District of New Jersey
Press releases recorded for this federal judicial district.
Passaic County, N.J., Man Pleads Guilty to Conspiring to Defraud the U.S. Treasury Department of More Than $2.5 MillionRead the Press Release
NEWARK, N.J. - A Passaic County, N.J., man today admitted his role in defrauding the U.S. Department of Treasury of more than $2.5 million in income tax return checks, U.S. Attorney Paul Fishman announced today.
Reyes Flores-Perez, 32, of Passaic, N.J., pleaded guilty today before U.S. District Judge Kevin McNulty to an information charging him with one count of conspiracy to defraud the United States and one count of knowingly transferring false identification documents.
According to documents filed in this case and statement made in court:
Citizens of the Commonwealth of Puerto Rico typically do not file tax returns with the IRS as long as all of their income is derived from sources in Puerto Rico. Members of the conspiracy filed or caused to be filed phony individual income tax returns with the IRS using the identity information of other individuals, including citizens of the Commonwealth of Puerto Rico. The IRS processed the false returns as if they were legitimate and issued refund checks, which were obtained by Flores-Perez’ conspirators. Flores-Perez’ role in the scheme was to produce fraudulent identification documents that matched the identities of the payees on the treasury checks, which his conspirators used to negotiate the treasury checks. Flores-Perez admitted the total loss from the conspiracy was more than $2.5 million.
The conspiracy charge to which Flores-Perez pleaded guilty carries a maximum potential penalty of five years in prison. The transferring fraudulent identification documents charge carries a maximum potential penalty of 15 years in prison. Both charges also carry a potential $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for Sept. 10, 2014.
U.S. Attorney Fishman credited special agents of the IRS-Criminal Investigation, under the direction of Acting Special Agent in Jonathan D. Larsen; postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; and the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes, with the investigation leading to today’s plea.
The government is represented by Assistant U.S. Attorneys Cari Fais of the General Crimes Unit and Andrew J. Bruck of the Organized Crime/Gangs Unit in Newark.
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Defense counsel: John Whipple Esq., Morristown, N.J.Flores-Perez, Reyes, Information
Neptune, N.J., Man Admits Involvement in Shooting of Cab Driver, Several Armed Robberies in Monmouth CountyRead the Press Release
TRENTON, N.J. – A Neptune, N.J., man today admitted his involvement in a 24-hour crime spree that took place in five separate shore-area towns and involved the shooting of a cab driver and a number of armed robberies, U.S. Attorney Paul J. Fishman announced.
Quam Wilson, 23, pleaded guilty to committing a Hobbs Act robbery and using a firearm during a the commission of that robbery. Wilson also admitted to committing additional armed robberies, which will be taken into consideration at the time of his sentencing. Wilson entered his guilty plea before Judge Peter G. Sheridan in Trenton federal court.
Wilson was initially arrested and charged by criminal complaint with the conspiracy and firearms counts on March 13, 2013. On June 3, 2013, U.S. Magistrate Judge Lois H. Goodman remanded him to federal custody pending trial. Wilson pleaded guilty today to counts one and two of the indictment returned against him on Sept. 5, 2013.
According to the documents filed in this case and statements made in court:
Wilson engaged in a crime spree that began at approximately 5:00 a.m. on Nov. 13, 2012, when he robbed a cab driver in Asbury Park. The driver was shot during the robbery. The victim, who survived, sustained a single gunshot wound to the head and was taken to Jersey Shore University Medical Center. During today’s hearing, Wilson admitted he took the cab driver’s identification, taxi keys and debit card during the robbery.
After robbing the taxi driver, Wilson proceeded to a Shell gas station located in Ocean Township. There, he approached a gas station attendant and, while brandishing a handgun, robbed him of cash and fled the area.
Later that morning, Wilson attempted to obtain money from the cab driver’s bank account from several area banks. Suspecting that a theft was taking place, a bank employee confiscated the identification and debit card from Wilson and contacted police.At approximately 9:00 p.m., that same day, he committed an armed robbery at a taxi stand in Long Branch, again while brandishing a handgun.
During the early morning hours of the next day, Nov. 14, 2012, Wilson robbed an Exxon gas station in Red Bank at gunpoint.
A short time later, Wilson entered a Quick Check convenience store in Neptune Township. Again, he pointed a handgun at a cashier and demanded money.
Wilson was arrested at approximately 10:00 p.m. by several police officers in Asbury Park, where he had been hiding in an attic.
The robbery charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The firearm charge carries a maximum potential penalty of life in prison and a $250,000 fine, and a mandatory minimum penalty of 10 years in prison. Sentencing is currently scheduled for Sept. 3, 2014. U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Stephanie R. Shoemaker, with the investigation. He also thanked the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher Gramiccioni, Asbury Park Police Department, Ocean Township Police Department, Long Branch Police Department, Neptune Township Police Department and the United States Marshals Service N.Y./N.J. Regional Fugitive Task Force for their excellent work in the investigation and apprehension of Wilson.The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office in Trenton, and Special Assistant U.S. Attorney Jacquelynn Seely.
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Defense counsel: David R. Oakley Esq., Princeton, N.J.
Wilson, Quam Indictment
Morris County, N.J., Doctor Sentenced to Prison, Fined for Taking Cash Kickbacks for Patient ReferralsRead the Press Release
NEWARK, N.J. – A doctor practicing internal medicine in Orange, N.J., was sentenced today to five months in prison and five months of home confinement for taking cash kickbacks for making referrals to a diagnostic testing lab in Orange, U.S. Attorney Paul J. Fishman announced.
Mahesh Patel, 64, of Florham Park, N.J., a board-certified physician, previously pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an information charging him with soliciting and receiving more than $6,000 in illegal cash kickbacks for patient referrals in violation of the federal health care anti-kickback statute.
Including Patel, 17 defendants – including 15 doctors – have been convicted in connection with the government’s ongoing investigation of illegal payments made by Orange Community MRI LLC (Orange MRI), a diagnostic testing facility.
According to documents filed in this case and statements made in court:
Patel operated his own medical practice in Orange. From 2010 through November 2011, Patel agreed to take cash payments from Orange MRI in exchange for MRI scans he referred to the diagnostic testing facility. Patel admitted to receiving cash on a per-patient basis for nearly two years, and that on one of the occasions on which he received cash, Oct. 13, 2011, he received $375 in exchange for his prior referral of Medicare and Medicaid patients.
In addition to the prison term, Judge Cecchi sentenced Patel to serve two years of supervised release, forfeit $6,600 and pay a $30,000 fine.Ashokkumar Babaria, 64, of Moorestown, N.J., Orange MRI’s former medical director, has been ordered to forfeit more than $2 million in revenue from corrupt referrals. Chirag Patel, 38, of Warren, N.J., Orange MRI’s former executive director, awaits sentencing and has agreed to forfeit $89,180 in corrupt gains. In addition, 13 health care providers, including Mahesh Patel, have agreed to forfeit a total of $460,140 in illegal cash kickbacks. Two health care providers were convicted at trial and forfeiture has yet to be determined.
U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, who investigated the case with criminal investigators from the U.S. Attorney’s Office.The government is represented by Deputy Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit and Acting Chief of the office’s General Crimes Unit, Joseph Mack; and Deputy Chief Scott B. McBride of the office’s Economic Crimes Unit in Newark.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered approximately $535 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.
Defense counsel: Robert J. Cleary Esq. and William C. Komaroff Esq., New York
14-178Two More Alleged Kidnappers Arrested, Charged in Plot to Coerce Reluctant Husband to Grant Jewish DivorceRead the Press Release
TRENTON, N.J. - Special agents of the FBI arrested two men at their Lakewood, N.J., homes this morning for allegedly kidnapping a reluctant Jewish husband in order to coerce him through violence to grant his wife a religious divorce – referred to as a “get” – U.S. Attorney Paul J. Fishman announced.
David Aryeh Epstein, 39, and Chaim Baruch Rubin, 32, are charged by criminal complaint with kidnapping. Both defendants appeared in Trenton federal court this afternoon before U.S. Magistrate Judge Douglas E. Arpert. They each were released on $500,000 bail with home detention and electronic monitoring.
According to the complaint unsealed today:
In November 2009, Rubin called the victim concerning a sales job opportunity at “ShredZone” in Lakewood, and the victim, who had been living in Brooklyn, N.Y., moved to a temporary residence in Lakewood to begin work. A few days later, Rubin asked him to stay late for a private meeting.
When he walked to his car that evening, the victim was attacked by a group of men. He was bound, put in a van, beaten and shocked with a stun gun until he agreed to grant his wife a divorce.
David Epstein is the son of rabbi Mendel Epstein, 68, of Brooklyn, who was previously charged in October 2013 with conspiracy to commit kidnapping, along with nine other individuals. Four of those charged have since pleaded guilty to extortion charges in connection with this case.
If convicted, the defendants face a maximum potential penalty of life in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s arrests.
The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah Wolfe of the U.S. Attorney’s Office in Trenton.
The pending charges and allegations against these and related defendants are merely allegations and they are considered innocent unless and until proven guilty.
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Defense counsel:
David Epstein: Harlan Protass Esq., New York
Chaim Rubin: James Moriarty Esq., New YorkEpstein, David and Chaim, Rubin Complaint
Trenton, N.J., Mayor Sentenced to 58 Months in Prison on Federal Extortion, Bribery and Mail and Wire Fraud ChargesRead the Press Release
Mayor’s Brother, Also Convicted at Trial, Sentenced to 30 Months
TRENTON, N.J. - Trenton Mayor Tony F. Mack was sentenced today to 58 months in prison after being convicted at trial in February on all six federal extortion, bribery and mail and wire fraud charges against him, U.S. Attorney Paul J. Fishman announced.
Mack’s brother, Ralphiel Mack, who was also convicted on three of the charges, but found not guilty on three mail fraud and wire fraud counts, was sentenced to 30 months in prison. The Macks had been convicted following a five-week trial before U.S. District Judge Michael A. Shipp, who imposed the sentences today in Trenton federal court.
The Macks were charged in connection with a scheme to accept $119,000 in bribes in exchange for Mayor Mack=s official actions and influence in assisting cooperating witnesses in the development of an automated parking garage on City-owned land.
“Nearly four years ago, Tony Mack raised his hand and swore to uphold the state and federal constitutions as he assumed the office of mayor of the capital city of New Jersey,” U.S. Attorney Fishman said. “Within 10 weeks, he began selling that office and, with the help of his brother and others, he sold out the people of Trenton in the process. Today, he learned the true cost of his actions: He will spend 58 months in federal prison.”
“Instead of providing transparent government to the citizens of Trenton, Tony Mack and his brother allowed themselves to succumb to self-interest and greed,” FBI Special Agent in Charge Aaron T. Ford said. “This investigation brought to light the unsavory underworld of secret meetings with convicted felons, the calculated use of ‘buffers’ and bagmen, and bribe payments associated with inside deals to give away the city’s treasures, its property. The citizens of Trenton are entitled to political figures who discharge their duties with goodness of heart, and not those motivated by personal gain.”
Tony F. Mack, 48, and Ralphiel Mack, 41, both of Trenton, originally were charged by complaint on Sept. 10, 2012, with one count of conspiracy to obstruct commerce by extortion under color of official right related to the $119,000 extortion scheme. Also charged at that time was Joseph A. Giorgianni, 64, of Ewing, N.J. An indictment returned in December 2012 added charges against all three defendants.
Giorgianni pleaded guilty on Dec. 13, 2013, to one count of conspiring with the Macks and others to obstruct interstate commerce by extorting individuals under color of official right, in addition to a separate extortion scheme, a narcotics charge and illegal weapons possession, all charges unrelated to the Macks.
Mayor Mack was convicted of the six counts charged in the indictment:- Conspiracy to obstruct and affect interstate commerce by extorition under color of official right;
- Attempted obstruction of commerce by extortion under the color of official right;
- Accepting and agreeing to accept bribes;
- Two counts of wire fraud;
- Mail fraud;
Ralphiel Mack was convicted on the same first three counts and found not guilty of the mail and wire fraud charges. The jury members deliberated for seven hours before returning their verdicts.
According to documents filed in this case and the evidence presented at trial:
Tony Mack, Giorgianni and Ralphiel Mack conspired to accept approximately $119,000 in cash and other valuables, of which $54,000 was accepted and another $65,000 that the defendants planned to accept, from two cooperating witnesses (CW-1 and CW-2). In exchange for the payments, Tony Mack agreed to, and did, assist CW-1 and CW-2 in their efforts to acquire a City-owned lot (East State Street Lot) to develop an automated parking garage (the Parking Garage Project). The scheme included a plan to divert $100,000 of the purchase amount that CW-2 had indicated a willingness to pay to the City of Trenton for the lot as a bribe and kickback payment to Giorgianni and Tony Mack. The mayor authorized and directed a Trenton official responsible for disposition of City-owned land to offer the East State Street Lot to CW-2 for $100,000, significantly less than the amount originally proposed by CW-2.
The defendants went to great lengths to conceal their corrupt activity and keep Tony Mack “safe” from law enforcement. For example, Giorgianni and Ralphiel Mack acted as intermediaries, or “buffers,” who accepted cash payments for Tony Mack=s benefit. Tony Mack also used another City of Trenton employee involved in the scheme, Charles Hall III, 49, of Trenton, to contact other Trenton officials to facilitate the Parking Garage Project and to inform the mayor when Giorgianni had received corrupt cash payments. Hall pleaded guilty before Judge Shipp in February 2013 to an information charging him with one count of conspiracy to obstruct commerce by extortion under color of official right and one count of conspiring to distribute narcotics with others, including Giorgianni.
To conceal the corrupt arrangement, the defendants avoided discussing matters related to the scheme over the telephone. When those matters were discussed, they used code words and aliases. One such code word was “Uncle Remus,” which both Giorgianni and Hall regularly used to communicate to Tony Mack that a corrupt payment had been received. For example, on Oct. 29, 2011, Giorgianni telephoned Hall and informed him that Giorgianni had to “see” Tony Mack and that “I got Uncle Remus for him,” meaning a corrupt cash payment that Giorgianni had received from CW-1 two days earlier. Giorgianni directed Hall to bring Tony Mack to a meeting location controlled by Giorgianni (Giorgianni=s Clubhouse), stating “we gotta talk” because “I got something that might be good for him” and that “they=ve already come with Uncle Remus,” meaning a corrupt cash payment. On June 13, 2012, Giorgianni telephoned Tony Mack and informed him that “Uncle Remus,” meaning a corrupt cash payment, “was there.” Tony Mack replied, “I=ll call you, J. Okay?”@ In text messages to Tony Mack related to the scheme, Giorgianni would refer to himself as “Mr. Baker.”
The defendants also concealed their activities by holding meetings concerning the corrupt activity away from Trenton City Hall, including at Giorgianni=s residence, a restaurant maintained by Giorgianni known as JoJo=s Steakhouse, Giorgianni=s Clubhouse and Atlantic City restaurants. At one Atlantic City meeting among Tony Mack, Giorgianni, Hall and CW-2, Tony Mack instructed Giorgianni to ensure that no photographs were taken in order to conceal the corrupt arrangement.
In addition to the prison terms, Judge Shipp sentenced Tony Mack to three years of supervised release, 100 hours of community service and fined him $3,000. He sentenced Ralphiel Mack to three years of supervised release and fined him $1,500.
U.S. Attorney Fishman credited special agents of the FBI=s Trenton Resident Agency, Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s sentencings.
The government is represented by Assistant U.S. Attorneys Eric W. Moran and Matthew J. Skahill of the U.S. Attorney=s Office Special Prosecutions Division in Trenton and Camden, respectively.
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Defense counsel:
Tony Mack: Mark G. Davis Esq., Hamilton, N.J.
Ralphiel Mack: Robert Haney, Princeton Junction, N.J.Passaic County, N.J., Man Admits Distributing Images of Child Sexual Abuse over the InternetRead the Press Release
NEWARK, N.J. – A Wayne, N.J., man admitted today to sharing images of child sexual abuse from his home computer, U.S. Attorney Paul J. Fishman announced.
Manuel Fernandez, 33, pleaded guilty today before U.S. District Judge Jose L. Linares in Newark federal court to one count of an indictment charging him with distributing images of child pornography over the Internet. Fernandez has been in custody since his arrest in January 2012.
According to documents filed in the case and statements made during Fernandez’s guilty plea proceeding:
Fernandez admitted that between March 2011 and January 2012, he was a member of an online peer-to-peer file sharing network. Fernandez also admitted he made images and videos of child pornography available for other members to download from his “shared” folder. On March 24, 2011, an undercover law enforcement agent successfully downloaded multiple images and videos of child sexual abuse from Fernandez’s computer.
On Jan. 25, 2012, federal law enforcement agents executed a search warrant at Fernandez’s residence. The agents recovered a 1-terabyte hard drive and a 250-gigabyte computer tower, both of which contained numerous images and videos of minor children being sexually abused.
As part of his guilty plea, Fernandez agreed to forfeit the computers and computer accessories he used to commit the offense. He will also be required to register as a sex offender.
The distribution of child pornography count to which Fernandez pleaded guilty carries a mandatory minimum penalty of five years in prison and a maximum statutory penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for Aug. 19, 2014.
U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Newark Field Office, under the direction of Special Agent in Charge Andrew M. McLees, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: Chris Adams Esq. Holmdel, N.J.
Fernandez, Manuel Indictment
New York Physician Admits Taking Bribes in Test-Referrals Scheme with New Jersey Clinical LabRead the Press Release
NEWARK, N.J. – A physician with a practice in New York admitted today to accepting over $100,000 in exchange for test referrals as part of a massive bribery scheme operated by Biodiagnostic Laboratory Services LLC (BLS) of Parsippany, N.J., its president and numerous associates, U.S. Attorney Paul J. Fishman announced.
Michele Martinho, 39, of New York, pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging her with one count of accepting bribes.
According to documents filed in this and other cases and statements made in court:
Martinho admitted that from September 2010 through April 2013, she accepted bribes of $5,000 per month in cash in return for referring patient blood specimens to BLS, for which BLS received more than $350,000. Martinho accepted approximately $155,000 in bribes.
BLS salesman Kevin Kerekes paid the cash bribes to Martinho. Kerekes pleaded guilty to his involvement in the scheme on June 10, 2013.
The bribery count to which Martinho pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for July 8, 2014. As part of her guilty plea, Martinho agreed to forfeit $155,000, representing the bribes she received from BLS.
Including Martinho, 27 people – including 16 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. The investigation has recovered more than $7 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 in Newark; 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 plea.The government is represented by Assistant U.S. Attorney Joseph Minish, Senior Litigation Counsel Andrew Leven, 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 $535 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.
14-173Defense counsel: Arthur Aidala Esq., New York
Martinho, Michele Information
New York Attorney Indicted for Defrauding Two International Companies Out of Hundreds of Thousands of DollarsRead the Press Release
NEWARK, N.J. – A New York attorney was indicted today for his role in an alleged scheme to defraud two international companies out of hundreds of thousands of dollars by fraudulently billing them for services that were never provided, U.S. Attorney Paul J. Fishman announced.
Marijan Cvjeticanin, 50, of St. James, N.Y., was indicted today by a federal grand jury in Newark on six counts of mail fraud. The government is seeking the forfeiture of all funds fraudulently obtained by Cvjeticanin as a result of the scheme. Cvjeticanin was previously arrested and charged in May 2013 by complaint with one count of mail fraud.
According to the indictment and other documents filed in this case:
From approximately September 1996 to September 2012, Cvjeticanin was employed by a New York law firm specializing in immigration law, first as a paralegal and then as an attorney. Among other clients, the firm represented two international companies – with offices in New Jersey – in connection with various immigration law matters. Cvjeticanin was the case manager handling day-to-day tasks such as filing applications for permanent residency for certain foreign workers of those companies employed in the United States on a temporary basis.
The application process required the companies to place job ads, in the geographic location where the relevant position was located, to demonstrate that there were no minimally qualified U.S. citizens available to fill that position. To do that, Cvjeticanin caused the firm to retain a supposed advertising agency, Flowerson Holdings Inc., a/k/a Flowerson Advertising, which allegedly handled all of the advertisement obligations of the companies in connection with permanent residency applications. Neither the firm nor the companies knew that Cvjeticanin owned and controlled Flowerson.
From 2010 through September 2012, the companies paid Flowerson approximately $579,000 for advertisements, but Flowerson did not place the majority of those ads. Instead, Cvjeticanin stole the money and used it for his personal benefit.
If convicted, Cvjeticanin faces a maximum potential penalty of 20 years in prison and a $250,000 fine on each of the six counts.U.S. Attorney Fishman credited special agents of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees, Newark Field Office, and the U.S. Department of State Diplomatic Security Service, New York Field Office, under the direction of Special Agent in Charge David J. Schnorbus, with the investigation.
The government is represented by Assistant U.S. Attorney Francisco J. Navarro of the U.S. Attorney’s Office General Crimes Unit in Newark and Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton.The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
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Defense counsel: Lorraine Gauli-Rufo Esq., Verona, N.J.Marijan, Cjeticanin Indictment
Union County, N.J., Man Sentenced to 63 Months in Prison for Distributing Images of Child Sexual AbuseRead the Press Release
NEWARK, N.J. - A Cranford, N.J., man was sentenced today to 63 months in prison for distributing images of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.
Andrew Johnson, 30, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging him with one count of distribution of child pornography. Judge Wigenton imposed the sentence today in in Newark federal court.
According to documents filed in the case and statements in court:
Johnson admitted that on Dec. 7, 2012, he made available for others to download via an online peer-to-peer, file-sharing network images and videos of child sexual abuse that were stored on his home computer. An undercover law enforcement agent successfully downloaded from Johnson one image and 14 videos of child sexual abuse via the file sharing network.
As part of his guilty plea, Johnson agreed to forfeit the computers and computer accessories he used to commit the offense. He will also be required to register as a sex offender.
In addition to the prison term, Judge Wigenton sentenced Johnson to serve five years of supervised release and pay restitution of $13,500.
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; and the Cranford Police Department with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Danielle Alfonzo Walsman of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: Lorraine Gauli-Rufo Esq., Assistant Federal Public Defender, Newark
Philadelphia Woman Admits Conspiracy to Traffic Firearms from Philadelphia to CamdenRead the Press Release
CAMDEN, N.J. – A Philadelphia woman today admitted conspiring to sell guns without a license, U.S. Attorney Paul J. Fishman announced.
Rosselyn M. DeJesus, 26, pleaded guilty before U.S. District Judge Renée Marie Bumb in Camden federal court to an information charging her with conspiracy to deal firearms without a license.
According to documents filed in this case and statements made in court:
Between June 30, 2012, and July 19, 2012, DeJesus bought five pistols from Philadelphia-area gun shops, which she then transferred for resale to her conspirator, Michael Wayne Lee, also of Philadelphia. Lee, a previously convicted felon, resold them. Two of the five weapons were sold by a third individual, Ammie Steward, to a witness cooperating with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). These two weapons are now in the custody of law enforcement.
On Feb. 19, 2014, Lee pleaded guilty before Judge Bumb to one count of conspiring with DeJesus, Steward, and others to deal firearms without a license and one count of possession of a firearm by a previously convicted felon. He is scheduled to be sentenced Sept. 29, 2014.
On Dec. 19, 2012, Steward, pleaded guilty before Judge Bumb to dealing firearms without a license and one count of possession of a firearm by a previously convicted felon. He is scheduled to be sentenced Sept. 19, 2014.
Also in connection with this investigation, on May 5, 2014, ATF agents arrested Wendelle L. Ford, 40, of Camden. Ford was charged with conspiracy to deal firearms without a license.
From January 2012 through July 2012, Ford obtained firearms from different sources, who purchased them in gun shops in Philadelphia and pawn shops in North Carolina. Ford then resold the firearms, including at least two firearms to Steward, who in turn sold the weapons to an ATF informant. In total, Ford dealt 15 firearms without a license.
Ford made his initial appearance in court on May 5, 2014, before U.S. Magistrate Judge Karen M. Williams and was released on bond.
The count of conspiracy to illegally deal firearms to which DeJesus pleaded guilty, and with which Ford is charged, carries a maximum potential penalty of five years in prison and a $250,000 fine. DeJesus is scheduled to be sentenced Sept. 5, 2014.
U.S. Attorney Fishman credited special agents of the ATF, under the direction of Special Agent in Charge Robin Shoemaker, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office in Camden.
The charges and allegations contained in the complaint against Ford are merely accusations, and the defendant is considered innocent unless and until proven guilty.
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Defense counsel:
DeJesus: Frederick Klepp Esq., Cherry Hill, N.J.
Lee: Stanley King Esq., Woodbury, N.J.
Ford: Mark Catanzaro Esq., Moorestown, N.J.DeJesus, Resselyn Information
Lee, Michael Wayne Information
Steward, Ammie Information
Ford, Wendelle ComplaintOwner and Operator of New Jersey-Based Real Benefits Association LLC Admits Selling Bogus Health InsuranceRead the Press Release
TRENTON, N.J. - An insurance broker who allegedly stole nearly $1 million while continuing to sell health care coverage he knew was fake pleaded guilty today in connection with the scheme, U.S. Attorney Paul J. Fishman announced.
David Clark, 70, of Morristown, N.J., entered his guilty plea to an information, charging him with conspiracy to commit wire fraud, before U.S. District Judge Michael Shipp in Trenton federal court.
According to documents filed in this case and statements made in court:
Clark owned and operated Real Benefits Association, LLC (RBA), a New Jersey limited liability company he incorporated on Dec. 17, 2003, under a similar name. Clark established RBA as a purported labor organization and as a way to market and sell health insurance to the general public through the RBA Welfare Plan. Initially, the Welfare Plan was fully insured through Perfect Health, a licensed New York insurance company. Participants paid insurance premiums to bank accounts of RBA and/or the Welfare Plan, which Clark then remitted to Perfect Health.
Perfect Health was purchased by Health Insurance Programs (HIP) in 2008, and HIP discontinued its insurance policy with the RBA Welfare Plan. The federal government notified Clark that RBA did not qualify as a labor organization and was required to cease operating.
Nonetheless, Clark continued to market and sell the health insurance plans to unsuspecting participants. Eventually participants began to complain to their respective state insurance departments when their medical claims were not being paid, which prompted various departments throughout the United States to issue cease and desist orders.
Clark and conspirators continued to market and sell bogus health insurance, and from December 2008 to July 2011, they collected approximately $1,789,596 in premiums for RBA health insurance coverage. Clark diverted approximately $962,027 from the premiums paid by RBA participants for his personal use, including by using victims’ premiums to fund personal debit and credit card purchases, college tuition payments and deposits to a relative’s bank account.
The conspiracy charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is currently scheduled for Aug. 20, 2014.
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, under the direction of Acting Special Agent in Charge Cheryl Garcia; and the U.S. Department of Labor Employee Benefits Security Administration (EBSA), under Jonathan Kay, Regional Director; as well as postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria Kelokates, with the investigation leading to the plea.
The government is represented by Assistant U.S. Attorney Michael H. Robertson of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit in Newark.
If you have information or think you might be a victim of this scheme, please contact (866) 444-3272 to speak to an EBSA benefits advisor.14-170
Defense counsel: John P. McDonald Esq.; Somerville, N.J.
Clark, David Information
Gloucester County, N.J., Man Arrested, Charged in Alleged Mortgage Foreclosure Rescue, Real Estate Ponzi SchemeRead the Press Release
CAMDEN, N.J. – A Gloucester County, N.J., man is charged with scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits, U.S. Attorney Paul J. Fishman announced.
Randy Poulson, 42, of Woolwich Township, N.J. – the owner and operator of Equity Capital Investments LLC – was arrested this morning by special agents of the Philadelphia FBI. Poulson was arrested on a complaint charging him with mail fraud, which alleges the business he operated was actually a multimillion-dollar Ponzi scheme. Poulson is scheduled for an initial appearance and bail hearing this afternoon before U.S. Magistrate Judge Anne Marie Donio in Camden federal court.
According to the complaint unsealed today:
Poulson engaged in a two-pronged scheme. First, he promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him – for no other compensation. Using this method, Poulson obtained the deeds to more than 25 distressed homeowners’ residences, causing them to vacate the homes so renters could move in. Poulson then stopped making the monthly mortgage payments, causing those mortgages to go into foreclosure without the distressed homeowners’ knowledge.
In the second prong of the scheme, Poulson successfully solicited more than 50 private investors into his companies – including Equity Capital Investments, which purportedly bought and sold real estate. Poulson explained to the investors that their money would be used to acquire and rehabilitate properties, which Poulson claimed he would rent out and then sell for a 10 to 20 percent return on the investment. In order to give the impression that Equity Capital Investments was a legitimate business, Poulson provided investors with fake mortgages and promissory notes for residential properties he claimed to be purchasing, renting and reselling. In support of the scheme, Poulson gave three weekend-long seminars, numerous speeches at monthly dinners and various, private tutorial sessions purporting to teach real estate investing tips to individuals who paid fees to attend. Poulson was the former president of the South Jersey Real Estate Investment Club.
The properties for which Poulson solicited private investments were the properties he acquired from the distressed homeowners. In reality, Poulson spent the investments on personal expenses and to partially repay previous investors in Ponzi-scheme fashion. Poulson spent some of the investors’ money on Ray’s Pizza, Acme, Exxon/Mobil, Jos. A. Bank, DirecTV, Hollywood Grooming, Kiddie Garden, Philadelphia Union tickets, American Express, Studio 122 (a hair salon), The Disney Store, Toys ‘R Us, Wawa, and rent-to-own payments on a personal beach house located in Ventnor, N.J.
The investigation to date has uncovered more than $3 million in investor losses as a result of Poulson’s schemes.
The mail fraud count which with Poulson is charged carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special
Agent in Charge Edward J. Hanko in Philadelphia, for the investigation leading to today’s complaint.The government is represented by Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.
The charge and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.
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Defense counsel: Richard Coughlin Esq., Camden
Poulson, Randy Complaint
Former Financial Officer of New Jersey-Based Equipment Company Sentenced to 18 Months in Prison for Filing False Corporate and Personal Income Tax ReturnsRead the Press Release
CAMDEN, N.J. – A former financial officer and president of General Glass Equipment Company in Galloway, N.J., was sentenced today to 18 months in prison for concealing his actual income on corporate and personal tax returns, including more than $700,000 he failed to report in 2004, U.S. Attorney Paul J. Fishman announced.
Frank A. Dominico, 68, of Linwood, N.J., previously pleaded guilty before U.S. District Judge Noel L. Hillman to an indictment charging him with filing false income tax returns. Judge Hillman imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Between 2004 and 2009, Dominico worked as a financial officer for General Glass and prepared their corporate income tax returns. During that time he was promoted from treasurer to president of the company.
For each tax year between 2004 and 2008, Dominico admitted he filed returns which reported only a portion of his income and, in some years, overstated his itemized deductions.
For instance, Dominico admitted that for 2004 tax year, he listed his compensation from General Glass as $51,334 on his personal tax return and $89,822 on General Glass’s corporate federal income tax return. In fact, Dominico failed to report an additional $722,000 in compensation for the 2004 tax year, which resulted in a tax loss to the United States of $129,710.
In addition to the prison term, Judge Hillman sentenced Dominico to serve one year of supervised release and ordered him to pay restitution of $840,321.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Jason M. Richardson of the U.S. Attorney's Office Criminal Division in Camden.
Defense counsel: Lori M. Koch Esq., Assistant Federal Public Defender, Camden
14-172Union Officials Plead Guilty to Extortion Conspiracy Involving Christmastime Tribute PaymentsRead the Press Release
NEWARK, N.J. - Three former International Longshoremen’s Association (ILA) union officials admitted today that they conspired 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.
Vincent Aulisi, 82, of West Orange, N.J., the president of ILA Local 1235 from approximately 2006 through 2007; Thomas Leonardis, 56, of Glen Gardner, N.J., the president of the union from approximately 2008 through 2011 and former ILA representative; and Robert Ruiz, 55, of Watchung, N.J., the delegate of the union from approximately 2007 through 2010 and former ILA representative, pleaded guilty today to conspiring to extort Christmastime tributes from ILA Local 1235 members – count three of the second superseding indictment against them. Aulisi, Leonardis and Ruiz entered their guilty pleas before U.S. District Judge Claire C. Cecchi in Newark federal court.
According to documents filed in this case and statements made in court:
During their guilty plea proceedings, Aulisi, Leonardis and Ruiz 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 eight defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 58, of Kenilworth, N.J. – 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.
Two of the three remaining Genovese family associates are former union officials: Albert Cernadas, 78, of Union, N.J., the president of ILA Local 1235 from approximately 1981 to 2006 and former ILA Executive vice president; and Nunzio LaGrasso, 63, of Florham Park, N.J., the former vice president of ILA Local 1478 and former ILA Representative. The third, Richard Dehmer, 78, of Springfield, N.J., is charged with illegal gambling conduct unrelated to the waterfront extortions.
The charge to which Aulisi, Leonardis and Ruiz pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for Sept. 4, 2014, for Ruiz and Sept. 9, 2014, for Aulisi and Leonardis.
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.
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.14-166
Defense counsel:
Joseph Fusella Esq., Bloomfield, N.J.
Michael N. Pedicini Esq., Chatham, N.J.
Marc Agnifilo Esq., New York, N.Y.New York Man Admits Role in International $200 Million Credit Card Fraud ConspiracyRead the Press Release
TRENTON, N.J. – A New York man today admitted his role in one of the largest credit card fraud schemes ever charged by the Justice Department, U.S. Attorney Paul J. Fishman announced.
Khawaja Ikram, 41, of Staten Island, N.Y., pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with one count of conspiracy to commit bank fraud. Two co-defendants, Tarsem Lal, 73, of Iselin, N.J., and Azhar Ikram, 40, of Howard Beach, N.Y., pleaded guilty before Judge Thompson in Trenton on April 2, 2014, to informations charging them with conspiracy to commit bank fraud.
According to documents filed in this case and statements made in court:Khawaja Ikram was originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. Members of the conspiracy doctored credit reports to pump up the spending and borrowing power associated with the cards. They then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts – causing more than $200 million in confirmed losses to businesses and financial institutions.
The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus; pump up the credit of the false identity by providing false information about that identity’s creditworthiness to those credit bureaus; and finally, run up large loans.
The scope of the criminal fraud enterprise required Ikram and his conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as the mailing addresses of the false identities.
Ikram admitted he helped obtain credit cards in the name of third parties – many of which were fictional – then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. He also admitted he knew the cards would be used fraudulently at businesses.
The charge to which Ikram pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for Sept. 23, 2014. Azhar Ikram and Lal are scheduled to be sentenced Sept. 17, 2014,
U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Aaron T. Ford; postal inspectors, under the direction of Postal Inspector in Charge Maria L. Kelokates; and special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola, for the investigation leading to today’s guilty plea. He also thanked the U.S. Social Security Administration for its role in the investigation.
The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Barbara Ward of the office’s Asset Forfeiture and Money Laundering 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: Neil G. Duffy III Esq., Union, N.J.Ikram, Khawaja Information
Former New Jersey Transit Official Admits Agreeing to Accept $8,000 BribeRead the Press Release
NEWARK, N.J. – A former New Jersey Transit (NJ Transit) official today admitted she agreed to accept an $8,000 bribe and power washing services in connection with a snow removal contract, U.S. Attorney Paul J. Fishman announced.
Donna Schiereck, 56, of Jackson, N.J., pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an information charging her with one count of agreeing to accept a bribe.
According to documents filed in this case and statements made in court:
From September 2012 to December 2012, Schiereck was a supervisor at NJ Transit. Schiereck agreed to accept $8,000 in exchange for her assistance with maintaining snow removal work for a Lakewood, N.J., company. She also sought and received free power washing services from the company in return for her official assistance.
The bribery count to which Schiereck pleaded guilty carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for Sept. 9, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and the N.J. State Police, under the direction of Col. Joseph R. Fuentes, superintendent of the state police, for the investigation leading to today’s guilty plea. He also thanked N.J. Attorney General’s Office, under the direction of Acting Attorney General John Hoffman, and Eli Honig, director of the N.J. Division of Criminal Justice, for their work on the investigation.
The government is represented by Assistant U.S. Attorney Amy Luria of the U.S. Attorney’s Office Special Prosecutions Division in Newark and Special Assistant U.S. Attorney Michael A. Monahan, chief of the Financial and Computer Crimes Bureau, Division of Criminal Justice, N.J. Office of the Attorney General.
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Defense counsel: David A. Schwartz Esq., Eatontown, N.J.
Schiereck, Donna Information
Former Essex County, N.J., Sheriff’s Officer Sentenced to 15 Months in Prison for Collecting A Debt Through ExtortionRead the Press Release
Two Conspirators Sentenced to Probation
NEWARK, N.J. – A Monmouth County, N.J., man who formerly worked as a sheriff’s officer in Essex County was sentenced today to 15 months in prison for conspiring to collect a debt using extortionate means, U.S. Attorney Paul J. Fishman announced.John Balsamo, 50, of West Long Branch, N.J., previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an indictment charging him with using threats of violence and economic harm to collect a debt from the victim, an Ocean County, N.J., construction contractor. Judge Hayden imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Balsamo and conspirators Timothy Kelly, 38, of Jersey City, N.J., and Robert C. Bantang,
Jr., 45, of Oceanport, N.J., used extortionate means in order to collect $50,000 the contractor owed to Kelly from 2009. The conspirators made the victim believe that the money he had borrowed from Kelly was owed to the “Old Man,” a member of organized crime who would cause physical harm to the victim if the debt was not paid. Balsamo also displayed a key to a construction site where the victim was working in Brick, N.J., and warned that the key could be used to gain access to, and cause damage to the site, due to the victim’s failure to fully repay the debt. Balsamo and Kelly sent Bantang to the construction site on three occasions to deliver threats purportedly on behalf of the “Old Man.”On March 24, 2011, Balsamo and Kelly went to the Brick construction site, which was now a completed restaurant, to confront the victim. Kelly told the victim that if he had brought his “boys” that it would have gotten “done right in here, right in this place, right like this, in front of everybody . . . and your wife gets it too.” Kelly also told the victim that he deserved “a beatin’ just out of f- - kin’ principle.” Balsamo warned that the “Old Man” wanted to “beat the shit” out of the restaurant owner due to the victim’s failure to repay the debt, which Balsamo and Kelly now stated had grown to $70,000. Balsamo also advised the victim that the “Old Man” has been “promoted,” implying that the “Old Man” now possessed a higher position in organized crime.
Kelly and Bantang previously pleaded guilty in February 2012 to conspiring to collect a debt from the victim using extortionate means, before Judge Hayden. Kelly was sentenced today to three years of probation, including four months of house arrest and 40 hours of community service. Bantang was sentenced to three years of probation.
In addition to the prison term, Judge Hayden sentenced Balsamo to two years of supervised release and ordered him to pay restitution of $2,500 in cash and a Rolex watch he had taken from the victim.
Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and special agents of the N.J., State Commission of Investigation, under the direction of Executive Director Philip James Degnan, for the investigation leading to today’s sentencings.
The government is represented by Senior Litigation Counsel Leslie F. Schwartz of the U.S. Attorney’s Office Economic Crime Unit in Newark.
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Defense Counsel:
Balsamo: John Yauch Esq., Assistant Federal Public Defender, Newark
Kelly: Timothy Donohue Esq., West Orange, N.J.
Bantang: Michael Baldassare Esq., NewarkEssex County, N.J., Man Arrested in Multi-Million Dollar Real Estate Investment Fraud SchemeRead the Press Release
NEWARK, N.J. – An Essex County, N.J., man was arrested at his home by federal law enforcement officers this morning on charges that he allegedly ran a real estate investment scheme that bilked victims out of $4 million, U.S. Attorney Paul J. Fishman announced today.
Abbe Edelman, 50, of Livingston, is charged by complaint with six counts of wire fraud. He is scheduled to make his initial court appearance later today before U.S. Magistrate Judge Mark Falk in Newark federal court.
According to the complaint:
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 counts with which he is charged each carry a maximum potential penalty of 20 years in prison and a $250,000 fine.
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.
The charges and allegations against Edelman are merely accusations and he is considered innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky of the Economic Crimes Unit and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.
Today’s 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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Edelman, Abbe Complaint
Cape May County, N.J., Man Sentenced to 57 Months in Prison for Transporting Minor Across State Lines for SexRead the Press Release
CAMDEN, N.J. – A Cape May County, N.J. man was sentenced today to 57 months in prison for transporting an underage girl across state lines for the purpose of engaging in sexual activity, U.S. Attorney Paul J. Fishman announced.
Michael Kulick, 47, of Dennis Township, N.J., previously pleaded guilty before U.S. District Court Judge Joseph E. Irenas to an information charging him with one count of transportation of a minor over state lines in order to engage in sexual activity. Judge Irenas imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
In August 2012, Kulick and his family went on a vacation to Lancaster, Pa., accompanied by his daughter’s friend, a 15-year-old girl. Kulick engaged in sexual contact with the minor girl while staying at a hotel in Pennsylvania. Kulick admitted that after returning to New Jersey, he continued to have a sexual relationship with the minor girl for approximately two months. Kulick also admitted that at the time that he transported the minor girl to and from Pennsylvania, he knew that it was illegal in both New Jersey and Pennsylvania to commit statutory rape.
In addition to the prison term, Judge Irenas sentenced Kulick to 10 years of supervised release and must register as a sex offender. A restitution hearing is scheduled for July 9, 2014.
U.S. Attorney Fishman credited special agents of the FBI Atlantic City resident agency, under the direction of Special Agent In Charge Aaron T. Ford; in Newark; the N.J. State Police, under the direction of Col. Rick Fuentes, superintendent of the state police, and investigators with the Cape May County Prosecutor’s office, under the direction of Prosecutor Robert L. Taylor, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Diana Vondra Carrig of the U.S. Attorney’s Office Criminal Division in Camden.
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Defense counsel: Edwin J. Jacobs Jr. Esq., Atlantic City, N.J.Woodland Park, N.J., Man Sentenced to Three Years in Prison for Scheme to Defraud 17 Charities and Non-Profit OrganizationsRead the Press Release
NEWARK, N.J. - The owner and president of GAC Consulting Group LLC (GAC) was sentenced today to 36 months in prison for his role in a scheme to defraud at least 17 charities and non-profit organizations, costing them more than $750,000 in losses, U.S. Attorney Paul J. Fishman announced.
Gregory Ciccone, 37, of Woodland Park, N.J., previously pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to one count of wire fraud and one count of filing a false tax return. On Oct. 26, 2010, Ciccone was arrested and charged with mail fraud and wire fraud in connection with his charity fraud scheme, which promised high-end prizes that were never delivered. A superseding indictment returned by a federal grand jury on May 15, 2012, charged Ciccone with mail fraud, wire fraud and filing a false 2009 tax return.
According to documents filed in the case and statements made in court:
Ciccone owned and operated GAC, a business which contracted with charities and non-profit organizations and arranged for high-end prizes to be auctioned off to bidders during fund-raising events. They included: a walk-on role on the “Desperate Housewives” television show; tickets to the 2009 Tony Awards; an appearance by “C.A.,” a celebrity who is a cancer survivor; and rounds of golf at the Augusta National Golf Course in Augusta, Ga.
Ciccone convinced the charities and non-profit organizations to pay GAC both an up-front retainer and commission fees based upon his ability to provide certain prizes. Ciccone not only did not deliver the vast majority of the prizes offered to his victims, he never had the ability to do so. From October 2006 through April 2010, Ciccone’s actions caused more than $768,000 in losses to at least 17 different charities and non-profit organizations.
After his Oct. 26, 2010, arrest, Ciccone filed a false 2009 tax return on May 13, 2011, in which he failed to list certain retainer fees and commissions received from his victims, as well as gambling winnings. As part of his plea, Ciccone agreed to pay back $267,778 in criminal forfeiture.
In addition to the prison term, Judge Hayden sentenced Ciccone to three years of supervised release, ordered him to pay restitution of $768,103 and forfeiture of $267,788.
U.S. Attorney Fishman credited special agents with the FBI under the direction of Special Agent in Charge Aaron T. Ford; special agents of the IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys Joseph Mack and Kathleen P. O’Leary of the U.S. Attorney=s Healthcare and Government Fraud Unit.
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Defense counsel: Salvatore T. Alfano Esq., Bloomfield, N.J., and Louis C. Esposito Esq., Cedar Grove, N.J.Former Chief Executive Officer of Oil Services Company Indicted in New Jersey on Foreign Bribery and Kickback ChargesRead the Press Release
NEWARK, N.J. – The former co-chief executive officer (CEO) of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – was indicted today for his role in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA) and to defraud PetroTiger.
U.S. Attorney Paul J. Fishman of the District of New Jersey, Acting Principal Deputy Assistant Attorney General Marshall Miller of the Justice Department’s Criminal Division and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement.
Joseph Sigelman, 43, of Miami and the Philippines, was indicted today by a federal grand jury in Camden, N.J., with conspiracy to violate the FCPA and to commit wire fraud, conspiracy to launder money, and substantive FCPA and money laundering violations. Gregory Weisman, 42, of Moorestown, N.J., the former general counsel of PetroTiger, pleaded guilty on Nov. 8, 2013, to conspiracy to violate the FCPA and to commit wire fraud. Sigelman’s co-CEO, Knut Hammarskjold, 42, of Greenville, S.C., pleaded guilty to the same charge on Feb. 18, 2014.
According to documents filed in this case and statements made in court:
Sigelman and others paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million. To conceal the bribes, they first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform. Sigelman and Hammarskjold provided Weisman invoices, including her bank account information. The conspirators made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed. Sigelman and his conspirators took steps to conceal the bribe payments from PetroTiger’s board members.
In addition, Sigelman and others attempted to secure kickback payments while negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition. In exchange for negotiating more favorable terms for the owners of the target company, two of the owners agreed to kick back to the conspirators a portion of the increased purchase price. To conceal the kickback payments, Sigelman and others had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments and used the code name “Manila Split” to refer to the payments amongst themselves.
Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013, with conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA. Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport. Sigelman was arrested on Jan. 3, 2014, in the Philippines. The charges against Sigelman, Hammarskjold and Weisman were unsealed on Jan. 6, 2014. Today’s indictment consolidates the complaint’s conspiracy to commit wire fraud and to violate the FCPA charges into a single count, and adds one count of transacting in criminal proceeds.
The conspiracy to commit wire fraud and violations of the FCPA count carries a maximum potential penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The three substantive FCPA counts each carry a maximum potential penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum potential penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The transacting in criminal proceeds charge carries a maximum potential penalty of 10 years in prison and $250,000 or twice the gain or loss from the offense.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case was brought to the attention of the department through a voluntary disclosure by PetroTiger, which cooperated with the department’s investigation. The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, and the Republic of Panama for their assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s Newark Division. The case is being prosecuted by Assistant U.S. Attorney Zach Intrater of the District of New Jersey and Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.14-160
Defense counsel: Andrew C. Lourie, Matthew I. Menschel, William A. Burck, Juan Pablo Morillo Esqs., Washington; Patrick J. Egan Esq., Philadelphia
Sigelman, Joseph Indictment
Federal Charges Filed Against 22 Alleged Members of Related Camden Drug Trafficking OrganizationsRead the Press Release
NOTE: The press release below was originally issued Wednesday, May 7, 2014. The complaints on which it was based misidentified Bryan Falu of Philadelphia as one of the defendants. Charges against Bryan Falu have been dismissed and he is not being sought by law enforcement. The criminal complaint on which the original press release was based, and this press release, have been amended.
Camden’s C-4 Anti-Violence Team Arrests 16 in Coordinated Takedown
CAMDEN, N.J. – This morning, teams of federal, state and local law enforcement partners led by the FBI arrested 16 members of related drug trafficking organizations – bound by family and narcotics business relationships – that processed and distributed crack, powder cocaine and heroin on the streets of Camden County, U.S. Attorney Paul J. Fishman announced.
Based on criminal charges filed by the U.S. Attorney’s Office and executed through the cooperative work of the Camden County Crime Collaboration, or C-4, the arrests targeted a group of interconnected drug trafficking organizations (DTOs) operating primarily in the Whitman Park section of Camden. The complaints unsealed today charge 21 defendants in two separate DTOs: one allegedly led by Efraim Rivera (the Rivera DTO), and the second involving two groups run by the Roldan and Ramos families – allegedly led by cousins Raymond Roldan and Jerome “Ant” Ramos – operated cooperatively on Sheridan Street as one organization (the Sheridan Street DTO).
In addition to the 16 defendants arrested today, two of the charged individuals, Dewayne Jackson and Mark Washington, were already in custody on state charges. Three more are being sought by law enforcement. Those arrested today are expected to appear this afternoon before U.S. Magistrate Judge Anne Marie Donio in Camden federal court.
“According to the charges, these individuals turned entire city blocks into distribution centers for narcotics,” said U.S. Attorney Fishman. “Relying on the bond of blood ties, they allegedly operated drug trafficking businesses as a family affair, sharing suppliers and street dealers in Camden and throughout South Jersey. Law enforcement is collectively committed to improving the quality of life of the people who live in these neighborhoods, who deserve freedom from drug trafficking and related violence.”
“This is the largest FBI takedown in Camden in a decade,” said Edward J. Hanko, Special Agent in Charge of the FBI’s Philadelphia Division, “and we’re not done yet. The FBI’s South Jersey Violent Offender and Gang Task Force, aided by our outstanding law enforcement partners, is committed to dismantling the violent drug gangs poisoning Camden’s streets.”
According to documents filed in this case and statements made in court:
In addition to providing drugs to distributors on Sheridan Street, the DTOs together controlled or supplied numerous drug distribution groups, or “sets,” throughout Camden with powder cocaine, crack and – through the Ramos group – heroin. They also supplied other narcotics distributors, who sold the DTOs’ drugs throughout Camden County, including in Lindenwold, Sicklerville and Gloucester City.
Many of the DTOs’ members are relatives, and the Roldan and Ramos groups live in close proximity to one another on Sheridan Street. While the Roldan and Ramos groups each ran their own open-air drug sets along three blocks of Sheridan Street, they shared territory, set workers and suppliers, and used the same locations to process powder cocaine into crack cocaine.
An investigation led by the FBI used surveillance, confidential informants and cooperating witnesses, controlled drug purchases, record checks and telephone wiretaps to uncover the distribution networks.
Just during the time period of the wiretap – from Dec. 4, 2013 to March 4, 2014 – the Rivera DTO trafficked at least 225 ounces and the Sheridan Street DTO trafficked more than 50 ounces of powder cocaine. During the same period, the Rivera DTO trafficked approximately 24 ounces of crack. The Sheridan Street DTO sold more than 36 ounces of crack during a similar time frame – ending April 16, 2014 – during which the Ramos group also trafficked a minimum 325 grams of heroin, making approximately $1,800 a day on heroin alone.
“It is the continuing cooperative efforts of federal, state and county law enforcement agencies that have had a significant impact on the crime rate in Camden and made the city a safer place for its citizens, “said Camden County Prosecutor Warren Faulk. “Today’s arrests are just a part of these continuing efforts.”
“The Camden County Crime Collaboration is a collaboration of law enforcement agencies leveraging resources and intelligence to remove the most violent drug gang organizations from the streets in our region,” said Camden County Police Chief J. Scott Thomson. “Today’s arrest signals the end to a drug gang that has influenced violence in the Whitman Park neighborhood, one of Camden’s most challenged sections with gun violence. I am extremely grateful to the leadership of the U.S. Attorney’s Office of New Jersey for their stewardship of our C-4 efforts.”The Rivera DTO acquired and distributed powder cocaine to the Sheridan Street DTO, which then processed the powder into crack for sale at open-air drug sets it controlled. The DTOs maintained various stash houses; rented cars to conduct drug-related business; moved around different locations to manufacture crack; and employed coded language when conducting drug business by phone or text messaging.
Efraim Rivera primarily operated the Rivera DTO from his mother’s residence on Liberty Street in Camden, taking telephone orders for both powder and crack cocaine. He regularly travelled to Philadelphia, sometimes as often as three times a week, to purchase multiple-ounce quantities of cocaine from an uncharged conspirator who was Rivera’s source of supply. The Rivera DTO then sold the powder cocaine to the Sheridan Street DTO and to other customers. Some of the Rivera DTO’s customers then supplied powder or crack to Dymiere Demby, Dewayne Jackson and Daniel Alston for sets at 10th and Warsaw Streets, Green and Mechanic Streets, and Lindenwold, respectively.
The Sheridan Street DTO would then convert the powder cocaine to crack, which would be sold on the open-air drug markets respectively controlled by the Roldan and Ramos groups, or to other drug distributors, who supplied other drug traffickers or sets in and beyond the city of Camden. The Rivera DTO would purchase Sheridan Street DTO crack made from the same cocaine it sold to the Roldan group. Rivera’s DTO crack customers included Rivera’s relatives, Angel “Jungo” Garcia and Angel Velez, who would redistribute the crack.
When Raymond Roland was unable to obtain powder cocaine from the Rivera DTO, he turned to other suppliers, such as Luis “Canelo” Diaz, who also supplied the Rivera DTO. Roldan worked closely with his cousin “Ant” Ramos. The two maintained regular contact and reached out to each other when attempting to locate sources of supply. Roldan was assisted in the day-to-day operation of his group by his sister, Daisy Roldan, and her son, Anthony “Boo Boo” Esprit, who facilitated meetings with suppliers and customers, transported narcotics and collected drug proceeds.
“Ant” Ramos was assisted by his brothers Giovanny “Gio” Ramos and Alexsio “Al” Ramos, who, along with Jimmy Mercado, “cooked” the crack and processed the powder cocaine, crack cocaine and heroin for sale. Intercepted telephone conversations captured the coordination among the Ramos group members as they discussed materials including ammonia, sandwich bags, masks and grinders.
The Roldan and Ramos groups shared set workers, such as Christian Setzer and Graciano “Rocky” Diaz, who made walk-up sales on Sheridan Street.
Calls were intercepted between Sheridan Street DTO members referring to being armed with guns and having a “strap” or gun on their person. One DTO member stated, “at the end of the day, I’m shooting.” One DTO member stated in an intercepted conversation that he had just come from the gun range.
The defendants involved with the Rivera DTO each are charged with one count of conspiracy to distribute and to possess with intent to distribute 280 grams or more of crack and 5 kilograms or more of cocaine; the members of the Sheridan Street DTO each are charged with one count of conspiracy to distribute 280 grams or more of crack; 500 grams or more of cocaine; and 100 grams or more of heroin. Raymond Roldan, Luis Diaz and Efraim Rivera each are charged with both counts. Each count carries a minimum potential penalty of 10 years in prison and a maximum potential penalty of life in prison and a $10 million fine.
U.S. Attorney Fishman credited special agents of the FBI’s Philadelphia Division and the South Jersey Violent Offender and Gang Task Force, under the direction of FBI Special Agent in Charge Hanko; the Camden County Prosecutor’s Office, under the direction of Prosecutor Faulk; and the Camden County Police Department – Metro, under the direction of Chief Scott Thomson, with the investigation – as well as the Camden County Sheriff’s Office, under the direction of Sheriff Charles Billingham; the New Jersey State Police, under the direction of Col. Rick Fuentes; and the Gloucester County Prosecutor’s Office, under the direction of Prosecutor Sean Dalton. He also thanked other members of C-4, the Philadelphia/Camden High Intensity Drug Trafficking Area program and the New Jersey Division of Criminal Justice for their roles in the case.
The government is represented by Special Assistant U.S. Attorney Ira M. Slovin of the
U.S. Attorney’s Office Criminal Division in Camden.The charges and allegations contained in the complaints are merely accusations, and the defendants are considered innocent unless and until proven guilty.
This case was developed through the work of C-4. Every federal, state and local law enforcement agency and prosecutor’s office responsible for combating drug trafficking, gang activity and violent crime in Camden has come together in one location to share intelligence, develop strategies and support the investigative and prosecutorial efforts of its partners. C-4 has merged the individual missions of the various law enforcement agencies into a single strategic attack on drug trafficking and drug-related violent crime. Such intense coordination greatly enhances the law enforcement community’s ability to correctly identify and successfully prosecute the most dangerous criminals in one of our nation’s most dangerous cities.
Name
Age
Residence
Alleged Role
33
Camden
Leader, Rivera DTO
Supplier,
Sheridan Street DTORaymond Roldan
38
Camden
Leader, Roldan group
Supplier, Rivera DTOJerome Anthony Ramos,
aka “Ant”28
Camden
Leader, Ramos group
Uncharged conspirator
Supplier, Rivera DTO
Luis Diaz,
aka “Canelo”42
Camden
Supplier, Rivera DTO
Supplier,
Sheridan Street DTORamon Diaz,
aka “Paluco”44
Camden
Facilitator,
Sheridan Street DTODaisy Roldan
36
Camden
Facilitator, Roldan group
Anthony Esprit,
aka “Boo Boo”18
Camden
Facilitator, Roldan group
Alexsio Ramos,
aka “Al”25
Camden
Facilitator, Ramos group
Giovanny Ramos,
aka “G”20
Camden
Facilitator, Ramos group
Jimmy Mercado,
aka “J.I.”26
Camden
Facilitator, Ramos group
Christian Setzer.
aka “Hitstick”33
Camden
Set Worker,
Roldan and Ramos groupsGraciano Diaz,
aka “Rocky”26
Camden
Set Worker,
Roldan and Ramos groupsAngel Garcia,
aka “Jungo”36
Camden
Customer/Redistributor,
Rivera DTOAli Alexander,
aka “Ali Al”35
Camden
Customer/Redistributor,
Rivera DTOAngel Velez
32
Camden
Customer/Redistributor,
Rivera DTODaniel Alston,
aka “Boo”33
Camden
Customer/Redistributor,
Rivera DTODymiere Demby
23
Camden
Customer/Redistributor,
Rivera DTOGiovanny Carrero
34
Camden
Customer/Redistributor,
Rivera DTODewayne Jackson
45
Camden
Customer/Redistributor,
Rivera DTOMark Washington,
aka “Burger”, aka “BG”27
Camden
Customer/Redistributor,
Ramos groupEric Rivera,
aka “E”27
Camden
Customer/Redistributor,
Ramos group14-156
Rivera, Efraim et al Revised Complaint
Newark Man Sentenced to 234 Months in Prison for Three Armed CarjackingsRead the Press Release
NEWARK, N.J. – A Newark man was sentenced today to 234 months in prison for his role in three armed carjackings that occurred in a one-week span in three counties across northern New Jersey, U.S. Attorney Paul J. Fishman announced.
Rahim Braxton, 34, previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to a superseding information charging him with three counts of carjacking and one count of brandishing a firearm during the course of a violent crime. U.S. District Judge Esther Salas imposed the sentence today in Newark federal court.
According to documents filed in this case and in statements made in court:
Braxton admitted he participated with several other men in three carjackings that were committed in Essex, Hudson, and Passaic counties over a period of one week in March 2012. He said they agreed to take high-end BMW and Mercedes-Benz vehicles from their victims by force. Braxton also admitted that during each of the carjackings, at least one of the conspirators was armed with a gun that was to be used in order to threaten the drivers of the cars.
In addition to the prison term, Judge Salas sentenced Braxton to five years of supervised release.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes; the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano T. Gregory; the Newark Police Department, under the direction of Police Director Sheilah A. Coley and Chief Ivonne Roman; the Clifton Police Department, under the direction of Chief John E. Link; and the Secaucus Police Department, under the direction of Chief Dennis Corcoran, for the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney James Donnelly of the Organized Crime/Gangs Unit in Newark.
14-159
Defense counsel: Ruth M. Liebesman Esq., Paramus, N.J.Newark Man Charged with Producing Child Pornography for Recording His Sexual Abuse of GirlsRead the Press Release
NEWARK, N.J. – A Newark man made his initial court appearance today on charges that he sexually exploited two prepubescent girls after allegedly photographing himself abusing the girls, U.S. Attorney Paul J. Fishman announced.
Justin Kinney, 25, is charged by complaint with two counts of sexual exploitation of a child. He was already in state custody on related charges and had his initial appearance in Newark federal court today before U.S. Magistrate Judge Michael A. Hammer. Kinney was remanded without bail.
According to the complaint:
Law enforcement officers executed a search warrant on Kinney’s laptop computer and cellular telephone on Oct. 25, 2012. A forensic review of the equipment seized revealed several images of child sexual abuse that appear to be self-produced and allegedly depict Kinney sexually abusing two different prepubescent females.
Each charge of sexual exploitation of a child carries a mandatory minimum penalty of 15 years in prison, a maximum potential penalty of 30 years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents of the Department of Homeland Security Investigations (HSI), Immigrations and Customs Enforcement, under the direction of Special Agent in Charge Andrew McLees; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray, and the N.J. Regional Computer Forensics Laboratory with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Danielle M. Corcione of the U.S. Attorney’s Office General Crimes Unit in Newark.
HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-347-2423 or by completing its online tip form. Both are staffed around the clock by investigators. For additional information about wanted suspected child predators, download HSI’s Operation Predator smartphone app or visit the online suspect alerts page.
14-158
Defense counsel: John Yauch Esq., Assistant Federal Public Defender, Newark
Kinney, Justin Complaint
Middlesex County, N.J., Dermatologist Charged with Structuring Nearly $850,000 in Deposits to Avoid Reporting RequirementsRead the Press Release
NEWARK, N.J. - A dermatologist with a medical practice in East Brunswick, N.J., was charged today for allegedly structuring nearly $850,000 by intentionally purchasing numerous money orders for amounts below what would trigger a financial institution’s IRS reporting requirements, U.S. Attorney Paul J. Fishman announced.
Sandy S. Milgraum, 60, is charged in a criminal complaint with one count of conspiring to structure financial transactions to evade currency reporting requirements. Milgraum made his initial appearance in Newark federal court this afternoon and was released on $300,000 bail.
According to the complaint filed in this case and statements made in court:
Milgraum is a licensed and board-certified dermatologist who operates the Academic Dermatology Laser Surgery Center in East Brunswick. From January 2005 through August 2010, Milgraum and others acting at his direction purchased approximately 1,280 money orders and monetary instruments totaling at least $846,092.92.
Each money order was purchased below the $3,000 limit that would require a financial institution to file a Cash Transaction Report with the IRS and disclose the identity of the individual who conducted the transaction, as well as the individual or organization for whom the transaction was completed.
Milgraum and others purchased money orders from various venders including MoneyGram, Western Union, Bank of America and the United States Postal Service and then used them to make mortgage payments, credit card payments, business payments and other personal payments, including payments for various credit card debts incurred by a romantic partner of Milgraum’s.
The charge carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.
U.S. Attorney Fishman credited special agents of 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 Kelokates, with the investigation leading to the charge.The charge and allegations contained in the complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorney Michael H. Robertson of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit in Newark.
14-157
Defense counsel: Joseph J. Benedict Esq., New Brunswick, N.J.
Milgraum, Sandy Complaint
Federal Charges Filed Against 21 Alleged Members of Related Camden Drug Trafficking OrganizationsRead the Press Release
Camden’s C-4 Anti-Violence Team Arrests 16 in Coordinated Takedown
CAMDEN, N.J. – This morning, teams of federal, state and local law enforcement partners led by the FBI arrested 16 members of related drug trafficking organizations – bound by family and narcotics business relationships – that processed and distributed crack, powder cocaine and heroin on the streets of Camden County, U.S. Attorney Paul J. Fishman announced.
Based on criminal charges filed by the U.S. Attorney’s Office and executed through the cooperative work of the Camden County Crime Collaboration, or C-4, the arrests targeted a group of interconnected drug trafficking organizations (DTOs) operating primarily in the Whitman Park section of Camden. The complaints unsealed today charge 21 defendants in two separate DTOs: one allegedly led by Efraim Rivera (the Rivera DTO), and the second involving two groups run by the Roldan and Ramos families – allegedly led by cousins Raymond Roldan and Jerome “Ant” Ramos – operated cooperatively on Sheridan Street as one organization (the Sheridan Street DTO).
In addition to the 16 defendants arrested today, two of the charged individuals, Dewayne Jackson and Mark Washington, were already in custody on state charges. Three more are being sought by law enforcement. Those arrested today are expected to appear this afternoon before U.S. Magistrate Judge Anne Marie Donio in Camden federal court.
“According to the charges, these individuals turned entire city blocks into distribution centers for narcotics,” said U.S. Attorney Fishman. “Relying on the bond of blood ties, they allegedly operated drug trafficking businesses as a family affair, sharing suppliers and street dealers in Camden and throughout South Jersey. Law enforcement is collectively committed to improving the quality of life of the people who live in these neighborhoods, who deserve freedom from drug trafficking and related violence.”
“This is the largest FBI takedown in Camden in a decade,” said Edward J. Hanko, Special Agent in Charge of the FBI’s Philadelphia Division, “and we’re not done yet. The FBI’s South Jersey Violent Offender and Gang Task Force, aided by our outstanding law enforcement partners, is committed to dismantling the violent drug gangs poisoning Camden’s streets.”
According to documents filed in this case and statements made in court:
In addition to providing drugs to distributors on Sheridan Street, the DTOs together controlled or supplied numerous drug distribution groups, or “sets,” throughout Camden with powder cocaine, crack and – through the Ramos group – heroin. They also supplied other narcotics distributors, who sold the DTOs’ drugs throughout Camden County, including in Lindenwold, Sicklerville and Gloucester City.
Many of the DTOs’ members are relatives, and the Roldan and Ramos groups live in close proximity to one another on Sheridan Street. While the Roldan and Ramos groups each ran their own open-air drug sets along three blocks of Sheridan Street, they shared territory, set workers and suppliers, and used the same locations to process powder cocaine into crack cocaine.
An investigation led by the FBI used surveillance, confidential informants and cooperating witnesses, controlled drug purchases, record checks and telephone wiretaps to uncover the distribution networks.
Just during the time period of the wiretap – from Dec. 4, 2013 to March 4, 2014 – the Rivera DTO trafficked at least 225 ounces and the Sheridan Street DTO trafficked more than 50 ounces of powder cocaine. During the same period, the Rivera DTO trafficked approximately 24 ounces of crack. The Sheridan Street DTO sold more than 36 ounces of crack during a similar time frame – ending April 16, 2014 – during which the Ramos group also trafficked a minimum 325 grams of heroin, making approximately $1,800 a day on heroin alone.
“It is the continuing cooperative efforts of federal, state and county law enforcement agencies that have had a significant impact on the crime rate in Camden and made the city a safer place for its citizens, “said Camden County Prosecutor Warren Faulk. “Today’s arrests are just a part of these continuing efforts.”
“The Camden County Crime Collaboration is a collaboration of law enforcement agencies leveraging resources and intelligence to remove the most violent drug gang organizations from the streets in our region,” said Camden County Police Chief J. Scott Thomson. “Today’s arrest signals the end to a drug gang that has influenced violence in the Whitman Park neighborhood, one of Camden’s most challenged sections with gun violence. I am extremely grateful to the leadership of the U.S. Attorney’s Office of New Jersey for their stewardship of our C-4 efforts.”The Rivera DTO acquired and distributed powder cocaine to the Sheridan Street DTO, which then processed the powder into crack for sale at open-air drug sets it controlled. The DTOs maintained various stash houses; rented cars to conduct drug-related business; moved around different locations to manufacture crack; and employed coded language when conducting drug business by phone or text messaging.
Efraim Rivera primarily operated the Rivera DTO from his mother’s residence on Liberty Street in Camden, taking telephone orders for both powder and crack cocaine. He regularly travelled to Philadelphia, sometimes as often as three times a week, to purchase multiple-ounce quantities of cocaine from an uncharged conspirator who was Rivera’s source of supply. The Rivera DTO then sold the powder cocaine to the Sheridan Street DTO and to other customers. Some of the Rivera DTO’s customers then supplied powder or crack to Dymiere Demby, Dewayne Jackson and Daniel Alston for sets at 10th and Warsaw Streets, Green and Mechanic Streets, and Lindenwold, respectively.
The Sheridan Street DTO would then convert the powder cocaine to crack, which would be sold on the open-air drug markets respectively controlled by the Roldan and Ramos groups, or to other drug distributors, who supplied other drug traffickers or sets in and beyond the city of Camden. The Rivera DTO would purchase Sheridan Street DTO crack made from the same cocaine it sold to the Roldan group. Rivera’s DTO crack customers included Rivera’s relatives, Angel “Jungo” Garcia and Angel Velez, who would redistribute the crack.
When Raymond Roland was unable to obtain powder cocaine from the Rivera DTO, he turned to other suppliers, such as Luis “Canelo” Diaz, who also supplied the Rivera DTO. Roldan worked closely with his cousin “Ant” Ramos. The two maintained regular contact and reached out to each other when attempting to locate sources of supply. Roldan was assisted in the day-to-day operation of his group by his sister, Daisy Roldan, and her son, Anthony “Boo Boo” Esprit, who facilitated meetings with suppliers and customers, transported narcotics and collected drug proceeds.
“Ant” Ramos was assisted by his brothers Giovanny “Gio” Ramos and Alexsio “Al” Ramos, who, along with Jimmy Mercado, “cooked” the crack and processed the powder cocaine, crack cocaine and heroin for sale. Intercepted telephone conversations captured the coordination among the Ramos group members as they discussed materials including ammonia, sandwich bags, masks and grinders.
The Roldan and Ramos groups shared set workers, such as Christian Setzer and Graciano “Rocky” Diaz, who made walk-up sales on Sheridan Street.
Calls were intercepted between Sheridan Street DTO members referring to being armed with guns and having a “strap” or gun on their person. One DTO member stated, “at the end of the day, I’m shooting.” One DTO member stated in an intercepted conversation that he had just come from the gun range.
The defendants involved with the Rivera DTO each are charged with one count of conspiracy to distribute and to possess with intent to distribute 280 grams or more of crack and 5 kilograms or more of cocaine; the members of the Sheridan Street DTO each are charged with one count of conspiracy to distribute 280 grams or more of crack; 500 grams or more of cocaine; and 100 grams or more of heroin. Raymond Roldan, Luis Diaz and Efraim Rivera each are charged with both counts. Each count carries a minimum potential penalty of 10 years in prison and a maximum potential penalty of life in prison and a $10 million fine.
U.S. Attorney Fishman credited special agents of the FBI’s Philadelphia Division and the South Jersey Violent Offender and Gang Task Force, under the direction of FBI Special Agent in Charge Hanko; the Camden County Prosecutor’s Office, under the direction of Prosecutor Faulk; and the Camden County Police Department – Metro, under the direction of Chief Scott Thomson, with the investigation – as well as the Camden County Sheriff’s Office, under the direction of Sheriff Charles Billingham; the New Jersey State Police, under the direction of Col. Rick Fuentes; and the Gloucester County Prosecutor’s Office, under the direction of Prosecutor Sean Dalton. He also thanked other members of C-4, the Philadelphia/Camden High Intensity Drug Trafficking Area program and the New Jersey Division of Criminal Justice for their roles in the case.
The government is represented by Special Assistant U.S. Attorney Ira M. Slovin of the U.S. Attorney’s Office Criminal Division in Camden.
The charges and allegations contained in the complaints are merely accusations, and the defendants are considered innocent unless and until proven guilty.
This case was developed through the work of C-4. Every federal, state and local law enforcement agency and prosecutor’s office responsible for combating drug trafficking, gang activity and violent crime in Camden has come together in one location to share intelligence, develop strategies and support the investigative and prosecutorial efforts of its partners. C-4 has merged the individual missions of the various law enforcement agencies into a single strategic attack on drug trafficking and drug-related violent crime. Such intense coordination greatly enhances the law enforcement community’s ability to correctly identify and successfully prosecute the most dangerous criminals in one of our nation’s most dangerous cities.
Name
Age
Residence
Alleged Role
33
Camden
Leader, Rivera DTO
Supplier,
Sheridan Street DTORaymond Roldan
38
Camden
Leader, Roldan group
Supplier, Rivera DTOJerome Anthony Ramos,
aka “Ant”28
Camden
Leader, Ramos group
Uncharged conspirator
Supplier, Rivera DTO
Luis Diaz,
aka “Canelo”42
Camden
Supplier, Rivera DTO
Supplier,
Sheridan Street DTORamon Diaz,
aka “Paluco”44
Camden
Facilitator,
Sheridan Street DTODaisy Roldan
36
Camden
Facilitator, Roldan group
Anthony Esprit,
aka “Boo Boo”18
Camden
Facilitator, Roldan group
Alexsio Ramos,
aka “Al”25
Camden
Facilitator, Ramos group
Giovanny Ramos,
aka “G”20
Camden
Facilitator, Ramos group
Jimmy Mercado,
aka “J.I.”26
Camden
Facilitator, Ramos group
Christian Setzer.
aka “Hitstick”33
Camden
Set Worker,
Roldan and Ramos groupsGraciano Diaz,
aka “Rocky”26
Camden
Set Worker,
Roldan and Ramos groupsAngel Garcia,
aka “Jungo”36
Camden
Customer/Redistributor,
Rivera DTOAli Alexander,
aka “Ali Al”35
Camden
Customer/Redistributor,
Rivera DTOAngel Velez
32
Camden
Customer/Redistributor,
Rivera DTODaniel Alston,
aka “Boo”33
Camden
Customer/Redistributor,
Rivera DTODymiere Demby
23
Camden
Customer/Redistributor,
Rivera DTOGiovanny Carrero
34
Camden
Customer/Redistributor,
Rivera DTODewayne Jackson
45
Camden
Customer/Redistributor,
Rivera DTOMark Washington,
aka “Burger”, aka “BG”27
Camden
Customer/Redistributor,
Ramos groupEric Rivera,
aka “E”27
Camden
Customer/Redistributor,
Ramos group14-156
Rivera DTO Complaints
Sheridan Street DTO Complaints
Rivera and Sheridan Street DTO Complaints Attachment BSussex County, N.J., Man Sentenced to Two Years in Prison for Distributing Images of Child Sexual AbuseRead the Press Release
TRENTON, N.J. – A Sussex County, N.J., man was sentenced today to 24 months in prison for using a computer in his home to distribute images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.
Albert Rose, 55, of Lafayette, N.J., previously pleaded guilty before U.S. District Judge Joel A. Pisano to an information charging him with one count of distribution of child pornography. Judge Pisano imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
Rose admitted distributing images of child pornography via email using a computer located in his residence in February 2010. He also admitted to possessing more than 600 images of child pornography on his computer, which was seized from his residence in February 2012. Rose acknowledged that among the images he possessed and distributed were images which depicted minors posing in a sexually explicit manner.
In addition to the prison term, Judge Pisano sentenced Rose to serve five years of supervised release and ordered him to pay restitution of $500.
U.S. Attorney Fishman credited special agents of the Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Special Agent in Charge Andrew M. McLees, with the investigation leading to today’s sentencing.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: S. Emile Lisboa Esq., Hackensack, N.J.New York Man Admits to Participating in Five Armed Robberies of Electronics Stores in New Jersey and New YorkRead the Press Release
NEWARK, N.J. – A Brooklyn, N.Y., man admitted today to participating in five armed robberies of electronics stores, including an armed robbery in Linden, N.J., U.S. Attorney Paul J. Fishman announced.
Kajuan Crawley, 26, pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to a superseding indictment charging him with conspiracy to commit Hobbs Act robberies.
Crawley was arrested Oct. 17, 2013, and charged in a superseding indictment — along with Carl Williams, 30, Eric Williams, 33, and Unique Randolph, 27 — in connection with five armed robberies of electronic stores in New Jersey and New York. Crawley has been in custody since his arrest.
According to documents filed in this case and statements made in court:
Between June 11, 2012, and Sept. 20, 2012, Crawley conspired with others to commit a series of armed robberies of electronic store in New Jersey and New York, during which he and accomplices robbed merchandise for illegal resale.
Following the June 21, 2012, armed robbery of an electronic store in Rockville Center, N.Y., Crawley was apprehended by the officers with Nassau County Police Department. While released on bail, Crawley participated in the Sept. 20, 2012, armed robbery of an electronics store in Linden.
The charge of conspiracy to commit Hobbs Act robberies carries a maximum potential penalty of 20 years in prison and a maximum fine of $250,000. Sentencing is scheduled for Sept. 18, 2014.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 plea. He also thanked the Linden and Woodbridge police departments in New Jersey, as well as the New York City and Nassau County police departments and the Kings County District Attorney’s Office in New York for their work in this case.
The government is represented by Assistant U.S. Attorney Osmar J. Benvenuto of the U.S. Attorney’s Office Criminal Division.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:Carl Williams: Mark A. Berman Esq., River Edge, N.J.
Eric Williams: Aaron M. Goldsmith Esq., New York
Kajuan Crawley: Maria D. Noto Esq., Matawan, N.J.
Unique Randolph: Damian P. Conforti, Esq., NewarkCrawley, Kajuan Superseding Indictment
Lakewood, N.J., Man Admits Conspiracy to Kidnap Jewish Husband to Force Him to Give Wife A Religious DivorceRead the Press Release
TRENTON, N.J. - A Lakewood, N.J., man today admitted conspiring to kidnap a Jewish man to force him to give his wife a religious divorce, known as a “get,” U.S. Attorney Paul J. Fishman announced.
David Wax, 51, pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with conspiracy to commit kidnapping.
According to documents filed in this case and statements made in court:
In October 2010, Wax and his conspirators agreed to force a Jewish man (Victim One) to give his wife a “get,” a document which, according to Jewish law, must be presented by a husband to his wife to effect their divorce. Wax then lured Victim One from Brooklyn, N.Y., to Wax’s home in Lakewood on Oct. 17, 2010, under the pretense that Victim One would work on Talmudic books that Wax was publishing. When the victim arrived, he was brought upstairs, blindfolded, handcuffed, and bound. Victim One was then assaulted by Wax and his conspirators until he provided the get.
Victim One’s wife’s family paid Wax approximately $100,000 to obtain the forced get. Wax’s conspirators received approximately $50,000.
The conspiracy to commit kidnapping charge carries a maximum potential penalty of life in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Aug. 19, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah Wolfe of the U.S. Attorney’s Office in Trenton.
The pending charges and allegations against related defendants are merely allegations, and they are considered innocent unless and until proven guilty.
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Defense counsel: Mitchell J. Ansell Esq., Ocean, N.J., and Edward Dauber Esq., Newark
Wax, David Information
President of Middlesex County, N.J., Investment Company Admits Defrauding InvestorsRead the Press Release
NEWARK, N.J. – The former president of a Middlesex County, N.J., investment company today admitted he defrauded investors out of more than $250,000, U.S. Attorney Paul J. Fishman announced.
Shreyans Desai, 27, of Edison, president of Shreysiddh Capital LLC, located in Iselin, N.J., pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to Counts One and Two of a superseding indictment charging him with wire fraud. The third count in the indictment, securities fraud, will be dismissed after Desai is sentenced.
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.The wire fraud counts to which Desai pleaded guilty each carry a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for August 13, 2014.
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 guilty pleas.
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.
Desai, Shreyans Indictment
Convicted Ponzi Schemer Eliyahu Weinstein Arraigned on New Charges; Two Conspirators Admit Defrauding Investors with HimRead the Press Release
TRENTON, N.J. - Convicted Ponzi schemer Eliyahu Weinstein, 38, of Lakewood, N.J., was arraigned today in federal court in Trenton on new charges relating to an alleged scheme to defraud victims regarding purported investments in Facebook stock and Florida real estate, U.S. Attorney Paul J. Fishman announced.
Two co-defendants, Alex Schleider, 48, of Lakewood, and Aaron Glucksman, 41, of Brooklyn, N.Y., also appeared in court today and admitted participating in the fraudulent scheme with Weinstein.
Weinstein was arraigned before U.S. District Judge Joel A. Pisano, in Trenton federal court on an indictment returned April 17, 2014, by a federal grand jury sitting in Newark and entered a plea of not guilty. That indictment charges Weinstein with defrauding victims through three investment schemes: (1) pre-IPO shares of Facebook stock; (2) the purchase of an apartment complex in Florida; and (3) the purchase of the mortgage notes on seven Florida condominiums. Weinstein, Schleider, and a third defendant, Aaron Muschel, 64, were originally charged by criminal complaint with the Facebook fraud in May 2013.Schleider pleaded guilty today before Judge Pisano to an information charging him with one count of wire fraud. He admitted to participating with Weinstein in a scheme in which victims referred to as “Victim G.C.” and “Victim J.C.” lost more than $2.8 million that the victims had invested to purchase the Florida apartment complex. Schleider also agreed to restitution and forfeiture of $612,300. The charge to which Schleider pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. His sentencing is scheduled for Sept. 18, 2014.
Glucksman pleaded guilty today before Judge Pisano to an information charging him with one count of conspiracy to commit wire fraud and one count of transacting in criminal proceeds. He admitted during his plea hearing that, together with Weinstein and others, he defrauded victim-investors referred to as “the Florida condominium victims” out of $1.5 million. Glucksman admitted that, in concert with Weinstein, he duped these victims by using fraudulent e-mails to pretend to be an attorney named “Arthur Golden,” who purportedly was handling the closing of the transaction, and to pose as the supposed property manager of the condominiums. Glucksman also admitted to helping Weinstein conduct financial transactions with the proceeds of the fraud.
The charges to which Glucksman pleaded guilty carry maximum penalties of 20 years in prison and a $250,000 fine (conspiracy) and 10 years in prison and a $250,000 fine (transacting in criminal proceeds).
Judge Pisano sentenced Glucksman today 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 on Glucksman by U.S. District Judge Raymond J. Dearie of the Eastern District of New York in an unrelated case. Glucksman remains on release pending his designation to a federal institution by the U.S. Department of Justice, Bureau of Prisons.
According to the charging documents in these cases and statements made in court:
In February of 2012, Weinstein and his fellow conspirators allegedly 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 they 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 alleged misrepresentations by Weinstein and his conspirators, the Facebook victims wired millions of dollars between February and March of 2012 to an account Weinstein and a conspirator controlled. Weinstein and another conspirator convinced the Facebook victims to send the money by, among other things, providing them 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 and benefit by moving it through various accounts. 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 a number of different 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 falsely 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. In reliance on these representations, the Facebook victims wired approximately $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Weinstein and his conspirators, however, did not use the money to purchase Belle Glades Gardens. Instead, they allegedly 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 allegedly approached another group of investor victims (referred to in the indictment as the “Florida condominium victims”) and told them that 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 Florida condominium victims transferred approximately $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 and benefit.
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 U.S. District Judge Joel A. Pisano in Trenton, N.J., 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.The conspiracy count with which Weinstein is charged carries a maximum potential penalty of 20 years in prison; the wire fraud counts carry a maximum potential penalty of 30 years in prison (20 years on the wire fraud plus 10 years for commission while on pretrial release); and the transacting in criminal proceeds counts carry a maximum potential penalty of 10 years in prison. All the counts are also punishable by a $250,000 fine.
Charges against Muschel, who was charged in the criminal complaint filed against Weinstein and Schleider in May 2013, remain pending.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for their investigation of this case. He also credited special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for their important contributions.
The government is represented by Counsel to the U.S. Attorney Rachael A. Honig; Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorneys Zach Intrater of the Economic Crimes Unit and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.
The charges and allegations against defendants Weinstein and Muschel are merely accusations, and they are considered innocent unless and until proven guilty.
Today’s proceedings are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
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Defense counsel:
Weinstein: Eric Creizman Esq., New York
Glucksman: Alexei Schacht Esq., New York
Schleider: Marc Agnifilo Esq., New YorkWeinstein, Eliyahu Indictment II
Glucksman, Aaron Information
Schleider, Alex InformationAlleged Serial Bank Robber Arrested After Morning Robbery of Colonia, N.J., BankRead the Press Release
NEWARK, N.J. - A man allegedly responsible for a three-county New Jersey bank robbery spree faces a federal charge today following his arrest yesterday, May 1, 2014, after the rush hour robbery of a Rahway Savings Institute in Colonia, U.S. Attorney Paul J. Fishman announced.
May 1, 2014
Jason Novello, 35, of Elizabeth, N.J., is charged by complaint with one count of bank robbery in connection with the Colonia theft. He made his initial appearance today before U.S. Judge James B. Clark, III in Newark federal court and was detained.
According to the complaint filed today and statements made in court:
At approximately 9:05 a.m. on May 1, 2014, Novello entered the Rahway Savings Institute in Colonia, approached a bank teller and held up a note claiming he had a gun and demanding money. The teller gave the cash to Novello, including two “bait bills” from which the serial numbers had been pre-recorded by the bank.
A bank employee followed Novello out of the bank and noted the license plate of the blue Hyundai Elantra in which Novello fled. Law enforcement officers were able to track the car’s registration to an address where they waited for Novello. FBI agents arrested him when he showed up in the Hyundai.
Including the latest Colonia robbery with which he is charged, the complaint alleges Novello committed nine robberies in the nine months from August 2013 to May 2014, hitting two of the banks – in Colonia and Elizabeth – twice each:Rahway Savings Institute, Colonia
PNC Bank, Scotch Plains
March 22, 2014
Rahway Savings Institute, Colonia
March 8, 2014
Capital One Bank, Iselin
March 1, 2014
PNC Bank, Edison
Jan. 25, 2014
Capital One Bank, North Plainfield
Dec. 7, 2013
PNC Bank, Fanwood
Oct. 30, 2013
Investors Savings Bank, Elizabeth
Aug. 30, 2013
Investors Savings Bank, Elizabeth
The bank robbery charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and thanked the Middlesex and Somerset County Prosecutors’ Offices, as well as the Woodbridge, Edison, North Plainfield, Fanwood, Scotch Plains and Elizabeth police departments for their work.
The government is represented by Assistant U.S. Attorney Cari Fais of the U.S. Attorney’s Office General Crimes Unit in Newark.14-151
Defense counsel: Assistant Federal Public Defender Carol Gillen Esq., Newark
Novello, Jason Complaint
Former Unisys Engineer and Girlfriend Admit Receiving Nearly $100,000 in Kickbacks in Connection with TSA High-Tech Phone ContractRead the Press Release
Third Defendant, Former President of Vonetex LLC, Will be Sentenced for Paying Kickbacks
TRENTON, N.J. - A former project manager for Unisys and his girlfriend today admitted they were paid nearly $100,000 in kickbacks in connection with staffing a Transportation Security Administration (TSA) contract for high-tech phone systems, U.S. Attorney Paul J. Fishman announced.
James Anderson, 55, and Vickie Idoux-Walz, 48, both of Gainesville, Ga., pleaded guilty today before U.S. District Judge Michael A. Shipp to separate informations charging them with conspiracy to solicit and accept kickbacks in connection with a government contract. Neil Metzger, 41, of Leesburg, Va., was the president of Vonetex LLC, and has already pleaded guilty. He will be sentenced tomorrow.According to documents filed in this case and statements made in court:
Vonetex is a technical services and training company. Unisys, a government contractor, won a contract from the U.S. Department of Homeland Security that included the installation and servicing of high-tech phone services for the TSA. Vonetex was awarded a subcontract through an intermediary company, Izar Associates Inc.
Vonetex was paid, through Izar, for each hour that its employees and contractors billed under the contract. Anderson was an engineer and a project manager at Unisys who supervised the contracted work. Idoux-Walz was in a romantic relationship with Anderson, but was not an employee of Vonetex, Unisys, or Izar.
Anderson admitted that in November 2008, he agreed with Metzger to accept kickback payments, paid through Idoux-Walz, that were equal to $5 or $10 per hour that each Vonetex employee and contractor billed to the contract.
Idoux-Walz admitted that in December 2008 she and Metzger entered into a written agreement in which Vonetex would pay Idoux-Walz a fee for consulting services. The agreement also stated that for each hour billed by a Vonetex resource at Unisys, Idoux-Walz was to be given credits which could be used for discounts on additional work or equipment, or redeemed for cash. Each month, Idoux-Walz sent Metzger an invoice based on hours billed by Vonetex employees and contractors, and Metzger periodically sent kickback checks to Idoux-Walz with the understanding that the money represented the kickback payments Metzger had agreed to pay Anderson.
Anderson and Idoux-Walz together received a total of $97,850 in kickbacks from Metzger.
The count of conspiracy to accept kickbacks in connection with a government contract to which Anderson and Idoux-Walz pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine.
Metzger pleaded guilty on Jan. 14, 2014, to conspiring to pay kickbacks in connection with a government contract. Metzger also admitted that he made false claims against the government in the form of overbilling in June and July 2010, which resulted in a loss to the government of approximately $100,000. Metzger has entered a plea agreement with the government in which all parties agreed to a sentence of 15 months in prison. He is scheduled to be sentenced tomorrow before Judge Shipp in Trenton.
U.S. Attorney Fishman credited special agents of the U.S. Department of Homeland Security, Office of Inspector General, under the direction of Special Agent in Charge Gregory K. Null, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office in Trenton.
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Defense counsel:James Anderson: Andrea Bergman Esq., Trenton, N.J.
Vickie Idoux-Walz: Joshua Markowitz Esq., Lawrenceville, N.J.
Neil Metzger: Michael Sullivan Esq., Morristown, N.J., and Danny Onorato Esq., Washington, D.C.Anderson, James Information
Idoux-Walz, Vickie InformationFormer Elizabeth, N.J., School Attendance Officer Admits Defrauding Board of EducationRead the Press Release
NEWARK, N.J. – A former attendance liaison officer for the Elizabeth, N.J., Board of Education (EBOE) today admitted obtaining by fraud more than $5,000 by working a second job during hours when he was supposed to be tracking down truant students, U.S. Attorney Paul J. Fishman announced.
Scott J. Farley, 45, of Cranford, N.J., pleaded guilty before U.S. District Judge Kevin McNulty to an information charging him embezzling and converting to his own use more than $5,000 of money in the control and custody of the EBOE.
According to documents filed in this case and statements made in court:
Farley worked for the EBOE at an annual salary of $40,499 and $42,825 for school years 2009-2010 and 2010-2011, respectively. As an attendance liaison officer, he was expected to perform his duties during the school day, which lasted from approximately 8:15 a.m. to 3:00 p.m., by conducting home visits relating to excessive school absences by students. During this time, Farley worked in the shipping and receiving department of a private corporation based in Mountainside, N.J.
Time sheets from the corporation revealed Farley worked there during many hours when he was supposed to be working as a truant officer. Farley admitted working at the corporation during school hours on at least 100 days for both school years 2009-2010 and 2010-2011. He also admitted that during school year 2009-2010, he worked full days on approximately seven days at the corporation’s Tampa facility when the Elizabeth schools were in session and he was being paid to perform his work as a truant officer. In total, over the course of the two school years, Farley logged more than 250 hours at the corporation’s facilities during hours when he was being paid to perform duties on behalf of the EBOE.
The charge to which Farley pleaded guilty carries a maximum potential penalty of 10 years in prison and a $125,000 fine. As part of his plea agreement, Farley agreed to pay $22,065 in restitution to the Elizabeth Board of Education, reflecting the hours for which he was being paid to perform his duties as an attendance liaison officer but was actually working for the corporation. Sentencing is scheduled for August 6, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and investigators with the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace Park, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office in Newark and Assistant Prosecutor Robert Vanderstreet with the Union County Prosecutor’s Office.
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Defense counsel: Timothy R. Smith and Wolodymyr Tyshchenko Esqs., Fairfield, N.J.
Farley, Scott Information
New Jersey Regional Medical Center Pays Hundreds of Thousands to Resolve Kickback AllegationsRead the Press Release
NEWARK, N.J. – Somerset Medical Center – a regional medical center located in Somerville, N.J. – has paid $435,640 to settle allegations that it violated the federal False Claims Act by making improper rental payments to a cardiology group that referred large numbers of patients to the hospital, New Jersey U.S. Attorney Paul J. Fishman announced today.
The civil settlement agreement is between the United States of America – acting through the U.S. Attorney’s Office for the District of New Jersey and on behalf of the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) – and Somerset Medical Center.
“Making inflated rental payments to induce referrals is no better than slipping a doctor an envelope stuffed with cash,” U.S. Attorney Fishman said. “Kickback arrangements undermine the physician-patient relationship and can lead to unnecessary treatment and higher costs. There is no room in our healthcare system for hospitals that abuse federal health care programs to boost their bottom line.”
“Today’s settlement reaffirms our commitment to investigate all matters relating to kickbacks and inducements, which have no place in the healthcare arena,” Special Agent in Charge Tom O’Donnell from the U.S. Department of Health and Human Services Office of Inspector General said.
According to the contentions of the United States contained in the settlement agreement:
From Oct.1, 2006, to Sept. 30, 2013, Somerset paid Medicor Cardiology, a practice based in Hillsborough, N.J., rental amounts that were above fair market value for the leased space. The cardiology practice was a significant source of patient referrals to Somerset.
At least one purpose of the payments was to induce the referral of patients to Somerset, and they were successful. Somerset’s subsequent billings of the Medicare program for services resulting from those tainted referrals were therefore false claims in violation of federal anti-kickback and self-referral laws.
Somerset has agreed to pay $435,640, which includes interest, to the United States to settle the federal civil claims. The settlement resolves allegations against Somerset in a False Claims Act suit that was brought by two formerSomerset employees, a physician and an administrator.
The whistleblower – or qui tam – provisions of the federal False Claims Act permit private individuals, known as relators, to file such whistleblower actions and share in a portion of the proceeds recovered by the federal government.
U.S. Attorney Fishman credited special agents of HHS-OIG, under the direction of Special Agent in Charge O’Donnell, for the investigation leading to today’s settlement.
The government is represented by Assistant U.S. Attorney Charles Graybow of the U.S. Attorney’s Office Health Care and Government Fraud Unit.
The claims settled by these agreements are allegations; there have been no admissions of liability.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 $535 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.
14-148Counsel for Somerset Medical Center: Jack Wenik Esq., Newark
Counsel for Relators: John E. Riley Esq., PhiladelphiaSomerset Medical, Executed Settlement Agreement
Two Elizabeth, N.J., Women Each Sentenced to Prison for Operating Counterfeit Check SchemeRead the Press Release
NEWARK, N.J. – Two Elizabeth, N.J., women were each sentenced today to prison for conspiring to commit bank fraud by depositing more than half a million dollars in counterfeit checks into different TD Bank accounts, U.S. Attorney Paul J. Fishman announced.
Latisha White, 29, was sentenced to 26 months in prison and Synethia Bland, 30, was sentenced to 24 months in prison. Both women previously pleaded guilty before U.S. District Judge William J. Martini to one count of bank fraud conspiracy in the superseding indictment against them. Judge Martini imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
From October 2009 to May 2012, White created counterfeit checks on her computer using commercially available check-writing software. White and Bland deposited the counterfeit checks into multiple accounts at TD Bank. Bland recruited others to use their own accounts or open new accounts to deposit the counterfeit checks.
White and Bland employed a variety of methods to withdraw the fraudulent funds, including making ATM cash withdrawals, submitting cash withdrawal slips and making debit card purchases on merchandise and postal money orders.
White and Bland each admitted they arranged the deposit of more than 150 counterfeit checks into more than 120 different bank accounts. They also each admitted that they deposited counterfeit checks that totaled more than $500,000.
In addition to the prison term, Judge Martini sentenced White and Bland to each serve three years of supervised release and to forfeit $225,000 each. Restitution is still being determined.
U.S. Attorney Fishman credited special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; postal inspectors, under the direction of Inspector in Charge Maria L. Kelokates; and investigators at the Union County Prosecutor's Office, under the direction of Acting Prosecutor Grace H. Park, and the Morris County Prosecutor's Office, under the direction of Acting Prosecutor Fredric M. Knapp.
The government is represented by Assistant U.S. Attorney Andrew S. Pak of the U.S. Attorney’s Office Criminal Division in Newark.14-146
Defense counsel:
Bland: Rubin Sinins Esq., Springfield, N.J.
White: Ruth Liebesman Esq., Paramus, N.J.Resident of Florida and Ohio Sentenced to 37 Months in Prison for Defrauding Charter Flight Company, Others, of Hundreds of Thousands of DollarsRead the Press Release
NEWARK, N.J. - A resident of Florida and Ohio was sentenced to 37months in prison today for his role in defrauding a charter flight company and other merchants of hundreds of thousands of dollars in luxury goods and services, U.S. Attorney Paul J. Fishman announced.
Dante G. Dixon, 46, of Miami, Fla., and Akron, Ohio, previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with conspiracy to commit wire fraud. Judge Martini imposed the sentence – which will run consecutively to a one-year sentence previously imposed by U.S. District Judge Dickinson R. Debevoise for a violation of supervised release – today in Newark federal court.According to documents filed in this case and statements made in court:
From May through June of 2013, Dixon and others conspired to fraudulently obtain at least three private charter flights from Jet Aviation – an international business aviation services company with U.S. headquarters in Teterboro, N.J. – as well as tens of thousands of dollars in other luxury goods and services. Dixon and others used sham lines of credit issued to a well-known financial institution, of which they claimed to be employees.
On May 5, 2013, an individual using the name “Josh Stevens” called Jet Aviation's offices in Chicago, Ill., and Van Nuys, Calif., to inquire about its private charter flight services. He identified himself as a senior vice president at the financial institution and provided a supposedly affiliated email address, to which a Jet Aviation employee sent a draft charter services agreement. The agreement was signed by “Josh Stevens” and returned to Jet Aviation on May 9, 2013, falsely listing “Josh Stevens” as a senior vice president and Dixon as a vice president. The aviation company established an account and a line of credit for $350,000, which Dixon and others used to take private charter flights.
As a result of their misrepresentations to Jet Aviation, Dixon and others fraudulently obtained private high-end charter flights and limousine car services, with a total value of $175,790, for which Jet Aviation never received payment.
Dixon and others made similar misrepresentations about their purported employment at the financial institution to other luxury service providers and obtained approximately $20,000 in luxury watches, sunglasses, sterling silver and leather business cardholders, and approximately $25,500 in hotel stays at a luxury hotel in Miami.
As a result of their scheme, Dixon and others fraudulently obtained more than $220,000 in luxury goods and services.In addition to the prison term, Judge Martini sentenced Dixon to three years of supervised release and ordered him to pay restitution of $220,957.
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.
The government is represented by Assistant U.S. Attorney Andrew Pak of the U.S. Attorney's Office Economic Crimes Unit in Newark.
This case was coordinated with 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 is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the Task Force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the Task Force, visit www.StopFraud.gov.
Defense counsel: Lorraine Gauli-Rufo Esq., Verona, N.J.
14-147Former Jersey City Council Candidate Admits Misuse of ContributionsRead the Press Release
NEWARK, N.J. – Former Jersey City Council candidate Lavern Webb-Washington today admitted illegally using contributions to her political campaign for her personal use, U.S. Attorney Paul J. Fishman announced.
Webb-Washington, 65, of Jersey City, N.J., pleaded guilty before U.S. District Judge Jose L. Linares to a superseding information charging her with converting to her own use and the use of another up to $1,000 in money of the United States to which she was not entitled.
According to documents filed in this case and statements made in court:
As a 2009 candidate for city council in Jersey City, Webb-Washington had a duty truthfully to account to her campaign for contributions received and to not use campaign contributions for any improper purpose, such as for personal use. On March 30, 2009, April 23, 2009, and May 7, 2009, in Bayonne, N.J., and North Bergen, N.J., Webb-Washington accepted cash contributions from Solomon Dwek, a witness cooperating with federal law enforcement agents. Webb-Washington accepted those contributions with the intent to convert a portion of the money to her own use without authority and contrary to New Jersey state laws governing the proper use of campaign contributions. She failed to report these cash contributions to the N.J. Election Law Enforcement Commission (ELEC) as required and used up to $1,000 of that money to pay her own personal expenses. The funds that Webb-Washington admitted converting were federal funds given to Dwek by the FBI as part of the investigation.
The misdemeanor charge to which Webb-Washington pleaded guilty carries a maximum potential penalty of one year in prison and a $100,000 fine. Webb-Washington had been facing a mail fraud charge, which according to the plea agreement, will be dismissed at the time of her sentencing. Sentencing is scheduled for August 5, 2014.
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 up to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
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Defense counsel: Wanda M. Akin Esq., Newark
Webb-Washington, Lavern Superseding Information
Philadelphia Business Owner and Associate Charged in Murder-For-Hire Plot That Involved Atlantic City ShootingRead the Press Release
CAMDEN, N.J. – Two Philadelphia men are scheduled to appear in court today on charges of conspiracy, murder for hire and aiding and abetting the use of a firearm related to a shooting in Atlantic City, N.J., last year, U.S. Attorney Paul J. Fishman announced.
Ronald Galati, 63, and Jerome Johnson, 45, will have their initial court appearances before U.S. District Judge Joseph H. Rodriguez in Camden federal court. They were each charged in an indictment – returned by a federal grand jury on April 2, 2014, and unsealed today – with conspiring with Ronald Walker, 48, of Philadelphia, and Alvin Matthews, 46, of Brookhaven, Pa., to shoot and kill an individual in Atlantic City, N.J., on Nov. 30, 2013. Johnson was also charged with transporting a firearm for use during the commission of a felony, transferring a firearm for use in a crime of violence and being a previously convicted felon in possession of a firearm.
According to documents filed in this case and statements made in court:
Galati owned and operated American Collision & Automotive Center (American Collision) in Philadelphia. At various times, Johnson has worked there for Galati. Prior to June 2013, Galati allegedly began saying he was going to kill a person identified as “Victim One.” In June 2013, Galati, members of Galati’s family and associates of Galati had dinner with Victim One at a restaurant in Northfield, N.J. During dinner, Galati took Victim One into the kitchen and threatened to kill him.Galati and Johnson allegedly approached Walker and Matthews and asked them to kill Victim One in a way that would not implicate Galati. Galati promised to pay Walker and Matthews to shoot and kill Victim One.
Galati provided Walker and Matthews with several addresses associated with Victim One, including an address in the vicinity of Broad and Snyder streets in Philadelphia. In November 2013, in an attempt to find and kill Victim One, Johnson took Walker and another individual to Victim One’s home in Philadelphia. Finding the home empty, the other individual broke into Victim One’s home and vandalized it while Walker waited outside.
On Nov. 29, 2013, Johnson gave Matthews a Colt .25 caliber semi-automatic handgun. The next day, Johnson telephoned Walker and Matthews and arranged to meet them. At some point Galati called Johnson and told him that Victim One was in New Jersey. Johnson drove Walker and Matthews to Atlantic City and told them if there was a woman with Victim One, she was not to be harmed. While in Johnson’s vehicle, Matthews gave Walker the handgun he received from Johnson the day before. Johnson then dropped Walker and Matthews off around the corner from Victim One’s home.
When Victim One and a woman came out of a house, Walker and Matthews approached them and Walker shot Victim One with the Colt .25 caliber semi-automatic handgun, striking Victim One multiple times. The victim survived the shooting.
The count of conspiracy to commit murder for hire (Count 1) and the murder-for-hire count (Count 3) each carry a maximum potential penalty of 20 years in prison and a $250,000 fine. The count of conspiracy to possess and use a firearm during a crime of violence (Count 2) carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The count of aiding and abetting the possession and use of firearm during a crime of violence (Count 4) carries a mandatory minimum consecutive prison sentence of 10 years and maximum of life and a $250,000 fine.
The additional counts with which Johnson is charged, knowingly transporting a firearm for use during the commission of a felony (Count 5), knowingly transferring a firearm for use in a crime of violence (Count 6) and being a previously convicted felon in possession of a firearm (Count 7), each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.
On March 17, 2014, Matthews and Walker pleaded guilty before U.S. District Judge Joseph H. Rodriguez to a three-count information charging them with conspiracy to use interstate commerce facilities in the commission of a murder for hire; use of a firearm, and aiding and abetting the use of a firearm, in furtherance of a crime of violence, and with being a previously convicted felon in possession of a firearm. Matthews’ and Walker’s sentencings are schedule for June 30, 2014.
U.S. Attorney Fishman credited special agents of the FBI under the direction of Special Agent in Charge Aaron T. Ford; special agents of the ATF, under the direction of Special Agent in Charge Robin Shoemaker; and detectives of the Atlantic City Police Department, under the direction of Chief Henry White, for the investigation the case. He also thanked the Philadelphia District Attorney’s Office, under the direction of District Attorney R. Seth Williams, detectives of the Philadelphia Police Department, under the direction of Commissioner Charles Ramsey; and troopers of the Pennsylvania State Police, under the direction of Commissioner Frank Noonan, for their assistance.
The government is represented by Assistant U.S. Attorneys Jason M. Richardson and Matthew T. Smith of the U.S. Attorney's Office Criminal Division in Camden.
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Defense counsel:
Galati: Anthony Voci Esq. Philadelphia
Johnson: TBDGalati, Ronald, and Johnson, Jerome Indictment
Former Owner, Medical Director, of Diagnostic Testing Center Sentenced to 46 Months in PrisonRead the Press Release
Also Ordered to Forfeit More than $2 Million
NEWARK, N.J. - A radiologist who owned and operated a diagnostic testing center in Orange, N.J., was sentenced today to 46 months in prison and ordered to forfeit more than $2 million for overseeing a sprawling cash-for-patients scheme to bribe doctors for testing referrals, U.S. Attorney Paul J. Fishman announced.
Ashokkumar Babaria, 64, of Moorestown, N.J., previously pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with one count of offering and paying doctors and other health care providers illegal cash kickbacks for patient referrals in violation of the federal health care anti-kickback statute. Judge Cecchi imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Babaria, then a licensed radiologist, was the medical director and owner of Orange Community MRI LLC (Orange MRI). The facility provided diagnostic testing services, such as MRIs, CAT Scans, ultrasounds, echocardiograms and dual-emission X-ray absorptiometries, known as “DEXA Scans.” From 2008 through 2011, Orange MRI made nearly $2 million in corrupt revenues from Medicare and Medicaid billings for tests performed on patients who were referred to Orange MRI by doctors who were paid cash kickbacks for those referrals.
Babaria negotiated, approved and paid kickbacks to physicians for each diagnostic test referred and provided cash to his subordinates to do the same. During his guilty plea proceeding, Babaria admitted to several specific acts, including his 2009 approvals of kickback arrangements to pay one doctor roughly $100 for each of his MRI referrals and another doctor $75 for each MRI referral and $25 for each ultrasound or DEXA scan referral.
In addition to the prison term, Judge Cecchi sentenced Babaria to three years of supervised release, ordered him to forfeit $2,014,601 and fined him $25,000.
Defense counsel: Joseph D. Mancano Esq., Philadelphia
To date, 17 individuals have been convicted as a result of the investigation. Including Babaria, 15 people have pleaded guilty and two doctors were convicted at trial: Chikenzie Onyenso, 55, of Randolph, N.J., on Oct. 15, 2013, and Maryam Jafari, 43, of Hoboken, on Feb. 4, 2014.
Fourteen health care providers have agreed to forfeit a total of $370,960 in illegal kickbacks. Former Orange MRI executive director Chirag Patel, 38, of Warren, N.J., agreed to forfeit an additional $89,180 in corrupt gains.
U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, as well as criminal investigators from the U.S. Attorney’s Office, for the investigation.
The government is represented by Deputy Chief Scott B. McBride of the U.S. Attorney’s Economic Crimes Unit and Deputy Chief Joseph G. Mack of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 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.
13-144Union City, N.J., Man Admits Operating Supposed Charity as Illegal Bank, Falsifying TaxesRead the Press Release
NEWARK, N.J. - A Union City, N.J., man who operated a supposed charitable organization, or “gemach,” admitted today that he ran it as an unchartered bank, accepting millions of dollars in deposits – including nearly $1 million of his own money – which he shielded from state or federal regulation, U.S. Attorney Paul J. Fishman announced.
Moshe Schwartz, 33, a/k/a “David Schwartz” or “Gedalya David Schwartz,” pleaded guilty to two counts of an information: operating an unchartered bank and aiding and assisting in the filing of a false 2007 tax return. Schwartz entered his guilty plea before Judge Jose L. Linares in Newark federal court.
According to the information and statements made in court:
Schwartz operated Gemach Shefa Chaim (GSC), purportedly to provide interest-free loans to needy members of the Sanz community in Union City. During his guilty plea proceeding, Schwartz admitted he operated GSC as a bank, with millions of dollars in deposits and more than 350 client accounts by July 2009.
To operate a bank in the United States, a bank is required to obtain a charter from the United States or the state in which the bank operates. Chartered banks are subject to oversight, regulation, and periodic review by federal and state authorities. Neither Schwartz nor GSC had such a charter.
Schwartz admitted that, in operating GSC as a bank, he accepted deposits and credited clients’ accounts, wrote checks from GSC as directed by clients, made transfers between accounts, disbursed client funds upon request, negotiated GSC checks presented by persons other than the named payees, conducted wire transfers, provided clients with receipts of transactions, charged clients a fee for bounced checks and provided overdraft notices to clients. Schwartz also admitted that he opened and maintained various bank accounts at financial institutions in or around North Jersey in the name of GSC and used those institutions to deposit client funds, negotiate checks, provide clients with GSC checks and conduct wire transfers. Because client funds were deposited into and commingled within GSC’s bank accounts at financial institutions, the funds could only be traced back to GSC, thereby concealing the true ownership, nature and source of the funds. Many clients were thus able to use their GSC accounts to engage in suspicious and, at times, illegal activities, including evading federal taxes and money laundering.
Schwartz also admitted that he provided false and fraudulent information to his tax preparer in Union City concerning his income for tax year 2007, falsely representing that his income was $24,475 when it was approximately $208,845. Schwartz admitted that he used his own GSC account and a false identity to conceal his income and assets from the IRS, causing a $74,889 tax loss.
The banking offense to which Schwartz pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. The tax offense to which Schwartz pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine. Schwartz is scheduled to be sentenced on July 30, 2014.
GSC bank accounts were seized in July 2009 and approximately $500,000 was ultimately forfeited. The accounts had been used by Moshe Altman, 44, Itzak Friedlander, 46, and Shimon Haber, 38, to launder proceeds that cooperating witness Solomon Dwek, 41, had purported to be the proceeds of illegal activities. Altman pleaded guilty in December 2010, to, among other things, conspiring to launder monetary instruments and was sentenced in March 2011 to 41 months in prison. Friedlander pleaded guilty in April 2010 to conspiracy to launder monetary instruments and was sentenced in April 2011 to 24 months in prison. Haber pleaded guilty to the same charge in January 2010 and was sentenced in May 2010 to five months in prison.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty plea; as well as the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the Federal Deposit Insurance Corporation-Office of Inspector General, under the direction of Special Agent in Charge A. Derek Evans; and the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan, for their assistance.
The government is represented by Assistant U.S. Attorneys Maureen Nakly of the U.S. Attorney’s Special Prosecutions Division and Frances C. Bajada of the office’s Criminal Division.14-142
Defense counsel: Ricardo Solano Esq., Newark
Schwartz, Moshe Information
Ocean County, N.J., Man Admits Forging IRS Documents to Evade Federal Tax LienRead the Press Release
TRENTON, N.J. – An Ocean County, N.J., man today admitted forging and transmitting documents to evade a federal tax lien, U.S. Attorney Paul J. Fishman announced.
Charles W. Jarvis, 59, of Toms River, N.J., pleaded guilty today before U.S. District Judge Mary L. Cooper in Trenton federal court to an information charging him with one count of corruptly endeavoring to impede and impair the administration of the Internal Revenue Code.
According the documents filed in this case and statements made in court:
In 2012, Jarvis and his wife incurred a federal tax liability of $76,676 due to insufficient tax withholdings in 2009 and 2010. The IRS filed a tax lien against a piece of property that Jarvis’ wife had inherited from her deceased mother’s estate. Jarvis’ wife then contracted to sell the property to a third party, but could not transfer title due to the tax lien. Jarvis forged a “Notice of Tax Lien Release” and a letter purportedly from the IRS falsely claiming that the tax liability had been paid and the lien discharged. Jarvis sent the forged documents to the real estate attorney handling the sale of the property, who provided the documents to the title agent. The sale of the property closed even though the tax lien had not been satisfied.
The count to which Jarvis pleaded guilty carries a maximum potential penalty of three years in prison and a $5,000 fine. Sentencing is scheduled for August 7, 2014.
U.S. Attorney Fishman credited special agents of the Treasury Inspector General for Tax Administration, under the direction of Special Agent in Charge Robert M. Geary of the Philadelphia office, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton.14-139
Defense counsel: Robert J. Bowman Esq., Voorhees, N.J.
Jarvis, Charles Information
Middlesex County, N.J., Man Sentenced to 18 Years in Prison for Production, Distribution of Child Sex Abuse ImagesRead the Press Release
TRENTON, N.J. – A Middlesex County, N.J., man who once worked as a school crossing guard was sentenced today to 216 months in prison for taking compromising photographs of a naked child and distributing them and hundreds of other photographs of child sexual abuse over the Internet, U.S. Attorney Paul J. Fishman announced.
Kenneth Christensen, 45, of Edison, N.J., previously pleaded guilty before U.S. District Judge Peter G. Sheridan to information charging him with one count of production of child pornography and one count of distribution of child pornography. Judge Sheridan imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:Christensen – who worked as a school crossing guard in Metuchen, N.J., prior to his arrest – admitted that in 2012, he sent four individuals emails containing several hundred images of child pornography, including sadistic and masochistic conduct. Christensen acknowledged he distributed more than 600 such images.
Christensen also admitted that some of the files he distributed were photographs he took himself, including in his own bedroom, of a naked, prepubescent child who was bound in some of the images.
In addition to the prison term, Judge Sheridan sentenced Christensen to lifetime supervised release and required him to register as a sex offender.
U.S. Attorney Fishman credited special agents with 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 David M. Eskew of the U.S. Attorney’s Office General Crimes Unit in Newark.
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Defense counsel: K. Anthony Thomas Esq., Assistant Federal Public Defender, NewarkMercer County, N.J., Man Sentenced to More Than 17 Years in Prison for Producing Images of Child Sexual AbuseRead the Press Release
TRENTON, N.J. – A Mercer County, N.J., man was sentenced today to 210 months in prison for producing images of child sexual abuse by coercing a minor victim to stream explicit content to him over the Internet, U.S. Attorney Paul J. Fishman announced.
Fredy Arbito, 31, of Hightstown, N.J., previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of production of child pornography. Judge Shipp also imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
During his guilty plea proceeding, Arbito admitted that between July 2011 and January 2013, he made contact with a young girl over a video chat messaging system and coerced her to engage in sexually explicit conduct for the purpose of transmitting it live over the Internet. Arbito also admitted keeping copies of the video on his own computer.
Arbito was initially charged with possession of child pornography, apprehended by local authorities in Panama and returned to the United States where he was arrested by special agents of Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations (HSI) in April of 2013.
In addition to the prison term, Judge Shipp also sentenced Arbito to serve a lifetime of supervised release. Arbito is also required to register as a sex offender.
U.S. Attorney Fishman praised special agents of the HSI, under the direction of Special Agent in Charge Andrew M. McLees, with the investigation.
Defense counsel: James R. Lisa Esq., Jersey City, N.J.
The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office Criminal Division in Trenton.
14-141Hudson County, N.J., Woman Federally Charged with Robbing Three Banks in Three WeeksRead the Press Release
NEWARK, N.J. – A woman who allegedly robbed three banks in three-week span has been charged federally in connection with the spree, U.S. Attorney Paul J. Fishman announced.
Valeria Parziale, 34, of Harrison, N.J., is charged by complaint with three counts of bank robbery in connection with two robberies in Newark and one in Harrison in January and February of 2014. She was arrested by the Newark Police Department and charged on Feb. 24, 2014, by the Essex County Prosecutor’s Office with related crimes. The U.S. Attorney’s Office is adopting the case for federal prosecution.
Parziale is expected to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.
According to the complaint filed in this case:
Parziale robbed a Valley National Bank in Harrison on Jan. 30, 2014; a Wells Fargo bank in Newark on Feb. 14, 2014; and a Popular Community Bank in Newark on Feb. 20, 2014. During each robbery, Parziale handed the teller a note demanding cash and threatening to use a gun.
Parziale’s notes contained threatening language including, “I Have A Gun! Don’t Be Stupid!” She wore sunglasses and a wig to commit the Newark Wells Fargo robbery and a dark, hooded jacket and gloves to the bank in Harrison.
Each of the bank robbery charges carries a maximum potential penalty of 20 years in prison and a $250,000 fine.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to the arrest and charges. He also thanked the Newark, Kearny and Harrison Police Departments for their excellent work in this case.
The government is represented by Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.
The charges and the allegations contained in the complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
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Defense counsel: Assistant Federal Public Defender John Yauch Esq., Newark
Parziale, Valeria Complaint
Former Pharmaceutical Executive Sentenced to 16 Months in Prison for Central Role in Insider Trading SchemeRead the Press Release
Defendant and Conspirators Netted $1.4 Million in Illicit Profits over Five Years
NEWARK, N.J. - A former executive of a pharmaceutical technology firm was sentenced today to 16 months in prison for playing a central role in an insider trading scheme that repeatedly exploited non-public material information for financial gain, U.S. Attorney Paul J. Fishman announced.
John Lazorchak, 43, of Long Valley, N.J., previously pleaded guilty before U.S. District Judge Katharine S. Hayden to a six-count information charging him with one count of conspiracy to commit securities fraud and five counts of securities fraud. Judge Hayden imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Lazorchak was director of financial reporting at Celgene Corp., a global pharmaceutical company based in New Jersey. Mark Cupo, 53, of Morris Plains, N.J., a friend and former boss of Lazorchak, held a similar position at Sanofi-Aventis, another New Jersey-based global pharmaceutical company. Another conspirator, Mark Foldy, 44, of Morris Plains, a friend and high school classmate of Lazorchak, was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.
In their respective positions, Lazorchak, Cupo, and Foldy became privy to certain material information, including merger and acquisition plans, and – with respect to Lazorchak – quarterly earnings results and decisions on regulatory applications, before such information was made public.
From 2007 to 2012, Lazorchak regularly disclosed non-public information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news to Cupo with the expectation that Cupo would pass the information to a “friend” who would trade in the securities of Celgene or its target acquisition companies and then share the profits with Lazorchak and Cupo.There were, in fact, two “friends” to whom Cupo passed non-public material information: Lawrence Grum, 50, of Livingston, N.J., and Michael Castelli, 50, of Morris Plains, N.J. Both Grum and Castelli traded on the inside information and made more than half a million dollars in profits apiece. Grum and Castelli also passed certain Celgene inside information to friends and family members.
Lazorchak funneled information about Celgene’s anticipated acquisition of Pharmion Corp. in 2007 to his high-school friends, Foldy and Michael Pendolino, 44, a New Hampshire-based chiropractor. In the months leading up to the deal, Foldy and Pendolino traded on the inside information for a profit and broadened the insider trading network by tipping family members and other friends.
In May 2010, Lazorchak informed Cupo of Celgene’s then-confidential plans to acquire Abraxis BioScience Inc. After receiving the information from Cupo, Grum and Castelli purchased Abraxis stock and sold it immediately after the June 30, 2010, acquisition announcement. Grum and Castelli collectively made more than $150,000 in profits and paid thousands of dollars in cash to Cupo, to be shared with Lazorchak.
Between February and March 2011, Foldy informed Lazorchak of Stryker’s then-confidential plans to acquire Orthovita Inc. as payback for the Pharmion deal back in 2007. Foldy also tipped other friends and family members about the Orthovita deal.
Lazorchak passed the Orthovita tip to Pendolino and Cupo. Pendolino not only traded on the Pharmion-related inside information himself, but also passed it on to another high school friend. Cupo gave the information to Grum and Castelli, who traded for substantial profits and gave a cash portion back to Cupo, for distribution amongst Cupo, Lazorchak, and Foldy.
Over the course of the five-year scheme, the conspirators collectively reaped more than $1.4 million in illicit profits by trading ahead of at least 11 corporate news events that Lazorchak or Cupo revealed to them prior to public announcement.
In addition to the prison term, Judge Hayden sentenced Lazorchak to two years of supervised release and ordered him to forfeit $3,000.
Lazorchak is the fifth defendant charged with participating in this insider trading network to be sentenced. On April 9, 2014, Grum was sentenced to one year and one day in prison and Castelli was sentenced to nine months in prison. On April 16, 2014, Cupo was sentenced to 16 months in prison and Foldy was sentenced to two years of supervised release with six months of home confinement and electronic monitoring. The sixth and final charged defendant, Michael Pendolino, is scheduled to be sentenced by Judge Hayden on May 5, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentences. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
Today’s sentencing 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:
John Lazorchak: Lawrence S. Lustberg Esq. and Amanda B. Protess, Esq., Newark
Mark Cupo: Joseph J. Bell Esq. and Joseph J. Bell, IV Esq., Rockaway, NJ
Lawrence Grum: Scott A. Resnik Esq., New York
Michael Castelli: Daniel Zinman Esq. and Daniel Stein Esq., New York
Mark Foldy: Jonathan Marks Esq., New York
Michael Pendolino: James S. Friedman Esq., NewarkFormer Loan Officer Admits Role in Mortgage Fraud SchemeRead the Press Release
NEWARK, N.J. – A Middlesex County, N.J., man today admitted his role in a large-scale mortgage fraud scheme that caused millions of dollars in losses, U.S. Attorney Paul J. Fishman announced.
Delio Coutinho, 71, of Colonia, N.J., pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with conspiracy to commit wire fraud.
According to documents filed in this case and statements made in court:
From March 2008 through June 2012, Coutinho and his co-defendants conspired with each other and others to release liens on encumbered properties via fraudulently arranged short sale transactions. This allowed Coutinho and his co-defendants to profit from new fraudulent mortgage loans obtained on the properties from other mortgage lenders. To complete the short sale transactions, Coutinho and his co-defendants submitted materially false closing and other documents to mortgage lenders. They submitted fraudulent mortgage loan applications to lenders to obtain new loans on properties in and around Elizabeth, N.J., including a property on Fulton Street.
Coutinho was a loan officer at a northern New Jersey mortgage brokerage company, and he submitted false documents in support of the schemes. Co-defendants included Jose Luis Salguero Bedoya, 37, of Elizabeth, a real estate investor who, along with his girlfriend, Yazmin Soto-Cruz, 33, of Elizabeth, provided much of the funds used by the defendants to perpetuate their fraudulent schemes. Christopher Ju, 28, of Edison, N.J., negotiated the fraudulent short sale real estate transactions. In all, Coutinho and the others obtained approximately $2 million in illegal mortgage proceeds.
The conspiracy count to which Coutinho pleaded guilty carries a maximum potential penalty of 30 years in prison and a $100,000 fine.
U.S. Attorney Fishman credited the FBI Newark Mortgage Fraud Task Force, which includes special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; special agents of the U.S. Housing and Urban Development, Office of Inspector General, Northeast Region of Investigations, under the direction of Special Agent in Charge Christina Scaringi; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Inspector General Michael P. Stephens; special agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy L. Romero; special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and the Hudson County Prosecutor’s Office, under the direction of Acting Prosecutor Gaetano Gregory, for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Lakshmi Srinivasan Herman of the U.S. Attorney’s Office Economic Crimes Unit in Newark, and Charlton A. Rugg of the Narcotics/OCDETF Unit.
Today’s guilty plea is part of efforts 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: Michael A. Robbins Esq., West Orange, N.J.
Coutinho, Delio Information
Essex County, N.J., Woman Sentenced to 79 Months in Prison for Fraud Scheme That Targeted Elderly IndividualsRead the Press Release
NEWARK, N.J. – An Essex County, N.J., woman was sentenced today to 79 months in prison for a credit card fraud and identity theft scheme in which she targeted elderly women, U.S. Attorney Paul J. Fishman announced.
Terrell Brunson, 40, of Newark, N.J., previously pleaded guilty before U.S. District Judge Anne. E. Thompson in Trenton federal court to an indictment charging her with access device fraud and aggravated identity theft. Brunson was sentenced to 51 months on the access device fraud count, followed by 24 consecutive months on the aggravated identity theft count and four consecutive months for violating her supervised release.
According to documents filed in this case and statements made in court:
From April 2012 through February 2013, Brunson engaged in an identity theft and credit card fraud scheme that specifically targeted elderly women. She searched through publicly available directories for telephone numbers of individuals who she believed, based upon their names, were elderly women. One name that Brunson commonly sought out was “Ruth.” Brunson called these individuals and pretended to be someone else, such as a representative from a credit card company. She then solicited personal information from these women (Social Security numbers and dates of birth) and then contacted credit card companies and used the information to add herself as an authorized user to the victims’ accounts or to create new accounts.On July 3, 2012, a woman identified as “Victim One” received a telephone call from Brunson, purporting to be a representative of MasterCard. Brunson inquired about an alleged $400 transaction that she claimed Victim One had made at a Wal-Mart store. Victim One informed Brunson that the Wal-Mart transaction was fraudulent and provided her Social Security number, date of birth, and mother’s maiden name. Brunson then used Victim One’s personal information to open two retail store credit card accounts and to access one of Victim One’s current credit card accounts. Brunson then used these accounts to make thousands of dollars’ worth of purchases online and in person at various stores and restaurants in New Jersey.
On Dec. 14, 2007, Brunson was arrested in a similar scheme and was and charged with access device fraud in federal court. While on pretrial release in connection with these charges, Brunson continued the scheme and fraudulently obtained additional identities and access to the credit card accounts of others. Brunson pleaded guilty to a two-count information and on April 2, 2009, U.S. District Judge Anne E. Thompson sentenced her to 39 months in prison, followed by three years of supervised release. Brunson committed the present offenses while on supervised release.
In addition to the prison term, Judge Thompson sentenced Brunson to three years of supervised release, entered a judgment of forfeiture in the amount of $10,894 and ordered Brunson to pay restitution of $7,069.
U.S. Attorney Fishman credit special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton.
13-135Defense counsel: Muhammad I. Bashir Esq., Elizabeth, N.J.
Remarks as Prepared for Delivery by U.S. Attorney Paul J. Fishman at the Prisoner Reentry: Breaking the Cycle ConferenceRead the Press Release
ST. PETER’S UNIVERSITY, JERSEY CITY, N.J.
Thank you, Jim [McGreevey], for that very nice introduction. And thank you to both you and Mayor Fulop for having the vision and commitment to organize this conference and for bringing us all together. The program looks incredible and my only regret is that my schedule won’t allow me to stay after my speech. But this topic is so critical and so central to the mission of my office that I am honored for the opportunity to kick off the program by highlighting what the Justice Department is doing across the country and, in particular, here in federal court in New Jersey.
Every other Tuesday at 5:00 in the afternoon, about two dozen people come to a courtroom on the second floor of the Martin Luther King Jr. Federal Courthouse in Newark. At first, it looks like a lot of other proceedings in that courthouse. A federal Magistrate Judge, Judge Madeline Cox Arleo, sits on the bench. In what we call the well of the courtroom, at the two tables usually occupied by lawyers or their clients, there are a couple of lawyers from the federal Public Defender’s Office; four people from the U.S. Attorney’s Office; and at least one or two probation officers. Behind them, sitting on the benches usually occupied by spectators, are about 15 other people.
But this proceeding is different. Everyone on the benches has very recently left federal prison – some with a stop at a halfway house, others directly from jail. And one by one, each of them is called to the front of the courtroom and sits down at one of the tables to talk to the judge. “How is your daughter,” she asks one. “Tell me about your new apartment,” she inquires of another. “Can we help you print your resume?” “Do you want a lawyer to help you get a payment plan so you can get your driver’s license back?” “Do you have to leave early today to get to class?” And, finally, “What do you need?”
And as you listen to her questions, and hear the answers, and watch the interaction among all of those people, you begin to realize there is something very special, and really inspiring, going on in Courtroom 2A.
The last time those defendants were in that courthouse, lawyers from my office were asking another judge to send them to prison for a substantial period of time. The last time those defendants were in that courthouse, a different judge explained why the things they had done and the crimes they had committed required that they receive a meaningful term of incarceration.
Now when they walk in, members of my office and court personnel are editing their resumes, teaching them how to interview for a job, and offering to tutor them in math. The judge is helping them to register for college, find apartments, and get jobs – and is literally taking them to a charter school to help them enroll their kids. Now that they have served their time, those defendants are being asked by lawyers and staff from that same U.S. Attorney’s office and by a federal judge working with probation officers and public defenders, “What do you need?”
How did we get here? And is there an inconsistency in our approach?
The answer is “no.” We have a crisis in this country. Our federal and state prisons currently house 1.5 million people. Hundreds of thousands more are in local jails. In all, we estimate that more than 1 in 100 adults are behind bars. More than 200,000 are in the custody of the federal Bureau of Prisons, and it is my job, and the job of the people who work in my office, to put several hundred more there every year. In my judgment, they have committed crimes for which jail is the appropriate punishment.
But for almost all of them, their incarceration doesn’t and shouldn’t last forever. More than 95 percent of federal prisoners will be released and, when they are, the overwhelming majority go home – or somewhere near where they once called home. And it is on that journey and at its destination that they may well fail if they don’t have help.
Many come back to families that are barely intact, if they are there at all. Housing is hard to find, and jobs even tougher. It’s hard enough in today’s economy for lots of people without criminal records to find work, and here we’ve been particularly slow to recover. Imagine what it’s like for those just out of prison to compete in that environment.
And then add in the educational obstacles. Of the 20 fastest growing occupations, 13 require postsecondary education. But only 22 percent of prisoners have any postsecondary experience, compared to more than half of the rest of us. Two in five prison and jail inmates – 40 percent – lack a high school diploma or its equivalent.
Even when ex-offenders get a job, they face an uphill battle. A report from the Pew Charitable Trusts found that past incarceration reduced subsequent wages by more than 10 percent, cut annual employment by more than two months and reduced yearly earnings by 40 percent.
And it turns out that the ability to find a job after being released from prison is one of the greatest predictors of success on the outside. But without the foundations that the rest of us work so hard to build and maintain – the things that quite frankly we sometimes take for granted – the recently released are often alone, tempted by their past lives, sometimes still on the hook of an addiction, and too frequently with too few alternatives to falling, or stumbling, back into a life that they want to avoid if they can.
So it’s hardly surprising that so many fail. In fact, nationally, two out of every three people released from state prisons will be arrested again within three years of their release. Half of those released will end up back in prison in that time. Released federal prisoners do a little better: they have a 40 percent chance of being re-arrested or having their supervision revoked – which would send them back to prison in their first three years out.
These numbers and the realities they represent are daunting. With roughly 700,000 people coming out of our state and federal prisons every year, plus the millions that flow through jails at the local level, recidivism has terrible consequences for the lives of offenders and their families. It has serious, serious implication for public safety. And with resources already severely strained at the federal, state and local levels, it just costs too much money. The Bureau of Justice Statistics estimates that more than $74 billion is spent on federal, state and local corrections annually. And it costs nearly $30,000 to house a federal inmate for a year.
So how do we stop this terrible cycle?
At the national level, my boss, Attorney General Eric Holder, has convened a Federal Reentry Council to try to bring down the barriers that stop former prisoners from succeeding. The council comprises 20 federal agencies, all with common goals: to make our communities safer by reducing recidivism and victimization; to help those getting out to become productive citizens; and to save limited resources.
How do they do that? Part of it is just raising awareness. There are a huge number of misconceptions out there about the rights and obligations of those who have served time. Can they live in public housing? Yes. Can you get tax credits for hiring them? Yes. Can employers get bonded against theft? Yes. And so, among other things, the Council has promoted and published on line a series of what they call “mythbusters,” answering those questions, among others.
Part of it is knocking down systemic barriers and obstacles that make it difficult for people who have already been held accountable and paid for their crimes to contribute productively and to support themselves, their families and the economy.
In April 2011, Attorney General Holder sent a letter to every state Attorney General citing a comprehensive study by the Justice Department and the American Bar Association cataloguing more than 38,000 statutes across the 50 states and other territories that impose collateral consequences on people convicted of crimes. Although some of those restrictions serve public safety, many impose unnecessary burdens – including denial of employment and housing opportunities – that cripple an individual trying to make a new start. So he asked the states to evaluate relevant laws and policies and he made the Department’s resources available to provide support. And we in the Department of Justice looked to our own house – conducting a review of federal collateral consequences identified in the study.
Early last year, also under the Attorney General’s direction, the Justice Department began a comprehensive review of the criminal justice system – including charging, sentencing, incarceration and reentry – to identify areas in which federal laws could be enforced more fairly and efficiently. The idea was to figure out which practices were more successful and which might actually be working against our goals.The resulting initial reform package – called the “Smart on Crime” initiative – is already driving us to reexamine our priorities, more fairly enforce laws and apply just punishments, strengthen protections for vulnerable populations and focus even more strongly on prevention and reentry.
The final piece is targeting services to the population we’re trying to reach. This has to start in jail. As the Director of the Federal Bureau of Prisons has pointed out, most federal inmates leaving prison need “job skills, vocational training, education, counseling, and other assistance such as drug abuse treatment, anger management, parenting skills, and linkage to community resources for continuity of care if they are to successfully reenter society.” In other words, today’s BOP realizes that reentry begins the day an inmate enters a facility, not the day the inmate leaves it.And it must continue in halfway houses where many federal inmates begin their reintegration. But for too long, the policies and culture of those facilities were actually counterproductive in many ways. So just last month, Attorney General Holder announced that the Justice Department would require federal halfway houses – which saw 30,000 inmates go through their doors in just the past year – to enhance their treatment services. Those facilities will now have to provide a specialized form of treatment to prisoners, including those with mental health and substance abuse issues, provide greater assistance to inmates who are pursuing job opportunities – such as permitting cell phones to be used by inmates and providing funds for transportation – and expand access to equipment that allows more inmates to reenter society through home confinement.
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But even that isn’t enough. So here’s how we got to courtroom 2A:
Three years ago, I asked people in my office – and then in the courthouse – if we could do better. I asked if we had the resources – the time, the money, the commitment – to try something new. There were others who were already running or participating in reentry projects around the country, but we had never done it in federal court in New Jersey. Those conversations, and the hard work of a lot of people, led to the development of the first federal reentry court in New Jersey – what we call our “ReNew” program. That hard work, and most of all, the hard work of the program participants who have dedicated themselves to reimagining their lives – is why courtroom 2A is such a special place.
Because we know that it isn’t enough just to provide the right services; we must provide them at the right time in the right place. Former offenders are at a unique crossroad – poised to become law-abiding contributors or frequent flyers in the criminal justice system. They need to know the path of redemption is theirs to choose – and that they will be supported in their journey and their decision to leave what is familiar and trade it for the prospect of a better future.
To be clear, this isn’t a program for white-collar criminals who just did 18 months in a minimum security prison. The participants in our program were convicted of manufacturing and distributing of dangerous narcotics, selling and transporting firearms, and other very serious and dangerous crimes. They served years – in some cases 10 years or more – in federal prison and were predicted to be some of the most likely to reoffend.
Because of those challenges, it isn’t all smooth sailing. They have to work long hours at difficult jobs – sometimes more than one – and pursue challenging education and other programs to make progress. Some have family members who aren’t supportive and others have the wrong friends who want to reunite with their old buddies. Some just aren’t quite ready to turn away from their previous lives.
So, like everybody else, some of our participants make mistakes. There are excuses, impediments, and apologies. And there are sanctions. Some have to stay in the program for longer, losing credit. Some end up being directed to do some community service and others get some additional house arrest. But all of it – all of it – is geared toward getting these individuals back on their feet, ready and able to make it. And every two weeks, they remind us why this work is so important and they impress us with their ability to evolve and persevere.
Amare Terrell was a straight “A” student until, at around the age of 13, he began to rebel against his mother. He was sent to live with his paternal grandparents and with his father – a heroin addict who introduced him to the drug culture of the streets. He dropped out of high school, had a number of run-ins with the law, and in December 2008, was prosecuted by my office for conspiracy to distribute heroin.
Last year, he was one of the first to participate in our reentry court. Now, in front of Judge Arleo and the other participants, Mr. Terrell is leading in a different way. He obviously takes his role as a father seriously; he talks to the judge about his need for health insurance and a 401(k); and he is focused on what he needs to do to keep his life on track. A couple of months ago, right before one of the 700 snowstorms we had this winter, another participant told Amare that he was worried because he didn’t have any food in his house. And, as many of you know, grocery stores aren’t so plentiful in the urban parts of Essex County. Mr. Terrell told him to meet him at the grocery store in 10 minutes, where he bought him $70 worth of groceries. And, with our encouragement, Mr. Terrell recently spoke to a group of people suspected of committing the worst crimes in a neighborhood and presented a powerful message about what he lost when he broke the law. Next month, Amare Terrell will be one of the first four to graduate from our program. We know how much that means to him, and we hope he knows how much that means to us.
Also graduating is Eddie Wilson. Eddie’s mother and father were intravenous drug users who died of HIV/AIDS. He was raised by his grandmother who also passed away when Mr. Wilson was still a teenager. He was prosecuted by my office for selling guns and ammunition to an undercover ATF agent.
From the start of reentry court, Mr. Wilson was focused on getting his college degree, which has led to his being called the “Professor” in court. But his dedication is clear. He lived in a shelter until he could save enough money to pay for an apartment. But he never seemed down. When asked by the judge about his situation, he might say it was hard because he didn’t have any food. Or he might let her know that he had to be out of the shelter by 7:00 in the morning. But he would also say that it was probably good, because it made him get up to start studying. And the judge, encouraging his dedication, helped him to get a job at the college he attends.
Like Mr. Terrell, Mr. Wilson shows real ownership in this program. More than a few times, he has discovered and told us and the other participants about different programs that might help with rent payments or furniture. Through these efforts, he has probably taught the team as much about reentry as they have taught him.
Muhammed Shabbaz is one of the newest participants – he was released from a halfway house in mid-February. He also has the distinction of having served 14 years or so in prison – one of the longest sentences of anyone in the reentry court – for distribution of heroin and cocaine. In spite of that, or maybe because of it, he comes across in court as someone who is spiritual and has thought a great deal about how he wants to live his life and what comes next. He has a job, and has resumed a stable relationship with the woman to whom he was engaged when he went to prison. He has a facility for math, and will likely return to school to study accounting.
One side note on the extent to which our reentry court is full service: shortly after he joined the program, Mr. Shabbaz told the court that he had resumed living with his longtime girlfriend, and that they had had a religious wedding but weren’t formally married. Judge Arleo offered to perform the ceremony. He put her off. She offered again. And again. And again. She even offered to buy a cake. None of which is surprising if you know Judge Arleo. Finally they set a date. He and his wife wrote their own vows. And one Tuesday evening, not so long ago, in Courtroom 2A, we all learned Mr. Shabbaz is not only good at math, but he’s also a bit of a poet.
Today, you will hear other stories from Judge Arleo, from Tom Eicher, the Chief of our Office’s Criminal Division, and perhaps from Mr. Terrel, Mr. Shabbaz, Mr. Wilson, or their colleagues. You will hear about their successes and their failures, their excitement and their despair. You will learn that, as much work as the reentry team does to find job opportunities, housing, furniture and even schools and daycare for their children, it is the participants themselves who direct and control their experience. It is our job, our responsibility, to give them the opportunity to do just that.
And it’s not just for them. As long as 1 in 28 children – and 1 in 9 African American children – go to bed each night with an incarcerated parent – as long as our kids are continuing the cycle of generational crime by embarking on lifetimes of involvement with the justice system – our work is not done.
I, and the people who work with me in the U.S. Attorney’s Office, understand that we will only succeed if we take a multifaceted approach to law enforcement. We understand the need, as Attorney General Holder, has said, to be smart on crime. We will never arrest our way out of the problems of crime. Only by emphasizing prevention and reentry, together with enforcement, do we have a chance to make a real and lasting impact on the violence and other issues that plague our communities.
On Monday night, I sat at my family’s Seder, and reflected on the ideas of redemption, of spiritual reawakening, of the rebirth that comes with spring – all themes of Passover. This Sunday, Christians will celebrate Easter, a holiday that celebrates many of the same ideas and hopes, and our collective ability to stretch beyond our limitations, to change ourselves for the better.
I, and the people who work with me on the ReNew court, understand that promise and we see it every day. No matter what our religion, we are a group that believes in second chances.
Redemption is about the triumph of hope over despair – the belief that we all have the potential for and the ability to change, and perhaps to do so dramatically, even if the road is hard. And even if we need someone like a judge to look us in the eye and ask: “What do you need?”
Thank you.Convicted Ponzi-Schemer Indicted on New Fraud and Other ChargesRead the Press Release
NEWARK, N.J. - An Ocean County, N.J., man who was sentenced less than two months ago to 22 years in prison for running a Ponzi-style real estate scheme was indicted by a federal grand jury today on new charges of conspiracy, wire fraud and transacting criminal proceeds while on pretrial release, U.S. Attorney Paul J. Fishman announced.
Eliyahu Weinstein, 38, of Lakewood, N.J., was indicted on one count of conspiracy to commit wire fraud, five counts of wire fraud committed while on pretrial release, and seven counts of transacting in criminal proceeds. The government is seeking the seizure and forfeiture of all funds fraudulently obtained by Weinstein as a result of the scheme.
According the indictment and documents filed in this and other cases:
Weinstein allegedly defrauded victims through three investment schemes: (1) pre-IPO shares of Facebook stock; (2) the purchase of an apartment complex in Florida; (3) the purchase of the mortgage notes on seven Florida condominiums. Weinstein and co-defendants Alex Schleider and Aaron Muschel, were originally charged by criminal complaint with the Facebook fraud in May 2013.
In February of 2012, Weinstein and his fellow conspirators allegedly 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 they 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 alleged misrepresentations by Weinstein and his conspirators, the Facebook victims wired millions of dollars between February and March of 2012 to an account Weinstein and a conspirator controlled. Weinstein and another conspirator convinced the Facebook victims to send the money by, among other things, providing them 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 and benefit by moving it through various accounts. 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 a number of different 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 falsely 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. In reliance on these representations, the Facebook victims wired approximately $2.83 million to the Miami law firm in order to complete the Belle Glades Gardens transaction. Weinstein and his conspirators, however, did not use the money to purchase Belle Glades Gardens. Instead, they allegedly 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 allegedly approached another group of investor victims (referred to in the indictment as the “Florida condominium victims”) and told them that 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 Florida condominium victims transferred approximately $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 and benefit.
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 U.S. District Judge Joel A. Pisano in Trenton, N.J., 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.The conspiracy count with which Weinstein is charged carries a maximum potential penalty of 20 years in prison; the wire fraud counts carry a maximum potential penalty of 30 years in prison (20 years on the wire fraud plus 10 years for commission while on pretrial release); and the transacting in criminal proceeds counts carry a maximum potential penalty of 10 years in prison. All the counts are also punishable by a $250,000 fine.
Charges against Muschel and Schleider, who were charged in the criminal complaint filed against Weinstein in May 2013, remain pending.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s indictment. He also credited special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for role in the case.
The government is represented by Counsel to the U.S. Attorney Rachael A. Honig; Gurbir S. Grewal, Chief of the U.S. Attorney’s Office Economic Crimes Unit, and Assistant U.S. Attorneys Zach Intrater of the Economic Crimes Unit and Evan S. Weitz of the Asset Forfeiture and Money Laundering Unit.
The charges and allegations against the defendants are merely accusations, and they are considered innocent unless and until proven guilty.
Today’s indictment 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.
14-134Defense counsel: Eric Creizman Esq., New York
Weinstein, Eliyahu Indictment II