the relationships of the parties and the source of funding for the transactions.

Approximately two years after the fraudulent short sales, Bussanich Sr., bought the properties back from the straw purchasers using money that he owed the aforementioned business partner from a prior business venture.

Each count in the indictment carries a maximum of potential penalty of 30 years in prison and a $1 million fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

NEWARK, N.J. - The former treasurer of the North Brunswick Volunteer Fire Department No. 3 (“NBVFD”) today admitted embezzling at least $89,000, U.S. Attorney Paul J. Fishman announced.

Craig J. Snediker, 40, of Monroe Township, New Jersey, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with one count of wire fraud.

According to documents filed in this case and statements made is court:

As NBVFD’s treasurer, Snediker had the authority to deposit and withdraw money from NBVFD’s bank account, which held public funds and private donations. Snediker admitted that from March 25, 2014 through May 19, 2015, he used ATM machines at banks in Middlesex County, New Jersey, to access the funds for his personal expenses. He later concealed his actions by misrepresenting the account balance to the Township of North Brunswick. Overall, Snediker admitted that he withdrew between $89,000 and $92,986 without NBVFD’s authorization.

The wire fraud charge to which Snediker pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Dec. 15, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney José R. Almonte of the U.S. Attorney’s Office’s Special Prosecutions Division.

Defense counsel:  Robert C. Scrivo Esq., Morristown

TRENTON, N.J. – The former assistant division administrator of the Federal Highway Administration (FHWA), New Jersey Division, was sentenced today to 21 months in prison for using a straw company to fraudulently obtain grant funds, U.S. Attorney Paul J. Fishman announced.

Lawrence F. Cullari Jr., 43, of Tinton Falls, New Jersey, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with one count of mail fraud. Judge Sheridan imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

Cullari was the assistant division administrator at the FHWA’s New Jersey Division from 2010 through July 2013 and was able to influence the allocation of U.S. Department of Transportation funding. He also operated a private consulting and engineering company called Dencore Consulting, which was owned by his ex-wife. His former father-in-law owned and operated “Company 1,” an engineering company located in Middletown, New Jersey, that provided mechanical, plumbing and electrical designs for commercial and residential projects.

Cullari admitted that in 2006, he and his father-in-law agreed to use Company 1 as a straw contractor to get FHWA-funded work for Dencore Consulting from Rutgers University’s Center for Advanced Infrastructure and Transportation (Rutgers CAIT) and the N.J. Institute of Technology (NJIT). From May 2006 through June 2013, Cullari prepared bids and work proposals for Company 1 to sign and submit to Rutgers CAIT and NJIT. When Rutgers CAIT or NJIT awarded the projects to Company 1, Cullari arranged for the completion of engineering reports and invoices that fraudulently stated that Company 1 completed the work. After Rutgers CAIT or NJIT paid Company 1, its owner kept a small portion of the payment and wrote a check to Dencore Consulting for the remaining balance.   

In addition to the prison term, Judge Sheridan sentenced Cullari to three years of supervised release and fined him $20,000.

U.S. Attorney Fishman credited special agents of the U.S. Department of Transportation, Office of the Inspector General, under the direction of Regional Special Agent in Charge Douglas Shoemaker, and the N.J. Department of Transportation, Office of the Inspector General, for the investigation leading to today’s sentencing.      

The government is represented by Assistant U.S. Attorney Scott B. McBride, Deputy Chief of the U.S. Attorney’s Office’s Economic Crimes Unit. 

Defense counsel: Bradley L. Henry Esq., New York

TRENTON, N.J. – A California man today admitted shipping large quantities of cocaine from California to a drug trafficking organization that operated in Ocean and Monmouth Counties and elsewhere in New Jersey, U.S. Attorney Paul J. Fishman announced.

Marlon Ramos, 31, of Redlands, California, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with one count of conspiracy to distribute heroin and cocaine.  

In March 2014, 21 other alleged members of the drug trafficking organization to which Ramos supplied narcotics were charged by criminal complaint with conspiring to distribute heroin. The complaint referred to the drug trafficking organization as the “Britt-Young DTO,” after its leaders, Robert Britt, a/k/a “True,” and Rufus Young, a/k/a “Equan,” a/k/a “E-Money,” a/k/a “Kintock.”  Of those 21 individuals, 18 have pleaded guilty.  

According to documents filed in this case and statements made in court:

Between November 2013 and March 2014, Ramos conspired with others, including Thomas Shannon, a/k/a “Cuzzo,” 36, of Jersey City, New Jersey, one of the Britt-Young DTO’s primary heroin suppliers, to ship large quantities of heroin and cocaine from California to New Jersey. Afterwards, New Jersey conspirators re-packaged the narcotics for distribution to others, including members of the Britt-Young DTO, and deposited cash into bank accounts provided by the California suppliers. Ramos admitted today that he used a bank account in his own name to receive payments. He also admitted shipping at least one kilogram of cocaine as part of the conspiracy.   

The conspiracy charge to which Ramos pleaded guilty carries a maximum potential penalty of 40 years in prison and a $5 million fine. Sentencing is scheduled for Dec. 17, 2015.

On June 5, 2015, Shannon was charged by indictment with narcotics distribution, illegal possession and use of firearms, and transacting in criminal proceeds. The charges against him are merely accusations and he is considered innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney Nicholas Grippo of the U.S. Attorney’s Office Criminal Division in Newark.

Defense Counsel: David Bahuriak Esq., Philadelphia

NEWARK, N.J. - A California CPA today admitted abusing his positions at a worship center in New Jersey and a non-profit in California to steal more than $4 million, U.S. Attorney Paul J. Fishman announced.

Donald Gridiron, 51, of Pomona, California, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with one count of wire fraud and one count of filing a false tax return.

According to documents filed in the case and statements made in court:

A religious facility located in Rahway, New Jersey, hired Gridiron based, in part, on his connections with individuals in the religious community as well as his standing within that community. The religious facility agreed to pay Gridiron a monthly salary and reimburse him for reasonable expenses related to his work. In addition, Gridiron was the treasurer for a non-profit entity registered in California.

Gridiron used his employment with the worship center and his status with the non-profit to illegally syphon money without their consent or authorization. In total, Gridiron transferred more than $4 million to accounts he controlled. Gridiron then used the funds for his own use, including mortgage payments, luxury car payments and gambling expenses. Gridiron also failed to report this income on his tax returns, including $950,000 he stole during the 2011 tax year.

The charge of wire fraud is punishable by a maximum potential penalty of 20 years in prison and $250,000 fine, or twice the gross gain or loss from the offense. The charge of filing a false tax return is punishable by a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is scheduled for Dec. 14, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and law enforcement officers of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Defense counsel: Candace Hom Esq., Newark, New Jersey

NEWARK, N.J. - An Alexandria, Virginia, man was sentenced today to 24 months in prison for his role in a multi-state scheme to unlawfully obtain driver’s licenses for illegal aliens, U.S. Attorney Paul J. Fishman announced.

Ho-Man Lee, 43, previously pleaded guilty before U.S. Magistrate Judge James B. Clark III to Count One of a superseding indictment charging him with conspiring to unlawfully produce identification documents. U.S. District Judge Kevin McNulty imposed the sentence today in Newark federal court. 

According to documents filed in this case and statements made in court:

Young-Kyu Park, 59, also known as “Oscar,” a former resident of Fort Lee, New Jersey, and later a resident of Los Angeles, was the leader of a criminal enterprise that operated in New Jersey, California, Nevada and Virginia (the “Park Criminal Enterprise”).  The Park Criminal Enterprise provided a range of illicit services to individuals who were residing illegally in the United States, including obtaining driver’s licenses. In furtherance of the scheme, Park maintained a network of brokers in various states who helped illegal residents obtain driver’s licenses. Lee was Park’s Virginia broker.

The Park Criminal Enterprise illegally obtained driver’s licenses genuinely issued by New Jersey, New York, Virginia, Nevada, and elsewhere. To do so, it obtained, created and counterfeited a variety of documents and sold them to customers. Conspirators also escorted customers to various state motor vehicle agencies and coached them on obtaining licenses. Customers typically paid the Park Criminal Enterprise $3,000 to $4,500 for the unlawful services.

Park fraudulently obtained and sold genuine I-797 forms used by the federal government B including the U.S. Citizenship and Immigration Services (“USCIS”), a division of the Department of Homeland Security B to communicate with others or convey an immigration benefit. State agencies that issue driver’s licenses rely on the forms to verify the authenticity of an applicant’s foreign passport and to verify the applicant’s lawful presence in the United States.

Park obtained blank I-797 forms from Martin Trejo, 48, of Rialto, California, a former USCIS employee who stole batches of the forms. After obtaining the stolen forms, Park and other conspirators used a computer to print a customer’s information on the form. The Park Criminal Enterprise also altered and counterfeited other immigration documents, including passports, and created and provided fictitious documents to customers B such as fictitious utility bills and bank statements used to establish residency requirements.

Lee worked in northern New Jersey as Park’s Virginia broker. In exchange for cash, Lee met with customers, provided them with the fraudulent documents, including the fraudulent I-797 forms, and then escorted them to Virginia Department of Motor Vehicle offices to obtain licenses. Afterwards, Lee deposited the funds into bank accounts controlled by Park and kept a portion for his services.

In addition to the prison term, Judge McNulty sentenced Lee to three years of supervised release.

Park was sentenced to 72 months in prison on Jan. 8, 2015. Trejo was sentenced to 26 months in prison on Sept. 17, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Kevin Kelly; the Department of Homeland Security, Office of Inspector General, Special Agent in Charge Gregory K. Null of the Philadelphia field office; and U.S. Citizenship and Immigration Services, under the direction of New Jersey District Director John E. Thompson, with the investigation leading to today’s sentencing.

U.S. Attorney Fishman noted the work of the N.J. Motor Vehicle Commission, under the direction of Chief Administrator Raymond P. Martinez; the Bergen County Prosecutor=s Office, under the direction of Prosecutor John L. Molinelli; and the N.J. State Police, under the direction of Colonel Joseph R. Fuentes, for their assistance.

He also thanked the FBI field offices in Los Angeles, Las Vegas, New York, Atlanta, and Richmond, Va., as well as U.S. Attorney's Offices for the District of Nevada and the Central District of California for their support.

The government is represented by Assistant U.S. Attorneys Anthony Moscato and David M. Eskew of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Paul Brickfield Esq., River Edge, New Jersey, and Joseph Horn Esq., Ridgefield Park, New Jersey

NEWARK, N.J. – A Englewood Cliffs, New Jersey, man today admitted using bogus litigation support companies to obtain millions from two law firms where his wife was a partner, U.S. Attorney Paul J. Fishman announced.

Melvin Feliz, 48, of Englewood Cliffs, New Jersey, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of tax evasion.

According to documents filed in the case and statements made in court:

Feliz’s wife, Keila Ravelo, 49, also of Englewood Cliffs, worked as a partner at Law Firm 1 from July 1, 2005 through October 2010. She then joined Law Firm 2 as a partner and worked there from October 2010 through November 2014. Feliz admitted that during that time, Feliz and Ravelo formed two limited liability companies, Vendor 1 and Vendor 2, that purported to provide litigation support for both firms, but in fact provided no actual services.

Feliz admitted that from 2008 through July 2014, he and Ravelo controlled the Vendor 1 and Vendor 2 bank accounts and submitted invoices to Law Firm 1, Law Firm 2 and a client of both firms for work that was never performed. Ravelo, in her capacity as a partner at the law firms, approved payments to Vendor 1 and Vendor 2 that Ravelo and Feliz later used for personal expenses.

Over the course of the conspiracy, the law firms paid Vendor 1 and Vendor 2 a combined total of approximately $7.8 million. Feliz admitted that he failed to report the income on his tax returns, including nearly $2,360,000 in illicit profits from 2012 alone.

The charge of conspiracy to commit wire fraud is punishable by a maximum potential penalty of 20 years in prison and $250,000 fine, or twice the gross gain or loss from the offense.  The tax evasion charge is punishable by a maximum potential penalty of five years in prison and $250,000 fine. Sentencing is scheduled for Dec. 14, 2015.

Charges against Ravelo are merely accusations and are still pending. She is considered innocent unless and until proven guilty.

U.S. Attorney Fishman credited law enforcement officers of the Drug Enforcement Administration, Newark Division, under the direction of Special Agent in Charge Carl Kotowski, and law enforcement officers of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorneys Andrew Kogan, Brian Urbano and Ronnell Wilson of the U.S. Attorney’s Office Criminal Division; Barbara Ward, Chief of the office’s Asset Forfeiture and Money Laundering Unit; and Assistant U.S. Attorney David Foster of the U.S. Attorney’s Office Special Prosecution’s Division in Newark.

Defense counsel: Jason Orlando Esq., Jersey City, New Jersey

Melvin Feliz