District of New Jersey

CAMDEN, N.J. – A Palmyra, New Jersey, man was sentenced today to 108 months in prison for using a computer in his home to distribute images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Donald Kivel, 38, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with one count of receiving child pornography. Judge Rodriguez imposed the sentence today in Camden federal court.

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

Kivel admitted downloading images of child pornography that were available for distribution using peer-to-peer sharing software using a computer in his residence in June and July 2011. He also admitted to possessing more than 600 images of child pornography on his computer, which was seized from his residence July 15, 2011.  Kivel acknowledged that among the images he possessed and distributed were images which depicted minors posing in a sexually explicit manner, images of child pornography involving children under the age of 12, and images that portrayed sadistic and/or masochistic conduct or other images of violence.

In addition to the prison term, Judge Rodriguez sentenced Kivel to serve 10 years of supervised release and ordered him to pay restitution of $19,980.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s sentencing.

The government is represented by Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.

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Defense counsel: Maggie Moy Esq., Assistant Federal Public Defender, Camden

TRENTON, N.J. – A New York man today admitted participating in armed robberies of electronics stores in New Jersey, including armed robberies in Linden, Paramus, and Woodbridge, U.S. Attorney Paul J. Fishman announced.

Eric Williams, 34, of Brooklyn, New York, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to a superseding information that charged him with one count of conspiracy to commit Hobbs Act robberies.

Williams was arrested on Feb. 14, 2013, and charged in a superseding indictment — along with Carl Williams, 31, and Unique Randolph, 28, both of Brooklyn – in connection with several armed robberies of electronic stores in New Jersey. Eric Williams has been in custody since his arrest.

According to documents filed in this case and statements made in court: On Sept. 20, 2012, Carl Williams and Leonard Arrington, 28, of Roslyn Heights, New York, walked into a T-Mobile store in Linden brandishing a firearm, while Eric Williams and other conspirators served as lookouts and get-away drivers. Carl Williams and Arrington then tied up the employees in the back of the store, stole 50 to 60 cell phones and fled in a Land Rover. Eric Williams and other conspirators then delivered the stolen phones to a cell phone store in Brooklyn.

On Oct. 2, 2012, Arrington entered a T-Mobile store in Woodbridge, brandishing a firearm, along with another man. After locking the front door, the men took the employees to the back of the store and tied them up, then stole approximately 40 cell phones. One of the robbers then called the getaway driver, who drove them away in a Land Rover. Eric Williams and others delivered the stolen phones to the same Brooklyn store.

Eric Williams participated in the planning of a subsequent robbery of an electronics store in Paramus, which took place on Jan. 16, 2013. Randolph and another individual entered an electronics store and, after forcing employees and a customer into the back of the store, Randolph tied them up using zip-ties, while his conspirator held them at gunpoint. As Randolph and his conspirator were looting the store of cell phones, a UPS employee walked into the backroom.  Randolph forced him onto the ground and used zip-ties to tie him up. Randolph and his conspirator then fled, along with Carl Williams who was waiting outside as a lookout.

The charge of conspiracy to commit Hobbs Act robberies carries a maximum potential penalty of 20 years in prison and a maximum fine of $250,000. Carl Williams, Arrington and Randolph have previously pleaded guilty.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s guilty plea. He also thanked the Linden, Paramus, and Woodbridge police departments, as well as the New York City and Nassau County police departments and the Kings County District Attorney’s Office in New York for their work in this case.

The government is represented by Assistant U.S. Attorney Osmar J. Benvenuto of the U.S. Attorney’s Office Criminal Division.

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Defense counsel: Carl Williams: Mark A. Berman Esq., River Edge, N.J.
Eric Williams: Michael A. Armstrong Esq., Willingboro, N.J.
Unique Randolph: Damian P. Conforti Esq., Newark
Leonard Arrington: Dennis S. Cleary Esq., Newark

CAMDEN, N.J. - An Atlantic City, New Jersey, man was sentenced today to 120 months in prison for engaging in a conspiracy to distribute heroin with Mykal Derry, a leader of the “Dirty Block” criminal street gang that allegedly used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City, U.S. Attorney Paul J. Fishman announced.

Aree Toulson, a/k/a “Beyah,” a/k/a “Beyeazz,” 26, previously pleaded guilty before U.S. District Judge Joseph E. Irenas to a superseding information charging him with one count of conspiracy to distribute and to possess with intent to distribute, and to distribute and to possess with intent to distribute within 1,000 feet of public housing, 100 grams or more of heroin. Judge Irenas imposed the sentence today in Camden federal court.

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

Toulson acted as a distributor on behalf of Mykal Derry, 34, of Atlantic City, helping Dirty Block distribute heroin in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court and Cedar Court in Atlantic City.

Toulson was arrested on March 26, 2013. He and others travelled with Mykal Derry to a shooting range in Lakewood, New Jersey, on Oct. 18, 2012, where Toulson – a previously convicted felon – used, possessed, and discharged a firearm.  According to filed documents, members of the group also participated in a violent altercation with rival drug traffickers at an Atlantic City casino in December 2012.

In addition to the prison term, Judge Irenas sentenced Toulson to serve eight years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang (Safe Streets) Task Force, with the investigation leading to today’s sentencing.

He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Northfield Police Department; the Vineland Police Department; the Brigantine Police Department; the Millville Police Department; the Mullica Township Police Department; the South Jersey Transportation Authority; and the U.S. Secret Service for their contributions.

The government is represented by Assistant U.S. Attorneys Patrick Askin and Justin Danilewitz of the U.S. Attorney’s Office in Camden and Special Assistant U.S. Attorney Edmund Burgos of the Atlantic County Prosecutor’s Office.

The charges and allegations against Derry are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

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Defense counsel:  Paul George Esq., Philadelphia

NEWARK, N.J. – A Belvidere, New Jersey, man today admitted he concealed a mortgage fraud scheme carried out by his wife, a former real estate title agent, in which they obtained seven loans, totaling more than $3.7 million, on two properties located in Belvidere and Wood-Ridge, New Jersey, U.S. Attorney Paul J. Fishman announced.

Zbigniew Cichy, 45, pleaded guilty before U.S. District Judge Stanley R. Chesler to a superseding information charging him with one count of misprision of felony.

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

Cichy owned and operated Global Builders LLC, a construction company. His wife, Ania Nowak, 48, also of Belvidere, was the owner and operator of A.N. Title Agency LLC and was an agent for Stewart Title Guaranty Company.

Nowak obtained seven mortgage loans through fraudulent means, including: an April 2005 loan for her sham sale of the Wood-Ridge property to Cichy; Cichy’s November 2005 refinancing loan on the Wood-Ridge property; a 2005 construction loan to build a house on the Belvidere property owned by Cichy; Cichy’s August 2006 loan on the Belvidere property; May 2007 loans for Cichy’s sham sale of the Belvidere property to another conspirator in the scheme, Kim Salvemini, 60, of Wallington, New Jersey; Salvemini’s May 2007 refinancing loan on the Belvidere property; and Cichy’s November 2007 refinancing loan on the Belvidere property. Nowak admitted that, for each of the seven loans, she lied on loan documents, failed to pay off prior mortgages at closing, failed to record the mortgages and any deeds and that most of the loans went into default for non-payment.

Cichy admitted that although he was aware of the mortgage fraud scheme, including Nowak’s failure to pay off existing liens at closing, he failed to report the fraudulent mortgage transactions to authorities. Instead, Cichy took steps to conceal the scheme by making mortgage payments on a number of the fraudulent loans out of his personal and business accounts to prevent foreclosure and thereby conceal from lenders that the loans had been obtained through fraud. Cichy also admitted to lying on certain loan documents that were used in furtherance of the scheme.

The charge of misprision of felony to which Cichy pleaded guilty carries a maximum penalty of three years in prison and a fine of $250,000, or twice the gross gain or loss resulting from the offense. Sentencing is scheduled for May 5, 2015.

Nowak pleaded guilty on Jan. 15, 2015, and is also scheduled to be sentenced May 5, 2015.  Salvemini previously pleaded guilty to her role in the scheme and awaits sentencing.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu and Senior Litigation Counsel Leslie F. Schwartz of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark.

Today’s guilty plea 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.

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Defense counsel:  Carl J. Herman Esq., West Orange, New Jersey

NEWARK, N.J. – A Hudson County, New Jersey, man was arrested today and charged with violating a defendant’s civil rights by using excessive force during an arrest that took place in Bayonne, New Jersey, as well as falsifying records in an attempt to conceal the alleged crime, Attorney Paul J. Fishman announced.

Police Officer Domenico Lillo, 44, of Bayonne, New Jersey, was arrested by federal agents this morning and after a federal grand jury in Newark returned an indictment charging him with the deprivation of civil rights under color of law and falsification of records. Lillo had his initial appearance and arraignment before U.S. Magistrate Judge James B. Clark III in Newark federal court. He was released on $100,000 unsecured bond.

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 allegedly struck the subject of the warrant with a flashlight while the individual was handcuffed and not resisting arrest, which resulted in bodily injury. Lillo allegedly falsified a Bayonne Police Department Use of Force Report related to the arrest with the intent to impede an investigation into the case.

The use of excessive force count with which Lillo is charged carries a maximum penalty of 10 years in prison. The charge of falsifying records carries a maximum penalty of 20 years in prison.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford 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 continuing investigation leading to today’s arrest.

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.

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

NEWARK, N.J. – A former contractor of the Newark Watershed Conservation and Development Corporation (NWCDC) today admitted his role in a bribery and kickback scheme involving an employee and consultant of the NWCDC, U.S. Attorney Paul J. Fishman announced.

James Porter, 78, of East Orange, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiring with Donald Bernard Sr., a former employee and consultant of the NWCDC, and others, to defraud the NWCDC and one count of tax evasion.

According to documents filed in this case and statements made in court: Between October 2008 and April 2013, Porter conspired with Bernard to provide Bernard and others with a stream of concealed, undisclosed kickbacks in exchange for Bernard’s assistance in securing business opportunities and payments to two companies operated by Porter: Jim P. Enterprises LLC (JPE) and New Beginnings Environmental Services (NBES), a company in which Bernard was also a partner. Both JPE and NBES purported to perform landscaping, snow removal, clean-up and sign posting services to the NWCDC from 2008 through 2013. JPE received payments from the NWCDC totaling more than $500,000 and NBES received approximately $290,000 from the NWCDC.  Both companies submitted invoices to the NWCDC that were fraudulently inflated to cover kickback payments to Bernard and billed for some services, such as landscaping and snow removal, which were never performed. 

Porter passed a stream of kickback payments to Bernard totaling more than $500,000, which was funded by the proceeds JPE and NBES obtained from the NWCDC, including cash withdrawn from the bank accounts of JPE and NBES totaling $378,867; Bernard’s use of an ATM card issued in his name to withdraw at least $74,681 directly from the NBES bank account; Bernard’s use of the NBES ATM card issued in Bernard’s name to pay personal expenses of nearly $5,000; and checks written from the accounts of JPE and NBES totaling $41,650, which were made payable to Bernard, or to companies he controlled, including a consulting company, Bernard & Associates, and the African American Heritage Parade Committee (AAHPC).

In August 2012, Porter also accepted a $5,000 check payable to JPE from Essex Home Improvements, another contractor of the NWCDC for work that was never performed, and delivered the proceeds to Bernard. The payment from Essex Home Improvements was provided to JPE, rather than to Bernard directly, as a means of concealing a kickback from Essex Home Improvements to Bernard.  Bernard and Giacomo DeRosa, 58, a Clinton Township, New Jersey contractor, have been charged in separate indictments and are awaiting trial.

From 2009 to 2012, Porter failed to report income of $767,750 from the proceeds that JPE and NBES received from the NWCDC. Porter also pleaded guilty today to intentionally underreporting income for the 2012 tax year on his personal tax return by $151,603, resulting in tax due and owing of $48,971.
The conspiracy to defraud count and the tax evasion count to which Porter pleaded guilty each carry a maximum potential penalty of five years in prison and a fine of either $250,000 or twice the gain or loss from the offenses. The government is also seeking forfeiture of $573,333. Sentencing is scheduled for May 12, 2015.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford; special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the Office of Inspector General, U.S. Department of Housing and Urban Development, under the direction of Special Agent in Charge Christina Scaringi, as well as criminal investigators of the U.S. Attorney’s Office, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Jacques S. Pierre and Mala Ahuja Harker of the U.S. Attorney’s Office Special Prosecutions Division.

The charges and allegations in the indictment against Bernard and DeRosa are merely accusations, and the defendants are considered innocent unless and until proven guilty.

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Defense counsel:  Anthony Mack Esq., Newark         

TRENTON, N.J. – A regional manager selling medical devices to hospitals for Integra LifeSciences Corp. of Plainsboro, New Jersey, was sentenced to prison today for his role in a scheme to defraud hospitals of more than $800,000, U.S. Attorney Paul J. Fishman announced.

Daniel Metz, 34, of Fairfield, New Jersey, was sentenced to nine months in prison and nine months of home confinement. Charles B. Carey Jr., 35, of Clark, New Jersey, whose cooperation led to Metz’ conviction, was sentenced to three years of probation. Metz and Carey previously pleaded guilty before U.S. District Judge Joel A. Pisano to separate informations charging them with conspiracy to commit wire fraud. Judge Pisano imposed the sentences today in Trenton federal court.

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

Integra is a provider of orthopedic products, including devices and implants for the spine, foot and ankle, hand and wrist, and shoulder and elbow. Metz worked there from July 2005 until his termination in April 2013, first as a product specialist (also referred to as a sales representative) and then as Northeast regional manager, supervising 16 product specialists and assistant sales representatives in Massachusetts, New Jersey, New York, and Pennsylvania.  Carey was a product specialist, reporting to Metz, from January 2009 until he resigned in April 2011.

Product specialists at Integra were responsible for calling on surgeons to increase sales volume and were routinely present during surgeries. When present during surgeries, product specialists brought with them consignment trays with pre-packaged Integra products available to surgeons, as well as surgery-specific products. Integra billed the hospitals and surgery centers for the products used and product specialists (and their supervisors) were compensated based on salary, sales target-based commission and bonuses.

Metz admitted he used various fraudulent methods to overcharge hospitals and surgery centers. He would sometimes charge for a greater quantity or a more expensive product than was actually used, increasing his compensation and improving his employment evaluations.

Metz and Carey admitted that after Metz became regional manager, he taught at least some of the fraudulent methods to product specialists working for him, including Carey, who sometimes employed those methods.

Metz and Carey fraudulently caused medical facilities to pay more than $800,000 in inflated bills.

In addition to the prison term and home confinement, Judge Pisano sentenced Metz three years of supervised release. As part of their plea agreements, Metz and Carey will forfeit $100,000 and $77,000, respectively, representing the amounts of money they personally made through the fraud scheme. The defrauded hospitals have been reimbursed by Integra for the fraudulent charges.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation. He also thanked detectives of the Morris County Prosecutor’s Office, under the direction of Prosecutor Fredric M. Knapp, for their contributions to the investigation.

The government is represented by Jacob T. Elberg, Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, in Newark.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office 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.

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Defense counsel: Metz: Lawrence Lustberg Esq., Newark
Carey: Timothy Donohue Esq., West Orange, N.J.

TRENTON, N.J. – The developer of three Trenton affordable housing projects was sentenced today to 27 months in prison for making false statements to a financial institution to divert project money for personal and other unauthorized purposes, and to conducting a transaction with the proceeds of this crime, U.S. Attorney Paul J. Fishman announced.

Robert Kahan, 69, of Sunny Isles Beach, Florida, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to two counts of an indictment charging him with making false statements in a loan application (Count 8) and to transacting in criminal proceeds that resulted from those false statements (Count 12). Judge Sheridan imposed the sentence today in Trenton federal court.

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

Between 2006 and 2009, Kahan was a developer of three affordable housing projects in Trenton – the Canal Plaza Homeownership Project, the Southwest Village II Project and the Catherine S. Graham Project – for which he obtained both private and public funding.

The Southwest Village II Project was a project to construct 52 affordable housing units. Kahan diverted substantial portions of the project’s financing from a $6,435,000 construction loan from Roma Bank to his own personal use, his other development projects and other uses that were outside of the project budget. In October 2008, Kahan diverted $343,354 of Southwest Village II project financing and applied it as a down payment to purchase a Florida condominium. In numerous payment applications made to the loan administrator for the project financing requesting advances of loan and subsidy money, Kahan falsely stated that all money that he was previously paid had been used to pay costs for labor, materials and other obligations for the Southwest Village II Project.

In addition to the prison term, Judge Sheridan sentenced Kahan to four years of supervised release. Under terms of the plea agreement, Kahan must forfeit $989,901 in criminal proceeds.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Christina Scaringi, Special Agent in Charge, Northeast Region, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Eric Moran in Trenton and Senior Litigation Counsel Mark J. McCarren in Newark, both of the U.S. Attorney’s Office Special Prosecutions Division.

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Defendant Must Also Pay $900,000 in Forfeiture and Civil Damages

NEWARK, N.J. – A doctor with offices in Newark, Union City, Paterson and Passaic today admitted his role in a three-year scheme to bill Medicare for services that were not provided and services provided by unlicensed and unsupervised providers, U.S. Attorney Paul J. Fishman announced.

Benjamin Sabido, 62, of Franklin Lakes, N.J., pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an information charging him with health care fraud.

According to documents filed in this case, statements made in court and the civil settlement agreement:

From at least December 2006 through April 2010, Sabido received $237,182 from Medicare and Medicaid based upon fraudulent claims. He instructed staff to submit bills for physical therapy services that were not in fact provided. He authorized and encouraged unqualified staff members to provide physical therapy services, including electrical stimulation, massage, and other therapeutic services. During the time period of the scheme, Sabido did not employ any licensed physical therapists, nor anyone otherwise qualified to provide physical therapy services.

The count of health care fraud to which Sabido pleaded guilty carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.  Sentencing is scheduled for May 14, 2015.

Sabido will pay $700,545, plus interest, to resolve allegations arising from Sabido’s submission of claims for physical therapy and nerve conduction studies. From December 2006 to December 2010, Sabido submitted to Medicare and Medicaid claims for physical therapy services that were rendered because the patients wanted these services and not necessarily because they benefited from them, were not provided pursuant to a plan of care, were not properly supervised, or were not provided by qualified personnel. The settlement alleges that from January 2006 through December 2010, Sabido submitted to Medicare claims for nerve conduction studies for which Sabido’s patient charts do not establish that the services were medically necessary or, in some cases, even rendered. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.

U.S. Attorney Fishman credited special agents of the Department of Health and Human Services Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to today’s guilty plea.

The government is represented in the criminal case by Assistant U.S. Attorney Joseph Mack, Deputy Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, and in the civil settlement by Assistant U.S. Attorney Charles Graybow of the Health Care and Government Fraud Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office 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 $625 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Federal Food, Drug and Cosmetic Act and other statutes.

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Defense counsel: John A. Azzarello Esq., Chatham, N.J.

TRENTON, N.J. – A Monmouth County, New Jersey, man was sentenced today to 276 months in prison for his involvement in a 24-hour crime spree in five separate shore-area towns that involved the shooting of a cab driver and a number of armed robberies, U.S. Attorney Paul J. Fishman announced.

Quam Wilson, 24, of Neptune, New Jersey, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to the first two counts of an indictment charging him with committing a Hobbs Act robbery and using a firearm during the commission of that robbery. Judge Sheridan imposed the sentence today in Trenton federal court.

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

Wilson engaged in a crime spree that began at approximately 5:00 a.m. on Nov. 13, 2012, when he robbed a cab driver in Asbury Park. The driver was shot during the robbery. The victim, who survived, sustained a single gunshot wound to the head and was taken to Jersey Shore University Medical Center. During the plea hearing, Wilson admitted he took the cab driver’s identification, taxi keys and debit card during the robbery.

After robbing the taxi driver, Wilson proceeded to a Shell gas station located in Ocean Township. There, he approached a gas station attendant and, while brandishing a handgun, robbed him of cash and fled the area. Later that morning, Wilson attempted to obtain money from the cab driver’s bank account from several area banks. Suspecting that a theft was taking place, a bank employee confiscated the identification and debit card from Wilson and contacted police.  At approximately 9:00 p.m., that same day, he committed an armed robbery at a taxi stand in Long Branch, again while brandishing a handgun.

During the early morning hours of the next day, Nov. 14, 2012, Wilson robbed an Exxon gas station in Red Bank at gunpoint. A short time later, Wilson entered a Quick Check convenience store in Neptune Township. Again, he pointed a handgun at a cashier and demanded money. Wilson was arrested at approximately 10:00 p.m. later that day by several police officers in Asbury Park, where he had been hiding in an attic.

In addition to the prison term, Judge Sheridan sentenced Wilson to serve five years of supervised release. Restitution will be determined at a later date. Wilson’s sentence will be served consecutively to a state prison term he is currently serving. He was sentenced on March 14, 2014, to eight years in state prison with a four- year period of parole ineligibility.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in George Belsky, with the investigation leading to today’s sentencing. He also thanked the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, Asbury Park Police Department, Ocean Township Police Department, Long Branch Police Department, Neptune Township Police Department and the United States Marshals Service N.Y. /N.J. Regional Fugitive Task Force for their assistance.

The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office in Trenton, and Special Assistant U.S. Attorney Jacquelynn Seely from the Monmouth County Prosecutor’s Office.

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TRENTON, N.J. – An Ocean County, New Jersey, attorney was sentenced today to 46 months in prison for his role in a scheme that defrauded investors in connection with a Facebook IPO and several real estate deals, U.S. Attorney Paul J. Fishman announced.
 
Fred Todd, 61, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of transacting in criminal proceeds.

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

Todd is an attorney with offices in Seaside Heights, New Jersey, and Los Angeles, California. His two co-defendants, Eliyahu Weinstein, 39, of Lakewood, and Aaron Glucksman, 41, of Brooklyn, New York, have already pleaded guilty to charges related to their roles in the scheme.

Weinstein, already convicted and sentenced to 22 years in prison in a separate Ponzi scheme, pleaded guilty on Sept. 3, 2014, to three counts of an indictment pending against him: one count of conspiracy to commit wire fraud, one count of committing wire fraud while on pretrial release, and one count of money laundering. He was sentenced on Dec. 15, 2014, on those charges to an additional two years in prison.

Glucksman has also pleaded guilty and was sentenced by Judge Pisano on May 5, 2014, to 52 months in prison, three years of supervised release, and ordered him to forfeit $1.2 million. Judge Pisano ordered Glucksman’s sentence to run partially concurrently with a 36-month sentence recently imposed by U.S. District Judge Raymond J. Dearie of the Eastern District of New York in an unrelated case.

In February 2012, Todd and his conspirators offered a pair of investors (referred to in the information as the “Facebook victims”) the opportunity to purchase large blocks of Facebook shares prior to the company’s initial public offering, or IPO, in May 2012. The offer was particularly attractive because large blocks of the shares were extremely difficult to get and were expected to increase in value at the time of the IPO. Weinstein and his conspirators did not actually have access to the shares.

Based on misrepresentations by the conspirators, the Facebook victims wired millions of dollars between February and March of 2012 to an account Weinstein and a conspirator controlled. Weinstein and another conspirator provided investors with false documents showing companies owned by various conspirators held assets, which would secure the Facebook victims’ investment.

The conspirators did not use any of the Facebook victims’ money to purchase Facebook shares, instead misappropriating it for their own use.

Around the same time, Todd and his conspirators also persuaded victims to invest in the purported purchase of an apartment complex in Florida. They told the victims that Weinstein had the opportunity to purchase the notes on the condominiums at a discounted price and immediately flip it at a substantial profit. The victims wired money to complete the purchase, but Todd and his conspirators instead used the money for their own purposes.

In addition to the prison term, Judge Pisano sentenced Todd to three years of supervised release and ordered him to pay restitution of $6.53 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty plea. He also thanked agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for their role in the investigation.

The government is represented by Counsel to the U.S. Attorney Rachael A. Honig; Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Zach Intrater of the Economic Crimes Unit.

This case was brought in coordination with President Barack 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.

15-025                                                          

Defense counsel: James Filan Esq., Westport, Conn.

Todd, Fred Information

NEWARK, N.J. – A North Carolina man was sentenced today to three years of probation and ordered to pay more than $750,000 in restitution for role in one of the nation’s largest and longest running stolen identity refund fraud schemes ever prosecuted, U.S. Attorney Paul J. Fishman announced.

Luis Martinez, 49, of Matthews, N.C., previously pleaded guilty before U.S. District Judge Claire C. Cecchi, to an information charging him with conspiracy to defraud the United States and theft of government property. The conspiracy caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds and resulted in losses to the United States of more than $12 million.

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

Stolen Identity Refund Fraud (SIRF) is a common type of fraud that results in over $2 billion in losses annually to the U.S. Treasury. 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, who often reside in the Commonwealth of Puerto Rico;
• SIRF participants complete Individual Income Tax Return 1040 Forms using the fraudulently-obtained information, and falsifying wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 form are entitled to tax refunds – when in fact, the various tax withholdings indicated have not been paid and no refunds are due;
• SIRF perpetrators direct the U.S. Treasury Department to issue the refunds through checks to locations they control or can access, in various ways;
• SIRF perpetrators generate cash proceeds. Some sell the checks at a discount to face value. The buyers then cash the checks at banks or check cashing businesses or deposit them into bank accounts.

Federal law enforcement agencies, recognizing that SIRF was a serious problem, created a multi-agency task force in New Jersey comprised of investigators from the IRS and the U.S. Postal Inspection Service, along with the U.S. Secret Service, and with assistance from the Drug Enforcement Administration (the “New Jersey Task Force”). 

An investigation led by the New Jersey Task Force with assistance from U.S. Immigration and Customs Enforcement, Homeland Security Investigations has revealed that starting as early as 2007, dozens of individuals in the New Jersey and New York area have been engaged in a large-scale, long running SIRF scheme. The scheme has caused more than 8,000 fraudulent 1040 forms to be filed, seeking more than $65 million in tax refunds, with losses to the U.S. Treasury of more than approximately $12 million.

Members of the conspiracy obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. They used those identifiers to create fake 1040s, which falsely reported wages purportedly earned by the “taxpayers” and taxes purportedly withheld, to create the appearance that the “taxpayers” were entitled to tax refunds. The returns were filed electronically. By tracing the specific IP addresses that submitted them, law enforcement officers learned just a handful of IP addresses created many of the fraudulent forms that led to the issuance of tax refund checks.

Martinez and the other members of the conspiracy then gained control of checks, sometimes bribing mail carriers to intercept checks and deliver them to other members of the conspiracy.

During the course of the investigation, members of the task force identified certain “hot spots” of activity and intercepted more than $22 million in fraudulently-applied for refund checks before they were delivered to members of the conspiracy.

U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Marie Kelokates; the U.S. Secret Service, under the direction of Acting Special Agent In Charge Carl Agnelli; and the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski, for the investigation leading to today’s sentencing.

In addition to the three-year term of probation, Judge Cecchi ordered Martinez to pay $753,041 in restitution and fined him $10,000.

The government is represented by Assistant U.S. Attorneys Danielle Alfonzo Walsman, Mala Ahuja Harker, Lakshmi Srinavasan Herman, and Zach Intrater of the U.S. Attorney’s Office Criminal Division in Newark.

15-023                                                           

NEWARK, N.J. – Veteran Construction Associates LLC (Veteran Construction), a construction company headquartered in Burlington, New Jersey, will pay $1.3 million to resolve allegations that it improperly billed the U.S. Department of Veterans Affairs on government contracts, U.S. Attorney Paul J. Fishman announced today.

Veteran Construction was formed in 2006 and listed a service-disabled veteran as its 51 percent owner. From 2008 through 2011 the company bid on and received government construction contracts that were reserved for companies that were certified as owned and operated by service disabled veterans. Veteran Construction successfully completed and invoiced the United States 68 times on those contracts for a total of $6.5 million.

The government, through the Small Business Administration and the Department of Veterans Affairs, encourages businesses that are majority owned and operated by service disabled veterans through a federal government procurement program that sets acquisitions aside for exclusive competition among service disabled veteran owned small businesses.
The settlement resolves allegations that Veteran Construction was not owned and controlled by a service disabled veteran, and thus should neither have received the government contracts, nor invoiced the government for work performed on those contracts. Veteran Construction admitted that it is liable to the United States for its conduct under the False Claims Act.

In addition to the $1.3 million payment by Veteran Construction, the company has agreed that it shall never seek to obtain any government contracts set aside for veterans of the United States military and will not seek any government contracts at all for three years from the settlement. The company agreed that none of its current or former members will maintain more than a 10 percent ownership interest in any company seeking to obtain government contracts set aside for veterans of the United States military for three years.

U.S. Attorney Fishman credited Special Agent in Charge Jeffrey G. Hughes of the Department of Veterans Affairs, Office of the Inspector General, Criminal Investigation Division, and Special Agent in Charge Aaron Collins of the U.S. Small Business Administration’s Office of Inspector General, Eastern Region, with the investigation leading to the settlement.

The government is represented by Assistant U.S. Attorney Mark C. Orlowski of the U.S. Attorney’s Civil Division in Newark and Assistant U.S. Attorney J. Andrew Ruymann of the U.S. Attorney=s Civil Division in Trenton.

15-024                                                            

Defense Counsel: Michael A. Schwartz Esq., Philadelphia

NEWARK, N.J. – The U.S. Department of Justice is now accepting applications from individuals and organizations interested in serving as the federal monitor of the Newark Police Department (NPD), U.S. Attorney Paul J. Fishman and Acting Assistant Attorney General for Civil Rights Vanita Gupta announced today. The Justice Department reached an agreement in principle with Newark to undertake wide-ranging reforms within the police department, including an independent court-appointed monitor, and to incorporate those reforms into a judicially enforceable consent decree.

A three-year investigation by the Justice Department and the New Jersey U.S. Attorney’s Office revealed a pattern or practice of constitutional violations in areas including stop and arrest practices, use of force, and theft by officers. The agreement and a summary of the Justice Department’s findings were announced in July 2014.

Selecting a monitoring team to oversee and implement the consent decree is an integral part of the reform process. The Justice Department invites all interested parties to submit applications to serve as the monitoring team of the NPD consent decree.  The monitoring team will assess and guide reforms in a number of areas, including: community engagement and civilian oversight; stops, searches, and arrests; use of force; bias-free policing; theft by officers; intake and investigation of misconduct complaints; and police discipline. The monitoring team is expected to serve for at least five years. Successful candidates will have experience in evaluating organizations, measuring organizational change, and engaging with diverse communities, as well as expertise in law enforcement practices and statistical analysis, and familiarity with federal, New Jersey, and local criminal and civil rights laws. Applications must include the qualifications of each team member, a list of prior experience and references, a scope of work detailing the methods and activities the team would use to implement the consent decree, a list of all potential or perceived conflicts of interest, and a cost proposal.

The deadline for submitting applications is Feb. 13, 2015. The Justice Department, in consultation with the City of Newark, will select the monitoring team from applications received by that date.

The request for applications is available at: Request for Applications . The Department’s findings report and the agreement in principle can be found here: Agreement & Findings . For more information about the Civil Rights Division, please visit the Division’s website, Civil Rights Division .

Federal civil rights complaints specific to New Jersey can be directed to the U.S. Attorney’s Office civil rights complaint hotline at 855-281-3339 or can be submitted by filling out a complaint form at: Civil Rights Enforcement.

THIS IS A REQUEST FOR INFORMATION ONLY. This request is issued solely for information and planning purposes. It does not constitute a Request for Proposal (RFP) or a promise to issue a RFP in the future. This request is not part of, and shall not be governed by, any formal municipal, state, or federal procurement process. This request does not commit the parties to select an individual or firm to serve as the Monitor or a member of the monitoring team. The parties may solicit additional information from applicants to supplement information provided in response to this request. Responders are advised that the parties will not pay for any information or administrative costs incurred in response to this request; all costs associated with responding to this request will be solely at the interested party’s expense. Not responding to this request does not preclude participation in any future request for applications, if any is issued, nor does it eliminate an individual or firm from being considered for the monitor or a member of the monitor’s team.

CAMDEN, N.J. – Four members of a criminal street gang that used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City, New Jersey, were convicted at trial today on drug conspiracy and weapons charges, U.S. Attorney Paul J. Fishman announced.

The defendants – Kareem Bailey, 21, Terry Davis, 26, Lamar Macon, 26, and Dominique Venable, 24, all of Atlantic City – were each convicted of conspiracy to distribute one kilogram or more of heroin, possession of firearms in furtherance of a drug trafficking crime and brandishing and discharging firearms in furtherance of the conspiracy following a six-week trial before U.S. District Judge Joseph E. Irenas in Camden federal court. The jury deliberated approximately five hours before returning the verdicts.

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

The four men are members of a gang known as “Dirty Block,” a/k/a “Crime Fam,” “3.6.6.12,” or “3.6,” which operated in a geographic area of Atlantic City that includes the public housing apartment complexes of Stanley Holmes Village Public Housing Complex, Renaissance Plaza and Schoolhouse Apartments.

The defendants participated in a violent street-level drug trafficking organization that controlled heroin sales through the possession of dozens of firearms and the use of gun violence, including at least one homicide and several non-fatal, drug-related shootings.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang (Safe Streets) Task Force, with the investigation leading to today’s convictions.

He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Northfield Police Department; the Vineland Police Department; the Brigantine Police Department; the Millville Police Department; the Mullica Township Police Department; the South Jersey Transportation Authority; and the U.S. Secret Service for their contributions.

The government is represented by Assistant U.S. Attorneys Patrick Askin and Justin Danilewitz of the U.S. Attorney’s Office in Camden and Special Assistant U.S. Attorney Edmund Burgos of the Atlantic County Prosecutor’s Office.

The charges and allegations against the other defendants arrested in this investigation are merely accusations and the defendants are considered innocent unless and until proven guilty.

15-021                                                           

Defense Counsel: Bailey: John Holliday Esq., Hamilton, N.J.
Davis: Gina Capuano Esq., Philadelphia
Macon: William Spade Esq., Philadelphia
Venable: James Murphy Esq., Princeton, N.J.

Brothers Indicted for Tax Crimes Involving $8.9 Million in Income

NEWARK, N.J. - A new trial date has been set for television personality Michael “The Situation” Sorrentino and his brother, Marc Sorrentino, on charges they did not properly pay taxes on $8.9 million in income Michael Sorrentino received from promotional activities, U.S. Attorney Paul J. Fishman announced.

U.S. District Judge Susan D. Wigenton issued a complex case designation and a continuance order that sets the matter down for trial on Sept. 14, 2015. 

The Sorrentinos are charged with one count of conspiracy to defraud the United States. Marc and Michael Sorrentino also are charged with three and two counts, respectively, of filing false tax returns for 2010 through 2012. Michael Sorrentino faces an additional count for allegedly failing to file a tax return for 2011. The original trial date was March 2, 2015.

The government is represented by Assistant U.S. Attorney Jonathan W. Romankow of the U.S. Attorney=s Office Criminal Division in Newark, and Trial Attorney Tino Lisella of the Tax Division of the U.S. Department of Justice.

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

15-017                                                         

Defense counsel: Michael Sorrentino: Richard Sapinski Esq., Newark
Marc Sorrentino: Chris Adams Esq., Colts Neck, N.J.

Sorrentino, Michael and Marc Continuance Order

NEWARK, N.J. – A Boonton, New Jersey, man today admitted using a computer in his home to download images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Lucas J. Reinmann, 35, pleaded guilty today before U.S. District Judge Susan D. Wigenton to an information charging him with one count of knowingly receiving images of child pornography over the internet.

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

Reinmann admitted that he downloaded images and videos of child sexual abuse from the internet to his computer using a peer-to-peer file sharing network. He also admitted possessing more than 600 images of child sexual abuse on his computers and USB drives, which were seized from his residence in July 2013.

The count to which Reinmann pleaded guilty carries a mandatory minimum penalty of five years in prison and a maximum potential penalty of 20 years in prison, followed by a mandatory minimum of five years of supervised release and a $250,000 fine. Sentencing is scheduled for April 20, 2015.

U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge John P. Woods; the Morris County Prosecutors Office, under the direction of Prosecutor Fredric M. Knapp; and the Boonton Township Police Department, under the direction of Chief Paul C. Fortunato with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Sara F. Merin of the U.S. Attorney’s Office OCDETF Unit in Newark.

15-019                                                        

Defense counsel: Edward V. Sapone Esq., New York

NEWARK, N.J. - A former real estate title agent admitted yesterday to carrying out a mortgage fraud scheme in which she obtained seven loans, totaling more than $3.7 million, on two properties located in Wood-Ridge, New Jersey and Belvidere, New Jersey.

Prior to going to trial, Ania Nowak, 48, of Belvidere, pleaded guilty before U.S. District Judge Stanley R. Chesler to Count One of the superseding indictment charging her with conspiracy to commit wire fraud.
According to documents filed in this case and statements made in court: Ania Nowak was the owner and operator of A.N. Title Agency LLC and was an agent for Stewart Title Guaranty Company. Nowak had a duty to review a property’s title to determine ownership and the existence of any prior liens and truthfully disclose them in the title insurance documents. She also had a duty to issue title insurance policies to lenders guaranteeing there were no other liens so that they would be first in line to have the property sold if the borrower stopped making mortgage payments. Nowak also acted as a settlement agent and was required to disburse loan money in accordance with lender instructions, pay off any existing liens and record loan documents in the appropriate county clerk’s office.

Nowak admitted her role in obtaining seven mortgage loans through fraudulent means, including: an April 2005 loan for her sham sale of the Wood-Ridge property to her husband, Zbigniew Cichy, 45, of Belvidere; a November 2005 refinancing loan for the Wood-Ridge property; a 2005 construction loan to build a house on the Belvidere property owned by Cichy; an August 2006 loan on the Belvidere property; May 2007 loans for a sham sale of the Belvidere property to another conspirator in the scheme, Kim Salvemini, 60, of Wallington, New Jersey ; Salvemini’s May 2007 refinancing loan on the Belvidere property; and Cichy’s November 2007 refinancing loan on the Belvidere property. Nowak admitted that, for each of the seven loans, she lied on loan documents, failed to pay off prior mortgages at closing, failed to record the mortgages and any deeds and that most of the loans went into default for non-payment.

The wire fraud conspiracy charge to which Nowak pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss resulting from the offense. Sentencing is scheduled for May 5, 2015.

Salvemini previously pleaded guilty to her role in the scheme and awaits sentencing. Charges against Cichy are still pending 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 Aaron T. Ford in Newark, for the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu and Senior Litigation Counsel Leslie F. Schwartz of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark. 

Today’s guilty plea 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.

15-018                                           

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

TRENTON, N.J. – A federal grand jury today indicted the managing clerk of the New York office of a prominent, international law firm for his alleged participation in a multi-year insider trading scheme that netted more than $5.6 million in illicit profits, New Jersey U.S. Attorney Paul J. Fishman announced.
Steven Metro, 40, of Katonah, New York, is charged by indictment 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, Metro, who was then the managing clerk of the New York office of Simpson Thacher & Bartlett LLP (the “Law Firm”), one of the nation’s premier mergers and acquisitions firms, repeatedly provided material, nonpublic information to his friend and former law school classmate, Frank Tamayo, 41, of Brooklyn, New York.  The inside information divulged by Metro to Tamayo 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 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 allegedly stole the inside information by scouring the firm’s computer system using search terms such as “merger agreement,” “bid letter,” “engagement letter,” “due diligence,” as well as client names, client-matter numbers, or combinations thereof.

Metro then divulged the inside information 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 Vladimir Eydelman, 42, of Colts Neck, New Jersey, a professional stock broker. Tamayo usually would meet Eydelman near Eydelman’s workplace, such as at the large clock in New York City’s Grand Central Terminal, where Tamayo would pass the inside information 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 chew the paper or napkin 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/or 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 Metro.
Tamayo, Metro and Eydelman netted more than $5.6 million in illicit profits over the course of the five-year insider trading scheme.

The conspiracy count with which Metro is charged carries a maximum potential penalty of five years in prison and a fine of $250,000. The securities and tender offer fraud counts carry a  maximum potential penalty of 20 years in prison and a fine of $5 million.
 
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s indictment. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel Hawke.

The government is represented by Assistant U.S. Attorneys Shirley U. Emehelu of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark, and R. Joseph R. Gribko of the U.S. Attorney’s Office in Trenton, as well as Assistant U.S. Attorney Barbara Ward 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.
The charges and allegations contained in the indictment are merely accusations, and defendant is presumed innocent unless and until proven guilty.

Alleged Insider Trades

APPROX. DATE(S) OF PURCHASES

ANNOUNCEMENT DATE

SECURITY

APPROX. ILLICIT PROFIT

2/17/2009

Sirius XM Radio

$212,814

12/29/2009-1/15/2010

1/18/2010

Brinks Home Security

$773,154

7/8/2010-7/15/2010

7/15/2010

Smithtown Bancorp

$29,010

10/20/2010-10/29/2010

11/1/2010

CNA Surety Corporation

$241,141

4/11/2011-4/12/2011

4/13/2011

Graham Packing Company Inc.

$105,964

1/31/2011-4/19/2011

4/26/2011

SMART Modular Technologies

$1,575,382

4/4/2011-4/21/2011

4/27/2011

Vital Images, Inc.

$39,233

4/29/2011

5/2/2011

International Coal Group, Inc.

$231,276

6/21/2011-8/22/2011

8/23/2011

PharMerica Corp.

$1,517,092

4/16/2012-4/20/2012

5/1/2012

Collective Brands, Inc.

$360,775

5/14/2012-10/1/2012

N/A

“Company A”

N/A

9/20/2012-9/25/2012

9/27/2012

Sealy Corporation

$14,509

1/31/2013-2/15/2013

2/20/2013

Officemax Inc.

$573,332

APPROX. TOTAL ILLICIT PROFITS

$5,673,682

15-020                                              ###

Defense counsel:  James Froccaro Esq. Port Washington, N.Y.

NEWARK, N.J. – The owner of a Guttenberg, New Jersey, contracting company today admitted rigging the selection process for projects run by the Union City Community Development Agency (UCCDA), causing losses of at least $120,000, U.S. Attorney Paul J. Fishman announced.

Leovaldo Fundora, 53, of Guttenberg, pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an information charging him with one count of embezzling, stealing, purloining, and converting to his own use and the use of another, money from the U.S. Department of Housing and Urban Development (HUD).

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

The UCCDA receives funding from HUD under a federal block grant that provides money for home improvement, sidewalk replacement and other projects. Between May 2007 and September 2011, Fundora owned Falcon Remodeling Inc., a general contracting company.

Fundora colluded with two UCCDA inspectors and two other contractors to attain HUD grant funds by having the contractors complete phony proposals with prices higher than those submitted by Falcon. Fundora then submitted these phony proposals and Falcon’s proposals to the UCCDA in order to improperly obtain home improvement projects and sidewalk replacement projects.

On two occasions in June 2010, Fundora submitted phony proposals from the other two contractors pricing sidewalk replacement projects at Kerrigan Avenue and 13th St. in Union City for $4,200. As a result, Falcon secured both projects for $3,900.

The charge to which Fundora pleaded guilty carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is currently scheduled for April 22, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Amy Luria and J Imbert of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

15-013                                      

Defense counsel: Raymond F. Flood Esq., Hackensack, New Jersey

TRENTON, N.J. - An Orthodox Jewish rabbi today admitted conspiring to travel to New Jersey to coerce a Jewish man to give his wife a religious divorce – referred to as a “get” – through threats of violence, U.S. Attorney Paul J. Fishman announced.

Martin Wolmark, 56, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with conspiracy to travel in interstate commerce to commit extortion.

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

On Aug. 7, 2013, Wolmark, an ordained Orthodox Jewish rabbi, spoke with a woman and her brother about obtaining a Jewish divorce from the woman’s recalcitrant husband. A get is a divorce document which, according to Jewish Law, must be presented by a husband to his wife to effect their divorce. Unbeknownst to Wolmark, the woman and the brother were actually undercover FBI agents. During the conversation, which was recorded by law enforcement, Wolmark informed the agents that there were two ways to go about obtaining a get from such a recalcitrant husband, one of which was to “nail him.” Wolmark also told the agents that coercing the husband into giving a get could be expensive. He then recommended that the agents speak with his colleague, Mendel Epstein, who he knew had previously used violence to coerce recalcitrant husbands into giving gets to their wives. Wolmark then initiated a conference call with the agents and Mendel Epstein.

On Aug. 14, 2013, the agents met with Mendel Epstein at his home to discuss the case further. On Oct. 2, 2013, Wolmark convened a rabbinical court (a “beth din”) with Mendel Epstein and Jay Goldstein in his office in Suffern, New York. The purpose of this proceeding was to determine whether there were grounds under Jewish law to coerce the husband into giving the get. The female agent also attended and recorded the meeting. During this meeting, Mendel Epstein discussed openly the plan to kidnap and assault the purported husband in order to obtain the get.

On Oct. 9, 2013, a group of Wolmark’s conspirators – including Jay Goldstein, Moshe Goldstein, Avrohom Goldstein, Simcha Bulmash, Ariel Potash, Binyamin Stimler, and Sholom Shuchat – traveled from New York to a warehouse in Edison, New Jersey, with the intent of forcing the purported husband to give his wife a get by means of violence and threats of violence.  Six of these coconspirators previously pleaded guilty to traveling to New Jersey to commit extortion.

The conspiracy count to which Wolmark pleaded guilty 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 May 18, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah Wolfe of the U.S. Attorney’s Office in Trenton.

The pending charges and allegations against related defendants are merely allegations, and they are considered innocent unless and until proven guilty.

15-016                                           

Defense counsel:  Benjamin Brafman Esq., New York

Wolmark, Martin Information

TRENTON, N.J. - A Wayside, New Jersey, man was sentenced today to 87 months in prison for using a computer in his home to distribute images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Nathan Brochstein, 41, previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of distribution of child pornography. Judge Cooper imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court: Brochstein admitted making images and videos depicting child sexual abuse available online via peer-to-peer file sharing software. He also admitted possessing more than 600 images of child sexual abuse on his computer and external hard drive, which were seized from his residence in November 2012. Brochstein acknowledged that the images and videos of child pornography he distributed portrayed sadistic or masochistic conduct or other depictions of violence and included images of a prepubescent minor. 

In addition to the prison term, Judge Cooper sentenced Brochstein to serve five years of supervised release.

U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge John P. Woods, with the investigation leading to today’s sentencing. He also thanked the Ocean Township Police Department and the Monmouth County Prosecutor’s Office for their assistance.

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

15-014                                                   

Defense counsel: Robert Weir Esq., Red Bank, New Jersey

NEWARK, N.J. – Five people involved in an extensive scheme to obtain millions of dollars through fraudulently obtained tax refund checks issued by the U.S. Treasury pleaded guilty today in Newark federal court, U.S. Attorney Paul J. Fishman announced.

Julio C. Concepcion 49, of Passaic, New Jersey, pleaded guilty before U.S. District Judge Kevin McNulty to an information charging him with one count of conspiracy to steal government funds and one count of theft of government funds. Concepcion also pleaded guilty to separate information charging him with one count of conspiracy to commit wire fraud in connection with his involvement in a separate mortgage fraud scheme.

Concepcion’s two sons, Angel Concepcion-Vasquez, 30, and Julio Concepcion-Vasquez, 32, and two other defendants, Jose Zapata, 67, and Romy Quezada, 24, all of Passaic, also pleaded guilty to one count each of conspiracy to steal government funds.

Concerning the Stolen Identity Refund Fraud (SIRF) scheme, according to documents filed in this case and statements made in court:

Members of the conspiracy, from at least October 2009 through May 2013, obtained the personal identifying information, including the names and Social Security numbers, of other individuals, including residents of Puerto Rico. Conspirators filed with the IRS false and fraudulent income tax returns using the stolen identity information, which generated income tax refund checks to which the members of the conspiracy were not entitled.  The funds from these refund checks were then routinely transferred between bank accounts controlled by members of the conspiracy. The SIRF scheme resulted in more than $2.5 million in losses to the U.S. Treasury.     

Julio C. Concepcion admitted to obtaining these fraudulent refund checks and recruiting others to open bank accounts and deposit the checks, sometimes providing them with false identification in order to do so. Angel Concepcion-Vasquez, Julio Concepcion-Vasquez, Quezada and Zapata each admitted to opening bank accounts into which these fraudulently obtained refund checks were deposited.

Concerning the mortgage fraud information, according to filed documents and statement made in court:

From January 2008 through March 2010, Concepcion conspired with others to commit wire fraud, specifically mortgage fraud. Once a conspirator purchased properties in New Jersey.  Concepcion and others caused people to purchase the homes and receive mortgages for the homes either by using false identification documents or without the intent to live in the homes or pay off the mortgages.

Concepcion and others were able to cause parties to issue mortgages for the properties in reliance on fraudulent documents and material misrepresentations. The Federal Housing Administration (FHA) insured some of these mortgages.

As a result of these actions, the FHA and parties who approved the mortgages have lost more than $2.5 million.

The conspiracy to steal government funds charge is punishable by a maximum penalty of five years in prison. The theft of government funds charge is punishable by a maximum potential penalty of 10 years in prison. The conspiracy to commit wire fraud charge is punishable by a maximum penalty of 20 years in prison. All charges are also punishable by a fine of up to $250,000, or twice the gain or loss caused by the offense. Sentencings for all defendants are scheduled for May 7, 2015.

U.S. Attorney Fishman credited special agents of the IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; special agents of the U.S. Secret Service, under the direction of Assistant Special Agent in Charge Carl Agnelli; and the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes, with the investigations leading to today’s pleas.

The government is represented by Assistant U.S. Attorneys Andrew Kogan of the Economic Crimes Unit and Cari Fais and Melissa Wangenheim of the General Crimes Unit.

14-015                                               

Defense counsel: Julio Cesar Concepcion: Genesis Peduto Esq. North Bergen, N.J.
Julio Concepcion-Vasquez: David Fromkin Esq., Wallington, N.J.
Angel Concepcion-Vasquez: Anthony Fusco Jr. Esq., Passaic, N.J.
Romy Quezada: Stephen Dratch Esq., Livingston, N.J.
Jose Zapata: Elizabeth Smith Esq., Mendham, N.J.

NEWARK, N.J. – Special agents of the FBIand officers of the Madison Police Department (MPD) arrested a Morris County, New Jersey, man at his home this morning for allegedly distributing sexually explicit images of children from his home computer, U.S. Attorney Paul J. Fishman announced.

Michael Hodukavich, 24, is charged by complaint with one count of distributing images of child sexual abuse over the Internet. He appeared this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court and was released on $100,000 bond.

According to the criminal complaint filed today:

On Nov. 20 and 21, 2014, Hodukavich distributed videos and images depicting child sexual abuse on the Internet via peer-to-peer file sharing software, which allowed others access to the material in shared directories. An undercover agent discovered and downloaded the images and videos, and the username and IP address of the sharer was traced back to Hodukavich’s residence.

The distribution count carries a minimum penalty of five years in prison and a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and the MPD, under the direction of Chief Darren Dachisen, Chief of Police, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney Melissa M. Wangenheim of the U.S. Attorney’s Office General Crimes Unit in Newark.

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

15-012                                         

Defense counsel: James S. Friedman Esq., Newark

Hodukavich, Michael Complaint

TRENTON, N.J. – A former Princeton, New Jersey, youth soccer coach was sentenced today to 36 months in prison for possessing images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.

Jorge A. Roman, 50, previously pleaded guilty before U.S. District Judge Joel A. Pisano to an information charging him with one count of possession of child pornography. Judge Pisano imposed the sentence today in Trenton federal court.

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

On May 16, 2013, Roman possessed 600 or more images of child sexual abuse on various DVDs, computers or other digital media at his residence in Princeton. Some of the images in Roman’s possession were images of prepubescent minors engaged in sexually explicit conduct.

In addition to the prison term, Judge Pisano sentenced Roman to serve five years of supervised release.

U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office in Trenton.

15-010                         

Defense counsel: Lisa Van Hoeck Esq., Assistant Federal Public Defender, Trenton

TRENTON, N.J. – An Essex County Corrections Officer today admitted her involvement in a scheme to smuggle contraband, including cell phones, into the Essex County Correctional Facility, a federal pretrial detention facility, U.S. Attorney Paul J. Fishman announced.

Channel Lespinasse, 26, of Florham Park, New Jersey, pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging her with one count of conspiring to commit extortion under color of official right.

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

On multiple occasions between August 2013 and January 2014, Lespinasse delivered contraband to federal pretrial detainees at the Essex County Correctional Facility in exchange for cash bribes. On one occasion in November 2013, Lespinasse agreed to deliver a cell phone to an inmate in exchange for $1,000. A conspirator retrieved the cell phone and the $1,000 payment from an individual outside of the facility – actually an undercover FBI agent – and gave the phone, along with a portion of the payment, to Lespinasse, who then delivered the contraband to the inmate.     

The conspiracy charge to which Lespinasse pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for May 7, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and investigators with the Internal Affairs Division of Essex County Correctional Facility, under the leadership of Essex County Corrections Director Al Ortiz, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division and Rob Frazer of the office’s Organized Crime/Gangs Unit in Newark.

15-011                         

Defense counsel: Paulette Pitt Esq., Woodbridge, New Jersey

A Canadian man was arrested today for allegedly orchestrating a large-scale, international stock market manipulation scheme in the first federal prosecution of securities fraud involving a high-frequency trading strategy known as “layering,” U.S. Attorney Paul J. Fishman for the District of New Jersey announced.

Aleksandr Milrud, 50, of Ontario, Canada, and Aventura, Florida, is charged by complaint with one count of conspiracy to commit securities fraud and one count of wire fraud.  FBI agents arrested Milrud at his residence in Aventura this morning.  He is scheduled to appear this afternoon before U.S. Magistrate Judge John J. O’Sullivan in federal court in Miami.  

“As our complaint shows, illegally manipulating markets to cause even small price changes can yield large gains when done on a massive scale,” U.S. Attorney Fishman said.  “The defendant and his far-flung network of conspirators operated an international scheme in which they generated millions of dollars in illicit profits for themselves with artificial trade orders executed at high speeds.”

“As alleged in the complaint, Mildrud was the engineer behind a sophisticated, international, groundbreaking market manipulation scheme that utilized an illicit, high-speed trading strategy to execute trades,” said Special Agent in Charge Aaron T. Ford of the FBI in Newark, New Jersey.  “The losses to investors due to this innovative fraud could be in the millions.  The FBI will continue to identify and investigate frauds such as this one, in order to ensure a level playing field for all investors.”

According to the complaint unsealed today:

Milrud allegedly orchestrated an extensive and sophisticated international layering scheme that, according to him, yielded millions of dollars in illicit profits.  Layering, also known as “spoofing,” is a form of manipulative, high-speed stock trading in which a trader places non-bona fide orders to buy or sell securities and then quickly cancels them before they are executed.  The purpose of these non-bona fide orders is to artificially move the price of security up (in the case of non-bona fide buy orders) or down (in the case of non-bona fide sell orders) and to induce other market participants to buy or sell a security at a price not representative of actual supply or demand.  While the non-bona fide orders are pending, the trader simultaneously executes trades in an attempt to profit from the artificial movement of the share price that the trader has created.  Milrud’s layering scheme targeted U.S. securities markets and involved high-speed trading through numerous brokerage accounts and foreign traders that Milrud recruited and managed in China and Korea.

In January 2013, Milrud solicited the assistance of an individual who owned an off-shore broker-dealer (the Foreign-BD) but who, unbeknownst to Milrud, was a cooperating witness (CW) with law enforcement.  Milrud sought to open a trading account at the Foreign-BD for use in his layering scheme.  Over the course of several consensually recorded calls and meetings between the CW, Milrud and others, Milrud explained his illegal trading strategies in detail.  Milrud said he controlled approximately 60 percent of all China-based traders engaged in layering, that his traders used various trading accounts that were not tied to Milrud in any manner and that the layering scheme generated millions of dollars in illicit profits.  Milrud explained that to enable his traders to place and cancel many orders quickly, he worked with a software company on programming “hotkeys” – shortcuts for placing and cancelling multiple orders quickly with few keystrokes.  Milrud also explained his efforts to avoid detection by law enforcement and regulators, including not discussing business on the phone, communicating through third party liaisons, and using multiple trading and clearing firms and accounts to execute a single securities transaction, a practice he described as “shredding.” 

On Aug. 27, 2014, Milrud met the CW at the offices of the Foreign-BD.  The meeting was video and audio recorded by law enforcement.  Milrud explained his layering scheme in more detail.  Milrud stated that overseas stock traders who he controlled simultaneously utilized at least two trading accounts to execute the layering scheme; one account was used to conduct the manipulative layering trading (the Layering Account), which Milrud referred to as the “dirty work,” and another “clean” account (the Profit Account) was used to buy or sell the manipulated stock at a profit during the small window of time in which the stock price had been artificially moved by the “dirty” activity in the Layering Account.  According to Milrud, his foreign traders logged into these accounts from different computers and different internet protocol (IP) addresses so that it would not appear as if the same individual was trading through the two accounts and to evade automated fraud detection systems established by the trading platforms.  After explaining his manipulative trading strategy, Milrud said, “Regular trading.  If I didn’t tell you what I just told you, it would seem like regular trading – you would not know nothing of what I do.”  The CW replied, “Will look just like regular buying and selling?”  Milrud responded, “Exactly. One hundred percent kosher.  If I didn’t tell you everything behind it, you have no way of [knowing].”

During the Aug. 27, 2014, meeting, Milrud agreed to log into his trading platform using the CW’s computer to show the CW his traders’ activity in real time.  The CW had been provided by law enforcement with a laptop computer (the FBI Computer), which included software that recorded all activity and keystrokes on the computer.  Milrud logged into and remotely accessed his trading system using the FBI Computer.  According to Milrud, his overseas traders were controlling the orders and trades that he and the CW were observing on the FBI Computer.  The CW then observed multiple real time trades in a number of different securities in both the Layering and Profit Accounts, and orders being placed and cancelled, while Milrud narrated. 

According to Milrud’s statements to the CW during a consensually recorded call on Dec. 15, 2014, the scheme could generate anywhere from $1 million to $50 million per month and had yielded approximately $600,000 in a single day in recent weeks.  The investigation is ongoing and law enforcement continues to investigate the brokerage accounts, trader identification numbers that Milrud used to carry out the scheme and the full scope of the illicit profits.      

The conspiracy count with which Milrud is charged carries a statutory maximum sentence of five years in prison and a $250,000 fine, or twice the gain or loss from the offense.  The wire fraud count carries a statutory maximum sentence of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. 

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s arrest and complaint.  He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke, for its role in the case.

The government is represented by Chief Gurbir S. Grewal and Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Economic Crimes Unit .

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

Scheme Targeted U.S. Securities Markets and Involved Complex Web of Brokerage Accounts, Off-Shore Entities and High-Speed Trading by Stock Traders in China and Korea      

NEWARK, N.J. – A Canadian man was arrested today for allegedly orchestrating a large-scale, international stock market manipulation scheme in the first federal prosecution of securities fraud involving a high-frequency trading strategy known as “layering,” U.S. Attorney Paul J. Fishman announced.

Aleksandr Milrud, 50, of Ontario, Canada, and Aventura, Florida, is charged by complaint with one count of conspiracy to commit securities fraud and one count of wire fraud. FBI agents arrested Milrud at his residence in Aventura this morning. He is scheduled to appear this afternoon before U.S. Magistrate Judge John J. O’Sullivan in Miami federal court.

“As our complaint shows, illegally manipulating markets to cause even small price changes can yield large gains when done on a massive scale,” U.S. Attorney Fishman said. “The defendant and his far-flung network of conspirators operated an international scheme in which they generated millions of dollars in illicit profits for themselves with artificial trade orders executed at high speeds.”

“As alleged in the complaint, Mildrud was the engineer behind a sophisticated, international, groundbreaking market manipulation scheme that utilized an illicit, high-speed trading strategy to execute trades,” Aaron T. Ford, FBI Special Agent in Charge, Newark, said. “The losses to investors due to this innovative fraud could be in the millions. The FBI will continue to identify and investigate frauds such as this one, in order to ensure a level playing field for all investors.”

According to the complaint unsealed today:

Milrud allegedly orchestrated an extensive and sophisticated international layering scheme that, according to him, yielded millions of dollars in illicit profits. “Layering,” also known as “spoofing,” is a form of manipulative, high-speed stock trading in which a trader places non-bona fide orders to buy or sell securities and then quickly cancels them before they are executed. The purpose of these non-bona fide orders is to artificially move the price of security up (in the case of non-bona fide buy orders) or down (in the case of non-bona fide sell orders) and to induce other market participants to buy or sell a security at a price not representative of actual supply or demand. While the non-bona fide orders are pending, the trader simultaneously executes trades in an attempt to profit from the artificial movement of the share price that the trader has created. Milrud’s layering scheme targeted U.S. securities markets and involved high-speed trading through numerous brokerage accounts and foreign traders that Milrud recruited and managed in China and Korea.

In January 2013, Milrud solicited the assistance of an individual who owned an off-shore broker-dealer (the “Foreign-BD”) but who, unbeknownst to Milrud, was a cooperating witness (“CW”) with law enforcement. Milrud sought to open a trading account at the Foreign-BD for use in his layering scheme. Over the course of several consensually recorded calls and meetings between the CW, Milrud, and others, Milrud explained his illegal trading strategies in detail.  Milrud said he controlled approximately 60 percent of all China-based traders engaged in layering, that his traders used various trading accounts that were not tied to Milrud in any manner, and that the layering scheme generated millions of dollars in illicit profits. Milrud explained that to enable his traders to place and cancel many orders quickly, he worked with a software company on programming “hotkeys” – shortcuts for placing and cancelling multiple orders quickly with few keystrokes. Milrud also explained his efforts to avoid detection by law enforcement and regulators, including not discussing business on the phone, communicating through third party liaisons, and using multiple trading and clearing firms and accounts to execute a single securities transaction, a practice he described as “shredding.” 

On August 27, 2014, Milrud met the CW at the offices of the Foreign-BD. The meeting was video and audio recorded by law enforcement. Milrud explained his layering scheme in more detail. Milrud stated that overseas stock traders who he controlled simultaneously utilized at least two trading accounts to execute the layering scheme; one account was used to conduct the manipulative layering trading (the “Layering Account”), which Milrud referred to as the “dirty work,” and another “clean” account (the “Profit Account”) was used to buy or sell the manipulated stock at a profit during the small window of time in which the stock price had been artificially moved by the “dirty” activity in the Layering Account. According to Milrud, his foreign traders logged into these accounts from different computers and different internet protocol (IP) addresses so that it would not appear as if the same individual was trading through the two accounts and to evade automated fraud detection systems established by the trading platforms. After explaining his manipulative trading strategy, Milrud said, “Regular trading. If I didn’t tell you what I just told you, it would seem like regular trading – you would not know nothing of what I do.”  The CW replied, “Will look just like regular buying and selling?”  Milrud responded, “Exactly. One hundred percent kosher.  If I didn’t tell you everything behind it, you have no way of [knowing].”

During the August 27, 2014, meeting, Milrud agreed to log into his trading platform using the CW’s computer to show the CW his traders’ activity in real time.  The CW had been provided by law enforcement with a laptop computer (the “FBI Computer”), which included software that recorded all activity and keystrokes on the computer. Milrud logged into and remotely accessed his trading system using the FBI Computer. According to Milrud, his overseas traders were controlling the orders and trades that he and the CW were observing on the FBI Computer. The CW then observed multiple real time trades in a number of different securities in both the Layering and Profit Accounts, and orders being placed and cancelled, while Milrud narrated.

According to Milrud’s statements to the CW during a consensually recorded call on Dec. 15, 2014, the scheme could generate anywhere from $1 million to $50 million per month and had yielded approximately $600,000 in a single day in recent weeks. The investigation is ongoing and law enforcement continues to investigate the brokerage accounts, trader identification numbers that Milrud used to carry out the scheme, and the full scope of the illicit profits.    

The conspiracy count with which Milrud is charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. The wire fraud count carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s arrest and complaint. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke, for its role in the case.

The government is represented by Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit.

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

15-009                                                 

TRENTON, N.J. – A former Jersey City police officer was sentenced today to 36 months in prison for his role in stealing more than half a million cigarettes from a trailer and extorting $20,000 from a drug courier who turned out to be an undercover FBI agent, U.S. Attorney Paul J. Fishman announced.

Mario Rodriguez, 40, of Jersey City, New Jersey, previously pleaded guilty before U.S. District Judge Anne E. Thompson to an information charging him with one count of cargo theft and one count of conspiracy to commit Hobbs Act extortion under color of official right. Judge Thompson imposed the sentence today in Trenton federal court.

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

On July 3, 2013, Rodriguez and an individual working for the FBI as a confidential informant (CI) drove to a warehouse in Secaucus, New Jersey, to break into a trailer, steal cigarettes and sell the stolen goods to the CI’s associate. Law enforcement agents had previously parked the trailer at the warehouse and established surveillance of the area.

After using bolt-cutters to cut the lock off of the trailer, Rodriguez and the CI loaded 50 cases containing approximately 600,000 cigarettes and six televisions from the trailer into their vehicle. As they drove the stolen items to a parking lot in Staten Island, New York, Rodriguez made several phone calls seeking buyers for the TVs.

The pair met the CI’s associate – actually an undercover officer – in the parking lot to get the $5,000 payment for the cigarettes. Rodriguez kept $3,000 of the cash and three of the TVs.

On July 10, 2013, Rodriguez, the CI and an undercover law enforcement agent met in New Jersey and discussed the possibility of robbing a drug courier, who was actually another undercover officer. On July 24, 2013, the group met again in Staten Island to discuss the plan. The undercover officer told Rodriguez the courier would be delivering cocaine to them that day in exchange for a $20,000 payment. Rodriguez suggested a Jersey City mall parking lot due to an absence of surveillance cameras and called his associate, Anthony Roman, 48, of Jersey City, who was not a law enforcement officer, to help him with the robbery. Roman was charged with one count of Hobbs Act extortion.

Later that day, Rodriguez and Roman drove an SUV to the location where the CI and the drug courier were parked. Law enforcement agents had already established surveillance and staged the car containing $20,000 cash in a plastic bag. Rodriguez and Roman approached the car and identified themselves as law enforcement officers who were investigating the CI. They pretended to arrest the CI, threatened to arrest the drug courier and took the cash.

Later that day, Rodriguez, the CI and the undercover agent met in a hotel room at a Pennsylvania casino to split the cash.

In addition to the prison term, Judge Thompson sentenced Rodriguez to serve three years of supervised release and ordered him to pay a $2,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; the Special Investigations Unit of the Jersey City Police Department, under the direction of Acting Chief Joseph Connors; the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano T. Gregory; and criminal investigators of the U.S. Attorney’s Office with the investigation leading to the charges. He also thanked the Bayonne Police Department, Waterfront Commission of New York Harbor, IRS-Criminal Investigation, U.S. Department of Labor Office of Inspector General, and the N.J. State Commission of Investigation for their significant contributions to the investigation.

The government is represented by Assistant U.S. Attorney Jonathan W. Romankow of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

The charges against Roman remain pending. They are merely accusations, and he remains innocent unless and until proven guilty.

15-008                                 

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

NEWARK, N.J. - An Essex County, New Jersey, man who robbed a New York Community Bank in Newark and fled by hailing a cab was sentenced today to 24 months in prison, U.S. Attorney Paul J. Fishman announced.                

Willie Chestnut Jr., 62, of Newark, previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with one count 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:

Chestnut robbed the New York Community Bank in Newark on Oct. 11, 2013, by intimidating the teller and another bank employee who attempted to intercede. He approached the teller and told her he needed to make a withdrawal. After the teller handed him a withdrawal slip, Chestnut demanded bills from the top teller drawer.

Chestnut was arrested by officers of the Newark Police Department shortly after fleeing the scene in a taxi cab, wearing the same clothes he wore during the robbery and with the stolen money and the withdrawal slip in his pocket.

In addition to the prison terms, Judge Hayden sentenced Chestnut to serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s sentencing. He also thanked the Newark Police Department for its contribution.

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

15-006                                             

Defense counsel: Lisa Mack Esq., Assistant Federal Public Defender, Newark

Criminal Enterprise Provided Illegal Aliens and Others with Stolen Immigration Documents, Falsified Visas, Passports, Utility Bills and Bank Statements

NEWARK, N.J. – The leader of a criminal organization who ran a multi-state scheme to fraudulently obtain driver’s licenses for illegal aliens and other ineligible individuals was sentenced today to 72 months in prison, U.S. Attorney Paul J. Fishman announced.

Young-Kyu Park, 58, formerly a resident of Fort Lee, New Jersey, and later a resident of Los Angeles, California, previously pleaded guilty before U.S. District Judge Faith S. Hochberg to Counts One through Three of an indictment charging him with conspiracy to produce identification and false identification documents; conspiracy to steal government property and transport stolen property in interstate commerce, and conspiracy to commit money laundering. Judge Hochberg imposed the sentence today in Newark federal court.

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

Park was the leader of a criminal enterprise (the Park Criminal Enterprise) operating in Palisades Park, New Jersey, Fort Lee and in other states. He was one of 22 people charged in June 2012 with allegedly providing a suite of unlawful services to individuals illegally residing in the United States, including fraudulently obtaining driver's licenses, and investor and student visas. Federal agentsarrested defendants in New Jersey, New York, California, Nevada, Virginia, and Georgia B including a contract employee of U.S. Citizenship and Immigration Services (USCIS) charged with and later convicted of stealing and providing forms used to aid in the scheme.

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

Park fraudulently obtained, completed and sold genuine I-797 forms for customers to get licenses. An I—797 form is used by the federal government B including 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 these forms to verify the authenticity of an applicant’s foreign passport and to verify the applicant’s lawful presence in the United States. One version of this form can be used to show eligibility for in-state college tuition.

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.

In addition to the prison term, Judge Hochberg sentenced Park to two years of supervised release, fined him $10,000 and ordered forfeiture of $1.2 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge John P. Woods; 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 ofNew 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, Lisa M. Colone and David M. Eskew of the U.S. Attorney’s Criminal Division in Newark.

15-004                                    

Defense counsel: Mark Waecker, Los Angeles, Calif.

NEWARK, N.J. – The owner of a New Jersey-based insurance adjusting company was sentenced today to 32 months in prison for his role in a scheme to defraud the N.J. Turnpike Authority (NJTA) and various insurance companies of at least $900,000, U.S. Attorney Paul J. Fishman announced.

Robert Napolitano, 55, of Clifton, New Jersey, owner of Dawn to Dusk LLC, previously pleaded guilty before U.S. District Judge Kevin McNulty to an information charging him with using the mail to facilitate a scheme to defraud the NJTA and insurance companies through false and fraudulent pretenses, representations and promises. Judge McNulty imposed the sentence today in Newark federal court.

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

In October 2011, Napolitano reached an agreement with Gerardo Blasi, 56, of Clifton, New Jersey, a claims manager for the NJTA. It was Blasi’s job to negotiate and recover the costs of repairs from insurance companies of motorists who caused damage to property belonging to the NJTA. As part of the agreement, it was Napolitano’s responsibility to evaluate the damage caused by the insured motorist, create an estimate of the cost to repair the damage, and negotiate with the particular insurance company to arrive at the repair amount. Napolitano would request that the checks issued by the insurance companies for the costs of repairing the damage be made payable to Dawn to Dusk and mailed to Napolitano’s business.

Once Napolitano received these checks he would keep a portion of the proceeds for himself, provide Blasi with a share of the proceeds, and sometimes send the remaining amount to the NJTA as payment for the damages caused by the insured motorist. However, on several occasions, he and Blasi simply kept all of the proceeds. As a result of this scheme, Napolitano and others defrauded the NJTA and various insurance companies of approximately $900,000.

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

Blasi previously pleaded guilty to his role in the scheme and was sentenced on Nov. 12, 2014, to 45 months in prison and three years of supervised release.

U.S. Attorney Fishman credited special agents from the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s sentence. He also thanked the N.J. Turnpike Authority, under the direction of Veronique Hakim, for its cooperation during the investigation.

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

15-005                                             

Defense counsel: John Yauch Esq., Assistant Federal Public Defender, Newark

CAMDEN, N.J. – A Camden, New Jersey, man was sentenced today to 24 months in prison for his role in a scheme to produce and sell fake government documents, U.S. Attorney Paul J. Fishman announced.

Domingo Luna, 34, aka “Morro,” previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with one count of making fake identification documents and one count of willfully entering the United States illegally. Judge Rodriguez imposed the sentence today in Camden federal court.

Luna was arrested by special agents of Immigration and Customs Enforcement, Homeland Security Investigations (ICE HSI) on Dec. 12, 2013. A Mexican citizen not legally in the United States, he has been held in ICE administrative custody since that time.

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

Luna, who previously convicted of theft in 2001 and later convicted of aggravated assault with bodily harm in 2011, was deported from the United States on May 29, 2012. During his plea hearing Luna admitted to willfully entering the United States after his 2012 deportation.

Federal law enforcement officers learned that a man nicknamed “Morro” was producing and selling false and fraudulent U.S. Social Security cards, permanent residence cards and driver’s licenses from a location in Camden. From early to mid-December 2013, “Morro,” who was later identified as Luna, sold an undercover law enforcement officer two fake Social Security cards, a fraudulent permanent residence card and a Pennsylvania driver’s license. Luna took pictures of the officer with a digital camera and produced the documents at the Camden address. At the time of his arrest, law enforcement officers found evidence of a sophisticated fraudulent document-making operation, including computer equipment, a digital camera, a laminating machine and at least 25 fake cards in Luna’s residence.

In addition to the prison term, Judge Rodriguez sentenced Luna to three years of supervised release.

U.S. Attorney Fishman credited special agents of ICE HSI, under the direction of Acting Special Agent in Charge John P. Woods with the investigation leading to today’s arrests.

The government is represented by Assistant U.S. Attorney Sara A. Aliabadi of the U.S. Attorney’s Office Criminal Division in Camden.

15-007                                                                 

NEWARK, N.J. – A Bergen County, New Jersey, man was sentenced today to 18 months in prison for tax evasion, U.S. Attorney Paul J. Fishman announced.

Mikhail Goldman, 63, of Fort Lee, New Jersey, previously pleaded guilty before U.S. Magistrate Judge Michael A. Hammer to a one-count information charging him with tax evasion for failing to report a total of $600,000 in income that he received between 2007 and 2011.  Goldman was sentenced to 18 months in prison by United States District Judge Faith S. Hochberg. 

According to documents filed in this case and statements made in court: Goldman received $12 million in checks written to various companies controlled by him, which he cashed for a fee of 5 percent of the face amount of each check. Goldman then failed to disclose those retained fees of $600,000 on his income tax returns to avoid paying the taxes he owed.

In addition to the prison term, Judge Hochberg sentenced Goldman to three years of supervised release and ordered Goldman to pay over $120,000 in restitution to the United States.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s sentence.

The government is represented by Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

14-003                                                    

Defense counsel: George Farkas Esq., Brooklyn, New York

Admitted Accepting Bribes for Test Referrals to Clinical Laboratory

NEWARK, N.J. – A doctor with a practice in Paterson, New Jersey, was sentenced today to three years’ probation, which includes one year of house arrest with electronic monitoring, for accepting more than $200,000 in bribes from Parsippany, New Jersey-based Biodiagnostic Laboratory Services LLC (BLS) as part of a long-running scheme operated by the lab, its president, and numerous associates, U.S. Attorney Paul J. Fishman announced.

Claudio Dicovsky, 52, of Fort Lee, New Jersey, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging him with one count of accepting bribes. Judge Chesler imposed the sentence today in Newark federal court.

Including Dicovsky, 33 people – 22 of them physicians – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.

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

Dicovsky admitted he agreed with BLS president David Nicoll, 40, of Mountain Lakes, New Jersey, to accept bribes in exchange for his referral of blood specimens. To disguise those bribes, Dicovsky and BLS entered into a sham lease agreement and a sham service agreement in which the monthly bribe payments of more than $5,000 were characterized as “lease” and “service” payments. While the lease agreement purported to be for 1,000 square feet of space, little or no space was allocated to BLS in Dicovsky’s medical office in Paterson. Between November 2006 and August 2009, Dicovsky received more than $224,000 in bribe payments from BLS, and BLS made more than $800,000 through testing on blood specimens referred by Dicovsky.

In addition to probation and house arrest, Judge Chesler fined Dicovsky $75,000 and sentenced him to 1,500 hours of community service. He must also forfeit more than $222,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS– Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.

The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Joseph Minish, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office 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 $620 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.

15-002                                              

Defense counsel: Gerald Miller Esq., Jersey City, N.J.

NEWARK, N.J. – The former Rockaway Township superintendent of schools today admitted instructing a witness to lie to the FBI about $4,000 that the witness had previously given to him, U.S. Attorney Paul J. Fishman announced.

Gary Vitta, 63, of Denville, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging him with one count of attempted witness tampering.

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

Vitta was the superintendent of the Rockaway Township School District from 2006 to 2011. He dealt with brokers who provided insurance brokerage services to the district and were paid a commission for the insurance contracts they negotiated. At a Vitta family event, Vitta accepted approximately $4,000 in cash from three of the brokers who had provided insurance brokerage services. Shortly after accepting the $4,000, Vitta returned the $4,000 to one of the insurance brokers. Then, in December 2013, Vitta again accepted the $4,000 from the same insurance broker to whom he had returned it.

After accepting the $4,000, Vitta was interviewed by law enforcement agents with the FBI about any benefits that he may have received from insurance brokers who provided brokerage services to the school district. Vitta failed to mention the $4,000 that he had recently received from an insurance broker, or the $4,000 that he had previously received from three insurance brokers at a family event. Following the interview, Vitta contacted the insurance broker who had repaid him the $4,000 in December 2013. He met the insurance broker at a restaurant in Denville, New Jersey, where they first discussed whether the broker was wearing a wire. Vitta told broker that he had recently been approached by FBI agents. He handed the broker a note instructing the broker to lie to the FBI about the $4,000 that the broker had given to him in December 2013. He instructed the broker to lie about the $4,000 that Vitta had previously received at a family event. He also confirmed to this broker that one of the other insurance brokers who had paid him money at that family event also would lie to the FBI if questioned about that payment.

The witness tampering charge to which Vitta pleaded guilty carries a maximum potential penalty of 20 years in prison and a maximum fine of $250,000. Sentencing is scheduled for April 22, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Lee M. Cortes Jr. of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

15-001                      

Defense counsel: Henry E. Klingeman Esq., Newark

NEWARK, N.J. – A Mauritius man is scheduled to appear in Newark federal court for allegedly engaging in abusive sexual contact with a sleeping woman aboard a cruise ship, U.S. Attorney Paul Fishman announced.

Karan Seechurn, 25, was detained upon arrival in Bayonne, New Jersey, early on Dec. 27, 2014, and arrested by agents of the FBI. He is charged by complaint with abusive sexual contact and is scheduled to appear this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

According to the complaint:

Seechurn was an employee of the cruise line and was responsible for restocking the minibars located in passengers’ rooms. In order to conduct this duty, he was provided with a key that gave him access to passengers’ rooms. On Dec. 23, 2014, he allegedly used this key to access passengers’ rooms when he was not authorized or permitted to do so. Seechurn entered a sleeping female passenger’s room without her knowledge and permission. She awoke to find Seechurn touching her genitalia and she pushed him off her. When she tried to leave the room, he pulled her back and threated to burn down the cruise ship if she told anyone.

The federal government has special maritime jurisdiction over sexual abuse cases, such as those that occur on cruise ships.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the charge.

The government is represented by Meredith Williams of the U.S. Attorney’s Office General Crimes Unit in Newark.

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

14-459                                                     

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

Seechurn, Karan Complaint

NEWARK, N.J. – A company and its owner have agreed to pay $105,000 to settle allegations that they failed to properly account for grant money given to Justice Planners International, a joint venture created to provide juvenile detention center consulting services to Native American tribes, U.S. Attorney Paul J. Fishman and Michael Horowitz, Inspector General for the U.S. Department of Justice, announced today.

Mark Goldman of Atlanta, Georgia, and Mark Goldman Associates (MGA) have agreed to resolve allegations that they violated the federal False Claims Act. They have agreed to pay $105,000 to the United States to resolve the federal and civil claims.

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

Beginning in October 2005 Goldman and MGA allegedly failed to properly account for $2,369,838 drawn from Justice Department grants. These funds were used by Goldman and his business partner, Justice Solutions Group, of Closter, New Jersey, to provide training and technical assistance to Native American tribes in planning and constructing correctional facilities. While there was no indication that Goldman and MGA failed to perform the services as required by the grants, they nevertheless failed to maintain books and records to satisfactorily account for the funds drawn down from those grants.

The civil settlement agreement is between the United States of America – acting through the U.S. Attorney’s Office for the District of New Jersey and on behalf of the U.S. Department of Justice Office of the Inspector General (DOJ OIG), and Goldman and MGA.

U.S. Attorney Fishman credited Special Agent in Charge M. Elise Chawaga of the DOJ OIG with the investigation leading to the settlement.

The government is represented by Special Litigation Counsel Anthony J. LaBruna of the U.S. Attorney’s Office Civil Division in Newark.

The claims settled by this agreement are allegations only; there have been no admissions of liability.

14-460                                                          

Defense counsel: Brian McEvoy Esq., Atlanta, Ga.

TRENTON, N.J. - A U.S. Bureau of Prisons employee today admitted providing two mobile phones to an inmate at Fort Dix Federal Correctional Institution (FCI Fort Dix), U.S. Attorney Paul J. Fishman announced.

Elizabeth M. Quinones, 30, of Willingboro, New Jersey, pleaded guilty before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court to an information charging her with one count of giving an inmate at FCI Fort Dix two mobile telephones.

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

Quinones worked as a health services assistant at FCI Fort Dix, in Burlington County, New Jersey. Between May 2014 and June 2014, Quinones provided an FCI Fort Dix inmate with two mobile phones. Federal inmates housed at FCI Fort Dix are prohibited by federal statute from possessing mobile telephones.

The offense to which Quinones pleaded guilty is punishable by a maximum potential penalty of one year in prison and a $100,000 fine. Sentencing is scheduled for April 9, 2015.

U.S. Attorney Fishman credited special agents of the U.S. Department of Justice Office of the Inspector General, New Jersey Area Office, under the direction of Special Agent in Charge Ronald G. Gardella, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Eric W. Moran of the U.S. Attorney’s Office Special Prosecutions Division in Trenton.

14-461                                                          

Defense Counsel: Mark W. Catanzaro Esq., Trenton, N.J.

NEWARK, N.J. - A complaint charging the owner of a Ramsey, New Jersey, auto dealership with allegedly engaging in a pattern of fraudulent activity through his business has been unsealed, U.S. Attorney Paul J. Fishman announced today.

Afzal Khan, a/k/a “Bobby Khan,” 32, of Egg Harbor Township, New Jersey, was charged by complaint with one count of wire fraud. He is currently being sought by law enforcement.

According to the complaint unsealed today in Newark federal court:

From at least December 2013 through September 2014, Khan, through Emporio Motor Group, engaged in acts to defraud lenders to Emporio and customers of the dealership.

As part of his criminal activities, Khan obtained loans from the auto finance division of a large bank for cars that he never delivered, but for which the purchaser was still responsible.  He also obtained loans from the bank for cars that were delivered, but for which neither he nor Emporio had title. As a result, the purchasers of these cars were liable for the loan, but could not register the vehicles. In addition, Khan offered to sell cars for individuals on consignment, and then neither returned the cars nor provided any money from car sales.

For example, Emporio submitted a loan application in February 2014 for approximately $150,000 in connection with the sale of a 2013 Rolls Royce. The victim who had intended to purchase the car had signed the necessary paperwork for the purchase and financing of the car, but never received the vehicle. Khan himself sent some loan payment checks – some of which he stopped or were returned for insufficient funds – but failed to pay the balance on the car. The true owner of the Rolls Royce told law enforcement that it had never even been sold to Khan or left the owner’s possession.

As a result of Khan’s actions, the bank is exposed to a potential loss of more than $1.7 million. To date, more than 75 individuals have filed complaints concerning Khan’s actions at Emporio.

The charge of wire fraud carries a maximum potential penalty of 20 years in prison and a fine of the greater of $250,000 or twice the gross profits to Khan or twice the gross loss suffered to the victims of the offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; as well as officers of the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli, and the Borough of Ramsey Police Department, under the direction of Chief of Police Bryan H. Gurney, Chief of Police, with the investigation.

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

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

14-458                                                            

Khan, Afzal Complaint

NEWARK, N.J. - A Somers Point, New Jersey, man was sentenced today to six hours in jail for killing, or attempting to kill, four different species of hawks protected by federal law, U.S. Attorney Paul J. Fishman announced.

Robert Losasso, 70, previously pleaded guilty before U.S. Magistrate Judge Steven C. Mannion to six counts of violating the Migratory Bird Treaty act for shooting the birds from his home. Judge Mannion imposed the sentence today in Newark federal court.

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

Losasso admitted that he fatally shot or attempted to shoot red-tailed, sharp-shinned, red-shouldered and Cooper’s hawks on several occasions. These species are among the tens of thousands of birds of prey that migrate every year from Canada along the Atlantic Flyway through New Jersey.  Losasso also admitted that he didn’t have any permit to shoot the birds.

The Migratory Bird Treaty Act is a statute that was enacted in 1918 and implements in the United States protections afforded migratory birds under several international conventions to which the United States is a party. Breeding populations of red-shouldered hawks are listed as endangered on the State of New Jersey’s Endangered and Threatened Wildlife list. Sharp-shinned hawks and populations of Cooper’s hawks also have special protections under New Jersey state law.

In addition to the incarceration, which will be served Jan. 5, 2015, Judge Mannion sentenced Losasso to 18 months of supervised release, during which time he may not possess any firearms. He must also pay a total of $4,350 in restitution to four wildlife rehabilitation facilities and perform 60 hours of community service at a wildlife facility.

In his plea agreement, Losasso must also pay more than $4,000 in restitution to the wildlife rehabilitation centers that incurred losses treating or euthanizing hawks injured as a result of his conduct.

U.S. Attorney Fishman credited special agents of U.S. Fish and Wildlife Service, Office of Law Enforcement, under the direction of Resident Agent in Charge Carmine Sabia, with the investigation leading to today’s sentencing. He also thanked the N.J. Division of Fish and Wildlife, Bureau of Law Enforcement, and the Somers Point Police Department for their roles in the case.

The government is represented by Assistant U.S. Attorney Kathleen P. O’Leary of the U.S. Attorney's Office Health Care and Government Fraud Unit in Newark.

14-457                                                     

NEWARK, N.J. – A Randolph, New Jersey, man was sentenced to 141 months in prison for robbing a bank at gunpoint, U.S. Attorney Paul J. Fishman announced today.

Rahman Fulton, 35, was previously convicted by a federal jury of one count of bank robbery and one count of using a firearm in furtherance of the bank robbery. Fulton was convicted after a two-week trial before U.S. District Judge Stanley R. Chester, who imposed the sentence today in Newark federal court.

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

Fulton was charged with robbing the PNC bank in Randolph May 25, 2012. Fulton entered the bank wearing a black cloth mask covering his head and face and holding a handgun. He demanded and received money from a bank teller. The bank teller slipped a GPS tracking device into the money she handed over to Fulton. The GPS data placed the tracking device in Fulton’s bedroom minutes after the robbery. He later lied to the police about his whereabouts during the robbery and made other incriminating statements to his girlfriend and girlfriend’s sister, including a call just 10 minutes after the robbery to someone that worked across the street from the bank asking them if they had heard about the robbery.

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

U.S. Attorney Paul J. Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the charge. He also thanked the Randolph Township Police Department and Morris County Prosecutor’s Office for their contributions to the case.

The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Elizabeth Harris of the U.S. Attorney's Office General Crimes Unit in Newark.

14-456                                                      

Defense counsel: Carol Gillen Esq. and K. Anthony Thomas Esq., Assistant Federal Public Defenders, Newark                       

NEWARK, N.J. - A former partner of a prominent New York law firm and her husband were arrested by federal law enforcement officers this morning for allegedly engaging in a conspiracy to obtain millions of dollars through fraudulent activity, U.S. Attorney Paul Fishman announced.

Agents of IRS-Criminal Investigation and the Drug Enforcement Administration, arrested Keila Ravelo, 49, and Melvin Feliz, 50, of Englewood Cliffs, New Jersey, this morning on a complaint charging them with conspiracy to commit wire fraud. They are scheduled to make their initial appearance this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.

According to the complaint:

An investigation conducted jointly by the IRS and DEA revealed that from 2008 through July 2014, Ravelo and Feliz used two companies  (Vendor 1 and Vendor 2) to fraudulently obtain money from two New York law firms (Law Firm 1 and Law Firm 2) where Ravelo previously worked. Ravelo worked as a partner at Law Firm 1 from at least 2008 to October 2010. She then joined Law Firm 2 as a partner and worked there from October 2010 to November 2014.  Vendor 1 and Vendor 2 purported to provide litigation support services to both of those law firms.   

Ravelo and Feliz either created or caused to be created both vendors, including having bank accounts opened in Vendor 1’s and Vendor 2’s names, and controlled those bank accounts.  Ravelo and Feliz used Vendor 1 and Vendor 2 to fraudulently obtain money from Law Firm 1, Law Firm 2, and a client of both those firms by submitting invoices to both law firms for work that was not performed. Funds paid to Vendor 1 and Vendor 2 were allegedly used to pay the personal expenses of Ravelo and Feliz or were transferred to a joint account held by them. Checks were issued from accounts controlled by Ravelo and Feliz to certain individuals for allegedly performing litigation support work. Law enforcement officers interviewed some of these individuals, who stated that they never performed any legal or litigation support work for Vendor 1 and/or Vendor 2.  Law firm employees who worked with Ravelo on matters allegedly supported by the vendors stated that they reviewed no work product produced by either Vendor 1 or Vendor 2. Individuals who opened the respective bank accounts for Vendor 1 and Vendor 2 said they did so at the request of either Ravelo or Feliz and then signed blank checks, which were given to Ravelo or Feliz.

The two law firms paid Vendor 1 and Vendor 2 more than $5 million. Ravelo, in her capacity as a partner at the law firms, approved many of the payments from the law firms to Vendor 1 and Vendor 2. The couple funneled the majority of the fraudulently obtained funds into their joint bank account and used the funds to pay for their personal expenses and investments, which included $250,000 in payments to a jewelry store.

Both law firms and the client have cooperated with the investigation. 

The charge of conspiracy to commit wire fraud carries a maximum potential penalty of 20 years in prison and a fine of the greater of $250,000, twice the gross profits to the defendants or twice the gross loss sustained by the victims.

U.S. Attorney Fishman credited special agents of the DEA, Newark Division, under the direction of Special Agent in Charge Carl J. Kotowski; and special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, New Jersey, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys Andrew Kogan, Brian Urbano, Ronnell Wilson and Marion Percell, of the U.S. Attorney’s Office Criminal Division and Assistant U.S. Attorney David Foster of the U.S. Attorney’s Office Special Prosecution’s Division in Newark.

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

14-455                                      

Defense counsel: Ravelo: Aidan O’Connor Esq., Hackensack, N.J., and Steve H. Sadow Esq., Atlanta, Ga.

Feliz: Patrick Joyce Esq., New York

Union Officials Admit Extorting Port Workers for Christmastime Tribute Payments

NEWARK, N.J. – Three North Jersey men today admitted conspiring to conduct or participate in the affairs of the Genovese organized crime family of La Cosa Nostra (the “Genovese family”) through a pattern of racketeering activity, including a conspiracy to extort members of the International Longshoremen’s Association (ILA) for Christmastime tribute payments, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.

Stephen Depiro, 59, of Kenilworth, New Jersey, a Genovese family soldier, and two other Genovese family associates – Albert Cernadas, 79, of Union, New Jersey, former president of ILA Local 1235 and former ILA executive vice president; and Nunzio LaGrasso, 64, of Florham Park, New Jersey, former vice president of ILA Local 1478 and ILA representative – pleaded guilty today before U.S. District Judge Claire C. Cecchi in Newark federal court. All three pleaded guilty to Count One of the second superseding indictment charging them with racketeering conspiracy. Depiro admitted to predicate acts involving conspiracy to commit extortion and bookmaking. Cernadas and LaGrasso admitted to predicate acts involving conspiracy to commit extortion and multiple extortions.

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

Since at least 2005, Depiro has managed the Genovese family’s control over the New Jersey waterfront – including the nearly three-decades-long extortion of port workers in ILA Local 1, ILA Local 1235 and ILA Local 1478. Members of the Genovese family, including Depiro, are charged with conspiring to collect tribute payments from New Jersey port workers at Christmastime each year through their corrupt influence over union officials, including the last three presidents of Local 1235 and vice president of ILA Local 1478.  Depiro also controlled a sports betting package that was managed by several others, through the use of an overseas sports betting operation.

During their guilty plea proceedings, Depiro, Cernadas and LaGrasso admitted their involvement in the Genovese family, including conspiring to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear.   Cernadas and LaGrasso admitted to carrying out multiple extortions of dockworkers. The timing of the extortions typically coincided with the receipt by certain ILA members of “Container Royalty Fund” checks, a form of year-end compensation. 

The racketeering charge to which Depiro, Cernadas and LaGrasso pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled as follows: Cernadas, Jan. 16, 2015; LaGrasso, March 9, 2015; and Depiro, March 10, 2015.

U.S. Attorneys Fishman and Lynch credited the FBI in New Jersey, under the direction of Special Agent in Charge Aaron T. Ford, and in New York, under the direction of Assistant Director in Charge George Venizelos, as well as the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia, with the investigation leading to today’s guilty pleas. They also thanked the Waterfront Commission of New York Harbor for its cooperation and assistance in the investigation.

The government is represented by Assistant U.S. Attorney Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York, and Assistant U.S. Attorney Anthony Mahajan, of the U.S. Attorney’s Office, District of New Jersey.

14-452                                                              

Defense counsel: Depiro: Alyssa Cimino Esq., Fairfield, New Jersey
Cernadas: Joseph Hayden Esq., Roseland, New Jersey
LaGrasso: Michael Critchley, Sr., Esq., Roseland

Depiro, Stephen et al. S2 Indictment

NEWARK, N.J. – Lockheed Martin Integrated Systems (LMIS) has agreed to pay $27.5 million to resolve allegations that it violated the False Claims Act by knowingly overbilling the government for work performed by LMIS employees who lacked required job qualifications.

The settlement was announced today by U.S. Attorney Paul J. Fishman for the District of New Jersey and Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.

“U.S. forces rely on the goods and services provided by defense contractors, so it is imperative the government be able to rely on those contractors to adhere to the rules,” said U.S. Attorney Fishman.  “This settlement should remind all who do business with the government that there is a price to pay for fudging the math.”

“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Branda.  “The department will ensure that those who do business with the government, and seek taxpayer funds, do so fairly and in accordance with the applicable rules.”

LMIS is a subsidiary of Lockheed Martin Inc., which is headquartered in Bethesda, Maryland.  The alleged labor mischarging occurred on the Rapid Response (CR2) contract and the Strategic Services Sourcing (S3) contract, both issued by the U.S. Army Communication and Electronics Command (CECOM).  CECOM is located at Fort Monmouth, New Jersey, and at the Aberdeen Proving Group in Maryland.  The purpose of the CR2 and S3 contracts is to provide rapid access to products and services to be provided to the Army in Iraq and Afghanistan. Individual task orders then are separately negotiated, based on these contracts, to quickly meet the needs of CECOM.  LMIS allegedly violated the terms of the contracts by using under-qualified employees who were billed to the United States at the rates of more qualified employees.  The overbilling allegedly resulted in greater profit for LMIS.

“This settlement demonstrates the commitment of the Defense Criminal Investigative Service (DCIS) and our partners to vigorously pursue alleged violations of the False Claims Act,” said Special Agent in Charge Craig W. Rupert of the DCIS Northeast Field Office.  “All contractors doing business with the federal government are expected to abide by the acquisition rules no matter who they are.  Investigations of such allegations are necessary to protect American taxpayers and our warfighters.”

This settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of New Jersey, the Southern New Jersey Branch of the Defense Contract Audit Agency (DCAA) and the DCAA’s Mid-Atlantic Region's Comprehensive Labor Team and Investigative Support Team, the U.S. Army’s Criminal Investigative Command’s Major Procurement Fraud Unit and the DCIS.

The District of New Jersey was represented by Senior Litigation Counsel Anthony J. LaBruna Jr. of the U.S. Attorney’s Office Civil Division in Newark.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

14-454                                                   

TRENTON, N.J. – Two members of a large-scale drug trafficking organization have admitted conspiring to distribute hundreds of grams of heroin throughout Monmouth and Ocean counties, U.S. Attorney Paul J. Fishman announced.
 
Valerie Resendes, 27, of Beachwood, New Jersey, and Rashawn Ramos, 37, of Perth Amboy, New Jersey, both pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court. Resendes pleaded guilty today to an information charging her with one count of conspiring to distribute heroin. On Dec. 16, 2014, Ramos pleaded guilty to an information charging him with one count of conspiring to distribute 100 grams or more of heroin and 500 grams or more of cocaine.

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. Of those 21 individuals, 10 have pleaded guilty.

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

Resendes admitted that between February 2013 and March 2014, she conspired with Young and others to distribute heroin in Ocean and Monmouth counties. During this time, Resendes possessed and sold more than 400 grams of heroin.

Ramos admitted that from November 2013 through March 2014, he received numerous packages of heroin and cocaine at his residence in Perth Amboy. The packages were sent from California via the U.S. Mail. Ramos later transferred the packages to another conspirator, who distributed the narcotics to others in New Jersey, including members of the Britt-Young DTO. Altogether, Ramos received at least 1,000 grams of heroin and 1,500 grams of cocaine.   

The narcotics conspiracy charge to which Resendes pleaded guilty carries a maximum penalty of 20 years in prison and $1 million fine. The narcotics conspiracy charge to which Ramos pleaded guilty carries a mandatory minimum penalty of five years in prison, a maximum of 40 years in prison and a $5 million fine. Sentencing for Resendes and Ramos is set for March 10, 2015, and March 24, 2015, respectively.

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Office, under the direction of Special Agent in Charge Aaron T. Ford; officers of the Brick Township Police Department, under the direction of Chief Nils R. Bergquist: and officers of the Toms River Police Department, under the direction of Chief Mitchell Little, with the investigation leading to today’s guilty pleas. He also thanked special agents of the Bureau of Alcohol Tobacco Firearms and Explosives, under the direction of Acting Special Agent in Charge George Belsky; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; officers of the Monmouth County Prosecutor’s Office, under the direction of acting Prosecutor Christopher J. Gramiccioni; and officers of the Ocean County Prosecutor’s Office, under the direction of Prosecutor Joseph D. Coronato, for their work on the investigation. He also thanked the Monmouth County Sheriff’s Office and the Neptune Township, Asbury Park, Marlboro, Long Branch and Freehold police departments for their roles in the case.

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Defense Counsel:

Ramos: Anthony Simonetti Esq., Hightstown, New Jersey
Resendes: Lawrence G. Welle Esq., Wall, New Jersey

Resendes, Valerie Information
Ramos, Rashawn Information

NEWARK, N.J. – An Ocean County, New Jersey, man was indicted today for his role in a large-scale mortgage fraud scheme that caused millions of dollars in losses, U.S. Attorney Paul J. Fishman announced.

Joseph DiValli, 45, of Jackson, New Jersey, was charged in a seven-count indictment with one count of conspiracy to commit wire fraud and six counts of wire fraud, all of which caused losses of at least $2 million. DiValli was originally charged by complaint on Jan. 24, 2013, with one count of conspiracy to commit wire fraud.

According to documents filed in this case and statements made in court: From as early as March 2011, DiValli, a loan officer at a mortgage bank, allegedly engaged in a large-scale mortgage fraud conspiracy. He provided fraudulent documents to financial institutions in connection with mortgage loan applications on behalf of “straw buyers” to induce those financial institutions to fund mortgage loans. Relying upon those false documents, financial institutions funded mortgage loans. DiValli then profited illegally by receiving money from a conspirator.

DiValli is also charged with wire fraud involving a modification of a loan on his personal residence. From as early as March 2011, DiValli caused a loan officer at a mortgage brokerage company to send payroll ledgers and earnings statements from DiValli’s employer that falsely understated his earnings in order to fraudulently secure the modification. 

The counts of wire fraud conspiracy and bank fraud are each punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million.

U.S. Attorney Fishman credited law enforcement agents of the FBI Newark Mortgage Fraud Task Force, including special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; special agents of the Federal Housing Finance Agency, Office of the Inspector General, under the direction of Special Agent in Charge Steven Perez; special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan Larsen; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria Kelokates; special agents of the U.S. Housing and Urban Development, Office of Inspector General, Northeast Region of Investigations, under the direction of Special Agent in Charge Christina Scaringi; special agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy Romero; and the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano Gregory, for the investigation leading to today’s charges.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

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

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

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Defense counsel: Michael Calabro Esq., Newark

DiValli, Joseph Indictment

NEWARK, N.J. – The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, pleaded guilty today to conspiracy to commit wire fraud in relation to a scheme in which he directed the sale of diluted and adulterated dietary ingredients and supplements sold by his company, U.S. Attorney Paul J. Fishman announced.

Barry Steinlight, 69, of Hackettstown, New Jersey, pleaded guilty to a one-count information charging him with conspiring to commit wire fraud.  As part of his plea agreement, Steinlight admitted that Raw Deal’s gross sales during the scheme were between $7 million and $20 million.  Steinlight has agreed to forfeit more than $1 million in profits from the scheme.

“Barry Steinlight diluted his products, cheated his customers and lied to the Food and Drug Administration when they came to inspect his company,” U.S. Attorney Fishman said. “This scheme went on for four years and essentially became the business model at his company. People who sell and use dietary supplements have the right to expect that the ingredients are listed and they get what they paid for.”

“This dietary supplement company owner ignored his basic obligations in his pursuit for profit,” said Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division. “American consumers have a right to know that the dietary supplements they purchase are safe to consume and that the ingredients listed on the label are actually in the bottle. This case demonstrates the Department of Justice’s commitment to ensuring that those who deal products affecting the health and safety of consumers are law abiding and that wrongdoers will be held accountable.”

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.  Further during an U.S. Food and Drug Administration (FDA) inspection of Raw Deal in February 2012, Steinlight instructed Raw Deal employees to alter a document before providing it to the FDA.

U.S. Attorney Fishman credited special agents of the FDA’s Office of Criminal Investigations, under the direction of Acting Special Agent in Charge James J. Royal, who investigated the case.

“When a company distributes adulterated and misbranded dietary supplements, they put consumers at risk,” said Acting Special Agent in Charge Royal.  “Today’s plea agreement should serve as a reminder that FDA’s Office of Criminal Investigations will continue working with the Department of Justice to protect consumers from public health risks and fraud.”

The conspiracy charge carries a statutory maximum sentence of five years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for March 30, 3015.

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.  Paralegal Jeffrey Skonieczny of the U.S. Attorney’s Office also assisted in the criminal investigation.

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 $620 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.

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Defense counsel: William F. Maderer Esq., Florham Park, N.J.      

Steinlight, Barry Information

Obtained More Than $350,000 in Fraudulent Tax Refunds

NEWARK, N.J. – An Essex County, New Jersey, tax return preparer was sentenced today to 57 months in prison for filing false claims with the IRS using a dead tax return preparer’s identification and preparing false documents for numerous fraudulent loans, U.S. Attorney Paul J. Fishman announced.

Todd P. Halpern, 49, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with one count of filing false claims and one count of wire fraud. Judge Martini imposed the sentence today in Newark federal court.

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

In late 2008, Halpern purchased A & V Financial (A & V), a tax return preparation business located in Guttenberg, New Jersey, from the wife of the prior owner, identified only as “V.R.,” who had died in March 2008. Halpern received the company’s computers and all of its client records. As part of the agreement to purchase A & V, Halpern was to obtain a new Electronic Filing Identification Number (EFIN) in his own name. Instead, he continued to file tax returns using V.R.’s EFIN number because Halpern’s criminal record prevented him from obtaining an EFIN.

From 2009 through 2010, Halpern prepared and filed 657 fraudulent federal income tax returns with the IRS using V.R.’s EFIN. Halpern prepared and filed some of these fraudulent tax returns without the knowledge and authorization of the taxpayers identified on the returns. Some of these tax returns contained fraudulent income and deduction amounts, which generated fraudulent refunds that were directly deposited into Halpern’s bank account.

On June 24, 2009, Halpern prepared and filed a fraudulent 2008 U.S. Individual Income Tax Return 1040 form with the IRS in the name of B.G., which fraudulently claimed an income tax refund in the amount of $13,183. The 2008 1040 form prepared by Halpern contained false income and deduction entries for B.G., because B.G. did not have any income for that tax year and did not file an income tax return. The $13,183 tax refund was directly deposited into Halpern’s bank account.

Halpern received a total of $373,938 in fraudulent tax refunds. He used these funds to support his lavish lifestyle, including purchases at Prada, Chanel, Saks Fifth Avenue, and Bloomingdales, to acquire season tickets to the New York Giants, to purchase thousands of dollars in jewelry, gold coins, and silver certificates, to make car payments on multiple luxury vehicles, including a 2007 Cadillac Escalade and a 2008 Lexus GX-470, and to buy parts for his classic 1957 Chevy Bel Air.

From January 2008 through May 2012, Halpern prepared false documents for numerous fraudulent loans from financial institutions. Halpern prepared tax returns, W-2 forms, and bank statements showing inflated income and asset balances to be used to support loan applications for borrowers, including him, to acquire mortgage loans, primarily involving residential properties in New Jersey, as well as other personal and business loans. Halpern and others caused the fraudulent documents to be submitted to mortgage lenders, other financial institutions, the U.S. Department of Housing and Urban Development, and the Federal Housing Administration (FHA), which were relied upon for the approval of mortgage and other loans.

In November 2009, Halpern served as the buyer for the short sale of 215 Newark Ave., Bloomfield, New Jersey, from seller B.S. for a purchase price of approximately $185,000. In support of Halpern’s purchase of this property, an FHA-insured mortgage loan for Halpern in the amount of $181,649 was obtained from a New Jersey-based mortgage company. Halpern and others submitted numerous fraudulent documents to FHA and to the mortgage company, including false bank statements, pay stubs and 2008 federal income tax returns in Halpern and his wife’s names. As in his tax fraud scheme, the false tax returns that Halpern prepared reflected V.R.’s identification number in an effort to conceal that Halpern had personally prepared the tax returns.  

At the plea hearing, the Judge Martini also entered a consent judgment and order of forfeiture for $373,938 and for a classic 1957 Chevy Bel Air, which constitutes the proceeds that Halpern obtained as a result of his frauds. In addition to the prison term, Judge Martini also sentenced Halpern to serve five years of supervised release and pay restitution of $1.3 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Cary Rubenstein, with the investigation leading to today’s sentencing.

The government is represented by Senior Litigation Counsel Leslie Faye Schwartz of the U.S. Attorney’s Office Criminal Division in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

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Defense counsel: Marshall J. Wofsy Esq., Jersey City, N.J.

CAMDEN, N.J. – A Lawnside, New Jersey, man today admitted illegally possessing firearms and selling 22 guns without a license, U.S. Attorney Paul J. Fishman announced.

Anthony Gilmore, a/k/a “Tone,” 25, pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to an information charging him with one count of conspiring to deal firearms without a license and one count of possession of a firearm by a previously convicted felon.

According to documents filed in this case and statements made in court: Between April 8, 2013, and July 8, 2014, Gilmore conspired with four others to sell 22 firearms on several occasions, for profit and without a license. The 22 firearms included handguns, shotguns, and an assault rifle. Gilmore personally sold or participated in the sale of at least seven firearms, including handguns and shotguns, as well as a bullet-proof vest, to a witness cooperating with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Gilmore’s conspirators obtained the firearms in South Carolina and brought them to New Jersey on a weekly basis, at times using Amtrak to transport the guns. On two occasions, Gilmore sold a firearm to the cooperating witness along with ammunition. All 22 weapons are now in the custody of law enforcement.

The conspiracy charge to which Gilmore pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. The unlawful possession of a firearm as a convicted felon charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for March 23, 2015.

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

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Defense counsel: Assistant Federal Public Defender Christopher O’Malley Esq., Camden

Gilmore, Anthony Information