District of New Jersey
Press releases recorded for this federal judicial district.
Former South Plainfield, N.J., Police Captain Pleads Guilty to Sexually Exploiting A MinorRead the Press Release
TRENTON, N.J. – A former South Plainfield, N.J., police captain admitted today to exploiting a minor girl by enticing her to live-stream sexually explicit acts via the Internet in exchange for payment, U.S. Attorney Paul J. Fishman announced.
Michael Grennier, 51, of South Plainfield, pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to an information charging him with one count of production of child pornography. Grennier was charged by complaint on Feb. 19, 2013, and has been in custody since that date.
According to documents and evidence in this case and statements made in court:
On Feb. 14, 2013, Grennier enticed a girl to perform sexually explicit acts and stream images of herself over the Internet while he watched remotely from his home computer. During the webcam session, Grennier exchanged text messages with the minor in which he directed her actions. Grennier admitted during his guilty plea proceeding that he promised to buy his victim clothing in exchange for her performance.
At the time of his arrest, Grennier was working for a private computer forensics firm. Prior to his retirement, he was a computer forensics specialist for the South Plainfield Police Department.
The production count carries a maximum potential penalty of 30 years in prison and a $250,000 fine. The mandatory minimum sentence for this offense is 15 years in prison. Sentencing is currently scheduled for March 27, 2014.
U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s plea. He also thanked the South Plainfield Police Department, under the direction of Chief of Police James Parker, and the Middlesex County Prosecutor’s Office, under the direction of Acting Prosecutor Andrew Carey, for their assistance with the investigation.
The government is represented by Assistant U.S. Attorney Harvey Bartle, Attorney-in-Charge of the U.S. Attorney’s Office in Trenton.
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Defense counsel: Frank Arleo Esq., West Orange, N.J.
Grennier Information
Nine Members of Largest Counterfeit Goods Conspiracy Ever Charged Admit GuiltRead the Press Release
NEWARK, N.J. – Nine members of a massive, international counterfeit goods conspiracy have admitted their roles in the scheme, U.S. Attorney Paul J. Fishman announced.
Hai Dong Jiang, 37, and Fei Ruo Huang, 37, both of Staten Island, N.Y.; Hai Yan Jiang, 34, of Richardson, Texas; Xiance Zhou, 39, and Jian Chun Qu, 33, both of Bayside, N.Y.; and Ming Zheng, 48, of New York, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court. Dong Jiang, Ruo Huang, and Yan Jiang pleaded guilty to informations charging them each with one count of conspiracy to traffic in counterfeit goods. Xiance Zhou and Qu pleaded guilty to informations charging them each with one count of conspiracy to structure money. Zheng pleaded guilty to an information charging him with a conspiracy to launder money.
Wei Qiang Zhou, 38, of Brooklyn, N.Y., pleaded guilty Dec. 3, 2013, Patrick Siu, 41, of Richardson, Texas, pleaded guilty Dec. 4, 2013, and Da Yi Huang, 43, of Staten Island, pleaded guilty Dec. 11, 2013, all before Judge Salas in Newark federal court, to informations charging them each with one count of conspiracy to traffic in counterfeit goods.
According to documents filed in this case and statements made in Court:
From November 2009 through February 2012, the defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever charged by the Department of Justice. The defendants and others conspired to import hundreds of containers of counterfeit goods – primarily handbags, and footwear, and perfume – from China into the United States in furtherance of the conspiracy. These goods, if legitimate, would have had a retail value of more than $300 million.
The counterfeit goods were manufactured in China and smuggled into the United States through containers fraudulently associated with legitimate importers, with false and fraudulent shipping paperwork playing a critical role in the smuggling scheme. Some of the conspirators created and managed the flow of false shipping paperwork between China and the United States, and supervised the importation of counterfeit goods, and others controlled the importation of the counterfeit goods into the United States.
Other conspirators managed the distribution of counterfeit goods once those goods arrived in the United States. After importation, the counterfeit goods were delivered to warehouses, and distributed throughout New York, New Jersey, and elsewhere. Certain conspirators paid large amounts of cash to undercover law enforcement officers to assist in the removal of counterfeit goods from the port.Some conspirators acted as wholesalers for the counterfeit goods, supplying retailers who sold counterfeit goods to customers in the United States. Other conspirators were money structurers, who arranged for cash to be wired to China in amounts small enough to avoid applicable financial reporting requirements, to evade detection of the smuggling scheme and related proceeds.
Law enforcement introduced several undercover special agents (collectively, the UCs) to the conspirators. The UCs purported to have unspecified “connections” at the port, which allowed the UCs to release containers that were on hold, and pass them through to the conspirators. The conspirators paid the UCs for these “services.” In total, during the course of this investigation, the conspirators provided the UCs more than $2 million.UCs recorded dozens of phone calls and in-person meetings with various conspirators. The investigation also utilized several court-authorized wiretaps of telephones and electronic communications.
Roles of the Individual Defendants
- Patrick Siu, a/k/a “Sam Huang,” facilitated the importation and distribution of counterfeit goods, by serving as the “hub” for communications between customs brokers, UCs, and the conspirators. Siu sent false and fraudulent shipping documents to UCs and customs brokers (including by interstate and international faxes and e-mails); engaged in conversations with UCs, customs brokers, and other conspirators in furtherance of the smuggling scheme; and created or caused to be created false and fraudulent identification documents.
- Hai Dong Jiang, a/k/a “Jimmy,” a/k/a “Dong,” served as one of the directors of the smuggling scheme. Dong Jiang ordered counterfeit merchandise from China; negotiated shipments of counterfeit goods from China; arranged for payment for that merchandise; and supervised the distribution of that merchandise in and around the New York/New Jersey area.
- Hai Yan Jiang, a/k/a “Yan,” served as one of the directors of the smuggling scheme. Yan Jiang made decisions regarding what kind of counterfeit goods should be manufactured; arranged for payment for counterfeit merchandise; supervised the distribution of that merchandise in and around the New York/New Jersey area; and interacted with wholesalers of counterfeit goods by arranging payments by the wholesalers to the directors of the scheme.
- Fei Ruo Huang, a/k/a “Emily,” a/k/a “Ah Yue,” was another director of the smuggling scheme. Ruo Huang coordinated the distribution of counterfeit merchandise once it arrived in the New York/New Jersey area. Ruo Huang directed merchandise to warehouses, where it was stored and then delivered to wholesalers.
- Da Yi Huang, a/k/a “Boss,” a/k/a “Da Nian,” was another director of the smuggling scheme. Da Yi negotiated pricing for counterfeit merchandise; made payments for the counterfeit merchandise; and participated in deciding which counterfeit products should be ordered from China.
- Wei Qiang Zhou’s primary role was to assist other conspirators in arranging for transportation of counterfeit merchandise.
- Xiance Zhou and Jian Chun Qu’s primary roles were to wire proceeds obtained from the smuggling scheme to accounts in China. Conspirators in the scheme dropped off large sums of money to Xiance Zhou and Qu and others – sums far in excess of $10,000 at a time. Xiance Zhou and Qu, then divided these large sums into amounts of less than $10,000, deposited them into accounts they controlled to evade reporting requirements, and wired the money – in increments of less than $10,000 – to China and elsewhere.
- Ming Zheng, a/k/a “Uncle Mi,” was a money launderer. Other conspirators obtained cash from UCs, which was purportedly the proceeds of gambling and other unlawful activities. These other conspirators then provided the money to Zheng. For every $50,000 in cash the UCs provided, Zheng and others would return approximately $42,500 – via wire transfers from banks in China – into a bank account set up by the UCs. When other conspirators, including Ning Guo, received money from the UCs to be laundered, he would then contact Zheng, who in turn contacted a Chinese-based conspirator, and transferred the money to locations in China. Then the money (less the laundering fee) was transferred from in Fujian, China, to a bank in Guangzho, China, where it was subsequently withdrawn and physically transported via courier to a bank in Hong Kong. The final transfer was from the bank in Hong Kong to the UCs’ bank account. Zheng was therefore instrumental in each of the money laundering transactions – he received the cash from other conspirators and caused it to be transferred overseas in furtherance of the laundering process.
The conspiracy to traffic in counterfeit goods count to which Da Yi Huang, Hai Dong Jiang, Hai Yan Jiang, Fei Ruo Huang, Patrick Siu, and Wei Qiang Zhou pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a fine of $2 million. The money laundering count to which Zheng pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a fine of $500,000 or twice the gain or loss caused be the offense. The structuring conspiracy to which Zhou and Qu pleaded guilty is punishable by a maximum potential penalty of 5 years in prison and a fine of $250,000. Sentencing for Siu and Qiang Zhou is scheduled for March 17, 2014. Sentencing for Qu, Zhou and Zheng is scheduled for March 24, 2014. Sentencing for Hay Yan Jiang, Hai Dong Jiang and Fei Ruo is scheduled for March 25, 2014.
U.S. Attorney Fishman praised special agents of Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Andrew M. McLees, and special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to the guilty pleas.
The government is represented by Assistant U.S. Attorneys Andrew Pak and Zach Intrater of the Computer Hacking and Intellectual Property section of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark and Nicholas Grippo of the U.S. Attorney’s Office in Trenton.
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Defense counsel:
Qiang Zhou: Jonathan Marks Esq., New York
Siu: Robert Gottlieb Esq., New York
Da Yi Huang: Daniel Kratka Esq., New York
Hai Dong Jiang: Joseph Conway Esq., Mineola, N.Y.
Hai Yan Jiang: Benjamin Herzweig Esq., Patchogue, N.Y.
Fei Ruo Huang: Adam Mehfar Esq., New York
Qu: Alan Liebowitz Esq., Englewood, N.J.
Xiance Zhou: Patrick Brackley Esq., New York
Ming Zheng: Stacey Van Malden Esq., Bronx, N.Y.New York Man Admits to Participating in Three Armed Robberies of Electronics Stores in New Jersey and New YorkRead the Press Release
TRENTON, N.J. – A Brooklyn, N.Y., man admitted today to participating in three armed robberies of electronics stores, including two armed robberies in Woodbridge, N.J., and Linden, N.J., U.S. Attorney Paul J. Fishman announced.
Terrell McQueen, 30, pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to a superseding information charging him with one count of conspiracy to commit Hobbs Act robberies.
McQueen was arrested on May 22, 2013, and originally charged in an indictment in connection with two armed robberies of electronics stores in Woodbridge and Linden. McQueen has been in custody since his arrest.
According to documents filed in this case and statements made in court:
Between May 30, 2012, and Oct. 2, 2012, McQueen conspired with others to commit a series of gunpoint electronics store robberies in New Jersey and New York during which he and accomplices robbed merchandise for illegal resale. McQueen provided the firearms used in both of the New Jersey robberies, coordinated the resale of the stolen merchandise and distributed the profits from the robberies to the other perpetrators.
The charge of conspiracy to commit Hobbs Act robberies carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for June 9, 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 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 excellent 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 in Newark.
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Defense counsel: Anthony J. Pope Esq., Newark, N.J.McQueen Superseding Information
Monmouth County, N.J., Casino Owner Pleads Guilty to Evading Nearly $1.3 Million in Income Taxes from Trinidad CasinoRead the Press Release
TRENTON, N.J. – A Monmouth County, N.J., man admitted today to evading taxes on income from his ownership of a casino in Trinidad, resulting in an approximately $1.3 million loss to the United States, U.S. Attorney Paul J. Fishman announced.
David Migliore, 50, of Brielle, N.J., pleaded guilty before U.S. District Judge Mary L. Cooper in Trenton federal court to one count of an indictment charging him with evading taxes with respect to his 2011 personal tax return.
According to the documents filed in this case and statements made in court:
Migliore owns several businesses in New Jersey, including Brielle Investment LLC, Brielle Investments & Management Co. LLC and La Soufriere Maritime Inc., as well as Island Club Casino in Trinidad.
From 2009 to 2011, Migliore earned millions of dollars from Island Club Casino, resulting in taxes due of $1,286,657. During that time, Migliore took steps to conceal his income and assets from the IRS. At his guilty plea proceeding, Migliore admitted to using unreported bank accounts in Trinidad to deposit personal income; using U.S. bank accounts in the names of his New Jersey business entities to receive income from Island Club Casino; and using those business entities to pay for personal expenses.
Migliore also admitted to transferring income from Island Club Casino directly to vendors in the U.S. for personal expenses and directing Island Club Casino employees to send his income through Western Union to individuals in New Jersey who collected the cash on his behalf.
The tax evasion count to which Migliore pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss arising out of the offense together with the costs of prosecution. Sentencing is scheduled for March 20, 2014.
Pursuant to the plea agreement, Migliore agreed to pay restitution of $1,286,657 to the IRS.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; special agents of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees in Newark; law enforcement officers from the Monmouth County Prosecutor’s Office, under the direction of Acting Monmouth County Prosecutor Christopher J. Gramiccioni; police officers from Wall Township Police Department, under the direction of Chief Robert Brice; and international assistance from the Financial Intelligence Unit for Trinidad & Tobago, with the investigation.
The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
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Defense counsel: Robert Weir Esq., Red Bank, N.J.Migliore, David Indictment
Mercer County, N.J., Man Admits His Role in Conspiracy to Extort BribesRead the Press Release
Also Pleads Guilty to Separate Extortion, Narcotics Distribution and Weapons Charges; Co-Defendant Admits Narcotics Distribution
TRENTON, N.J. — A Mercer County, N.J., man admitted today he conspired with the Mayor of Trenton and others to extort bribes and kickbacks in connection with a Trenton parking garage project, U.S. Attorney Paul J. Fishman announced.
Joseph Giorgianni (a/k/a “Jo Jo”), 64, of Ewing Township, N.J., pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to Count One of an indictment returned in December 2012 charging him with conspiring with Trenton Mayor Tony F. Mack, 47, Ralphiel Mack, 41, (Mayor Mack’s brother) both of Trenton, and others to obstruct interstate commerce by extorting individuals under color of official right by corruptly arranging to obtain, and obtaining, money and things of value in exchange for Tony Mack’s exercise of official authority and influence.
Giorgianni also pleaded guilty to Count Eight in the indictment, charging him with conspiring with City of Trenton employee Charles Hall III, 50, of Trenton, to obstruct interstate commerce by extorting another individual under color of official right by corruptly arranging to obtain, and obtaining, money and things of value from that individual in exchange for Hall’s exercise of official authority and influence in connection with the administration of a power-washing contract.
Giorgianni also pleaded guilty to charges contained in a separate indictment returned in March 2013 which included conspiring with others, including Hall, to distribute and possess with intent to distribute oxycodone (Count One) and to being a felon in possession of a firearm (Count Six).
An associate of Giorgianni, Mary Manfredo, 65, of Lawrenceville, N.J., pleaded guilty to conspiring with Giorgianni, Hall and others to distribute and possess with intent to distribute oxycodone (Count One of the March 2013 indictment).
Hall, a former City of Trenton employee, pleaded guilty in February 2013 to conspiring to obstruct commerce by extortion under color of official right by agreeing with Giorgianni, Tony Mack and Ralphiel Mack to obtain payments from the purported developers of the parking garage project in exchange for Tony Mack’s official assistance on the project. Hall also admitted his involvement in the narcotics distribution conspiracy involving Giorgianni, Manfredo and others in connection with the purchase and sale of oxycodone.
The extortion and narcotics conspiracy counts are punishable by a maximum potential prison term of 20 years in prison per count. The firearms count carries a maximum penalty of 10 years in prison. All offenses except the narcotics offense carry a maximum fine of $250,000; the narcotics offense has a $1 million maximum fine. Sentencing for both defendants has been scheduled for March 19, 2014.
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 guilty pleas.
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.
The charges and allegations in the referenced indictments are merely accusations, and all defendants with pending charges are presumed innocent unless and until proven guilty.
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Defense Counsel:
Giorgianni: Jerome A. Ballarotto Esq., Trenton
Manfredo: Anthony Simonetti Esq., Hightstown, N.J.Giorgianni, Joseph et al. Indictments
Seafood Company and Owner Admit False Records Conspiracy, Overharvesting Sea Scallops Off the Atlantic CoastRead the Press Release
D.C. Air and Seafood To Pay $520,371 in Restitution
NEWARK, N.J. – A Maine seafood company and one of its owners admitted in federal court today that they conspired to falsify records and obstruct justice to conceal the overfishing of Atlantic Sea Scallops, submitting documents that failed to report approximately 79,666 pounds harvested off the coast of New Jersey and Cape Cod in Massachusetts, New Jersey U.S. Attorney Paul J. Fishman announced.
D.C. Air & Seafood Inc., a seafood wholesaler based in Winter Harbor, Maine, and one of its owners, Christopher Byers, 41, also of Winter Harbor, pleaded guilty to separate informations charging them with conspiring with each other and with six fishing boat operators to prepare false reports to conceal the overharvesting. Byers entered the guilty pleas on behalf of himself and the company before U.S. District Judge William H. Walls in Newark federal court. The six boat operators previously pleaded guilty before Judge Walls and await sentencing.
According to documents filed in this case and statements made in court:
D.C. Air & Seafood purchased Atlantic Sea Scallops harvested by federally permitted vessels in the Elephant Trunk Access Area – a large sea scallop fishing ground off the mid-Atlantic coast. The area, and others managed by the National Oceanic and Atmospheric Administration (NOAA), had been closed to fishing as part of an area rotation management program to rebuild the scallop population, but were open to limited scallop fishing by federally permitted vessels for two-week periods in March 2007, July 2007 and March 2008.
During those periods, individual vessels were restricted to harvesting no more than 400 pounds of scallops per vessel per trip. Vessels operated by the conspiring boat operators failed to report a total of 79,666 pounds of scallops harvested off the coast of New Jersey and Cape Cod for purchase by D.C. Air & Seafood during the permit periods. Some of the scallops were off-loaded from the vessels in Atlantic City, N.J., to trucks used by Byers and D.C. Air & Seafood.
Byers admitted during the guilty plea proceeding that D.C. Air & Seafood and he conspired with the six boat operators to conceal the overharvesting of scallops by preparing fishing vessel trip reports – required to be submitted to NOAA – which falsely represented the amount of scallops harvested on certain vessel trips was 400 pounds or less.
As part of its plea agreement, D.C. Air & Seafood agrees to pay $520,371 in restitution to the United States – representing the loss to the government – and to be placed on probation for five years. During the probationary period, the company will be subject to the terms of an environmental compliance plan to ensure all purchases and sales of fish comply with federal law. The company has also agreed not to participate in the scallop industry during that time.
The charge to which Byers pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for March 18, 2014.
U.S. Attorney Fishman credited special agents of the National Oceanic and Atmospheric Administration, under the direction of Special Agent in Charge Logan Gregory, with the investigation.
The government is represented by Assistant U.S. Attorney Kathleen P. O’Leary of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
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Defense counsel: William J. Hughes Esq., Atlantic City, N.J.
D.C. Air & Seafod Information
Byers Information
D.C. Air, Byers Plea AgreementsNewark Man Admits Role in Multiple Armed Robberies of New Jersey EstablishmentsRead the Press Release
NEWARK, N.J. – A Newark, N.J. man today admitted committing two armed robberies of commercial establishments in Essex County, N.J., U.S. Attorney Paul J. Fishman announced.
Antwon Yarbrough, 27, of Newark, N.J., pleaded guilty before U.S. District Judge William H. Walls to an information charging him with one count of conspiring to commit Hobbs Act robberies.
According documents filed in this case and statements made in court:
Between April 2013 and May 2013, Yarbrough conspired with others to rob a Krauszers store in West Orange, N.J., on April 24, 2013, and a Subway restaurant in Verona, N.J., on May 20, 2013. Yarbrough and his conspirators robbed these establishments at gunpoint. In each robbery, Yarbrough and his co-conspirators used plastic zip ties to restrain their victims. They then stole cash, cigarettes, and other items.
In the Krauszers robbery on April 24, 2013, Yarbrough and another robber entered the store wearing dark hoodies, face masks, and gloves. Yarbrough secured the door from the inside using a zip tie, while the other robber pointed a firearm at an employee and forced the employee to the floor. The robber restrained the employee with zip ties then struck the employee in the head with the gun. Yarbrough restrained the hands and feet of two other victims, one of whom Yarbrough struck in the head with his forearm. Yarbrough and the other robber then emptied the cash register of several hundred dollars, stole several cartons of Newport cigarettes, and fled.
In the Subway robbery on May 20, 2013, Yarbrough and two other robbers again entered the restaurant wearing dark hoodies, face masks, and gloves. Both robbers accompanying Yarbrough brandished firearms. After entering the restaurant, the robbers restrained an employee by tying the employee’s hands and feet with zip ties. The robbers then emptied the cash register of several hundred dollars and fled.
The Hobbs Act conspiracy to which Yarbrough pleaded guilty is punishable by a maximum potential penalty of 20 years in prison, and a fine of $250,000, or twice the gross gain or loss arising out of the offense. Sentencing is scheduled for March 18, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea. He also thanked the Belleville, Bloomfield, Kearny, Linden, Maplewood, Newark, Paramus, Verona and West Orange police departments, along with the N.J. State Police and the Essex County Prosecutor’s Office for their work on this case.
The government is represented by Assistant U.S. Attorneys Jamari Buxton and Rahul Agarwal of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel: Stacy Biancamano Esq., West Orange, N.J.
Yarbrough Information
N.J. Turnpike Authority Employee Admits Stealing at Least $1.5 MillionRead the Press Release
NEWARK, N.J. – A former claims manager for the N.J. Turnpike Authority today admitted devising a scheme which led to the theft of at least $1.5 million from the authority and various insurance companies, U.S. Attorney Paul J. Fishman announced.
Gerardo A. Blasi, 55, of Clifton, N.J., pleaded guilty before U.S. District Judge Kevin McNulty to an information charging him with using the mails as part of a scheme to defraud the Turnpike Authority and certain insurance companies and to obtain money and property by false and fraudulent pretenses, representations and promises.
According to the documents filed in this case and statements made in court:
From May 2009 until June 2013, while working as the claims manager for the Turnpike Authority (NJTA) it was Blasi’s job to negotiate and recover the costs of repairs from insurance companies of motorists who caused damage to property belonging to the NJTA. With the assistance of representatives from two New Jersey-based insurance claims adjusting companies, Blasi inflated the costs to repair the damages done to NJTA property by insured motorists. The inflated claims were submitted to the motorists’ insurance companies and payment was directed through the mail to the one of the New Jersey-based claims adjusting companies instead of to the NJTA. Payments for actual costs were passed on to the NJTA, and Blasi and his conspirators shared the difference between the inflated costs and the payments for actual costs sent to the NJTA.
Despite a NJTA policy of not attempting to recover on damages caused by motorists who died from accidents on the Turnpike, Blasi continued to process those claims. Because the NJTA was unaware that Blasi had processed the claims, he was able to share the entire payment sent by the insurance company between himself and one of his conspirators. Blasi and others defrauded the NJTA and various insurance companies of at least $1.5 million.
The charge to which Blasi pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for March 19, 2014.
U.S. Attorney Fishman credited special agents from the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s plea. He also thanked the N.J. Turnpike Authority, under the direction of Executive Director Veronique Hakim, for its cooperation during the investigation.
The government is represented by Assistant U.S. Attorney David L. Foster of the U.S. Attorney’s Office, Special Prosecution’s Division.
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Defense counsel: Anthony Iacullo Esq., CliftonBlasi Information
Camden, N.J., Man Admits Conspiracy to Steal Checks from MailRead the Press Release
CAMDEN, N.J. – A Camden man today admitted his role in a scheme in which he and others stole business checks from the U.S. Mail in New Jersey, Pennsylvania, and Delaware, altered them, and cashed them at banks using a series of conspirators, U.S. Attorney Paul J. Fishman announced.
Derrick Warner, 29, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with one count of conspiracy to commit bank fraud and one count of possession of a firearm by a previously convicted felon: Warner admitted to illegally possessing the weapon (a Smith and Wesson .44 Magnum handgun) after purchasing it for a conspirator.
According to documents filed in this case and statements made in court:
Warner and others stole checks from curbside U.S. mailboxes in business industrial parks in Burlington and Camden counties in New Jersey and in Pennsylvania and Delaware. Warner and his conspirators would then recruit a conspirator to cash the stolen checks. Once they identified a person to cash the check, Warner and others would alter the stolen checks so that the name of the “payee” of the check would match the name of the recruited check casher. Warner, the check casher, and often a conspirator would then travel to a bank where the check casher would cash the check.
Warner and his conspirators cashed or attempted to cash more than 45 stolen and altered business checks worth more than $200,000. The scheme resulted in a total loss of more than $100,000 to the victim banks.
Warner is also charged with being a felon in possession of a handgun in late March 2013. He admitted that he purchased the firearm in Camden on behalf of one of his conspirators.
The conspiracy to commit bank fraud to which Warner pleaded guilty is punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million, or twice the gross gain or loss resulting from the offense. The felon in possession of a firearm count is punishable by a maximum potential penalty of 10 years in prison and a fine of $250,000. Sentencing is scheduled for April 4, 2014.
U.S. Attorney Fishman credited special agents from the U.S. Postal Inspection Service, under the direction of Inspector in Charge David Bosch; and the FBI, under the direction of Special Agent in Charge Edward J. Hanko in Philadelphia, for 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 Criminal Division in Camden.
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Defense counsel: Richard Sparaco Esq., Cherry Hill, N.J.Warner Information
Brooklyn Man Who Broke into Pharmacy Sentenced to 65 Months in Prison for Conspiracy to Sell Stolen OxycodoneRead the Press Release
TRENTON, N.J. – A Brooklyn, N.Y., man was sentenced today to 65 months in prison for his involvement in a plot to burglarize a pharmacy in Marlboro Township, N.J., and sell the stolen narcotics for cash, U.S. Attorney Paul J. Fishman announced.
David Mordukhaev, 22, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to distribute and possess with intent to distribute oxycodone. Judge Wolfson imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
The Union Hill-Supremo Pharmacy in Marlboro Township was burglarized shortly after 4:00 a.m. on June 17, 2012. Mordukhaev and his fellow conspirators filled 17 garbage bags and two cardboard boxes with merchandise from the pharmacy, including 1,988 dosage units of methylphenidate, 500 dosage units of hydromorphone, 300 dosage units of Opana (a trade name for oxymorphone) and 3,800 dosage units of oxycodone – all Schedule II controlled substances.
The stock lost by the pharmacy was valued at approximately $335,000.
Mordukhaev admitted that he stole the drugs, and that he did so knowing they would be sold for profit.
In addition to the prison term, Judge Wolfson sentenced Mordukhaev to three years of supervised release and ordered him to pay $334,722 in restitution.
Two of Mordukhaev’s conspirators, James Zarbailov, 23, and Dzheykhun Avshalumov, 24, both of Brooklyn, have previously pleaded guilty to the same charge. Zarbailov was sentenced to 63 months’ imprisonment on Nov. 18, 2013. Avshalumov’s sentencing is scheduled for Dec. 19, 2013.
U.S. Attorney Fishman credited special agents of the FBI’s Red Bank Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and law enforcement officers from the Marlboro Township Police Department, under the direction of Police Chief Bruce E. Hall, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton.13-459
Defense counsel: Lance Lazzaro Esq., Brooklyn, N.Y.Pennsylvania Woman Charged with Millions of Dollars in Fraudulent Sales of Telecom EquipmentRead the Press Release
NEWARK, N.J. – A Pennsylvania woman was indicted by a federal grand jury today for her role in a long-running, large-scale scheme involving the fraudulent sale of telecommunications equipment belonging to a company she worked for as a consultant, U.S. Attorney Paul J. Fishman announced.
Juanita L. Berry, 45, of Philadelphia, Pa., was charged in an indictment with three counts of wire fraud that allegedly caused losses of at least $3.5 million.According to the indictment and other documents filed in this case:
From 2008 to 2011, Berry worked as a consultant for an Indiana company that installed and removed telecommunications systems, first as a sales representative and later as the company’s vice president for major accounts. Initially, Berry worked out of the company’s Levittown, Pa., facility and, later, out of its Dayton, N.J., facility. The “brains” of the telecommunications systems the company installed and removed were the electronic circuit boards of varying complexity that range in price between several hundred to tens of thousands of dollars.
Berry owned a company named J. Starr Communications Inc., (J. Starr) through which she arranged her consulting agreement and allegedly operated her fraudulent scheme.
Without the knowledge or authorization of the telecommunications company’s management, Berry sold both used cards and new cards with other telecommunications equipment owned by the company as though such equipment belonged to her or J. Starr. She then pocketed the proceeds from such fraudulent sales. Berry deceived employees at the Levittown and Dayton facilities into thinking that the shipments of used cards were part of the telecommunications company’s normal course of business.
Berry allegedly deceived the company’s management in Indiana and other company employees on site about her activities by altering internal project reports and blaming others for the missing cards. Berry deceived a company in Florida that purchased the equipment into thinking that she or her company J. Starr had title to that equipment. Between 2008 and 2011, the Florida company that purchased the cards from Berry or J. Starr wired in excess of $3.5 million in payment to J. Starr’s bank account.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney Bohdan Vitvitsky of the U.S. Attorney’s Office Economic Crime Unit in Newark.
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: Paul D. Petrus Esq., New York
Berry, Juanita Indictment
New Jersey Gastroenterologist Admits Taking Cash Kickbacks for Patient ReferralsRead the Press Release
NEWARK, N.J. – A physician practicing gastroenterology and internal medicine in West Orange, N.J., pleaded guilty today to receiving cash kickbacks for diagnostic testing referrals, becoming the 13th health care provider and 14th defendant to be convicted in connection with the government’s investigation of illegal payments made by an Orange, N.J., diagnostic testing facility, U.S. Attorney Paul J. Fishman announced.
John Green, M.D., 60, of Basking Ridge, N.J., pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with soliciting and receiving more than $14,000 in illegal cash kickbacks for patient referrals in violation of the federal health care anti-kickback statute.
According to documents filed in this case and statements made in court:
Green was a licensed and board-eligible gastroenterologist who operated his own medical practice in West Orange. From January 2009 through December 2011, Green agreed to take cash payments from Orange Community MRI LLC (“Orange MRI”) in exchange for MRIs and CAT scans he referred to the diagnostic testing facility. During his guilty plea proceeding, Green admitted to receiving cash on a per-patient basis for approximately three years.
Green met with an Orange MRI representative nicknamed “Kenny” on Oct. 6, 2011, and Nov. 10, 2011, at Green’s medical office in West Orange. On each occasion Green received an envelope with more than $800 in cash for referring patients.
The anti-kickback charge carries a maximum potential penalty of five years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for March 25, 2014.In addition to the 14 individuals convicted as a result of the investigation, 11 health care providers, including Green, have agreed to forfeit a total of $353,910 in illegal cash kickbacks. Additionally, Ashokkumar Babaria, 63, of Moorestown, N.J., Orange MRI’s former medical director, agreed to forfeit his revenue from corrupt referrals, which the government estimates is in excess of $2 million. Chirag Patel, 38, of Warren, N.J., Orange MRI’s former executive director, also agreed to forfeit $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, who investigated the case with criminal investigators from the U.S. Attorney’s Office.The government is represented by Assistant U.S. Attorneys Scott B. McBride and Deputy Chief Joseph G. Mack of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit in Newark.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $500 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
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Defense counsel: Kevin A. Buchan Esq. and James A. Plaisted Esq., Roseland, N.J.
Green, John Information
Bergen County Woman Sentenced to 10 Years in Prison for Murder-For-Hire Plot Against RivalRead the Press Release
NEWARK, N.J. – A Bergen County, N.J., woman was sentenced today to 120 months in prison for trying to hire a hitman to kill a romantic rival by shooting her in the head, U.S. Attorney Paul J. Fishman announced.
Nicole Faccenda, 44, of Lyndhurst, N.J., previously had pleaded guilty on Aug. 8, 2012 before U.S. Magistrate Judge Patty Shwartz to an information charging her with one count of using the mail and facilities of commerce with the intent of carrying out a murder-for-hire plan. Faccenda was charged in October 2011 with offering to pay someone to kill her ex-boyfriend’s new girlfriend. U.S. District Judge Faith S. Hochberg imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Faccenda had been in a long-term relationship with a man who had fathered her child. The relationship ended when the man began seeing with another woman, with whom he also had a child. On Oct. 19, 2011, Faccenda contacted a person she knew and trusted in Florida and asked for help in finding someone to carry out a hit on her ex-boyfriend’s new girlfriend. She said she had a black dress ready to wear to the intended victim’s funeral and would “spit on the casket.”
The acquaintance contacted federal authorities, and the next day, spoke again with Faccenda – a conversation that was recorded by agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives. The acquaintance told Faccenda he had found someone to do the murder. The acquaintance and an undercover ATF task force officer posing as a hitman then met with Faccenda at a Mahwah, N.J., supermarket parking lot to arrange the killing.
Faccenda agreed to pay the undercover hitman $5,000 in advance and $5,000 after the girlfriend was killed. In a number of recorded conversations, Faccenda said she wanted the new girlfriend to be gone, and her boyfriend to be miserable. She said she wanted the girlfriend shot in the head and that the boyfriend could be shot in the foot. If something happened to the girlfriend’s children, she said, “Oh, well, I’m sorry.”
On Oct. 24, 2011, Faccenda met with her acquaintance from Florida in a Secaucus, N.J., gas station parking lot and gave him an envelope with $2,000 for the purported hitman. Over the next few hours, she provided information, including a name, photo, work schedule and license plate number of the intended victim. Two days later, on Oct. 26, 2011, the friend called Faccenda and told her the victim had been shot in the head in what appeared to be a robbery. Faccenda was arrested at work by ATF agents a short time later.
In addition to the prison term, Judge Hochberg sentenced Faccenda to three years of supervised release and ordered her to pay restitution of $19,292.
U.S. Attorney Fishman credited special agents of the ATF under the direction of Acting Special Agent in Charge George Belsky with the investigation leading to today’s sentencing.
The government is represented by Special Litigation Counsel Serina M. Vash of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel: Peter Willis Esq., Jersey City, N.J.
Bergen County Woman Sentenced to 10 Years in Prison for Murder-For-Hire Plot Against RivalRead the Press Release
NEWARK, N.J. – A Bergen County, N.J., woman was sentenced today to 120 months in prison for trying to hire a hitman to kill a romantic rival by shooting her in the head, U.S. Attorney Paul J. Fishman announced.
Nicole Faccenda, 44, of Lyndhurst, N.J., previously had pleaded guilty on Aug. 8, 2012 before U.S. Magistrate Judge Patty Shwartz to an information charging her with one count of using the mail and facilities of commerce with the intent of carrying out a murder-for-hire plan. Faccenda was charged in October 2011 with offering to pay someone to kill her ex-boyfriend’s new girlfriend. U.S. District Judge Faith S. Hochberg imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Faccenda had been in a long-term relationship with a man who had fathered her child. The relationship ended when the man began seeing with another woman, with whom he also had a child. On Oct. 19, 2011, Faccenda contacted a person she knew and trusted in Florida and asked for help in finding someone to carry out a hit on her ex-boyfriend’s new girlfriend. She said she had a black dress ready to wear to the intended victim’s funeral and would “spit on the casket.”
The acquaintance contacted federal authorities, and the next day, spoke again with Faccenda – a conversation that was recorded by agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives. The acquaintance told Faccenda he had found someone to do the murder. The acquaintance and an undercover ATF task force officer posing as a hitman then met with Faccenda at a Mahwah, N.J., supermarket parking lot to arrange the killing.
Faccenda agreed to pay the undercover hitman $5,000 in advance and $5,000 after the girlfriend was killed. In a number of recorded conversations, Faccenda said she wanted the new girlfriend to be gone, and her boyfriend to be miserable. She said she wanted the girlfriend shot in the head and that the boyfriend could be shot in the foot. If something happened to the girlfriend’s children, she said, “Oh, well, I’m sorry.”
On Oct. 24, 2011, Faccenda met with her acquaintance from Florida in a Secaucus, N.J., gas station parking lot and gave him an envelope with $2,000 for the purported hitman. Over the next few hours, she provided information, including a name, photo, work schedule and license plate number of the intended victim. Two days later, on Oct. 26, 2011, the friend called Faccenda and told her the victim had been shot in the head in what appeared to be a robbery. Faccenda was arrested at work by ATF agents a short time later.
In addition to the prison term, Judge Hochberg sentenced Faccenda to three years of supervised release and ordered her to pay restitution of $19,292.
U.S. Attorney Fishman credited special agents of the ATF under the direction of Acting Special Agent in Charge George Belsky with the investigation leading to today’s sentencing.
The government is represented by Special Litigation Counsel Serina M. Vash of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel: Peter Willis Esq., Jersey City, N.J.
Camden County, N.J., Man Convicted for $1.2 Million Phony Pizza Shop Investment Scam, Other OffensesRead the Press Release
CAMDEN, N.J. — A federal jury convicted a Camden County, N.J., man today for allegedly defrauding an investor out of approximately $1.2 million he claimed would be invested in a pizza shop, then laundering that money, failing to report it to the IRS and threatening the victim to keep quiet about his crimes, U.S. Attorney Paul J. Fishman announced.
Giovanni Arena, 58, of Laurel Springs, N.J., was found guilty of 15 counts of mail fraud, eight counts of money laundering, three counts of failure to file income tax returns and one count of tampering with witnesses following a seven-day trial before Chief U.S. District Judge Jerome B. Simandle in Camden federal court. The jury deliberated less than four hours before delivering the guilty verdicts. Arena was acquitted on seven counts of mail fraud and one count of money laundering.
According to documents filed in this case and the evidence at trial:
Arena’s scheme defrauded a single investor of approximately $1.2 million from 2004 through 2008. Arena, who had operated pizza restaurants in the past, enticed the victim to send checks and cash through the U.S. mail to invest in the purchase of a pizza shop in southern New Jersey. Rather than using the money to buy a restaurant, Arena purchased luxury automobiles – including a Maserati Coupe and Chevrolet Camaro – gambled at Atlantic City Casinos and paid his living expenses.The jury reviewed casino records that showed the defendant spent many hours at the gaming tables, losing more than $700,000 in four years of Atlantic City gambling. During the trial, the jury watched surveillance video of the defendant buy in at a black jack table using $81,000 in cash he brought to the table in a shopping bag.
In addition, Arena willfully did not file his individual tax returns for tax years 2006, 2007
and 2008, failing to report hundreds of thousands of dollars in income to the IRS. After federal agents served search warrants on Arena’s property during the course of the investigation, Arena instructed the victim investor to lie to federal investigators and made threatening statements, saying, “you better not put me in trouble because if you put me in trouble, I’ll put you in trouble.”Each mail fraud count carries a maximum potential penalty of 20 years in prison and a $500,000 fine. Each money laundering count carries a maximum potential penalty of 10 years in prison and a $250,000 fine or twice the value of the property involved in the transaction. Each failure to file tax returns count carries a maximum potential of one year in prison and a $100,000 fine or twice the gain resulting from the offense or twice the loss to any victim. The tampering with a witness or victim count carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for March 18, 2014.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen in Newark, and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge David W. Bosch, Philadelphia Division, with the investigation leading to today’s verdict.
The government is represented by Assistant U.S. Attorney Jason M. Richardson of the U.S. Attorney’s Office Criminal Division in Camden.13-453
Defense counsel: Brian S. O’Malley Esq., Haddon Heights, N.J.
Union County, N.J., Man Sentenced to 33 Months in Prison for Impersonating A Federal Officer to Defraud Illegal AliensRead the Press Release
NEWARK, N.J. - A Union County, N.J., man was sentenced today to 33 months in prison for pretending to be an Immigration and Customs Enforcement officer to defraud illegal aliens seeking to apply for legal status in the United States, U.S. Attorney Paul J. Fishman announced.
Ruben Alvarado, 28, of Elizabeth, N.J. previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with impersonation of a federal officer and identity fraud. Judge Hayden imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
From September 2009 through May 2011, and again from February 2013 through March 2013, Alvarado pretended to be an employee and officer of the Department of Homeland Security, Immigration and Customs Enforcement (DHS-ICE), and the Transportation Safety Administration (TSA). Alvarado demanded and obtained money from his victims after promising to help them, through his purported government employment at DHS-ICE, to obtain legal, or more permanent, status in the United States. He wore clothing bearing the letters “I.C.E.,” carried handcuffs, what appeared to be a holstered gun, a false photo identification card identifying him as a “TSA Air Marshall” and a badge that read, “Official Court Officer.” Alvarado recruited victims in New Jersey through in-person contact and victims in Florida via Facebook.
When Alvarado’s “customers” realized he was a fraud and demanded their money back, he would threaten and intimidate them, claiming to have the power to have them and their children deported. After his initial appearance on these charges in October 2012, Alvarado was released on bail. During a routine vehicle stop in March 2013, the Elizabeth Police Department found Alvarado again to be in possession of false immigration applications, a fingerprinting kit, clothing bearing the letters “I.C.E.,” a holster and blank pistol, and a fake “I.C.E.” badge.
Alvarado admitted in court that he has never been employed by any federal agency, but had produced false identification badges for himself and worn clothing and accessories suggestive of employment at ICE in order to solicit payments from illegal aliens for immigration assistance. He also admitted to having defrauded 33 victims in both New Jersey and Florida out of a total of $33,459, both before his federal arrest and while on pretrial release for these charges.
In addition to the prison term, Judge Hayden sentenced Alvarado to serve three years of supervised release and ordered him to pay $33,459 in restitution to his victims.
U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Office of Professional Responsibility, under the direction of Special Agent in Charge Terence S. Opiola; the Department of Homeland Security, Office of Inspector General in Miami, Fla., under the direction of Special Agent in Charge David Nieland; the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace H. Park; and the Elizabeth Police Department, under the direction of Police Director James Cosgrove, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Danielle Alfonzo Walsman of the U.S. Attorney’s Office Healthcare and Government Fraud Unit in Newark.
13-451Defense counsel: Kevin Carlucci Esq., Assistant Federal Public Defender, Newark
Former New Jersey Union Officer Convicted of Embezzling Union FundsRead the Press Release
NEWARK, N.J. - A former union officer from Local 164 of the International Brotherhood of Electrical Workers (IBEW) was convicted today of embezzling funds by ensuring his then-girlfriend got paid by the union for unauthorized and unnecessary work, U.S. Attorney Paul J. Fishman announced.
Richard “Buzzy” Dressel, 64, of Montvale, N.J., was convicted of one count each of conspiracy to embezzle and embezzlement from the union, the first two counts of the indictment against him. He was acquitted on other substantive embezzlement counts. The jury returned the verdict after nearly three days of deliberation following a nine-day trial before U.S. District Judge William J. Martini in Newark federal court.
According to documents filed in this case and the evidence at trial:
While the principal officer of the Local 164 IBEW, Dressel put his girlfriend on the payroll from March 2008 to March 2010, when her work provided no genuine benefit to the union or its members. He created an unnecessary position as an in-house caterer for her. Additionally, he padded her income – and indirectly his own – by giving her an office job she didn’t perform, providing her with an additional salary and a fringe benefit package. In all, Dressel embezzled $221,530 in this way.
Each count carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is currently scheduled for March 12, 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, New York Regional Office; and special agents of the U.S. Department of Labor, Employee Benefits Security Administration, under the direction of Jonathan Kay, Director for the New York Regional Office, with the investigation leading to today’s guilty verdict.
The government is represented by Assistant United States Attorney Grady O’Malley of the U.S. Attorney’s Office Organized Crime/Gangs Unit and Special Assistant U.S. Attorney Thomas Kearney of the office’s Criminal Division in Newark.13-452
Defense counsel: Jeffrey Smith Esq.; Alice Penna Esq., Teaneck, N.J.
Former New Jersey Man Charged in $18 Million Ponzi SchemeRead the Press Release
TRENTON, N.J. – A former Monmouth County, N.J., man was arrested today on a charge that he operated an $18 million Ponzi scheme involving victims from New Jersey, U.S. Attorney Paul J. Fishman announced.
Louis J. Spina, 56, formerly of Colts Neck, N.J., and now living in Miami, Fla., was charged by complaint with one count of wire fraud. He is scheduled to appear this afternoon before U.S. Magistrate Judge Lois H. Goodman in Trenton federal court for an initial appearance.
According to the complaint:
Between August 2010 and November 2013, Spina collected $18 million from 28 investors. Spina allegedly represented to the investors that he would invest their funds through his business, LJS Trading LLC, using algorithmic computer software, and that the investors would receive guaranteed monthly rates of return ranging from 9 to 14 percent. Spina commingled all of the investor funds together in one bank account. He only transferred $8 million of the investor funds to a trading account, which he then lost in unsuccessful trading. He allegedly used the remaining $10 million to pay the investors’ monthly interest payments, to return portions of some investors’ principals, and to pay for his own personal expenses, including car purchases/payments, luxury apartment rental payments, and a $400,000 donation to a private university.
The wire fraud count with which Spina is charged is punishable by a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and U.S. Secret Service, under the direction of Special Agent in Charge James Mottola, for the investigation leading to today’s arrest.
The government is represented by Assistant U.S. Attorney Sarah M. Wolfe of the U.S. Attorney’s Office Criminal Division in Trenton.13-450
Spina Complaint
Two New York Doctors Admit Taking Bribes in Test-Referrals Scheme with New Jersey Clinical LabRead the Press Release
NEWARK, N.J. – Two doctors with a practice in New York admitted today to accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, N.J., its president and numerous associates, New Jersey U.S. Attorney Paul J. Fishman announced.
Richard Goldberg, 60, of Weston, Conn., and Gary Leeds, 60, of Greenwich, Conn., each pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to one count of accepting bribes.
Including Goldberg and Leeds, 20 people have now pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.
According to documents filed in this and related cases and statements made in court:
During today’s guilty plea proceedings, Goldberg and Leeds admitted to accepting thousands of dollars per month in cash between September 2010 and April 2013 in return for referring patient blood specimens to BLS. The pair acknowledged they each accepted more than $100,000 in cash from BLS in exchange for referring at least a combined $1.8 million in lab business from their joint practice, Family Medical Group of Manhattan.
As part of their guilty pleas, Goldberg and Leeds each agreed to forfeit $108,000.
On April 9, 2013, federal agents arrested David Nicoll, 39, of Mountain Lakes, N.J., Scott Nicoll, 33, of Wayne, N.J., a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 35, of Whippany, N.J., a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, N.J. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme.
So far, 11 employees or associates of BLS, and 9 physicians have pleaded guilty to their roles in the bribery scheme. The investigation has recovered more than $6.5 million to date through forfeiture.
The bribery count to which Goldberg and Leeds pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing for both defendants is scheduled for April 1, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.
The government is represented by 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 $500 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.
13-445Defense counsel:
Richard Goldberg: Aidan P. O’Connor Esq., Hackensack, N.J.
Gary Leeds: E. Scott Morvillo Esq., New YorkGoldberg, Richard Information
Leeds, Gary InformationTwo Defendants Admit Roles in $65 Million Stolen Identity Income Tax Refund Fraud SchemeRead the Press Release
NEWARK, N.J. – Two defendants have admitted their roles in one of the nation’s largest and longest running stolen identity refund fraud schemes ever identified, U.S. Attorney Paul J. Fishman announced today.
The scheme caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds, and which resulted in the losses to the United States of more than $12 million.
Michael Senatore, 43, of Moscow, Pa., and David Pinski, 75, of Fort Lee, N.J., both pleaded guilty before U.S. District Judge Claire C. Cecchi to informations charging them with conspiracy to defraud the United States and theft of government property. Senatore entered his plea today, Pinkski entered his plea Nov. 20, 2013.
The conspiracy count is punishable by a maximum potential penalty of five years in prison and up to a $250,000 fine. The substantive count of theft of government property carries a maximum potential penalty of 10 years in prison and up to a $250,000 fine.
According to documents filed in this case and statements made in court:
Stolen Identity Refund FraudStolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually to the United States Treasury. SIRF schemes generally share a number of hallmarks:
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- SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.
- SIRF perpetrators complete Individual Income Tax Return Form 1040s using the fraudulently-obtained information, and falsifying wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 forms are entitled to tax refunds – when in fact, the various tax withholdings indicated on the fraudulent 1040s have not been paid by the listed “taxpayers,” and no refunds are due.
- SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.
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- Perpetrators direct the U.S. Treasury Department to issue the refunds through checks (Tax Refund Treasury Checks) generated by the fraudulent 1049 forms to locations they control or can access, in various ways.
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- With Tax Refund Treasury Checks now in hand, SIRF perpetrators generate cash proceeds. Certain SIRF perpetrators sell refund checks at a discount to face value. In turn, the buyers then cash the checks, either themselves or using straw account holders, by cashing checks at banks or check cashing businesses, or by depositing checks into bank accounts. When cashing or depositing checks, SIRF perpetrators often present false or fraudulent identification documents in the names of the “taxpayers” to whom the checks are payable.
The Investigation
Federal law enforcement agencies created a multi-agency task force in New Jersey composed of investigators from the IRS and the U.S. Postal Inspection Service, along with the U.S. Secret Service, and with assistance from the Drug Enforcement Administration (the “New Jersey Task Force”).
An investigation led by the New Jersey Task Force, with assistance from U.S. Immigration and Customs Enforcement, Homeland Security Investigations, revealed that from at least 2007, dozens of individuals in the New Jersey and New York area have been engaged in a large-scale, long running SIRF scheme that caused more than 8,000 fraudulent 1040 forms to be filed, seeking more than $65 million in tax refunds, with more than $12 million in losses to the U.S. Treasury.
Pinski, Senatore and others obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. They used those identifiers to create fraudulent 1040 forms, which falsely reported wages purportedly earned by the “taxpayers” and taxes purportedly withheld, to create the appearance that the “taxpayers” were entitled to tax refunds. The returns were filed electronically. By tracing the specific IP addresses that submitted the electronically-filed 1040s, law enforcement officers learned that just a handful of IP addresses created many of the fraudulent 1040 forms that lead to the issuance of tax refund checks.
Conspirators purchased mail routes, that is, lists of addresses covered by a single mail carrier. Conspirators applied for refunds, inserted addresses along the mail route as the purported home addresses of the “taxpayers,” and obtained the refund checks sent to the addresses. They also applied for checks using addresses otherwise controlled by, or accessible by, certain conspirators, and collected the checks after they were delivered to those addresses. During the course of the scheme, hundreds of refund checks were mailed to just a few different addresses in a few different towns, including Nutley, Somerset and Newark, N.J., and Shirley, N.Y.
After receiving the refund checks, Pinski, Senatore and others caused the checks to be cashed at check cashing institutions, and then causing the proceeds to be divided among the conspirators.
During the course of the investigation, members of the task force identified certain “hot spots” of activity and intercepted more than $22 million in refund checks – that had been applied for fraudulently – before they were delivered to members of the conspiracy.
Sentencing for Pinski is scheduled for March 3, 2014, and sentencing for Senatore is scheduled for March 5, 2014.
U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; the U.S. Secret Service, under the direction of Special Agent In Charge James Mottola; and the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl Kotowski, for the investigation leading to today’s this week’s guilty pleas.
The government is represented by Assistant U.S. Attorneys Mala Ahuja Harker, Lakshmi Srinivasan Herman, Zach Intrater, and Danielle Walsman of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel:
David Pinski: Samuel DeLuca Esq., Jersey City, N.J.
Michael Senatore: Christopher Patella Esq., Bayonne, N.J.Pinski, David Information
Senatore, Michael Information-
Newark Man Pleads Guilty to 17 Armed Robberies, an Armed Carjacking, and A ShootingRead the Press Release
NEWARK, N.J. – A Newark, N.J. man today admitted committing 17 armed robberies of commercial establishments throughout Union, Essex, and Bergen counties, U.S. Attorney Paul J. Fishman announced.
Bobby Dawson, 30, pleaded guilty before U.S. District Judge William H. Walls to a three-count Information charging him with committing an armed carjacking, conspiring to commit Hobbs Act robberies and discharging a firearm during the commission of one of those robberies.
According to the documents filed in this case and statements made in court:
Dawson conspired with others to rob commercial establishments as follows:
Pao Da Terra
Newark
Dec. 29, 2012
Newark
Jan. 20, 2013
Newark Community Pharmacy
Newark
Jan. 24, 2013
Linden Stationary
Linden
Feb. 1, 2013
Delta Gas Station
Newark
Feb. 1, 2013
Shoppers Express
Belleville
Feb. 2, 2013
Krauszers
Kearny
Feb. 10, 2013
Krauszers
Bloomfield
Feb. 13, 2013
Pat’s Deli
Newark
Feb. 19, 2013
Smashburger
Paramus
March 16, 2013
Krauszers
Bloomfield
March 29, 2013
MS&K Confectionery
Maplewood
April 1, 2013
Belleville News and Food
Belleville
April 17, 2013
South Wood Discount Liquor
Linden
April 17, 2013
Krauszers
West Orange
April 24, 2013
Newark Community Pharmacy
Newark
May 1, 2013
Subway Restaurant
Verona
May 20, 2013
Dawson and his conspirators robbed each of these establishments at gunpoint, stealing cash, cigarettes, and other items. In 15 of the 17 robberies, Dawson and his conspirators used zip ties or duct tape to restrain their victims.
In the MS&K robbery on April 1, 2013, Dawson threatened the clerk of the store with a .380 caliber semi-automatic handgun. When the clerk resisted, Dawson fired his gun at the clerk, ordered the clerk to lie down and then stole $9,000 from the cash register.
In the robbery of Krauszers in West Orange on April 24, 2013, Dawson and his conspirator tied up three individuals in the store with zip-ties before stealing approximately $600 and several cartons of cigarettes. Dawson injured a store employee by hitting the victim in the head with his firearm.
The armed carjacking to which Dawson pleaded guilty is punishable by a maximum potential penalty of 15 years in prison. The Hobbs Act conspiracy to which Dawson pleaded guilty is punishable by a maximum potential penalty of 20 years in prison. The charge of discharging a firearm during a crime of violence is punishable by a maximum penalty of life in prison and a mandatory minimum sentence of 10 years in prison, which must run consecutively to any other prison term. Each count also carries a maximum fine of $250,000 or twice the gross gain or loss arising out of the offense. Sentencing is scheduled for March 11, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea. He also thanked the Belleville, Bloomfield, Kearny, Linden, Maplewood, Newark, Paramus, Verona and West Orange police departments, along with the N.J. State Police and the Essex County Prosecutor’s Office for their work on this case.
The government is represented by Assistant U.S. Attorneys Jamari Buxton and Rahul Agarwal of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel: Candace Hom Esq., Assistant Federal Public Defender, Newark
Dawson Information
Former NJ Transit Official Charged with Agreeing to Accept $8,000 BribeRead the Press Release
NEWARK, N.J. – A former New Jersey Transit official appeared in court today on charges she agreed to accept an $8,000 bribe in connection with a snow removal contract, U.S. Attorney Paul J. Fishman announced.
Donna Schiereck, 56, of Jackson, N.J., is charged by complaint with one count of agreeing to accept a bribe. Schiereck appeared this afternoon before U.S. Magistrate Judge James B. Clark III in Newark federal court for an initial appearance.
According to the complaint unsealed today:
From September 2012 to December 2012, Schiereck was a supervisor at NJ Transit. During that same time period, Schiereck agreed to accept $8,000 in exchange for her assistance with securing a snow removal contract for a Lakewood, N.J., company.
The charge is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and the N.J. State Police, under the direction of Col. Joseph R. Fuentes, superintendent, for the investigation leading to today’s charge. He thanked the N.J. Attorney General’s Office, under the direction of Acting Attorney General John Hoffman, and Elie Honig, director of the N.J. Division of Criminal Justice, for their roles in this 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, the Deputy Chief of the Corruption Bureau, Division of Criminal Justice, in the New Jersey Office of the Attorney General.
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Defense counsel: David A. Schwartz, Eatontown, N.J., for Donna Schiereck.
Schiereck, Donna Complaint
Former CFO of New York Brokerage Firm Admits Stealing $1 Million from His Former EmployerRead the Press Release
TTRENTON, N.J. – The former chief financial officer of the Manhattan-based brokerage firm Needham & Co. today admitted stealing $1 million from his former employer through an elaborate false invoicing scheme, U.S. Attorney Paul J. Fishman announced.
Glen W. Albanese, 42, of Manalapan, N.J., pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with conspiring to steal $1 million from Needham & Co. Two of Albanese’s conspirators, Vincent Sarubbi, 43, of Manalapan, N.J., and Eric Siegel, 38, of New York, previously pleaded guilty in connection with their roles in the scheme.
According to documents filed in this case and statements made in court:
From 2000 through 2010, while he was employed as the CFO of Needham & Co., a broker-dealer with headquarters in New York, Albanese stole $1 million from the company through a false invoicing scheme. Albanese induced several vendors of Needham – including Data Source Partners, an information technology services company owned by Sarubbi, and S&R Graphic Company, a printing company where Siegel worked – to submit fraudulent invoices to Needham. Some of the fraudulent invoices charged for services that were never provided, while others inflated the amount due for services that were provided. Albanese approved the fraudulent invoices on behalf of Needham and then directed the vendors to send him the bulk of the illicit proceeds.
The vendors funneled the illicit proceeds to Albanese in a variety of ways. Albanese admitted that he directed Siegel to meet him at predetermined locations in Manhattan with envelopes containing thousands of dollars in cash. He directed both Siegel and Sarubbi to pay his personal expenses directly. Siegel and Sarubbi used the proceeds from the scheme to pay for landscaping and interior decorating at Albanese’s residence, a designer-breed dog and “canine fence,” equestrian equipment, thousands of dollars’ worth of wine and more than $40,000 in flights, hotels and travel expenses.
The conspiracy count to which Albanese pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. As part of the plea, Albanese agreed to pay restitution of $1 million to Needham. Sentencing is scheduled for Feb. 25, 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 plea.
The government is represented by Christopher J. Kelly, Chief of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
13-446Defense counsel: Joseph R. Benfante Esq, New York
Albanese, Glen Information
Bergen County, N.J., Couple Convicted of Bank Fraud, Conspiracy to Commit Wire Fraud, in Connection with Mortgage SchemeRead the Press Release
NEWARK, N.J. — A husband and wife from Bergen County, N.J., were both convicted today of one count each of bank fraud and conspiracy to commit wire fraud, U.S. Attorney Paul J. Fishman announced.
Linda Yarleque, 44, and her husband, Fabio Moreno Vargas, 46, of Westwood, N.J., were convicted following a one-week trial before U.S. District Judge William H. Walls in Newark federal court. The jury deliberated two hours before returning the guilty verdicts.
According to documents filed in this case and the evidence at trial:
Yarleque and Moreno obtained 10 fraudulent loans over a period of three years. They falsified their employment and income, failed to disclose their debts and other properties that they owned, and lied about where they lived. They fraudulently obtained a total of $3.4 million in mortgages this way and personally pocketed approximately $269,000, through “cash out” refinancings that they directed to their own bank accounts. They then spent that money on vacations, cars, and to buy more properties.
The defendants made up a phony business where Moreno was supposedly employed (My Limousine). They then obtained a phone line in the name of My Limousine and had it forwarded to their personal cell phones. When mortgage lenders called to verify Moreno’s employment, the defendants lied, posing as fictitious employees, using names such as “Janet Alvarez” and “Casandra Sterling.”
Each count upon which the defendants were convicted is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is scheduled for March 11, 2014.U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today=s convictions. He also thanked IRS-Criminal Investigation for its role in the case.
The government is represented by Assistant U.S. Attorney J. Jamari Buxton of the general crimes unit and Rachael A. Honig, counsel to the U.S. Attorney.13-448
Defense counsel:
Yarleque: Peter Willis Esq., of Jersey City, N.J.,
Moreno: Chester Keller Esq. and Carol Gillen Esq., Assistant Federal Public Defenders, NewarkYarleque, Linda and Moreno, Fabio Indictment
Prominent Tri-State Cardiologist Sentenced to 78 Months in Prison for Record, $19 Million Billing Fraud Scheme, Exposing Patients to Unnecessary Medical TreatmentRead the Press Release
Dr. Jose Katz Also Ordered to Pay $19 Million in Restitution
NEWARK, N.J. – A well-known cardiologist and the founder, CEO and sole owner of two large medical services companies in New Jersey and New York was sentenced today to 78 months in prison and ordered to pay $19 million in restitutionfor conspiring in a multimillion-dollar health care fraud scheme that subjected thousands of patients to unnecessary tests and potentially life-threatening, unneeded treatment, as well as treatment by unlicensed or untrained personnel. The sentence was announced today by New Jersey U.S. Attorney Paul J. Fishman.
Jose Katz, 69, of Closter, N.J., previously pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiracy to commit health care fraud and one count of Social Security fraud arising from a separate scheme to give his wife a “no show” job and make her eligible for Social Security benefits. Judge Linares imposed the sentence today in Newark federal court.
“Katz prized illegal profits over patients to a staggering degree, committing record-breaking fraud and compromising care,” said U.S. Attorney Fishman. “Prison is an appropriate consequence for ripping off the government and insurance companies through the shocking exposure of patients to unneeded or untrained treatment.”
As part of his plea agreement with the government, Katz agreed that the loss amount sustained by Medicare, Medicaid and other insurers victimized by the fraudulent billings was $19 million. U.S. Department of Health and Human Services, Office of Inspector General and FBI records indicate the loss amount suffered by the victims is the largest recorded in New Jersey, New York and Connecticut for an individual practitioner convicted of health care fraud.
According to documents filed in this case and statements made in court:
Katz was the founder, CEO and sole equity-holder of Cardio-Med Services LLC (Cardio-Med), and Comprehensive Healthcare & Medical Services LLC (Comprehensive Healthcare). From 2004 through 2012, Cardio-Med had offices in Union City, Paterson and West New York, N.J., and Comprehensive Healthcare had offices in Manhattan and Queens, N.Y. Both Cardio-Med and Comprehensive Healthcare provided cardiology, internal medicine and other medical services to individual patients. During that time period, Katz conspired to bill Medicare Part B, Medicaid, Empire BCBS, Aetna and others for unnecessary tests and unnecessary procedures based on false diagnoses and for medical services rendered by unlicensed practitioners.
Between July 2006 and February, 2009, Katz spent more than $6 million for advertising on Spanish-language television and radio stations. The ads attracted hundreds of patients to Cardio-Med and Comprehensive Healthcare every day. Overall, Katz was able to bill Medicare and Medicaid more than $75 million for his services from 2005 through 2012.
Over the course of the conspiracy, Katz ordered and performed essentially the same battery of diagnostic tests for nearly all the patients he treated, regardless of their symptoms. Katz also instructed his non-physician employees to order and perform diagnostic tests for patients of other doctors working at his offices, even though he had not examined those patients and the other physicians had not ordered the tests.
Most significantly, Katz admitted that he falsified patient charts with fictitious and boilerplate symptoms and falsely diagnosed a majority of his Medicare and Medicaid patients with coronary artery disease and debilitating and inoperable angina. He also admitted to making the diagnoses to justify prescribing and administering an unnecessary treatment for those patients called enhanced external counter pulsation, or EECP. Katz even prescribed EECP treatments for some patients with contraindications for the treatment, therefore subjecting those patients to a substantial risk of serious injury or death.
From 2005 through 2012, Medicare and Medicaid paid Katz more than $15.6 million just for his EECP treatments, most of which were fraudulent.
In addition, Katz ordered conspirator Mario Roncal, 62, of Woodland Park, N.J. – who had a medical degree from San Juan Bautista School of Medicine in San Juan, Puerto Rico, but did not have a license to practice medicine in any of the 50 states – to treat patients, knowing he was not licensed. At Katz’s direction, Roncal held himself out to fellow employees and to patients as “Dr. Roncal,” examined new patients as well as Katz’s follow-up patients, ordered diagnostic tests, diagnosed patients with medical conditions and diseases and recommended and prescribed courses of treatment and surgery – including falsely diagnosing patients with angina and prescribing EECP treatments for those patients.
To conceal this illegal and unlicensed practice of medicine, Roncal forged Katz’s signature on paperwork associated with Roncal’s unlawful medical services, including on patient charts. During the conspiracy, Katz used his own billing numbers to bill Medicare Part B and Medicaid for the illegal services Roncal provided as though they were provided by Katz.
Roncal was indicted on March 2, 2012, for conspiracy to commit health care fraud. He entered a guilty plea on Jan. 4, 2013 and awaits sentencing.
Katz also admitted to a Social Security fraud scheme in which, from 2005 through 2012, he kept his wife on Cardio-Med’s payroll though she performed little or no work. During the course of the scheme, Katz sent false W-2 forms for calendar years 2005 through 2011 to the U.S. Social Security Administration purportedly reflecting $1,251,604 in earnings for his wife, making her eligible for an estimated $263,000 in Social Security benefits to which she was not entitled.
In addition to the prison term and restitution, Judge Linares sentenced Katz to serve three years of supervised release.U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria Kelokates; the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Edward J. Ryan; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and criminal and civil investigators with the U.S. Attorney’s Office for the investigation leading to today’s sentence. He also thanked the Medicaid Fraud Division of the Office of the New Jersey State Comptroller for its assistance.
The government is represented by Assistant U.S. Attorney Scott B. McBride of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
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Defense counsel: Blair R. Zwillman Esq., Parsippany, N.J.Combatting Health Care Fraud in NJ
Former Union County, N.J., Vendor Admits to Paying Bribes and Defrauding County of More Than $120,000Read the Press Release
NEWARK, N.J. – The owner of a company that sold maintenance and cleaning supplies today admitted paying bribes to a Union County official and to defrauding the county of more than $120,000 in connection with the purchases, U.S. Attorney Paul J. Fishman announced.
Richard Greer, 54, of Marlboro, N.J., pleaded guilty to an information charging one count of conspiracy to commit mail fraud. Greer entered his guilty plea before U.S. District Judge William H. Walls in Newark federal court.
According to documents in this case and statements made in court:
From 2006 to 2011, Greer owned and operated Positive Attitude LLC, a commercial vendor that sold, among other products, maintenance and cleaning supplies to Union County. Aniello Palmieri, 57, of Toms River, N.J., was the director of the Division of Facilities Management for Union County, and oversaw the purchasing of building materials, tools, hardware, janitorial supplies and other supplies used by the various bureaus of the division.
Greer made cash bribe payments to Palmieri of $500 per month in exchange for ensuring continued Union County business for Positive Attitude. Greer generated fictitious invoices to Union County for many industrial cleaning products to cover the monies paid to Palmieri, often including a profit for himself above the kickback he paid to Palmieri. Positive Attitude received $120,000 to $200,000 in fraudulent proceeds from the fictitious invoices. Greer used the mails to facilitate this scheme by having Union County send the checks in payment for these purchases to his company in Marlboro.
The conspiracy to commit mail fraud charge to which Greer pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. The plea agreement requires that Greer pay restitution of $185,000. Greer is scheduled to be sentenced on March 11, 2014.
On Oct. 2, 2013, Palmieri and Frank Donald Vicendes III, 48, of Berkeley Heights, a Union County vendor, also admitted to engaging in a similar bribery scheme and to defrauding Union County of more than $120,000 in connection with sale of supplies to Union County. Palmieri and Vicendes entered their guilty pleas to mail fraud before Judge Walls in Newark federal court. Palmieri and Vicendes face the same penalties as Greer and are scheduled to be sentenced on Jan. 8, 2014, and Jan. 7, 2014, respectively.
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 the guilty pleas. He also thanked the N.J. Attorney General’s Office under the direction of Acting Attorney General John Hoffman and Elie Honig, director of the N.J. Division of Criminal Justice, for their work in this investigation.
The government is represented by Assistant U.S. Attorney Amy Luria of the U.S. Attorney’s Office Special Prosecutions Division in Newark, and Special Assistant U.S. Attorney Michael A. Monahan, the deputy chief of the Corruption Bureau, Division of Criminal Justice, in the N.J. Office of the Attorney General.
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Defense counsel: Marc A. Agnifilo Esq., New York
Greer Information
Palmieri Information
Vicendes InformationEssex County, N.J., Contractor and Three Employees Charged in Related Tax Fraud SchemesRead the Press Release
Company Worked Extensively on Palmer Square Project in Princeton, N.J.
NEWARK, N.J. – The owner of three Parsippany, N.J.-based construction companies surrendered to federal agents this morning on charges that he failed to collect and turnover federal and state payroll taxes totaling more than $1 million, evaded personal income taxes on more than $1.4 million in income, and falsified reports with respect to union benefit fund contributions, U.S. Attorney Paul J. Fishman announced.
Also, three employees of the construction companies were arrested on charges including filing false income tax returns, bankruptcy fraud, and a mail fraud scheme to defraud the state of New Jersey with respect to unemployment compensation benefits. All four defendants are scheduled to make their initial appearances later today before U.S. Magistrate Judge James B. Clark III in Newark federal court.
According to the three complaints filed in this case:
First Complaint:
Frank Chimento, Jr., 67, of West Caldwell, N.J., was the owner of Chimento Construction, Chimento Construction Services, and FAC Construction, three interrelated and commingled companies specializing in commercial masonry and concrete work (the “Chimento Companies”). From 2008 through 2011, the Chimento Companies’ primary construction job was the Palmer Square project located in Princeton, N.J.
Chimento Companies allegedly operated a cash payroll for a significant portion of the wages paid to employees during the period 2006 through 2011. Allegedly at Chimento Jr.’s direction, a conspirator (CC-1) who is not named in the complaints conducted structured cash transactions at several separate financial institutions to obtain cash to fund the payroll and in an attempt to avoid currency transaction reports from being filed. CC-1 would then purportedly prepare envelopes containing cash payroll based on the hours and wage rate information provided by Chimento Jr., who, as owner, was responsible for collecting, accounting for and paying over to the IRS withholdings from employees for Social Security, Medicare, and income taxes (collectively referred to as “payroll taxes”).
The complaint also alleges that as early as August 2009, the Chimento Companies have been parties to a collective bargaining agreement (CBA) with the International Union of Bricklayers and Allied Craftworkers, Administrative District Council of New Jersey, consisting of Local Unions 2, 4, and 5 (BAC/ADC), located in Bordentown, N.J. Among other things, the CBA provided that the Chimento Companies must make specified contributions to various BAC benefits funds for each hour of covered work performed by employees of the Chimento Companies. Chimento Jr. was required to complete remittance reports identifying the employees that had performed covered work under the CBA and the number of hours that they worked. According to the complaint, from August 14, 2009, through April 30, 2012, Chimento Jr. failed to make required contributions and caused false statements and representations to be made in remittance reports.
Joseph Carsillo, 45, of East Hanover, N.J., was the project superintendent for the Chimento Companies at Palmer Square. He has worked for the Chimento Companies since 2007. According to the Complaint, Carsillo conspired with Chimento Jr. to defraud the United States with respect to payroll taxes due and owing for the companies’ employees. Carsillo was responsible for keeping track of employees’ hours and would furnish that information to CC-1, which was used to determine the cash wages due to each employee.
According to the complaint, Carsillo received total cash wages from the Chimento Companies of approximately $167,466 during the years 2009 through 2011, which he failed to include on his personal tax returns for those years.Second Complaint:
Frank Chimento III, 45, of Verona, N.J., has worked for the Chimento Companies for more than 10 years and was one of the employees that received cash wages.
In 2007, Chimento III briefly operated his own excavation business. An analysis of his bank accounts showed payments in 2007 from the Chimento Companies totaling $85,860. Chimento III filed with the IRS a 2007 Individual Income Tax Return that was not correct as it did not include $45,860 he received from his employment with the Chimento Companies.
He also allegedly willfully did not file individual income tax returns from 2008 through 2011 although he received a Form 1099 for $100,000 in cash wages in 2008, and a total of $351,788 in cash wages during the years 2009 through 2011.
Third Complaint:
Carl J. Corso, 58, of Hamilton Township, N.J., started working for the Chimento Companies on August 12, 2009.
In addition to payroll checks, Corso requested and received cash wages from the Chimento Companies with regard to his employment in 2009 through 2011. Corso disclosed to his return preparer only the wages he received by payroll check and deliberately omitted the cash payments from his personal tax returns despite knowing that the cash should have been included on these returns.
Corso is also charged with a scheme to defraud the N.J. Department of Labor and Workforce Development (NJDOL-WD) with respect to unemployment compensation benefits. On Nov. 1, 2009, Corso advised the NJDOL-WD that he was no longer working and reactivated an earlier application for unemployment benefits and was awarded a weekly benefit of $526. He collected a total of $19,988 through the U.S. mail.
The three complaints charge the following offenses:
U.S. v. Frank Chimento Jr. and Joseph Carsillo
Defendant
Counts
Maximum Potential Penalty per Count
Count 1: Conspiracy to defraud the United States
Five years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 2-15: Failure to collect and pay over payroll taxes
Five years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 16-19: Mail fraud
20 years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 20-29: False statements in ERISA documents
Five years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 30-34: Individual Income Tax Evasion
Five years in prison; $250,000 fine or twice the gross gain or loss from the offense
Joseph Carsillo
Count 1: Conspiracy to defraud the United States
Five years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 35-37: Filing False Individual Income Tax Returns
Three years in prison; $250,00 fine or twice the gross gain or loss from the offense
Count 38: Bankruptcy Fraud
Five years in prison; $250,000 fine or twice the gross gain or loss from the offense
U.S. v. Frank Chimento III
Counts
Maximum Potential Penalty per Count
Count 1: Filing False Individual Income Tax Return
Three years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 2-5: Willful Failure to File an Individual Tax Return
One year in prison; $100,000 fine
U.S. v. Carl J. Corso
CountsMaximum Potential Penalty per Count
Count 1: Mail Fraud
20 years in prison; $250,000 fine or twice the gross gain or loss from the offense
Counts 2-9: Filing a False Individual Tax Return
Three years in prison; $250,000 fine or twice the gross gain or loss from the offense
U.S. Attorney Fishman praised special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; 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 New York Regional Office, for the investigation leading to today’s charges. He also thanked the N.J. Department of Labor and Workforce Development, under the leadership of Commissioner Harold J. Wirths for its assistance in the investigation.
The government is represented by Assistant U.S. Attorney Leslie Faye Schwartz of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
The charges and allegations contained in the complaints are merely accusations and the defendants are considered innocent unless and until proven guilty.
13-442Chimento, Frank Jr., and Carsillo, Joseph Complaint
Chimento, Frank III Complaint
Corso, Carl ComplaintStars of ‘Real Housewives of New Jersey’ Television Series Indicted on Additional Fraud ChargesRead the Press Release
NEWARK, N.J. – Two of the stars of the Bravo television show “The Real Housewives of New Jersey” were indicted today on additional charges of bank fraud and loan application fraud, U.S. Attorney Paul J. Fishman announced.
The 41-count superseding indictment returned by a federal grand jury against Teresa Giudice, 41, and her husband, Giuseppe “Joe” Giudice, 43, both of Towaco, N.J., adds two new counts charging both defendants: one count of bank fraud and one count of loan application fraud. The original 39 counts on which they were indicted on July 29, 2013, which include conspiracy to commit mail and wire fraud, bank fraud, making false statements on loan applications and bankruptcy fraud, as well as charges against Giuseppe Giudice for failure to file tax returns from 2004 through 2008, remain in place.
An arraignment on the new charges has been scheduled for 10:30 a.m., Nov. 20, 2013, before U.S. District Judge Esther Salas in Newark federal court.According to the superseding indictment:
The two additional counts stem from a $361,250 mortgage loan that Teresa Giudice obtained in July 2005. In the course of obtaining the loan, she and Giuseppe Giudice prepared a loan application which falsely stated that Teresa Giudice was employed as a realtor and that she had a monthly salary of $15,000. Teresa Giudice was not employed outside the home at the time.
The bank fraud and loan application fraud counts each carry a maximum potential penalty of 30 years in prison and a $1 million fine.
U.S. Attorney Fishman credited special agents of the Federal Deposit Insurance Corporation, Office of Inspector General, New York Region, under the direction of Special Agent in Charge A. Derek Evans; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and Region 3 U.S. Trustee Roberta DeAngelis and the Newark office of the U.S. Trustee, with the investigation which led to today’s indictment.
The government is represented by Assistant U.S. Attorneys Jonathan W. Romankow and Rachael Honig of the U.S. Attorney’s Office, Criminal Division in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty
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Defense counsel:
Giuseppe Giudice: Miles Feinstein Esq., Paterson
Teresa Giudice: Henry E. Klingeman Esq., NewarkGiudice, Giuseppe and Teresa Superseding Indictment
Stars of ‘Real Housewives of New Jersey’ Television Series Indicted on Additional Fraud ChargesRead the Press Release
NEWARK, N.J. – Two of the stars of the Bravo television show “The Real Housewives of New Jersey” were indicted today on additional charges of bank fraud and loan application fraud, U.S. Attorney Paul J. Fishman announced.
The 41-count superseding indictment returned by a federal grand jury against Teresa Giudice, 41, and her husband, Giuseppe “Joe” Giudice, 43, both of Towaco, N.J., adds two new counts charging both defendants: one count of bank fraud and one count of loan application fraud. The original 39 counts on which they were indicted on July 29, 2013, which include conspiracy to commit mail and wire fraud, bank fraud, making false statements on loan applications and bankruptcy fraud, as well as charges against Giuseppe Giudice for failure to file tax returns from 2004 through 2008, remain in place.
An arraignment on the new charges has been scheduled for 10:30 a.m., Nov. 20, 2013, before U.S. District Judge Esther Salas in Newark federal court.According to the superseding indictment:
The two additional counts stem from a $361,250 mortgage loan that Teresa Giudice obtained in July 2005. In the course of obtaining the loan, she and Giuseppe Giudice prepared a loan application which falsely stated that Teresa Giudice was employed as a realtor and that she had a monthly salary of $15,000. Teresa Giudice was not employed outside the home at the time.
The bank fraud and loan application fraud counts each carry a maximum potential penalty of 30 years in prison and a $1 million fine.
U.S. Attorney Fishman credited special agents of the Federal Deposit Insurance Corporation, Office of Inspector General, New York Region, under the direction of Special Agent in Charge A. Derek Evans; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and Region 3 U.S. Trustee Roberta DeAngelis and the Newark office of the U.S. Trustee, with the investigation which led to today’s indictment.
The government is represented by Assistant U.S. Attorneys Jonathan W. Romankow and Rachael Honig of the U.S. Attorney’s Office, Criminal Division in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty
13-440
Defense counsel:
Giuseppe Giudice: Miles Feinstein Esq., Paterson
Teresa Giudice: Henry E. Klingeman Esq., NewarkGiudice, Giuseppe And Teresa Superseding Indictment
Englishtown, N.J., Pharmacy Burglar Sentenced to 63 Months in Prison for Conspiracy to Sell Stolen OxycodoneRead the Press Release
TRENTON, N.J.– A Brooklyn, N.Y., man was sentenced today to 63 months in prison for his involvement in a plot to burglarize a pharmacy in Englishtown, N.J., and sell the stolen narcotics for cash, U.S. Attorney Paul J. Fishman announced.
James Zarbailov, 23, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to distribute and possess with intent to distribute oxycodone. Judge Wolfson imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
The Union Hill-Supremo Pharmacy in Englishtown was burglarized shortly after 4:00 a.m. on June 17, 2012. Zarbailov and his fellow conspirators filled 17 garbage bags and two cardboard boxes with merchandise from the pharmacy, including approximately 1,988 dosage units of methylphenidate, 500 dosage units of hydromorphone, 300 dosage units of Opana (a trade name for oxymorphone) and 3,800 dosage units of oxycodone – all Schedule II controlled substances.
The stock lost by the pharmacy was valued at approximately $350,000.
Zarbailov admitted that he stole the drugs, and that he did so knowing they would be sold for profit.
In addition to the prison term, Judge Wolfson sentenced Zarbailov to serve three years of supervised release and ordered him to pay $334,722.12 in restitution.
Two of Zarbailov’s conspirators, David Mordukhaev, 22, and Dzheykhun Avshalumov, 24, both of Brooklyn, have previously pleaded guilty to the same charge. Mordukhaev’s sentencing is scheduled for Dec.3, 2013, and Avshalumov’s sentencing is scheduled for Dec. 19, 2013.
U.S. Attorney Fishman credited special agents of the FBI’s Red Bank Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and law enforcement officers from the Marlboro Township Police Department, under the direction of Police Chief Bruce E. Hall, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton.13-439
Defense counsel: Sanford Talkin Esq., New YorkMiddlesex County, N.J., Man Sentenced to Four Years in Prison in $65 Million Stolen Identity Income Tax Refund Fraud SchemeRead the Press Release
NEWARK, N.J. – A Middlesex County, N.J., man was sentenced today to 48 months in prison for his role in one of the nation’s largest and longest running stolen identity refund fraud schemes ever identified, U.S. Attorney Paul J. Fishman.
The scheme caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds, and which resulted in losses to the United States of more than $12 million.
Manuel Rodriguez, 50, of New Brunswick, N.J., previously pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with conspiracy to defraud the United States, theft of government property and aggravated identity theft. Judge Cecchi imposed the sentence today in Newark federal court.According to documents filed in this case and statements made in court:
Stolen Identity Refund Fraud
Stolen Identity Refund Fraud (“SIRF”) is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually to the United States Treasury. SIRF schemes generally share a number of hallmarks:
- SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.
- SIRF perpetrators complete Individual Income Tax Return Form 1040s (“Form 1040”) using the fraudulently-obtained information, and falsifying wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 forms are entitled to tax refunds – when in fact, the various tax withholdings indicated on the fraudulent 1040s have not been paid by the listed “taxpayers,” and no refunds are due.
- Perpetrators direct the U.S.Treasury Department to issue the refunds through checks (“Tax Refund Treasury Checks”) generated by the fraudulent 1049 forms to locations they control or can access, in various ways.
- With Tax Refund Treasury Checks now in hand, SIRF perpetrators generate cash proceeds. Certain SIRF perpetrators sell Tax Refund Treasury Checks at a discount to face value. In turn, the buyers then cash the Tax Refund Treasury Checks, either themselves or using straw account holders, by cashing checks at banks or check cashing businesses, or by depositing checks into bank accounts. When cashing or depositing Tax Refund Treasury Checks, SIRF perpetrators often present false or fraudulent identification documents in the names of the “taxpayers” to whom the checks are payable.
The Investigation
Federal law enforcement agencies created a multi-agency task force in New Jersey composed of investigators from the IRS and the U.S. Postal Inspection Service, along with the U.S. Secret Service, and with assistance from the Drug Enforcement Administration (the “New Jersey Task Force”).
An investigation led by the New Jersey Task Force, with assistance from U.S. Immigration and Customs Enforcement, Homeland Security Investigations, revealed that from at least 2007, dozens of individuals in the New Jersey and New York area have been engaged in a large-scale, long running SIRF scheme that caused more than 8,000 fraudulent 1040 forms to be filed, seeking more than $65 million in tax refunds, with more than $12 million in losses to the U.S. Treasury.
Rodriguez and others obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. They used those identifiers to create fraudulent 1040 forms, which falsely reported wages purportedly earned by the “taxpayers” and taxes purportedly withheld, to create the appearance that the “taxpayers” were entitled to tax refunds. The returns were filed electronically. By tracing the specific IP addresses that submitted the electronically-filed 1040s, law enforcement officers learned that just a handful of IP addresses created many of the fraudulent 1040 forms that led to the issuance of tax refund checks.
During the course of the investigation, members of the task force identified certain “hot spots” of activity and intercepted more than $22 million in refund checks – that had been applied for fraudulently – before they were delivered to members of the conspiracy.
In addition to the prison term, Judge Cecchi sentenced Rodriguez to three years of supervised release and ordered to pay restitution of $5.2 million.
U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Marie L. Kelokates; the U.S. Secret Service, under the direction of Special Agent In Charge James Mottola; and the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl Kotowski, for the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Mala Ahuja Harker, Lakshmi Srinavasan Herman, Zach Intrater, and Danielle Walsman of the U.S. Attorney’s Office Criminal Division in Newark.13-438
Defense Counsel: Mark A. Berman, River Edge, N.J.
- SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.
Pharmacist Arrested in New Jersey, Charged with Assembling Illegal Drug LabRead the Press Release
NEWARK, N.J. - Special agents of the Drug Enforcement Administration (DEA) and FBI arrested a pharmacist early this morning in Jersey City, N.J., on federal charges alleging he assembled equipment for an illegal drug lab, New Jersey U.S. Attorney Paul J. Fishman announced.
Jordan Gonzalez, 33, of New York and formerly of Jersey City, is charged by criminal complaint with one count of attempting to manufacture methylenedioxyamphetamine (MDA) and one count of possessing chemicals and materials to manufacture a controlled substance.
Law enforcement officers are executing search warrants in New Jersey and New York in connection with the ongoing investigation that led to the arrest.
Gonzalez will appear on the charges before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court at a date and time to be determined.
According to the complaint:
Gonzalez made a series of purchases through an online auction website of materials associated with the manufacture of MDA, a hallucinogen and Schedule I controlled substance. His acquisitions included various chemicals and flasks, as well as empty gel caps and a machine to fill them.
The investigation also showed that Gonzalez has conducted Internet research related to the synthesis of MDA.
The manufacturing charge carries a maximum potential penalty of 20 years in prison and a $1 million fine. The possession of equipment charge carries a maximum potential penalty of four years in prison and a maximum $250,000 fine, or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the New Jersey DEA, under the direction of Special Agent in Charge Carl J. Kotowski, and the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the ongoing investigation. He also thanked the New York City and Jersey City Police Departments and the New Jersey State Police for their assistance.The government is represented by Assistant U.S. Attorneys L. Judson Welle and Francisco J. Navarro of the U.S. Attorney’s Office Criminal Division in Newark.
The charges and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.
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Defense counsel: Assistant Federal Public Defender David Holman Esq., Newark
Gonzalez, Jordan Complaint
Former Owner of Morgan, N.J., Construction Company Admits Role in Bid-Rigging SchemeRead the Press Release
TRENTON, N.J. – A former owner of Tarheel Enterprises Inc., a heavy construction and paving company, admitted today to participating in a bid-rigging scheme, U.S. Attorney Paul J. Fishman announced.
George Chrysanthopoulos, 50, of Little Silver, N.J., pleaded guilty mid-trial to Count Three of an indictment, charging him with a scheme to defraud a private terminal operator at Port Elizabeth, N.J., of the honest services of one of its employees through bribes to rig a bid. Chrysanthopoulos entered his plea before U.S. District Judge Joel A. Pisano in Trenton federal court. The remaining six counts of the indictment are to be dismissed at sentencing.
According to documents and evidence admitted in this case and statements made in court:
Chrysanthopoulos was a vice-president and a co-owner of Tarheel, a heavy construction and paving company headquartered in Morgan, N.J. Between February 2011 and April 2011 Chrysanthopoulos schemed to bribe Donald Olesky, the former director of facilities Maintenance at Maher Terminals LLC, in exchange for the Olesky’s assistance in rigging Maher Terminals’ bid process for a construction project in favor of Tarheel. Unbeknownst to Chrysanthopoulos, Olesky was cooperating with law enforcement and recorded a series of meetings with Chrysanthopoulos, during which Chrysanthopoulos schemed to rig that bid. As part of the scheme, Chrysanthopoulos gave to Olesky a list of contractors to invite to bid on the project and also agreed to pay Olesky a $50,000 bribe in exchange for his assistance in rigging the bid process in favor of Tarheel.
Chrysanthopoulos, who was released on bond, faces a maximum prison term of 20 years and a maximum fine of $250,000. Sentencing before Judge Pisano is scheduled for March 26, 2014.
Donald Olesky previously pleaded guilty before U.S. District Judge Freda L. Wolfson in Trenton federal court to two counts of the use of mail and facilities in interstate commerce to promote commercial bribery. Olesky’s sentencing will be scheduled at a later date.
U.S. Attorney Fishman credited special agents of the FBI’s Trenton Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s guilty plea. Fishman also thanked the N.J. Department of Transportation, Office of Inspector General, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys Harvey Bartle, Attorney-in-Charge of the U.S. Attorney’s Trenton Office, and Vikas Khanna, of the U.S. Attorney’s Office Special Prosecutions Division.
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Defense counsel: Michael Critchley Esq., and John Vazquez Esq., Roseland
Chrysanthopoulos, George Indictment
Essex County, N.J., Woman Admits Mailing Threatening LetterRead the Press Release
NEWARK, N.J. – An Irvington, N.J., woman today admitted that she mailed a threatening letter to the Town of Secaucus, U.S. Attorney Paul J. Fishman announced.
Karen Waller, 50, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging her with mailing a threatening communication in interstate commerce.
According to documents filed in this case and statements made in court:
Waller admitted that she wrote and mailed a letter to Secaucus that included threatening language about bomb attacks and warned against underestimating her.
The charge carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Feb. 27, 2014.
U.S. Attorney Fishman credited special agents, detectives and investigators assigned to the Joint Terrorism Task Force (JTTF), under the direction of FBI Special Agent in Charge Aaron T. Ford in Newark, with the investigation. The JTTF comprises law enforcement officers from numerous federal, state and local agencies throughout New Jersey.
The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: Assistant Federal Public Defender Lisa Mack Esq., Newark
Waller Information
Two Defendants Admit Guilt in Insider Trading SchemeRead the Press Release
NEWARK, N.J. –The two primary traders in an extensive insider trading network admitted today to repeatedly using information divulged by insiders at pharmaceutical/medical technology firms operating in New Jersey, U.S. Attorney Paul J. Fishman announced.
Lawrence Grum, 49, of Livingston, N.J., pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with two counts of conspiracy to commit securities fraud and four counts of securities fraud.
Michael Castelli, 49, of Morris Plains, N.J., pleaded guilty before Judge Hayden to an information charging him with two counts of conspiracy to commit securities fraud and five counts of securities fraud.
According to documents filed in this case and statements made in court:
From 2007 to 2012 Grum and Castelli executed numerous, profitable trades based on inside information fed to them by their friend, Mark Cupo, 52, of Morris Plains, N.J., who was an executive at Sanofi-Aventis, a global pharmaceutical company with United States operations based in New Jersey. Cupo, in turn, obtained much of the inside information from his friend and former employee, John Lazorchak, 43, of Long Valley, N.J., who was director of financial reporting at Celgene Corp., another global pharmaceutical company based in New Jersey. Lazorchak also obtained certain inside information from Mark Foldy, 43, of Morris Plains, a friend and former high school classmate of Lazorchak, who was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.
During the course of the multi-year insider trading operation, Grum and Castelli regularly received from Lazorchak, via Cupo, material, nonpublic information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news, with the understanding that Grum and Castelli would trade based on the inside information and share their profits with Lazorchak and Cupo. Grum and Castelli also received inside information directly from Cupo regarding a corporate acquisition planned by Cupo’s employer, Sanofi, as well as inside information regarding a Stryker acquisition, which inside information Cupo had obtained from Lazorchak. Lazorchak, in turn, had obtained the Stryker inside information from his friend, Foldy.
Grum and Castelli made efforts to conceal their involvement in insider trading by, for example, compiling binders of market research to try to provide an independent basis for their knowledge of confidential, material nonpublic information.
The material, nonpublic information available to Grum and Castelli enabled them to reap substantial profits by engaging in lucrative securities trading ahead of the public announcement of several corporate acquisitions, numerous quarterly earnings results, and regulatory news. In addition, they shared a portion of their profits with Lazorchak and Cupo, for their respective role in providing Grum and Castelli inside information.
Grum and Castelli each face a maximum potential penalty of five years in prison and a fine of $250,000 on the conspiracy counts; and a maximum potential penalty of 20 years in prison and a fine of $5 million on the securities fraud counts. Grum and Castelli are both scheduled to be sentenced on Feb. 20, 2014.
Grum and Castelli are the last of the six defendants charged with participating in this insider trading network to plead guilty. The other four defendants: Lazorchak, Cupo, Foldy, and Michael Pendolino, 44, of Nashua, N.H., entered their guilty pleas before Judge Hayden on Oct. 7, 2013, and are scheduled to be sentenced on Jan. 20, 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 pleas. He also thanked the U.S. Securities and Exchange Commission=s Market Abuse Unit and Philadelphia Regional Office, under the direction of Daniel M. Hawke.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:
Lawrence Grum: Scott A. Resnik Esq., New York
Michael Castelli: Daniel Zinman Esq. and Daniel Stein Esq., New York
John Lazorchak: Lawrence S. Lustberg Esq., Newark
Mark Cupo: Joseph J. Bell Jr. Esq. and Joseph J. Bell, IV Esq., Rockaway, N.J.
Mark Foldy: Jonathan Marks Esq., New York
Michael Pendolino: James S. Friedman Esq., NewarkGrum, Lawrence Information
Castelli, Michael InformationNew York Man Pleads Guilty in Huge Stolen Identity Refund Fraud CaseRead the Press Release
Admits He was Personally Involved in $9.9 Million in Phony Transactions
NEWARK, N.J. – A New York man today admitted his role as a leader of one of the nation's largest and longest running stolen identity refund fraud schemes ever identified, U.S. Attorney Paul J. Fishman announced.Jose Torres, a/k/a “Jose Quilestorres,” a/k/a “Carlos Jose Luis,” 47, of Bronx, N.Y., pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an information charging him with conspiracy to defraud the United States, theft of government property and aggravated identity theft.
The scheme caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds and resulted in losses to the United States of more than $12 million. Torres admitted the fraudulently obtained tax refund checks in which he was personally involved totaled $9.9 million.
According to documents filed in this case and statements made in court:Stolen Identity Refund Fraud
Stolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually. The schemes generally share a number of hallmarks:
• The perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.
• They complete individual income tax returns (Form 1040) using the fraudulently obtained information and falsifying wages, taxes withheld and other data. They use the data to make it appear that the “taxpayers” listed on the fraudulent 1040 forms are entitled to tax refunds – when, in fact, the various tax withholdings indicated on the fraudulent 1040s have not been paid by the listed taxpayers, and no refunds are due.
• Perpetrators direct the U.S. Treasury Department to issue the refunds through checks generated by the fraudulent 1040 forms to locations they control or can access.
• With the checks in hand, SIRF perpetrators generate cash proceeds. Some sell the checks at a discount to face value, and the buyers cash them, either themselves or using straw account holders, at banks or check cashing businesses or deposit them into bank accounts. They often use fraudulent identification documents to do this.
The Investigation
Federal law enforcement agencies in New Jersey created a multi-agency task force composed of investigators from the IRS and the U.S. Postal Inspection Service, along with the U.S. Secret Service, and the Drug Enforcement Administration.An investigation led by the New Jersey task force, with assistance from U.S. Immigration and Customs Enforcement, Homeland Security Investigations, revealed that from at least 2008, dozens of individuals in the New Jersey and New York area have been engaged in a large-scale, long-running SIRF scheme that caused more than 8,000 fraudulent 1040 forms to be filed, seeking more than $65 million in tax refunds, with more than $12 million in losses to the U.S. Treasury.
Torres and others obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. Torres then directed others to use those identifiers to create fraudulent 1040 forms to create the appearance they were entitled to tax refunds. The fraudulent 1040 forms were created and filed electronically. By tracing the specific IP addresses that submitted the electronically filed 1040s, law enforcement officers learned that only a handful of IP addresses created many of the fraudulent 1040 forms, which, in turn, led to the issuance of refund checks that the conspirators obtained, sold, cashed, and spent.
Torres and others gained control of the refund checks by bribing mail carriers to intercept checks and deliver them to other conspirators. In exchange for cash payments, the carriers gave checks to conspirators, who sold the checks to other conspirators.
Torres and others also purchased “mail routes,” lists of addresses covered by a single mail carrier. Conspirators applied for refunds, inserted addresses along the mail route as the purported home addresses of the taxpayers, and obtained the refund checks sent to the addresses. In other instances, the conspirators applied for checks using addresses otherwise controlled by, or accessible to, certain conspirators, and collected the checks after they were delivered to those addresses. During the course of the scheme, hundreds of tax refund checks were mailed to just a few different addresses in a few different towns, including Nutley, Somerset and Newark, N.J., and Shirley, N.Y.
The New Jersey task force identified certain “hot spots” of activity; millions of dollars of tax refund checks were being directed to just a few towns and cities in and around New Jersey. Task force members then interacted with U.S. Postal Service employees in these hot spots and identified the characteristics of refund checks connected to the scheme. As a result of these efforts, more than $22 million in refund checks, applied for fraudulently, that had been issued by the U.S. Treasury were not delivered to the conspirators or others, but were interdicted by law enforcement officers.
The conspiracy count is punishable by a maximum potential penalty of five years in prison and up to a $250,000 fine. The substantive count of theft of government property is punishable by a maximum potential penalty of 10 years in prison and up to a $250,000 fine. The aggravated identity theft count is punishable by a statutory mandatory minimum sentence of two years in prison, which must run consecutively to any other sentence.
Torres previously pleaded guilty in the Southern District of New York to charges arising out of the same scheme. He will be sentenced in the Southern District of New York on the charges from both states at a date to be determined.
U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Maria L. Kelokates, with the investigation leading to today’s guilty pleas. He also thanked the special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski; and HSI-ICE, under the direction of Special Agent in Charge Andrew M. McLees, for their roles.The government is represented by Assistant U.S. Attorneys Mala Ahuja Harker, Lakshmi Srinavasan Herman, Zach Intrater, and Danielle Walsman of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel: Joseph Bondy Esq., New York, and Paul Warburgh Esq., Huntington, N.Y.
Torres, Jose Information
Property Manager Admits Role in Multimillion-Dollar Mortgage FraudRead the Press Release
CAMDEN, N.J. – A property manager admitted today to conspiring to defraud financial institutions as part of a multimillion-dollar mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on over-developed condominiums in the Wildwood, N.J., U.S. Attorney Paul J. Fishman announced.
Steven Schlatmann, 27, of Jersey City, N.J., pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.
According to documents filed in this case and statements made in court:
Schlatmann and his conspirators identified homes in Wildwood and Wildwood Crest. Schlatmann’s conspirators recruited straw buyers to purchase those properties at inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. Schlatmann was aware that his conspirators created fraudulent loan applications that contained false information concerning the straw buyers’ employment, income, assets and intended use of the properties. These actions were designed to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.
Schlatmann and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds, Schlatmann’s conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled from the fraudulent mortgage loans or lines of credit on several properties. They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles. For his part in the conspiracy, Schlatmann received $259,294 from four separate real estate transactions.
The wire fraud conspiracy charge is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The conspiracy to commit money laundering charge is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. Schlatmann’s sentencing is scheduled for March 24, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen in Newark, for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.
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Defense counsel: John Klotz Esq., Clifton, N.J.Schlatmann, Steven Information
New Hampshire Man Arrested, Charged in New Jersey for Illegal Weapons Sales on Underground Online MarketplaceRead the Press Release
NEWARK, N.J. B Federal agents arrested a New Hampshire man in Hampton, N.H., on charges that he illegally trafficked firearms through New Jersey on an underground, Internet-based marketplace known as “Black Market Reloaded,” New Jersey U.S. Attorney Paul J. Fishman announced.
Matthew Crisafi, 38, of Hampton, was arrested by special agents from U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), on a federal criminal complaint charging him with three counts: the unlicensed sale of firearms; smuggling of firearms from the United States to an overseas destination; and conspiring to commit money laundering in connection with firearms trafficking activities.
The defendant, who is the owner of an independent trucking company in New Hampshire, is scheduled for an initial appearance and bail hearing this afternoon before U.S. Magistrate Judge Daniel Lynch, in Concord, N.H., federal court. He will be brought to New Jersey to appear in Newark federal court on a date to be determined.
“International arms trading and other crimes are just as dangerous whether deals are made in person or through anonymous computer networks and currencies,” said U.S. Attorney Fishman. “Online black market sellers should take note: we aren’t just targeting the administrators of these sites, which can pop up again elsewhere. If you buy or sell illegal goods on an underground marketplace, law enforcement is watching.”
According to the criminal complaint unsealed today:
In April 2013, HSI special agents conducted an investigation of illicit sales activity on Black Market Reloaded (BMR). The website provides a platform for vendors and buyers to conduct anonymous online transactions involving the sale of a variety of illegal goods, including firearms, ammunition, explosives, narcotics and counterfeit items. Unlike mainstream e-commerce websites, BMR is only accessible via the Tor network – a special computer network designed to enable users to conceal their identities and locations. Transactions on BMR are conducted using Bitcoin, an anonymous, decentralized form of electronic currency that only exists online.
During the investigation, HSI learned that Crisafi maintained a seller’s profile on BMR to advertise the illegal sale of firearms and ammunition. Over a period of approximately three months, Crisafi negotiated with an undercover officer – whom he believed was an international purchaser of firearms – to sell a number of semi-automatic handguns and rifles, including a Smith & Wesson Model Bodyguard .380 caliber semi-automatic handgun; a Glock Model 26, 9mm caliber semi-automatic handgun; a KelTec Model P32, .32 caliber semi-automatic handgun; a NORINCO SKS 7.62 semi-automatic rifle; an AR-15 Bushmaster semi-automatic rifle and others. In all, Crisafi sold multiple firearms to the undercover officer, valued by law enforcement to be worth more than $11,000 on the black market.
Crisafi shipped the firearms in packages through the U.S. Postal Service. Several of the weapons Crisafi sold were sent to the undercover officer through a location in New Jersey, where they were seized by law enforcement officials.
“Today’s arrest is a testament to the strong working relationships HSI has forged with our numerous law enforcement partners,” said HSI Newark Special Agent in Charge Andrew McLees. “People who think they can hide behind a veil of an “underground” website to buy and sell weapons illegally are mistaken – HSI will use all of our collective resources to track you down and bring you to justice.”
U.S. Attorney Fishman credited special agents of HSI, under the direction of Special Agent in Charge McLees in Newark and Special Agent in Charge Bruce M. Foucart in Boston with leading the investigation; as well as postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria Kelokates; special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Acting Special Agent in Charge George P. Belsky; the U.S. Attorney’s Office for the District of New Hampshire, under the direction of John P. Kacavas; and officers from the Hampton Police Department in Hampton, N.H., under the direction of Police Chief Jamie Sullivan, for their important contributions.
The prosecution is being handled by the U.S. Attorney’s Office National Security Unit in Newark.The charges and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.
13-430Crisafi, Matthew Complaint
Iraqi-Based Construction Company Pays $2.7 Million for Alleged False Claims in Bribery SchemeRead the Press Release
NEWARK, N.J. – Iraqi Consultants and Construction Bureau (ICCB) has paid the United States $2.7 million to resolve allegations that it violated the False Claims Act by bribing a government official to obtain United States government contracts in Iraq, the Department of Justice announced today. ICCB is a privately owned construction company headquartered in Baghdad, Iraq.
“It is offensive that anyone would see projects to promote stability, health and education in a rebuilding country as a way to make illegal cash on the side; we will not abide companies paying to play in such a system,” said Paul J. Fishman, U.S. Attorney for the District of New Jersey.
The government alleged that from 2007 to 2008, ICCB paid bribes to Army Corps of Engineers procurement official John Salama Markus, 41, of Nazareth, Pa., to obtain information that gave it an advantage in bidding on several construction contracts with the Department of Defense in Iraq. The contracts supported reconstruction efforts in the Iraq war, including infrastructure and security projects and the building of medical facilities and schools. ICCB then knowingly overcharged the United States for services provided under the contracts, according to the government’s allegation.
“Bribery will not be tolerated in government contracting,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division. “We will ensure that government contracts are awarded on merit and pursue allegations of fraudulently procured contracts wherever they occur.”
“The Defense Criminal Investigative Service (DCIS) is committed to protecting the integrity of the Defense acquisition process from personal and corporate avarice,” said Craig Rupert, Special Agent in Charge, DCIS Northeast Field Office. “Ensuring the proper use of U.S. taxpayers’ dollars and preventing contract fraud is in our nations’ interest and remains a priority.”
The settlement is part of a larger investigation initiated by the U.S. Attorney’s Office for the District of New Jersey. As part of that investigation, Markus pleaded guilty on Sept. 7, 2012, to wire fraud, money laundering and failure to report a foreign bank account in connection with more than $50 million in contracts awarded to foreign companies in Gulf Region North, Iraq. Markus was sentenced to 13 years in prison on March 12, 2013, in Newark federal court.
The investigation is being handled by the U.S. Attorney’s Office for the District of New Jersey and the Civil Division’s Commercial Litigation Branch, in cooperation with the Defense Criminal Investigative Service, the Major Procurement Fraud Unit of the Army’s Criminal Investigation Command, the Criminal Investigative Division of the Internal Revenue Service, and the Department of Homeland Security.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
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Vending Machine Company Executive Admits Tax Fraud Conspiracy, Agrees to Pay Pepsi $1 Million in RestitutionRead the Press Release
NEWARK, N.J. — The former principal of a New Jersey vending company today admitted his role in a tax fraud scheme and agreed to pay restitution of $1 million to the Pepsi Bottling Group, the U.S. Attorney Paul J. Fishman announced.
Joseph Belasco, 62, of Cedar Grove, N.J., pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to a superseding information charging him with providing a false 2008 IRS 1099 form to the wife of a PepsiCo executive for consulting services that she never performed. Former PepsiCo executive, Edwin Glasspool, 53, of Caldwell, had previously pleaded guilty to defrauding Pepsi of $2.9 million dollars and having his wife receive his annual share of the defrauded money through checks for consulting services issued by Impact Marketing, the vending company.
According to documents filed in the case and statements made in court:In the spring of 1998, Belasco, along with a business associate, created Impact Cause Related Marketing (Impact Marketing), a subsidiary of Culinary Ventures Vending, a company that placed and stocked vending machines in private and commercial facilities, such as state colleges and entertainment venues. The purpose of Impact Marketing was allegedly to provide Pepsi Bottling Co. with leads for acquiring new customers to purchase its cans, bottles and fountain products. Impact Marketing and Belasco would receive commissions for as long as the client remained a Pepsi customer. According to its contract, Impact Marketing would also receive quarterly rebates, depending upon the amount of Pepsi product a customer purchased on an annual basis.
Glasspool, a Pepsi employee who developed new customers, assigned those customers to Impact Marketing. He also reassigned existing Pepsi customers to the list of new customers allegedly referred by Impact Marketing, generating additional commissions for leads for Belasco that Belasco had not actually generated himself. Between 1998 and 2008, Impact Marketing received from Pepsi $2.9 million in commissions and rebates as a result of the fraudulent scheme.
Glasspool and his wife, who filed joint tax returns, received as much as $200,000 in unlawful annual income from Belasco and Impact Marketing.
The charge to which Belasco pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. In addition to the plea of guilty, Belasco agreed to make a restitution payment of $1 million dollars to PepsiCo. Sentencing is scheduled for Feb. 25, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation leading to today’s guilty plea.The government is represented by V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney=s Office Organized Crime/Gangs Unit in Newark.
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Defense counsel: John A. Azzarello Esq., and David Fassett Esq., Chatham, N.J.
Belasco superseding Information
Queens, N.Y., Men Plead Guilty to Large-Scale ATM Skimming Scheme Targeting New Jersey Bank CustomersRead the Press Release
NEWARK, N.J. – Two Romanian natives residing in Queens, N.Y., today admitted to a scheme to steal account information from bank customers throughout New York, New Jersey, and Connecticut by installing secret card-reading devices on ATMs, U.S. Attorney Paul J. Fishman announced.
Ioan Leusca, a/k/a “Ionel Spinu,” 30, and Dezso Gyapias, a/k/a “Valentin Folea,” 29, each pleaded guilty before U.S. District Judge William J. Martini to separate informations charging each with one count of conspiracy to commit bank fraud and one count of aggravated identity theft. Leusca and Gyapias have been held without bail since their arrests on Jan. 13, 2013.
According to documents filed these and other cases and statements made in court:
Leusca and Gyapias admitted that they and their fellow conspirators installed skimmers and pinhole cameras at bank ATMs. The devices were installed on multiple ATMs in New Jersey and Connecticut. Each skimmer, an electronic device, would read and record identity and account information contained in the magnetic strip of a customer’s ATM card. The pinhole camera secretly recorded bank customers’ keystrokes as they entered their personal identification numbers. Leusca and Gyapias admitted that they and other conspirators went back to collect the devices containing the recorded information.
Leusca and Gyapias acknowledged that after the stolen customer account and identification information had been loaded onto blank ATM cards, they and their conspirators used those cards to steal $985,000 from Citibank ATMs in New Jersey, New York and Connecticut.
The charges to which Leusca and Gyapias pleaded guilty arose from a larger investigation into a skimming scheme that targeted customers in the tri-state area in 2012 and early 2013. Together, the schemes cost a number of banks a total of $5 million in cash stolen from their customer accounts.
Of the eight others charged in relation to the wider scheme, all Romanian nationals who lived in Queens, seven are in custody. The leaders of the scheme, Marius Vintila, 31, and Bogdan Radu, 30, were charged by criminal complaint on July 10, 2013. Vintila and Radu designed and created the actual skimming devices and pinhole cameras and recruited individuals, including Leusca and Gyapias, to install them on bank ATMs. Vintila used an alias to rent multiple self-storage units, in which he stored the contents of an entire skimming operation, including skimming devices, pinhole cameras, super glue, tape, SD cards, batteries, computers, molds, fraudulent ATM cards, and cash proceeds. Radu taught co-conspirators how to install the skimming devices, and Radu used an alias to move skimming devices and cash proceeds overseas.
Other charged conspirators, including Constantin Ginga, 53, Marius Cotiga, 35, Constantin Pendus, 30, Emil Revesz, 30, Florin Apetrei, 18 and another individual charged as “first name unknown, last name unknown,” a/k/a “Chioru,” installed the devices designed by Vintila and Radu onto bank ATMs and used fraudulent ATM cards to steal millions of dollars. They used hats, jackets, scarves and sunglasses to disguise themselves while installing the devices and while using the cards to withdraw money.
Ginga, Cotiga, Leusca, Gyapias, Pendus, Revesz, Apetrei, and Radu are in custody in New Jersey and being held without bail. Ginga previously pleaded guilty to conspiring to commit bank fraud and aggravated identity theft and awaits sentencing on Dec. 18, 2013. On Sept. 24, 2013, Vintila was apprehended in Sweden and awaits extradition to the United States. The individual known as “Chioru” remains at large.
The bank fraud conspiracy charge to which Leusca and Gyapias pleaded guilty is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The aggravated identity theft charge carries a mandatory, consecutive penalty of two years in prison and a maximum $250,000 fine. Sentencing is currently scheduled for Feb. 20, 2014.
U.S. Attorney Fishman praised special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge James Mottola, along with special agents of Immigration and Customs Enforcement, Homeland Security Investigations (HSI) in Newark, under the direction of Andrew M. McLees, with the investigation leading to today’s guilty pleas.
The charges and allegations against the other defendants charged in the pending complaints are merely accusations, and the defendants are considered innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorneys Rahul Agarwal and David Eskew of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense Counsel:
Leusca: Frank Arleo Esq., West Orange, N.J.Gyapias: Joe Rotella Esq., Newark
Leusca, Ioan Information
Gyapias, Dezso InformationNewark, N.J., Corrections Officer Faces Indictment Charging Sexual Abuse of DetaineeRead the Press Release
NEWARK, N.J. – A corrections officer with the Essex County Correctional Facility is expected to appear in court this afternoon for allegedly sexually assaulting a pretrial detainee in the facility and then lying about it to investigators, U.S. Attorney Paul J. Fishman announced.
Shawn D. Shaw, 40, of Newark, was charged by indictment with depriving an individual of rights under color of law and with obstruction of justice. The indictment was unsealed upon Shaw’s arrest on Oct. 8, 2013. He appeared that day before U.S. Magistrate Judge Madeline Cox Arleo and was released on a $100,000 bond with home detention. Shaw has been suspended from his duties since his arrest. His arraignment is scheduled for this afternoon before U.S. District Judge Faith S. Hochberg in Newark federal court.
According to the indictment:
On Dec. 28, 2010, Shaw, while acting in his official capacity as a corrections officer, subjected a detainee in the custody of the Essex County Correctional Facility to aggravated sexual abuse that caused bodily injury to the victim.
When investigators questioned Shaw about the attack, he lied and intentionally omitted information from his statement in order to obstruct the investigation. Specifically, Shaw falsely stated that he did not make sexual comments to the detainee or enter the victim’s cell.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to the arrest. He also thanked the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray, with providing valuable information.
The charge of deprivation of rights under color of law carries a maximum potential penalty of life in prison. The obstruction of justice count carries a maximum potential penalty of 20 years in prison. Each count also carries a maximum $250,000 fine.
The government is represented by Criminal Division Chief Thomas Eicher and Assistant U.S. Attorney Shana Chen of the U.S. Attorney’s Office in Newark, and Trial Attorney Shan Patel of the Justice Department’s Civil Rights Division.
The charges and allegations contained in the indictment are merely accusations and the defendant is considered innocent unless and until proven guilty.
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Defense counsel: Anthony C. Mack Esq., Newark
Shaw Indictment
Florida Man Admits Role in Stolen Identity Income Tax Refund Fraud SchemeRead the Press Release
CAMDEN, N.J. – A Florida man today admitted using his position in a doctor’s office to steal personal identifying information as part of his role in running a stolen identity refund fraud scheme, U.S. Attorney Paul J. Fishman announced.
Berness Swan, 44, of Spring Hill, Fla., formerly of Sicklerville, N.J., pleaded guilty today before U.S. District Judge Renée Marie Bumb, to an information charging him with one count of theft of government property and one count of aggravated identity theft. Swan caused numerous fraudulent U.S. income tax returns to be filed, which sought thousands of dollars in tax refunds and resulted in losses to the United States of more than $120,000.
Stolen Identity Refund Fraud (SIRF) is a common type of fraud that results in more than $2 billion in losses annually to the U.S. Treasury. SIRF schemes generally share a number of hallmarks:
• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals;
• SIRF participants complete Individual Income Tax Return 1040 Forms using the fraudulently-obtained information, and falsify wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 form are entitled to tax refunds – when in fact, the various tax withholdings indicated have not been paid and no refunds are due;
• SIRF perpetrators direct the U.S. Treasury Department to issue the refunds through checks to locations they control or can access, in various ways.According to documents filed in this case and statements made in court:
Swan was employed by the Phoenix Medical Group in Mount Laurel, N.J., from Jan. 8, 2009, through March 23, 2012. Swan had access to numerous individuals’ personal identifying information, including Social Security numbers and dates of birth. Swan stole the personal identifying information and used it to file fraudulent income tax returns with the IRS. Swan sought federal tax refunds in filing the tax returns. The Department of the Treasury issued tax refunds to numerous bank accounts Swan had so that Swan could access the money for his personal benefit.
U.S. Attorney Fishman praised special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea.
The count of theft of government property is punishable by a maximum potential penalty of 10 years in prison and up to a $250,000 fine. The count of aggravated identity theft is punishable by a statutory, mandatory two-year consecutive prison term to the sentence the court will impose on the theft of government property count. Sentencing is scheduled for Feb. 7, 2014.
The government is represented by Assistant U.S. Attorney R. Stephen Stigall, Attorney-in-Charge of the U.S. Attorney’s Camden Branch Office.
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Defense counsel: Mark W. Catanzaro Esq., Mt. Holly, N.J.Swan, Berness Information
Bergen County, N.J. Man Sentenced to 33 Months in Prison for His Role in $3.5 Million Foreign Currency Investment Ponzi SchemeRead the Press Release
CAMDEN, N.J. – A Bergen County, N.J., man claiming to run New Jersey-based hedge funds using a secret computer program to invest in foreign currency was sentenced today to 33 months in prison for his role in defrauding victims out of more than $3.5 million, U.S. Attorney Paul J. Fishman announced.
Carmelo Provenzano, 31, of Garfield, N.J., and co-conspirator Daniel Dragan, 43, of Lebanon, N.J., previously pleaded guilty to separate informations charging them with wire fraud conspiracy before U.S. District Judge Jerome B. Simandle in Camden federal court. A third co-conspirator, George Sepero, 40, of Glen Rock, N.J., previously pleaded guilty to a superseding information charging him with wire fraud conspiracy, wire fraud and tax evasion before Judge Simandle.
Dragan will be sentenced in December 2013. Sepero was sentenced to 100 months in prison on Oct 18, 2013.
According to documents filed in this and other cases and statements made in court:
Beginning in 2009, Dragan, Provenzano and Sepero claimed to run a series of hedge funds in New Jersey, luring investors with the prospect of extraordinary profits in foreign currency trading. The defendants made numerous misrepresentations and omissions to induce their victims to invest in Caxton Capital Management and CCP Pro Consulting Inc. Dragan, Provenzano and Sepero claimed they controlled a proprietary computer algorithm for trading foreign currencies; that they had used the algorithm to achieve returns of more than 170 percent in the prior two years; and that any investment funds would be highly liquid and could be withdrawn on a few days’ notice.
Relying on these and other misrepresentations, investors sent the defendants more than $3.5 million. Dragan, Provenzano and Sepero invested little or no money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures.
Dragan, Provenzano and Sepero spent investor money on credit card bills averaging $25,000 per month; bar tabs of $18,241 - including a $4,000 tip - and $14,034 on separate nights at “Drai’s Hollywood” nightclub in Los Angeles; and flights to Paris and elsewhere. Provenzano bought a luxury Range Rover Sport SUV costing more than $71,000, with a down payment of more than $65,000.
The defendants furthered the scheme by emailing victims fake statements showing their principal had been invested in the foreign currency markets and was achieving substantial results. Many of these e-mails were purportedly sent by an individual named “Mel Tannenbaum,” a fictional character of Provenzano’s invention.The defendants also e-mailed to several investors screen shots of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets. In reality, the shots reflected trading in fictional accounts set up by the conspirators to dupe investors.
In addition to the prison term, Judge Simandle sentenced Provenzano to serve three years of supervised release and ordered him to pay restitution of $4,508,949.
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 sentence. He also thanked the Commodity Futures Trading Commission’s New York Regional Office, under the direction of David Meister.
The government is represented by Assistant U.S. Attorneys Christopher Kelly and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Evan Weitz of the Office’s Asset Forfeiture 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:
Dragan: David Fassett Esq., Chatham, N.J.
Provenzano: Raymond Flood Esq., Hackensack, N.J.
Sepero: John Weischel Esq., Hackensack, N.J.U.S. Attorney's Office Reminds New Jersey Voters to Use Election Day Hotline for Complaints of Voting Irregularities or AbusesRead the Press Release
NEWARK, N.J. – Tuesday, Nov. 5, 2013, is New Jersey’s general election, and U.S. Attorney Paul J. Fishman is reminding voters to use the Election Day Hotline if they suspect voter fraud. The U.S. Attorney’s Office will receive and respond to reports of election irregularities, voter intimidation or any other activities that would interfere with a citizen’s right to vote. The Election Day Hotline – (855) 291-6791 – will be active from Nov. 3, 2013, through Nov. 7, 2013, and staffed live on Election Day.
The Department of Justice and federal law enforcement partners will work with county boards of election and the New Jersey Attorney General’s Office to respond to complaints and direct them to the appropriate authority.
The Justice Department seeks to ensure that all qualified voters have the opportunity to cast their ballots and have their votes counted, without discrimination, intimidation or fraud.
Established in 2010, this yearly initiative is intended to foster public confidence in the integrity of the election process by providing local points of contact within the Justice Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.
The Justice Department and federal investigative agencies, led by the FBI, work cooperatively with the state Attorney General’s Office, under the direction of Acting Attorney General John Jay Hoffman, to enforce voters’ rights at the polls.13-424
Camden, N.J., Man Admits That He Exchanged More Than $2.5 Million in Snap/Food Stamp Benefits for CashRead the Press Release
CAMDEN, N.J. – A Camden man today admitted that he stole more than $2.5 million dollars from the U.S. Government through a food stamps scheme, U.S. Attorney Paul J. Fishman announced.
Alexander D. Vargas, 34, pleaded guilty today before U.S. District Court Judge Joseph H. Rodriguez to an information charging him with stealing U.S. Government monies during a scheme in which he purchased Supplemental Nutrition and Assistance Program (SNAP) benefits (formerly known as food stamps) for approximately 50 cents on the dollar at the local grocery store he managed in Camden. Vargas was detained after his arrest on May 16, 2013, and his detention was continued.
According to documents filed in this case and statements made in court:
From January 2012 through December 2012 Vargas managed Eddies Grocery, a small store in Camden that was authorized to accept SNAP benefits. The program is administered by the U.S. Department of Agriculture. Retail food stores approved for participation in SNAP may sell food in exchange for food stamp benefits. However, they may not exchange food stamp benefits for cash.
Every food stamp recipient receives an Electronic Benefits Transfer (EBT) card, similar to a debit card, with which to make purchases. Every retailer authorized to accept food stamp benefits has an EBT terminal. Food purchases are made by swiping the card at the terminal. After the customer enters a secret Personal Identification Number (PIN), the EBT terminal verifies the PIN, determines whether the customer’s account balance is sufficient to cover the proposed transaction and informs the retailer whether the transaction should be authorized or denied. If the transaction is authorized, the amount of the purchase is then deducted electronically from the food stamp benefits reserved for the customer, and the amount is credited to the retailer’s designated bank account.
Eddies Grocery designated a bank account at Sovereign Bank to receive the reimbursements for SNAP benefits. Bank records listed Vargas and another individual as managers of Eddies Grocery.Eddies Grocery was first approved to participate in the SNAP program in 2007. In his application to participate in SNAP, the owner estimated that Eddies Grocery would generate receipts of approximately $280,000 annually, or an average of $23,333 per month. The volume of SNAP benefits reimbursement received at Eddies Grocery substantially exceeded those estimates, indicating large scale food stamp fraud. From February 2012 through November 2012 the SNAP redemptions were more than $2.8 million greater than the estimates.
In addition to the high volume of SNAP benefits redemptions, law enforcement agents verified the fraudulent exchange of SNAP benefits for cash through the use of a cooperating witness and an undercover law enforcement officer. During a series of five transactions from June 7, 2012, through Oct. 4, 2012, law enforcement agents directed a cooperating witness and an undercover law enforcement officer to go into Eddies Grocery and exchange $1,359.75 in SNAP benefits for $650 cash.
A review of the bank records for the Eddies Grocery account showed total cash withdrawals of $3,109,776 for the 2012 calendar year. Records from Feb. 15, 2012, (when defendant Alexander Vargas was added as an authorized cosigner on the account) through December 2012, showed $2,548,510 in cash withdrawals – of which Vargas’ name was on 40 withdrawals totaling $1,869,266.
Vargas faces a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Under the terms of the plea agreement, Vargas has agreed to forfeit $22,273 seized from him on the date of his arrest, and has also agreed to the entry of a forfeiture money judgment for $2,981,642. Sentencing is scheduled for Feb. 5, 2014.
U.S. Attorney Fishman credited special agents of the U.S. Department of Agriculture, Office of Inspector General, under the direction of Special Agent in Charge William G. Squires Jr. in New York; the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew McLees; and IRS – Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Diana Carrig of the U.S. Attorney’s Office in Camden.
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Defense counsel: Jeffrey C. Zucker Esq., Camden, N.J.
Vargas Information
Boonton Township, N.J., Man Arrested, Charged with Distributing Sexually Explicit Images of ChildrenRead the Press Release
NEWARK, N.J. – Special agents of U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE HSI)and officers of the Boonton Township Police Department arrested a Boonton Township, N.J., man at his home this morning on a charge that he distributed sexually explicit images of children from his home computer, U.S. Attorney Paul J. Fishman announced.
Lucas J. Reinmann, 34, is charged by complaint with one count of distributing images of child pornography over the Internet. He appeared this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court and was released on a $150,000 bond.
According to the criminal complaint unsealed today:
On June 8, 2013, Reinmann distributed videos and images depicting child pornography on the Internet via peer-to-peer file sharing software, which allowed others access to the material in shared directories. An undercover agent discovered and downloaded the images and videos, and the username and IP address of the sharer was traced back to Reinmann’s residence.
ICE HSI special agents, working with the Morris County Prosecutor’s Office (MCPO) and the Boonton Township Police Department, executed a search warrant at Reinmann’s home on July 15, 2013, and discovered computer equipment allegedly containing multiple images of child pornography.
The distribution count carries a minimum penalty of five years in prison and a maximum potential penalty of 20 years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents of ICE HSI, under the direction of Special Agent in Charge Andrew M. McLees in Newark; the MCPO, under the direction of Acting Prosecutor Fredric M. Knapp; and the Boonton Township Police Department, under the direction of Chief Paul C. Fortunato, with the investigation leading to today’s arrest.
The government is represented by Assistant U.S. Attorney Sara F. Merin of the U.S. Attorney’s Office General Crimes Unit in Newark.
The charge and allegations contained in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
13-422Defense counsel: Edward V. Sapone Esq., New York
Reinmann Complaint
Mercer County, N.J., Man Pleads Guilty to Production of Child PornographyRead the Press Release
TRENTON, N.J. – A Mercer County, N.J., man today admitted producing images of child sexual abuse, U.S. Attorney Paul J. Fishman announced.
Fredy Arbito, 31, of Hightstown, N.J., pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of production of child pornography.
According to documents filed in this case and statements made in court:
From July 2011 to Jan. 28, 2013, Arbito knowingly coerced an 11-year-old girl to engage in sexually explicit conduct for the purpose of transmitting it live over the internet.
The production of child pornography charge to which Arbito pleaded guilty is punishable by a maximum potential penalty of 30 years in prison, with a mandatory minimum of 15 years in prison and a $250,000 fine. Sentencing is scheduled for Feb. 4, 2013.
U.S. Attorney Fishman praised special agents of the Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney R. Joseph Gribko of the U.S. Attorney’s Office Criminal Division in Trenton.
13-421Defense counsel: James R. Lisa Esq., Jersey City, N.J.
Arbito, Fredy Information
Defense Contractor Arraigned on Charges She Exported Military Blueprints to India Without A LicenseRead the Press Release
Indictment Alleges She Used Local Church’s Website Illegally to Transmit
Defense Materials to Overseas ConspiratorTRENTON, N.J. – The owner of two New Jersey defense contracting businesses was arraigned today for allegedly transmitting military blueprints to India without a license, in violation of export laws, U.S. Attorney Paul J. Fishman announced.
Hannah Robert, 48, North Brunswick, N.J., was arraigned before U.S. District Judge Joel A. Pisano in Trenton federal court. She was indicted by a federal grand jury on Oct. 10, 2013, on one count of violating the Arms Export Control Act and one count of conspiracy to violate the act. She remains under home detention pending trial.
According to the documents filed in this case and statements made in court:
Robert was the founder, owner, and President of One Source USA LLC, a company located at her then-residence in Mount Laurel, N.J., and contracted with the U.S. Department of Defense (DoD) to supply defense hardware items and spare parts pursuant to government contracts. In September 2012, Robert opened a second defense-contracting company, Caldwell Components Inc., based at the same address in Mount Laurel.
Along with “R.P,” a resident of India, Robert owned and operated a company in India, One Source (One Source India), that manufactured at its own facility defense hardware items and spare parts. From June 2010 to December 2012, Robert and R.P. conspired to export to India defense technical drawings without obtaining the necessary licenses from the U.S. Department of State. The exported technical drawings include parts used in the torpedo systems for nuclear submarines, in military attack helicopters, and in F-15 fighter aircraft.
Robert allegedly lied on her bids for DoD contracts, stating that she would be supplying American-made products and that her N.J.-based company was a manufacturer, rather than a dealer, of defense spare parts. One Source USA also subcontracted to other American defense contractors, including those in Sussex County, N.J., and Boca Raton, Fla. Robert provided export-controlled items made in India to these defense contractors in the United States in such a way as to appear to the DoD that the items were manufactured in this country.
In addition to United States’ sales, Robert and R.P. sold defense hardware items to foreign customers. Robert transmitted export-controlled technical data to R.P. in India so that Robert and R.P. could submit bids to foreign actors, including those in the United Arab Emirates (UAE), to supply them or their foreign customers with defense hardware items and spare parts. Neither Robert nor R.P. obtained approval from the U.S. Department of State for this conduct.
On August 23, 2012, R.P. e-mailed Robert from India requesting the technical drawing for a particular military item. R.P.’s e-mail forwarded Robert an e-mail from an individual purporting to be “an official contractor of the UAE Ministry of Defence,” and who listed a business address in Abu Dhabi, UAE. The UAE e-mail requested quotations for a bid for the “blanket assembly” for the CH-47F Chinook military helicopter and listed the “End User” for the hardware item as the UAE Armed Forces. Later that same day, Robert replied to R.P.’s e-mail, attaching, among other things, the electronic file for an export-controlled technical drawing titled “Installation and Assy Acoustic Blankets, STA 120 CH-47F,” to be used in the Chinook attack helicopter.
Starting in October 2010, Robert transmitted the military drawings for these parts to India by posting the technical data to the password-protected website of a Camden County, N.J., church where she was a volunteer web administrator. This was done without the knowledge of the church staff. Robert e-mailed R.P. the username and password to the church website so that R.P. could download the files from India. Through the course of the scheme, Robert uploaded thousands of technical drawings to the church website for R.P. to download in India.
On June 25, 2012, R.P. e-mailed Robert from India, stating in part: “Please send me the church web site username and password.” The e-mail was in reference to both an invoice to, and a quote for, an individual known to Robert as a broker of defense hardware items for an end-user in Pakistan. This individual (the “Pakistan trans-shipper”) employed a UAE address for shipping purposes. Later than day, Robert replied to this e-mail, providing a new username and password for the church website so that R.P. could download the particular defense drawings.
There were quality issues with the parts that Robert provided to the DoD. After the DoD in October 2012 disclosed the failure of certain parts used in the wings of the F-15 fighter aircraft, supplied by one of One Source USA’s American customers, Robert and R.P. provided the principal of that company with false and misleading material certifications and inspection reports for the parts. These documents, to be transmitted to the DoD, listed only One Source USA’s New Jersey address and not the address of the actual manufacturer in India, One Source India. As a result of the failed wing pins, the DoD grounded approximately 47 F-15 fighter aircraft for inspection and repair, at a cost estimated to exceed $150,000.
Robert was, until November 2012, an employee of a separate defense contractor in Burlington County, N.J., where she worked as a System Analyst and had access to thousands of drawings marked with export-control warnings and to information on this defense contractor’s bids on DoD contracts. During her employment, Robert misrepresented to her employer the nature and extent of her involvement with One Source USA.
The conspiracy count with which Robert is charged is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. The substantive violation of the Arms Export Control Act is punishable by a maximum potential penalty of 20 years in prison and a $1 million fine. The indictment also seeks forfeiture of Robert’s proceeds from the alleged criminal scheme.
The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.
U.S. Attorney Fishman credited special agents of the U.S. Department of Defense, Defense Criminal Investigative Service Northeast Field Office, under the leadership of Special Agent in Charge Craig W. Rupert, and special agents of the Department of Homeland Security, Homeland Security Investigations, Counter Proliferation Investigations, under the supervision of Special Agent in Charge Andrew M. McLees, with the investigation leading to the indictment.
The government is represented by Assistant U.S. Attorney John E. Clabby 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 considered innocent unless and until proven guilty.
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Defense counsel: David Schafer Esq., Assistant Federal Public Defender, TrentonRobert Indictment
Co-Owner of Company That Originated $30 Million in Fraudulent Mortgages Pleads GuiltyRead the Press Release
NEWARK, N.J. B The co-owner of a mortgage company that was responsible for a long-running, large-scale mortgage fraud that caused losses of more than $30 million today admitted his role in the scheme, U.S. Attorney Paul J. Fishman announced.
Lester Soto, 57, of Freehold, N.J., pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with two counts of conspiracy to commit bank fraud.
According to the Information and other publicly-filed documents:
From September 2006 to May 2008, Soto and others, including fake document creators, a complicit lawyer and paralegal, and numerous loan officers, engaged in two related mortgage fraud conspiracies through a company called Premier Mortgage Services (APMS). Soto and his conspirators targeted properties in low-income areas of New Jersey. After recruiting “straw buyers,” Soto and his conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets and earned far more income than they actually did.
Soto and his conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the subject properties. Soto and his conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements (HUD-1s), which hid the true sources and destinations of the mortgage funds provided by financial institutions. The straw buyers had no means of paying the mortgages, and many of the properties entered into foreclosure proceedings. Soto and his conspirators defrauded financial institutions out of more than $30 million. Besides being a part-owner of PMS, Soto also acted as a loan officer on certain PMS mortgage loan applications. Soto took a percentage of PMS’ profits. Soto employed document makers to create false and fraudulent documents and put mortgage brokers at PMS in contact with these document makers to create other false and fraudulent documents. Soto instructed PMS employees to provide him with loan files that PMS employees believed contained suspicious information, and then personally shepherded these loan files through to funding.Other conspirators, including Isaac DePaula, Adilson Silva, and Klary Arcentales were loan officers at PMS. DePaula, Silva, and Arcentales recruited straw buyers, provided false and fraudulent documents to the straw buyers, and incorporated false and fraudulent documents into loan applications to induce financial institutions to fund mortgage loans. The loan officers profited illegally by receiving a commission from PMS for each mortgage loan that they closed and also profited illegally by diverting portions of the fraudulently obtained mortgage proceeds for themselves, often via shell corporations or nominee bank accounts.
Rodrigo Costa created false and fraudulent documents, including Verifications of Deposit (VODs) and Verifications of Rent (VORs). Other defendants, including DePaula and Silva, then submitted Costa’s fraudulent documents to support the fraudulent mortgage loan applications of various straw buyers. For his participation, Costa received a portion of the illicit proceeds from the mortgages.
Michael Rumore was an attorney licensed in the State of New Jersey. Rumore served as the settlement agent on mortgage loans brokered by DePaula, Silva, and Soto for various subject properties. Rumore used his status as an attorney to further the fraudulent scheme, including by convening closings, receiving funds from lenders, and preparing HUD-1s that purported to reflect the sources and destinations of funds for mortgages on subject properties B when in fact, the HUD-1s were neither true nor accurate. Rumore disbursed mortgage loan proceeds directly to PMS, Soto, DePaula, and Silva, including amounts not reflected on the HUD-1s. Rumore received a fee for each fraudulent loan in which he participated.
Antonio Pimenta owned and managed Kelmar Construction Co. (Kelmar). Kelmar built properties that were then sold to straw buyers utilizing fraudulent mortgage loans brokered by Arcentales.
The counts with which Soto is charged are each punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million. Sentencing is scheduled for Feb. 10, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea. Fishman also thanked the Social Security Administration-Office of Inspector General, under the direction of Special Agent in Charge Edward Ryan, for its participation in the investigation.
The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Zach Intrater of the U.S. Attorney’s Office Criminal Division.
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.gov13-419
Defense counsel: Jeff Smith Esq., of Teaneck, N.J.
Soto Information