District of New Jersey

NEWARK, N.J. – Two Newark men will make their initial appearance in court today on charges they carried out two armed carjackings and one attempted carjacking during a five-day span in September 2013, U.S. Attorney Paul J. Fishman announced.

Dion Hines, 21, is charged by complaint with two counts of carjacking, one count of attempted carjacking, and one count of using and carrying a firearm during a crime of violence. Roosevelt Robinson, 23, is charged by complaint with one count of carjacking, one count of attempted carjacking, and one count of using and carrying a firearm during a crime of violence. Both defendants are expected to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

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

At 10:30 p.m. on Sept. 22, 2013, Hines, Robinson, and another male conspirator allegedly approached a Mercedes Benz sedan that was parked in a residential driveway in Newark. Hines brandished a silver revolver and ordered the driver to get out of the vehicle. Hines, Robinson, and the other conspirator pulled on the driver’s side door, but the victim resisted. Robinson allegedly said: “Shoot that [expletive].” The victim eventually got out of the Mercedes Benz and Robinson sat in the driver’s seat.

After Hines and the other conspirator fled on foot, the victim pulled Robinson from the Mercedes Benz, got back into the vehicle and reversed the car. Hines allegedly returned and fired two shots at the Mercedes Benz, striking the rear driver side door. Hines, Robinson, and the other conspirator then ran down the block and jumped into a car waiting nearby. The victim pursued them in the Mercedes Benz, striking both the getaway car and Robinson before Robinson entered the vehicle. A car chase ensued, during which Hines fired two additional shots at the Mercedes Benz.

At 9:25 p.m. on Sept. 26, 2013, Hines allegedly approached a vehicle parked in a lot near a Newark residence. After the driver exited the vehicle, Hines allegedly pointed a black revolver and stated: “Give me your car keys or I’ll shoot.” Around this time, another victim, who had just parked a late-model Acura sedan in the parking lot, walked over to where Hines and the other victim were standing. Hines then pointed the revolver at owner of the Acura and demanded the car keys. The owner of the Acura complied and Hines got into the car and fled.

At 4:45 a.m. on Sept. 27, 2013, a dark-colored SUV driven by an unknown person pulled in front of a Range Rover stopped at an intersection in Belleville, New Jersey, blocking the Range Rover’s path. Hines allegedly jumped out of the passenger side of the dark-colored SUV and pointed a black handgun at the victim. Hines then approached the driver’s door, pulled the victim out of the vehicle and demanded the car keys. The victim complied and Hines then got into the Range Rover and fled, followed by the dark-colored SUV.

At 2:20 p.m. that day, law enforcement located the Range Rover in Newark. A brief car chase ensued, during which the Range Rover rammed multiple police vehicles before getting trapped and stopping. Law enforcement officers surrounded the Range Rover with their guns drawn. Hines and Robinson both exited the Range Rover and ran. Law enforcement officers arrested them shortly thereafter. The third occupant was taken into custody immediately. After arresting the three men, law enforcement officers searched the Range Rover and discovered a loaded black revolver in the vehicle.

U.S. Attorney Fishman credited special agents of the U.S. Department of Homeland Security, Homeland Security Investigations, under the direction of Acting Special Agent in Charge John P. Woods in Newark; and the Newark, Elizabeth and Belleville police departments with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney J. Jamari Buxton of the U.S. Attorney’s Office Organized Crime/Gangs in Newark.

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Hines, Dion, and Robinson, Roosevelt Complaint

TRENTON, N.J. – A former collateralized mortgage obligation (CMO) bond trader was sentenced today to 30 months in prison for engaging in a fraudulent trading scheme in which he manipulated the prices of CMOs by millions of dollars over a period of four years, U.S. Attorney Paul J. Fishman announced.

Douglas Green, 50, of Boca Raton, Florida, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to one count of securities fraud. Judge Wolfson imposed the sentence today in Trenton federal court.

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

From May 2004 through June 2008, Green was a registered representative associated with Crocker Securities, a broker dealer that used the clearing services of Pershing LLC.  Pershing, which is based in Jersey City, New Jersey, is one of the largest clearing firms in the United States.  As Crocker’s clearing firm, Pershing received payments and securities from Crocker and handled record-keeping for the securities Crocker controlled.

Green traded a Crocker account on behalf of the firm. In June 2004, the account Green managed suffered significant trading losses, which continued to grow during the length of the fraudulent scheme. To conceal the losses, Green entered into fraudulent transactions designed to increase the price of the CMOs to correspond to and cover the increasing losses in the Crocker trading account.

Green admitted that to manipulate the price of the CMO he entered a fraudulent sale into Pershing’s trading system.  As the settlement date of the trade approached, Green cancelled the fraudulent sale so it would not actually settle and thereby alert Pershing and the purported purchasers, who were unaware they were identified in the fake transaction.

Green also manipulated the price of the CMOs using a network of bond traders. The traders purchased the CMOs at Green’s direction and immediately sold them back to him at slightly elevated prices. As a result of Green’s fraudulent trading activity, the total price of the CMOs was artificially inflated by millions of dollars. When the scheme collapsed, Pershing lost millions of dollars when it was forced to liquidate the CMO positions in the Crocker account.

In addition to the prison term, Judge Wolfson sentenced Green to three years of supervised release and ordered him to pay $9.2 million in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent-in-Charge Aaron Ford, for the investigation which led to today’s sentence. He also thanked the Financial Industry Regulatory Authority for its assistance in the investigation.

The government is represented by Assistant U.S. Attorney Paul A. Murphy of the U.S. Attorney’s Office Economic Crimes Unit 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: Thomas Fitzpatrick, Esq. – New York, N.Y.

NEWARK, N.J. – A pediatrician with a practice in Staten Island and Brooklyn, New York, was sentenced today to 37 months in prison for accepting bribes in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Demetrios Gabriel, 47, of Brooklyn, 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 Gabriel, 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 related cases and statements made in court: Gabriel admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid more than $4,500 per month. Gabriel received a flat fee of $3,000 per month in cash, plus additional cash based on the number of patient blood samples his pediatric practice referred to BLS each month. In addition, Gabriel received $1,500 per month through credit card payments to a restaurant he owns.

In addition to the prison term, Judge Chesler sentenced Gabriel to one year of supervised release and fined him $75,000.

The investigation has recovered more than $10.3 million to date through forfeiture.

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 Acting Special Agent in Charge Jonathan D. Larsen; 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.

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Defense counsel: Joseph Corozzo Esq., New York; Joseph Hayden Esq., Roseland

NEWARK, N.J. - A Morris County, New Jersey, man pleaded guilty today to health care fraud in a scheme to bill for diagnostic testing services he did not render and to enable a cardiologist to evade the Medicare program’s pre-payment review of his claims, U.S. Attorney Paul J. Fishman announced.

Vijay Patel, 57, of Parsippany, New Jersey, pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with one count of health care fraud.

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

From 2009 to the present, Patel has been the owner of a diagnostic testing facility in Parsippany called Mobile Diagnostic Testing of NJ LLC (Mobile Diagnostic). He was also a participant in Medicare.

Patel had an associate identified as “S.A.,” who was a cardiologist and also a participant in the Medicare program. From around 2009 through 2012, S.A.’s Medicare contractor had placed him on so-called “pre-payment review,” which was initiated to ensure that S.A. was submitting claims within established rules and regulations and consistent with appropriate medical decision-making, and which required S.A. to submit medical and other documentation to support the services being billed to Medicare. Under pre-payment review, claims for reimbursement that did not have the documentation necessary to support the services being billed are rejected by the Medicare contractor.

From November 2009 through October 2012, Patel and S.A. engaged in a scheme to defraud Medicare whereby S.A. paid Patel substantial sums of money to enable S.A. to evade Medicare’s prepayment review. Patel admitted in court that he submitted claims to Medicare for diagnostic testing services that S.A. had performed as if Mobile Diagnostic had performed the services instead of S.A. Once Medicare paid Patel and Mobile Diagnostic for diagnostic testing services that S.A. had actually provided, Patel then transferred a portion of the payment to S.A. and kept a substantial portion for himself.    

The charge to which Patel pleaded guilty carries a maximum potential penalty of 10 years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for March 23, 2015.

U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, for the investigation leading to the guilty plea. 

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

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Defense counsel: Richard M. Asche Esq., New York

Patel, Vijay Information

NEWARK, N.J. – A Hudson County, N.J., man today admitted to trying to kill a rival gang member, U.S. Attorney Paul J. Fishman announced.

Carlos Valdez, a/k/a “Catracho,” 27, was indicted in July 2014 with numerous other top-ranking members of the international criminal street gang, Mara Salvatrucha (also known as “MS” or “MS-13”), for racketeering crimes, including conspiracy to commit murder.  Valdez, who admitted to being the leader of an MS-13 set, or “clique,” operating in Hudson County, known as “Hudson Locotes Salvatruchas,” pleaded guilty today before U.S. District Court Judge Stanley R. Chesler in Newark federal court to Count One of the indictment, engaging in a racketeering conspiracy, and Count Five, conspiring to possess firearms in furtherance of a crime of violence.

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

In autumn 2013, Valdez was recruited by Joel Antonio Cortez, a/k/a “Pee Wee,” a high-ranking member of Mara Salvatrucha’s national leadership, to join the “national program,” a scheme to consolidate the gang’s cliques under a single, nationwide organization devoted to violence, extortion, and drug trafficking. At the time, Cortez was incarcerated in a California state prison and used a contraband cellular phone to remain in contact with Mara Salvatrucha members on the East Coast. Cortez served as a top deputy for Jose Juan Rodriguez-Juarez, a/k/a “Sacerdote,” the leader of Mara Salvatrucha in the United States and the primary organizer of the new “national program.”

In November 2013, Valdez and other gang leaders in northern New Jersey hatched a plot to murder two brothers in Hudson County, New Jersey. Before carrying out the plot, Valdez and others sought authorization from high-ranking members in the gang’s national and international leadership, including Cortez and incarcerated members of the gang in El Salvador. Law enforcement learned of the murder plot during the course of its investigation and arrested certain gang members, including Valdez, before it could be completed.

Both of the charges to which Valdez pleaded guilty carry a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 16, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford. The investigation involved multiple FBI Field Offices, with substantial assistance provided by the FBI Field Office in Los Angeles. Fishman also thanked the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano T. Gregory, and the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace Park, for their work on this case. He also acknowledged the U.S. Attorney’s Office for the Central District of California for its assistance in the ongoing investigation.

 The government is represented by Assistant U.S. Attorneys James M. Donnelly and Andrew J. Bruck of the U.S Attorney’s Office Organized Crime/Gangs Unit in Newark.

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

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Defense counsel:  Scott Finckenauer Esq., Fairview, N.J.

Valdez, Carlos Indictment

A Hudson County, New Jersey, man today admitted to trying to kill a rival gang member, U.S. Attorney Paul J. Fishman announced.

Carlos Valdez, aka “Catracho,” 27, was indicted in July 2014 with numerous other top-ranking members of the international criminal street gang, Mara Salvatrucha (also known as “MS” or “MS-13”), for racketeering crimes, including conspiracy to commit murder.  Valdez, who admitted to being the leader of an MS-13 set, or “clique,” operating in Hudson County, known as “Hudson Locotes Salvatruchas,” pleaded guilty today before U.S. District Court Judge Stanley R. Chesler in Newark federal court to Count One of the indictment, engaging in a racketeering conspiracy, and Count Five, conspiring to possess firearms in furtherance of a crime of violence. 

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

In autumn 2013, Valdez was recruited by Joel Antonio Cortez, aka “Pee Wee,” a high-ranking member of Mara Salvatrucha’s national leadership, to join the “national program,” a scheme to consolidate the gang’s cliques under a single, nationwide organization devoted to violence, extortion, and drug trafficking.  At the time, Cortez was incarcerated in a California state prison and used a contraband cellular phone to remain in contact with Mara Salvatrucha members on the East Coast. Cortez served as a top deputy for Jose Juan Rodriguez-Juarez, aka “Sacerdote,” the leader of Mara Salvatrucha in the United States and the primary organizer of the new “national program.” 

In November 2013, Valdez and other gang leaders in northern New Jersey hatched a plot to murder two brothers in Hudson County, New Jersey.  Before carrying out the plot, Valdez and others sought authorization from high-ranking members in the gang’s national and international leadership, including Cortez and incarcerated members of the gang in El Salvador.  Law enforcement learned of the murder plot during the course of its investigation and arrested certain gang members, including Valdez, before it could be completed. 

Both of the charges to which Valdez pleaded guilty carry a maximum potential penalty of 20 years in prison and a $250,000 fine.  Sentencing is scheduled for March 16, 2015.  

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford.  The investigation involved multiple FBI Field Offices, with substantial assistance provided by the FBI Field Office in Los Angeles.  Fishman also thanked the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano T. Gregory, and the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace Park, for their work on this case.  He also acknowledged the U.S. Attorney’s Office for the Central District of California for its assistance in the ongoing investigation.

The government is represented by Assistant U.S. Attorneys James M. Donnelly and Andrew J. Bruck of the U.S Attorney’s Office Organized Crime/Gangs Unit in Newark.

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

One Contractor Who Paid Kickbacks Also Charged

NEWARK, N.J. – A former high ranking employee of the Newark Watershed Conservation and Development Corp. (NWCDC) and a contractor from whom he allegedly received kickbacks were indicted by a federal grand jury today in connection with a scheme to solicit and accept payments for work by outside contractors, U.S. Attorney Paul J. Fishman announced.

Donald Bernard Sr., 67, of Newark, is charged in the indictment with six counts of defrauding the corporation of his honest services, four counts of violating the Travel Act, three counts of extortion under color of official right affecting interstate commerce, two counts of wire fraud and three counts of money laundering.

Giacomo (Jack) DeRosa, 58, of Clinton Township, New Jersey, was indicted separately on two counts of wire fraud, one count of violating the Travel Act and three counts of money laundering.

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

During the time that Bernard was a consultant to NWCDC (2008 through 2009), as well as when he worked there as manager of Special Projects (January 2010 through March 2013), he devised scheme to accept a stream of concealed and undisclosed bribes and kickbacks from contractors.  Bernard agreed to accept, and did accept, at least $730,000 in kickbacks directly and indirectly from various contractors, including DeRosa. Bernard assisted the contractors in financing the payments to him by causing certain contractors to submit fraudulent and inflated invoices to the NWCDC, which contained materially false representations and half-truths, in many instances billing the NWCDC for work that was never performed.

For example, from August 2008 to January 2011, Bernard accepted approximately $136,000 in kickbacks from a Newark company (Company 1) that performed printing work for the NWCDC. At times, due to the physical ailments suffered by the proprietor of the company, Bernard obtained blank checks from the company signed by the proprietor, which Bernard filled out payable to himself or his consulting company, Bernard & Associates (B&A), with the proprietor’s consent.
The maximum potential penalties per count are detailed in the chart below:

Counts of Indictment

Defendant

Charge

Maximum Penalty per Count

Bernard

18 U.S.C. §§ 1343 and 1346
(Wire Fraud)

20 years

Counts 1 and 2

DeRosa

Counts 7 to 11

Bernard

18 U.S.C. § 1952(a)(3) (the Travel Act)

5 years

Count 3

DeRosa

Counts 12 to 15

Bernard

18 U.S.C. § 1951(a) (extortion under color of official right affecting interstate commerce)

20 years

Counts 16 and 17

Bernard

18 U.S.C. § 1343
(Wire Fraud)

20 years

Counts 18 to 20

Bernard

18 U.S.C. § 1956(a)(1)(B)(i) (Money Laundering)

20 years

Counts 4 to 6

DeRosa

The maximum fines for all of the above violations except the money laundering charges are $250,000 or twice the gain or loss resulting from the offense. The maximum fines for the money laundering charges are:  $500,000, or twice the value of the property involved in the money laundering transactions, or twice the gain or loss resulting from the offense, whichever is greatest.

The Bernard indictment also seeks forfeiture of $1.4 million to $1.8 million in connection with the fraudulent schemes and forfeiture of $20,000 in connection with the money laundering charges. The DeRosa indictment seeks forfeiture of between $200,000 and $360,000 in connection with the fraudulent scheme and forfeiture of at least $20,000 in connection with the money laundering charges.

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; IRS – Criminal Investigation, Newark Field Office, 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, Newark office, 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 the charges.

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 contained in the indictments are merely accusations and the defendants are considered innocent unless and until proven guilty.

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Defense counsel: Bernard Sr.:  Thomas Ashley Esq., Newark
DeRosa:  Anthony Pope Esq., Newark

Bernard, Donald Indictment
DeRosa, Giacomo Indictment

NEWARK, N.J. – An Essex County, N.J., man today admitted his role in a real estate investment scheme that bilked victims out of more than $5 million, U.S. Attorney Paul J. Fishman announced today.

Abbe Edelman, 50, of Livingston, New Jersey, pleaded guilty before U.S. District Judge Susan Wigenton in Newark federal court to an information charging him with wire fraud.

According to documents filed in this case and statements made in court: Beginning in 2004, Edelman operated through several companies alleged to be in the business of buying and selling real estate. He allegedly engaged in a real estate investment fraud in which he obtained millions of dollars from victims who invested in his scheme. Edelman told investors that he had significant past real estate experience, including a purported history of successfully buying and selling numerous bank-foreclosed properties, and an MBA degree from NYU in real estate finance. Edelman claimed that he had long-standing relationships with banks that provided him with unique access to purchase foreclosed properties below market prices and, in fact, already had negotiated with the banks to purchase certain properties at agreed-upon prices that would guarantee an easy resale and profit for investors.

Edelman promised investors that any investment would be used solely for the purchase and renovation of specific investment properties in, among other places, New York, New Jersey, California, and Florida. Edelman represented to his investors that he could obtain extraordinary returns – as much as 25 percent – in as little as eight to 12 months. Edelman allegedly told some victims he had received from other investors, including professional athletes and celebrities, the majority of the capital needed to purchase the investment properties. He also said he provided cash deposits to the financial institutions to secure the right to purchase the investment properties and invested his own money in the deals.

In reality, neither Edelman nor any of his real estate companies had a history of purchasing any bank-foreclosed properties. Edelman also did not possess even an undergraduate degree. He did not have any deals lined up involving any investment properties, did not have his own money invested in any such deals, and did not have any money from celebrity investors. Edelman induced investors to give him $4 million and used little, if any, of it to fund any real estate acquisitions or renovations, instead diverting the funds for his own use.

He allegedly used the funds for his home mortgage and day-to-day living expenses, such as restaurants, telephone, and gas bills, purchased merchandise from high-end retailers, such as Gucci and Neiman Marcus, repaid existing investors in Ponzi-scheme fashion and paid his legal expenses in connection with victims seeking repayment of their investment.

When investors later inquired about the status of their investments, Edelman offered additional misrepresentations, including emails sent from a fake email account he had created, falsely assuring investors that he and his company had closed on the foreclosed properties, sometimes telling them buyers for the properties already had been identified.

In some cases, to allow the scheme to continue undetected, Edelman made “lulling” payments to investors, ranging from $100 to tens of thousands of dollars, to permit the scheme to continue. When payments were made to any investors, Edelman generally represented that the money was from the sale of investment properties, when, in fact, it came from a new investor.

The wire fraud count to which he pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 23, 2015.

U.S. Attorney Fishman credited criminal investigators with the U.S. Attorney’s Office and 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 arrest.

Today’s 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.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Lakshmi Srinivasan Herman of the Economic Crimes Unit, and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.

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Defense Counsel: William Rush Esq., Wayne, N.J.

Edelman, Abbe Information

Already Serving 22 Years for Previous Fraud Scheme

TRENTON, N.J. – A man already serving 22 years in prison for a real estate Ponzi scheme was sentenced today to an additional 24 months in prison for defrauding investors in connection with the Facebook IPO and several additional real estate deals and laundering the proceeds of the scheme, U.S. Attorney Paul J. Fishman announced.

Eliyahu Weinstein, 39, of Lakewood, New Jersey, was previously sentenced to 22 years in prison for running a real estate investment fraud scheme that caused $200 million in losses. Today, U.S. District Judge Joel A. Pisano sentenced Weinstein to 135 months in prison, 111 months of which will be served concurrently with his previous sentence and 24 months to be served consecutively. His total sentence for the two schemes is 24 years in prison. Weinstein previously pleaded guilty before Judge Pisano to an indictment charging him with one count of conspiracy to commit wire fraud, one count of committing wire fraud while on pretrial release, and one count of money laundering.

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

In February 2012, Weinstein and his fellow conspirators offered a pair of investors (referred to in the indictment 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 Weinstein and his conspirators, the Facebook victims wired millions of dollars between February and March of 2012 to an account that 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. Weinstein used some of the money to pay lawyers and experts representing him in his earlier – and at that time, still pending – criminal case and in related civil matters. Weinstein and his conspirators also used the Facebook victims’ money to make investments in businesses unrelated to Facebook and to make loans for their own benefit.

Around the same time, Weinstein and his conspirators also persuaded the Facebook victims to invest in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. They told the Facebook victims that Weinstein had the opportunity to purchase Belle Glade Gardens at a discounted price and immediately flip it at a substantial profit. Weinstein and his conspirators further told the Facebook victims that Weinstein had already placed $2.5 million in the trust account of a Miami law firm for the transaction; that if the Facebook victims contributed another $2.5 million toward the transaction, those funds would remain in escrow at the Miami law firm until the deal closed; and that the Facebook victims would be repaid within 60 days. The Facebook victims wired $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Weinstein and his conspirators did not use the money to purchase Belle Glades Gardens. Instead, they redirected the money from the law firm to accounts that they controlled, returned $1.8 million to the Facebook victims as a purported return on their Facebook investment, and used the remaining money for their own purposes.

In July 2012, Weinstein approached another group of investor victims (referred to in the indictment as the “Florida condominium victims”) and told them he had the opportunity to purchase the notes on seven condominiums in Florida at a discounted price of $3 million. Weinstein and his conspirators falsely represented that they had already paid $1.5 million toward the deal, and that they needed only $1.5 million to complete the transaction. They claimed that the properties had an annual rental income of approximately $780,000 and provided to the Florida condominium victims fraudulent documentation purporting to verify this fact. The victims transferred $1.5 million to Weinstein and his conspirators between August 2012 and December 2012. Weinstein did not use this money to purchase the notes on the Florida condominiums – many of which he himself had previously owned and lost to foreclosure. Instead, Weinstein and his conspirators converted the money to their own use.

Throughout the scheme, Weinstein was already under indictment and on pretrial release, and was prohibited from engaging in any monetary transaction for more than $1,000 without the approval of court-appointed special counsel. Weinstein pleaded guilty on Jan. 3, 2013, before Judge Pisano to two counts of that indictment, admitting he ran a Ponzi-style real estate investment fraud scheme that caused $200 million in losses and then laundered the proceeds of the scheme. Judge Pisano sentenced Weinstein on Feb. 25, 2014, to 264 months in prison and ordered him to pay more than $200 million in restitution and forfeiture to the victims of his scheme.

In addition to the prison term, Judge Pisano today ordered Weinstein to pay $6.2 million restitution and forfeiture.

Two co-defendants, Alex Schleider, 49, of Lakewood, and Aaron Glucksman, 41, of Brooklyn, New York, have already pleaded guilty to charges related to the scheme. On Dec.8, 2014, Judge Pisano sentenced Schleider to serve on year and one day in prison, three years of supervised release, and ordered him to pay restitution of $613,200 and forfeiture of $363,200. Judge Pisano sentenced Glucksman 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.

Charges against another conspirator, Aaron Muschel, 64, of Brooklyn, NY, who was charged in the criminal complaint filed against Weinstein and Schleider in May 2013, remain pending. The charges against him are merely accusations and he is presumed innocent until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Aaron T. Ford in Newark, for the investigation leading to today’s sentencing. He also thanked special 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; Assistant U.S. Attorneys Zach Intrater of the Economic Crimes Unit; and Evan S. Weitz of the Asset Forfeiture and Money Laundering 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.

14-439                                                           

Defense counsel:  Eric Creizman Esq., New York

TRENTON, N.J. – A Brick, New Jersey, woman today admitted stealing benefit money from the Federal Emergency Management Agency (FEMA) after major storms in New Jersey, falsely claiming she needed the funds for housing, U.S. Attorney Paul J. Fishman announced.

Sara L. Cengiz, 47, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging her with disaster benefits fraud related to Hurricane Irene.

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

On April 2, 2010, a Presidential Disaster Declaration was issued for certain areas in the State of New Jersey adversely affected by severe storms, which occurred in March 2010. Cengiz filed an application the following month with FEMA seeking federal rental assistance and assistance for personal property damage. Cengiz admitted that in her application, she falsely claimed she had to rent another residence because her residence was damaged as a result of the severe storms and was unfit for occupancy. Cengiz submitted fraudulent lease agreements and rental receipts to FEMA to prove she was paying rent, which she was not. From May 2010 to June 2011, Cengiz received $26,938 in fraudulently obtained FEMA disaster-related funds.  

On Aug. 31, 2011, a Presidential Disaster Declaration for the State of New Jersey was issued as a result of Hurricane Irene. The next month, Cengiz again filed an application with FEMA seeking federal rental assistance and assistance for personal property damage as a result of Hurricane Irene. Cengiz admitted that she again falsely claimed her residence was unfit for occupancy. Cengiz again submitted fraudulent lease agreements and rental receipts to FEMA to prove she was paying rent. From November 2011 to January 2012, Cengiz received $13,039 in fraudulently obtained FEMA disaster related funds.  

The charge to which Cengiz pleaded guilty carries a maximum potential penalty of 30 years in prison and a $250,000 fine. As part of her plea agreement, Cengiz will also be required to pay restitution. Sentencing is scheduled for March 27, 2015.

U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Office of Inspector General, Philadelphia Field Office, under the direction of Special Agent in Charge Gregory Null, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.

14-437                    

Defense counsel: Andrea Bergman Esq., Assistant Federal Public Defender, Trenton

Cengiz, Sara Information

Scheme Involved International Environmental Consulting Contracts, Including Reconstruction Contracts in Afghanistan and Iraq

TRENTON, N.J. – The former president, chief executive officer, and chairman of the board of a New Jersey-based international engineering consulting company pleaded guilty to conspiring to defraud the U.S. Agency for International Development (USAID) with respect to billions of dollars in contracts over a nearly 20-year period, U.S. Attorney Paul J. Fishman announced.

Derish Wolff, 79, of Bernardsville, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to a superseding information charging conspiracy to defraud the government with respect to claims.

“Two years after the Louis Berger Group and two of its executives confessed to defrauding USAID, the company’s former chairman admitted his role in the scheme,” U.S. Attorney Fishman said. “Derish Wolff admitted today that he enriched himself and his company with money intended for important reconstruction projects in Afghanistan and Iraq. This type of conduct cheats the American taxpayers.”

“Today’s plea is the result of impressive investigative work undertaken to root out fraud that hinders global development,” Special Agent in Charge Daniel Altman, USAID-Office of Inspector General, said.

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

Wolff, the former president and CEO of Morristown-based Louis Berger Group Inc. (LBG), and the former chairman of LBG’s parent company, Berger Group Holdings Inc. (BGH), led a conspiracy to defraud USAID by billing the agency on so-called “cost-reimbursable” contracts – including hundreds of millions of dollars of contracts for reconstructive work in Iraq and Afghanistan – for LBG’s overhead and other indirect costs at falsely inflated rates.

USAID, an independent federal government agency that advances U.S. foreign policy by supporting economic growth, agriculture, trade, global health, democracy, and humanitarian assistance in developing countries, including countries destabilized by violent conflict, awarded LBG hundreds of millions of dollars in reconstruction contracts in Iraq and Afghanistan as well as in other nations. LBG calculated certain overhead rates and charged USAID and other federal agencies these rates on cost-reimbursable contracts, which enabled LBG to pass on their overhead costs to the agency in general proportion to how much labor LBG devoted to the government contracts.

From at least 1990 through July 2009, LBG, through Wolff and other former executives, intentionally overbilled USAID in connection with these cost-reimbursable contracts. The scheme to defraud the government was carried out by numerous LBG employees at the direction of Wolff.

Wolff targeted a particular overhead rate, irrespective of what the actual rate was, and ordered his subordinates to achieve that target rate through a variety of fraudulent means. From at least as early as 1990 through 2000, Wolff ordered LBG’s assistant controller to instruct the accounting department to pad its time sheets with hours ostensibly devoted to federal government projects when it had not actually worked on such projects.    

At an LBG annual meeting in September 2001, Salvatore Pepe, who was then the controller and eventually became chief financial officer (CFO), presented a USAID overhead rate that was significantly below Wolff’s target. In response, Wolff denounced Pepe, called him an “assassin” of the overhead rate and ordered him to target a rate above 140 percent, meaning that for every dollar of labor devoted to a USAID contract, LBG would receive an additional $1.40 in overhead expenses supposedly incurred by LBG.

In response, Pepe and former controller Precy Pellettieri, with Wolff’s supervision, hatched a fraudulent scheme from 2003 through 2007 to systematically reclassify the work hours of LBG’s corporate employees, including high-ranking executives and employees in the general accounting division, to make it appear as if those employees worked on federal projects when they did not. Wolff admitted in court today thatPepe and Pellettieri, at Wolff’s direction, reclassified these hours without the employees’ knowledge and without investigating whether the employees had correctly accounted for their time, and at times did so over an employee’s objection.

In addition to padding employees’ work hours with fake hours supposedly devoted to USAID work, Wolff instructed his subordinates to charge all commonly shared overhead expenses, such as rent, at LBG’s Washington, D.C., office to an account created to capture USAID-related expenses, even though the D.C. office supported many projects unrelated to USAID or other federal government agencies.

“Derish Wolff spent close to 20 years creating and executing a series of elaborate fraudulent billing schemes, ultimately defrauding the federal government of tens of millions of dollars,” FBI Special Agent in Charge Aaron T. Ford said. “This long-term, complex investigation required much in terms of investigative resources and financial analysis. The FBI, in partnership with the U.S. Agency for International Development and the U.S. Department of Defense, and through its vast experience investigating complex financial schemes was able to provide such resources, resulting in today's guilty plea of Derish Wolff.”

“The plea by Mr. Wolff for his actions as chief executive of Louis Berger Group Inc. supports the need for continued aggressive oversight and investigation of allegations of wrongdoing,” Special Agent in Charge Craig W. Rupert, Defense Criminal Investigative Service Northeast Field Office, said. “This example of corporate and personal greed harms both the American taxpayer and the acquisition process, saying nothing of the harm to the reputation of the many faithful employees of this corporation. DCIS will continue to work with our law enforcement partners on our priority to search out and prosecute fraud found in Defense Department programs.”

On Nov. 5, 2010, Pepe and Pellettieri both pleaded guilty before then-U.S. Magistrate Judge Patty Shwartz to separate informations charging them with conspiring to defraud the government with respect to claims. Also on that date, LBG resolved criminal and civil fraud charges related to Wolff’s and others’ conduct. The components of the settlement included:

•           a Deferred Prosecution Agreement (DPA), pursuant to which the U.S. Attorney’s Office in New Jersey suspended prosecution of a criminal complaint charging LBG with a violation of the Major Fraud Statute; in exchange, LBG agreed, among other things, to pay $18.7 million in related criminal penalties; make full restitution to USAID; adopt effective standards of conduct, internal controls systems, and ethics training programs for employees; and employ an independent monitor who would evaluate and oversee the company’s compliance with the DPA for a two‑year period;

•           a civil settlement that required the company to pay the government $50.6 million to resolve allegations that LBG violated the False Claims Act by charging inflated overhead rates that were used for invoicing on government contracts; and

•           an administrative agreement between LBG and USAID, which was the primary victim of the fraudulent scheme.

In the settlement, the government took into consideration LBG’s cooperation with the investigation and the fact that those responsible for the wrongdoing were no longer associated with the company.

The charge to which Wolff pleaded guilty carries a maximum potential penalty of 10 years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for March 20, 2015.

U.S. Attorney Fishman credited special agents of USAID-Office of Inspector General, under the direction of Special Agent in Charge Altman; the FBI, under the direction of Special Agent in Charge Ford; the U.S. Department of Defense, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Rupert; and the former Office of the Special Inspector General for Iraq Reconstruction, under the direction of former Special Inspector General Stuart W. Bowen Jr., for the investigation leading to the guilty plea. He also thanked the U.S. Attorney’s Office, District of Maryland, and the U.S. Department of Justice Civil Division for their roles in the case.

The case is being prosecuted by Assistant U.S. Attorneys Scott B. McBride, Deputy Chief of the U.S. Attorney’s Office’s Economic Crimes Unit, and Joyce M. Malliet of the U.S. Attorney’s Office National Security Unit.

14-438                 

Defense counsel: Herbert J. Stern Esq.; Mark W. Rufolo Esq.; Jeffrey Speiser Esq.; Florham Park, N.J.

Wolff, Derish Superseding Information

NEWARK, N.J. – A Hudson County, N.J., man was indicted today on an additional charge of paying thousands of dollars in bribes to a fire official in exchange for the elimination of outstanding fines and penalties on certain buildings that had fire code violations, U.S. Attorney Paul J. Fishman announced.

Victor Coca, 48, of West New York, N.J. was also charged by a federal grand jury with two counts of violating the Travel Act. Coca had been arrested May 20, 2014, by special agents of the FBI and charged by complaint with one count of paying bribes to the fire official for the West New York Bureau of Fire Prevention.

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

Coca was the owner of a general contracting company located in West New York. There were two buildings in West New York with outstanding fines for fire code violations – one building had approximately $14,500 in fines and the other had approximately $8,730,000 in fines and penalties.

Coca paid the fire official cash bribes to reduce or eliminate the outstanding fines. For the first building, Coca paid a $2,000 cash bribe to the fire official to eliminate the outstanding $14,500 in fines. For the second building, Coca wrote paid a $5,000 cash bribe to the fire official, in return for the fire official reducing the $8,730,000 in outstanding penalties, thus making the amount due to the West New York Bureau of Fire Prevention only the initial fine amount of $5,000.

The charge is punishable by a maximum potential penalty of ten years in prison and a maximum fine of $250,000 or twice the gain or loss arising out 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, with the investigation leading to today’s indictment.

The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

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Defense counsel: Zak Aljaludi Esq., Union City, N.J.

Coca, Victor Indictment

CAMDEN, N.J. – Federal, state and local law enforcement authorities arrested eight people this morning in connection with a ring that allegedly trafficked heroin, powder cocaine and crack cocaine in the Atlantic City area, U.S. Attorney Paul J. Fishman announced.

In pre-dawn raids, agents and officers of the FBI, Drug Enforcement Administration, the Atlantic County Prosecutor’s Office, N.J. State Police and Atlantic City Police Department arrested eight people, seven of whom were charged by indictment with drug trafficking conspiracy; one of those defendants, Toye Tutis, is also charged with one count of money laundering along with Jazmin S. Vega, who is charged only with a single count of money laundering.

A ninth defendant is already in custody on other charges in Pennsylvania and two more defendants are being sought in California.

The defendants arrested in New Jersey today are scheduled to make their initial court appearance this afternoon before U.S. Magistrate Judge Ann Marie Donio in Camden federal court.

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

The defendants are allegedly members of a drug trafficking organization that dealt in large quantities of heroin, powder cocaine, and crack cocaine in and around Atlantic City. All but one of the defendants (see chart below) are charged with a single count of conspiracy to distribute more than five kilograms of cocaine, more than 280 grams of crack cocaine, and more than one kilogram of heroin.

The conspiracy count carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. The count of money laundering carries a maximum potential penalty of 10 years in prison and a $250,000 fine.

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 DEA’s Newark Division, under the direction of Special Agent in Charge Carl J. Kotowski; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; and the Atlantic City Police Department, under the direction of Police Chief Henry Wright, with the investigation leading to today’s arrests.

He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco and Firearms; U.S. Immigration and Customs Enforcement (ICE)-Homeland Security Investigation (HSI); U.S. Postal Inspection Service; Cumberland County Sheriff’s Office and the Ventnor, Northfield and Millville police departments for their assistance.

The government is represented by Assistant U.S. Attorney Diana V. Carrig of the U.S. Attorney’s Office Criminal Division in Camden.

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

DEFENDANTS

Name

Age

Residence

42

Pleasantville, New Jersey

Kareem A. Taylor

39

Atlantic City, New Jersey

Ivan Joel Cuellar-Naranjo*

28

Los Angeles, California

Francisco Alberto Rascon-Muracami

21

Lancaster County Prison, Pennsylvania

Phillip C. Horton*

49

Inglewood, California

Tozine N. Tiller

40

Absecon, New Jersey

Talib N. Tiller

32

Pleasantville

Kabaka Atiba

43

Atlantic City

Ronald D. Byrd

49

Pleasantville

John Wellman

39

Atlantic City

Jazmin S. Vega

40

Pleasantville

*Not in custody

14-435                                                         

Tutis, Toye et al., Indictment

CAMDEN, N.J. – Federal, state and local law enforcement authorities arrested eight people this morning in connection with a ring that allegedly trafficked heroin, powder cocaine and crack cocaine in the Atlantic City area, U.S. Attorney Paul J. Fishman announced.

In pre-dawn raids, agents and officers of the FBI, Drug Enforcement Administration, the Atlantic County Prosecutor’s Office, N.J. State Police and Atlantic City Police Department arrested eight people, seven of whom were charged by indictment with drug trafficking conspiracy; one of those defendants, Toye Tutis, is also charged with one count of money laundering along with Jazmin S. Vega, who is charged only with a single count of money laundering.

A ninth defendant is already in custody on other charges in Pennsylvania and two more defendants are being sought in California.

The defendants arrested in New Jersey today are scheduled to make their initial court appearance this afternoon before U.S. Magistrate Judge Ann Marie Donio in Camden federal court.

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

The defendants are allegedly members of a drug trafficking organization that dealt in large quantities of heroin, powder cocaine, and crack cocaine in and around Atlantic City. All but one of the defendants (see chart below) are charged with a single count of conspiracy to distribute more than five kilograms of cocaine, more than 280 grams of crack cocaine, and more than one kilogram of heroin.

The conspiracy count carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. The count of money laundering carries a maximum potential penalty of 10 years in prison and a $250,000 fine.

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 DEA’s Newark Division, under the direction of Special Agent in Charge Carl J. Kotowski; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; and the Atlantic City Police Department, under the direction of Police Chief Henry Wright, with the investigation leading to today’s arrests.

He also thanked the N.J. State Police; the Atlantic County Sheriff’s Office; the Bureau of Alcohol, Tobacco and Firearms; U.S. Immigration and Customs Enforcement (ICE)-Homeland Security Investigation (HSI); U.S. Postal Inspection Service; Cumberland County Sheriff’s Office and the Ventnor, Northfield and Millville police departments for their assistance.

The government is represented by Assistant U.S. Attorney Diana V. Carrig of the U.S. Attorney’s Office Criminal Division in Camden.

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

DEFENDANTS

Name

Age

Residence

42

Pleasantville, New Jersey

Kareem A. Taylor

39

Atlantic City, New Jersey

Ivan Joel Cuellar-Naranjo*

28

Los Angeles, California

Francisco Alberto Rascon-Muracami

21

Lancaster County Prison, Pennsylvania

Phillip C. Horton*

49

Inglewood, California

Tozine N. Tiller

40

Absecon, New Jersey

Talib N. Tiller

32

Pleasantville

Kabaka Atiba

43

Atlantic City

Ronald D. Byrd

49

Pleasantville

John Wellman

39

Atlantic City

Jazmin S. Vega

40

Pleasantville

*Not in custody

14-435                                                         

Tutis, Toye et al., Indictment

NEWARK, N.J. – An Essex County, New Jersey, man today admitted committing five armed carjackings between June 6, 2012 and June 22, 2012.

Jahleel McLendon, 21, of Newark, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with five counts of theft of a motor vehicle by force, violence, and intimidation, and one count of brandishing a firearm during a crime of violence.

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

On June 6, 2012, McLendon approached a man sitting in the driver’s seat of a parked Chrysler 300 and ordered him out of the car at gunpoint. Three days later McLendon and an accomplice carjacked an Acura TL while the victim was loading the trunk of the car. On June 15, 2012, McLendon and an accomplice carjacked a Chevrolet Trailblazer at gunpoint, and approximately 20 minutes later, used that Trailblazer to carjack a BMW 325 at a gas station in Newark. On June 22, 2012, McLendon carjacked a Chevrolet Impala at gunpoint. Less than two hours later, McLendon was arrested by Newark police officers and found to be in possession of a handgun.

The carjacking counts to which McLendon pleaded guilty each carry a maximum potential penalty of 15 years in prison. The firearms charge to which McLendon pleaded guilty is punishable by a minimum consecutive term of seven years in prison and a maximum consecutive term of life in prison. Each of these charges also carries a maximum $250,000 fine. Sentencing is scheduled for March 23, 2015.

U.S. Attorney Fishman credited the Newark Police Department, under the direction of Police Director Eugene Venable and Police Chief Anthony Campos; special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; detectives with the Essex County Prosecutor’s Office, under the Direction of Acting Prosecutor Carolyn A. Murray, and investigators with the U.S. Attorney’s Office with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Cari Fais and Meredith Williams of the Criminal Division in Newark.

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Defense counsel: Carol Gillen, Esq., Assistant Federal Public Defender, Newark

McLendon, Jahleel Information

TRENTON, N.J. – A Middlesex County, New Jersey, woman was sentenced today to 30 years in prison for sexually exploiting a minor female by coercing the girl to live stream sexually explicit acts via the Internet, U.S. Attorney Paul J. Fishman announced.

Jane Dornick, 53, of South Plainfield, New Jersey, pleaded guilty, prior to the selection of a jury, to Count One of an indictment charging her with three counts of sexual exploitation of a child. The remaining counts will be dismissed at sentencing. Dornick entered her plea before U.S. District Judge Freda L. Wolfson in Trenton federal court.

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

On August 16, 2010, Dornick coerced and used “Victim 1,” a minor female, to perform sexually explicit acts and live stream them over the Internet to Michael Grennier, 51, who watched remotely via his computer in his home in South Plainfield.

In addition to the prison term, Judge Wolfson sentenced Dornick to lifetime supervised release.

Grennier pleaded guilty before Judge Wolfson to a separate charge of the sexual exploitation of a minor on Dec. 16, 2013, and was sentenced Nov. 21, 2014, to 20 years in prison.

U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s plea. Fishman also thanked the South Plainfield Borough Police Department, under the direction of Chief of Police James Parker, and the Middlesex County Prosecutor’s Office, under the direction of Prosecutor Andrew Carey, for their assistance with the investigation.

The government is represented by Assistant U.S. Attorneys Fabiana Pierre-Louis and Harvey Bartle, Attorney-in-Charge of the U.S. Attorney’s Trenton Office.

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Defense counsel: Bruce Throckmorton Esq., Trenton

NEWARK, N.J. – A Union City contractor today admitted conspiring to rig the contractor selection process for projects run by the Union City Community Development Agency (UCCDA), causing losses of at least $70,000, U.S. Attorney Paul J. Fishman announced.

Joseph Lado, 66, of Fort Lee, New Jersey, pleaded guilty to an information charging him with one count of conspiring with agents of the UCCDA and a Jersey City, New Jersey, contractor to obtain money from the agency by fraud. Lado entered his guilty plea before U.S. District Judge William H. Walls in Newark federal court.

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

Between June 2007 and September 2010, Lado owned Lado Construction in Union City.  There were two individuals (Inspector 1 and Inspector 2) at the UCCDA, a government agency that received funds from the U.S. Department of Housing and Urban Development under a federal block grant. The funding was used for home improvement projects and sidewalk replacement projects, among other things.

Lado conspired with another individual who owned a paving contracting company in Jersey City, New Jersey (the Contractor), Inspector 1 and Inspector 2 to rig the competitive process by submitting false and materially misleading proposals for contracts to perform sidewalk replacement and residential rehabilitation. The process was rigged to favor of certain contractors, including Lado Construction. Lado caused the Contractor to provide Lado with phony proposals from the Contractor’s company that were higher than Lado’s own proposals. He also caused the contractor to provide Lado with blank proposal forms from the Contractor’s company that Lado later completed with the help of another, listing amounts that were higher than Lado Construction’s proposals for the same work. Under both of those scenarios, Lado would then submit the Contractor’s phony higher-priced proposals and his own to the UCCDA in order to obtain projects, and ultimately, HUD grant funds, from the UCCDA for the completion of the projects. Lado would also, at the request of Inspector 1 and Inspector 2, provide both inspectors with phony proposals for amounts higher than his competitors for projects that the inspectors had already decided to award to other contractors.

The conspiracy charge to which Lado pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Lado is scheduled to be sentenced on March 24, 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, with the investigation leading to today’s guilty plea.

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

14-432                                           

Defense counsel: John M. Vazquez Esq., Roseland, N.J.

Lado, Joseph Information

NEWARK, N.J. – A Miami, Florida, man was sentenced today to 28 months in prison for his role in a multi-state conspiracy to possess and sell prescription medication taken from a stolen tractor trailer, U.S. Attorney Paul J. Fishman announced.

Martin Lopez, a/k/a “El Negro,” 47, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with conspiracy to possess stolen prescription medicine. Judge Martini imposed the sentenced today in Newark federal court.

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

On Dec. 2, 2009, a full shipment of prescription respiratory medicine manufactured by Dey LLP in Allen, Texas, was stolen on its way to Sandoz Inc. in Mechanicsburg, Pennsylvania. Lopez admitted that from December 2009 through March 2010, he conspired with others to acquire and sell medicine stolen from the shipment.

In early 2010, Lopez spoke with Ernesto Romero-Vidal, a/k/a “Bemba,” 48, of Hallandale, Florida, to identify a potential buyer for the stolen medicine. On March 2, 2010, Lopez arranged to have the medicine delivered to a buyer in New Jersey. Two days later, two other conspirators delivered the stolen goods to the buyer in return for $64,000 in cash, which they split with Lopez.

In addition to the prison term, Judge Martini sentenced Lopez to three years of supervised release and ordered forfeiture of $7,000.

On Dec. 18, 2013, Romero-Vidal was sentenced by Judge Martini to 80 months in prison for his role in the scheme and other federal charges.

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 detectives of the North Bergen Police Department, under the direction of Chief Robert J. Dowd, with the investigation leading to today’s sentencing. 

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

14-430                              

Defense counsel: Kathleen M. Theurer Esq., Jersey City, N.J.

NEWARK, N.J. - The former president of International Longshoremen’s Association (ILA) was sentenced today to 22 months in prison for conspiring to extort ILA Local 1235 longshoremen on the New Jersey piers 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.

Thomas Leonardis, 57, of Glen Gardner, New Jersey, the president of the union from 2008 through 2011, previously pleaded guilty before U.S. District Judge Claire C. Cecchi to Count Three of a second superseding indictment charging him with conspiring to extort Christmastime tributes from ILA Local 1235 members. Judge Cecchi imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: During their guilty plea proceedings, Leonardis – along with Vincent Aulisi, 82, of West Orange, New Jersey, the president of ILA Local 1235 from approximately 2006 through 2007; and Robert Ruiz, 56, of Watchung, New Jersey, the delegate of the union from approximately 2007 through 2010 and former ILA representative – admitted that they conspired with each other and others to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. 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. Leonardis and Ruiz were suspended from their positions following their arrest in January 2011. Aulisi had already retired from his employment on the New Jersey piers at the time of his arrest.

Charges are still pending against three defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 59, of Kenilworth, New Jersey – a soldier in the Genovese organized crime family of La Cosa Nostra. 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.

In addition to the prison term Judge Cecchi sentenced Leonardis to serve three years of supervised release.

Aulisi and Ruiz previously pleaded guilty before Judge Cecchi to conspiring to extort Christmastime tributes from ILA Local 1235 members. In October 2014, Aulisi and Ruiz were sentenced to 18 months and 20 months in prison, respectively.

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 sentencing. 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.

The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.

14-431                                                      

Defense counsel: Michael N. Pedicini Esq., Chatham, New Jersey

Corporation to Pay More than $80 Million to Resolve Criminal and Civil Investigations

NEWARK, N.J. – OtisMed Corp. and its former chief executive officer admitted today to intentionally distributing knee replacement surgery cutting guides after their application for marketing clearance had been rejected by the Food and Drug Administration (FDA), and the corporation agreed to pay more than $80 million to resolve its related criminal and civil liability, the Justice Department announced today.

OtisMed and its CEO, Charlie Chi, 45, of San Francisco, pleaded guilty in Newark federal court. OtisMed pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging it with distributing, with the intent to defraud and mislead, adulterated medical devices into interstate commerce in violation of the Food, Drug, and Cosmetic Act (FDCA). Judge Cecchi also sentenced the company today, fining OtisMed $34.4 million and ordering $5.16 million in criminal forfeiture. In a separate civil settlement, OtisMed agreed to pay $40 million plus interest to resolve its civil liability. Chi pleaded guilty before U.S. Magistrate Judge Mark Falk to three counts of introducing adulterated medical devices in interstate commerce. Chi will be sentenced by Judge Cecchi on March 18, 2015.

 “It is vital that products like the OtisKnee are subjected to the appropriate level of scrutiny,” U.S. Attorney Paul J. Fishman said. “Patients seeking medical care are vulnerable; they are often afraid, and in pain. They should be able to trust their doctors. And they should be entitled to trust that the devices their doctors are using are safe, effective, tested, and approved. OtisMed and Charlie Chi betrayed that trust.”

“Americans must be able to trust that they are treated with medical devices that have been shown to be safe and effective,” Deputy Assistant Attorney General Jonathan Olin for the Justice Department’s Civil Division said  “The Department of Justice will not tolerate companies and individuals that cut corners when it comes to the public’s health.”

The civil settlement resolves claims filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States and obtain a portion of the government’s recovery. The civil lawsuit was filed in the District of New Jersey and is captioned U.S. ex rel. Adrian v. OtisMed Corp., et al.

OtisMed was a privately held company when OtisMed and Chi committed the criminal conduct, and was later acquired by Stryker Corp., a medical technology company based in Michigan, in November 2009. At the time the shipments were made in September 2009, Stryker executives were not aware that OtisMed and Chi had shipped cutting guides after the FDA had rejected the company’s application for marketing clearance for the device. Stryker, OtisMed’s parent corporation, cooperated with the government with regard to Otismed’s pre-acquisition conduct throughout the investigation. In addition to the criminal pleas and civil resolution, OtisMed also agreed to be excluded from participating in all federal health care programs for a period of 20 years and Stryker separately agreed to a series of compliance measures aimed at preventing future misconduct.

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

Chi was among the founders of OtisMed in August 2005, and conceived of the OtisKnee orthopedic cutting guide, its primary product. Chi acted as OtisMed’s president, chief executive officer and board of directors’ chairman until OtisMed was acquired by Stryker in November 2009. The OtisKnee was used by surgeons during total knee arthroplasty (TKA), commonly known as knee replacement surgery. The surgical procedure requires a surgeon to remove the ends of the leg bones and to reshape the remaining bone to accommodate the implantation of an artificial knee prosthesis. The cuts to the bone must be made at precise angles because they are critical to the clinical result; failure to achieve the correct angle in TKA procedures can result in failure of the bones and/or the implanted prosthetic joint.

OtisMed marketed the OtisKnee cutting guide as a tool to assist surgeons in making accurate bone cuts specific to individual patients’ anatomy based on magnetic resonance imaging (MRI) performed prior to surgery. None of OtisMed’s claims regarding the OtisKnee device were evaluated by the FDA before the company used them in advertisements and promotional material.

Between May 2006 and September 2009, OtisMed sold more than 18,000 OtisKnee devices, generating revenue of approximately $27.1 million.

On Oct. 2, 2008, OtisMed submitted a pre-market notification to the FDA seeking clearance to market the OtisKnee. The company had not previously sought the FDA’s clearance or approval and had been falsely representing to physicians and other potential purchasers that the product was exempt from such pre-market requirements.

On Sept. 2, 2009, the FDA sent OtisMed a notice that its submission had been denied, noting that the company had failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed devices. The letter warned OtisMed that distribution of the OtisKnee prior to approval would be an FDCA violation, and indicated the FDA viewed the product as a “significant risk device system,” which is defined as presenting a potential for serious risk to the health, safety or welfare of a subject. Chi and others at OtisMed received advice from legal and regulatory counsel confirming it would be unlawful for OtisMed to continue distributing the OtisKnee.

Though the board of directors unanimously decided to stop further shipments of the devices, Chi and others at OtisMed were concerned that inconveniencing surgeons planning to use the OtisKnee in scheduled surgeries would exacerbate the negative impact of the FDA letter on the reputation of OtisMed and the device. Chi directed OtisMed employees to organize a mass shipment of all OtisKnee devices that had been manufactured but had not yet been shipped and suggested ways for the employees to hide the shipments from FDA regulators.

At Chi’s direction, OtisMed shipped approximately 218 OtisKnee guides from California to surgeons throughout the United States, including 16 to surgeons in New Jersey. Both Chi and OtisMed admitted that Chi ordered the distribution a week after the FDA denied OtisMed’s request for clearance.

“Companies and individuals put the public health at risk by not complying with FDA regulatory requirements for the pre-market review of medical devices,” said Acting Director Philip J. Walsky for the FDA’s Office of Criminal Investigations. “We will continue to assure consumer confidence in FDA-regulated products by investigating and bringing to justice those who endanger patient safety by distributing unapproved surgical devices.”

“When OtisMed and its CEO, Charlie Chi, distributed medical devices that were not FDA-approved, they violated the trust that patients extend to health care professionals. This outrageous behavior triggered our agency to exclude OtisMed from participating in Medicare and Medicaid for 20 years,” Special Agent in Charge Thomas O’Donnell of the New York Regional Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) said. “We will continue to work with our law enforcement partners to protect federally funded health care programs and the patients who rely on those programs.”

The civil settlement resolves allegations arising from the marketing and distribution of the OtisKnee without receiving approval or clearance from the FDA for the device. Specifically, the settlement alleged that in May 2006, OtisMed, through co-promotion activities with Stryker Corporation, began commercially distributing the OtisKnee without having received clearance or approval from the FDA for the device. OtisMed continued to distribute the device while its application was pending and even after the FDA informed OtisMed that the product could not be lawfully distributed until FDA approved the device.

The settlement also alleged that OtisMed encouraged health care providers to submit claims for MRIs that were not reimbursable because they were not performed for diagnostic use, but rather solely to provide data for the creation of the OtisKnee. 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.

The company will pay approximately $41.2 million, including interest, to resolve its civil liability for submitting false claims to the Medicare, TRICARE, Federal Employees Health Benefits and Medicaid programs. Of that amount, approximately $41 million will be paid to the federal government. Medicaid is funded jointly by the states and the federal government and participating Medicaid states will receive approximately $376,700 of the settlement amount. As part of today’s resolution, the relator will receive approximately $7 million.

In addition to agreeing to continue to cooperate with the government’s investigation and maintain a compliance program, Stryker agreed to conduct a review and audit regarding whether other marketed devices have the appropriate FDA approvals and share the results of that audit with the government. Stryker also agreed to annual certifications from the president of Stryker’s orthopedics group and from Stryker’s board of directors regarding the effectiveness of the compliance program.

Chi faces a statutory maximum sentence of one year in prison and a $100,000 fine, or twice the gain or loss from the offense, for each of the three counts of introducing adulterated medical devices in interstate commerce.

The guilty pleas and civil settlement are the culmination of a long-term investigation conducted jointly by the FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Antoinette V. Henry, and HHS-OIG, under the direction of Special Agent in Charge O’Donnell. Counsel to the HHS-OIG and FDA’s Office of Chief Counsel to the FDA also assisted. The National Association of Medicaid Fraud Control Units, along with the Medicaid Fraud Control Unit of the Massachusetts Attorney General’s Office, assisted in coordinating the settlements with the various states.

Additional assistance was provided by the Defense Health Agency and the Office of Personnel Management–Office of the Inspector General.

This resolution illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The government is represented in the criminal case by Jacob T. Elberg, chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit and Trial Attorney Ross S. Goldstein of the Justice Department’s Consumer Protection Branch, and in the civil settlement by Assistant U.S. Attorney Charles Graybow of the District of New Jersey’s Health Care and Government Fraud Unit, and Trial Attorney Charles Biro of the Justice Department’s Civil Division.

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 the 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 FDCA and other statutes.

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Defense counsel:

OtisMed: Brien O’Connor Esq.; Joshua Levy Esq., Boston
Charlie Chi: Peter Harvey Esq., New York

Counsel for Relator Richard Adrian:  Joseph Callow Esq., Cincinnati, Ohio; Joel Hesch Esq., Lynchburg, Virginia

OtisMed Documents

TRENTON, N.J. – A Lakewood, New Jersey, man was sentenced today to one year and one day in prison for his part in a real estate investment fraud scheme that defrauded investors of more than $1 million, U.S. Attorney Paul J. Fishman announced.
 
Alex Schleider, 49, previously pleaded guilty before U.S. District Judge Joel A. Pisano to an information charging him with one count of wire fraud. Judge Pisano imposed the sentence today in Trenton federal court.

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

Schleider, Eliyahu Weinstein, 39, of Lakewood, and the other defendants persuaded victims to invest in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. They told the victims that Weinstein had the opportunity to purchase Belle Glade Gardens at a discounted price and immediately flip it at a substantial profit. Schleider and Weinstein further told the victims that Weinstein had already placed $2.5 million in the trust account of a Miami law firm for the transaction; that if the victims contributed another $2.5 million toward the transaction, those funds would remain in escrow at the Miami law firm until the deal closed; and that the victims would be repaid within 60 days. The victims wired $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Schleider and Weinstein did not use the money to purchase Belle Glades Gardens. Instead, they redirected the money from the law firm to accounts that they controlled, returned $1.8 million to the victims as a purported return on a prior Facebook investment, and used the remaining money for their own purposes.

In addition to the prison term, Judge Pisano Schleider to serve three years of supervised release and ordered him to pay restitution of $613,200 and forfeiture of $363,200.

Weinstein, 39, also pleaded guilty to charges related to his role in the scheme and is scheduled for sentencing on Dec. 15, 2014. Charges against a third conspirator, Aaron Muschel, 64, of Brooklyn, New York, who was charged in the criminal complaint filed against Weinstein and Schleider in May 2013, remain pending. The charges against him are merely accusations and he is presumed innocent until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Aaron T. Ford in Newark, for the investigation leading to today’s sentencing. 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; Assistant U.S. Attorney Zach Intrater, Deputy Chief of the General Crimes Unit; and Evan S. Weitz of the Asset Forfeiture and Money Laundering 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.

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Defense counsel:  Marc Agnifilo Esq., New York

Press Release

OtisMed News Release

Court Documents:

OtisMed

OtisMed Information

OtisMed Plea Agreement with Attachments

Stryker Side Letter Agreement

OtisMed Civil Settlement Agreement

Charlie Chi

Charlie Chi Information

Charlie Chi Plea Agreement

Government Exhibits from OtisMed Sentencing:

Exhibit 1

Exhibit 2

Exhibit 3 - Video with no audio. Video description: The bones of the diseased preoperative knee joint rotate on the left side of the screen. On the right, a progressive series of magnetic resonance imaging (MRI) images of the same knee are displayed. The MRI images are transformed into a computer-generated three dimensional model of the knee that rotates in the center of the screen. A computer-generated yellow grid is superimposed over the surfaces of the rotating computer model, illustrating the contours of the bone structure. As it rotates, the prosthetic knee implant appears, affixed to the articular surfaces of the bones. The screen then returns to the depiction of the diseased knee, and the OtisKnee cutting guide is affixed to the surface of the femoral condyles. A bone saw is inserted through the cutting guide and cuts through the bone. The guide and cut surface are removed to reveal the prepared femoral surface, following the completion of the femoral cuts. The metallic femoral knee prosthesis is affixed to the femur. The same cutting process is illustrated with regard to the tibia: the OtisKnee cutting guide is placed over the diseased tibial end, the bone saw is inserted through the slot in the cutting guide, removing the articular surface, and the tibial prosthetic implant is placed on the cut surface.

NEWARK, N.J. – A Passaic County, New Jersey, man was arrested at his home today by special agents of the FBI and officers of the Passaic County Sheriff’s Office and West Milford Police Department on a charge that he distributed sexually explicit images of children from his computer, U.S. Attorney Paul J. Fishman announced.

Thomas Bachalis, 30, of West Milford Township, New Jersey, is charged by complaint with one count of distributing images of child pornography over the Internet. He is scheduled to make his initial court appearance this afternoon before U.S. Magistrate Judge Mark Falk in Newark federal court.

According to the complaint:

On Aug. 15, 2013, Bachalis allegedly distributed images depicting child sexual abuse on the Internet via peer-to-peer file sharing software.  In September 2013, officers of the Passaic County Sheriff’s Office executed a search warrant at Bachalis’ residence and seized digital evidence that contained images depicting child sexual abuse—including material involving prepubescent minors.

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 the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; the Passaic County Sheriff’s Office, under the direction of Sheriff Richard H. Berdnik; and the West Milford Police Department, under the direction of Chief Timothy Storbeck, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorney Courtney A. Howard 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 presumed innocent unless and until proven guilty.

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Bachalis, Thomas Complaint

TRENTON, N.J. – Three members of a large-scale drug trafficking organization have admitted conspiring to distribute heroin in Ocean and Monmouth counties and elsewhere in New Jersey, U.S. Attorney Paul J. Fishman announced today.
 
Richard Durham, 28, of Brick, New Jersey, Jamar Johnson, 35, a/k/a “Rep,” of Lakewood, New Jersey, and Anthony J. Brooks, 45, of San Bernadino, California, all pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to informations charging them with conspiring to distribute heroin. Durham entered his plea today. Johnson and Brooks entered their pleas on Dec. 1, 2014, and Nov. 24, 2014, respectively. 

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

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

Between September 2013 and March 2014, Johnson and Durham conspired with Rufus Young and others to distribute heroin in Ocean and Monmouth counties as part of the Britt-Young DTO.

Brooks shipped through the U.S. Postal Service packages from California containing large quantities of heroin and cocaine to conspirators in New Jersey, including an individual who supplied heroin to the Britt-Young DTO. The conspirators in New Jersey then transported and packaged the narcotics and distributed them to others. Brooks shipped more than 1 kilogram of heroin and 1.5 kilograms of cocaine from California to New Jersey.   

The narcotics conspiracy charge to which Durham and Johnson pleaded guilty carries a maximum penalty of 20 years in prison and $1 million fine. The charge to which Brooks 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 Durham is scheduled for March 10, 2015. Johnson’s sentencing is scheduled for March 9, 2015, and Brooks’ sentencing is scheduled for March 2, 2015.

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, with the investigation leading to the guilty pleas.

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

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Defense Counsel:  Durham: Scott Krasny Esq., West Trenton, N.J.
Johnson: Joshua Markowitz Esq., Lawrenceville, N.J.
Brooks: Ryan Clark Esq., Freehold, N.J.

Durham, Richard Information
Brooks, Anthony, Information
Johnson, Jamar Information

CAMDEN, N.J. - A Burlington Township, New Jersey, man today admitted seven bank robberies of South Jersey banks between November 2013 and January 2014, U.S. Attorney Paul J. Fishman announced.

David Glenn, 23, pleaded guilty before Chief U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with seven counts of bank robbery.

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

Glenn robbed the following New Jersey banks on the dates below:

Beneficial Savings Bank

Willingboro

Nov. 14, 2013

Willingboro

Nov. 26, 2013

PNC Bank

Mount Laurel

Nov. 29, 2013

3rd National Bank

Delran

Dec. 12, 2013

Roma Bank

Delran

Dec. 12, 2013

TD Bank

Bellmawr

Jan. 8, 2014

PNC Bank

East Windsor

Jan. 8, 2014

Glenn admitted he robbed the banks with Shalir Hall, 21, of Edgewater Park, New Jersey. The two men took turns going into the banks and staying in the getaway vehicle.

The charges to which Glenn pleaded guilty each carry a maximum potential penalty of 20 years in prison and a $250,000 fine. In addition, Glenn’s plea agreement also requires him to make full restitution to each of the banks. Sentencing is scheduled for March 13, 2015.

Hall pleaded guilty before Judge Simandle on Nov. 14, 2014, and is currently scheduled for sentencing on Feb. 27, 2015. Both defendants have been in custody since Jan. 15, 2014, when they were detained on charges filed by the Burlington County Prosecutor’s Office.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agents in Charge Aaron T. Ford and Edward J. Hanko in Newark and Philadelphia, respectively, with the investigation leading to today’s guilty plea. He also thanked the Camden County Prosecutor’s Office and the Burlington County Prosecutor’s Office; the Burlington County Sheriff’s Department Warrant Unit; and the U.S. Marshals Service New York/New Jersey Regional Fugitive Task Force; as well as the East Windsor Township Police Department, Willingboro Police Department, Maple Shade Police Department, Delran Township Police Department, Mount Laurel Police Department, Philadelphia Police Department and the Hazelton, Pennsylvania Police Department for their work on the case.

The government is represented by Assistant U.S. Attorney Diana Carrig of the U.S. Attorney's Office Criminal Division in Camden.

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Defense counsel: Lisa Evans Lewis Esq., Assistant Federal Public Defender, Camden

Glenn, David Information

NEWARK, N.J. - A California CPA who allegedly stole more than $4 million from a worship center in New Jersey, is scheduled to have his initial New Jersey court appearance on Dec. 8, 2015, U.S. Attorney Paul Fishman announced.

Donald Gridiron, 50, is charged by complaint with one count of wire fraud. He was arrested in California Dec. 2, 2014, by FBI agents and released on bail after appearing in court there.

According to the complaint:

The worship center, a religious facility located in New Jersey, hired Gridiron based, in part, on his connections with individuals in the religious community as well as his standing within that community. The worship center agreed to pay Gridiron a monthly salary and reimburse him for reasonable expenses related to his work.

Gridiron allegedly used his employment to obtain additional money from the worship center without authorization. He had the worship center’s bank accounts transfer more than $2.75 million to accounts he controlled and more than $1.5 million to an account associated with a foundation in which Gridiron was involved. Gridiron then used funds from his accounts for his own use, including payments on a mortgage for his residence, payments to a luxury car dealership, and withdrawals in furtherance of his gambling. 

The charge of 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 Gridiron or twice the gross loss suffered to the victims of his offense.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; law enforcement officers of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s arrest. He also thanked special agents of the FBI in California for their assistance.

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 considered innocent unless and until proven guilty.

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Gridiron, Donald Complaint

NEWARK, N.J. – The former president of a Middlesex County, New Jersey, investment company was sentenced today to 15 months in prison for defrauding investors out of more than $250,000, U.S. Attorney Paul J. Fishman announced.

Shreyans Desai, 27, of Edison, New Jersey, president of Shreysiddh Capital LLC, located in Iselin, New Jersey, previously pleaded guilty before U.S. District Judge William J. Martini to Counts One and Two of a superseding indictment charging him with wire fraud. The third count in the indictment, securities fraud, was dismissed after Judge Martini imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: Desai misled a number of investors about his licensing status and the registration status of the company to induce them to entrust their money to him so that he could trade securities on their behalf. Desai then sought to retain control of the funds by providing investors with an inflated value of their investments and also inflated the amount of commissions he purportedly earned through trading those funds.

In addition to the prison term, Judge Martini sentenced Desai to three years of supervised release and ordered to pay restitution of $121,250.

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.

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

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Defense counsel: Alyssa A. Cimino Esq., Fairfield, N.J.

NEWARK, N.J. – A Paterson City Council member and former council president today admitted accepting bribes from a purported developer in exchange for his official help, New Jersey U.S. Attorney Paul J. Fishman announced.

Anthony Davis, 50, of Paterson, New Jersey, pleaded guilty today before U.S. District Judge William H. Walls in Newark federal court to an information charging him with one count of attempting to obstruct, delay and affect interstate commerce by extortion under color of official right.

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

On April 20, 2012, Davis accepted $5,000 in cash from an individual who was cooperating with federal authorities and who purported to be an out-of-state real estate developer. Davis accepted the bribe in exchange for his official action as Paterson City Council president to foster the developer’s business interests in Paterson. Between July 6, 2012, and July 25, 2012, Davis had meetings with the developer, during which Davis discussed the possibility of accepting additional money from the developer in exchange for a letter from Davis to the developer’s lender indicating that the Paterson City Council supported the developer with respect to certain business endeavors in Paterson. On July 25, 2012, Davis agreed to accept and accepted $5,000 in cash from the developer in exchange for such a letter.    

The extortion count to which Davis pleaded guilty is punishable by up to 20 years in prison and a fine of the greater of $250,000 or twice the gross pecuniary loss or gain from the offense. Sentencing is scheduled for March 18, 2015.

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

The government is represented by Assistant U.S. Attorney Vikas Khanna of the U.S. Attorney’s Office Special Prosecutions Division.

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Defense counsel: Randy Davenport Esq., Piscataway, N.J.    

Davis, Anthony Information

NEWARK, N.J. - An Ohio woman who claimed she investigates labor unions on behalf of attorneys was sentenced today to six months in prison and six months’ home confinement for impeding a federal investigation, U.S. Attorney Paul J. Fishman announced.

Debbie Shank Morgan, 58, of Euclid, Ohio, previously pleaded guilty before U.S. District Judge Kevin McNulty to an information charging her with one count of obstruction of justice. Judge McNulty imposed the sentence today in Newark federal court.

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

In May 2012, Morgan contacted federal agents from the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations (DOL-OIG) in New Jersey, a law enforcement agency that investigates allegations related to federal crimes, such as bribery and theft, involving labor unions, union officers, and employee benefit plans.

Morgan said she was a non-practicing lawyer who investigates crimes associated with labor unions, employee benefit plans and other alleged violations of federal criminal and civil law. Morgan said she had information that a former union officer and his father, both from an international labor union, had committed serious violations of federal law. She alleged they had embezzled $30 million from a political action committee (PAC) associated with the union.

Morgan provided federal agents with e-mails and other documents and items as evidence. She had, in fact, falsified, altered and created these items.  Morgan provided federal agents with e-mails she claimed were evidence in support of her allegations. Federal agents then obtained a court-authorized search warrant and seized the actual e-mails transmitted through the service provider. The e-mails from the search warrant demonstrated that she had altered and fabricated the e-mails before giving them to federal agents. In September 2012, she claimed that an unknown individual had fired a weapon at her car while she was driving it in Ohio. Morgan then provided federal agents with two digital recordings, allegedly with the wife of the alleged shooter. In these consensual recordings, the wife admitted that her husband had fired a weapon at Morgan’s car. The recordings, however, were fabricated and created by Morgan and an unknown third party.

In addition to the prison term, Judge McNulty sentenced Morgan to serve three years of supervised release and fined her $5,000.

U.S. Attorney Fishman credited special agents of the U.S. Department of Labor Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Region, under the direction of Special Agent in Charge Cheryl Garcia, for the investigation.

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

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Defense counsel: Jack A. Meyerson Esq., Philadelphia

CAMDEN, N.J. – A Gloucester County, New Jersey, man was sentenced today to 48 months in prison for conspiring to distribute 5,000 oxycodone pills, U.S. Attorney Paul J. Fishman announced.

Kristopher Williams, 29, of Glassboro, New Jersey, previously pleaded guilty before U.S. District Judge Noel H. Hillman to an information charging him with conspiracy to distribute and possess with intent to distribute oxycodone. Judge Hillman imposed the sentence today in Camden federal court.

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

Williams admitted that he and his conspirator, Corey Glenn, sought to obtain 5,000 oxycodone 30 milligram tablets in exchange for $30,000 in April 2012.  Glenn previously pleaded guilty to the conspiracy charge and was sentenced on August 18, 2014, to 132 months’ in prison, followed by four years’ supervised release.

In addition to the prison term, Judge Hillman sentenced Williams to three years of supervised release.

U.S. Attorney Fishman credited special agents of the DEA, under the direction of Special Agent in Charge Carl J. Kotowski in Newark, 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:  Nino V. Tinari Esq.  Philadelphia

TRENTON, N.J. – An attorney from Maplewood, New Jersey, today admitted his involvement in a scheme to smuggle contraband, including marijuana and tobacco, into the Essex County Jail, a federal pretrial detention facility, U.S. Attorney Paul J. Fishman announced.

Brian Kapalin, 67, pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of conspiring to smuggle contraband into a federal detention facility.

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

From September 2013 to May 2014, Kapalin accepted packages of contraband containing marijuana and tobacco from Vladimir Sauzereseteo, 40, of East Orange, New Jersey. In exchange for cash payments from Sauzereseteo, Kapalin agreed to smuggle the contraband to federal pretrial detainees at the Essex County Jail, including Sauzereseteo’s brother, Muhammad Subpunallah, 32.

In January 2014 Subpunallah gave Kapalin $500 to deliver a package of marijuana to another inmate. Kapalin met with the inmate at the jail’s attorney conference room and gave him the contraband. Kapalin admitted delivering multiple packages of marijuana to a third inmate at the Essex County Jail between August 2013 and May 2014 in return for $500 per package.

The conspiracy charge to which Kapalin pleaded guilty carries a maximum penalty of five years in prison and a maximum fine of $250,000. Sentencing is scheduled for March 18, 2015.

Sauzereseteo previously pleaded guilty to one count of conspiring to smuggle contraband into a federal detention facility and is scheduled to be sentenced on Dec. 4, 2014. Charges against Subpunallah are still pending and he is considered 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, and investigators with the Internal Affairs Division of Essex County Jail, under the leadership of Warden Roy Hendricks, 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 Criminal Division, Organized Crime/Gangs Unit, in Newark.

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Defense counsel: Michael Pedicini Esq., Chatham, New Jersey

Kapalin, Brian Information

TRENTON, N.J. – A previously convicted sex offender admitted today that he uploaded images of child sexual abuse to an online file-sharing network, U.S. Attorney Paul J. Fishman announced.

Layne Bracht, 32, of Highlands, New Jersey, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court to an information charging him with one count of possession of child pornography.

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

Bract admitted that on Oct. 28, 2013, he knowingly placed images and videos depicting child sexual abuse into shared folders that others could access via a peer-to-peer network. Special agents of the FBI executed a search warrant at his residence in Highlands on Jan. 15, 2014 and seized digital evidence that contained numerous videos and images depicting child sexual abuse, including material involving prepubescent minors and sadistic or masochistic conduct. The digital evidence seized included three files previously downloaded from Bracht by law enforcement agents working in an undercover capacity on the peer-to-peer network.

In 2006, Bracht was arrested and charged with possession of child pornography, a charge to which he subsequently pleaded guilty. On April 2, 2008, U.S. District Judge Joseph E. Irenas sentenced Bracht to 30 months in prison to be followed by five years of supervised release. As a previously convicted sex offender, Bracht now faces a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 13, 2015.

U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford in Newark, New Jersey, and the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.

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Defense counsel: Brian P. Reilly Esq, Assistant Federal Public Defender, Trenton           

Bracht, Layne Information

NEWARK, N.J. - A former longshoreman was sentenced to 12 months in prison today for conspiring to extort others in Local 1235 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.

Salvatore LaGrasso, 58, of Edison, New Jersey, a former supervisor on the New Jersey piers – previously pleaded guilty before U.S. District Judge Claire C. Cecchi to conspiring to extort Christmastime tributes from the union members – count three of the second superseding indictment against him. Judge Cecchi imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: LaGrasso admitted that he and others conspired to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. 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.

Charges are still pending against three defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 59, of Kenilworth, New Jersey – a soldier in the Genovese organized crime family of La Cosa Nostra (Genovese family). 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.

In addition to the prison term, Judge Cecchi sentenced LaGrasso to two years of supervised release.
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.

The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.

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Defense counsel: Peter Till Esq., Springfield, N.J.

NEWARK, N.J. - A former longshoreman was sentenced to 12 months in prison today for conspiring to extort others in Local 1235 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.

Salvatore LaGrasso, 58, of Edison, New Jersey, a former supervisor on the New Jersey piers – previously pleaded guilty before U.S. District Judge Claire C. Cecchi to conspiring to extort Christmastime tributes from the union members – count three of the second superseding indictment against him. Judge Cecchi imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court: LaGrasso admitted that he and others conspired to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. 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.

Charges are still pending against three defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 59, of Kenilworth, New Jersey – a soldier in the Genovese organized crime family of La Cosa Nostra (Genovese family). 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.

In addition to the prison term, Judge Cecchi sentenced LaGrasso to two years of supervised release.
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.

The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.

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Defense counsel: Peter Till Esq., Springfield, N.J.

NEWARK, N.J. – The former chief financial officer of a Bergen County business was arrested at home this morning by special agents of the FBI for allegedly embezzling nearly $6.3 million from the company, U.S. Attorney Paul J. Fishman announced.

Gomidas Garabed Hartounian, 50, of Franklin Lakes, New Jersey, is charged by complaint with one count of wire fraud. He is expected to appear this afternoon before U.S. Magistrate Judge James B. Clark III in Newark federal court.

According to the complaint:

From April 2007 through April 2014, Hartounian was the CFO for “Company A,” a for-profit company with its principal place of business in Englewood, New Jersey. Hartounian is also the sole owner of MGB LLC, a company registered to his residence.

During the time that Hartounian was with Company A, he fraudulently designated MGB as a vendor in Company A’s accounting system without disclosing that he controlled MGB. Hartounian then directed Company A employees to issue checks to MGB for freight services that MGB supposedly provided Company A. When asked for the MGB invoices, he claimed that he was maintaining them in his office.

Because Hartounian didn’t have sole signatory power, he forged the signatures of the chief executive officer or the chief operating officer before depositing the checks into bank accounts that he controlled. Hartounian also had checks issued directly from Company A bank accounts to pay for his personal expenses, including real estate taxes, motor vehicle expenses and credit card payments. Hartounian allegedly stole nearly $6.3 million from the victim company.

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 resulting from the crime.

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 arrest.

The government is represented by Assistant U.S. Attorney Shana W. Chen 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.

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.

14-416            

CAMDEN, N.J. – A North Bergen, New Jersey, man was sentenced today to 37 months in prison for defrauding an elderly woman of approximately $279,000 while she was hospitalized for cancer treatment, U.S. Attorney Paul J. Fishman announced.

Ralph Cozzino, 45, previously pleaded guilty before U.S. District Judge Robert B. Kugler to one count of mail fraud. Judge Kugler imposed the sentence today in Camden federal court.

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

Cozzino admitted to stealing stock certificates from the elderly victim’s apartment. Cozzino then presented the stolen stock certificates to the victim’s stock transfer agent, along with a fraudulent power of attorney bearing the victim’s name, address, Social Security number and forged signature, which purported to grant him control over the victim’s financial affairs, including the power to redeem and/or sell stock.

Cozzino instructed the stock transfer agent to transfer ownership of the stolen stocks into Cozzino’s name and to liquidate certain shares of stock for his benefit. Cozzino caused the stock transfer agent to send him the proceeds of the liquidated shares, which he deposited into bank accounts that he controlled and spent the funds on various personal expenditures, including a 2006 Nissan, Lasik eye surgery, as well as a down payment, closing costs, and furniture for a new house.  From April 2006 until October 2007, Cozzino liquidated, and converted to his own use, approximately $279,000 in stolen shares belonging to the victim.

In addition to the prison term, Judge Kugler sentenced Cozzino to serve three years of supervised release and ordered him to pay restitution of $279,020.

U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, for the investigation.

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

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Defense counsel: J. Michael Farrell Esq., Wenonah, New Jersey

CAMDEN, N.J. – A former branch manager for Newfield National Bank in Franklinville, New Jersey, was sentenced today to 30 months in prison for embezzling $263,864 from the bank, U.S. Attorney Paul J. Fishman announced.

Season Wengert, 32, of Franklinville, previously pleaded guilty before U.S. District Court Judge Robert B. Kugler to an information charging her with one count of bank embezzlement. Judge Kugler imposed the sentence today in Camden federal court. 

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

Wengert worked as the bank manager at the Franklinville Branch of the Newfield National Bank. From Sept. 4, 2007, through Jan. 7, 2013, Wengert embezzled funds by fraudulently conducting online computer transfers of money from 38 accounts belonging to 23 customers into accounts owned by her or her husband. She also withdrew money from customers’ accounts and deposited it into her accounts. As branch manager, Wengert was able to conceal her embezzlement by failing to note the fraudulent withdrawals in the customers’ passbooks and by transferring money through various customers’ accounts to cover shortages. When customers sought to withdraw money from an account which had been embezzled, Wengert would then transfer money from another victim’s account to cover the withdrawal and conceal her fraudulent conduct.  Wengert stole $263,864 for her own use.

In addition to the prison term, Judge Kugler sentenced Wengert to three years of supervised release and ordered her to pay restitution of $261,654.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Edward J. Hanko in Philadelphia, with the investigation leading to the guilty plea.

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

14-415                                                  

Defense counsel: John C. Eastlack Jr. Esq., Cherry Hill, New Jersey

Worked as ‘Casher’ for Organization that Allegedly Capitalized on
Information Hacked From Customers of More Than a Dozen Global Financial Institutions

TRENTON, N.J. – A member of an alleged international cybercrime, identity theft and credit card fraud conspiracy was sentenced today to 41 months in prison for his role in a scheme to use information hacked from customer accounts at more than a dozen banks, brokerage firms, payroll processing companies and government agencies to attempt to steal $15 million from customers, U.S. Attorney Paul J. Fishman announced.

Richard Gundersen, 48, of Brooklyn, New York, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an indictment charging him with one count of conspiracy to commit wire fraud, access device fraud and identity theft. Judge Sheridan imposed the sentence today in Newark federal court.

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

Gundersen was asked by other members of the conspiracy to participate in a scheme to “cash out” bank accounts and pre-paid debit cards opened in the names of others. Oleksiy Sharapka, 34, of Kiev, Ukraine, allegedly directed the conspiracy with the help of Leonid Yanovitsky, 39, also of Kiev. Oleg Pidtergerya, 50, who previously pleaded guilty to his role in the conspiracy, managed a cash-out crew in New York for Sharapka and Yanovitsky, and Robert Dubuc, 41, who has also pleaded guilty to his role in the conspiracy, controlled a cash-out crew in Massachusetts. Gundersen worked as “casher” under Pidtergerya.

Hackers first gained unauthorized access to the bank accounts of customers of more than a dozen global financial institutions and businesses, including: Aon Hewitt; Automatic Data Processing Inc.; Citibank N.A.; E-Trade; Electronic Payments Inc.; Fundtech Holdings LLC, iPayment Inc.; JP Morgan Chase Bank N.A.; Nordstrom Bank; PayPal; TD Ameritrade; U.S. Department of Defense, Defense Finance and Accounting Service; TIAA-CREF; USAA; and Veracity Payment Solutions Inc.

After obtaining unauthorized access to the bank accounts, Sharapka and Yanovitsky diverted money from them to bank accounts and pre-paid debit cards they controlled. They then implemented a sophisticated cash-out operation, employing crews of individuals, including Gundersen, to withdraw the stolen funds by making ATM withdrawals and fraudulent purchases in New York, Massachusetts, Illinois, Georgia and elsewhere. Both Sharapka and Yanovitsky are under indictment in the United States and remain at large.

Gundersen admitted he was aware fraudulent accounts and cards were created without the consent of the individuals in whose names they were opened. He admitted that he opened bank accounts in the names of identity theft victims and that those accounts were funded with money stolen by other conspirators. He also admitted conducting ATM and bank withdrawals of the stolen funds and providing the proceeds of the fraud, less his own fees, to immediate higher-ups in the organization – Pidtergerya and Dubuc, who, in turn, sent a portion of the proceeds to Sharapka and Yanovitsky in Ukraine.

The government’s ongoing investigation into the organization has so far identified attempts to defraud the victim companies and their customers of more than $15 million.

In addition to the prison term, Judge Sheridan sentenced Gundersen to three years of supervised release and ordered him to pay restitution of $88,160.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, under the direction of Assistant Special Agent in Charge Carl Agnelli; U.S Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge John P. Woods; Department of Defense, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Jeffery D. Thorpe, Cyber Field Office; and IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty pleas.

The government is represented by Economic Crimes Unit Chief Gurbir S. Grewal of the U.S. Attorney’s Office in Newark.

The charges and allegations concerning the remaining conspirators are merely allegations and they are presumed innocent unless and until proven guilty.

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.

14-411                                              

Defense counsel: Cynthia Hardaway Esq., Newark

TRENTON, N.J. – A former South Plainfield police captain was sentenced today to 20 years in prison for exploiting a minor girl by enticing her to live-stream sexually explicit acts via the Internet in exchange for payment, U.S. Attorney Paul J. Fishman announced.

Michael Grennier, 52, of South Plainfield, New Jersey, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of production of child pornography. Grennier was charged by complaint on Feb. 19, 2013, and has been in custody since that date. Judge Wolfson imposed the sentence today in Trenton federal court.

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

On Feb. 14, 2013, Grennier enticed a girl to perform sexually explicit acts and stream images of herself over the Internet while he watched remotely from his home computer. During the webcam session, Grennier exchanged text messages with the minor in which he directed her actions. Grennier admitted during his guilty plea proceeding that he promised to buy his victim clothing in exchange for her performance.

At the time of his arrest, Grennier was working for a private computer forensics firm. Prior to his retirement, he was a computer forensics specialist for the South Plainfield Police Department.

In addition to the prison term, Judge Wolfson sentenced Grennier to serve lifetime supervised release. Restitution will be determined at a later date. Grennier will also be required to register as a sex offender.

U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s plea. He also thanked the South Plainfield Police Department, under the direction of Chief of Police James Parker, and the Middlesex County Prosecutor’s Office, under the direction of Acting Prosecutor Andrew Carey, for their assistance with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton and Harvey Bartle, the Attorney-in-Charge of the U.S. Attorney’s Trenton Office.

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

NEWARK, N.J. – A former Newark City Hall employee today admitted producing fraudulent New Jersey birth certificates, U.S. Attorney Paul J. Fishman announced.

Cory Cooke, 45, of Newark, New Jersey, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of producing false identification documents.

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

Cooke was previously employed by the City of Newark at its Office of Vital Statistics and was responsible for issuing official New Jersey birth certificates. From August 2013 to October 2013, Cooke produced four fraudulent New Jersey birth certificates using four different individuals’ personal identifying information, which Cooke had acquired from a conspirator. After producing the fraudulent New Jersey birth certificates, Cooke gave the documents to his conspirator, who subsequently sold them.

The count of producing false identification documents to which Cooke pleaded guilty carries a maximum potential penalty of 15 years in prison and a $250,000 fine. Sentencing is scheduled for Feb. 23, 2015.

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

The government is represented by Assistant U.S. Attorney J. Jamari Buxton of the U.S. Attorney’s Office Criminal Division in Newark.

14-413                                                    

Defense counsel: Stephen N. Dratch Esq., Livingston, N.J.

Cooke, Cory Information

NEWARK, N.J. – U.S. Attorney Paul J. Fishmanannounced today that the New Jersey District, working with partner agencies and divisions, collected$52,963,571in asset forfeiture actions in Fiscal Year 2014; it also collected $17,289,649 – $15,063,556 in criminal actions and $2,226,093 in civil actions – during the same fiscal year.

 Additionally, New Jersey worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $27,762,608 in cases pursued jointly.         

Attorney General Eric Holder announced today that the Justice Department collected $24.7 billionin civil and criminal actions in the fiscal year ending Sept. 30, 2014.            Across the country, the more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions in that same period.

“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” Attorney General Holder said. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy.  And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”   

“Over the past five years, the dedicated public servants in my office have collected substantially more in fines, penalties, restitution and settlements – more than $570 million – than it has cost to operate the office,” U.S. Attorney Fishman said. “That money is used in a variety of ways: It makes whole the victims of crimes , is shared with our state and local law enforcement partners, and returned to the general treasury for the benefit of all Americans.”

This past July, the District of New Jersey recovered $1.6 million as part of a total $10.4 million penalty against two shipping firms – Columbia Shipmanagement (Deutschland) GmbH (CSM-D), a German corporation, and Columbia Shipmanagement Ltd. (CSM-CY), company based in Cyprus. The companies had pleaded guilty to charges including violation of the Act to Prevent Pollution from Ships, for failing to maintain an accurate oil record book, obstruction of justice and making false statements.

The U.S. Attorneys’ Offices, along with the Department of Justice’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims.  The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss.  While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The $52,963,571 in assets the District of New Jersey collected through forfeiture actions is deposited into the Department of Justice Assets Forfeiture Fund and used to restore funds to crime victims and for a variety of law enforcement purposes.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Departments of Housing and Urban Development, Health and Human Services, Education, the Internal Revenue Service and Small Business Administration.

14-407                                   

TRENTON, N.J. – A Colts Neck, New Jersey, man who defrauded dozens of investors today admitted operating a $20 million Ponzi scheme out of his Fair Haven, New Jersey office and Miami residence, U.S. Attorney Paul J. Fishman announced.

Louis J. Spina, 57, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with one count of wire fraud.

According to documents filed in this case and statements made in court: Spina admitted he solicited victims to invest through his business, LJS Trading, LLC. After receiving the funds, Spina provided each investor with a note specifying a guaranteed monthly rate of return, typically ranging from nine to 14 percent. Between August 2010 and November 2013, Spina collected $20 million from 36 investors and deposited the funds into the LJS bank account.

Over the course of the scheme, Spina only transferred $9.5 million of the investor funds into a trading account. He used the remaining $10.5 million to pay the investors’ monthly interest payments, return portions of some investors’ principals, and to pay for his own personal expenses, including car purchases, luxury apartment rental payments, and a $400,000 donation to a private university.

Spina admitted he lied to investors about the status of their funds, telling them they were making large gains despite the fact he lost all of the $9.5 million that was actually invested. When certain investors became suspicious, he reassured them by sending misleading screen shots of their account balances that reflected only temporary gains, not the total daily losses. In addition, Spina was able to defraud his investors out of an additional $1.7 million by fabricating a story about a wealthy individual planning to buy LJS, which he told them would result in a 14 to 30 percent return on their investment. Altogether, Spina’s scheme cost investors a total of $12.7 million. 

The wire fraud count to which Spina pleaded guilty carries a maximum potential penalty of 20 years in prison and $250,000 fine or twice the gross gain or loss from the offense. Spina will also be ordered to pay restitution at sentencing, currently scheduled for Feb. 26, 2015.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, New Jersey; and the U.S. Secret Service, under the direction of Assistant Special Agent in Charge Carl Agnelli in Newark, for their work in the investigation.

The government is represented by Assistant U.S. Attorney Sarah M. Wolfe of the U.S. Attorney’s Office Criminal Division in Trenton.

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Defense counsel: Assistant Federal Public Defender Brian P. Reilly Esq., Trenton

Spina, Louis Information

CAMDEN, N.J. – A Manhattan man was arrested today for traveling to New Jersey for the purpose of sexually abusing a 13-year-old girl, U.S. Attorney Paul J. Fishman announced.

Michael Tway Smith, 66, of New York, was arrested by special agents of the U.S. Department of Homeland Security, Immigration and Customs Enforcement, Homeland Security Investigations (ICE HSI) in Maple Shade, New Jersey, where he expected to meet the girl. He is scheduled to have his initial court appearance today before U.S. Magistrate Judge Joel Schneider in Camden federal court.

According to the complaint:

Beginning on Nov. 13, 2014, Smith initiated a series of chats on a website with an undercover agent from ICE HSI, whom he believed was a 13-year-old girl. Over the course of the next several days, Smith had multiple online communications with the agent during which he indicated his desire to engage in sexual activity with the fictitious girl. Smith then made arrangements to travel from Manhattan to Maple Shade. On Nov. 19, 2014, Smith traveled to Maple Shade, where he had reserved a room at a motel and contacted the fictitious girl to finalize the meeting. Today, Smith went to a convenience store near the motel believing he was going to meet the girl and return to the motel with her to engage in sexual activity.

The count of traveling with intent to engage in illicit sexual conduct carries a maximum potential penalty of 30 years in prison and a $250,000 fine.

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

The government is represented by Assistant U.S. Attorney Steven D’Aguanno of the New Jersey U.S. Attorney’s Office Camden Office.

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

14-410                                                                                                     

Smith, Michael Tway Complaint

NEWARK, N.J. – A former New Jersey resident was arrested today in North Carolina on charges that he allegedly orchestrated a scheme to defraud a United States subsidiary of an international investment bank of more than $1.5 million, U.S. Attorney Paul J. Fishman announced today.

Michael Lieberman, 43, formerly of New Jersey and currently a resident of Huntersville, North Carolina, is charged by complaint with two counts of wire fraud. He is scheduled to make his initial appearance later today in federal court in Charlotte, North Carolina, at which time it is expected that he will be ordered to appear in Newark federal court.

According to the complaint: Lieberman was employed by “Company A,” a United States-based subsidiary of an international investment bank, in its International Settlements Group located in Iselin, New Jersey. Company A engaged in and settled cross-border securities transactions and acted as a settlement agent for similar securities transactions entered into by its broker-dealer clients.  Company A’s International Settlements Group was responsible for, among other things, wiring funds to settle various securities transactions. 
From April 2012 through May 2014, Lieberman devised a scheme to defraud Company A out of more than $1.5 million by using his position in the International Settlements Group to initiate more than 40 separate fraudulent wire transfers of Company A’s money, directing the proceeds to bank accounts he either owned or controlled. Lieberman then spent Company A’s money for his own purposes, including purchasing a home in North Carolina, making tens of thousands of dollars in credit card payments and spending hundreds of thousands of dollars on hotels, airplane tickets, home furnishings, restaurant tabs and other expenditures. 

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

The wire fraud counts with which Lieberman is charged each carry a maximum potential penalty of 30 years in prison and a fine of up to $1 million, 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, with the investigation leading to the arrest.

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

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

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

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Defense counsel: TBD

Lieberman, Michael Complaint

NEWARK, N.J. – Two Bergen County, New Jersey, residents were charged today in a scheme to defraud two international companies out $3 million by fraudulently billing them for services that were never completed, U.S. Attorney Paul J. Fishman announced.

Barbara Brown, 64, and Philip Charles de Gruchy, 61, both of Park Ridge, New Jersey, surrendered to federal agents this morning and were charged by complaint with one count of conspiracy to commit mail fraud. The defendants made their initial appearances this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court. Each was released on $250,000 unsecured bond.

According to the complaint filed in this case:

From August 2007 through April 2, 2010, Brown was employed by “Company A,” a toy and juvenile products retailer headquartered in Wayne, New Jersey, first as director of customer relationship management and then as director of global customer relations management. As part of her position, she had authority to hire and pay contractors. Brown caused Company A to enter into a business relationship with CEM, a company that Brown and de Gruchy secretly controlled. From Nov. 5, 2007, through March 4, 2010, CEM submitted more than 60 invoices to Company A for alleged marketing consulting work. The purported work was either copied from other vendors’ work, was related to other businesses or did not correspond to items on CEM’s invoices.

The net amount that CEM billed and collected from Company A was $2.855 million. Although each of the checks that Company A issued to CEM was mailed to various Canadian addresses, the checks were ultimately deposited at bank branches located in White Plains, New York. Checks were written out of the CEM account payable directly to either de Gruchy or Brown or to Silk Farm and Ontario LLC, companies affiliated with de Gruchy. Monies obtained from the scheme were used for personal purposes, including home renovations and mortgage payments on the Park Ridge residence that Brown and de Gruchy shared, and credit card bills.

From July 2010 through Nov. 11, 2011, de Gruchy was employed as the director of global relations management for “Company B,” an international manufacturer and retailer of luxury travel suitcases and accessories, headquartered in South Plainfield, New Jersey. As part of his job, de Gruchy was responsible for a data migration project designed to assist Company B with identifying customer purchasing patterns. De Gruchy obtained verbal approval from Company B to hire Brown to assist on the migration project. At no time did de Gruchy reveal his personal or business relationship with Brown.

From Nov. 4, 2010, through Sept. 22, 2011, Company B mailed $216,835 in checks to a Canadian address purporting to belong to Brown or BI Insights, an alleged Canadian company engaged in marketing consulting services and controlled by Brown. De Gruchy approved all of the invoices submitted by Brown and BI Insights. An examination of documents that purported to support the invoices to Company B revealed that no meaningful work product was furnished. Additional invoices submitted by Brown to Company B, totaling $124,150, were not paid after the scheme to defraud was uncovered.

The counts of conspiracy to commit mail fraud with which the defendants are charged carry a maximum penalty of 20 years in prison.

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 the charges.

The government is represented by Assistant U.S. Attorney Leslie Faye Schwartz 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 defendants are considered innocent unless and until proven guilty.

CAMDEN, N.J. - A South Carolina man today admitted tampering with a witness in a federal criminal trial that concluded in September 2013, U.S. Attorney Paul J. Fishman announced.

Dennis Nadeau, 53, of Myrtle Beach, South Carolina, pleaded guilty before U.S. District Judge Noel L. Hillman in Camden federal court to an information charging him with one count of witness tampering.

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

From 2010 through 2013, Nadeau worked at the New Jersey-based Vacation Ownership Group LLC (VO Group) and its successor VO Financial. In 2013, 13 former VO Group employees pleaded guilty to conspiring to defraud timeshare owners. Four other VO Group employees, including VO Group President Adam Lacerda and his wife, Ashley Lacerda, were convicted by a jury of conspiracy to defraud and related charges after a seven-week trial that concluded in September 2013. The Lacerdas have been in custody since the trial and all defendants are awaiting sentencing.

Shortly before the start of last year’s trial, Ashley Lacerda directed Nadeau to call former VO Group customers who had spoken to the FBI. Nadeau was told to try to convince them that everything had been explained to them and that any problems occurred because they had not followed the VO Group’s instructions. After Nadeau had an initial call with a witness, Adam Lacerda gave Nadeau a written script and directed him to call the witness again using the script.  Adam Lacerda told Nadeau that he wanted to obtain ammunition to use when the witness testified at trial and instructed him to record the call without the witness’ knowledge. With Adam Lacerda standing over him, Nadeau called witness using the script and tried to get the witness to agree with several false statements.

The witness testified at trial and the recording was played during the witness’ trial testimony.

Nadeau then testified at trial as one of Adam Lacerda’s defense witnesses. Adam Lacerda prepared Nadeau to testify and told Nadeau to tell two lies during his trial testimony. Nadeau admitted today that he complied with Adam Lacerda’s instructions and gave false testimony at trial.

The count of witness tampering carries a maximum potential penalty of 20 years in prison and a fine of the greater of $250,000 or twice the gain or loss caused by the offense. Sentencing is scheduled for Feb. 24, 2015.

U.S. Attorney Fishman credited special agents of FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford; and special agents from the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia, NewYork Region, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney R. David Walk Jr. of the U.S. Attorney’s Office in Camden.

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Defense counsel:  Stanley O. King Esq., Woodbury, N.J.

Nadeau, Dennis Information

TRENTON N.J. - An Essex County, N.J. contractor who was paid nearly $100,000 to renovate the home of a Bronx, N.Y., woman, was sentenced today to 14 months in prison for defrauding her of the money in connection with the remodeling project, U.S. Attorney Paul J. Fishman announced today.

Raymond Norville, 45, of Orange, N.J., owner of RRL Unique Homes Inc., a construction company, previously pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to a superseding information charging him with one count of conspiracy to commit wire fraud. Judge Pisano imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court: In 2011, Norville was a contractor who owned RRL Unique Homes Inc. The victim wanted to renovate her newly purchased home in the Riverdale section of Bronx. Norville agreed to perform the renovations on the residence for $250,000.  He submitted invoices to the victim, inducing her to pay him $98,600 in cash for the purchase of materials, supplies, architectural plans, rental equipment and permits needed for the project. Norville emailed pictures of materials that he intended to purchase. Norville neither delivered to the job site, nor provided proofs of purchase for the materials. By May 2011, work on the project had not started and the victim demanded either a refund or the materials and supplies Norville promised to buy. Norville attempted to repay a portion of the $98,600 by providing a check for $24,500, which was rejected for insufficient funds.

In addition to the prison term, Judge Pisano sentenced Norville to three years of supervised release and ordered him to pay restitution of $98,600.

U.S. Attorney Fishman credited special agents of the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia for the New York Region; and detectives of the Waterfront Commission of New York Harbor, under the direction of Commissioner Michael Murphy, for the investigation leading to today’s guilty plea.

The government is represented by Senior Litigation Counsel V. Grady O’Malley in Newark.

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Defense counsel: David P. Schroth Esq., Trenton

NEWARK, N.J. – An Irvington, New Jersey, man was sentenced today to 57 months in prison for using stolen identities to file false tax returns and obtain hundreds of thousands of dollars in tax refund checks, U.S. Attorney Paul J. Fishman announced.

Hakeem Awe, 40, of Irvington, New Jersey, previously pleaded guilty before U.S. District Judge Jose L. Linares to two counts of an indictment charging him with mail fraud and aggravated identity theft. Judge Linares imposed the sentence today in Newark federal court.

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

Awe used stolen names, Social Security numbers, and other personally identifying information to file false tax returns, using fictitious financial information to make it appear that the filer was entitled to a tax refund. Awe also listed the filer’s address as one of several post office boxes that he controlled in and around New Jersey. He received the checks at his post office boxes and then deposited them into bank accounts that he controlled.

In addition to the prison term, Judge Linares sentenced Awe to three years of supervised release and ordered him to pay restitution of $1,242,047.

U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen in Newark, and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Andrew J. Bruck of the Organized Crime/Gang Unit and Jacques S. Pierre of the Special Prosecutions Division, both of the U.S. Attorney’s Office in Newark.

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Defense counsel: Timothy R. Anderson Esq., Red Bank, N.J.

NEWARK, N.J. – A doctor with practices in Wall Township and Howell Township, New Jersey, today admitted accepting bribes in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Anthony DeLuca, 52, of Point Pleasant, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes. 

Including DeLuca, 32 people – 21 of them doctors – 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. The investigation has so far recovered more than $10.2 million to date through forfeiture.

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

DeLuca admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $1,500 per month, which he received from another person on in his medical office engaged in the same activity.

On April 9, 2013, federal agents arrested David Nicoll, 40, of Mountain Lakes, New Jersey, Scott Nicoll, 33, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme

The bribery count to which DeLuca pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine.  Sentencing is scheduled for March 20, 2015. As part of his guilty plea, DeLuca must forfeit $16,500, representing the total bribe monies received from BLS.

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 Acting Special Agent in Charge Jonathan D. Larsen; 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 $540 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: Patrick Egan Esq., Philadelphia, Pa.

DeLuca, Anthony Information

NEWARK, N.J. – A federal jury in Newark has convicted a carjacker identified after his victim used the “find my iPhone” feature on the phone also stolen during the gunpoint robbery, U.S. Attorney Paul J. Fishman announced.

Lee Caraballo, 28, of Newark, was convicted of both counts in the indictment against him: theft of a motor vehicle by force, violence and intimidation and use of a firearm in furtherance of a crime of violence. Following a three-day trial before U.S. District Esther Salas, the jury deliberated one hour before returning the guilty verdict.

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

The government proved that, on Nov. 30, 2012, Lee Caraballo carjacked a Rutgers law student at gunpoint, in the driveway of the student’s home. After stealing the victim’s wallet and cell phone, Caraballo fled in the victim’s Toyota Corolla.

A Roselle Park police officer pulled over Caraballo later that day in a routine traffic stop, during which he was driving his own car. In that car, law enforcement found the victim’s cell phone and car keys as well as various items of clothing the victim later identified.

While Caraballo was in police custody, the carjacking victim located his phone remotely and called the police station. He later identified the defendant.

The carjacking charge carries a maximum potential penalty of 15 years in prison. The firearms charge carries a minimum consecutive term of seven years in prison and a maximum consecutive term of life in prison. Each charge also carries a maximum $250,000 fine. Sentencing is currently scheduled for Feb. 23, 2015.

U.S. Attorney Fishman credited investigators and officers of the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; the New Jersey State Police, Newark Police Department and Roselle Park Police Department for the investigation that led to the conviction.
The government is represented Assistant U.S. Attorneys Barry A. Kamar and Adam N. Subervi of the U.S. Attorney’s Office Criminal Division in Newark.

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Defense counsel: Gary Leo Cutler Esq., Newark